Indo Credit Capital Ltd Management Discussions.

NBFCs aid in economic development in following ways:

- Mobilization of resources- It converts savings into investments.

- Capital Formation- Aids to increase capital stock of Company.

- NBFCs provide long term credit and specialized credit.

- Aids in employment generation

- Help in development of financial markets.

- Help in attracting foreign grants.

- Helps in breaking the vicious circle of property by serving as Governments Instrument.

OVERALL REVIEW:

As per Economic Survey 2018-19, the GDP growth in 2016-17 was 8.2%. In 2018-19, the agriculture and industry sectors are expected to grow at 2.9% and 6.9% respectively, while the service sector is estimated to grow at 7.5%. Inflation: The Consumer Price Index (CPI) based inflation declined from 3.6% in 2017-18 to 3.4% in 2018-19.

The economic fundamentals are showing slow but improving trends, which corroborates the expected growth in the economy. Inflation has been largely tamed. The investment cycle in India is showing positive growth and expenditure on consumption is increasing, although in a fluctuating trend. This growth is likely to be sustainable considering governments focus on industrial activities, infrastructure development and ease of doing business.

OPPORTUNITIES, THREATS, RISKS, CONCERNS, PERFORMANCE AND OUTLOOK:

According to the Reserve Bank of Indias (RBI) Financial Stability Report-2019, recent developments in the Nonbanking financial companies (NBFC) sector have brought the sector under greater market discipline as the better performing companies continued to raise funds while those with Assets Liability Mismatch and/or asset quality concerns were subjected to higher borrowing costs.

The Indian market too corrected almost 14% from its life time highs in August 2018 when the SENSEX reaching almost 39,000 down to 33,350 in December 2018. The investment community was considerably relieved with the rise in the markets post budget from February 2019 on the back of substantial FII flows leading to the Sensex breaching its life time high and closing above 39,000 on 31st March, 2019.

Another area of concern is the fall in household savings which have fallen to two decade low to 17.2% of GDP in FY18 vs. 25.2% of GDP in FY10. The main reason for the dwindling household savings is a sharp jump in household financial liabilities, which have nearly doubled from 3.9 trillion in FY16 to 7.4 trillion in FY18, may be due to surge in unsecured lending from Banks, Micro finance and NBFCs.

On a brighter note, it was heartening to see that GST collection has finally moved up and crossed 1.1 lac crores for the month of April 2019. The biggest fear for the economists was that GST will fuel inflation and for the assessees that an online system will never succeed. Both these fears have been negated with the business community relieved of dealing with myriad departments of the 17 to 18 different state and centre related taxes which were subsumed in GST and economists pleased with the retail price inflation touching a low of 1.97 % in January 2019 falling from as high as about 5% in FY 17 - 18 when GST was introduced.

Another development which deserves attention is the growth in deposits in ‘Jan-Dhan accounts, a version of nofrill accounts and the basic savings accounts launched in August 2014, intended as a first step in increasing financial inclusion across Indias population, have inched close to the 1 lakh crore. As on 3rd May, 2019, deposits in Jan-Dhan accounts stood at 98,874.5 crore, spread across 35.54 crore beneficiaries. Deposits in such accounts have risen by 22 percent over the previous year. Average account balance in the Jan-Dhan accounts stood at 2,782 in April, 2019 compared to 838.8 at the end of the schemes first phase in January 2015. This is a incredible success story and is now being closely studied and implemented by many other countries. Expectedly, the aforesaid reforms have laid the foundation for buoyant equity markets in the future. GST is leading to formalization of the economy which is helping organized retail, Jan-Dhan accounts has strengthened the liability side of PSU

Banks and will lead to plethora of opportunities to market products for Banks, Insolvency and Bankruptcy Code has brought a discipline into the workings of companies resulting in reduction of excess debt in balance sheets. A trend which is now catching favor globally is Industry consolidation. This is happening in India too. There is a visible consolidation in a few industries namely, airlines, telecom and real estate developers leading to disruption and breakdown of many weaker players. This has unfortunately led to rising unemployment, higher NPAs for Banks and NBFCs, and large write offs in the income statements of creditors as seen in the Jet Airways scenario. The emergence of strong leaders in industries which are consolidating brings forth investment opportunities. In financial markets it is commonly referred to as "Value Migration".

In the year to come your company will continue to identify opportunities in select sectors which the management believes have potential to grow your wealth. To summarize, the path to rejuvenation of the Indian economy to higher growth as experienced in the years 2007 to 2010 remains a quandrum. However, there are silver linings in the clouds of low growth primarily higher capacity utilization but how far this will sustain over the year only time will tell. Data released by the Reserve Bank of India says that capacity utilization at 75.2 per cent in the quarter ended March 2018 the highest in last two years. Economists, however, caution that corporate capacities are still far away from the 83.2 per cent recorded in March 2011. Valuations remain rich which may lead to lower appreciation than what the market has rewarded shareholders in the last few years. We will continue to look for opportunities both in the listed and unlisted space.

NBFCs bring the much needed diversity to the financial sector thereby diversifying the risks, increasing liquidity in the markets thereby promoting financial stability and bringing efficiency to the financial sector.

In the backdrop of a growing economy, NBFCs will continue to grow in the financial ecosystem and create meaningful financial inclusion and further the government agenda of ‘Make in India and ‘Start-Up India.

The Directors confirm that all the investments have been made with the intent to hold for long term appreciation, to enhance the income from dividends and are not held for trade. The Company continues to remain invested in sectors, which we believe have potential to remain value accretive over the long term. The Company continues to invest for the long term while availing opportunities to realize gains. The Company endeavours to evaluate opportunities considering the macro economic conditions both globally and domestically.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The financial performance of the Company for the year 2018-19 is described in the Directors Report under the head of ‘Operation.

SEGMENT WISE PERFORMANCE:

The Company has only one segment i.e. NBFC - Investment Company.

INTERNAL CONTROL SYSTEMS AND ADEQUACY:

The Internal Control Systems and their Adequacy of the company for the year 2018-19 is described in the Directors Report under the head of ‘Internal Control Systems And Their Adequacy.

HUMAN RESOURCE DEVELOPMENT/INDUSTRIAL RELATIONS:

Driven by the Groups visionary leadership during the year, training programs are conducted to facilitate competency development both functional and behavioral for harmonious and cordial Industrial relations. The knowledge and skill enhancement programme were conducted for the employees. No operating days were lost due to strike, lock out etc. Human Resources Development, in all its aspects like training safety and social values are under constant focus of the management.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

There is no material development in human resources. Industrial relation with number of employed during the year are cordial.

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR, INCLUDING:

Particulars FY 2018-19 FY 2017-18
(i) Debtors Turnover N.A. N.A.
(ii) Inventory Turnover N.A. N.A.
(iii) Interest Coverage Ratio N.A. N.A.
(iv) Current Ratio 7.72 5.77
(v) Debt Equity Ratio N.A. N.A.
(vi) Operating Profit Margin (%) N.A. N.A.
(vii) Net Profit Margin (%) N.A. N.A.

or sector-specific equivalent ratios, as applicable.

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof - Not Applicable

CAUTIONARY STATEMENT:

Statement in this Management Discussion and Analysis Report describing the Companys objective, projects, estimates and expectations may be forward looking statement within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. Several factors could make a significant difference to the Companys operations. These include economic conditions, Government regulations and Tax Laws, political situation, natural calamities etc. over which the Company does not have any direct control.