Kwality Credit & Leasing Ltd Management Discussions

This Management Discussion and Analysis Report contain forward-looking statements which are based on certain assumptions, risks, uncertainties and expectations of future events. All statements that address expectations or projections about the future are forward-looking statements. The actual results, performance or achievements can thus differ materially from those projected in any such statements depending on various factors including: the demand supply conditions, change in government regulations, tax regimes, economic development within the country and abroad and such other incidental factors over which, the Company does not have any direct control.

This Report is framed in compliance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations").

a) INDUSTRY STRUCTURE AND DEVELOPMENTS

Economic growth and social development go hand-in-hand in today’s New India. Being primarily a Non-Banking Financial Company (NBFC), we are an important medium of meeting the financial requirements of the bottom of the pyramid population and thereby, play a significant role in taking forward the Financial Inclusion agenda of the country thus contributing to the building of "Aatmanirbhar Bharat".

The unprecedented COVID-19 outbreak has significantly impacted economies across the globe and India is no exception. With the strict lockdown imposed at the beginning of the Financial Year 2020-21, demand and supply were disrupted in India. However, the impact of the lockdown and economic disruption was different in different sectors.

In the COVID-led Financial Year 2020-21, Central Statistical Organization (CSO), in its third advanced estimates, projects India’s annual Gross Domestic Product (GDP) to contract by 7.3%. Considering the sector-wise growth, while the output for all the sectors declined over the previous year (except agriculture), construction and trade/hotels have been more severely hit and have seen a sharper decline in output.

In the first half of the Financial Year 2020-21, demand was lower across sectors due to lockdown and the supply of goods and services was disrupted mainly due to the non-availability of labour and logistics constraints. However, the gradual opening of the economy from October 2020, resulted in a faster than-expected recovery in the second half of the Financial Year 2020-21. Leading indicators of pick-up in economic activity such as power consumption, GST (Goods and Services Tax) collections, PMI (Purchasing Manufacturing Index) were either similar or higher than the pre-COVID levels in the second half of the year. Multiple measures and much-needed financial support provided by the Government under the Atmanirbhar Bharat Mission also cushioned economic growth. Further, India continued to be a preferred destination for investments by global investors and was one of the few countries to receive high inflows in the Financial Year 2020-21.

In the recent past, NBFCs have played increasingly important role in resource mobilisation and credit intermediation. NBFCs will continue to play a significant role in economic growth and financial inclusion and in particular in meeting the country’s goal of "Aatmanirbhar Bharat" as NBFCs are vital in meeting the financial needs of the unbanked segment of the population.

The COVID-19 phenomenon has brought about a series of challenges for the NBFC sector and the Reserve Bank of India (RBI) and the Government undertook various liquidity augmenting measures to tackle COVID-19 disruptions: including, extension of moratorium on loans to temporarily mitigate the hardship of the borrowers, which facilitated favourable market conditions and boosted the loan recovery. It is expected that, NBFCs with proper planning can overcome the impact of the COVID-19 disruption, and continue its successful growth trajectory.

b) BUSINESS OVERVIEW

The core financial activities of the Company comprises of providing business loan to corporate and individuals. However, the Company has diversified its financial business portfolio to stay competitive.

The Company has been constantly focused on improving its revenue and maintaining a sustainable growth. The financial performance for the year ended 31^st March, 2021 was satisfactory.

c) OPPORTUNITIES, THREATS RISKS & CONCERNS

The competition in the NBFC Sector is intense on account of large number of players.

However, regulations relating to governing non-banking financial companies (NBFCs) are being increasingly harmonized with those of banks to forge the right balance for financial stability while encouraging them to focus on specialized areas. Yet, adverse interest rates can significantly hit the cost of borrowing for NBFCs.

Being primarily a NBFC, our collections from customers has been deferred on account of the COVID-19 pandemic as the same has been adversely impacted due to restrictions on the movement of people, as a result of which, our employees have not been able to make on-field visits at the customer’s place. Further, various customers are facing financial crunch due to the lockdown and this has also impacted our business. In this connection, we are providing moratorium support to our customers/borrowers on specific requests raised by them after assessing the merit of their requests and their loan repayment track record and in line with the RBI directives.

d) OUTLOOK

The sound financial System is essential for country’s overall economic growth. The overall performance of the Company for the financial year under review was better than performance of the previous corresponding year. The focus for the forthcoming financial year for the Company will be continued delivery in progressing mode and inculcate a high performance. NBFCs have proven their mettle in many other specialized financial services such as factoring, lease finance, venture capital finance, financing road transport and also in the business of securities-based lending such as Loan against Shares, Margin Funding, IPO Financing, Promoter Funding etc. The Company will strengthen its position in current business and will try to grab new opportunities beneficial for the Company as well as try to overcome all the hindrances and challenges blocking the performance of the Company. The Company is trying to explore new areas which can be developed and marketed to leverage its performance and growth.

e) RISK MANAGEMENT

The risk management plan of the Company is monitored by the Risk Management Committee in accordance with the Risk Management Policy of the Company.

NBFCs success largely depends on correctly judging the creditworthiness of the customer. Your Company believes that, the success of NBFCs can be attributed to lower cost, wider and effective reach, strong risk management capabilities to check and control bad debts, and better understanding of their customer segments. In this manner, the Company strives to achieve success not only in its traditional segment of financing i.e.: business loan to corporate and individuals. The Company manages credit risks through stringent credit norms to verify the identity of an individual, corporate and determine their intent and ability to repay a loan.

Further, NBFC’s on the one hand, are also exposed to Interest Rate Risk (resulting from changes in market interest rates may have adverse impact on NBFC’s earnings by changing its Net Interest Income) and liquidity risk (which poses a threat to the ability to meet short term financial demands). In this connection, Interest Risks and Liquidity Risks are managed through regular monitoring of maturity profile. Besides, operational risks in the form of risks of incurring losses due to manual errors, fraud or system failure, can be monitored through an effective internal control system management and its periodic assessment.

f) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company strives to continuously upgrade its Internal Control System in line with the best available practices to commensurate with its size and the nature of its operations.

The Company’s Internal Control Systems are thus adequate. Further, checks and controls have been exercised through remote access to systems by working from home during the shutdown period.

The Audit Committee in coordination with the Internal Audit team regularly reviews the adequacy and effectiveness of internal control systems, in view of the ever changing business environments.

g) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial statements of Kwality Credit & Leasing Limited is prepared in compliance with the Companies Act, 2013 and generally accepted accounting principles in India (GAAP). The discussions herein below relate to Standalone statement of profit and loss for the year ended March 31, 2021. Significant accounting policies used for the preparation of the financial statements are disclosed in the notes to the financial statements

? STANDALONE FINANCIAL RESULT

During the year under review, the Company’s revenue on standalone was 25.07 lacs as against revenue of 30.45 lacs in the preceding financial year. The Loss on a standalone basis amounted to 49.24 lacs as against loss of 30.34 lacs in the previous year.

h) HUMAN RESOURCE DEVELOPMENT

The Company always considers its human resources as a valuable asset and is committed towards their development for continuous growth. Focus on training to enhance the skill-sets of employees in line with the business and market requirements continued throughout the year and it confers rewards and recognition based on merit. Human resources play a key role in helping the Company deal with the fast-changing competitive environment. So, the company endeavours to provide individual development and growth to the employees that motivate them to give high performance helping the Company to achieve its goals. There were 9 number of employees on roll at the end of the financial year under review.

i) DISCLOSURE OF ACCOUNTING TREATMENT:

They were no change in the treatment of accounting. The company follows IND-AS method of Accounting for preparation of financial statements of the company for the financial year 2020-2021.

j) CAUTIONARY STATEMENT

Statement in the Management Discussion and Analysis Report describing company’s objectives, expectations or predictions may be ‘forward looking statements’ within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied. Important factors that would make a difference to the Company’s operation include demand supply conditions, change in government regulations, tax regimes, economic development within the country and abroad and such other factors over which Company does not have any direct control.

CEO & CFO COMPLIANCE CERTIFICATE

To

The Board of Directors,

Kwality Credit & Leasing Ltd.

7, Lyons Range,

3^rd Floor, Room No. 9 & 10,

Kolkata 700 001

Re: CEO and CFO Compliance Certificate on Financial Statements for the year ended on March 31, 2021

We, Mr. Bhagwan Das Soni, Managing Director & Mr. Subrata Dutta, CFO, certify that:

A. We have reviewed financial statements and the cash flow statement for the financial year ended on March 31, 2021 and that to the best of our knowledge and belief :

1. these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

2. these statements together present a true and fair view of the listed entity’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

B. There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year ending on March 31, 2021 which are fraudulent, illegal or violative of the Company’s code of conduct.

C. We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluated the effectiveness of internal control systems of the company pertaining to financial reporting, and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and steps have been taken to rectify these deficiencies.

D. We further certify that:

1. There have been no significant changes in the internal control over financial reporting during this year;

2. There have been no significant changes in accounting policies during this year and requiring disclosures in the notes to the financial statements; and

3. We are not aware of any instance during the year of significant fraud with involvement therein of the management or any employee having a significant role in the Company’s interval control system over financial reporting.

Mr. Bhagwan Das Soni	Mr. Subrata Dutta
Managing Director	CFO
DIN: 002308414
Place : Kolkata
Date : 04.09.2021

Declaration Regarding Compliance by Members of the Board of Directors and Senior Management Personnel with the Code of Conduct

This is to confirm that the Company has adopted Code of Conduct for its Members of the Board of Directors and Senior Management Employees including the Managing Director. The Company has also adopted the Code of Conduct for Non-Executive Directors. Both these Codes are posted on the Company’s website.

I confirm that the Company has for the financial year ended March 31, 2021, received from its Members of the Board of Directors and Senior Management Employees a declaration of compliance with the Code of Conduct as applicable to them.

For the purpose of this declaration, Senior Management Employees means the Members of the Management one level below the Managing Director as on March 31, 2021.

Place : Kolkata	Sd/-
Date : 04.09.2021	Bhagwan Das Soni
	Managing Director
	DIN-002308414

CERTIFICATE ON CORPORATE GOVERNANCE

To

The Members of

Kwality Credit & Leasing Limited

I have examined the compliance of conditions of Corporate Governance by Kwality Credit & Leasing Limited for the year ended on March 31, 2021 as stipulated in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") of the Stock Exchanges with relevant records and documents maintained by the company and furnished to me.

The compliance of conditions of Corporate Governance is the responsibility of the management. My examination was limited to review the procedures and implementations thereof adopted by the Company for ensuring compliance with the conditions of the Corporate Governance as stipulated above. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In my opinion and to the best of my information and according to the explanations given to me and the representations made by the Directors and the management, I certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Regulations.

I further state that such compliance is neither an assurance as to future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.

Place : Kolkata	Arun Kumar Jain
Dated : 04.09.2021	Arun Jain & Associates
	Chartered Accountant
	FRN-325867E
	Membership No.053693
	UDIN:21053693AAAAGL3276

CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS

(Pursuant to Regulation 34(3) and Schedule V Para C clause (10)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015)

To,

The Members

Kwality Credit & Leasing Ltd.

7, Lyons Range, 3^rd Floor,

Room No. 9 & 10

Kolkata-700 001

I have examined the relevant registers, records, forms, returns and disclosures received from the Directors of Kwality Credit & Leasing Ltd. having CIN-L65921WB1992PLC056686 and having registered office at 7, Lyons Range, 3^rd Floor, Room No. 9 & 10, Kolkata-700 001, (hereinafter referred to as ‘the Company’), produced before me by the Company for the purpose of issuing this Certificate, in accordance with Regulation 34(3) read with Schedule V Para-C Sub clause 10(i) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In my opinion and to the best of my information and according to the verifications (including Directors Identification Number (DIN) status at the portal www.mca.gov.in) as considered necessary and explanations furnished to me by the Company & its officers, I hereby certify that except Mr. Amu Thapa and Ms. Babita Shah whose DIN is de-activated due to non-filing of DIR-3KYC none of the Directors on the Board of the Company as stated below for the Financial Year ending on 31^st March, 2021 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs, or any such other Statutory Authority:

Sr. No. Name of Director	DIN	Date of appointment in Company
1 Amu Thapa	00674928	09/07/2012
2 Suresh Kumar Jain	00705828	09/07/2012
3 Bhagwan Das Soni	02308414	01/01/2013
4 Babita Shah	07771685	07/04/2017

Ensuring the eligibility for the appointment / continuity of every Director on the Board is the responsibility of the management of the Company. My responsibility is to express an opinion on these based on my verification. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.

Place : Kolkata	Sd/-
	CS Amit Jajodia
Dated :01.09.2021	Company Secretary in Practice
	M. No. 37613
	C.P. No. 14303
	UDIN-A037613C000875351