NPR Finance Ltd Management Discussions.

This Management Discussion and Analysis Report contains 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").

1. Industry Structure and Developments.

Sustained high economic growth has become a national imperative in India. The Honorable Prime Minister has laid down the vision of India becoming a $5 trillion economy by 2025 - this requires a sustained real GDP growth rate of 8%. In this direction, steps such as:- reorienting policies for MSME growth, stress on "Sundar Bharat" and "Swasth Bharat", effective use of Technology for Welfare Schemes, plans of redesigning a Minimum Wage System in India for Inclusive Growth and providing affordable, reliable and sustainable Energy – are being stressed upon.

The global economy has witnessed challenging times on account of various reasons such as: Introduction of new and retaliatory tariff measures, heightened US-China trade tensions, weaker global economic growth. The World Economic Outlook (WEO) Report (April, 2019), has envisaged a stabilization of growth of the global economy in the first half of the year and a gradual recovery thereafter. It has further projected that, Indias growth is likely to pick up in 2019 and 2020, supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy.

During the financial year under review, India has been the fastest growing major economy in the world. In the year 2018-19, India recorded a moderated GDP growth rate of 6.8%. This moderation in growth momentum is mainly on account of lower growth in Agriculture & allied, Trade, hotel, transport, storage, communication and services related to broadcasting and ‘Public administration & defence sectors. On the positive side, Banking system improved as Non-Performing Asset (NPA) ratios declined and credit growth accelerated. Insolvency and Bankruptcy Code led to the recovery and resolution of significant amount of distressed assets and improved business culture. Service sector has remained the key driver of economic growth.

Non-Banking Financial Companies (NBFCs) bring in diversity and efficiency to the financial sector and makes it more responsive to the needs of the customers. In the recent past, NBFCs have played increasingly important role in resource mobilisation and credit intermediation, thereby helping commercial sector to make up for low bank credit growth. The crisis faced by a large prominent institution of the country in 2018-19, led to drying-up bank lending, resulting in severe liquidity crunch faced by NBFCs. The government took immediate steps to ring curb the severity. As a result, the flow of resources from the banking sector to NBFCs did improve to certain extent. However, financial markets remained cautious on NBFCs and the squeeze in of inflow of resources to NBFCs has impacted the lending capability of the sector. The gradual improvement in liquidity situation indicates stabilisation for the NBFC sector and is an indication that, the Industry will be able to tide over the short term liquidity punch. Regardless of the recent panic, NBFCs are here to stay and will play a significant role in economic growth and financial inclusion. Further, the Micro finance institution model has proved itself to be a viable and sustainable means of providing access to finance and meet the financial requirements of the bottom of the pyramid population. As a dedicated credit delivery channel for vast un-banked/under-banked segments, these institutions have been playing a significant role in taking forward the Financial Inclusion agenda of the Government of India. In 2018-19, microfinance in India showed rapid, regionally-balanced and resilient growth.

The stress on Renewable Energy resources is evident from Economic Survey 2018-19, wherein, renewable energy sources are a strategic national resource witnessed and harnessing these resources has been considered as part of Indias vision to achieve - social equity and energy transition with energy security, a stronger economy and climate change mitigation. The Survey further provides that, globally, India stands 4th in wind power, 5th in solar power and 5th in overall renewable power installed capacity. However, competitive bidding regime for Power Projects needs to be watched out.

The Money-Changing Sector plays a very crucial position in todays global market place since, money-exchange facilitates easy buying/selling of goods across borders. This sector is expected to provide increasing growth, since it is directly proportional to the growth of the economy.

Over the past few years, the Indian Real Estate Sector has been witnessing a series of structural transformations led by Real Estate (Regulation and Development) Act, 2016, Demonetization, GST and the Benami Transactions (Prohibition) Amendment Act, 2016. Such reforms are expected to boost consumer confidence in the near future. An overall positivity, propelled by a combination of factors, is expected to push growth in the long-run.

2. Opportunities and threats.

The intense competition in the NBFC Sector, high cost of funds, coupled with regulatory restrictions - are some of the challenges for the NBFC sector. However, the opportunity of being a well regulated participant in the financial system is likely to outweigh the costs associated with greater regulations in the long run. Moreover, opportunities arising from large untapped rural and urban markets and increasing digitization are expected to benefit the NBFC sector.

The Money-Changing Sectors growth depends on the economic well-being of the nation, travel spends of corporates and other customers, etc. However, the sector would be adversely impacted if the Rupee depreciates as this would lead to escalating cost of foreign travel, foreign education etc.

As far as the Wind Energy Sector is concerned, the Government of Indias efforts to encourage Public Sector Banks to lend for Renewable Energy projects and to help Renewable Energy developers with the access to easy finance, is expected to encourage the Renewable Energy Developers. The government is keen to tap-in the full potential of the renewable energy sector – which is a positive sign. However, the unexpected wind trend, low plant load factor, high capital cost may hinder the growth of this sector.

As regards the Real Estate Sector, Governments support to developers as well as buyers, coupled with the initiative to provide affordable housing to all and also possibilities of rising income levels in the country, is likely to boost this sector. Nevertheless, this sector may be adversely affected by various factors such as: volatility in the interest rates, income inequality resulting in supply-demand mismatch, etc.

3. Segment–wise or product-wise performance.

Segment-wise or product wise performance data is enumerated in accordance with AS-17 in Note No. 2.29 of the "Notes to the Financial Statement" section of the Annual Report.

4. Outlook.

Three Wheeler Financing has been the focus of the Company since more than a decade. However recently Company has entered in the area of Personnel Loan with a steady and cautious approach.

Apart from Personnel Loan Company is also extending Micro finance loan in semi Urban & Rural Areas from April 2019 in a limited way in line with RBI Guidelines & accordingly Company expects moderate interest income from the above activities. Further, as the Company has deployed surplus liquidity generated from recovery in extending loan to other bodies Corporate, the Company does expect interest income in line with the previous Financial Year.

As regards the money changing business, the Company is expecting a consistent profitability from this area of business. The Government is focused on futuristic and clean energy. Initiatives to promote renewal energy source products are an encouraging sign. Your Company is desirous to further explore this arena with a cautious approach.

The Indian Real Estate Sector is currently witnessing a structural transformation towards being a complete organized sector on account of multiple initiatives by the Government. Considering the fact that, India is a growing economy, the expected outlook for the Real Estate Sector is positive in the long-run.

5. Risks and concerns.

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 are subjected to credit risks, which, your Company manages through stringent credit norms to verify the identity of an individual and also determining their intent and ability to repay a loan. Further, NBFCs are also exposed to Interest Rate Risk and liquidity risk which 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.

The Money Changing Sector is exposed to various types of risks such as: Risks associated with non-payment of dues by customers - Cheque bouncing risk. Further, the seller is also exposed to adverse impact of Rupee depreciation as this would lead to escalating cost of foreign travel, foreign education, etc. One of the ways to manage currency fluctuations is to have a better geographic balance in revenue mix. The Company also closely monitors the exchange rate movement and further, has in place, detailed policies in accordance with the Reserve Bank of India guidelines to ensure that there is timely identification of business risks and operational risks, evaluation of their impact and mitigation of the same through appropriate measures.

The Wind Energy Sector is exposed to Climatic Risk and Operation and Maintenance Risk. The performance of the Wind Energy sector is largely subject to varied wind velocity over which the Company has no control. However, Operation & Maintenance Risk is by and large controlled by constantly monitoring & supervising the Wind Turbine Generators performance to reduce down time due to breakdowns.

The Real Estate Sector is adversely affected by demand lag, unfavourable economic conditions, slow income growth, high borrowing costs etc.

6. 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 Companys Internal Control Systems are thus adequate. 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.

7. Discussion on financial performance with respect to operational performance.

Company has recorded turnover at Rs.3,660.60 lakhs during the financial year under review in comparison to Rs.3,573.41 lakhs of the previous year. The rise in turnover is primarily due to:

(a) Rise in income from financing activities.

Income from financing activities has increased by Rs.134.85 lakhs in comparison to the previous financial year mainly due to: higher Recoveries against earlier years Write-offs, lower write-offs in the year under review and higher generation of interest income due to increased volumes.

(b) Increase in Income from Generation of Wind Power.

Income from generation of Power has increased by 14.81% due to rise in power generated in comparison to the previous year and comparative lower breakdown error in the machine.

(c) Increase in other operating revenues.

The Company has recorded rise in interest income by Rs.52.27 lakhs on account of loan given to bodies corporate. Employee Benefit Expenses are marginaly up by 0.71%, whereas, other operating expenses have gone down by 16.28% primarily on account of reduction in expenses towards Legal, Professional & Consultancy Charges. Finance Cost has increased marginally by 0.64%.

Profit before taxes (PBT) is registered at Rs.309.69 lakhs against Rs.115.96 lakhs of the previous financial year. Profit after Taxes (PAT) was recorded at Rs.262.44 lakhs against Rs.149.15 lakhs in the previous year. The comparative higher profit is due to :

a. Higher interest income from financing operations.

b. Higher recovery on account of bad debt vis-a-vis lower write offs.

c. Higher Income from Wind power Division.

d. Reduction in other operational Cost.

Owned Fund of the Company stands at Rs.4405.26 lakhs as against Rs.4142.81 lakhs, recorded in previous year.

8. Material developments in Human Resources / Industrial Relations front, including number of people employed.

Employees relations continued to be harmonious throughout the year with the management. Number of employees on roll was 46 as on 31st March 2019 against 30 as at the end of previous year.

Your Company believes that, its employees are its greatest strength and the most valuable asset. The management and staff has a mutual faith and trust. The Company provides equal opportunity to all employees and strives to inculcate high performance culture in the organisation.

9. Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, alongwith detailed explanations thereof.

a. The details of the key financial ratios in which there has been a significant change (i.e. change of 25% or more) :

Sl. No. Key Financial Ratios 2018-19 2017-18 Reason for significant change (i.e. change of 25% or more)
1. Debtors Turnover 0.01 0.05 Primarily due to realisation of dues from Maharashtra State Electricity Distribution Co Ltd (MSEDLC) – in respect of revenue generated from generation of power through Wind Energy.
2. Inventory Turnover 0.0044 0.0003 Primarily due to stock of vehicle Repossessed under Hypothecation Agreement.
3. Interest Coverage Ratio 6.04 2.89 The change is on account of higher Earnings Before Interest and Tax (EBIT) resulting from various factors morefully described in point no. 7 of this Report.

b. Further, there is no significant change in the following key financial ratios:

Sl. No. Key Financial Ratios 2018-19 2017-18
1. Current Ratio 9.62 8.80
2. Debt Equity Ratio 0.09 0.10
3. Operating Profit Margin (%) 10.14% 4.96%
4. Net Profit Margin (%) 7.17% 4.17%
5. Return on Net Worth 5.96% 3.60%



The Members, NPR Finance Ltd.

I have examined the compliance of conditions of Corporate Governance by NPR Finance Ltd. for the year ended on 31st March, 2019, in terms of the applicable provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure) Regulations, 2015 (hereinafter referred to as the "Listing Regulations"), based on the 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 has been limited to a review of the procedures and implementations thereof, adopted by the Company for ensuring compliance with the conditions of the Corporate Governance as stipulated in the above mentioned Listing Regulations. 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 applicable and stipulated in Chapter IV of the 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 Niaz Ahmed
Dated : 29.05.2019 Company Secretary in Practice
M. No. F9432