Shree Nidhi Trading Company 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 & Development

The Financial Year 2022- 2023 was the first normal year, since the pandemic in Financial Year 20202021 which opened up a domino effect of events starting with the lockdown, six months of the moratorium, various natural calamities in operationally active geographies for the finance industry followed by wave 2 and 3 of COVID-19.

Economic growth and social development go hand-in-hand in todays 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 contribution of the NBFCs towards supporting real economic activity and their role as a supplemental channel of credit intermediation alongside banks is well recognised. Over the years, the sector has undergone considerable evolution in terms of size, complexity, and inter connectedness within the financial sector. Many entities have grown and become systemically significant and hence keeping in view their changing risk profile, the Reserve Bank of India (RBI) has issued Scale Based Regulation for Non-Banking Financial Companies (NBFCs) - effective from 1^st October, 2022.

2. Business Structure & Development

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, 2023 was satisfactory.

3. Opportunities and threats.

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.

Opportunities

1. Diverse loan book to accelerate growth

2. Unique Business Model helps to minimise risk and operating cost

3. Adequate capitalisation to support medium-term growth plans

4. Operates in underpenetrated business segment with huge growth potential

Threats

1. Unpredictable policy changes by the Government

2. Increasing competition from local and global players

3. Higher exposure to semi-formal and informal sector customers

4. Segment - wise or product wise performance

The Company has only one segment i.e. financing.

5. Outlook.

The sound financial System is essential for countrys 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. 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 has developed a new strategic plan for growth in order to achieve transformation in its preparation for the future. The Company intends to continue its efforts of mainstreaming financial inclusion and providing affordable credit and non-credit services to customers in the lower half of the socio-economic pyramid. The Company aims to create value for its customers, employees, and shareholders, by expanding operations in existing areas, expanding to newer geographies and exploring new ways in its journey to the ‘next. Additionally, the Company seeks to improve its product offerings, reduce pricing, and promote digital financial inclusion for its. The companys focus this year centres on implementing more efficient processes, expanding its suite of products, and increasing its outreach, all in line with its strategic vision.

6. 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 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, NBFCs on the one hand, are also exposed to Interest Rate Risk (resulting from changes in market interest rates may have adverse impact on NBFCs 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.

7. Internal Control Systems and their Adequacy.

The Company has adequate internal controls and standardised operating processes that are envisaged to protect assets and business efficiency. 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 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.

8. Review of Operational and Financial Performance.

The Company concluded there is a increase in its core business. The revenue from operation of the Company during the Financial Year 2022-23 was Rs.89.47 lakhs as compared to Rs. 39.81 lakhs for

the previous financial year. The total expenses increased to Rs. 86.92 lakhs in the reporting year as compared to Rs. 56.08lakhs in the previous year.

9. Material developments in Human Resources.

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 7 employees on roll at the end of the financial year under review.

10. Cautionary Statement

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.