SORIL Infra Resources Ltd Management Discussions.

ECONOMIC REVIEW

The management team of the respective businesses regularly assesses policy and programs of the economy to evaluate the impacts on income, operating costs, productivity, competitiveness and sustainability.

The Company is geared to gain from the economic vision of the country.

Global Economy

The global GDP is projected to grow at 2.9 percent in 2019 and recover to 3.6 percent in 2020 as per IMF. The Federal Reserve has reduced Federal funds rate by 25 basis points (bps) for the first time after 2008 to ensure growth momentum seen in the US economy since last 18 months.

The present environment is dealing with the weakening of European economies, crude price volatility, subdued commodity prices, persistence of uncertainty around Brexit, on-going US-China trade tensions, slump in auto sector, and derivative exposure of a large European bank.

Indian Economy

The Indian economy grew at 6.8 percent in 2018-19 and Gross Domestic Product (GDP) growth is expected to be at 6.9 percent for 2019-20 as per CRISIL. The Company has noted the ten point vision of the decade, presented in the budget speech by the newly elected Government, wherein the mission of Indian economy is to reach USD 3 Trillion in 2019-20 and USD 5 Trillion in the next five years.

The structural reforms in areas of indirect taxation, bankruptcy, and real estate have had a transformative effect on the economies operations.

The Companys business streams are going to immensely gain by the vision of Government to build physical and social infrastructure along with digitisation of every sector of the economy.

The Government of India is taking every possible initiative to boost the infrastructure sector. Announcements in Union Budget 2019-20:

• The Government of India has given a massive push to the infrastructure sector by allocating 4.56 lakh crore (USD 63.20 billion) for the sector.

• Communication sector allocated 38,637.46 crore (USD 5.36 billion) towards development of postal and telecommunications departments.

• The Indian Railways received 66,770 crores (USD 9.25 billion). Out of this allocation, Rs 64,587 crores (USD 8.95 billion) is capital expenditure.

• Rs 83,015.97 crore (USD11.51 billion) allocated towards road transport and highway.

• Rs 3,899.9 crore (US$ 540.53 million) to increase capacity of Green Energy Corridor Project along with wind and solar power projects.

• Rs 8,350.00 crore (US$ 1.16 billion) to boost telecom infrastructure.

• Water supply to be provided to all households in 500 cities.

BUSINESS REVIEW

The Company endeavours to create sustainable business for the benefit of its stakeholders. With a view to tap into lending opportunities in un-served rural India, the Company, during the year, forayed into financial services business with the primary focus on financing in rural markets by acquiring 100% stake in an existing Non-Banking Finance Company registered with RBI. Through this 100% owned NBFC, the Company has undertaken such rural and macro financing / lending business.

The Company is operating in the following businesses:

1. Equipment renting services,

2. LED lighting,

3. Financing & related activities,

4. Management and maintenance services, and

5. Construction advisory and other related activities

The Directors believe that these businesses have huge potential as explained in the following paragraphs:

Equipment renting services branded as "Indiabulls Store One" ( www.indiabullsstoreone.com )

The Company is one of the largest equipment rental solutions providers in India with pan-India projects of its customers and operates from offices in Mumbai, Gurugram, Kolkata, Hyderabad, Bangalore, Ahmedabad, Pune and Chennai. The rental fleet of 660 equipment is operated across more than 85 projects sites. Primary equipment in the rental fleet are Tower Cranes, Passenger Hoists, Piling Rigs, Excavators, Dozers, Motor Graders, Wheel Loaders, Mobile Boom Placers, Transit Mixers, Dumpers, Steel Stir-up machines, Concrete Batching Plants etc of reputed International & Indian manufactures.

The Company has also forayed into new equipment sales & service business in aerial work platform segment, for which it has tied up with international manufacturers for distribution of their scissor lifts & boom-lifts in India. Aerial Work Platform is one of the fastest growing equipment segments across the world and has great potential in developing countries like India. By adding new machine sales, the Company has become a full equipment service provider, providing tailor made solution for rental, sales, and service to its esteemed customers.

The business is being managed by a professional & experienced team, who have vast knowledge and hands on experience in managing the rental & leasing fleet across several industry segments.

Companys customer base is spread across industry segments such as Real Estate, Precast, Infrastructure, Metro, Petroleum Refinery, Piling, Industrial, and Road. In FY 2018-19, renting services has achieved a revenue growth of 52.23% on YoY basis. Our customers are primarily major players in infrastructure and construction segments with large order books. Our customers look for a professional rental companies which can take care of their equipment needs for multiple projects. This in turn allows our customers to focus on their core strength of managing & executing the projects.

The benefits of Companys offering to the customers are:

• Short term and long term rental agreements

• Ability to take on critical projects

• Vast equipment fleet

• Experienced operations team to respond to challenges during project execution

• Giving high importance to safety of manpower and deployed equipment

• Reduction in overhead expenses, followed by lowering of technical and other maintenance charges

The Company believes that the Government Policy initiatives like Housing for all and Smart cities mission and 100 percent FDI permission under the automatic route across various infrastructure sectors makes the future prospects very promising. India is expected to become the third largest construction market globally by 2022, and the required investment of 56.11 lakh crores (USD 777.73 billion) will have substantial impact.

As part of its long term growth strategy, the Company will grow its presence across major cities in India and increase its product offerings. We shall strive to be preferred rental partner of our customers.

LED lighting branded as "Ib LED" ( www.indiabullsled.com )

LED business started with Projects in the Institutional LED Lighting market in FY 2017-18 and expanded to Consumer LED Lighting market in 2018-19. Within this short span of time the Company has reached a turnover of about 46.5 crores (net of taxes). The Directors believe that the operations of Led Lighting is progressing by virtue of continuous efforts in establishing excellence in product value offered, technology and design innovation, and supply chain and distribution network. The Company shall maximise automation and digitisation to improve productivity and increase shareholder value.

The vision of the Company is to establish itself in the consumer product segments through LED Lights and scale up the operations to other products at the appropriate time. According to a report from the Electric Lamp and Component Manufacturers Association (ELCOMA), the Indian LED market is expected to grow to Rs 26,100 crores by 2020, which is approximately 80 percent of the total lighting industry. TechSci (a global research-based consulting firm) has advised that the LED lighting market in India is projected to register a CAGR of over 24 percent during 2016-2021.

In a short span of time, the Company has established a professional design and development team comprising of experienced Illumination Engineers and Industrial Designers who have developed product offerings of 715 SKUs in our LED lighting portfolio. The Company has set up a technologically advanced Lighting Innovation Centre in Mumbai, which is best in class in the industry.

The Company is ISO 9001:2015 certified for Design, Development, Engineering, Marketing and supply of LED Luminaires, Lighting Controls and Accessories including Electronics drivers, as well as for Lighting Design and Marketing Services.

The products are marketed through 23 offices across the Country, and distributed across a network of 131 town/cities of India through 250 channel partners & more than 5000 retail points, as of 31st July, 2019.

Indiabulls LED is working with major IT/ITES, Banking and Financial Institutions, Real Estate Developers, Manufacturing Industries, Pharmaceutical Industries, and Infrastructure Projects. It has been able to win several prestigious project supply orders in various trade sectors.

The IB LED team is proud to present to its shareholders one of the most popular product ranges of the company. Indiabulls LED: A Light Wellness Company

Light Wellness by Indiabulls LED is a lighting system that replicates the natural daylight through artificial lighting to boost emotional wellbeing, health, comfort and productivity of individual.

Urban lifestyle compels us to work and carry out most of our routine activities under artificial light in homes, offices, factories and other workplaces. This lifestyle has been affecting individuals with stress, anxiety, insomnia and eye- related diseases to name a few. Circadian Rhythm are physical, mental and behavioural changes that follow a daily cycle.

The Light Wellness concept is brought about through our daily effective lighting system that creates dynamic lighting for agile workspaces with dynamic color temperature changing lighting solutions ranging between 2000K - 8000K.

Light wellness is an Innovation from Indiabulls LED. It significantly improves the lighting ambience and conditions, thereby helps individual to handle occupational and lifestyle factors more effectively and increases employee productivity at the workplace.

The Directors are proud of the efforts of the IB LED team in establishing the business from scratch. The Company expects demand growth to accelerate for the following factors: rising disposable income, easy access to credit, electrification of rural areas, and above all, exciting innovation and cost saving opportunity in LED lighting products

Financing & related activities, branded as "Indiabulls Rural Finance" ( www.indiabullsruralfinance.com )

To tap into lending opportunities in un-served rural India, the Company, during FY 2018-19, forayed into financial services business with the primary focus on financing in rural markets and acquired 100% stake in "Littleman Fiscal Services

Private Limited", an existing Non-Banking Finance Company registered with RBI on 25th January, 2019. Through this 100% owned NBFC, the Company has undertaken such rural and macro financing / lending business. Subsequent;y the name of the Company was changed to Indiabulls Rural Finance Private Limited. This NBFC company is a non-deposit taking, non-systemically important Non-Banking Finance Company.

The Company, through its this NBFC arm, deals majorly in secured lending business and will tap into financing opportunities in underserved Semi-urban and rural India, including Tier II & III cities for Micro, Small and Medium Enterprises("MSME"). The team strives to bridge the existing credit gaps in this sector.

MSMEs are currently drivers of economic growth in the country.

Brief overview of MSME sector:

MSME Units (#) Jobs created Contribution to exports % of GDP
5.6 crores 12.4 crores 45% of total exports 31% of the GDP

Debt Demand and Debt Gap in India

Crores

Particulars Micro Small Medium Total
Debt demand 11,80,000 21,70,000 3,20,000 36,70,000
Debt Supply 3,80,000 4,90,000 2,20,000 10,90,000
Debt gap 8,00,000 16,80,000 1,00,000 25,80,000
Debt Demand Growth Debt Demand- sector wise
21% CAGR 47% Manufacturing 53% service sector

Data Source: Financing Indias MSME- IFC World bank Report Nov 2018

MSMEs make significant contribution to GDP and employment and there lies great opportunity to fulfil the credit gap of about 25.80 lacs crores.

The Company shall reform, perform and transform the credit delivery by virtue of people, technology and understanding of customer profile. The Company is confident of capitalising on the present NBFC environment by virtue of its approach to business and continuous focus of Government on Rural Economy. Government has further initiated recapitalisation of public sector banks, relaxation in securitisation norms, expansion of infrastructure, and easing the FDI and ECB route to investments.

Assets under management as on 31st March, 2019 was 140.44 crores with Capital adequacy ratio of 78.46%. The Company has made an equity investment of 117.04 crores as on 31st March, 2019, to capitalize this NBFC for its business needs.

Management and maintenance services:

The Company has developed expertise in all avenues of management and maintenance of properties. The Companys current projects span more than two million square feet of high end Commercial and Residential developments wherein the revenue in the current year was 20 crores from maintenance of residential properties in Mumbai and NCR.

Construction advisory and other related activities

The Company provides advisory services pertaining to identification and acquisition of land, project planning, design management, construction, execution, maintenance and management of completed projects, as well as consultancy

and advisory services on engineering and other related technical matters. Income from construction and related activity was Rs 3.63 crores in the current year.

To streamline the operations and ownership structure of the Company, in a manner leading to maximization of stakeholders value and diversification of shareholders portfolio by providing them direct ownership in each business segments, the Board of Directors of the Company has approved the composite Scheme of Arrangement amongst the Company, its holding company Indiabulls Integrated Services Limited ("IBULISL") and their subsidiaries (viz, Albasta Wholesale Services Limited, Sentia Properties Limited, Lucina Infrastructure Limited, Ashva Stud and Agricultural Farms Limited, Mahabala Infracon Private Limited, Store One Infra Resources Limited, Indiabulls Enterprises Limited and Indiabulls Pharmacare Limited) and Indiabulls Pharmaceuticals Limited and their respective shareholders and creditors ("Scheme"). The public shareholders of the Company, will also get the benefit of having the direct ownership in the life and non-life insurance businesses, being carried out under IBULISL.

Pursuant to the Scheme, the public shareholders of the Company will get extra shares of IBULISL, and Indiabulls Enterprises Limited free of any cost, in lieu of their shareholding in the Company. With this, post effectiveness of the Scheme, they will have shares of two listed entities -

(1) IBULISL, shares of which are listed on NSE and BSE, focusing on insurance and related businesses, and

(2) Indiabulls Enterprises Limited, shares of which will be listed on NSE and BSE, focusing on non-insurance businesses of the Company and of IBULISL and their subsidiaries (including proposed pharma business and rural finance business).

The Scheme is subject to all applicable statutory and regulatory approvals, including approval from the stock exchanges, SEBI, shareholders and creditors of the company(ies) involved in the Scheme and the jurisdictional bench of the NCLT. The Company has already filed the Scheme with National Stock Exchange of India Limited and BSE Limited for seeking their & SEBIs NOC to the Scheme, which is awaited.

DISTINGUISHING ATTRIBUTES OF OUR BUSINESS OPERATIONS:

1. Deep domain knowledge in every business undertaken to exceed customer expectation.

2. Emphasis on better customer and project management through continuous development of domain expertise in all businesses. Endeavour to lower costs while maintaining quality and managing complexity.

3. Focus on improving working capital level and optimum treasury activities

4. Continued focus on reducing working capital levels by emphasis on speedy customer collections, accelerating invoicing of work and supplies completed, and reducing inventory levels.

5. Promoting innovative disruptions of business models through digitization and technology.

6. Actively investing in people, products and processes to accelerate business vision

OPPORTUNITIES Equipment renting services Opportunity drivers:

• Infrastructure demand of the young demography in India and impetus to develop new areas. Leveraging supportive schemes of the Government such as smart cities, Make in India project, Real Estate being regulated by Real Estate Regulatory Authority (RERA).

• Continuously adopting new technologies to achieve better productivity in project execution space.

• Companys presence in all regions and opening branches in major cities of the country.

• Service differentiation by keeping simple performance matrices.

Although the equipment rental industry is highly fragmented and diverse, the Company believes that it is well positioned to take advantage of this environment because, as a large company, it has extensive resources and compelling advantages. The Companys size gives greater purchasing power, the resources to provide customers with a broader range of equipment and services, which is well maintained and consistent in quality and the ability to enhance the earning potential of the Companys assets by transferring equipment among various regions and sites to satisfy customer needs.

LED Lighting business Opportunity drivers:

• LED growth drivers are price parity with its nearest competitor CFL and improving cost economics with government support.

• Favourable macro- economic conditions by virtue of Government policies and push on electrification, and improvement of infrastructure and housing will ensure consistent growth in market demand.

• Pan-India distribution network of the Company will ensure that the Company is able to increase its market position and introduce varied products for all segments of the market.

• The Company has established very wide product portfolio in both consumer and professional category, which will ensure better business opportunity for the Company.

Financing & related activities Opportunity drivers are:

• The market share of NBFC compared to banks will continue to expand due to speed of delivery. The expansion will be supported by NBFCs ability to customise products, price the risk and manage ultimate credit costs, especially related to small -ticket loans viz, small ticket housing loans and loan against property.

• Increasing aspiration of people to own homes and expand business due to rapid change in social and physical infrastructure across the country.

• Low credit penetration in semi-urban and rural India.

RISK AND CHALLENGES AND RISK MANAGEMENT SYSTEM

Risk is an essential part of business and taking risk is a fundamental driving force in business. In fact, it is the unique differentiator between companies who thrive and those who merely survive or otherwise. This has never been more important than in todays VUCA (Volatility, Uncertainty, Complexity and Ambiguity) world. There are several rapid, unprecedented and unpredictable changes taking place all the time. The size, scale and scope of these changes in todays world are enormous. Many of these are driven by changes in technology and have consequential impacts on supply chain, logistics and costs. The aforementioned uncertainties warrant robust process and framework to minimize the threats and capture opportunities to create sustainable value for the organization. The risk horizon considered includes long term strategic risks, short to medium term risks as well as single events.

Key business risks identified by the Company are:

Credit risk

This is the risk of loss arising from a default and is, therefore, also known as default risk. Each of the businesses has distinct policies and monitoring mechanism for managing credit risk. Credit risk is a managed by capping exposures on the basis of customer profile and security offered. Company ensures portfolio diversification, stringent approval processes and periodic remedial measures to maintain the asset quality.

Your Companys NBFC has a strong framework for the appraisal and execution of credit facilities that involves detailed evaluation of industry, business, financial and including sponsors financials strengths and defined approach to risk identification and mitigation.

Interest rate risk

Interest rate risk is the risk of changes in market interest rates and its impact of net interest income or net operating income as per the business model. The Company manages the interest rate risk by regularly reviewing the re-pricing characteristic of balance sheet positions. The management keep a good balance of floating rate and blended rate structures to manage the market dynamics.

Business/ Strategy risk

Business/ strategic risk is the current or prospective impact on the companys earnings, capital, reputation or standing arising from faulty decisions, improper execution of decisions, or lack of responsiveness to industry, regulatory, economic or technological developments.

The Companys management of this risk is guided by certain core principles,

1) Diversification- The Company constantly maintains a diversification in its business through various products, customer segments and geographies.

2) Technology risk- The Company continuously reviews the potential losses due to technology obsolescence in Led inventory and EHB machines.

3) Balanced growth- The Company strives to grow and gain market share, while maintaining asset quality and margin

4) Prudent Provisioning - The Company management shall ensure that the books reflect the true financial position by ensuring correct provision of bad assets.

Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, systems, or from external events. Your company has built into its operations process proper segregation of functions, clear reporting structures and well-defined processes.

The risk that the purchase of various goods and services is not managed at economical cost. Efficiency of operations is a key thrust area for the Company. The Company continuously develops and collaborates with suppliers to ensure that operations are not affected for any delays and optimum schedule of procurement and payment is followed to manage the operations. The Companys technology team ensures that all procurements are futuristic and value centric to the Company.

The Company has a well -designed Business continuity plan to meet any operational exigencies.

Legal and Compliance

The risk that the Company is found to have inadvertently violated laws covering business conduct. The countrys regulatory framework is ever evolving and the risk of non-compliance and penalties may increase for the Company, leading to reputational risks. Periodic and ad hoc reporting to the management for oversight ensures effectiveness of managing compliance.

Competition Risks

The risk that the Company may face stiffer completion for growth of its businesses. With the expanding capacities of existing players and also the emergence of new entrants, competition is a sustained risk. Strategic initiatives to enhance brand equity through enhanced marketing activities and continuous efforts in enhancing the product portfolio and value adding services have been the thrust areas of the Company.

Financial Risks

The risk of exposure to interest rates, foreign exchange rates and the requirements of cash for operations. The Company has elaborate financial risk management policies which are followed for every transaction undertaken. The Companys policies to counter such risks are reviewed periodically and keep a track of the operations to ensure consistent cash conversion cycle.

Information Technology Risks

Risks related to Information Technology systems; data integrity and physical assets the Company deploys Information Technology systems including ERP, SCM, CRM and Mobile Solutions to support its business processes, communications, sales and logistics. Risks could primarily arise from unavailability of systems and/or loss or manipulation of information. To mitigate these risks, the Company uses back up procedures and stores information at two different locations. Systems are upgraded regularly with latest security standards.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS AND CHANGE IN RETURN ON NETWORTH

In compliance with the requirements of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, the details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios and changes in Return on Net Worth of the Company including detailed explanations therefor are as under:

Significant Changes in Key Financial Ratios:

Due to equity infusion of 210.21 crores in FY 2018-19, subsequent to issue of 39,00,000 equity shares at an issue price of Rs. 539 per share, on preferential issue basis, the Current Ratio increased from 0.55 in FY 2017-18 to 0.84 in FY 201819 and the Debt Equity Ratio reduced from 32.3 in FY 2017-18 to 0.02 in FY 2018-19. Also, the Debtor Turnover Ratio reduced from 4.49 in FY 2017-18 to 2.37 in FY 2018-19, due to start of new business and expansion of existing business.

Change in Return on Networth:

Due to equity infusion of Rs. 210.21 crores in FY 2018-19, subsequent to issue of 39,00,000 equity shares at an issue price of Rs. 539 per share, on preferential issue basis, the return on net worth decreased from 211% in FY 2017-18 to 13% in FY 2018-19.

HUMAN RESOURCES

The Companys human resources provide the business edge. The Company continuously builds talent pipeline at the entry, junior and middle level for its businesses. Further the Company has initiated various training and development programme for its employees to capitalize on business opportunities.

The Company is enhancing its HR processes for scale, agility and consistent employee experience. The HR environment ensures that Company houses P&L and operations leaders.

As on March 31, 2019, the Company had a Strong team of 262 employees, who are aligned and dedicated towards the Companys goals.

INTERNAL CONTROL SYSTEMS

The Company has a sound and adequate system of internal controls commensurate with the size of the Company and the nature of its business to ensure that all the assets are safeguarded and protected against loss from unauthorized use or disposition, and that the transactions are authorized, recorded and reported correctly and adequately by appropriate empowered authorities. These are routinely tested and certified by Statutory as well as Internal Auditors and cover all offices, warehouses and key business areas. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Companys internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Companys risk management policies and systems.

CAUTIONARY STATEMENT

Statements in this Report on Managements Discussion and Analysis describing the Companys objectives, estimates and expectations may be forward looking statements based on certain assumptions and expectations of future events. Actual results might differ substantially or materially from those expressed or implied. The Company here means the consolidated entity consisting of its subsidiary (ies).

The Company assumes no responsibility nor is under any obligation to publicly amend, modify or revise any forward looking statements on the basis of any subsequent developments, information or events.