Viji Finance Ltd Management Discussions.

ECONOMIC OUTLOOK

The Indian economy retained its tag of the fastest growing major economy in the world in 2018-19. However, overall growth for 2018-19 slumped to a five-year low of 6.8% compared with 7% projected in the second advance estimates released in February. A few factors that have helped India in maintaining its status quo as the fastest growing nation are:

Policy reforms: Reforms such as increased FDI limits, Goods and Services Tax (GST), etc led to creation of jobs and bringing more businesses into the organised sector. It also improved the ease of doing business, thus benefitting the economy in a major way.

Improvement in infrastructure: Recognised as a key driver for the economy of any nation, the infrastructure sector has enjoyed a lot of focus from the government. Measures such as construction of smart cities, One of the main factors - Domestic Consumption, which drives 60% of the GDP growth is expected to grow up to USD 6 trillion by 2030, supported by a 1.4 billion population.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Government of India has taken steps to revive NBFC sector, in a major step aimed at easing the ongoing stress on Indias non-banking finance companies (NBFCs), the government will lend a helping hand to top-rated entities, announced in the Union Budget 2019-20.

The amendments proposed to the RBI Act 1934, include powers relating to resolution of NBFCs. The RBI may frame schemes for amalgamation, reconstruction or splitting up of the viable and nonviable businesses of the NBFC to ensure continuance of critical activities. The regulator may also establish "bridge institutions" that is a temporary arrangement to enable continuity of NBFCs business.

India has a diversified financial sector undergoing rapid expansion with many new entities entering the market along with the existing financial services firms. The sector comprises commercial banks, insurance companies, NBFCs, Housing Finance Companies, Cooperatives, Pension Funds, Mutual Funds and other smaller financial entities. Another vital element of the nations financial sector is the rapidly growing insurance industry. The Reserve Bank of India (RBI) recently allowed new entities such as payment banks and small finance banks to commence operations, focusing on specific segments of transactional banking and small-ticket lending, respectively. Banks in the financial space - In 2020, banks would have to reflect on how these third-party services could be integrated with their operations, thus eliminating the middle-man altogether.

OPPORTUNITIES

Non-Banking Financial Companies (NBFCs) are fast emerging as an important segment of Indian financial system. The Company provides finance to the various sectors. Thus, the Company has broadened and diversified the range of products and services offered by a financial sector. Gradually, the Company, being recognized as complementary to the banking sector due to its customer-oriented services; flexibility and timeliness in meeting the credit needs of specified sectors; etc. There are several other exciting opportunities for the company.

• Demographic changes.

• Large untapped rural and urban markets.

• Growth in overall vehicle segment.

• Use of digital solutions for business/collections.

THREATS

• There are various regulatory changes in the NBFC and ancillary sectors.

• High cost of funds put restrictions on Deposit taking

• Deterioration of asset quality and rising levels of NPA are one of the major threats to NBFC.

• Restrictions on deposit taking NBFCs.

• Competition from other NBFCs and banks.

• Significant slowdown in the economy affects the various segments of NBFC

• Inflation and economic slowdown

• Some other threats to NBFCs are the growing retail thrust within banks and also competition from unorganized money lenders.

SEGMENT-WISE PERFORMANCE

The Company operates only in one segment i.e. Finance services.

OUTLOOK

The Indian economy is expected to grow at 7.4% in 2019-20 on account of steady improvement in major sectors as government and private consumption remains robust and investment is steadily picking up. One of the main factors - domestic consumption, which drives 60% of the GDP growth is expected to grow up to USD 6 trillion by 2030, supported by a 1.4 billion population. In the longer term, however, Indias growth is expected to reflect the benefits of its structural reforms and its growing workforce. But to unlock Indias massive economic potential, the nation will need to accelerate and sustain its continuing upward trajectory on key human development indicators and aim for a more inclusive growth.

RISKS & CONCERNS

Being a Non Banking Financial company (NBFC), Viji Finance is exposed to specific risks that are particular to its business and the environment within which it operates, including interest rate volatility, economic cycle, credit risk and market risk. The most important among them are credit risk, market risk and operational risk. The measurement, monitoring management of risk remains key focus areas for the company. Viji Finance has laid down stringent credit norms through the Lending Policy Framework approved by the Board. The company maintains a conservative approach and manages the credit risk through prudent selection of clients, delegation of appropriate lending powers and by stipulating various prudential limits. In loan businesses like ours, overall portfolio diversification and reviews also facilitate mitigation and management.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company believes that strong internal control system and processes play a critical role in the health of the Company. The Companys well-defined organizational structure, documented policy guidelines, defined authority matrix and internal controls ensure efficiency of operations, compliance with internal policies and applicable laws and regulations as well as protection of resources. Moreover, the Company continuously upgrades these processes and systems in line with the best available practices. The internal control system is supplemented by extensive internal audits, regular reviews by the management and standard policies and guidelines which ensure reliability of financial and all other records. The Internal Auditor directly reports to the Audit Committee. He prepares audit plan after discussions with Audit Committee. The Internal Audit reports are periodically reviewed by the Audit Committee. The Company has, in material respect, an adequate internal financial control over financial reporting and such controls are operating effectively.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Financial and Operational performance forms part of the Annual Report and is presented elsewhere in the report.

HUMAN RESOURCE

We are a dynamic and progressive group that actively fosters a challenging work environment and encouraging entrepreneurship. We groom leaders to drive our future in knowledge intensive, people driven business, such as, ours. We strive towards creating an empowering environment to support the development of highly motivated and skilled professionals in their pursuit of excellence. Our organization has three (4) employees and with trust being the critical part of our business belief, we lay strong emphasis on integrity, teamwork, innovation, performance and partnership. Our organization is committed and focussed on identifying and retaining the right talent to meet the overall business strategy and objective. The broad range of activity includes viz. robust manpower planning process in line with the business objective, enhancement of employee skill-sets by identifying training and development needs, retention programmes, reward and recognition, learning and development.

DETAILS OF SIGNIFICANT CHANGES IN THE KEY FINANCIAL RATIOS

As per the amendment made under Schedule V to the Listing Regulations read with Regulation 34(3) of the Listing Regulations,

details key financial ratios are given below:

Particulars 2018-19 2017-18 Change Reason for Change
Interest coverage ratio 15.87 50.69 (68.69%) Due to reduced profit and EBIT ,Interest coverage ratio is decreased in the current year
Current ratio 0.18 0.14 28.57% The change is due to repayment of loans and reduction of liabilities
Debt-Equity ratio 0.01 0.02 (50%) The change is due to repayment of loans and reduction of liabilities
Operating profit margin (%) 0.38 0.83 (54.21%) Due to reduced operating profit ,there is change in the current year
Net profit margin (%) or sector-specific equivalent ratio as applicable 0.19 0.62 (69.35%) Due to reduced net profit, there is change in the current year

DETAILS OF CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR

There is Change of -78.57% in Return of Net Worth as compared to previous Financial Year Due to reduced net profit

CAUTIONARY STATEMENT

Statement in this Managements Discussion and Analysis detailing the Companys objectives, projections, estimates, estimates, expectations or predictions are "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include changes in Government regulations, tax regimes, economic developments within India and other countries within which the Company conducts business and other factors such as litigation and labour negotiations. The Company is not under any obligation to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments, information or events.

Sustained strong performance by any company is directly linked to an organizations philosophy and levels of Corporate Governance. Keeping this important reality in view, Your Company has always placed major thrust on managing its affairs with diligence, transparency, responsibility and accountability.