MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Your Directors brsents before you the Company's Management Discussion and Analysis Report for the year ended on 31.03.2014. The management of the Company is brsenting herein the overview, opportunities and threats, initiatives by the company and overall strategy of the company and its outlook for the future. This outlook is based on management's own assessment and it may vary due to future economic and other future developments in the country.

OVERVIEW OF INDIAN ECONOMY

The banking system in India continued to grapple with rising delinquencies and higher scrutiny from the regulators. The process for new licenses was set into the motion, with the onset of the new Governor. The rates were increased a couple of times to counter the rising inflation, thereby leading to turning off the tap to bare minimum when it came to funding at competitive rates by the banks. The core industries and the infrastructure sectors witnessed lower traction in terms of activity, thereby leading to lukewarm economic activity across key states.

INDUSTRY STRUCTURE AND DEVELOPMENTS

NBFCs are an integral part of the country's financial system complementing the services of commercial banks. The main reason attributed to the growth of NBFCs is the combrhensive regulation of the banking system. Other factors include higher level of customer orientation, lesser br/post sanction requirements and higher rates of interest on deposits being offered by NBFCs. It is mandatory that every NBFC should be registered with RBI to carry on any business of non banking financial institution.

The activities of non-banking financial companies (NBFCs) in India have undergone qualitative changes over the years through functional specialization. The role of NBFCs as effective financial intermediaries has been well recognized as they have inherent ability to take quicker decisions, assume greater risks, and customize their services and charges more according to the needs of the clients. While these features, as compared to the banks, have contributed to the proliferation of NBFCs, their flexible structures allow them to unbundle services provided by banks and market the components on a competitive basis. The distinction between banks and non-banks has been gradually getting blurred since both the segments of the financial system engage themselves in many similar types of activities. At brsent, NBFCs in India have become prominent in a wide range of activities like hire-purchase finance, equipment lease finance, loans, investments, etc. By employing innovative marketing strategies and devising tailor-made products,

NBFCs have also been able to build up a clientele base among the depositors, mop up public savings and command large resources as reflected in the growth of their deposits from public, shareholders, directors and other companies, and borrowings by issue of non-convertible debentures, etc.

OPPORTUNITIES AND THREATS

Opportunities

Some of the key changes in the Industry which are favorable to the Company are:

• Expected buoyancy in the Capital Market & further increased FIIs inflow

• The players in the NBFC sector still have a lot of scope to cover larger market and the rural markets are still untapped

Threats

• Regulatory changes in the NBFC and ancillary sectors

FINANCIAL PERFORMANCE

During the year, your Company has deployed the funds in various areas viz., Inter Corporate Deposits, Loans to individuals & firms, Primary Market, Secondary Market and Deposit with Banks etc. Since your company mainly concentrated on Loans & Advances to various individuals, firms, corporate etc and earned a handsome interest. The Net Profit after tax generated during the year is Rs. 1.14 as compared to Rs. 1.07 Lacs in the brvious year.

OUTLOOK

The continual growth in the Finance sector is expected to give the necessary support to the NBFC industry. The Company is making all efforts to accelerate growth in its business. It expects to improve its position in the market in the coming years.

RISK & CONCERN

The performance of Non Banking Financial Company in India has a direct correlation with the prospect of economic growth and political stability. In this sector, effective risk management has become very crucial. Change in government rules & regulations and change in regulatory policies of Reserve Bank of India may affect the business operations and profitability of company. Your Company is exposed to credit risk, liquidity risk and interest rate risks. Your Company has in place suitable mechanisms to effectively reduce such risks. All these risks are continuously analyzed and reviewed at various levels of management through an effective information system.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your company has robust internal control system that is geared towards achieving efficiency in operations, optimum utilization of resources, effective monitoring and compliance with all applicable laws and regulations. A programme of internal audit by an Independent firm of Chartered Accountants, is reviewed by Management and documented policies, guidelines and procedures, supplements the internal control systems that are designed to ensure reliability of financial and all other records to brpare financial statements and other data and to maintain accountability of assets.

DEVELOPMENTS IN HUMAN RESOURCES

Your Company recognizes the value of human resource, therefore, the human resource policies are framed in such fashion that they not only aim at achieving the organizational goal but also recognize, apbrciate and develop the individual interest of the employees. The Human Resource Development policies of the company are so framed that it is in the best interest of the organization as well as employees of the company.

FORWARD LOOKING STATEMENT

Statement in this report, particularly those which relate to Management Discussion and Analysis, describing the company's future plans, objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might vary materially from those either exbrssed or implied.