MANAGEMENT DISCUSSION & ANALYSIS

ABOUT THE INDUSTRY:

The year 2014 has been a landmark year in the history of Indian Politics as the new NDA government came into power and formed the government with sweeping majority. The magnitude of the mandate has ignited hopes that the new government would be able to implement reforms for greater growth in the future. The first quarter of FY15 saw a surge in investor sentiments that was triggered by the ascent to power of the NDA .The new government brsented the Budget for the FY15-16 which focussed on growth, weaker sections and social security and at the same time, fiscal responsibility was maintained.

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 specialisation. 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. The importance of NBFCs in delivering credit to the unorganised sector and to small borrowers at the local level in response to local requirements is well recognised. The rising importance of this segment calls for increased regulatory attention and focused supervisory scrutiny in the interests of financial stability and depositor protection.

The RBI and the Government have taken notable steps in FY 2014-15 to address the economic headwinds. The Government formed the Project Management Group to facilitate large projects, undertook actions on power tariffs, gas price and continued diesel price increases. The RBI initiated efforts at recognizing and cleaning up Non-Performing Assets ("NPA"). On the policy front, it introduced a shift in focus to Consumer Price Inflation (CPI) from Wholesale Price Inflation (WPI), and a move towards inflation targeting. If implemented correctly and in a time bound manner, these collectively have the ability to create a meaningful impact on the economy.. Though the real economy is largely domestic oriented, given its dependence on capital flows, India is open to exchange volatility and its related pitfalls. On the global front, the Federal Reserve reduced its monthly asset purchases with the last reduction for FY 2014-15 being made in February 2014. The year ahead will be challenging on the interest rate and credit quality front, however, if India votes a stable Government, we could see an improvement in asset quality and return growth.

NBFCs as components of the financial sector:

A broad picture of the role of NBFCs and the inter connectedness they have in the financial sector can be gauged from the details given below:

General:

The RBI circulated new norms for the sector, titled 'Revised Regulatory Framework for NBFCs' on November 10, 2014. These were aimed at strengthening the structural profile of NBFCs and, at the same time, safeguarding the interests of the depositors. An 'approved credit rating agency 'for the purpose of rating fixed deposits of NBFCs. Accordingly,NBFCs may also use the ratings of SMERA for the purpose of rating their Fixed Deposits. The Minimum Investment Grade Rating for Fixed deposits is "SMERA A". The central bank has modified regulations regarding raising money by NBFCs through Private Placement of Non-Convertible Debentures (NCDs) in February 2015.

Provisioning of doubtful assets -In July 2014, the RBI released a circular outlining prudential norms on income recognition, asset classification and provisioning pertaining to advances. The rules related to minimum net owned funds were tightened and the deposit acceptance ratio, capital norms, asset classification rules and corporate governance norms were made more stringent. Budget 2015-16 proposed that NBFCs with assets of " 5,000 million and above will be treated as financial institution Under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002.

This initiative will bring about parity in regulation for NBFCs registered with the RBI and other financial Institutions, in matters relating to recovery. With respect to lending against shares, NBFCs are now required to maintain an LTV ratio of 50% and accept only Group 1 securities (specified by SEBI) as collateral for loans with values of more than " 5 lakh, subject to review. Further, all NBFCs with asset sizes of " 1,000 million and above are required to report on-line to stock exchanges, information on the shares pledged in their favour, by borrowers availing loans.The RBI has accredited SME Rating Agency of India Ltd. (SMERA)

An Overview of Regulation of NBFCs

In response to the perceived need for better regulation of the NBFC sector, the Reserve Bank of India (RBI) Act, 1934 was amended in 1997, providing for a combrhensive regulatory framework for NBFCs. The RBI (Amendment) Act, 1997 conferred powers on the RBI to issue directions to companies and its auditors, prohibit deposit acceptance and alienation of assets by companies and initiate action for winding up of companies.

(1) Mission

To ensure that:

a) The financial companies function on healthy lines,

b) These companies function in consonance with the monetary policy framework, so that their Functioning does not lead to systemic aberration

c) The quality of surveillance and supervision exercised by the RBI over the NBFCs keeps pace with the developments in this sector.

d) combrhensive regulation and supervision of Asset liability and risk management system for NBFCs,

(2) Amendments to the Reserve Bank of India (RBI) Act, 1934

RBI Act was amended in January 1997 providing for, inter alia.

a) Entry norms for NBFCs and prohibition of deposit acceptance (save to the extent permitted Under the Act) by unincorporated bodies engaged in financial business,

b) Compulsory registration, maintenance of liquid assets and creation of reserve fund,

c) Power of the RBI to issue directions to an NBFC or to the NBFCs in general or to a class of NBFCs.

e) Combrhensive regulation and Supervision of deposit taking NBFCs and

pattern)(b) off-site monitoring through returns ,(c) market intelligence, and (d) exception reports by statutory auditors, d)Punitive action like cancellation of Certificate of Registration (CoR), prohibition from acceptance of deposits and alienation of assets, filing criminal complaints and winding up petitions in extreme cases, appointment of the RBI observers in certain cases, etc. e) Co-ordination with State Governments to curb unauthorised and fraudulent activities, training programmes for personnel of NBFCs, State Governments and Police officials.

(4) Other steps for protection of depositors' interest

Publicity for depositors' education and awareness, workshops / seminars for trade and industry organizations, depositors' associations, chartered accountants, etc.

ABOUT THE ODYSSEY CORPORATION LIMITED:

Business Overview:

Our Company is a non deposit taking NBFC, registered with the RBI. Our Company has been in the business of providing financial services since inception. Our Company is primarily focused in providing inter corporate loans, personal loans, loans against shares & securities, loans against properties, trade financing, bills discounting, trading in shares & securities and arbitrage business in stock and commodity market. Being an, NBFC our Company has positioned itself between the organized banking sector and local money lenders, offering the customers competitive, flexible and timely lending services. Recently Our Company offers financial services to commercial, industrial and financial clients with a one stop financial solution:-

FINANCIAL PERFORMANCE:

Consolidated Loss:

The total consolidated Loss of the Company for the FY 2014-15 comprises as Rs -40,29,0 98

Standalone Profit:

During the fiscal 2015, the gross operational profit of the Company stood at Rs. 95,37,878 /-

Financial Highlights: (Rupees in Thousands)

a) Income from operation stood at 27,62,42,297 for fiscal 2015 b ) Profit Before Taxes offiscal 2015 was Rs 93,06,903 C ) Profit After Taxes of fiscal 2015 was xRs 95,37,878

d) Basic Earnings per share for fiscal 2015 was 0.24 per share.

e) Cash & cash equivalents stood at Rs . 11,56,371 as on March 31, 2015

f) Face value of per Equity shares is Rs 5/-

SWOT ANALYSIS:

STRENGTHS:-

Ready contacts for business development: Our Company has strong relationships with the well established business houses in India cultivated through several years of client servicing.

The board of our Company comprises of qualified professionals, experienced in the industry.

WEAKNESS:-

Branding: Despite our ready contacts for business development & listing on esteemed Exchange (BSE), our company is not a well established brand among large NBFC players who have access to larger financial resources.

Accessibility: We do not have branches on a Pan India basis, so we are not able to explore the business opportunities in those regions.

OPPORTUNITIES:-

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

Desire for status: With increased desire of individuals to improve their standard of living, the NBFC industry is getting exposed to new category of Client (Individuals) in a big way with large share of business coming from this segment apart from corporate clients.

THREATS:-

a) Economic Downturn: If the Economic downturn is prolonged it can reduce the financing need of people due to shrinking business opportunities.

b) Private Banks: Private Banks are also working on the similar business model as the NBFCs do, thereby giving a very strong competitions to the NBFC's.

c) RBI and Government restrictions: With more stringent norms governing the functioning of NBFC and certain government restrictions act as a hindrance in smooth functioning of NBFC

d) Changes in policies towards NBFC: There is a growing trend towards more stringent yet structurally beneficial regulation in the NBFC sector. Anticipating such regulations and implementing good governance norms before they are mandated has been a constant practice . Accordingly, the Company stands to benefit by policy notifications

FUTURE STRATEGY:

a) Expansion of existing activities: - Our Company intends to expand its financial services by enhancing its focus on margin funding, loan against shares and securities, loan against properties and corporate loan, bill discounting and working capital loan.

b) Financial Management/Advisory Services: - We have an in house team which has the capacity to provide services in the area of financial management/advisory services like syndication for big ticket loans from banks, project appraisals, debt restructuring and arranging non fund based limits form bank. Our Company is planning to foray into business of financial management/advisory services with the potential clients.

c) Differentiated Services:- In the growing economy, the corporate clients will be requiring funds for further expansions. Our Company would be providing all diversified service portfolio under one umbrella to cater most of the customer needs and demands.

d) Brand recognition: We are in such a business where we are facing lot of competition. We are planning to put more efforts to build Comfort as a well known brand. Despite our existing contacts & listing on esteemed Exchange (BSE),our Company is not a well established brand among large NBFC players. We will be making the necessary arrangements for our brand reorganization.

REGULATORY:

As Being a Non-Banking Finance Company, is regulated by department of Non- Banking supervision of Reserve Bank of India. Company is current under category of Non -Deposit taking company so company is not within purview of various guidelines applicable. However RBI has issued several guidelines applicable to Non-Deposit taking companies. Company is complying various statutory provisions such as Companies Act, Income tax, Service tax, BSE Listing Agreement provisions and other applicable laws and regulations applicable to the company. Notable among which are

a) Submission of Financial results

b) Submission of Business continuity certificate

c) Compliance with Prudential Norms

INTERNAL CONTROL SYSTEM AND ADEQUACY:

Internal Control Systems has been designed to provide reasonable assurance that assets are safeguarded, transactions are executed in accordance's with management's authorization and properly recorded and accounting records are adequate for brparation of financial statements and other financial information. Internal check is conducted on a periodical basis to ascertain the adequacy and effectiveness of internal control systems.

CAUTIONARY:

Statement in the Management Discussion & Analysis, describing the company's objectives, projections and estimates are forward looking statement and progressive within the meaning of applicable laws & regulations. Actual result may vary from those exbrssed or implied. Important developments that could affect the company's operations are significant changes in political and economic environment in India, tax laws, RBI regulations, exchange rate fluctuation and other incidental factors.

FOR ODYSSEY CORPORATION LIMITED

Sd/- Pooja H Mehta Whole Time Director & CFO

Sd/- Hiten R. Mehta Director

Date 14th August, 2015

Place: Mumbai