Arohan Financial Services Limited | Annual Report 2021-22

BALANCE SHEET ANALYSIS Loan Portfolio Arohan had a 11% de-growth in the Gross Loan Portfolio from the previous year and closed at INR 4,122 Cr. This was caused due to muted business resulting from the COVID-19 pandemic and corresponding lockdowns across locations over the first half of the year. Net Worth 4,415 6,000 4,000 2,000 - 4,375 1,023 959 FY 21 FY 22 Debt Outstanding Net Worth Managing liquidity during the year Customer household income at the base of the pyramid during the financial year 2021- 22 witnessed a bumpy ride, starting with a disruption due to 2nd wave of the COVID-19 pandemic. The infection was spreading faster than before and the reported numbers for COVID-19 were on raise during April 2022. Most of the states we operated in, announced a localised lockdown to control the COVID-19 infection. This adversely affected the business activities which resulted in diminishing household income for the customers during this period. However, by the second half of Q2, we witnessed good recovery and things were back to normal. The business activities gained momentum during the festive season and flourished till December’ 21. However, Q4 started with a 3rd wave of COVID-19 but this disruption was short lived and business activities picked up pace in February which helped in good financial year closing in March’ 22. The COVID-19 pandemic has changed the way of managing businesses. For a NBFC, managing liquidity is themost essential aspect of business. The changing behaviour of both the business assets and liabilities has forced management to revisit the approach to manage liquidity in order to sustain the business growth. With rapid change in the macro-environment during FY2021-22, selecting the right approach to managing liquidity has been a challenging task for the industry with Arohan as no exception. However, with strong expertise in managing liquidity, the Company successfully drew down INR 3,050.62 Cr from the market during FY2021-22. Arohan was proactive in adapting to the changing dynamics and altered the traditional borrowing mix by raising more fund through structured debt to maintain the Company’s cost of borrowing without compromising on liquidity. The Company remained agile and borrowed from all the instruments available in the market, with a diversified lender base ensuring success. Arohan has struck a fine balance between carrying high liquidity in the books and taking the drag of negative carry on such liquid assets. This was a conscious decision by the management of the Company to mitigate liquidity risk during uncertain times. Arohan’s Cash and Cash Equivalent as of March 31, 2022 stands at INR 954 Cr. Further, the Liquidity Coverage Ratio (LCR) as on financial year end was reported at 353%. Raising funds during the year As expected during FY2021-22, a turbulent period, there was limited appetite for non- recourse transactions. However, multiple partial recourse transactions were executed during the financial year. Arohan executed multiple partial recourse transaction in the form of securitization, wherein the Company used its existing pool of assets for raising 65 Annual Report | 2021-2022 Management Discussion & Analysis