INDIA INFOLINE FINANCE LIMITED - Securities and Exchange ...

India Infoline Finance Limited
continuing to offer products which are relevant to our target base of clients, developing managerial
experience to address emerging challenges and ensuring a high standard of client service. We will need to
recruit new employees, who will have to be trained and integrated into our operations. We will also have to
train existing employees to adhere properly to internal controls and risk management procedures. Failure to
train our employees properly may result in an increase in employee attrition rates, erode the quality of
customer service, divert management resources, increase our exposure to high-risk credit and impose
significant costs on us.
32. Our insurance coverage may not adequately protect us against losses.
We maintain such insurance coverage that we believe is adequate for our operations. Our insurance policies,
however, may not provide adequate coverage in certain circumstances and are subject to certain
deductibles, exclusions and limits on coverage. We maintain general liability insurance coverage, including
coverage for errors or omissions. We cannot, however, assure you that the terms of our insurance policies
will be adequate to cover any damage or loss suffered by us or that such coverage will continue to be
available on reasonable terms or will be available in sufficient amounts to cover one or more large claims,
or that the insurer will not disclaim coverage as to any future claim.
A successful assertion of one or more large claims against us that exceeds our available insurance coverage
or changes in our insurance policies, including premium increases or the imposition of a larger deductible
or coinsurance requirement, could adversely affect our business, financial condition and results of
operations.
33. Any change in control of our Promoter or our Company may correspondingly adversely affect our
operations and profitability.
As on June 30, 2012, our Promoter holds 98.87% of our paid up share capital. If our Promoter ceases to
exercise direct control over our Company and/or there is change in direct control over our Promoter, as a
result of any transfer of shares or otherwise, our business and results of operations could be adversely
affected.
34. A significant component of our exposure is in the real estate sector and any factor affecting this sector
could adversely affect our business
As of March 31, 2012, we have extended loans and advances with outstanding more than ` 250 million
each, aggregating to ` 6036.56 million to borrowers operating in the real estate sector. This amounts to
8.95% of our loan portfolio. These loans are secured against the real estate which in most cases is under
development. In the event the real estate sector is adversely affected due to any reason whatsoever, the
value of our collaterals may diminish which may affect our results of operations in the event of a default in
repayment by our clients. Moreover, since most of the collaterals in this sector are real estate, under
development, any undervaluation of the property post development may significantly affect our revenues.
35. We undertake distribution of certain third party products which could result in our Company being made
party to litigations.
We distribute mutual fund products of third parties through our branch network. Whilst contractually we are
not liable for the performance of third parties and their products that we distribute, in the event of any
deficiency in service by such third parties and/ or non-performance of some of their products, the persons
who avail of such products may incur losses. We may be subject to a reputation risk in such instances and
management time and cost may be incurred to address such situations.
36. Our ability to assess, monitor and manage risks inherent in our business differs from the standards of
some of our counterparts.
We are exposed to a variety of risks, including liquidity risk, interest rate risk, credit risk, operational risk
and legal risk. The effectiveness of our risk management is limited by the quality and timeliness of
available data. Our hedging strategies and other risk management techniques may not be fully effective in
mitigating our risks in all market environments or against all types of risk, including risks that are
unidentified or unanticipated. Some methods of managing risks are based upon observed historical market
behaviour. As a result, these methods may not predict future risk exposures, which could be greater than the
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