Shriram City Union Finance Limited - Karvy

valuation mechanism, which are personnel-driven operations. Moreover, competition for experiencedemployees in the finance sector can be intense. While we have an incentive structure and two employeestock option schemes namely, ESOP 2006 and ESOP 2008, designed to encourage employee retention, ourinability to attract and retain talented professionals, or the resignation or loss of key management personnel,may have an adverse impact on our business and future financial performance.30. We are exposed to fluctuations in the market values of our investment and other asset portfolio.Recent turmoil in the financial markets has adversely affected economic activity globally, including inIndia. Continued deterioration of the credit and capital markets could result in volatility of our investmentearnings and impairments to our investment and asset portfolio, which could negatively impact ourfinancial condition and reported income.31. Our results of operations could be adversely affected by any disputes with our employees.As of March 31, 2011, we employed 2,318 employees. Currently, none of our employees are members ofany labor union. While we believe that we maintain good relationships with our employees, there can be noassurance that we will not experience future disruptions to our operations due to disputes or other problemswith our work force, which may adversely affect our business and results of operations.32. Our inability to obtain, renew or maintain our statutory and regulatory permits and approvals requiredto operate our business may have a material adverse effect on our business.We require certain statutory and/or regulatory permits and approvals for our business. Our Companyincorporated a wholly owned subsidiary namely Shriram Housing Finance Limited in November 2010,with a view of entering the housing finance sector. We have applied to National Housing Bank (whollyowned by the Reserve Bank of India), for a certificate of registration under the National Housing Bank Act,1987, to carry on business of a housing finance institution. Failure to obtain the same will adversely affectour proposed business in the housing finance sector. In the future, we will be required to renew suchpermits and approvals and obtain new permits and approvals for any proposed operations. There can be noassurance that the relevant authorities will issue any of such permits or approvals in a timely manner or atall, and/or on favorable terms and conditions. Failure by us to comply with the terms and conditions towhich such permits or approvals are subject, and/or to renew, maintain or obtain the required permits orapprovals may result in the interruption of our operations and may have a material adverse effect on ourbusiness, financial condition and results of operations.33. We are subject to supervision and regulation by the RBI as a deposit-taking NBFC, and changes inRBI’s regulations governing us could adversely affect our business.We are subject to the RBI’s guidelines on financial regulation of NBFCs, including capital adequacy,exposure and other prudential norms. The RBI also regulates the credit flow by banks to NBFCs andprovides guidelines to commercial banks with respect to their investment and credit exposure norms forlending to NBFCs. The RBI’s regulations of NBFCs could change in the future which may require us torestructure our activities, incur additional costs or could otherwise adversely affect our business and ourfinancial performance.The RBI, from time to time, amends the regulatory framework governing NBFCs to address, inter-alia,concerns arising from certain divergent regulatory requirements for banks and NBFCs. Pursuant to twonotifications dated December 6, 2006, (Notifications No. DNBS. 189 / CGM (PK)-2006 and DNBS.190 /CGM (PK)-2006), the RBI amended the NBFC Acceptance of Public Deposits (Reserve Bank) Directions,1998, reclassifying deposit taking NBFCs, such as us. We are also subject to the requirements of the NonBanking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank)Directions, 2007, issued by the RBI on February 22, 2007, as amended.The laws and regulations governing the banking and financial services industry in India have becomeincreasingly complex and cover a wide variety of issues such as interest rates, liquidity, securitization,investments, ethical issues, money laundering and privacy. In some cases, there are overlapping regulations13