Hero Fincorp Limited IPO

We sourced 99.04%, 99.69% and 99.93% of our two-wheeler loans from our Promoter, Hero MotoCorp Limited's two-wheeler dealership in Fiscals 2024, 2023 and 2022, respectively. Any decline in demand for Hero two-wheelers may adversely affect us.

Stage 3 Loans amounted to 4.02%, 5.11% and 7.54% of Total Gross Loan as at March 31, 2024, 2023 and 2022, respectively. Non-payment or default by our customers and our inability to provide any adequate provisioning coverage for non-performing assets may adversely affect our business, results of operations, cash flows and financial condition.

Our Company's retail finance business depends on new-to-credit borrowers who constituted 26.55%, 34.06% and 46.33% of our total retail assets under management as at March 31, 2024, 2023 and 2022, respectively. We may not be able to properly assess the credit of new-to-credit borrowers, and loans extended to such new-to-credit borrowers may accordingly have a higher risk of non-performance or default.

Retail finance, comprising vehicle loans, personal loans and mortgage loans, and micro, small and medium enterprises finance constituted 85.88%, 83.14% and 79.02% of our assets under management as at March 31, 2024, 2023 and 2022, respectively. We are susceptible to any adverse developments that reduce demand for our loans and/or increase loan default rates amongst retail and micro, small and medium enterprises customers.

Certain Promoters have been and are currently subject to certain regulatory proceedings initiated by authorities. Any adverse outcome in such proceedings may lead to reputational risks.

We rely extensively on our information technology systems and any unforeseen internal or external disruptions, downtime and inadequacy may have a detrimental impact on our operations.

Changes in interest rates may affect our treasury operations, causing our net interest income to decline.

We extend fixed rate and floating rate loans to customers, and any adverse change in interest rates could cause our net interest income to decline and adversely affect our business, results of operations, cash flows and financial condition.

In Fiscals 2024, 2023, 2022, unsecured loans comprised 39.13%, 37.18% and 31.76% of our total assets under management, respectively. If we are unable to recover such receivables in a timely manner or at all, our business, results of operations, cash flows and financial condition may be adversely affected.

We are subject to regulations and periodic inspections by regulatory authorities in India. Non-compliance with regulations and observations made during their inspections could expose us to penalties, suspension and restrictions as well as cancellation of our license.