Northern ARC

Enhance its ecosystem by growing and deepening relationships with its partners, while leveraging and scaling up its technology products.

Expand to adjacent sectors such as climate lending and gold loans, and enhance our ESG risk management systems.

Expand its Fund Management channel.

Continue to scale its Direct to Customer Lending channel to enhance risk adjusted returns.

Focus on credit quality to manage credit cost efficiently.

Continue to diversify its source of funds and widen its lender base to scale its borrowing requirements while lowering costs.

Expansion through inorganic growth.

Large addressable and underpenetrated market with strong sectoral expertise.

Large ecosystem of partners and data and technology platform creating strong network effects.

Proprietary technology product suite transforming the debt market ecosystem.

Robust risk management based on domain expertise, proprietary risk models and data repository driving asset quality.

Diversified sources of funding for its own deployment and proactive liquidity management.

Professional management team supported by an experienced Board and marquee investors driving high standards of governance.

Strong ESG framework integrated into the business model with focus on creating sustainable impact and climate-smart lending.

The company operates a diversified business model that exposes it to various risks and an inability to manage such risks may have an adverse effect on its business, results of operations, cash flows and financial condition.

If the company borrowers default in their repayment obligations it may lead to increased levels of non-performing assets ("NPA"), related provisions and write-offs, its business, results of operations, cash flows and financial condition may be adversely affected.

The company does not have any identifiable promoter in terms of the SEBI ICDR Regulations and the Companies Act, 2013.

Its Statutory Auditors have included modifications in their report on the company audited consolidated financial statements for Fiscals 2024 and 2023 under eport on Other Legal and Regulatory Requirements`, and certain other remarks/ comments in the annexure to report prescribed under the Companies (Auditor`s Report) Order, 2020 for Fiscals 2024 and 2023.

A significant portion of its investments are in credit facilities and debt instruments that are unsecured, and/or subordinated to other creditors. An inability to recover such investments may result in increased levels of NPAs, which could adversely affect its business, prospects, results of operations, cash flows and financial condition.

Its inability in the future to comply with or any delay in compliance with the strict regulatory requirements with respect to its listed non- convertible debentures may have an adverse effect on its business, results of operations, cash flows and financial condition. Additionally, the trading in its NCDs may be limited or sporadic, which may affect the company`s ability to raise debt financing in future.

The company is subject to certain conditions and restrictions in terms of its financing arrangements and the company has not been in compliance with certain of these covenants in the past. An inability to comply with repayment and other covenants in its financing agreements could adversely affect the company`s business, financial condition, cash flows and results of operations.

The company operates in a highly competitive industry and its inability to compete effectively may adversely affect the company`s business, reputation, results of operations, cash flows and financial condition.

The company may faces asset-liability mismatches which would expose it to interest rate and liquidity risks that could have a material and adverse effect on its business, results of operations, cash flows and financial condition.

Its business requires funds regularly, and any disruption in the company funding sources would have a material adverse effect on its business, results of operations, cash flows and financial condition.

Its premises are either leased or on seat-sharing basis. Non-renewal or dispute with lessor or co-tenants may lead to disruption of business and cost associated with shifting of its offices, which may have an adverse impact on the company`s business, results of operations, cash flows and financial condition.

The company has had negative cash flows in the past and may continue to have negative cash flows in the future.

The locations in which the company operates could experience natural disasters. The occurrence of natural or manmade disasters may adversely affect its business, cash flows, results of operations and financial condition.

Some of its corporate records, including those relating to allotments of the company Equity Shares in the past, are not traceable. The company cannot assure that regulatory proceedings or actions will not be initiated against it in the future and that the company will not be subject to any penalty imposed by the competent regulatory authority in this regard.

Non-compliance with the RBI`s or any other regulators` observations made during their inspections could expose it to penalties and restrictions as well as cancellation of its license, which could have a material and adverse effect on its business, financial condition, results of operation and cash flows.

Its success depends in large part upon the company`s KMPs, Senior Management and certain other employees and its inability to attract, train and retain such persons could adversely affect the company`s business, results of operations, cash flows and financial condition.

The company depends on certain key lenders for a significant portion of its borrowings (the company`s top five and 10 lender sources accounted for 34.13% and 52.15%, respectively, of its borrowings as of March 31, 2024). Any decrease in the amount of borrowings from any of the company`s key lender sources or any loss of these lender sources may adversely affect its business, financial condition, cash flows and results of operations.

Its business operates through various channels, which inherently carry certain risks that could adversely affect the company`s business, results of operations, cash flows and financial condition.

The company has and may continue to faces instances of defaults from its borrowers, including Originator Partners and Direct to Customer Borrowers. An inability of its borrowers to meet their repayment obligations or any increase in defaults or any large-scale defaults from the company borrowers could adversely affect its business, results of operations, cash flows and financial condition.

There have been certain instances of delays in payment of statutory dues in the past. Any delay in payment of statutory dues in future, may result in the imposition of penalties and in turn may have an adverse effect on its business, financial condition, results of operation and cash flows.

Its business operations involve direct and indirect exposures to relatively high credit risk borrowers in the under-served households and businesses of India. Any large-scale defaults in this category could adversely affect its business, results of operations, cash flows and financial condition.

Any adverse developments in its focused sectors could adversely affect the company`s business, results of operations, cash flows and financial condition.

Its asset quality may be materially impacted on account of correlated risk events occurring as a result of high concentration of exposures on a single or a few borrowers, sectors, states or regions, which could adversely affect its business, results of operations, cash flows and financial condition.

The company depends on the accuracy and completeness of information about borrowers for certain key elements of its credit assessment and risk management process. Any misrepresentation, fraud, errors in or incompleteness of such information could adversely impact the quality of underwriting decisions and in turn adversely affect its asset quality, business, results of operations, cash flows and financial condition.

Its may be unable to recover the full amounts due to the company through its collections mechanism, which could expose it to losses, which could have an adverse impact on its business, profitability, results of operations, cash flows and financial position.

There have been certain instances of delay or other non-compliance with legal or regulatory requirements, including with respect to form filings and intimations under the Companies Act, and with the SEBI, RBI and the BSE and there have been irregularities in a certain regulatory filing made with the RoC under applicable law.

The company is highly dependent on its relationships with its Originator Partners, Retail Lending Partners and Investor Partners for its operations. Any deterioration or inability to maintain such relationships with them could adversely affect its business, reputation, results of operations, cash flows and financial condition.

Its may not be successful in implementing the company`s growth strategies or entering new markets, which could adversely affect its business, results of operations, cash flows and financial condition.

Its financial performance is vulnerable to interest rate risk, and an inability to manage its interest rate risk may have a material adverse effect on the company`s net interest income, operations and cash flows.

The company utilize the services of certain third parties for its support functions. Any deficiency or interruption in their services could adversely affect its business, reputation, results of operations, cash flows and financial condition.

The company is subject to stringent regulations governing the financial services industry in India. Its may fails to obtain, maintain or extend its statutory and regulatory approvals to operates or expand the company`s business in a timely manner or at all, or to comply with the terms and conditions of its existing regulatory approvals and licenses, which may impede its business, operations, results of operations, cash flows and financial condition.

The company relies significantly on its technology platforms and systems for its business and operations and any failures, disruption, downtime, inadequacy or security breach in such systems could adversely affect its business, reputation, results of operations, cash flows and financial condition.

Any privacy or data security breach, and any changes in laws or regulations relating to privacy or the protection or transfer of data or any actual or perceived failure by it to comply with such laws and regulations, could adversely affect its business, reputation, results of operations, cash flows and financial condition.

There are outstanding legal proceedings/matters involving the Company and its Subsidiaries. Any adverse outcome in such legal proceedings/ matters may affect its business, results of operations, prospects, cash flows, reputation and financial condition.

The company is subject to customer complaints and if its customer grievance redressal mechanism is ineffective, it could result in complaints being left unaddressed or inefficiently handled, which could have a material adverse impact on its business, results of operations, cash flows, financial condition and reputation.

Any failures or significant weakness of the company internal controls system could cause operational errors or incidents of fraud, which would adversely affect its profitability, reputation, business, results of operations, cash flows and financial condition.

An inability to develop, monitor, manage or implement effective risk management frameworks could expose it to unidentified risks or unanticipated levels of risk, which could adversely affect its business, results of operations, cash flows and financial condition.

Its may be required to increase the company`s capital adequacy ratio. Its inability to achieve or maintain the required capital adequacy ratio within the stipulated timeframe could have an adverse impact on its business, prospects, results of operations, cash flows and financial condition.

Its Fund Management channel may face a number of additional risks, which if materialized, may adversely affect its business, results of operations, cash flows and financial condition.

Any disruption in its ability to sell-down exposures will impact the company`s liquidity and earnings and have an adverse impact on its business, results of operations, cash flows and financial condition.

Any downgrade to its credit ratings could increase the company`s finance costs and adversely affect its business, results of operations, cash flows and financial condition.

Certain of its Subsidiaries have incurred losses in the past.

Certain new or complex products which have helped meet customer and investor needs in the past may not be successful in the future, and as a result, could have an adverse impact on its business, results of operations, cash flows and financial condition.

A significant portion of its loans and investments are rated in the BBB category or lower or may not be rated. Such assets may be illiquid and its may not be able to liquidate the company positions as planned, which could affect its business, profitability, results of operations, cash flows and financial condition.

Its results of operations could be adversely affected by any disputes with or misconduct by the company`s customers.

Its may faces difficulties in conducting operations and incur additional expenses in operating in non-urban areas, where infrastructure may be limited, particularly for transportation, electricity and internet connectivity, which may have an adverse impact on its business, profitability, results of operations, cash flows and financial condition.

Its financing products may faces concerns regarding the financial terms provided and product suitability requirements, adversely affecting its business, reputation, results of operations, cash flows and financial condition.

The company may not be able to continue to design and offer new products or structures and its new products or structures may be low-vintage or unsuccessful, which could harm its reputation and adversely affect the company`s business, results of operations, cash flows and financial condition.

Its business is subject to variability, which may contribute to fluctuations in the company`s business, results of operations, cash flows and financial condition.

The company may undertake strategic acquisitions or investments, enter into new businesses, which could disrupt its business, divert the company`s management`s attention, be difficult to integrate and manage or may not be successful.

Its revenue, demand for the company`s services and access to customers in its Placements channel could be adversely affected by the historical and expected risk of the company`s Originator Partners and the liquidity, risk preferences and business strategy of its Investor Partners as well as the risk of disintermediation.

The company offer products that are inherently complex and all possible risks are difficult to predict and mitigate. Materialization of any such unexpected and/or unmitigated risks could have an adverse impact on its asset quality, business, profitability, results of operations, cash flows and financial position.

Its may fails to detect money laundering and other illegal or improper activities in the company`s business operations on a timely basis, which could adversely affect its business, financial condition, cash flows and results of operations.

The COVID-19 pandemic affected its business and operations and any future pandemic or widespread public health emergency in the future, could affect its business, results of operations, cash flows and financial condition.

The company is exposed to the risk of mis-selling of products by its employees, partners, agents or third parties as well through its technology platform, which could result in regulatory sanctions, reputational damage, and customer complaints, and adversely affect its business, results of operations, cash flows and financial condition.

The company operations could be adversely affected by strikes or increased wage demands by its employees or any other kind of disputes with or misconduct by the company`s employees.

Its inability to manage the various risks associated with the company large number of branches and widespread network of operations could adversely affect its business, results of operations, cash flows and financial condition.

If the provisions of the IBC in India are invoked against any of its customers, it may affect the company`s rights and ability to recover loans from customers and the enforcement of its rights will be subject to the IBC.

Its insurance coverage may not adequately protect the company`s against losses and successful claims that exceed its insurance coverage could adversely affect the companay`s business, results of operations, cash flows and financial condition and diminish its financial position.

The company has certain contingent liabilities as per Ind AS 37 in its financial statements and the company`s financial condition could be adversely affected if any of these contingent liabilities materialize.

The company has entered into related party transactions in the past and will continue to do so in the future, which may potentially involve conflicts of interest with the equity shareholders.

Its Managing Director and Chief Executive Officer, and certain of the company`s Directors, Key Managerial Personnel and Senior Management are interested in the Company in addition to the remuneration and reimbursement of expenses.

Its ability to pay dividends in the future will depends on the company compliance with certain conditions prescribed by the RBI, earnings, financial condition, cash flows, capital requirements, capital expenditures and restrictive covenants of its financing arrangements.

The company has in this Red Herring Prospectus included certain non-GAAP financial measures and certain other selected statistical information related to its operations and financial performance that may vary from any standard methodology that is applicable across the financial services industry.

Its inability to protect or use the company intellectual property rights may adversely affect its business, financial condition, cash flows and results of operations.

The Company will not receive any proceeds from the Offer for Sale portion.

The objects of the Fresh Issue for which the funds are being raised have not been appraised by any bank or financial institutions. Any variation in the utilization of its Net Proceeds as disclosed in this Red Herring Prospectus would be subject to certain compliance requirements, including prior shareholders` approval.

The Company has issued Equity Shares during the preceding one year at a price that may be below the Offer Price.

Certain of its Directors are involved in one or more ventures which are in the same line of business as that of the Company.

Certain sections of this Red Herring Prospectus disclose information from the CRISIL Report which has been prepared exclusively for the Offer and commissioned and paid for by it in connection with the Offer, and any reliance on such information for making an investment decision in the Offer is subject to inherent risks.

Certain of its existing and future Shareholders together may be able to exert significant influence over the Company after completion of the Offer, which may limit your ability to influence the outcome of matters submitted for approval of its Shareholders.