Authum Investment & Infrastructure Ltd Management Discussions

Global Economy

Overview: Global economic growth declined from 3.5% in CY 2023 to 3.3% in CY 2024. The continued geopolitical tensions led to commodity price spikes and supply chain disruptions. Central banks maintained high interest rates to combat inflation with dampened borrowing, investment and consumer spending. Fiscal tightening in countries with high debt further constrained growth.

While the advanced economies (primarily comprising of USA, Euro area (Germany, France, Italy, Spain), Japan, UK, Canada) maintained stable growth at 1.8%, the growth in Emerging Market and Developing Economies declined from 4.7% in CY 2023 to 4.3% in CY 2024.

Regional growth (%)	2024	2023
World output	3.3	3.5
Advanced economies	1.8	1.8
Emerging and developing economies	4.3	4.7

The global inflation level is largely under control even though price pressures exist in some countries. After peaking at 9.4% YoY in the third quarter of CY 2022, headline inflation rates are projected at 4.2% in CY 2025.

Global trade volume as a share of world GDP did not deteriorate, despite the ongoing political tensions. Global trade hit record USD 33 trillion in CY 2024 driven by services and developing economies. The cost of brent crude oil averaged USD 80.53 per barrel in CY 2024, down from USD 82.49 per barrel in CY 2023. However, signs of geopolitical fragmentation started to emerge with increasingly more trade within the geopolitical blocks rather than between them.

Global equity capital markets activity hit a 3 year high in CY 2024 with global proceeds totaling USD 531 billion across 5,624 offerings closed representing a 22.3% increase in proceeds. This was also fueled by widespread adoption and integration of AI not only in US tech giants but also in several companies in Europe, Japan, etc. Asian markets contributed significantly with Japan being the top performing global market in early 2024.

(Source: IMF WEO Update - Oct24, Jul25; OECD Economic Outlook Dec24; S&P Global Jan25; UN trade & development March25; JP Morgan Global Equities Review 2024 - Dec24)

Outlook: Global growth is projected to decline to 3.0% in CY 2025 and 3.1% in CY 2026 primarily due to the ongoing tariff measures being introduced by the United States, and countermeasures by its trading partners. The resilience shown by many large emerging economies may be tested as servicing

high debt levels becomes more challenging in unfavourable global financial conditions.

However, global growth could bounce back if trade negotiations lead to a predictable framework and to a decline in tariffs. Growth in advanced economies is projected at 1.5% in CY 2025 and 1.6% in 2026. In emerging market and developing economies, growth is expected to be 4.1% in 2025 and 4.0% in CY 2026. Global headline inflation is expected to fall to 4.2% in CY 2025 and 3.6% in CY 2026. (Source: IMF WEO Update - April25, Jul25)

Indian Economy

Overview

The Indian economy is projected to grow at 6.5% in the 2024-25 fiscal (provisional estimates) against 9.2% (first revise estimate) in 2023-24. The fiscal was marked by global headwinds, from elevated interest rates to geopolitical tensions. While Q4 saw a brisk growth of 7.4%, the overall growth of 6.5% was the lowest in the last four years.

Growth of the Indian economy

	FY22	FY23	FY24	FY25
Real GDP growth (%)	9.7%	7.6%*	9.2%*	6.5%*

(Source: MoSPI)

*FY23 is Final Estimate; FY24 is First Revise Estimate; FY25 is Provisional Estimate as per the Ministry of Statistics and Programme Implementation, India

Growth of the Indian economy quarter by quarter, FY 2024-25

	Q1FY25	Q2 FY25	Q3 FY25	Q4 FY25
Real GDP growth (%)	6.5	5.6	6.4	7.4

(Source: MoSPI)

The economy also witnessed early signs of stress in the consumer and microfinance sectors. FY25 saw the first shrinkage in microfinance portfolios in over a decade, with assets under management (AUM) falling nearly 17% YoY. The gross loan portfolio (GLP) in the microfinance sector dropped 13.9% YoY to Rs. 3.8 lakh crores. Active loans dropped from 16.1 crores to 14 crores and disbursements fell 38% YoY.

However, the overall outlook remains highly positive considering the growth story over the years that India has demonstrated. From being the 14 th largest economy in the world in 1990, to 11 th in 2009 and fifth in 2024, India is now the fourth largest economy after overtaking Japan, behind USA, China and Germany. The growth story is backed by a resilient consumer base, a superior corporate Balance Sheet, a broadening investment landscape, a digitally skilled

and dynamic workforce and continued growth of domestic participation in the capital markets.

Domestic consumer spending was the largest driver of economic growth in India, contributing ~61.4% to GDP in fiscal 2024-25. Private consumer spending jumped 7.2% YoY up from 5.6% in the last financial year due to improved rural demand on account of moderating food prices and relatively higher spending during the festival season. Proactive monetary policies and further ease in inflation is expected to further fuel this spending which has also seen a shift towards luxury goods.

Indias corporate sector, across industries, witnessed a positive shift in financial health with a superior balance sheet. While the profits surged especially in sectors like banking, IT and manufacturing in FY25, the margins are diminishing in the last couple of quarters. Firms were able to reduce their debt- to-equity ratios by refinancing loans at lower rates, improving solvency and investor confidence. The banks reported healthier asset quality and lower NPAs. The gross NPA ratio declined to 2.3% in FY25 from 2.8% in FY24.

Indias export of goods and services registered an all-time high of USD 825 billion in FY25 driven by strong performance in Q4 FY25 of USD 386.5 billion. This is 6% higher than the exports in FY24 of USD 778 billion. Exports in services registered a record high of USD 388 billion in FY25 against USD 341 billion in FY24 thereby registering a 13.6% growth.

The nations foreign exchange reserve reached a historic milestone of USD 665 billion after months of decline showing renewed signs of foreign investment confidence in the Indian markets.

(Source: Deloitte report, Economic Times, DD news, Business Standard, Livemint, NDTV, Times now, Crif highmark)

Outlook : India withstood global headwinds in 2024 and is likely to remain the worlds fastest growing major economy on the back of growing demand, moderate inflation, stable interest rates and robust forex reserves. In 2025, India surpassed Japan to become the fourth largest economy in the world. In July25, IMF upgraded Indias FY26 and FY27 growth forecast to 6.4%.

Global rating agency S&P upgraded Indias credit rating for the first time in ~2 decades from BBB- to BBB in August25 with a stable outlook. The agency placed India among the best performing economies driven by robust growth and better quality of government spending. They also predicted minimal impact of the tariffs imposed by USA largely because India is not a very trade-oriented economy and other businesses would help balance the impact of the tariffs.

In August 2025, Morgan Stanley reported that India is poised to become the worlds most attractive consumer market fuelled by a major energy transition and increased manufacturing contribution to GDP. It also noted that a final trade deal with USA, new capital expenditure announcements and stronger

trade ties with China could act as catalysts in growing the economy further.

However, continued uncertainty with regards to US tariff front along with the ongoing geopolitical tensions in different parts of the world may weigh on Indias trade performance in the coming quarters. (Source: Times of India, Economic Times)

Union Budget FY 2025-26: The Union Budget 2025-26 identified four key engines of development namely Agriculture, MSME, Investment and Exports to drive Indias journey towards Viksit Bharat (Developed India). The engines are designed to stimulate inclusive growth, boost productivity and enhance global competitiveness. The total expenditure presented was Rs. 50.65 lakh crore with a targeted fiscal deficit of 4.4% of GDP.

In agriculture, the focus was on enhanced credit to farmers, development and propagation of high yield seeds, improvements in productivity and sustainability of cotton farming and setting up a Makhana board in Bihar.

For the MSME, the government initiatives aimed at enhancing ease of doing business by offering credit cards for micro enterprises, several schemes for first time entrepreneurs and several measures for labour intensive sectors like footwear, leather, toys, food processing.

Under Investment, the focus was primarily on investing in people, economy and innovation by expansion of capacity in IITs, setting up centre for excellence in AI, expansion of medical education, support for state infrastructure and power sector reforms, resulting in an overall capital expenditure of Rs. 11.2 lakh crore (3.1% of GDP)

The Indian equity market

The Indian stock market had a volatile year with the first half driven by economic growth momentum from FY24 and retail money and the second half witnessing sharp corrections due to lower earnings, slowdown in economic growth, stretched valuations and massive foreign capital outflow. Despite the downturn in H2, the strong gains in H1 helped Nifty50 and BSE Sensex end FY25 with a modest gain of 5.3% and 5.1% respectively. The gains were driven by active participation by the Domestic Institutional investors who were net buyers throughout the year.

FIIs were net sellers during the financial year (selling equity in 7 out of 12 months) and sold Indian equities worth Rs. 1,27,041 crores while the Domestic Institutional Investors were net buyers throughout the year at Rs. 6,06,368 crores. There was a substantial increase in retail participation with the number of demat accounts soaring from 3.6 crores in FY19 to 19.4 crores in FY25.

Sectorally, the Nifty Defence index topped the charts surging 37% during FY25. Nifty financial services, pharma, metal and consumer durables also delivered double digit returns between 11% - 19%. Among the underperformers were Nifty

Media, Energy, PSU bank, Oil & Gas which were down between 8% - 16%.

Total number of companies listed on NSE marked a slight rise of 10.21% with the number increasing from 2,379 companies in FY24 to 2,622 in FY25.

Despite the subdued performance of markets, your company showed resilience and delivered strong FY25 results. Your companys revenue from investment activity grew from Rs. 1,756 crores in FY24 to Rs. 2,272 crores in FY25. The AUM in the equity division grew from Rs. 8,779 crores in FY24 to Rs. 12,641 crores in FY25.

Going forward, the key growth drivers for capital market activities are structural and regulatory changes that provide faster settlement cycles and improve market efficiency, continued increasing share of non-institutional and retail investors, regulations and initiatives by SEBI to aid growth and penetration like Application Supported by Blocked Amount (ASBA), block mechanism facility, shorter settlement cycle.

(Source: Crisil Report, Economic Times)

Indian credit market overview

Indias financial sector is thriving with growth and diversification. This dynamic landscape includes a range of entities such as commercial banks, insurance companies, non-banking financial companies (NBFCs), co-operatives, pension funds, mutual funds, and various smaller financial organizations. Both established players and new entrants are

With the increased shift by NBFCs towards retail lending, corporate bespoke opportunities remain a niche and relatively less crowded space with companies looking for debt-based investments and customized solutions. Authum with its expertise in this space has tapped on this opportunity and has seen strong deal movement by deploying over Rs. 3,000 crores in the last two years. Your company continues to look for superior risk reward opportunities using its expertise and grow its deal book further.

(Source: CRISIL Intelligence)

Digitization and technological advancements

Digitization has profoundly transformed the NBFC sector, enhancing efficiency and customer experience. NBFCs are increasingly leveraging digital technologies, including super apps to engage with customers and streamline operations. Technology, data and analytics are playing a growing role

contributing to the sectors rapid expansion and robustness. As per a Crisil Intelligence report, the financial sector in India is dominated by the banking sector with commercial banks accounting for ~72% of the market share in FY25.

While banks are the primary institutions for banking in India, retail loan portfolio forms only 34% of the overall banking credit as of FY24. Other focus areas for banks are wholesale lending to large corporates, credit to services sector and agriculture sector. Lower presence of banks in the retail space has created an opportunity for NBFCs to penetrate the segment which has also led to greater financial inclusion as NBFCs also cater to riskier customer profiles with lower income.

The Non-Banking Financial Companies (NBFCs) sector in India has experienced impressive growth, becoming a key player in the countrys financial ecosystem. Indias NBFC sector is growing at a higher rate than the countrys overall economic growth and is expected to continue the trend. As per the Global NBFC ranking 2024, Indias NBFC sector ranks third globally behind USA and UK. NBFCs outpaced commercial banks in credit growth during FY25 by registering a 20% increase vs 12% increase in the banking sector basis a BCG report. NBFCs have shown remarkable resilience and gained importance in the financial sector ecosystem, growing from less than Rs. 2 trillion AUM at the turn of the century to Rs. 43 trillion at the end of FY24. NBFCs AUM as of FY19 was Rs. 23.91 trillion which has grown at a 5-year CAGR of 12% to Rs. 42.62 trillion as of FY24.

across the value chain, particularly in credit assessment, underwriting, collections and fraud management. The adoption of scorecards utilizing both traditional and new data sources is on the rise, aimed at refining credit evaluation processes. Digital collections and the use of data analytics are expected to become more prevalent as NBFCs strive to improve collection efficiency.

Role and contribution

NBFCs have become vital financial sources for a broad segment of the population, including small and medium sized enterprises (SMEs) and underserved communities. They address diverse borrower needs with their extensive reach, quick response times, and deep understanding of various financial requirements. Non-bank money lenders have significantly contributed to financial inclusion by supporting MSMEs and providing employment opportunities. Recent

developments in the Indian financial services landscape, such as rise of neo-banking, digital authentication, UPI adoption and increased mobile and internet usage have led to the modularization of financial services, particularly credit.

Regulatory environment and outlook

As a key component of the Indian financial sector, NBFCs are subject to strengthened regulations and enhanced oversight to bolster their resilience. NBFCs with strong capital adequacy, healthy margins, efficient cost management, and prudent risk practices are expected to sustain their growth in the near future.

As per S&P rating, Indias economy is projected to grow by 6.4% in the current fiscal year. As per Ind-Ra report, Indias NBFC growth is expected to moderate in FY26 as selective lending and asset quality pressures dent the expansion. The slowdown is being driven by several factors such as reduced bank funding despite normalised risk weights, more cautious lending approaches and lingering asset quality pressures in microfinance and unsecured business loans.

Ind-Ra has retained a neutral outlook for vehicle loans, loans against property and gold loans while maintaining a deteriorating outlook for unsecured business and microfinance loans. The outlook for personal loans has been upgraded to neutral from deteriorating backed by stable financial performance in the segment.

However, regulatory support is expected to benefit the sector. The RBIs cumulative 100 basis point repo rate cut since February 25 and 50 bp drop in 10-year government security yields to 6.3% are easing borrowing costs for top rated NBFCs. Higher rated NBFCs, particularly those dependent on capital market finding and operating in areas with less bank competition are expected to benefit from margin improvements. Profitability is likely to remain resilient backed by selective and cautious customer onboarding and corrective measures in previously stressed loan segments.

As of the end of March 2025, NBFCs had a capital to risk assets ratio (CRAR) of 18.05%, a gross non-performing asset (GNPA) ratio of 2.9% and a return on assets (RoA) of 2.4%. The Microfinance sectors portfolio outstanding reached Rs 3,35,071 crore, falling 12% in FY 2024-25. Personal loans experienced substantial growth at 25%, with NBFC MFIs leading the charge, holding a dominant 36.4% market share.

Outlook of distressed assets in India

Indian scheduled commercial banks witnessed continued improvement in asset quality with banks shifting focus to retail loans to avoid large ticket slippages and continuing to clean up balance sheet through recoveries, write-offs and asset sales to

ARCs. The gross NPA ratio declined to 2.3% in FY25 from 2.8% in FY24.

Recoveries under the Insolvency and Bankruptcy Code (IBC) saw the highest ever annual figure of over Rs. 67,000 crores, representing a 42% increase from Rs. 47,206 crores resolved in the previous financial year. The total number of corporate resolutions increased from 275 cases resolved in FY24 to 284 cases in FY25 on account of better streamlining of regulatory processes. The number of new insolvency admissions also increased slightly from 1,318 cases in FY24 to 1,346 cases in FY25.

Recovery from Asset Reconstruction Companies (ARCs) increased by 27% YoY to Rs. 2.2 Lakh crore as on 31 st March25. Out of the above recovery Rs. 39,430 crore was through the IBC route in FY25 vs Rs. 23,192 crores in FY24. The unsecured retail book of ARCs in unsecured and micro finance loans has risen by over 50% from Rs. 50,634 crores to Rs. 76,029 crores. The redemption of security receipts (SRs) for ARCs grew by 15.8% YoY to Rs. 43,256 crores in FY25. This broadly represents improved recoveries with locked up amounts in stressed sectors like power and infrastructure getting resolved.

In November 2024, the Supreme Court had cited lack of members at NCLT as the primary reason hindering insolvency proceedings. Since then, around 20 new members were appointed to the NCLT in February 25. As a result, by the end of March25, only 3 out of the tribunal positions remained vacant thereby facilitating faster resolutions.

The ARC industry in India is expected to grow due to the ease in selling bad loans, improvement in debt resolution through IBC and sale of stressed assets by NBFCs. The growth of AUM of the ARC industry is expected to moderate to 5-6% for the next couple of years primarily on account of lower GNPAs in the banking system

In line with growing the offerings of the company and diversifying to a fully integrated credit platform, your company completed the acquisition of 88.37% shareholding in India SME Asset Reconstruction Company Ltd. (ISARC) on 17 th June 2025 for a total investment of Rs. 313 crores. As of 30 th June 2025, the Net Worth of ISARC stood at Rs. 343 crores with free cash reserves of ~Rs. 325 crores available for deployment in debt buyout.

(Source: Economic Times, Business Standard, CRISIL Intelligence)

Company overview

Authum Investment & Infrastructure Limited began its journey in 1982. The Company is listed on the National Stock Exchange of India Limited (listed since April 23, 2024) and BSE Ltd. As a registered Non-Banking Financial Company (NBFC), it specializes in investing in the Indian capital markets, as well as offering a wide spectrum of credit products to enhance shareholder value.

Key numbers		(Rs. in lakhs)
Safety incident/number	FY 2024-25	FY 2023-24
Revenue from operations	4,612	2,611
EBIT	4,067	4,226
PAT	4,241.41	4,284.83
Return on capital employed (%)	28.04%	41.59
Current ratio (x)	12.89	9.30
Net profit margin (%)	92.64%	165.64%

Our risk management framework

Risk	Mitigation
Economic risk Adverse macroeconomic conditions could impact the companys performance.	Authums experience and capability to identify and evaluate opportunities which have superior risk-return profiles is a key mitigant.
Underwriting risk Failure to evaluate customer credibility could lead to increased delinquencies.	The Companys strong underwriting team follows a well-defined customer evaluation standard and includes experienced professionals, such as Chartered Accountants.
Employee risk Increased turnover among experienced talent could hinder the companys growth.	The Companys long-term business strategy provides growth opportunities for its employees. Most middle and senior-level staff have a long vintage in the Company.
Reputation risk The Companys brand image could be impacted if it fails to address customer claims effectively.	The Company conducts a thorough situation analysis to evaluate customer claims and is expected to take decisive action against customer underservicing.
Regulatory risk Non-compliance with regulatory and compliance norms could result in financial losses or damage to the Companys reputation.	The Company places the highest priority on ensuring compliance with all applicable regulatory guidelines and has set up a dedicated team to proactively ensure the same.
The Companys internal audit system is consistently monitored and updated to ensure asset protection, regulatory compliance, and timely resolution of outstanding issues. The audit committee regularly reviews reports from internal auditors, records their	observations, and takes corrective actions as needed. The committee also maintains ongoing communication with both statutory and internal auditors to ensure that internal control systems are functioning effectively.
The Company views its employees as crucial to its success and is committed to equipping them with the skills needed to adapt to evolving technological advancements. As of March 31,2025, the Companys permanent workforce numbered 326. Throughout the year, the Company organized a variety of training programs	in areas including technical skills, behavioral skills, business excellence, general management, advanced management, leadership, customer orientation, safety, values, and the code of conduct. may be forward-looking statements within the meaning of applicable securities laws and regulations.
This statement made in this section describes the Companys objectives, projections, expectations and estimations, which