Luharuka Media & Infra Ltd Management Discussions

THE ECONOMIC LANDSCAPE - "GROWTH AND UNCERTAINTY"

In 2024, the global economy expanded by 3.2%, sustaining its growth trajectory despite ongoing geopolitical tensions. However, this growth was uneven across regions. The United States maintained strong momentum, while the Eurozone experienced slower economic progress. Disinflation persisted globally, though the pace of improvement varied, with some countries still grappling with elevated inflation levels.

Looking ahead, global growth is projected to moderate to 2.8% in 2025 and 3.0% in 2026, as rising trade tensions and heightened policy uncertainty weigh on the outlook. A key concern is the recent imposition of tariffs by the new U.S. administration on Canada, Mexico, and China, which has triggered retaliatory measures. These developments pose risks to global trade flows, inflation stability, and overall economic momentum.

Amid these challenges, restoring clarity and policy coordination is critical. Global cooperation will be essential to foster a stable and predictable trade environment, facilitate timely debt restructuring, and address shared macroeconomic vulnerabilities. At the same time, countries must focus on domestic policy reforms and correct structural imbalances to preserve internal stability.

Such a balanced and coordinated approach will help manage the trade-off between growth and inflation, rebuild financial resilience, improve long-term growth potential, and reduce systemic risks in the global economy.

(Source: IMF)

OVERVIEW OF THE INDIAN ECONOMY:

India has consistently demonstrated strong economic resilience, even amid a highly unpredictable and challenging global landscape. Despite persistent global trade disputes, geopolitical tensions, and shifting policy landscapes, the country has retained its status as one of the fastest-growing major economies worldwide.

For the fiscal year 2025, India’s provisional GDP growth stands at a solid 6.5%, driven by robust domestic demand, steady public infrastructure investments, and continued strength in the financial sector. This upward growth trend highlights the nations capacity to withstand external pressures while sustaining internal economic momentum.

Several key factors contribute to this resilience, including a growing and youthful labour force, increasing consumer spending, and major government-led initiatives focused on infrastructure, digital transformation, and industrial development. The Union Budget for FY 2026 reinforces this growth path by prioritizing sectors such as agriculture, small and medium enterprises (SMEs), and job creation.

With a record capital expenditure allocation of R11.21 lakh crore, the budget places significant emphasis on enhancing transportation infrastructure, rural access, and urban development. Notably, public infrastructure projects have been crucial in creating jobs, improving connectivity, and boosting economic efficiency across various sectors.

The Reserve Bank of India (RBI) has played a vital role in maintaining economic momentum by adopting proactive monetary policy strategies. Since February 2025, it has implemented a total repo rate reduction of 100 basis points, bringing the rate down from 6.5% to 5.5%. This significant rate cut is anticipated to lower borrowing costs for both businesses and consumers, thereby improving access to credit.

Enhanced credit availability is crucial for sustaining domestic consumption, stimulating investment, and driving broader economic activity. The RBIs accommodative policy approach reflects its commitment to striking a balance between managing inflation and fostering economic growth. In addition to rate cuts, the RBI has introduced various measures to improve overall liquidity in the financial system, thereby easing financial conditions and supporting continued economic resilience.

Indias macroeconomic stability is further bolstered by sound fiscal management. The government has maintained a careful balance between fiscal discipline and strategic investments in critical sectors, thereby reinforcing the countrys economic foundations. Ongoing structural reforms in areas like labour laws, taxation, and financial regulations have steadily improved the ease of doing business, encouraging both domestic and international investment.

Indias commitment to strengthening its manufacturing base, boosting exports, and accelerating infrastructure development will serve as the cornerstone of its ambition to become a USD 10 trillion economy. Key initiatives such as the Make-in-India campaign and the Production Linked Incentive (PLI) scheme are central to this transformation. These programmes aim to scale up domestic production, draw in foreign capital, and enhance Indias competitiveness on the global stage—while generating employment opportunities and integrating the country more deeply into global supply chains.

(Source: RBI, IMF)

OVERVIEW OF THE NBFC SECTOR IN INDIA:

"India’s NBFC sector is the third largest globally, after the USA and the UK"

Indias non-banking financial company (NBFC) sector has become a key component of the nations financial landscape, playing a crucial role in expanding credit access to underserved and underbanked communities. Ranking as the third-largest NBFC sector globally—after the United States and the United Kingdom—Indias NBFC industry has seen remarkable growth and increasing importance.

NBFCs have proven essential in addressing the credit needs of segments often overlooked by traditional banking systems, such as small businesses, micro-enterprises, and rural populations. By bridging this credit gap, they have significantly contributed to financial inclusion and economic development across the country.

The NBFC sector has witnessed strong growth in recent years, with assets under management (AUM) increasing by 23% in FY2024. However, the NBFC-Microfinance Institution (NBFC-MFI) segment faced a setback, recording an 11.9% year-on-year decline in AUM due to lower disbursements and rising credit risks.

Despite this dip, the industry is projected to recover gradually, with overall AUM growth expected to stabilize at a more sustainable rate of 15-17% by FY2026. This moderated growth outlook is influenced by a combination of macroeconomic and regulatory factors. One of the primary concerns is the rising delinquency levels, particularly in unsecured lending and microfinance segments, which has led NBFCs to adopt a more cautious approach.

In response to these evolving risks, many NBFCs are reassessing their lending strategies, restructuring their loan portfolios, and tightening credit norms to safeguard asset quality and maintain long-term financial stability.

The funding landscape for NBFCs has also undergone a notable shift. Traditionally reliant on bank financing to support their lending activities, NBFCs are now facing tighter liquidity conditions due to recent regulatory changes. These adjustments have limited their access to traditional funding channels, prompting the sector to diversify its funding strategies.

To ensure continued credit flow, NBFCs are increasingly turning to alternative sources such as capital markets, securitisation of loan portfolios, and other investment avenues. This strategic diversification is essential not only for maintaining liquidity but also for enhancing financial resilience in a more regulated and dynamic market environment.

Regulatory changes have been a key driver shaping the NBFC sector. The Reserve Bank of India (RBI) introduced a scale-based regulatory framework that provides more tailored oversight by categorizing NBFCs according to their size, complexity, and systemic significance. This approach is designed to enhance financial stability by subjecting larger and more interconnected NBFCs to stricter regulatory supervision.

Moreover, the RBI has intensified its emphasis on customer protection, transparency in pricing, and governance standards, raising operational compliance requirements across the industry. These measures aim to promote greater accountability and safeguard the interests of consumers, while ensuring the sectors sustainable growth.

OVERVIEW OF THE MSME SECTOR IN INDIA:

Micro, Small, and Medium Enterprises (MSMEs) serve as a cornerstone of Indias economic structure. They are instrumental in driving entrepreneurship, generating large-scale employment, and contributing significantly to both GDP and export growth. As of February 2025, India is home to over 5.93 crore MSMEs, which collectively employ around 24.14 crore individuals.

The sectors contribution to the nations Gross Domestic Product (GDP) has consistently increased. In 2020-21, MSMEs accounted for 27.3% of Indias Gross Value Added (GVA), a figure that has now surpassed 30%. Looking ahead, the government has outlined an ambitious vision to raise this contribution to 50%, underscoring the sectors central role in the countrys long-term economic development.

MSMEs have also emerged as a powerful force in Indias export landscape. From 2020-21 to 2024-25, MSME exports witnessed a remarkable increase—from Rs. 3.95 lakh crore to Rs. 12.39 lakh crore—marking over a threefold rise in just four years. In tandem, the number of MSME exporters grew significantly, from 52,849 to 1,73,350, reflecting stronger integration with global value chains.

This rapid growth showcases the sectors resilience, flexibility, and capacity for innovation. MSMEs are not only strengthening Indias domestic economy but also playing an increasingly influential role in elevating the countrys global trade footprint. Their continued success will be vital in achieving Indias broader economic ambitions.

The total funding requirement for the MSME sector is projected to reach Rs. 134.40 lakh crore, highlighting the immense financial needs of this critical segment. Of this, the estimated demand for debt alone stands at 4106.11 lakh crore, underscoring the significant reliance on credit to support the sectors growth, operations, and expansion efforts. Addressing this funding gap will be essential for unlocking the full potential of MSMEs and ensuring their sustained contribution to Indias economic development.

COMPANY OVERVIEW:

The Company was originally incorporated as "Indus Commercials Limited" on July 7, 1981, under the Companies Act, 1956, in the State of West Bengal. On September 19, 1991, the Companys name was changed to "Hindustan Stockland Limited", and a fresh Certificate of Incorporation was issued by the Registrar of Companies, Mumbai, Maharashtra. Subsequently, the name was changed to "Splash Mediaworks Ltd" on May 8, 2002, followed by another name change to "Splash Media & Infra Limited" on November 9, 2009.

On October 15, 2015, the Company adopted the name "Luharuka Media & Infra Limited" (LMIL), and a fresh Certificate of Incorporation was obtained from the Registrar of Companies, Mumbai, Maharashtra. Later, on May 22, 2025, the Company underwent its most recent name change to "DhanSafal Finserve Limited", and received a new Certificate of Incorporation from the Office of the Central Processing Centre, Ministry of Corporate Affairs.

The Company was taken over by the present promoters in the year 2015. It held a Certificate of Registration from the Reserve Bank of India (RBI) as a Non-Banking Financial Company (NBFC) under the name "Hindustan Stockland Limited" with registration number B-13.01559. Following the name change, a fresh NBFC Certificate of Registration was issued by the RBI under the name "Luharuka Media & Infra Limited" on January 12, 2017, bearing the same registration number. Most recently, the Company received an updated Certificate of Registration from the RBI to reflect its current name, DhanSafal Finserve Limited, as of July 10, 2025.

BUSINESS OVERVIEW

DhanSafal Finserve Limited (Formerly Known as Luharuka Media & Infra Limited) is a listed NBFC registered with the Reserve Bank of India. The new name DhanSafal has been carefully chosen to reflect the companys renewed commitment to enabling financial success (Safalta) through trusted (Safal) and accessible (Dhan) financial solutions. We are classified under the Base Layer according to RBIs Master Direction - Non-Banking Financial Company - Scale-Based Regulation Directions, 2023. We mainly offer financial services to micro, small, and medium-sized enterprises (MSMEs) and individual clients who are often overlooked by traditional banks.

The company offers retail financial services, with a growing focus on MSME lending, including loans against property for business expansion and working capital. DhanSafal is strategically positioned between the organized banking sector and local money lenders, aiming to provide accessible, flexible, and customer-centric credit solutions across various borrower segments.

With a strong presence in the retail loan sector, we offer flexible and competitive lending solutions tailored to individual needs for business loans to income-generating credit. Our mission is to bridge the gap between traditional banking and underserved communities through ethical practices, innovative digital platforms, and a relentless customer-first approach.

"At DhanSafal, we believe that financial empowerment should be accessible to all with the right support, success is possible for everyone."

BUSINESS PRODUCTS

SAFAL UDYOG LOAN

We support Indias micro, small, and medium enterprises (MSMEs) by offering accessible and flexible financing options tailored to meet their diverse needs. Safal Udyog Loans are designed to address the everyday operational requirements of small businesses—whether its purchasing inventory, managing cash flow, or funding expansion plans. These loans typically range from Rs. 3 lakhs to Rs. 10 lakhs, with tenures spanning 3 to 7 years, providing much- needed liquidity to business owners across various stages of growth.

While these loans are best suited for businesses with an operational track record, we also consider applications from start-ups, subject to additional eligibility criteria and comprehensive business plans. Our transparent and swift processing, along with a customer-first approach, ensures timely credit delivery.

Safal Udyog Loans are distributed through our wide branch network, enabling us to effectively cater to MSMEs in both tier I and tier II cities. In tier I cities, we focus on supporting more established enterprises with scalable growth needs, while in tier II and underbanked regions, we address the credit gap by serving first-generation entrepreneurs and smaller businesses with limited access to formal credit. This dual-city approach allows us to tailor our offerings to diverse market segments, ensuring financial inclusion across urban and semi-urban geographies.

Safal Udyog Loans form a key pillar of our MSME-focused strategy, reinforcing our commitment to inclusive lending. By empowering entrepreneurs and small businesses, we play a vital role in supporting local economies and contributing to Indias broader vision of equitable and sustainable economic growth.

SAFAL MSME LOAN

Small and Medium Enterprises (MSMEs) are the backbone of Indias economic engine, driving employment, innovation, and local development. At DhanSafal, we recognize the distinct challenges faced by MSMEs and are committed to supporting their growth through tailored financial solutions. Our Safal MSME Loans are designed to provide fast and flexible funding to meet a wide range of business needs—whether its scaling operations, adopting new technologies, or addressing day-to-day working capital requirements.

With loan tenures ranging from 3 to 10 years, Safal MSME Loans offer the long-term support businesses need to pursue sustainable growth. While these loans are well-suited for established enterprises, we also work with early-stage businesses and start-ups, who may be required to submit more detailed business plans and meet additional credit criteria to demonstrate their growth potential and financial stability.

Our approach combines quick disbursement, transparent terms, and personalized support, ensuring MSMEs receive the right financing at the right time. Through our growing presence in both tier I and tier II cities, we are able to address the financial needs of a wide spectrum of entrepreneurs—from high-growth enterprises in metro areas to emerging businesses in underbanked towns. This geographic and demographic reach reinforces our commitment to inclusive lending and deepens our impact across Indias diverse MSME landscape.

By empowering MSMEs with access to timely credit, we contribute to job creation, productivity, and Indias broader economic advancement.

"Safal MSME Loans are not just financial products—theyre a trusted catalyst for progress, helping entrepreneurs realize their ambitions and build resilient businesses"

SAFAL SAMPATI LOAN

At DhanSafal, we help unlock the full potential of your property assets through our flagship offering—Safal Sampati Loans. As one of our most successful and widely availed products, these Loan Against Property (LAP) solutions provide a powerful avenue for business owners and individuals to access high-value funding at competitive interest rates.

Whether youre aiming to expand your existing business, invest in a new opportunity, or consolidate high-interest debt into a single, manageable repayment plan, Safal Sampati Loans are designed to offer both flexibility and financial stability. Borrowers can pledge residential, commercial, or industrial properties as collateral, giving them the freedom to leverage idle assets for productive use.

With customized loan structures, longer tenures, and competitive pricing, we ensure the financing is tailored to suit your specific cash flow and repayment capacity. The application process is streamlined and transparent, backed by our strong local branch presence and a relationship-driven approach that prioritizes customer trust and long-term partnership.

Safal Sampati Loans are especially impactful in both tier I and tier II cities, where property-backed financing plays a crucial role in enabling business expansion and capital generation. This product has consistently demonstrated strong performance across our portfolio, contributing significantly to our growth and reinforcing our leadership in secured lending.

By helping clients convert property equity into working capital or investment funds, we not only fuel individual success stories but also contribute to regional economic development.

"We view property as more than a fixed asset—its a springboard for future opportunity."

FINANCIAL PERFORMANCE:

The following table presents Companys abridged financials for the financial Year 2024-25, including revenues, expenses and profits.

(Rs. in Lakh, except EPS)

PARTICULARS	FY 2024-25	FY 2023-24
Revenue from Operations	485.91	162.77
Other Income	31.08	2.65
Total Revenue	516.99	165.43
Total Expense	460.34	76.59
Profit before Tax	56.65	88.83
Current Tax	16.31	23.61
Deferred Tax	3.15	0.00
Tax of earlier year	0.05	4.63
Profit for the Year	37.14	60.59
Earnings Per Share (EPS) (Basic & Diluted)	0.02	0.05
PARTICULARS	FY 2024-25	FY 2023-24
Return on Average AUM (%)	1.39%	6.69%
Return on Average Tangible Equity (%)	1.08%	4.00%
Net Interest Margin (%)	15.93%	15.66%
Operating Expenses to Average AUM (%)	15.25%	8.15%
Borrowings to Tangible Equity ratio	0.20	0.06
Net NPA (%)	GN=“RIGHT”>NA	NA

ANALYSIS OF FINANCIAL PERFORMANCE:

Interest Income on loans -

Our robust growth in lending operations is reflected in the significant increase in our interest income. For the financial year 2024-25, we recorded an interest income of Rs. 460.32 lakhs, marking a growth of over 203% compared to Rs. 151.52 lakhs in FY 2023-24. This sharp rise underscores the strong demand for our loan products, improved asset utilization, and our continued focus on building a high-quality, revenue-generating loan book.

AUM-

FY 2024-25 marked a year of strong momentum for DhanSafal, characterized by significant operational and financial progress. Our Assets Under Management (AUM) grew more than threefold, rising from Rs. 9.86 crores in FY 2023-24 to Rs. 43.32 crores in FY 2024-25, representing a remarkable 339% year-on-year growth. This surge was fuelled by strategic branch expansion, the on boarding of key leadership talent, and the continued enhancement of our credit and risk management infrastructure. The performance underscores DhanSafals growing footprint in the MSME lending space and our ability to scale sustainably while maintaining asset quality.

Operating expenses-

Operating expenses for FY 2024-25 stood at Rs. 460.33 lakhs, reflecting a significant increase compared to Rs. 76.59 lakhs in FY 2023-24. This rise was primarily driven by higher employee costs, including salaries and wages, along with increased depreciation expenses resulting from infrastructure expansion and technology investments. The growth in expenses aligns with our strategic scale-up efforts across operations, branch network, and human capital to support our long-term growth trajectory.

Performance Highlights for FY2025

• As of FY 2025, Assets Under Management (AUM) have grown from Rs. 9.86 crore to Rs. 43.32 crore, while Equity has increased from Rs. 15.43 crore to Rs. 53.53 crore, with disbursement targets of Rs. 200 - 225 crore for the current financial year and an AUM goal exceeding Rs. 250 crores by FY2026.

• Net Worth and Net Owned Funds (NOF) recorded healthy growth as of March 31,2025, showcasing the company’s enhanced financial strength and readiness for future expansion.

• Since commencing operations under financial products of Dhansafal in October 2024, a total of Rs. 44.4 crore in loans has been disbursed as of FY2025, largely benefiting MSME borrowers and priority sectors, underscoring a commitment to entrepreneurship and financial inclusion.

Details of significant changes, if any, in the Key Financial Ratios, along with the detailed explanation are provided in the accompanying financial statements which form part of this Annual Report.

INTERNAL CONTROL SYSTEM, ADEQUACY AND COMPLIANCE

We maintain a robust and adaptive Internal Control System that underpins our operational integrity, financial accuracy, and regulatory compliance. Our internal control framework is aligned with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting, issued by the Institute of Chartered Accountants of India (ICAI), ensuring adherence to established industry best practices.

The system covers all critical business processes, including loan origination, credit underwriting, collections, risk management, and financial reporting. These controls are carefully designed to safeguard company assets, ensure data reliability, and prevent operational errors or fraud, thereby promoting transparency and accountability across all functions.

Our Internal Audit function operates within a risk-based audit framework, focusing on high-risk and high-impact areas. Regular internal audits are conducted to assess the effectiveness of controls, supported by data analytics and increasing levels of automation to enable real-time monitoring and early issue detection. Audit findings are reviewed by Senior Management and the Audit Committee, ensuring timely remediation and fostering a culture of continuous improvement.

We also maintain a comprehensive compliance framework aligned with the requirements of the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and other applicable regulatory bodies. During the year, we further strengthened our Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols, enhanced cybersecurity controls, and maintained rigorous compliance audit processes.

The Audit Committee plays a central role in oversight, periodically reviewing the adequacy and effectiveness of internal controls, audit outcomes, risk mitigation strategies, and regulatory compliance. We remain firmly committed to advancing our governance and control systems through the integration of emerging technologies, process improvements, and best-in-class practices—ensuring stakeholder trust and long-term institutional resilience.

"We maintain a proactive approach to monitoring regulatory developments, implementing timely updates to our policies and procedures, and conducting regular internal compliance audits. This disciplined framework helps safeguard the organisation against legal and reputational risks while reinforcing stakeholder confidence in our governance practices."

HUMAN RESOURCE

In FY 2024-25, we continued to foster a dynamic, inclusive, and employee-centric work environment at

DhanSafal. Our human resource strategies are designed to empower individuals, promote diversity, and build a high-performance culture anchored in integrity, agility, and continuous learning. We believe that a motivated and engaged workforce is essential for driving innovation, delivering operational excellence, and sustaining longterm competitive advantage.

This year marked a significant milestone in our organizational growth with the on boarding of key senior leadership, including our Chief Executive Officer (CEO), Chief Operating Officer (COO), Head of Credit & Operations, and Regional Business Heads. This strategic expansion of our leadership team has been pivotal in strengthening our execution capabilities and operational governance across regions.

We also made substantial investments in human capital development, increasing our total employee count from 8 as of March 31, 2024, to 50 as of March 31, 2025. This growth reflects our strong emphasis on building internal capabilities to support our expanding operations and evolving business needs. The Board of Directors extends its sincere appreciation for the commitment, dedication, and contributions of all employees across levels during the year under review.

At DhanSafal, people are our key pillars of strength. We are committed to attracting, developing, motivating, and retaining diverse talent in a competitive marketplace. Our employee policies and practices are people-first, aligned with our business strategy and focused on offering tailored learning and growth opportunities for every role and career stage.

"Building a Culture of Belonging and Strength"

We strive to create a workplace where every individual is respected and valued, regardless of gender, marital status, religion, caste, ethnicity, age, disability, or sexual orientation. Our commitment to diversity, equity, and inclusion (DEI) is deeply embedded in our culture, enabling us to build a future-ready workforce that is resilient, adaptive, and aligned with our strategic vision.

We actively promote a culture of inclusion and well-being through various initiatives aimed at strengthening team spirit and fostering a holistic work environment. Cultural celebrations, along with programs focused on awareness programmes, employee wellness webinars, and community engagement activities, have played a vital role in supporting the physical, emotional, and social well-being of our workforce.

FUTURE OUTLOOK

The outlook for the Non-Banking Financial Company (NBFC) sector in India for FY 2024-25 is one of cautious optimism, marked by both emerging opportunities and structural challenges. As regulatory oversight continues to tighten, NBFCs must focus on strengthening governance, enhancing risk management, and driving operational agility. Simultaneously, the ongoing economic recovery, especially in the retail lending, MSME finance, and affordable housing segments, is expected to fuel credit demand. Digital transformation remains a critical lever, with the accelerated adoption of technology playing a pivotal role in improving efficiency and customer engagement.

Against this dynamic backdrop, DhanSafal is well-positioned for substantial growth, driven by a forwardlooking strategy and a strong commitment to customer value, innovation, and operational resilience. Our outlook is underpinned by the following strategic pillars:

• Diversified Product Portfolio

We are expanding beyond conventional lending to introduce innovative, need-based financial solutions designed for a wide spectrum of customers, including underserved and emerging market segments.

• Digital Transformation

Technology will be central to our evolution. Through data-driven insights, process automation, and AI-led decision-making, we aim to boost efficiency, deepen customer understanding, and deliver seamless service experiences.

• Customer-Centric Approach

We place customers at the heart of our strategy. By offering personalized, responsive, and value-driven solutions, we aim to build trust, enhance satisfaction, and foster long-term loyalty.

• Excellence in Risk Management

A key strategic focus is enhancing our risk assessment, credit underwriting, and monitoring frameworks

to maintain asset quality, manage liquidity proactively, and ensure full regulatory compliance.

• Expansion and Market Penetration

We plan to selectively expand our geographic reach, particularly in underserved tier II and tier III markets, supported by strategic alliances and distribution partnerships that will accelerate our penetration and scale.

* Sustainability and Governance

We are embedding ESG principles into our core operations, with a strong emphasis on transparency, responsible lending, and ethical conduct. Our governance framework will continue to evolve in line with global standards and stakeholder expectations.

* Financial Strength and Capital Management

Ensuring robust capital adequacy, diversifying funding sources, and maintaining healthy liquidity buffers will be critical in sustaining financial resilience and navigating market volatility.

"By leveraging our strengths in innovation, digital adoption, customer engagement, and strategic expansion, DhanSafal is poised to capitalize on evolving market dynamics and emerge as a trusted and scalable player in the NBFC sector. Our balanced approach—anchored in prudent financial management, strong governance, and inclusive growth—will guide us in delivering sustainable value to all stakeholders in the coming years."

RISK & CONCERNS

At DhanSafal, effective risk management is fundamental to our business strategy and long-term sustainability. As a Non-Banking Financial Company (NBFC), we operate in a dynamic environment where exposure to a wide array of financial and operational risks is inherent. These include credit risk, liquidity risk, market risk, regulatory risk, and operational vulnerabilities.

The Companys senior management team is responsible for establishing a comprehensive risk management framework, with oversight provided by a dedicated Risk Management Committee. This core committee is tasked with formulating, reviewing, and continuously improving risk management policies and practices. Key risk matters and mitigation strategies are regularly reported to the Audit Committee of the Board, ensuring transparent governance and prompt corrective actions.

Key Risks and Mitigating Strategies

Risk Category		Description		Mitigating Strategies
1. Credit Risk		Increased demand for credit in semiurban and underserved markets can lead to challenges in assessing borrower creditworthiness. Sectoral stress, particularly in MSME and real estate lending, could result in elevated NPAs if macroeconomic conditions worsen.		- Strengthened credit underwriting and due diligence processes.
				- Use of data-driven credit scoring and alternative data for underbanked segments.
				- Portfolio diversification across geographies and sectors.
				- Regular stress testing and early warning systems to detect delinquencies.
2. Liquidity Risk		Reliance on market borrowings such as CPs and debentures exposes the Company to funding volatility, especially in tight liquidity environments. ALM mismatches can create refinancing challenges.		- Maintenance of adequate liquidity buffers and high-quality liquid assets.
				- Dynamic ALM policy with regular monitoring and scenario analysis.
				- Diversification of funding sources including long-term borrowings and securitization.
				- Compliance with RBIs Liquidity Coverage Ratio (LCR) guidelines.
3. Regulatory and Compliance Risk		The evolving regulatory framework requires NBFCs to comply with stricter norms on capital adequacy, asset classification, and governance. Noncompliance may lead to penalties and reputational damage.		- Dedicated compliance and legal teams ensuring adherence to RBI norms.
				- Proactive adoption of new regulatory guidelines, including IFRS/Ind-AS standards.
				- Periodic internal and external audits.
				- Training programs to ensure company
				- wide regulatory awareness.
Risk Category	Description		Mitigating Strategies
4. Interest Rate Risk	Fluctuations in interest rates can impact net interest margins and borrowing costs, especially with asset-liability mismatches.		- Periodic review of interest rate sensitivity and duration gaps.
			- Active ALM committee oversight.
			- Flexible product pricing and linking loan products to benchmark rates.
			- Exploring hedging mechanisms where appropriate.
5. Operational Risk	Increased digital dependence and remote operations may expose the Company to cyber threats, IT failures, and process lapses.		- Investments in cybersecurity infrastructure and regular vulnerability assessments.
			- Business continuity planning (BCP) and disaster recovery mechanisms.
			- Strong internal controls and process automation.
			- Regular employee training and awareness on cyber hygiene and risk protocols.
6. Market and Competitive Risk	Rising competition from banks, fintechs, and digital platforms may pressure margins and customer acquisition. Technological disruption can also render traditional models less effective.		- Continued investment in digital transformation and customer experience.
			- Development of differentiated financial products suited to local market needs.
			- Strategic partnerships and collaborations with fintechs and technology providers.
			- Agile product development and rapid go-to- market capabilities.
7. Macroeconomic Risk	Economic slowdowns, inflation, geopolitical tensions, and capital flow volatility may impact funding costs, credit demand, and asset quality.		- Regular monitoring of macroeconomic trends and scenario planning.
			- Conservative provisioning norms beyond regulatory minimums.
			- Agile decision-making frameworks to adjust to external shocks.
			- Prudent balance sheet and risk capital management.
8. Reputational and Legal Risk	Failure to uphold ethical standards or noncompliance with laws related to consumer protection, fair lending, or data privacy may harm the Companys reputation.		- Adoption of strong corporate governance practices and transparency in disclosures.
			- Robust grievance redressal mechanism and customer protection policies.
			- Full compliance with data privacy and fair lending regulations.- Periodic board oversight and ethics training across the organization.

OTHER RISKS

With the rapid evolution of technology, increasing complexity in business operations, regulatory shifts, and growing environmental concerns, financial firms are encountering a wider range of emerging risks. Among these, asset-liability risk has gained particular attention due to its leveraged nature. In todays dynamic global economy—characterized by complex legal compliance, cross-border transactions, and the need for business continuity and sustainability—effective risk management has become a top priority.

While it is not possible to completely eliminate all risks, they can be effectively controlled, mitigated, and managed within the organization to achieve a balance between risk and reward. Risk management forms a core part of the Companys business strategy and is integrated seamlessly into all aspects of its operations. The objective of the Companys risk management framework is to optimize the risk-return balance while ensuring full compliance with applicable current and forthcoming laws, regulations, and guidelines across all business activities. Risk management is a continuous process rather than a one-time task. The Company is committed to fostering a strong and disciplined risk-aware culture throughout all business units and organizational levels.

The ultimate responsibility for defining and overseeing the risk management framework lies with the senior management. To this end, a dedicated Management Committee has been formed to design, implement, and monitor risk management policies. These policies aim to identify and evaluate risks the Company may face, establish appropriate risk thresholds and controls, and adapt to changing market conditions through periodic policy reviews.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward looking within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied. Important factors that could make a difference to the Companys operations include global economy, political stability, stock performance on stock markets, changes in government regulations, tax regimes, economic developments and other incidental factors. Except as required by law, the Company does not undertake to update any forward-looking statements to reflect future events or circumstances. Investors are advised to exercise due care and caution while interpreting these statements