Step Two Corporation Ltd Management Discussions

About Step Two Corporation Limited

Step Two Corporation Limited (‘STCL) is a non-deposit taking Non-Banking Financial Company (NBFC-ND) registered with the Reserve Bank of India (RBI). It is engaged in the business of investments and lending

The global economic landscape continues to be influenced by geopolitical tensions, evolving trade dynamics and policy realignments. Recent developments, such as a selective easing of tariffs and renewed engagement in trade negotiations, have provided some stability. However overall growth expectations remain tempered, amidst continued global uncertainties and escalations. Financial markets have shown cautious optimism through modest rallies across certain equity markets, and softening of crude oil prices, even as the dollar index declined, bond yields faced volatility and gold prices remain elevated. While global economic activity continues to expand, the pace remains modest.

In the midst of challenging circumstances, India has demonstrated resilience and sustained its growth momentum. The National Statistics Office (“NSO”) has estimated Indias real Gross Domestic Product (“GDP”) growth at 6.5% for FY25, reaffirming its position as the fastest growing major economy. This was driven by robust consumption and net exports on the demand side, complemented by the services sector and a recovery in agricultural production on the supply side. Fiscal consolidation and proactive policy measures provided an impetus to both financial and non-financial sectors, whilst prioritizing macroeconomic stability. The stability of the financial sector-evident in stronger asset quality and well-capitalised institutions-provided additional support to economic activity. Looking ahead, Indias growth prospects remain encouraging despite potential downside risks from geopolitical uncertainties. There is optimism to build on the strong performance demonstrated in FY25, supported by continued strength in rural demand, uptick in investment activity and focused government expenditure. Considering these factors, the RBI has projected Indias real GDP growth for FY26 at 6.5%.

In this environment, financial institutions continued to play a pivotal role in maintaining Indias economic strength. During the year, scheduled commercial banks (“SCBs”) exhibited steady credit growth, improved asset quality, and healthy capital and liquidity positions. Within the lending space, Non-Banking Financial Companies (“NBFCs”) remain key enablers of last-mile credit delivery, particularly to unserved and underserved segments. Aggregate credit extended by NBFCs recorded steady growth, supported by improving profitability, asset quality, and robust capital adequacy. Notably, earlier stress in certain retail segments has begun to ease, further reinforcing the stability of the NBFC sector.

- Total net fixed assets for FY2024-25 stood at Rs. 0.48 lacs compared to Rs.0.69 lacs in FY2023-24

- Net worth stood at Rs. 562.19 lacs as on 31st March, 2025 compared to Rs. 564.59 lacs as on 31st March, 2024, a decrease of 10.04%.

- Revenues from operations stood at Rs. 130.31 lacs in FY2024-25 compared to Rs. 84.15 lacs in FY2023-24

- EBITDA increased to Rs. (2.29) lacs in FY2024-25 compared to Rs. (46.35) lacs in FY2023-24

- Loss after tax was witnessed at Rs. (2.39) lacs in FY2024-25 compared to Rs.(29.86) lacs in FY2023-24

- Depreciation and amortisation stood at Rs. 0.21 lacs in FY2024-25 compared to Rs. 0.21 lacs in FY2023-24

* Figures for Debtors Turnover (Days), Inventory Turnover and Interest Coverage Ratio have not been stated since the Company had Nil Debtors, Inventory and Interest Expense.

A strong risk management framework is fundamental to all our organizational activities, as it ensures financial stability and supports sustainable growth in a dynamic regulatory and economic landscape. A key element of our approach is cultivating a robust risk management culture within our Company, aligning risks with the creation, preservation, and realization of value. This structured methodology allows us to achieve consistent, comparable results, ensuring that our risk management practices are aligned with our strategic goals. Broad categories of risk that we face are Credit risk, Market risk, Operational risk, Fraud risk, Compliance and Governance risk, Information Security and Cyber Security risk, and Reputational risk. The risk management policies are well defined for various risk categories supplemented by periodic monitoring through the various sub committees of the Board.

Over the past few years, financial services as a sector has come under increased scrutiny and therefore, greater regulatory supervision. This is especially true for NBFCs, as over the years, the sector has undergone considerable evolution in terms of size, complexity and interconnectedness within the financial sector. With a view to bridge the regulatory gaps between the Banks and NBFCs, NBFCs are now increasingly being subject to regulations and guidelines at par with banks.

India continues to chart a robust growth path, with the IMF projecting it to become the worlds fourth-largest economy by nominal GDP, estimated to be $4.2 trillion in CY2025. This growth is underpinned by strong drivers including private consumption, a resilient services sector, and focused government expenditure. Additionally, the expanding MSME base, accelerating digital adoption, and a favourable demographic dividend further strengthen the countrys long-term prospects. Central to this growth trajectory is the financial services sector, which plays a vital role in enabling business expansion, consumer spending, and infrastructure development.

Government initiatives to boost MSME activity, coupled with the limited reach of traditional credit channels in remote areas, create a conducive environment for customized financing solutions. NBFCs, with their extensive reach, flexible underwriting practices, and digital agility, are uniquely positioned to bridge this gap and drive financial inclusion.

In terms of challenges, from a macroeconomic standpoint, NBFCs operate within a landscape susceptible to external factors viz. political developments, geopolitical tensions, systemic liquidity constraints, fiscal uncertainties, and inflationary pressures which may influence interest rates and borrower behaviour. These factors necessitate robust risk management frameworks and diversified funding strategies to withstand shocks and sustain growth.

NBFCs continue to face an increasingly competitive environment. Margin pressures persist due to competitive lending rates, especially as banks further deepen their reach and intensify their focus on retail and MSME lending, compressing spreads for NBFCs. Smaller NBFCs, in particular, struggle with limited access to affordable and stable funding sources, which constrains their ability to scale operations and maintain liquidity buffers.

Your Company ensures strict adherence to regulatory guidelines, ensuring compliance in both letter and spirit. With a well-articulated strategy, robust operating model, and high standards of corporate governance, STCL remains well-positioned to capitalize on the opportunities ahead.

The Company has an effective internal control system, commensurate with its size and nature to ensure smooth business operation, including assurance of recording all the transaction details, ensuring regulatory compliance and protecting the Company assets from any kind of loss or misuse. It evaluates the adequacy of all internal controls and processes, and ensures strict adherence to clearly laid down processes and procedures as well as to the prescribed regulatory and legal framework. The Company has further strengthened its internal audit function by investing in domain specialists to increase effectiveness of controls. The Audit Committee of the Board of Directors reviews the internal audit reports and the adequacy and effectiveness of the internal controls.

STCL fulfils norms and standards laid down by the RBI relating to the recognition and provisioning of non-performing assets, capital adequacy, statutory liquidity ratio, etc.

The Company continues to lay emphasis on people, its most valuable resource. In an increasingly competitive market for human resources, it seriously focuses on attracting and retaining the right talent. It provides equal opportunity to employees to deliver results.

Certain statements in the Management Discussion and Analysis describing the Companys objectives, predictions may be “forward-looking statements” within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward looking statements contained in this document due to various risks and uncertainties.