Apex Capital and Finance Ltd Management Discussions

I. COMPANY OVERVIEW:

Apex Capital and Finance Limited (the "Company") is an NBFC and is engaged in the business of providing various financial services, such as loans, advances, investments, leasing, hire-purchase and more. The Company is regulated by the Reserve Bank of India (RBI) under the framework of the RBI Act, 1934. The main objective of the Company is to finance various individuals, corporates, firms, societies and Industrial enterprises by way of making loans and advances in India and to carry out all such activities as may be ancillary to the achievement of main objectives of the Company.

INDUSTRY STRUCTURE AND DEVELOPMENT:

Non-Banking Financial Companies (NBFCs) have emerged as powerful engines of credit, significantly expanding access to financial services, especially for historically underserved or excluded segments. By complementing the traditional banking system, NBFCs have utilised innovative credit delivery models that leverage technology and local insights to create customised financial products tailored to diverse borrower needs. Their agility and close customer connections have enabled them to play a role that is not only complementary to traditional banks but also catalytic in building a financial ecosystem characterised by deeper intermediation and wider opportunities.

Over the past decade, the growth of NBFCs has consistently outpaced that of banks, a trend that has become even more pronounced in recent years. This rapid growth underscores the sector’s relevance and resilience. As NBFCs continue to grow in importance, it is crucial to focus on governance, risk management, and customer treatment to ensure their sustainable development.

NBFCs remain an important constituent of India’s financial sector, and continue to leverage their superior understanding of regional dynamics and customised products and services to expedite financial inclusion in India. Lower transaction costs, innovative products, quick decision making, customer orientation and prompt service standards have differentiated NBFCs from banks.

Rating agency ICRA highlighted that non-banking financial companies (NBFCs) are experiencing a moderation in credit expansion at present. Growth in this segment is expected to ease to 13-15% in FY 2025 and FY 2026 from the 17% expansion witnessed in the previous two fiscals.

Overall, NBFC credit stood at about Rs. 52 trillion in December 2024 and it is set to exceed Rs. 60 trillion in FY 2026. Within this, the retail assets, which accounted for 58% of the overall NBFC credit in December 2024, have been the key growth drivers, while other wholesale and infrastructure credit expanded at a stable rate of 10-12% during FY 2023-FY 2025. The retail assets of NFBCs expanded at compounded annual growth rate (CAGR) of 23% during FY 2023-FY 2024. ICRA expects this segment to grow at a relatively slower 16-18% CAGR during FY 2025-FY 2026, given the high base created in the post-Covid expansion of this segment, amid concerns of borrower overleveraging, which has impacted loan quality in some asset segments within this space.

Indias NBFC sectors total net advances mirrored this growth, also increasing by 20 percent year-on-year to reach Rs24.5 lakh crore. This propelled the overall balance sheet size of the NBFC industry to Rs28.2 lakh crore, marking a 20 per cent rise from the previous fiscal year. Total borrowings by NBFCs also saw a significant uptick of 22 per cent to Rs19.9 lakh crore, reflecting increased funding activity to support their expanding operations.

NBFCs also contribute to capital formation in the economy by channelling savings into productive investments. They mobilize funds from various sources and invest them in projects and businesses that require financing. NBFCs indirectly contribute to overall economic growth. Their role in credit intermediation helps in stimulating consumption and investment, leadingto economic expansion.

Your Company’s performance for the F. Y. 2024-25 has to be viewed in the context of aforesaid economic and market environment.

OPPORTUNITIES AND THREATS:

The establishment of Non-Banking Financial Companies (NBFCs) in India is driven by various threats and challenges that traditional banking institutions may not be equipped to address adequately. These risks include potential asset-liability mismatches, credit concentration risks, and operational vulnerabilities. As a result, regulatory oversight is crucial to ensure the stability of the NBFC sector and protect the interests of consumers and investors. The Reserve Bank of India (RBI) closely monitors NBFCs and implements prudential regulations to mitigate these risks and promote a robust and resilient financial system in the country.

NBFCs have various ways to grow their business, including obtaining affordable loans from multilateral development banks and using blended finance instruments to access concessional capital. Additionally, NBFCs can transform their operations by utilising digital tools and resources, which not only reduces their environmental impact but also improves governance and resource management. Overall, opportunities and sustainability are important drivers for growth in the NBFC sector and being innovative and ahead of the curve will lead to success in the market.

NBFC creates an opportunity in creating for the Indian financial system, contributing significantly to economic growth, financial inclusion, and credit availability. Following are the areas where NBFC sector played a crucial role in India’s overall development over the years:

1. Credit Penetration and Financial Inclusion: NBFCs have been instrumental in increasing credit penetration in India, especially in regions and sectors where traditional banks have limited reach. They have been successful in catering to the needs of underserved and unbanked segments of the population, contributing to financial inclusion.

2. Diverse Financial Products: NBFCs have introduced innovative and specialized financial products to meet the specific needs of different customer segments. From microfinance for the economically weaker sections to housing finance and vehicle loans, NBFCs have diversified the range of financial services available in the country.

3. Complementing Banking Sector: NBFCs complement the role of banks by providing additional channels for credit intermediation. They have been crucial in easing the pressure on the banking sector by taking up certain types of lending and serving niche markets, thereby promoting a more balanced and diversified financial system.

4. Supporting MSMEs and Infrastructure Development: NBFCs play a significant role in supporting the growth of Micro, Small, and Medium Enterprises (MSMEs), which are vital contributors to the Indian economy. They also contribute to infrastructure development by financing projects in this sector.

5. Job Creation: The growth of the NBFC sector has led to increased employment opportunities in various financial services-related roles. This has a positive impact on the overall economy by generating income and increasingconsumer spending.

6. Enhanced Competition and Innovation: The presence of NBFCs has spurred healthy competition in the financial sector, leading to innovation in products and services. This benefits consumers as they get access to a broader range of financial products at competitive rates.

7. Rural and Agricultural Finance: NBFCs have played a significant role in rural and agricultural finance. They have supported farmers and rural businesses by providing credit and financial services tailored to their needs.

In conclusion, the NBFC sector has significantly contributed to Indias overall development by expanding credit access, promoting financial inclusion, supporting economic growth, and offering innovative financial products. Its continued growth and evolution will remain vital for sustaining and strengthening Indias financial ecosystem in the future.

II. SEGMENT-WISE PERFORMANCE:

The Company is engaged in a single segment i.e. finance/lending. Details of performance have been provided in this report.

III. OUTLOOK:

NBFCs have played an increasingly important role in Indias financial system over the past two decades and are now well-positioned to continue expanding, especially in the retail and rural segments. Non-banking financial companies (NBFCs) outpaced commercial banks in credit growth during fiscal year 2025, clocking a sharp 20% increase compared to the banking sector 12% rise, according to a report by the Boston Consulting Group (BCG).

Operationally, the sector recorded improved efficiency, with the cost-to-income ratio easing from 36.7% in FY24 to 36.2% in FY25. Asset quality also strengthened slightly, with Gross Non-Performing Assets (GNPA) improving by 10 basis point.

In Indias banking system, banks primary focus has largely remained on wholesale lending to large corporates, services, and agriculture sectors. As of FY24, only 34 per cent of the total bank credit went to retail borrowers. This has left a significant gap in the retail lending space, which NBFCs have stepped in to fill. NBFCs have entered retail lending with 48 per cent of the total credit given to the retail segment much higher than the share held by banks. This indicates a clearfocus by NBFCs on serving individual borrowers, especially those from low- income or riskier profiles.

NBFCs are expected to play a crucial role in the India growth story fuelling formalised credit penetration among the underserved. Policy push, regulatory oversight and digital across the value chain are expected to define the growth of this sector.

Apex Capital and Finance Limited expects to improve its performance in financial year 202526. The approach would be to continue with the growth momentum while balancing risk. The Company will continue to invest in strengthening risk management practices; and in maintaining its investment in human resources to consolidate its position as a potential NBFC in India.

RISK MANAGEMENT:

In view of the growing volatility in the operating environment impacting global businesses on an unprecedented scale, we are reinforcing the risk management and mitigation mechanism. It is a fundamental aspect of good governance and prudent business practices, contributing to the long-term success and sustainability of the organization.

Incorporating risk management as an integral part of the business strategy requires a systematic approach, involving risk assessments, risk appetite determination, risk monitoring, and periodic reviews. It also necessitates a risk-aware culture where employees at all levels understand their roles in managing risks and are encouraged to report potential issues promptly. Ultimately, effective risk management strengthens a companys resilience and contributes to its long-term success in a dynamic and unpredictable business landscape.

IV. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company’s internal control system is designed to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with laws and regulations. The internal control system is supported by an internal audit process for reviewing the adequacy and efficiency of the Company’s internal controls, including its systems and processes and compliance with regulations and procedures. Internal Audit Reports are discussed with the Management and are reviewed by the Audit Committee of the Board which also reviews the adequacy and effectiveness of the internal controls in the Company. The Company’s internal control system is commensurate with the size, nature and operations of the Company.

V. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The financial performance of the Company during the year under reference was reasonably good. For detailed information, please refer to Directors’ Report, which forms part of this Annual Report.

VI. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

We recognize people as our most valuable asset and we have built an open, transparent and meritocratic culture to nurture this asset. Talent Management is a key people planning tool that provides an integrated means of identifying, selecting, developing and retaining top talent within our Organisation. Attrition has been managed well and has been below industry benchmarks. Apex Capital and Finance Limited has kept a sharp focus on employee engagement. We have a strong system of grievance handling too. No concern of our people goes without addressing. We strive for excellence by thrivingon our positivity.

Place: New Delhi	For and on behalf of the Board of Directors of
Date: 13.08.2025	Apex Capital and Finance Limited
	(Ramesh Shah)
	Chairman
	DIN:00029864