Classic Leasing & Finance Ltd Management Discussions

INTRODUCTION

The management discussion and analysis (MD&A) section is a narrative report in a companys financial statement, offering insights into the strategies and future outlook of the business. It mainly comprises of the statements which, inter-alia, involve predictions based on perceptions and may, therefore, be prone to uncertainties. It is the sum total of the Companys expectations, beliefs, estimates and projections which are forward looking within the meaning of applicable laws and regulations I he actual results could differ materially from those expressed herein specifically or impliedly.

INDUSTRY TREND AND DEVELOPMENT

Non-Hanking financial Companies (NBICs), particularly leasing and finance companies, complement the banking system by catering to niche customer segments and addressing financing requirements that may not be adequately served by traditional banks.

During the financial year, the Indian economy demonstrated resilience despite global economic uncertainties, geopolitical tensions, inflationary pressures, and fluctuating interest rates. Stable macroeconomic fundamentals, increasing infrastructure investment, digital financial inclusion, and supportive regulatory measures have contributed to sustained demand for credit.

The leasing and finance industry continues to w itness transformation driven by technology adoption, improved risk management practices, digital lending platforms, and increased regulatory oversight by the Reserve Bank of India (RBI). Companies operating in this sector are increasingly focusing on operational efficiency, portfolio quality, prudent lending practices, and customer-centric financial solutions.During FY 2025-26, the Company continued to focus primarily on its lending and financing activities, with emphasis on prudent deployment of funds, credit appraisal, recovery and portfolio quality.

OPPORTUNITIES AND THREATS

The Company sees opportunities in the growing demand for structured and customised financing solutions, equipment financing and leasing, increased credit penetration in semi-urban and rural markets, and the use of technology and data analytics for improved credit assessment and monitoring.

The Company also faces challenges including competition from banks, fintech companies and other NBFCs, changes in regulatory requirements, fluctuations in borrowing costs and credit risk arising from borrower defaults. Management remains focused on a cautious and growth-oriented approach while maintaining appropriate risk controls.

OUTLOOK

Despite geopolitical unrest across tire globe, India continues to be one of tire fastest-growing major economies. Continued infrastructure spending, expanding manufacturing activities, increased consumption, and government support tor financial inclusion are expected to sustain demand for financial services.

the Company intends to strengthen its lending portfolio through disciplined credit appraisal, improved recovery mechanisms, technology adoption and prudent risk management. Management remains cautiously optimism about the Companys growth prospects while continuing to monitor economic, financial and regulatory risks.

RISK AND CONCERN

The Companys performance is dependent on economic and fiscal policies, market interest rates, liquidity conditions, and tile overall regulatory environment. Key risks include:

• Fierce competition from established players;

• Changes in RBI regulations governing NHI*Cs;

• Changes in monetary policy and borrowing costs;

• Economic slowdown affecting repayment capacity;

* Credit risk arising from borrower defaults; and

• Information Technology and Cyborsecurlty Risk associated with digital operations.

The Company lias implemented appropriate risk management policies and internal control mechanisms to identify, monitor, and mitigate these risks. Continuous monitoring of the loan portfolio and regular review of credit exposures help maintain asset quality.

The Company also monitors contingent financial exposures, including corporate guarantees and other commitments disclosed in the financial statements. The Company evaluates such exposures on an ongoing basis and takes appropriate steps based on developments and the underlying circumstances.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has adequate internal control systems commensurate with its size, nature and scale of operations. I he internal controls are designed to safeguard the Companys assets, ensure compliance with applicable laws and regulations, maintain accuracy and reliability of financial reporting, facilitate efficient conduct of business operations and prevent and detect errors and irregularities.

The effectiveness of the internal control systems is monitored by the Management through appropriate review and approval mechanisms, segregation of responsibilities and periodic review of financial and operational activities. The Management continues to strengthen the internal control framework commensurate with the growth and changing requirements of the business.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year under review, the Company continued to focus on maintaining a healthy portfolio while ensuring prudent deployment of funds. The financial results for the year under review reflect a substantial improvement in profitability, with PAT increasing from Rs. 46.17 lakh in FY 2024-25 to Rs. 111.68 lakh in FY 2025-26. This growth was driven by disciplined cost management, prudent credit appraisal and improved recovery performance. The Company continues to maintain a healthy liquidity position to support future business expansion.

The Board remains focused on sustainable profitability through disciplined lending, effective cost management, ami strengthening of the Companys financial position.

SEGMENT WISE OR PRODUCE WISE PERFORMANCE

The Company is. primarily engaged in the business of leasing and financing activities. Accordingly, the business constitutes a single reportable segment in terms of the applicable Indian Accounting Standards. During the year, the Company continued to focus on prudent lending practices, maintaining asset quality, strengthening customer relationships, and improving operational efficiencies. The Company remained committed to ensuring balanced growth while maintaining adequate risk controls,

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAI RELATIONS

I Ionian resources continue to be an important asset of the Company. The Company focuses on employee competence, professional conduct, integrity and productivity and seeks to provide an appropriate working environment for its employees. The Company also encourages skill development and continuous learning, as appropriate to the requirements of its business.

Industrial relations remained cordial throughout the year.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may constitute "forward-looking statements" within the meaning of applicable laws and regulations. These statements are based on the Companys current expectations and assumptions and are subject to various risks and uncertainties. Actual results may differ materially from those expressed or implied in such forward-looking statements. The Company assumes no responsibility for any obligation to publicly update or revise such statements in light of subsequent developments, information or events, except as may be required under applicable laws and regulations.