Golechha Global Finance Ltd Management Discussions

INDUSTRIAL STRUCTURE AND DEVELOPMENT

Non-Banking Financial Companies (NBFCs) continue to play a pivotal role in Indias financial ecosystem by extending credit to underserved segments such as MSMEs, rural borrowers, and informal households. They complement banks by offering innovative lending models, digital-first origination, and niche services like gold loans, vehicle finance, and microfinance. NBFCs are crucial for employment generation, wealth creation, and financial inclusion, particularly in semi-urban and rural areas.

NBFCs act as intermediaries by channelizing funds into productive capital formation. Their activities include loans and advances, acquisition of securities, leasing, hire-purchase, and insurance-related services. While they cannot accept demand deposits, they remain regulated under RBIs Scale-Based Regulation (SBR) framework, ensuring systemic stability.

Indias NBFC sector has undergone a significant structural transformation in the aftermath of the IL&FS crisis and pandemic disruptions, emerging with stronger balance sheets, diversified liabilities, and enhanced governance frameworks. By FY26, NBFCs assets under management (AUM) stood at Rs. 48-50 trillion (USD 510-530 billion), contributing nearly 19% of systemic credit, with projections indicating that the sector will cross Rs. 50 trillion by FY27. Growth is being driven primarily by retail-focused NBFCs, which are expected to require incremental funding of 4.1-4.3 trillion in FY27. Within the segmental landscape, housing finance companies (HFCs) are competing on product mix and underwriting quality, gold loan NBFCs remain the fastest-growing though margins are stabilizing, microfinance NBFCs are diversifying beyond pure-play models, and fintech-partnered NBFCs are expanding reach through digital lending frameworks. This sectoral momentum is supported by a robust macroeconomic backdrop, with Indias GDP growing 7.7% in FY26, underpinned by strong private consumption and double-digit growth in manufacturing.

Source: https://www.bqprime.com/economy-finance/heres-why-icra-upwardly-revised-nbcfcs-2025-26-growth-outlook"

The opportunities and threats for Indias NBFC sector highlight both the growth potential and the challenges ahead. On the opportunity side, NBFCs are well-positioned to expand into digital lending, strengthen fintech partnerships, and tap rural credit markets, which align with rising demand for small-ticket personal loans and MSME financing. Government initiatives supporting financial inclusion and infrastructure financing further provide a strong policy tailwind. However, the sector also faces notable threats: global recessionary pressures could impact capital inflows, while volatility in equity markets and rising funding costs may strain margins. Currency risks from offshore borrowing exposure add another layer of vulnerability, and regulatory tightening under RBIs Upper Layer classification for large NBFCs will demand stricter compliance and governance standards. Together, these dynamics create a landscape of high growth potential tempered by external and regulatory risks.

The companys principal business continues to be lending operations, with financial performance showing notable improvement in FY26. Interest income rose to Rs. 62.45 lakhs compared to Rs. 44.38 lakhs in FY25, reflecting growth driven by retail loan expansion and better asset quality. Profit after tax (PAT) losses narrowed to Rs. 18.72 lakhs in FY26 from Rs. 31.07 lakhs in FY25, indicating progress toward profitability despite margins remaining under pressure. Overall, the companys trajectory demonstrates strengthening fundamentals, supported by retail-focused lending and disciplined asset management, though sustaining margin improvement will be a key challenge going forward.

The company anticipates steady growth in FY27, underpinned by expansion in loans and advances, alongside strategic investments in risk management, technology, and human capital. A key focus will be on digital origination and cross-selling to underserved borrowers, which is expected to enhance reach and improve customer engagement. Management remains optimistic about sustaining growth momentum while carefully balancing risk exposure, positioning the company to strengthen its competitive edge in the evolving NBFC landscape.

Key risks for the company remain centered around credit, market, and operational exposures. Rising unsecured loan exposure heightens credit risk, while liquidity constraints and price volatility contribute to market risk. Operational vulnerabilities, particularly in the areas of cybersecurity and digital fraud, add further complexity in an increasingly digital lending environment. To mitigate these challenges, the company emphasizes prudent underwriting practices, maintains diversified funding sources, and ensures strict compliance with RBI norms, thereby strengthening resilience against potential disruptions.

The company maintains robust internal controls designed to safeguard operations and ensure compliance. Automated monitoring of loan portfolios enables early detection of stress and enhances oversight of asset performance. Compliance frameworks are aligned with RBIs Scale-Based Regulation (SBR) guidelines, ensuring adherence to evolving regulatory standards. In addition, regular internal audits are conducted to verify the accuracy of financial reporting and optimize asset utilization. Together, these measures strengthen governance, improve transparency, and reinforce stakeholder confidence in the companys risk management practices.

During the year under review, the interest income from loans granted was Rs.19.0574 Lakhs as against Rs. 32.03 Lakhs for the previous year. The operations of the Company have resulted in Profit after Tax of Rs. 57.2821 Lakhs as against Rs. 147.7631 Lakhs in the previous year. During the period and under review Company has invested in the shares of other companies and the income from sale of shares during the current year is Rs.2840.9429 Lakhs against Rs. 1714.8743 Lakhs in the previous financial year.

Your Company considers its Human Resources as the key to achieve its objectives. Keeping this in view, your Company takes utmost care to attract and retain quality employees. The employees are sufficiently empowered and such work environment propels them to achieve higher levels of performance. The unflinching commitment of the employees is the driving force behind the Companys vision. Your Company appreciates the spirit of its dedicated employees. There is no material development in the human resources employed in the FY 2025-26 and there are no material developments in the human resources utilized in the Company.

I hereby certify that the Board of Directors and Senior Management Personnel of the Company have affirmed compliance with the Code of Conduct of the Company for the year 2025-26.