Goyal Associates Ltd Management Discussions

Your directors are pleased to present the Management Discussion and Analysis Report for the year ended 31st March, 2025.

NBFC Company:

The financial statements are prepared in accordance with the Companies Act, 2013 and Indian Accounting Standards (Ind AS), along with applicable RBI guidelines for NBFCs. Estimates and judgments have been made prudently to ensure the financials present a true and fair view of the Companys affairs. This report may include forward-looking statements involving risks such as regulatory changes, economic shifts, or strategy execution. Actual results may materially differ.

ECONOMIC OVERVIEW:

Global Economy:

Global economic conditions remain volatile, challenged by geopolitical tensions, inflationary pressures, and strained trade relations. Amidst uncertainty, Indias resilient domestic demand and reform-driven momentum continue to stand out.

Indian Economy:

Indias economy registered a robust real GDP growth of 6.5% in FY 2024-25, retaining its position as the fastest-growing major economy. The momentum was particularly strong in Q4 with 7.4% growth, even as the full-year performance reflected moderation due to global headwinds. Inflationary pressures eased sharply, with retail CPI falling to 2.82% in May 2025 the lowest since February 2019 providing significant relief to consumers and policymakers. In response, the Reserve Bank of India pursued aggressive monetary easing, cutting policy rates and reserve requirements to bolster domestic demand and sustain the growth cycle.

Indias external position also strengthened during the year, with robust performance in foreign trade, exports, and capital inflows. Reflecting confidence in the economys resilience and policy effectiveness, S&P upgraded Indias sovereign rating to BBB in August 2025. Looking ahead, the RBI expects GDP growth to remain steady at 6.5% in FY 2025-26, while a parliamentary panel has underscored the need to raise the investment rate to 35% of GDP to achieve and sustain an 8% growth trajectory over the coming decade.

Outlook:

The Indian governments high capital spending has brought the fiscal deficit to 5.8% in FY 2023-24 and the combined debt-GDP to above pre-pandemic levels. The RBI paid a higher-than-expected dividend payout of Rs 2.1 trillion to the government, v/s the expected Rs 0.9 trillion. This is likely to lead to lower market borrowings in the second half of the year and consequently lower bond yields.

INDUSTRY OVERVIEW:

Financial Services Industry:

Non-Banking Financial Companies (NBFCs) witnessed stellar growth in FY 2024-25, with credit expanding by 20%, significantly outpacing the banking sectors growth of around 12%. The sectors asset base surged to 28.2 lakh crore, supported by a 22% rise in borrowings to 19.9 lakh crore. However, profitability trends were uneven while sector-wide profit after tax (PAT) increased by 8%, microfinance institutions (MFIs) reported a sharp 95% plunge in profits, reflecting concentrated stress in certain borrower segments.

Looking ahead, rating agencies project moderation in growth. ICRA expects NBFC credit expansion to ease to 13 15% during FY 2025 and FY 2026. Retail lending, which has been the key growth driver, recorded a 23% CAGR in FY 2023-24 and is forecasted to grow at a healthy 16 18% in FY 2025-26. Supporting this trajectory, Crisil Intelligence highlighted that NBFCs assets under management (AUM) doubled from 23 trillion in FY 2019 to 48 trillion by the end of FY 2025, with a further 15 17% growth projected during FY 2025 28.

NBFCs now account for 21% of systemic credit, steadily gaining market share owing to their agility, technology-driven models, and ability to serve underserved customer segments. As of March 2024, 71.2% of NBFC credit was concentrated in industry and retail sectors, with vehicle loans, gold loans, and microfinance together forming 56.7% of the retail portfolio. This diversified yet focused approach underscores the sectors growing systemic importance while highlighting areas of concentrated risk that require continued regulatory and operational vigilance.

NBFCs in India:

Indias NBFC sector continued to demonstrate resilience and scale in FY 2024-25, with credit growth of 20% year-on-year well above the banking sector. However, industry forecasts suggest moderation to 13 15% in the coming years as growth stabilizes. Asset quality showed broad improvement, though pockets of stress remain, particularly in microfinance institutions (MFIs) and unsecured retail loans. The sectors assets under management (AUM) nearly doubled over the past six years, reaching 48 trillion by FY 2025, underscoring its expanding systemic importance.

NBFCs today account for over one-fifth of Indias total credit, steadily gaining market share due to their agility, diversified product offerings, and focus on underserved segments. Retail lending and MSME financing remain the sectors core growth drivers, supported by technology-driven models and strong last-mile connectivity. This combination has positioned NBFCs as a critical pillar in Indias financial ecosystem, bridging credit gaps while complementing the banking systems role in driving inclusive economic growth.

COMPANY OVERVIEW:

Goyal Associates Limited is a registered Non-Banking Finance Company (NBFC) regulated by the Reserve Bank of India (RBI). The Company is engaged in providing financial services with a focus on serving individuals and small businesses through credit and related offerings. Over the years, the Company has maintained a prudent business approach, ensuring compliance with regulatory norms while steadily strengthening its financial position.

For the financial year ended March 31, 2025, the Company reported revenue from operations of 28.12 lakhs as against 31.23 lakhs in the previous year. Despite a slight moderation in top-line growth, the Company delivered a Net Profit (PAT) of 10.97 lakhs, reflecting operational efficiency and cost discipline. The balance sheet remains stable, with total assets at 84.77 lakhs, supported by a healthy capital structure and controlled borrowings.

During the year, Goyal Associates continued to adopt a cautious yet growth-oriented strategy in line with evolving market conditions. The Company has emphasized improving its asset quality, optimizing resources, and aligning with the broader NBFC sectors transition toward digital and customer-centric models. With a clear focus on strengthening its core lending business, maintaining regulatory compliance, and building stakeholder confidence, the Company remains well-positioned to pursue sustainable growth in the years ahead.

OPPORTUNITIES & THREATS:

Opportunities:

Strong domestic demand, financial inclusion, and low credit penetration (~70% Credit-to-GDP) signal vast potential. Rapid growth in retail and MSME segments presents expanding market scope. Technology and customer reach provide competitive advantage for agile NBFCs. Upgraded sovereign rating, stable inflation, and policy reforms build favorable macro environment. Threats: Tightening credit conditions or global trade tensions may dampen demand. Rising delinquencies in unsecured retail and microfinance could impact margins. Regulatory shifts and capital costs remain key risks to profitability.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has adequate internal controls and standardised operating processes that are envisaged to protect assets and business efficiency. The Company has established strong and well-entrenched internal control procedures commensurate with its size and operations and relevant to its broad domain of the lending business.

HUMAN RESOURCES:

The Company continues to maintain robust internal control frameworks and operational processes appropriate to its scale. These ensure asset safety, compliance, and business efficiency.

We value our workforce and foster an inclusive work culture that motivates employees and drives retention, recognizing their pivotal role in the companys success.

OUTLOOK:

NBFCs will remain crucial in extending credit to underserved segments. Goyal Associates is well-positioned to benefit from expanding opportunities, provided asset quality is vigilantly monitored and digital/retail strategies are leveraged. A stable macroeconomy with manageable inflation and supportive regulatory environment augurs well for future performance.

FINANCIAL REVIEW

Key ratios of Goyal Associates Limited on a consolidated Basis:

Ratio	FY 2024-25	FY 2023-24	Analysis
Total Assets	8.48 Cr	6.05 Cr	40.0% increase indicating significant business expansion.
Net Worth	5.50 Cr	3.25 Cr	Improved due to current year profit and increase in share capital.
Return on Assets	7.53%	13.90%	Lower because assets increased faster than profits.
Return on Equity	15.70%	(258.9%)	FY24 ROE is not comparable due to negative opening net worth
Debt to Equity Ratio	0.19	35.00%	Excellent improvement. Company is less leveraged.
Borrowings to Total Assets	12.41%	18.89%	Dependence on borrowings reduced.
Net Profit Margin	31.44%	22.39%	Significant improvement in profitability.
Operating Expense Ratio	68.56%	77.61%	Expenses reduced as a percentage of revenue.
Asset Growth	40.00%	21.14%	Strong growth in asset base.

CAUTIONARY STATEMENT

This MD&A contains forward-looking statements within the meaning of securities laws. Actual outcomes may differ due to risks including economic variability, regulatory changes, asset quality shifts, and strategic execution. The Company disclaims any obligation to update these statements.