GSB Finance Ltd Management Discussions

A. Industry structure and developments.

The Indian NBFC sector has evolved significantly and continues to play an important role in strengthening the countrys financial ecosystem. NBFCs operate across diverse segments, including retail finance, MSME finance, vehicle finance, housing finance, microfinance and consumer finance, thereby complementing the banking sector and expanding access to credit.

The sector has benefited from increasing financial inclusion, rising credit demand, technological advancements and supportive policy measures. Digitization and data-driven lending practices have further enabled NBFCs to improve customer outreach, operational efficiency and service delivery, particularly in underserved and emerging segments.

The regulatory framework governing NBFCs has also continued to evolve, with greater emphasis on governance, risk management, capital adequacy, asset quality and customer protection. The sector has demonstrated resilience through strengthening capital positions, improved risk management practices, adequate provisioning and greater focus on sustainable growth. NBFCs are expected to remain an important source of credit for individuals, businesses and MSMEs, contributing to investment, entrepreneurship and overall economic development.

B. Opportunities and Threats.

The Company sees opportunities arising from the continued demand for retail and other credit facilities, increasing financial inclusion and the growing adoption of digital financial services. At the same time, competition, changing regulatory requirements, funding costs, asset quality concerns and broader economic uncertainties remain key challenges. The Company continues to pursue opportunities prudently while maintaining an appropriate risk-return balance.

C. Segment-wise or product-wise performance.

The Company operates predominantly in a single business segment of financing/lending activities. Accordingly, there are no separate reportable business or geographical segments requiring separate disclosure.

During the year under review, the Company continued to focus on its core lending and financing activities. The performance of the Company is therefore evaluated on an overall basis, considering factors such as growth in the loan portfolio, interest income, asset quality, profitability, capital adequacy and liquidity position.

The Company continues to focus on prudent credit appraisal, effective portfolio management, recovery and collection practices and maintaining adequate liquidity and capital resources, while complying with the applicable regulatory framework prescribed by the Reserve Bank of India.

D. Outlook

The outlook for the NBFC sector remains supported by the continuing requirement for credit across various segments of the economy. The Company intends to pursue sustainable growth with a focus on prudent lending, effective risk management, regulatory compliance and operational efficiency. The Company will continue to assess market conditions and business opportunities while maintaining financial and operational discipline.

E. Risks and concerns.

The Company is exposed to various risks inherent in the financial services business, including credit risk, liquidity risk, interest rate risk, market risk, operational risk and regulatory risk. The Company has established appropriate policies, systems and processes for identification, assessment, monitoring and mitigation of such risks. The risk management framework is reviewed periodically to ensure that emerging risks are appropriately addressed.

F. Internal control systems and their adequacy.

The Company has an adequate system of internal controls commensurate with the size and nature of its business. The internal control framework is designed to safeguard assets, ensure accuracy and reliability of financial information, promote operational

efficiency and ensure compliance with applicable laws and regulations. The effectiveness of internal controls is reviewed periodically by the management and through the internal audit mechanism.

G. Discussion on financial performance with respect to operational performance.

During the year under review, the Company continued to focus on strengthening its core lending operations and improving operational efficiency. The financial performance of the Company is closely linked to the growth and quality of its loan portfolio, cost of funds, recovery performance and overall operating efficiency. The management remains focused on sustainable growth, prudent financial management and improvement in operational performance.

H. Material developments in Human Resources / Industrial Relations

Human resources continue to remain an important enabler of the Companys business operations and growth. During the financial year under review, the Company continued to focus on maintaining an efficient and capable workforce commensurate with its business requirements. The Company also undertook appropriate changes in its management and organizational structure to align with its evolving business objectives.

During the financial year under review, the Company underwent a change in ownership and management pursuant to the acquisition/takeover completed in November 2025. Consequent to the change in management, the Company undertook necessary organizational and management-level changes to align its operations with the revised business objectives and future plans. As on March 31, 2026, the Company had one employee on its rolls. Considering the nature and scale of its present operations, the Company maintains a lean organizational structure and engages appropriate personnel and resources as required for its business and regulatory needs.

I. Financial Ratios

S. No.	Ratio	2024-25	2025-26	% Change	Reasons for Significant Changes (if changed 25% or more)
1	Debtors Turnover	-	-	-	N.A.
2	Inventory Turnover	-	-	-	N.A.
3	Interest Coverage Ratio	8.24	35.46	330%	Due to no borrowings in previous year
4	Current Ratio	122.54	156.68	28%	Due to significant decrease in current liabilities
5	Debt Equity Ratio	-	-	-	N.A.
6	Operating Profit Margin (%)	53.22	4.50	-92%	Due to significant decrease in revenue and increase in operating expenses
7	Net Profit Margin (%)	40.3	-25.04	-162%	Due to decrease in revenue & significant decrease in net profit
8	Return on Net Worth	4.98	-2.19	-144%	Due to decrease in revenue & significant decrease in net profit

Forward Looking Statement

Statement in this Management and Discussion Analysis describing your Companys objectives, projections and estimates and expectations may be "Forward Looking Statements" within the meaning of applicable laws and regulations. Actual results may differ substantially or materially from those expressed or implied. Being a Non-Banking Financial Company (NBFC), the operations of the Company are subject to the regulatory framework prescribed by the Reserve Bank of India ("RBI"), as amended from time to time. Changes in the regulatory environment, interest rates, credit conditions, availability and cost of funds, asset quality, liquidity conditions and overall economic conditions may have a bearing on the Companys operations and financial performance. The Company continues to closely monitor such developments and remains committed to maintaining prudent risk management practices and regulatory compliance.