HB Leasing & Finance Co Ltd Management Discussions

1. OPERATING RESULTS

During the year under review, the Companys Total Revenue is Rs. 27.71 Lakhs as compared to Rs. 19.02 Lakhs in the previous year. The Company incurred total expenses amounted to Rs. 55.33 Lakhs as compared to Rs.48.62 Lakhs during the previous year. Net loss stood at Rs. 27.45 Lakhs as against Net loss of Rs.29.30 Lakhs in the previous year.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS

The Non-Banking Financial Companies (NBFCs) sector continues to play a pivotal role in the Indian financial system by bridging the credit gap across various sectors of the economy. These institutions have complemented the traditional banking sector by offering financial services tailored to the unique needs of their clients, leveraging their extensive geographical reach and quick service delivery.

Financial Year 2025-26 witnessed a steady growth environment for the NBFC sector, supported by regulatory initiatives and increasing digital adoption, notwithstanding market volatility and global economic uncertainties. Looking ahead, prudent risk management, diversified funding strategies, and continued technology-driven innovation are expected to strengthen the sectors resilience and support sustainable growth in Financial Year 2026-27.

During the year under review, the Indian stock market witnessed phases of volatility influenced by a combination of domestic developments and global macroeconomic events. Benchmark indices such as the BSE Sensex and Nifty 50 recorded moderate 6.

growth during the first half of the year; however, the latter half witnessed heightened volatility and intermittent corrections. Market sentiment was significantly impacted by geopolitical developments, fluctuations in foreign institutional investor (FII) flows, global economic uncertainties and evolving monetary policy expectations. Additionally, escalating geopolitical conflicts in certain regions and concerns over rising crude oil prices contributed to increased market volatility and investor caution.

Stock indices i.e, BSE Sensex experienced considerable fluctuations during the Financial Year 2025-26. The BSE Sensex opened at 76,882 on 01st April, 2025, rose to 80,677 on 30th September, 2025 and declined to 73,165 on 30 th March, 2026.

Being an investment-focused Non-Banking Financial Company (NBFC), these developments had a direct bearing on its business performance and investment portfolio. Despite the challenging market conditions, the Company continued to adopt a prudent and disciplined approach to its operations and investment decisions, while closely monitoring market trends and associated risk factors.

3. OPPORTUNITIES AND THREATS -SEGMENT-WISE PERFORMANCE During FY 2025-26, NBFC sector witnessed a mixed outlook with both opportunities and threats. While credit growth moderated in certain segments, NBFCs continued to capitalize on opportunities in underserved markets, including rural and microfinance sectors, supported by technological advancements and increasing digital adoption. At the same time, the sector faced challenges such as rising borrowing costs, evolving regulatory requirements, and increasing competition from banks and fintech companies.

The transformative shift in Indias financial services landscape over recent years, driven by digital innovations such as neo-banking, digital authentication, the proliferation of the Unified Payments Interface (UPI), and increased mobile internet usage, has redefined the dynamics of financial services, especially credit. The modularization of financial services facilitated by these advancements has empowered NBFCs to offer specialized and accessible financial products.

4. FUTURE PROSPECTS AND OUTLOOK Despite the prevailing global economic challenges, the Indian economy is on a sustained growth and resilient trajectory. The countrys financial infrastructure demonstrates robustness, further reinforced by the continuous improvement in the health of its financial institutions. Although the global economic situation poses potential risks, along with the growing interconnectedness within the domestic financial landscape and the expanding role of Non-Banking Financial Companies (NBFCs) in financial services, the foundational strength of Indias banking sector, characterized by substantial capital reserves, regulatory vigilance, and solid balance sheets, is expected to provide a stable platform.

NBFCs are set to evolve into more digitally agile, regulatory-compliant, and customercentric institutions. While challenges such as funding constraints and compliance costs remain, their ability to innovate and penetrate underbanked segments will secure their critical role in Indias financial ecosystem.

5. RISKS AND CONCERNS

The Company like any other Company is exposed to specific risks that are particular to its business and the environment within which it operates. The Company is exposed to the market risk (including liquidity risk) and also the factors that are associated with capital market, which inter alia includes economic/business cycle, fluctuations in the stock prices in the market, besides the interest rate volatility and credit risk.

Risk Management Policy

The Company has implemented a systematic process to assist in the identification, assessment, treatment and monitoring of risks which provides the necessary tools and resources to management and staff to support the effective management of risks.

The Company is primarily engaged in investment in Securities viz. Equity Shares, Preference Shares, Mutual Funds etc. which involves macroeconomic risks, investee company specific risks, market wide liquidity risks and execution risks relating to the Company / its intermediaries.

(a) The macroeconomic risks, investee company specific risks are covered by investment decisions based on third party research and internal assessment.

(b) Market wide risks are assessed and managed by investment timing decisions.

(c) The execution risk is managed by dealing with reputed intermediaries and through own back office discipline re accounting and follow up of trades.

(d) All investment decisions are made after distinguishing among alternative courses of action with identification of expected risks.

The Company also faces credit default risks, concentration risk and industry specific risk while making Inter corporate loans to other body corporate. The Company performs the credit check on the prospective borrower considering various factors relating to the loan such as loan purpose, credit rating, and loan-to-value ratio and estimates the effect on yield (credit spread). The Company mitigates the concentration risk, industry specific risks by diversifying the borrower pool relating to different industries. The Company periodically monitors and reviews the financial condition, credit rating, debt to equity ratio to minimize the credit default risks associated with the borrowers.

The Company has established Internal Financial Control Systems to provide reasonable assurance regarding safeguarding of assets, maintenance of proper accounting records and the reliability of financial reporting.

The Company controls the operational risks associated with its business activities by way of prescribing / amending processes, imposing controls and defining roles and responsibilities.

The Company assesses the effectiveness of its risk management plan through structured continuous improvement processes to ensure risks and controls are continually monitored and reviewed.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has put in place an effective internal control system to synchronize its business processes, operations, financial reporting, fraud control, and compliance with extant regulatory guidelines and compliance parameters. Strict internal control and systems are devised as a depiction of the principles of the highest standards of governance. The Company ensures that a standard and effective internal control framework operates throughout the organization, providing assurance about safekeeping of the assets and execution of transactions as per the authorization in compliance with the internal control policies of the Company.

The Audit Committee of the Board of Directors actively reviews the adequacy & effectiveness of the internal control system at periodic intervals in close coordination with the Internal Auditors. Internal Audits are also carried out to review the adequacy of the internal control systems, compliance with policies and procedures.

7. FINANCIAL PERFORMANCE

a) Share Capital: The Companys Issued and Subscribed Share Capital consists of Equity Share Capital only. The Paid-up Share Capital of the Company as at 31 st March, 2026 stood at Rs. 12,86,27,310/- comprising of 1,28,62,731 Equity Shares of Rs.10/- each.

b) Financial Assets and Non-Financial Assets: The Financial Assets and NonFinancial Assets for the year under review stood at Rs. 532.16 Lakhs and Rs. 81.09 Lakhs respectively as against Rs. 556.24 Lakhs and Rs. 79.29 Lakhs for the previous year.

c) Financial Liabilities and Non-Financial Liabilities: During the year under review, the Financial Liabilities and Non-Financial Liabilities stood at Rs. 14.41 Lakhs and Rs. 54.77 Lakhs respectively as against Rs. 10.84 Lakhs and Rs. 54.04 Lakhs during the previous year.

d) Key Financial Ratios:

Rati o	Numerator	Denominator	31st March, 2026	31st March, 2025	% Variance	Reasons for change in ratio by more than 25% as compared to the previous year
Capital to risk- weighted assets ratio (CRAR)	Tier I Capital +Tier II Capital	Total risk weighted assets	150.40%	193.79%	-22.39%	NA
Tier I CRAR	Tier I Capital	Total risk weighted assets	138.35%	179.21%	-22.80%	NA
Tier II CRAR	Tier II Capital	Total risk weighted assets	12.05%	14.58%	-17.35%	NA
Liquidity Coverage Ratio*	NA	NA	NA	NA	NA	NA
Return on Net Worth	Net Profit after Tax	Total Shareholder Equity	-2.13%	-2.28%	0.15%	NA

The Company is a non-deposit taking/accepting Non-Banking Financial Company and asset size of the Company is less than Rs. 100 crores, so Liquidity Coverage ratio is not applicable to the Company.

9. HUMAN RESOURCES

The Company has adequate human resources which is commensurate with the current volume of activity and is reviewed by the management periodically and the Company would induct competent personnel on increase / expansion of the activity.

10. CAUTIONARY STATEMENT

Statements in this Managements Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable Securities Laws and Regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include interest rates and changes in the Government regulations, tax regimes, economic developments and other factors such as litigation etc.