India Home Loans Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INTRODUCTION Global Overview

Throughout FY25, the global economy continued to grapple with significant challenges, including heightened geopolitical tensions, persistent supply chain disruptions, and ongoing inflationary pressures, which have contributed to a prolonged cost-of-living crisis. By March 2025, the global financial landscape faced additional headwinds due to banking sector turmoil in several advanced economies. This situation raised concerns about potential contagion risks, leading to increased volatility across global markets.

As per the International Monetary Fund (IMF), global headline inflation stood at 3.5% median data up to February 2025. major central banks across the world resorted to monetary policy tightening. In the current upward interest rate cycle, as of date, the US Federal Reserve had cumulatively raised interest rates by 525 basis points (bps) & Fed maintained the target range at 4.254.50%, marking a pause in the rate-hike cycle despite ongoing inflation concern in March-25, the Bank of England by 430 bps and BoE maintained its rate at 4.50%, after modest early easing, with five consecutive meetings holding the rate steady at that level & the European Central Bank had executed cumulative 200 bps in cuts since July 2024, lowering the main policy rate including the deposit rate to around 2.00% . The Reserve Bank of India (RBI) increased the policy repo rate by a relatively lower amount of 275 bps & reaching 6.00% in March 25. Globally, the elevated consumer price inflation levels were well above the targeted inflation rates of most central banks.

As per the IMFs World Economic Outlook, global GDP growth for the calendar year 2025 was 3.0%, of which GDP of advanced economies was 1.5% and emerging markets and developing economies was 4.1%.

India Overview:

The Indian economy staged a broad-based recovery from the pandemic induced slowdown. Despite global headwinds, domestic economic activity was resilient. Most high frequency indicators, including those that were impacted during the pandemic recorded positive growth. As per the second advance estimates by the National Statistical Office (NSO), the Indian economy is estimated to grow by 7.0% to 7.4% in FY25. India has continued to be the fastest growing major economy. The Consumer Price Index (CPI) inflation for FY25 remained at elevated levels for most parts of the year under review, aggravated by rising commodity prices and adverse supply shocks. In the month of March 2025, with lower food and fuel prices, the CPI eased to 3.34%, marking. During the year, to anchor inflationary pressures, the RBI undertook a series of calibrated repo rate increases repo rate withdrawing Rs.1.27 lakh crore during FY 25 March 31, 2023, year-on-year bank credit growth was robust at 13% to 13.5%, though deposits growth continued to underperform. Owing to global macro-economic risks and geo-political tensions, during the year, foreign portfolio investors were net sellers of equity amount to round Rs.45000 crore & withdrawing Rs.1.27 lakh crore during FY 25. The Indian equity markets, however, were strongly supported by domestic institutional investors largely mutual funds and insurance companies who were net buyers amounting to 4.17 lakh crore.

Housing and Real Estate Market

FY24 marked a year of sustained growth for the Indian real estate sector. Residential markets saw strong traction in both, new launches and sales across the metros, tier II and tier III cities. Despite rising costs of construction and labour, real estate prices at a pan-India level recorded modest increases, though certain pockets, particularly in the higher-end luxury segment saw sharper increases in prices during the year. The strong momentum in the residential market was also evident from the fact that across the top metro cities, the unsold inventory stood at the lowest level in the past five years. Despite rising interest rates, the inherent demand for home loans continued on the back of rising disposable incomes, increased urbanisation and continued fiscal incentives. The demand for home loans was predominantly in the mid-income and premium segments. Indias net absorption of commercial office space during the year surpassed the five year pre-pandemic average rate. This showed the continued resilience in the India office space, despite certain companies opting for hybrid/ flexible work models. In addition, demand for commercial space is arising from logistics, warehousing. The Union governments Pradhan Mantri Awas Yojana (Urban) has been and will be a key factor to boost demand.

The Company

IHLL offers retail home loan product for affordable housing segment. Under this product, loans are offered to the customers for Purchase of home, home improvement, home extension and for construction of a dwelling unit on an owned plot of land. India Home Loan Limited formerly known as (MHFCL) Manoj Housing Finance Company Ltd which was incorporated on 19^th Dec 1990 under the Companies Act, 1956 in Maharashtra. During 2008-09, Mr. Mahesh Pujara and Associates took over this company and subsequently, the name of Manoj Housing Finance Company Ltd has been changed to India Home Loan Limited. India Home Loan Limited is a BSE listed company. IHLL specializes on loans to families in the self-employed category where formal income proofs arent easily available and their repayment capacity is appraised based on their cash flows IHLL started full scale operations in February 2018. IHLL offers following products to its customers: (i) home loans; (ii) loan against property; (iii) developer financing. IHLL has started offering affordable housing loans on a pilot basis in FY 2022. IHLL focuses on low risk segments across its portfolio. Individual housing loans, a low risk segment, contribute to more than 70% of the portfolio. Even within the low risk individual housing loans segment, nearly 95% of AUM consists of loans given to salaried and self-employed professionals. Going forward, it intends to increase its presence in self-employed and affordable housing segment with a calibrated risk strategy to cover full spectrum of housing loan market. IHLL is committed to building an optimal mix of housing and non-housing loan portfolio to balance risk and returns. IHLL has created a prudent and differentiated developer financing model with an immaculate portfolio performance. Going forward, IHLL plans to: i) deepen relationship with existing developers; ii) expand reach to new developers with granular exposure strategy; iii) expand its developer financing offerings to new geographies; and iv) create presence with the large developers. IHLL offers highest standards of engagement and service to its retail and corporate customers. However Rising interest rates may reduce affordability and demand for housing loans. IHLL is continuously investing in creating frictionless processes to provide seamless and consistent experience to its customer throughout the loan lifecycle. The Company ended the year with a capital-to-risk weighted asset ratio (CRAR) of 75.92% as on 31^st March 25 which is well above the regulatory limits specified by the regulator.

IHLL closed FY 2025 with an AUM of Rs.49.61 crore & AHS of Rs.50.04 crore.

As on 31 March 2025, IHLLs borrowings stood at Rs.53.44 crore

Using its robust risk management and portfolio monitoring framework, IHLL continued to take enhanced credit costs based on emerging trends across its different portfolios. IHLLs Gross and Net NPA as at 31^st March 2025 stood at 3.22% and 2.31% respectively.

The performance highlights for FY 2024-2025 are given in below.

IHLLs Performance Highlights, FY 2024-2025

• Assets under management (AUM): 49.61 crore.

• Total income: 13.68 crores

• Net interest income (NII): Increased by 133 % to Rs.5.95 crores.

• Profit before tax (PBT): Increased by 110 % to Rs.0.34 crores.

• Profit after tax (PAT): Increased by 108 % to Rs.0.27 crores.

• Capital adequacy ratio as of 31st March 2025 was 75.92%, which is well above the RBI norms.

Home Loans

IHLL offers home loans for ready to move in homes as well as those under construction across Maharashtra, Gujarat and Rajasthan locations in India with an average loan value of Rs.5 to 10 lakhs. It follows a micro- market presence strategy using a mix of direct and indirect channels.

As at the end of FY2025, the home loans business had AUM of Rs.46.61 crores

Loan Against Property

IHLL offers Loans Against Property (LAP) to against mortgage of their properties. The LAP business is operational in Maharashtra, Gujarat and Rajasthan locations across India with an average loan value of Rs.5 to 15 lakhs.

It ended FY 2024-2025 with AUM of Rs.2.28 crore

Developer Loans

IHLL offers construction finance to small and mid-size developers with strong track records of timely delivery of projects and loan repayments. It is present in Maharashtra and Gujarat locations across the country. Developer relationships enable IHLL to acquire retail customers for home loans.

Its AUM from developer loans was Rs.0.71 crores

Assets Under Management (AUM): A Snapshot

Table 2 breaks down the AUM across the major business verticals.

Table 2 (a): Assets Under Management

				(Rs. in crores)
AUM	FY2025	FY2024	Growth	AUM Mix
Housing loan	46.62	53.00	-6.38	93.97%
Loan against property	2.28	4.69	-2.41	4.60%
Other loans	0.71	0.70	0.01	1.43%
Total	49.61	58.40	8.79	100%

Financial Performance

			(Rs. in crores)
Particulars	FY 2025	FY 2024	Change
Interest Income	13.60	11.54	2.06
Interest and finance charges	7.64	9.51	1.83
Net interest income	5.96	2.03	3.89
Other Income	0.08	0.57	-0.47
Total operating expenses	5.47	6.68	-1.21
Pre-provisioning operating profit	0.57	-4.07	4.07
Loan losses and provisions	0.19	-0.69	0.88
Profit before tax (PBT)	0.34	-3.37	3.71
Profit after tax (PAT)	0.27	-3.44	-3.71
Other comprehensive income/ (expenses)	-0.82	0.03	-0.85
Total comprehensive income	26.46	-3.42	29.88
Earnings per share (EPS) basic, in	0.19	-2.41

Risk Management and Portfolio Quality

As a Housing Finance Company (HFC), IHLL is exposed to credit, liquidity, and interest rate risk. It continues to invest in talent, processes, and emerging technologies for building advanced risk and underwriting capabilities.

IHLL has a well-defined risk governance structure which provides for identification, assessment, and management of risks. Risk management involves making decisions and establishing governance systems that embed and support effective risk process, as well as building an organizational culture that supports agility. The Company has a Risk Management Committee (RMC).

IHLLs balanced approach to portfolio management coupled with a rigorous portfolio review mechanism has enabled it to pick up early warning signals and take corrective actions. IHLLs loan portfolio continues to remain healthy and in the growth mode.

A robust governance framework ensures that board committees approve risk strategies and delegates credit authorities, and robust underwriting practices coupled with continuous risk monitoring ensure that portfolios stays within acceptable risk levels. IHLL follows RBI/NHB prudential norms for asset classifications and Expected Credit Loss (ECL) model prescribed under Ind AS for provisioning.

IHLL calibrates its risk policies and underwriting norms periodically to promptly respond to the changing market scenario.

IHLLs Gross and Net NPA as at 31^st March 2025 stood at 3.22% and 2.31% respectively.

Asset Liability Management (ALM)

IHLLs total borrowings stood at Rs.53.44 crore as of 31 March 2025. IHLLs Asset Liability Committee (ALCO) meets as and when required to i) monitor asset-liability mismatches; ii) ensure that there are no imbalances on either side of the balance sheet; and iii) ensure that adequate level of liquidity is maintained.

IHLL has Asset Liability Committee (ALCO) to monitor its asset liability management. Borrowings of the Company are guided by Board approved resource raising policy.

ALCO reviews macroeconomic conditions affecting the housing finance business, liquidity situation and interest rate environment and provides direction to treasury on resource mobilization and fund planning.

The ALM position of the Company is based on the maturity buckets as per the guidelines issued by the regulator from time to time. IHLL assesses behavioralised maturity pattern of its assets and liabilities and maintains adequate liquidity for its business

Customer Service

Mortgages is a long duration product and a high involvement buying decision for the customer - which involves frequent and regular interactions. To enable a transparent, convenient and hassle-free customer experience, our dedicated team of customer service supported with transparent operations and strong technology infrastructure, helps us to be responsive to our customers thereby maintaining high standards of customer service. Digital communication, continuous customer feedback and transparency remain key focus areas of the Company while engaging with customers.

The Company strives towards improving and strengthening its customer experience by transitioning from query/complaint resolution to first time right delivery to customers. To uphold highest standards of transparency, IHLL has implemented an end to end proactive communication framework through life stages of customer journey. IHLL continues to leverage technology to gauge the unstated and emerging service needs of customers.

Human Resources

At IHLL, employees are the most valuable assets. In IHLL, employees performance enhancement, well- being, skill development, growth and engagement remains a key focus area. IHLL fosters a culture of productive empowerment to build an outcome focused organization.

As on 31^st March 2025, IHLL had 44 employees.

Internal Control Systems and their Adequacy

IHLL has instituted adequate internal control systems commensurate with the nature of its business and the size of its operations. Internal audit is carried out by external agency to evaluate the adequacy of all internal controls and processes. All significant audit observations and follow-up actions thereon are reported to the Audit Committee. The Audit committee reviews the internal audit reports and the adequacy and effectiveness of internal control.

Fulfilment of the RBI and NHBs norms and standards

IHLL fulfils and often exceeds norms and standards laid down by the RBI as well as NHB relating to the recognition and provisioning of non-performing assets and capital adequacy, etc. The capital adequacy ratio of the Company was 75.92% as of 31 March 2025, which is well above the regulatory norms.

The Reserve Bank of India, vide circular dated 22 October 2020, mandated housing finance companies to have minimum 60% of its assets towards housing finance and 50% of total assets towards housing finance for individuals, in a phased manner by 31 March 2025. As on 31 March 2025, the Company has 93.97% of its loans towards housing finance.

Disclosure of accounting treatment

There is no change in the accounting treatment in the Financial Year 2024-2025 as compared to Financial Year 2023-2024.

Segment Reporting

The Companys main business is to provide loans for the purchase or construction of residential units. All other activities revolve around the main business. Hence, there are no separate reportable segments.

Key Ratios

Ratios	FY 2025	FY 2024	Remarks
Debtors Turnover	NA	NA
Inventory Turnover	NA	NA
Interest Coverage Ratio	NA	NA
Current Ratio	1.74	1.69
Debt Equity Ratio	1.28	1.47
Operating Profit Margin (%)	2.33%	-27.82%	Due to increase in revenue/recovery from customers and reduction of operational costs.
Net Profit Margin (%)	0.98%	-28.66%	Due to increase in revenue/recovery from customers and reduction of operational costs.
Net interest income to average loans	3.45%	3.45%
Total operating expenses to NII	0.92	3.22
Return on equity (ROE)	6.39%	-8.36%	Increase in Profit After Tax (PAT) due to increase in revenue as compared to FY 23-24.
Capital to risk-weighted assets ratio (CRAR)	75.92%	70.87%
Tier I	38.51	41.11
Tier II	19.92	14.44
Gross NPA	3.22%	3.63%
Net NPA	2.31%	2.61%
Provisioning coverage ratio (PCR)	142%	102%
EPS - Basic (Rs.)	0.19	-2.41
Diluted (Rs.)	0.19	-2.41

Cautionary Statement

Some statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be forward looking within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied.