ISF Ltd Management Discussions

Annexure- I

Global Economy

The Outlook projects global GDP growth of 3.3% in 2025, up from 3.2% in 2024, and 3.3% in 2026. Inflation in the OECD is expected to ease further, from 5.4% in 2024 to 3.8% in 2025 and 3.0% in 2026, supported by the still restrictive stance of monetary policy in most countries. Headline inflation has already returned to central bank targets in nearly half of the advanced economies and close to 60% of emerging market economies. Growth prospects vary significantly across regions. GDP growth in the United States is projected to be 2.8% in 2025, before slowing to 2.4% in 2026. In the euro area, the recovery in real household incomes, tight labour markets and reductions in policy interest rates continue to drive growth. Euro area GDP growth is projected at 1.3% in 2025 and 1.5% in 2026. Growth in Japan is projected to expand by 1.5% in 2025 but then decline to 0.6% in 2026. China is expected to continue to slow, with GDP growth of 4.7% in 2025 and 4.4% in 2026. (Source: https://www.oecd.org/en/about/news/press-releases/2024/12/economic-outlook-global-growth-to-remain-resilient-in-2025-and-2026-despite-significant-risks.html)

Indian Economy

Despite recent moderation, Indias economic growth has remained robust, with GDP growth of 6% year over year in the first half of 2024/25. Inflation has broadly declined within the tolerance band, though food price fluctuations have created some volatility. The financial sector has remained resilient, with non-performing loans at multi-year lows. Fiscal consolidation has continued, and the current account deficit has remained well contained, supported by strong growth in service exports.

Real GDP is expected to grow at 6.5% in 2024/25 and 2025/26, supported by robust growth in private consumption on the back of sustained macroeconomic and financial stability. Headline inflation is expected to converge to target as food price shocks wane. The current account is expected to widen somewhat but remain moderate at -1.3% of GDP in 2025/26. Looking ahead, Indias financial sector health, strengthened corporate balance sheets, and strong foundation in digital public infrastructure underscore Indias potential for sustained medium-term growth and continued social welfare gains.

Risks to the economic outlook are tilted to the downside. Deepening geoeconomic fragmentation could affect external demand, while deepening regional conflicts could result in oil price volatility, weighing on Indias fiscal position. Domestically, the recovery in private consumption and investment may be weaker than expected if real incomes do not recover sufficiently. Weather shocks could adversely impact agricultural output, lifting food prices and weighing on the recovery in rural consumption. On the upside, deeper implementation of structural reforms could boost private investment and employment, raising potential growth.

(Source: https://www.imf.org/en/News/Articles/2025/02/26/pr25045-india-imf-executive-board-concludes-2024-article-iv-consultation-with-india)

Industry Structure and Developments

The Non-Banking Financial Company (NBFC) sector continues to be a critical pillar of Indias financial system, complementing banks in extending credit to under-served segments such as small businesses, micro-entrepreneurs, and retail borrowers. The sector offers diversified financial products, including vehicle finance, MSME loans, housing finance, gold loans, and microfinance.

During FY 2024-25, the NBFC sectors growth trajectory moderated compared to FY 2023-24, due to tighter liquidity conditions, elevated borrowing costs, and regulatory interventions aimed at strengthening prudential norms.

According to CRISIL Ratings, NBFCs overall Assets Under Management (AUM) growth is estimated at 15 17% in FY 2024-25, lower than ~23% in FY 2023-24, but still above the decadal average of ~14% (FY 2014 2024). ICRA projects (formerly Investment Information and Credit Rating of India) NBFC credit growth at 13 15% in FY 2025 and FY 2026, compared to ~17% in the last two fiscals. The credit-to-GDP ratio for NBFCs has risen to ~26% in FY 2024-25, up from ~16% in FY 2019, underscoring their systemic importance. (Source: https://www.crisilratings.com/en/home/newsroom/press-releases/2024/12/nbfcs-asset-growth-to-moderate-to-15-17percent-over-two-fiscals.html)

Growth was driven by retail segments such as personal loans, vehicle finance, gold loans, and MSME lending. The microfinance segment witnessed a slowdown, with NBFC-MFIs reporting contraction in AUM due to funding constraints and asset quality pressures, though recovery is anticipated in FY 2025-26.

Companys Overview

The Company is a prominent NBFC in the retail finance industry in India. ISF Limited focuses on solving the MSME funding Challenges across spectrum. The Company satisfy the clients business expansion requirements, capital needs, diversification in another associated line of business, and seasonal stocking to seek the benefit of season sales.

ISF Limited has finances Electric vehicles for commercial use, offers personal, micro enterprise and consumer durable loans for purchasing household appliances and electronic goods, and helps farmers by providing agriculture-oriented loans.

Along with the flexible tenure for loan payment, company also assures quick processing with minimal paperwork. Funding to the customers is decided on certain eligibility criteria.

The regulatory framework for NBFCs to introduce scale- based regulation came into effect from October 01, 2022. Under the new framework, NBFCs are placed in one of the four layers viz., Base Layer (BL), Middle Layer (ML), Upper Layer (UL) and a possible Top Layer (TL) based on their size, activity, and perceived risks. The new framework tightens regulatory oversight of the sector with stringent norms for NBFCs. The Company has been classified as Base Layer under Scale Based Regulatory Framework for NBFCs.

SWOT Analysis

Strengths:

1. Smoothly and easily catering the need of Customer via our loan products inclusive of

Term Loan, E-Vehicle Loans, Consumer durable Loans.

2. Understanding customers approach;

3. Experienced senior management team;

4. Better services to individual as well as corporate customers;

5. Strong relationships with other NBFCs, institutions and investors;

6. Easy and simplified sanction procedure and disbursement;

7. Flexible operation & ability to innovate.

Weakness:

1. Strong and dynamic competitors;

2. Weakness in urban markets due to disparities in public perception;

3. Business and growth are directly linked with the GDP growth of the country.

Opportunities:

1. No entry barriers or low entry barriers

2. Collaboration with Banks.

3. Opportunities in home equity, personal finance, personal investment, etc.

4. Securitizing to collect funds to generate asset growth

Threats:

1. Inadequate availability of bank finance and an upsurge in borrowing costs.

2. Competition from captive finance companies, small banks, FinTechs and new entrants.

3. Increasing competition from global and local competitors in terms of product development and technology innovations, leaving very thin margins of error.

4. External risks associated with liquidity stress, political uncertainties, fiscal slippage concerns, etc.

5. Growing commoditization of financial products remains the toughest challenge for the Company.

Segment wise or product-wise performance

Product Segment	FY 2024-25 (in Rs.)	Remarks
Consumer Durable Loan	30,53,603.00	These loans were originated in the
Personal Loan	23,06,923.00	Financial Year 2024-25.
Vehicle Loan	1,08,44,609.00

Outlook

The NBFC sector is expected to maintain a growth rate of 15 17% in FY 2025-26, supported by continued retail credit demand, digital penetration, and diversified funding channels. However, profitability will be influenced by funding costs, credit quality management, and regulatory compliance. Your Company will focus on prudent portfolio expansion, technology-led efficiencies, and robust risk management to sustain growth while preserving asset quality.

Risks and Concerns

Key risks include interest rate volatility, liquidity constraints, regulatory changes, and borrower repayment capacity. The Company has in place a comprehensive risk management framework to identify, assess, and mitigate credit, market, liquidity, legal and operational risks.

Internal control systems and their adequacy

The Company has carried out the internal audit in-house and has ensure that recording and reporting are adequate and proper, the internal controls exist in the system and that sufficient measures are taken to update the internal control system. The system also ensures that all transaction is appropriately authorized, recorded and reported. Exercises for safeguarding assets and protection against unauthorised use are undertaken from time to time. The Companys audit Committee reviewed the internal control system. All efforts are being made to make the internal control systems more effective. All these measures are continuously reviewed by the management and as and when necessary, improvements are affected.

Discussion on financial performance with respect to operational performance

The total revenue from operations of your Company for the year ended March 31, 2025 stood at Rs. 178.43 Lacs as against Rs. 202.20 Lacs for the year ended March 31, 2024. The Company has incurred a loss of Rs. 0.65 Lacs for the Year ended March 31, 2025 as compared to the loss of Rs 73.88 Lacs for the year ended March 31, 2024. The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013 and Generally Accepted Accounting Principles in India.

Human Resources

Your Company recognises human capital as a key enabler for sustainable growth. In FY 2024-25, initiatives were taken to strengthen employee engagement and performance-linked incentives. As of 31st March 2025, the Company had Nine (09) employees.

Future Strategy

The Board has determined the subsequent medium-term and long-term strategies to accomplish its corporate objectives within the upcoming 3-5 years:

1. Conduct periodic evaluations of pandemic risks, Business Continuity plan, and liquidity management.

2. Strengthen the leadership position in corporate financing.

3. Concentrate efforts on digital initiatives to efficiently cater to customers and educate them on the digital payment of EMIs.

4. Uphold customer loyalty through cultivating strong relationships and ensuring customer satisfaction.

5. Employ data analytics in loan disbursement and recovery procedures.

6. Enhance the loan portfolios quality.

Cautionary Statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized by the Company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments.

For and behalf of ISF Limited
SD/-	SD/-
Vishal Dang	Hargovind Sachdev
Whole- time Director	Independent Director
DIN: 07971525	DIN: 08105319	Date: 29.08.2025
		Place: Delhi