JMJ Fintech Ltd Management Discussions

Industry Structure and Developments:

The operating environment for non-banking financial companies (NBFCs) seems to be improving. With the economy on the lend, loan disbursements have picked up in most segments, funding costs are economic down and several banks are facing capital constraints, giving these lenders a foot in the door.

The NBFC segment has witnessed considerable growth in the last few years and is now being recognized complementary to the banking sector due to implementation of innovative marketing strategies, introduction of tailor-made products, customer-oriented services and attractive rates of return on deposits and simplified products etc.

NBFCs have been at the fore font of catering to the financial needs and creating livelihood sources of the so called non-bankable masses in the rural and semi-urban areas. Through strong linkage at the grass roots level, they have created a medium of reach and communication and are very effectively serving this segment. Thus, NBFCs have all the key characteristics to enable the government and regulator to achieve the mission of financial inclusion in the given time.

Improving Macro-Economic Fundamentals:

The cross-sectional distribution pattern of the industry is determined by the performance of the Company. The Macro-economic vulnerabilities at the domestic front have declined because of improvement in growth outlook, fall in inflation and recovery in industrial production data. With rising investor sentiment and business confidence, industry growth is likely to be fueled by lending in the future.

Strong Regulatory Initiatives:

The RBI has been tightening regulations to manage the risk in the sector and has been proposing higher capital and provisioning requirements. It has also been stressing higher disclosures to safeguard public money and prevent systematic shocks. In addition, the RBI has taken rapid preventive actions in addressing specific issues to manage systematic risk. It has issued an ombudsman scheme for NBFCs, offerings a grievance redressal mechanism for their customers.

Outlook:

NBFCs continue to be an integral part of the countrys financial service ecosystem. The expected reforms and drive towards various core sectors will provide more opportunities to the NBFCs to create significant financial inclusion and employment opportunities across the country. In line with the governments vision to achieve inclusive growth, the next key step is to include the unbanked population in the formal financial system. This will empower them and result in a significant increase in the average per capital income. Governments policies, combined with the financial services industrys efforts to look for growth, will argument financial inclusion.

Business Overview:

JMJ Fintech Limited (formerly known Meenakshi Enterprises Limited (MEL)) is one of the RBI registered NBFC Company. Primarily the Business of the Company is loan lending as NBFC Activity (Non-Deposit Taking Company).

NBFC Activities:

The Company is also into business of lending money or providing loans predominantly to retail customers. The Company is doing both secured and unsecured loans and is providing loans only after entering into an agreement for the same.

SWOT Analysis:

Strengths:

• Distinguished financial services provider, with local talent catering to local customers.

• Robust collection systems

• Simplified and prompt loan request appraisal and disbursements.

• Product innovation and superior delivery.

• Ability to meet the expectations of a diverse group of investors and excellent credit ratings.

• Innovative resource mobilization techniques and prudent fund management practices.

Weakness:

• Regulatory restrictions- Continuously evolving Government regulators may impact operations.

• Uncertain economic and political environment.

Opportunities:

• Demographic changes and under penetration.

• Large untapped rural and urban markets.

• Use of digital solutions for business/collections.

Threats:

• High cost of funds

• Rising NPAs

• Restrictions on deposit taking NBFCs

• Competition from other NBFCs and banks

Other risks and concerns:

As an NBFCs, the Company is subjected to both external risk and internal risk. External risk due to interest rate fluctuation, slowdown in economic growth rate, political instability, market volatility, decline in foreign exchange reserves etc. Internal risk is associated with your companys business which includes deployment of funds in specific projects, diversification into other business operations, retention of talented personnel, managing effective growth rate, volatility in interest rate, NPAs in portfolio, changes in compliance norms and regulations, contingent liabilities and other legal proceedings. Your Company recognizes the importance of risk management and has invested in people, process and technologies to effectively mitigate the above risks.

Companys performance is closely linked to the Indian Capital Market as the Company has investments in both quoted as well as unquoted shares. These investments represent a substantial portion of the Companys business and are vulnerable to fluctuations in the stock market. Any decline in the price of quoted investments may be affected by factors affecting the capital markets such a price and volume volatility, interest rates, currency exchange rates, foreign investment, government policy changes, political economic developments, crude oil prices and economic performance abroad etc.

As non-deposit taking NBFC, the Company is subjected to regulations by Indian governmental authorities, including the Reserve Bank of India. Their laws and regulations impose numerous requirements and liquid assets. There may be future changes in the regulatory system or in the enforcement of the laws and regulations that may adversely affect the Companys performance. Moreover, any slowdown in the economic growth in India could cause the business of the Company to suffer. Recently the growth of industrial production has been variable. Any slowdown in Indian economy could adversely affect the Companys Business.

Risk Management:

The Company has a robust Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Companys competitive advantage. The Business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level also has mitigation plans for each risk identified. The risk management policy of the Company is available on our website: www.jmjfintechltd.com

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

Internal Control system and their adequacy:

The Company has implemented a comprehensive system of internal controls and risk management systems for achieving operational efficiency, optimal utilization of resources, credible financial reporting and compliance with local laws. These controls are regularly reviewed by both internal and external agencies for its efficiency and effectiveness. Management information and reporting system for key operational activities form part of overall control mechanism.

The Company has retained the services of Independent firms of Professionals to function as internal auditors and provide reports and effectiveness of internal control measures are reviewed by top management and audit committee of the Board.

The Company believes that it has internal controls and risk management systems to assesses and monitor risks. The company has its management team which monitors and manages risks by monitoring trends that may have an effect on the economic environment and actively assesses on a routine basis the market value of the Companys loan book. The Company seeks to monitor and control its risk exposure through a variety of separate be but complementary financial and operational reporting systems. The Company believes it has effective

procedures for evaluating and managing the market, operationally and other risks to which it is exposed. Discussion On Financial Performance:

During the year under review, the Company has incurred net profit of Rs. 516.91 Lakhs as compared to the profit of Rs. 213.78 Lakhs in the previous year. Your Directors are continuously looking for avenues for future growth of the Company in the Finance Industry.

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

Human Resource:

The Company firmly believes that human resources is an important instrument to provide proper communication of the Companys growth story to its stakeholders and plays vital role in the overall prospects of the Company. So, the Company takes possible steps for the welfare of its manpower. The employee relationship was cordial throughout the year. We as on 31^st March, 2025 have one hundred and seventy three employees on our rolls.