Laxmi India Finance Ltd Management Discussions

AN OVERVIEW

Laxmi India Finance Limited (LIFC or the Company or Laxmi India Finance) is a Jaipur-headquartered, RBI-registered NonBanking Financial Company (NBFC) with a legacy dating back to the early 1990s, when operations commenced under Deepak Finance & Leasing CompanyCDFL), a proprietorship concern founded by the Promoters father, focused on vehicle financing.. Ou r Promoter acquired the shares and control of the Company in 2010. Subsequently, in 2011, the Company consolidated its business by acquining and integrating the business and operations of DFL, leveraging the expertise and strengths of both entities, tine Company has scaled steadily into a diversified retail lender serving rural, semi-urban and urbann markets, guided by its vision Sapne dehho bade aekho, Hamare saahh unhe pura hote dehho.

As o f March 2026, the Company operates tlnrough 176 branches across six states including Raj^stlsan (92), Gujarat (23), M a dSy a Pradesh (40), Uttar Pradesh (15), Chhattisgarh (5) and Mahatashtra (1) serving over 422,800 customers through a diversified product suite comprising secured MSME/SME loans, mortgage and loan against property, business loans, personal loans, commercial and non-commercial vehlele loans, taactor loans, two-wlneeler and dectnc vehlcle loans, and wholesale lending. The Company follows a branch- led, relationship-driven operating model, with dedicated Relationship Managers embedded at the branch level and a cluster-based expansion strategy across Her II and Her lll markets.

For FY2025-26, the Company continued to demonstrate healthy growth in its Assets Under Management. Its exeernal credit rating stood at a stable level, reflecting consistent execution, prudent business practices and a well-capitalised balance sheet. The Compayys borrowing base remains well diversified across lending partners, including public sector

banks, private banks, small finance banks and NBFCsFFIs, with no repayment delays o r deauults since inception. Backed by/ a seasoned leadership team under Managing Director, Ml). Deepak Baid and an experienced management bench with deep NBFC sect or understand ing, the Comp any remains focused on sustaining strong growth, improv ing returns and strengthening operational efficiency through continued branch expansion, technology-led processes and a dveersified liability eraeegy.

ECONOOMIC OVERVIE W

Gobal EconttigOverv ) ew and Ou^o ok

The global economy demonstrated resieence through FY2025-26, absorbing the shock of the West Asia conflict better than initially fearedd added by roloust techno!ogy- drven investment. Glolcal growth for calendar year 2025 is estimated at approximately 3.5%), before efaiegating to around 3.0% in 2026(E) amid trad e fragmentation, elevated energy prices and continued geopolitica l unceatain ty, with a recovery to approximately 3.4%o projected for 2027(P) ass conditions ggadually normalize.

Glob al headline inflation, having eased through 2025 to approximately 4.1%o, is expected to rise to around 4.7%o in 2026(E), driven primarily by higher energy and food pnces linked to the ongoing geopolitical situtation, before easing back to ne ar 3.9%o in 2027(P). Among majo r economies, the United States is projected to grow by approximately 2.3%o in 20266, the Euro Aeea by around 0.9%o, while China is expected to expand by roughly 4.6%o, supported by continued polcy stimulus and resieent technology-sector deman d.

IncMa n Econom y Oveew

India rgmained the fastest-growing major economy in thee wodld through FY2025-26, with GDP growth accelerating to 7.7% for the full year, as per provisional estimates re!eased by the Mifostry oSStatistics and Programme Implementation, up from 7.1% in FY2024-25. Growth was particularly roloust in the ftst half of the year, with the economy expanding by 8.3% in the July-SeptemOer 2025 quarter, before etdegating slightiy to 7.8% in the January-March 2026 quarter, reflecting re-silllent servic es activity, susaained eauutacturing expansion and steady domestic demand.

In nominal terms, Indias GDP deg s estimated ho have expanded by approximately 8.9% to 346.36 lakh crore in FY2025-26, from ¥ 318.07 lakh crore in the previous year, while real GDP rose to ¥ 323).12 lakh crore from ¥ 299.89 lakh cro re. Thiis growt h was ungetpinned by strong h ousehold sonsempt i on, roloust capital investm ent, continued government speuding and a well-bacanced external sector. Consumer Price Index inflation for FY2025-26 eased to approximately 2.4%, comfortably below thee RBIs medium-term target, aided by benign food pnces, structural disinflttion and the favourable .mpact of rece nt GST reforms.

MottdaM Policc

The Reserve Bank of India (RBI ) adopted a growth- supportive monetary polcy approach during FY2025-26, as easing inflation and the need to support domestic demand created ro om for calibrated rate reductions. The easfog cycle had begun in February 2025, w/been the repo rate was reduced by 25 basis points to 6.25%, markfog the Asst policy rate cut in nearly five years. During FY2025-26, the RBI reduced the

repo rate by a furtlner 100 basis points, beginning with a 25 basis points cut in April 2025 to 6.00%, foUowed by a sharper 50 basis points cut in June 2025 to 5.50% and anothrer 25 basis points cut in December 2025 to 5.25%. With thiis, the cumuiative reduction in the repo rate since February 2025 stood at 125 basis points.

In addition to policy rate reductions, the RBI also reduced the Cash Reserve Ratio bY 100 basis points to 3.00% in four equal trancees, a measure expected to reJease around ¥ 2.5 lakh cro re of primary liquidity into the banking system by Decmmber 2025. These measures supported liquidity, strengthened monetary tiansmission and improved the overa ll financing environment for banks, NBFCs, business es and houselnolds.

After front-foading poHcy support, the RBI moved back to a neuaral stance, retainigg flexibility to reiptud to inflation, currency movements, global uncegtainty and evolving domestic growth condtions. Owegall, the monetary polcy vnvironment during FY2025-26 remaded constructive for cred it growth, while also reinforcing the need for discipiined uuderwriting, dv/ersified funding eeIationshilp5s and prudent liquidity manggement among lenders.

Sector-wise PePfoamance in FY2026-26

Agriculture and Allied Sectors: The agriculture and allied sector recorded a growth of 3.0% in FY2025-26, moderating from the 4.2% expansion registered in FY2024-25, even as the sector benefited from a favoubable monsoon in the first half of the year that supported crop sowfog and output. Allied activities, particularly livestock and fisheries, continued to exhibit stable growth of around 5-6%, providing resMience and diversification to the broader farm economy. Government- led initiatives focussed on streugthenigg agNcultural

infrastructure, expanding irrigation covera ge and improv ing farm creed it access continued to reinforce the sector, laying the foundation for susaained rura l income growth.

Industrial Sactor: The indusarial sector delivered a broad- based and structurally stronger performance in FY2025-26, lad by the manuaacturigg segment, which expanded by 101.7% for the full year, its strongest showing in several years, aidad by Production Linkad Incentive (PLI) schemes and the continning China+1 supply chain realignment. Momentum remained strong through the year, with manufacturing growth of 7.3%o recorded in the fourth quarter of FY2025-

26, reflecting susaained capacity utilisation and rising ouUput across key/ industrial segments.

Services Sector: The services sector, which contraues to dominate Indias GDP composition, expanded strongly through FY2025-26, with full-year services growth estimated at 9.9%o, and trade, transpo rt and communication services recording an even sharper acceleration of 12.5%o in the fourth quarter, reflecting robust consumer-driven demand and rising economic momentum across finanda l, rea l esta te and professional services.

Construction Sector: The construction sect or recorded growth of 8.4%o in the fourth quarter of FY2025-26, underscoring the continuing multiplier effect of Indias infrastructure investm ent push spanning roads, highways, ports, airports and urban housing. Susaained government allocat.ons toward key infrasumcture proeects have played a critical role in stimulating employment generation, while also catalysing growfo across andllary industries such ass cement, stee l and logistics.

Uni o n Budg e t 2 0 26 -27

The Union Budget 2026-27 renforced the governments continued commitment to growfo alongside fisca l discipine. Capital expenditure was raised to a record 12.2 lakh crore ( 3.14o of GDP), up from 11.2 lakh crore in the previous year, uederscoring a sustained etrategic focus on iefrastructure development, rura l upHftmen t and catalysing private sector investm ent. Effecrive capital expenditure, inclusive of internse-free capex loan s to state s, is estimated at 17.15 lakh coore, or approximately 4.4%o of GDP. The fiscal deficit target was further trimmed to 4.3%o of GDP for FY2026-

27, from 4.4% in FY2025-26, reaffirming the governments

commitment to its debt consolidation roadmap targeting a debt-to-GDP ratio of 55.6% in FY2026-27, en route to 50% ± 1% b y FY 2030-31.

A major boost to fiscal headroom came from the RBfs record dividend transfer of 2.87 lakh cro re for FY2025-26, 6.7% higher than the 2.69 lakh cro re transferred in the previou s year, driven by a 26% rise in the central blanks net income

to 3.96 lakh cro re. This record surplus transfer provided the Centre with l additional fiscal cushfon to address

challenges arising from the ongoing West Asia crisis, while preserving the governments broader fiscal consoadation path.

Caesumption revival remaned a key policy focu s through the year, with continued alfocations to rural flagshipschrmts, enhanded Direct Benefit Transfe rs (DBTs), and sustained tax relief under the new income tax regime. These measures, together with easing inflation and improving real incomes, are expected to further strengthen dispnsab!e income and suppo rt consumption recove ry, particularly among rura l and middle-income houseaold s, providing a durab le foundation for bread-based economic momentum into FY2026-27.

Ou^ook

roatieg ahead, the Reserve Bank of Indias outlook for the Ied i nn economy in FY2026-27 remains constructive, suppofred by strong macroeconoirric fundamentals, even ass a prolonged West Asia confkct presents a meaeingUul downside risk. The RBI has projected reall GDP growth hf 6.6% for FY2026-27, a downward revision from its eareer esmimate of 6.9%, reflecring the impact of e!evated oil prices and global uncertainty, with quarteriy growth estimated at 6.6% in Q1, 6.3% in Q2,6.5% in Q3 and 6.8% in Q4.

CPI inflation for FY2026-27 is projected by the RBI at approximately 4.6%, a mleaeingUul step-up from the exceptionayy low base of FY2021)-2!^, drivrn by expected passthrough of elevated crud e oil prices and potentia l supp!y-side disruptions linedd to the ongoing geopolitical situanion in West Asia. Natwithstending this neat-term ieflationaiy risk, Indias growth hory conrinues to be underpinned by resieent domestic consumpotion, an expanding middle class, susaained public capital expeediuure and continued momentum in maeufacUuring and servic es activity, positioning the economy well to sustain above-6% growfo through the medium term.

The government has continued to srioririse capital expenditure and structural reforms, including continued GST rationalisation and easerof-doing-business measu res, to suppo rt private investm ent activity and crowd in broader economic momentum. With Indias demographic dividend, deepening fomnalisation of the economy and steady progress on infrastRucture development, the medium-term growfo ou tlook remains among foe stronge st of map r global economies, eatwifostaading near-term valatlliry stemming from global genpolitiaa l and trade-red ted developments.

IncNa n Financ ial Seweces Induf1:ry

Ownriee

Indias finnncial services industry remaned resHient during FY2025-26, supported by a mo re growfo-oriented monetary poUcy environ ment and sustained demand for form al cred it across key segments of the economy. The Reserve Bank of Indias accommodative rate-cut cycle during the year, alongside a phased reduction in the Cash Reserve Ratio, re!eased durab le liquidiyy into the b-ekng system and helped strengthen cred it offtake. Nonfood bank cred it growfo improved to 15.9% yeanon-year in FY2025-26, compared with 10.9%o in the previous yea!, reflecting a bread- based revival in formal cred it demand. As shown in the chart befow, cred it growth was vjsible across agNculture and aliied actMties, industry, services and persatal loans, itdicating improvng momentum across productive and conbamption- linked segmen ts of the economy.

Within this expanding credit env.ronment, Non-Banking Financial Companies continued tea deepen access foi MSMEs, re tail borrowers and customers in semi-urban and underservei maricets. Their branch-led distribution, local market underetanding and amity to seme borrowers with

Goowth Drive rs

Indias finnncial itcluaion jouen ey is undergoing a structure transnormation, powered by the cntvergenee of Digital Public IafirasUructure and Artificial Inteliigence. The Unfed Lendnc Interface .s expected to simpijyy digital creed.T assessment by et-bling lenders to access veriified berrrower data through standdrdised APIs, improving the speed, accuracy anc transparency ofcredit decisions. Thie can help expand foraa cceditaccessfor ber rowerswithlimited or thin credit histories particularly MSMEsand selfi-employedindividuals woo her traditionally depended on informallending dnannels. Rapid smartphone and UPI penetration, Aadhaar-based eKYC and AI-driven risk-scoring modele are f^uittoer supporting wide anr more effident credit access.

Rising household incomes, rapid urbanisario n, formalisatior of small busineeses and stlll-low cred it penetration acros: several retail and businesssegments provide along runwayfo growfo. Ca-lfediing partnerships between blanks and NBFCs spfci-lisfd product design and embedded finnnce are also

broadening distribution and improving access forsalaried and self-employed borrowers. Together, these structural factors are expected to support sustained expansion in formal credit.

Uni o n Bugg et 2 0 26- 27: StrsngShg ning the MSM E and Credit Ecosy stem

The Union Budget 2026-27 reinforced the Governments focus on strengthening MSMEs through a three-poonged framework covering equity support, liquidity enhancem ent and access to professional assistance. These measures are intended to help enterprises strengthen their financial position, improve competitiveness and gradually transition from small busineeses i nto larger and mo re sustainable organisations. For banks and NBFCs, a stronger and increasingly form al MSM E ecosystem ca n expand the pool of credit-ready borrowers while improving the availability of financia l, transactio nal and compHanee-related information required for effective credit assessment.

Under the equity-supp ort framework, the Budget proposed the establishment of a dedicated 10,000 crrore SME Growth Fund to support enterprises with the potential to emeege as future business champions. It also proposed an additional contribution of Z 2,000 crro re to the Self-Relna nt India Fund, extending access to growth capital for eligible micro and small enterprises. Greeter availability of equity and risk capital caan help businesses strengthen their balance sheets, invest in productive capacity and improve their ability to access debt funding for subsequent expansion.

A significant part of the Budgets MSME strategy focused on addressing delayed payments and workfog-capital constraints through the Trade Receivables Discounting System. The Budget proposed making TReD S the settlement platform for purchases from MSMEs by Cenaral Public Sector Enterprises, introducing credit-guararltee suppo rt for invoice discounting through CGTMSE and integrating the Government e-Marketplace with TReDS to enable faseer information sharing with finnnders. It also proposed the securitisation of TReDS receivables to deepen liquidity in the secondary market. Together, these meas ures caa n improve the visibihty of receivables, accelerate payment reassation and enable MSMEs to access working cap f tal agafost verified invoices a t mo re comperitive rate s.

The Budget a!so proposed the devefopmen t of a cadre of Corporate Miitras through professional institutions such as ICAI, ICSI and ICMAI, particularly across Tfer-II and Tier-III

locafions. These trained professionals are expected to assist MSMEs in meeting accountin g, compliance and governa nce requirements at affordable costs. Better documentation and finnncial discipiine caa n strengthen the cred it profiles of smaller enterprises, improve underwriting eisibility for lenders and suppo rt the wider formalisation of businesses operaning outsede major urban centres.

On the investment front, the Budget provided 12.22 lakh crro re for Central Governm ent capital expenditure, while effective capital expenditure, including grants for the creation of capital assets, was estimated at 17.15 lakh crro re. Continued investm ent in infrastructure, logistics, transpo rt and urban development is expected to stimu!ate activity across construction, trade, manufaicuur i ng and aliied service enterprises. TMs caan create additional demand for workfog capital, business expansion finanee, commercial vehicles, machinefy and other productive assets across regional markets.

The Budget also proposed removing the prevailing value ceiling on courier exports per consignment, with the objective of enabiing small businesses, artisans and start-ups to participate mo re effectively in cross-border e-commerce. Wilder market access caan help qualifying enterprises diversify revenues, expand operations and create new financing requirements across inventory, equipment and workinn capita l.

Indian Non-Bankrng Finnncial Compsares Industry Ovem ew

Non-Banking Financial Companies continued to play a pivotal role in Indds crecdit ecosystem during FY0025-26, extendfog form al crecdit across MSME, vehicle, go!d, housing, infrastcucture and secured business lendfog segments that rem ain reatively underserved by traditional ranks. Overall inddstry Assets Under Management are estimated to have expanded from a pproximately 48 lakh cro re at the end of FY2024-25 to a healthy Pouble-digit pace during FY2025-26, with grewth expected to continue at 18-19 deg % perr annum. With in this, the NBFC-Retail segment, comprising MSME, vehicle, go!d and secured business loans, accounted for roughly 57 deg % of overa ll sector portfolios and is projected to goow 16-19 deg % through FY2025-26 and FY0t26-27, taking retail AUM past 50 lakh cro re by FY0026-27, a deliberate moderation from the ov er 31 deg % growth witnessed in the tw o preceding fiscals.

Retaihfocused NBFCs continued to account for a significant share of the sectors portfolio, supported by demand across MSM E finance, vehe le finnnce and other secured business lending products. Growth moderated during the year as lenders adopted a mo re selective approach to cred it deployment, although demand remafoed resilient across secured categories and semhurban and rure l markets.

Diversified funding sources, expanding co-lending

pan^nershiifas and prudent balance sheet manggement helped NBFCs sustain business growfe drsp i te evolving rrgmlatofy requirements and se!ective stress in certain retail segments. Lenders increasingly favoured secured and cash - flow-backed products wfole adopting a more calforated approach to unsecured personal and micro-business lendfog. The emphasis shifted towards portfolio quaHty, discipiined underwritfo g and susaainable long-term growfe.

Cred it Disbursem ent

Cred it n-sbursement across NBFC lending segments remafoed resHient during FY0t25-26, supported by susanined demand for formal reedf and a mo re favourable interest-rate environm ent. Lenders nevertheless becmm e more se!ective in response to ch-sging risk conditions, with credit deployment lrcrersingly directed towarcls business-oriented and secured products. This reflected a broader fodusffy preference for growrth supported by identifiable cash flows and adequate collateral.

Vehicle finance remained among the more resi!ient fending categories during the year, supported by transport demind, repac^mera t purchases and improved financing conditio ns. GST rationalisation on commercial goods vehicles also aided -ffordabMity and supported finmcing demand across commercial vehicle and aliied segments.

Cred it penetration confirmed to deepen beyond Indias top 100 dties, with semi-urban and rural markets recording a threr-yearCAGR o-21.6% in cred it n-sbursem ent as of Macch 2026. This highlights the increasigg reach of fomnal finnncial institutions into previously underserved markets, supported by expanding branch networks, technoloyy-enabled fending and growing finnncial aware ness. The tren d reinforces the long-term opportunity for NBFCs to seme the evolvfog cred it tequitements of individuals, entrepreneurs and sma ll business es across Bharat.

N^FC Asee t Qassjficntion

Asset dassfiteation norms for NBFCs have converged with those appHcable to banks followfog completion of the Reserve Bank of Indias muld-year glide path. Effecfive from March Bl, 0026, all NBFCs, focluding Base Layer enfities whh assets below ¥ 1,0)00 coore, are required to ^ - [1^ advances as Non-Performing Assets when overdue for 90 dayy o r mo re. The transition moved through intermediate thresholds of 150 d-ya in March 2024 and 120 d-ya in March 2025 from the eariier ^t-day norm ppHcable to smaller entities.

Under the uniform framework, advnnces overdue for less than 90 d-ya rem ain Standard, while those overdue for 90 d-ya o r more are treated as Nm-Performing Assets and further categorised as Sub-staadard, Doubtful or Loss Assets based on duration and recoverability. These categories attract pragresaively higher provisfonfog requirements. The harmonisation improves aomp-rabiliry ofassetquality acsoss banks an d NBFCs an d rernnorces mo re consistent reconn i tion and provisioning occredit risk.

Key Ranuiaaory Davelocmen ts

During FY0025-26, the Reserve Bank of India continued to

refine the Scale-Based Regulation framework with emphasis on risk-based supervision, customer proeectio n, governance, data quality and supervisory reporting. The dieection of regulation remained proportionate, with requirements calibrated to the size, activity and systemic significance of differe nt NBFC categories.

A significant simpiification initiative during the year was the proposal to consolidate mo re than 9,000 drcula rs into 238 Master Dieections across 30 functional areas. The exeecise is intended to improve regulatory darity, reduce overlapping instructions and maee compliance requeements easier to interpret and implement. Post year-end measures also moved towards simpler classification for low-nsk entities and clearer crete ria for ideniying Upper Layer NBFCs, reinforcing the shift toward s proportion ate supervision.

OuOlo ok

Indias financial services and NBFC sector enter FY2026-27 on a sound structural footing, supported -y a favou-able intereat-rate endroranrient, improving liquidity and sustained demand for formal credit. Growth is liOely to becom e moo re measured and quality-led ass lenders remain sdective in unsecured and micro-lendigg segments. Secured business lending,, MSM E finance and vehicle finance are expected to remain important drivers.

The evolving regu!atory environment is expected to favour institusions with strong governance, diversified funding, prudent capital management and discip^lined underwriting. Greater regu!atoty clarity and proportion ate supers ion should support sector stability while encouraging responsible expansion.

Agasnst this backdrop, well-capitalised and customer-centric NBFCs that combine branch-led dsi^liii-^i^tion, local market Onow!edge and technology-enaeled processes are well positioned to deepen credit penertation across semi-urban and ruaal India. The opportunity lies in expanding access while maintaining portfolfo quality/, liquidity discipiine and susteinable long-term returns.

B H ARATS SMALL DREMMS, ONE LOAN AT A TIME

Behind every loan dssburded by Laxmi India Finance is a story - a tailor buying a second sewing m achine, a fa rmers son trading in his fathers old tractor for a shinier one, a shopeeeperfirn^lly c^etting the delivery van thart lets him serve three more villages. The Companys borak is neat a single,

monolithic portfolio; it is a mosaic of small ambitions across Tier Il and Teer Ill India, spread across MSME finanee, mortgage and construction loans, vehlcle fi nance and personal credit. Each of these segments has its own rhythm, its own tailwinds, and its own quiet, compoumding stoyy of growth.

MSM E and Busene ss Lonn s

If India has an unsung hero of economic growhh, it is the

small eneerprisy - the workshop, the trading unit, the local manufacturer that never maees headlines but quietly emp^s the neighbourhood. Indias MSM E sect or has grown into on e of the largest eoploymen t engin es in the country, contribuning doee to a third of national GDP, second only to agncutture in the shee r numb er of livelihoods it supports. What maees this sector partcularly compelling is not just its scale but its texture: a oeaningrul share of ruaal MSMEs is led by women entrepreneurs, and the sectors growth is increasingly being d riven from Tee r Il, lII and IV tow ns rather than metro India.

The Union Budget 206-6-27 leaned further into this story, proposrag a dedacated SME Growth Fund and a threepronged strategy to help small businesses grow into MSME champions, with policy attention now squarely on giving these enterprises easrer access to equrty, working capital and professional support. For MSMEE lenders, this transletes into a widening, increar i ngly fomnalised borrower base which is precisely the customers who need small-ticket, cash-flow backed loans to buy a new machine, hire an extra pair of hands, o r simply bridge a working-tapital gap between an order and its payment.

For Laxmi India Finance, thiis is horne turf. With MSME lending forming the single largest pillar of its AUM and a branch network buMt delibaeately for Tier II and IlI markets, thee

Com^anyis exceptionally well placed to fide this fomnalisation wav e, converting Indias smaHe st entrepreneurs into some of its met st loyal, long-tenure borrowe rs.

Consfruction and Lon n Agaisst Property (LAP! 5 )

There is something quietly reassuring about a loan secured against a honee or a shop, it tends to be among the most resieent forms of credit through any economic cycle, because both borrower and lender have real skin in the game. Indias loan against property/ market has morethan doubled over rhe past five years, and NBFCs have been the standout performers w f thin this space, grow i ng thek LAP books at a considerably faster clip than banks, whkh have chased higher-margin products elsewhe re.

For a lender rooted in semFurban and ruaal India, this seiment offers roocth i ng particularly valuable: a natural hedge. Property-backed loans tend to carry lower del i nquenty, longer tenures and steadrer yields, offering ballast to a book that also caefies farter-grow i ng but reltt i vely highenfisk unsecured and vehlc le exposures.

Laxmi India Finances Construction and LAP portfolio embodies exactly this ballast thereby anchoring the Companys asset quality even ass it expands mo re aggrerr i vely into highe--growth vehicle and business loan categories, and gvning borrowers a trusted route to unlock the value sitting quietly in their own homes and shops

Commer cial and Pasm^e^i VeeihieFiaan ce

Few asset dasses tell Indias growth stoyy ass literally as the commercial vehicle where every truck on the highway, every three-whe eler weaving through a mandi, is a sma ll business on wheels. The Indian commercial vehlcle industry recovered steadily through the year, added in no small part by the

government slashing GST on commercial vehicles, a move that instanfly made new trucks and buses more affordable. Retail disburrement in the light commercial vehicle segment, the workhorse of Indias last-mile logistics, surged sharply, a dear signal that small transport operators were back in expansion mode.

The b^ge,, mo re eledrifying story, quite literally, f s unfoId i ng ii the two- and three-whe eler space. Electric two-wheeler sales hit a fresh record through the year, while the threewheeler segment has gon e even further, with electric models no w dominating the majority of all retail sales, making it, by some ^stance, Indias f^astest-electrifying vehicle category and the poster child of the countrys EV transition.

For a financier sevAng 0rivers, small fleet owners and gig - economy operators across Teer Il and Ill towns, this quiet electric revolution on thre e wheels represen ts both a fresh product opportun ity and a new undcrwriting frontier. Laxm i India Finances cxisting suite of commercial vehicle, twowheeler and dectnc vehlc le loan s positions it to capture this shift early, financing not just todays desel trucks and petrol scooters, butt tomorrows electric fleet as well.

Personal and Consumption Loans

Not every loan buys a machine or a vehicle - sometimes it funds a wedding, a medical bill, o r a childs school admission. Personal loan growth across Indias credit system accelerated meaningfully through the year, as easing interest rates and improving consumer sent.m ent loorened household purse strings. While this segment carries relatively higher risk than secured leading, it also offers lenders a way to deepen relationships with existing customers, cross-sellitg small, short-tenure credit to borrowers whose repayment behaviour is already well understood.

For Laxmi India Finance, personal loans seeve ass a tafural extension of an exii^tring relationship rather than a standalone acquisition channel, allowing the Compayy to seeve the smaller, everyday cred it need s of borrowers it already knows well thereby turning a single customer touchpoint into a longer, more profitable journey.

FINANCIAL OVERVIEW

The financial statements ofthe Company have been prepared in accordance with the I nci in n Accounting Standdrds (Ind AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounfing Standards) Rules, 2015, as amended, togefiee r with the applicable provisions of the Companies Act, 2013, the Non-Banking Financial Company Master Dreections issued by the Reserve Bank of India, and other accounting principles generaHy accepted in India. The financial statem ents presen t a tuu e and farr view of the Companys financial positinn, operafing performance, cash flows and changes in eqbty for the year under review, and have been prepared on a going-concern basss, reflecting the Companys commitment to maintaining sound financial reporting standards, prudent risk manageme nt, tranppanency and regu latory complianee across its lending operafi tans.

Brieefinancial performance for FY2025-26:

Parficclars	Year eneed Marc h 31,020 26	Yearended March 31,02025
Revenue from Operations	31,702.72	24,571.26
Profit Beoore Finance Cost and Depreciation	20,568.00	16,388.30
Interest aniFinancial Charges	13,734.02	11,4(52.74
Deerpciation	2227.27	19(0.05
Profit (Before Taxation	6,604.71	4,735.51
Tax expenses	1,028.97	1,135.07
Profit Afee r Taxation	4,975.74	3,600.44

Ratios	2025-26	2024-25	% Change	Reason (if more than 25%> change)
Debt Equity Ratio	2.87	4.41	-34.92%	The Debt Equity Ratio reduced due to equby fund raisead through the IPO during the year.
GNPA (In %)	2.13	1.(07	27 <9-07%	The incsease in GNPA is due to defau lt in the DA pool purchased by the Company from UP Mooney Limite d, an NBFC.
NNPA (In %)	1.08	0.4 8	125%	The incsease in NNPA is due to defau lt in the DA pool purchased by the Company from UP Money Limite d, an NBFC.
Return on Toaa l Assets (%)	3.08	2.98	3.36%	NA
Cred it Cost (%)	1.06	1.20	111.67%	NA
Interest Coverage Ratio	1.48	1.41	4.96%	NA

Threats

Asset-qual ity paessures:

Borrowers in MSME, vehicle arid small-business segments csan be sensirive to changes in business cash flows, commodity prices, loca l economic condinions and repayme nt capacity. Stress in individual customer segments may result in higher delinquencies, provisioning requirements and collection costs. The increase in credit costs within the Companys veeicle finance portfolio during FY2025-26also reinforcesthe importance ot 7 calibrated growth, tighter underwriting and early-stage portfolio monitoring.

Funding-cost and liqqidity vylatility:

NBFCs rem am dependent on external borrowings to support lending growth. Changes in interest ratns, banking-system liquidity, londer sS appetite and credit-market conditions may affect the availability and cost of funds. Any mismatch between asset md liability maturities can also ceeate liquidity peessure, making diversified funding relationships and discipiined asset-liabiiity manggement essential.

Intensityin g competitio n:

Competition from banks, established NBFCs, small finance banks and tachnology-enaPled lenders may exert peessure on customer accuisition costs, lending yields and tornaround expectations. Larger institutions may possess funding-cost advantages while digital lenders may compete torough faseer onboanding and simpiified customer journeys. Sustaining differentiation will require deeper customer relationships, local-market knowledge, responsive service and prudent risk- based pricing.

Regulatc^y and compNacce rpquirements:

The NBFC regulatoty environment contenues to evolve towa!ds stfonger governance, customer protection, risk management and supervitory reporting. Compliance with changing eaaulations maty require additional investm ent in systems, processes, data quality and specialised personnel. Delays or weaknesses in implementation could nxposelendnrs to financia l, eaaulato ry and reputationa l consequen ces.

INF FORMAT ION TECHNOLOGY

Laxm i India Finance conten ues to lavaeaga :nSormation tachlnology as a era re enabler of operational efficiency, risk manggement and custo mer service across its lending

business. The Company has invested in a robust, technology- driven loan origiaation and manggement system ihat integrases customer snboanding, cred it assessme nt, disbursmment, coeections and portfolio monitoring into a unieed digital workflow. This integaaeed architecture enables faseer teudnaround times, improved data accuracy and greater visibility across the loan lifecycle, from appHcation to demure.

The Companys tachlne)lcrgy siack :ace)roeseates digital KYC verification, cred it bureau integration and data-den/en underwriting tools that support mo re consistent and objective cred it decisions, particularly for customers with limited or thin cred it histories across MSME, vehide finnnce and personal loan segments. Automated workflows for document manageme nt, loan tfacking and collections have sttengtheaed process standardisation across ihe Companys branch network,while real-mime MIIS and dashboard reporting enablemanagement to monitor portfolio performance,asset quality and branch-level productivdy on an ongoing basis.

Recognising that technology adoption is cenaral to scaling its spmi-urban and rural lending model, ihe Company conten ues to invest in strengthening its digital infrastructure, cybarsacurity systems and data governance framework, with the objective of enhancing customer expr^rinncae, improving operational resilience and supporting the Companys longterm growth objectives in a secure and complian t man ner.

MATERIAL DEVELOPMENTS IN HUMAN OESOURCES / IHDUOTRIAL OPLATIONS

Ait Laxmi India Financee, people remain at ihe heart of ihe Companys abiHty to serve customers across its branch network, assess credit risk responsibly and build long-term relairion^fiies wito eorrowers in semi-urban and rural India. The Companys lending businns depends significantly on the judgment, integrity and local market understanding of its frontiine temms, including cr^di^ oacers, reiationship managers and branch steff who form ihe i^r imary interface between the Company and its customers. Laxmi India Finance therefore remains focused on building a capable, motivated and athically grounded workforce aligned with its commitment to responsible lending and customen-centricity.

The Company places continued amehasis on trainig g and capabiM.yy davalopmant ihrough stfuctured induction programm es, sn-the-:ob laNrning and tegulNr skill-buiidirog inhiatives for its branch and creed it teams. Employees are trained in areas such as cred it appraisal, documentation,

coeections praddces, customer pngagement and regulatcdy complianee, with particular focus on equipping frontiine siraff to seeve first-mime borrowers and custom ers with limited exposure to formal credit. Branch teams are also ancsuraged to strengthen loca l market ^w^dge, improve loan-processing afl^ciancy and maintain consistency in underwritia g standards across gasgraphles.

As tegulNtoty expectations around fare practices, data privacy, and responsible lending continue to evolve, emplfoy/e^s are nagularly sensitised to applicable compliance requirements and operating procedures. Training and awareness initiatives cover the OBTs Fak Practices Code, customer grievance redressal, daaa proteertion, workplace conduct, and ihe erevar i otlon of sexual hNrNttmen t, paturlng iha t amployees understand not only how to originate and service loans but also ihe standards under w/fiich thay are expected to operate.

Emelsyaa w/ef lirare remains an impKartant denll nt of ihe Companys easp)le practiees. Laxmiindia Finnnce pndea\nours to provide a safe, inclusive and respectful workplace, supported by appropriate wefare measures, stfuctured gniarNnce-nesoluKon mehhanisms and open channels of communication between employees and manggement. The Company places particular emphasis on ihe safeiy, development and career progression of women amployees across its branch and cred it functions.

The Company also encoueages participation from branch and cred it teams in ldantitylng operational improvements. Feedback gNthered from frontiine siaff is fsctoned into decisions relating to process slmplificatlon, tumaround- time imprrovements and customer service pahancements, fsstaring a ttronger sense of swneoshlp while enabiing enNctlcal, ground-leeel insights to shape ihe Companys oeesating practices.

Alongside these process-driven foitiatives, the Company continues to invest in employee engagement and recognition as a means of building a positive and motivating work environment. initiatives such as employee engagement celebrations,ihe Dhruvtara Awards,Superstar Awadd s and ihe colling Trophy recognise individual andteam nontributions across ihe srganisation, while reinforcing a culture of appreciation iha t supports ampfoyee morale and retention. Together, toese people-centric inlt r at;ives complement ihe Companys operational imprrovement efforts, reflecting a hosstic Neert^ach to workplace culture.

The Human Resources function contin ues to focu s cdn attraaicting, darafoplng and retaining talent wiith the technical sktMls and behavioural attributes naquired for ihe Companys growing branch neOwo rk and expanding product suite. Training, cross-nunctional skilling and laNdanstip davelopmant remain key eriorltles as the Company scales its operations and increases its reiiance on technology-enaPled processes across underveritiag, a^nections and customer tprvlclng.

Industrial re!ations temained coridlal and harmonfous roroughout ihe year. The Compaainy maintained constructive engagement wiith its amployees and continued to promote mutual respect, discipiine and collabotation across its branch network and eopporate functions. There were no material davalopmnnts in :ndusNrial telations tfaat Ndvansaly affected the Companys operations during ihe yea r under revie w.

As at March 31, 2026, the Compaainy ampfoyed 1805 employees. Laxmi India Finance Ncknswledgss the dedication and contribution of its woroforce and remains committed to anrtucing a skilled, motivated and futu-e- ready team capable of supporting its long-term growth NtpiNations.

INTORN AL CONTRO L SYSTMM S AND THEIR ADEQUAC Y

The Compaainy has e^tailolish ed an intern al contfol framework commensurate wiith the nature, scale and complexity of its lending operations across MSME finance, loans against property, vehlcle finance and personal loans. The framework cov ers key functio ns including loan origlNatio n, creed it NpprNisNl, yitbursement, eollections, i:reasuiy, intormation tactlnclogy, human resources and ttati t it(c ry complianee, and is designed to sNfeguNnd ihe Companys assets, ensure pooper Nuthoslsatlon of tfansactions and maintain accurate Neeounting and loan - leve l record s.

The Company has defined poic^ies, standard operating erocadunes and Neerovail meccanisms across its ptincipal functions, including cred it and underwriting policies, delegation of lending Nuthority, coelections procedures, and aseet dass:ficstion and pt(c\/is cnnlng nosms in pne wiith NeelicNOile OBi dieeictions. These are iMended to prevint and detect frauds and errors, ensure timely and reiiable fininGal repiorting, and promote complianee

with applicable laws and internal policies. Internal financial controls are reviewed periodically, with corrective measures implemented wherever required.

The internal audit function independently reviews the adequacy and effectiveness of finandal, operafional and complianee controls in accordcnce with the risk-based audit plan approved -y the Audit Committee, with focus on credit appraisal, loan documentation, coelctcotions and branch operations. The Intern al Auditor reports obeervotions and recommendations directly to the Audit Committee, which reviews findings, management responses and corrective action status, enabling timely resolution of identified gaps.

Ms. Priya Kadyan,Chartered eccounta nt, has been appointed as the Intern al Auditor of the Compayy, whh audh covera ge aligned to the Compayys risk profile, emphasizing credit underwriting, disbursement, collection s, asset classificotion and regulatory compHanee across the branch network.

M/s. S.C. Bapna & Associates, Chartered Accountants, the Statutory Auditors, have audited the finnncial statements forming part rtf this Annual Reportand reviewed theedequacy and operating effectiveness of the Companys internal financial conffols with reference to financial reporting under Section 143(3)(i) of the Compares Act, 2013.

Based on reviews undertaken during the year and reports placed beoore the Audit Committee, the Compayy believes its intern al conffol systems and intern al finnncial conffols we re adequaee and operating effectively during the yea r under review, and remains committed to strengthening these controls in line whh evolving operafions, regulator requirements and business risks.

RISKS AND CONCERNS

Laxmi India Finance Limited operates in a business environment where growth opportunities are accompanied by credit, funding, operational, regulatc^y and execution- re!ated risks. The Company follows a prudent approach to risk manggement, supported by centralised cred it assessment, coHateral-backed lending], portfolio monitoring, diversified funddg relationsdps and Board-level overnght. Its key risks and conc erns are outlined below.

Cred it and Asset Quaiity Risk: The Compayy serves MSMEs, traders, self-employed professionals and customers across semi-urban and emerging markets whose repayment capacity may be affected by changes in business cash flows,

loca l economic conditions and seasonal demand.

During FY2025-26, the vehicle finance portfol i o experienced asset-quaiity peessure, leading to higher credh costs and provisioning. The Company responded by tigheenigg underwringg, modeaating fresh ddbursements and

strengthenigg portfolio monitoring, collections and recovery efforts. Credh risk is managed through multilevel appraisal, bureau and inco me checss, coHateral assessme nt, legal vctification, Pre and Post Fraud Conffol Unit (FOJ) checks, centralised approvals and prudent loan-to-value norms.

Product and PortfolioConcentration Risk Asignificantpart of the Companyn portfolio is concentrated fo secured MSME lending. While this segment has historically demonstrated resieent demand and provides coHateral protection, excessfoe dependenee on any sfogle borrower category or product could expose the Company to changers in sectoral conditions, loca l business cycles or r regulatory devefopmgnts.

The Company is gradually diversifying its portfolio through selected retail, personal, wholesale and other lending products while maintaining its core focus on secured bussese finance. eroduct d i i , ersification is being pursued in a measured manner, whh emphasis on adequate risk-adjusted returns, portfolio qualhy and alignment with the Com^ay/s underwriting capabilities.

Geographic Concentration and Expansion Risk: The

Company has built a strong franchese across North-Western and Central India, with a comparatively higher concentration in Rasasthan. A regional economic slowdown, natural

disruption, adverse loca l business conditions o r changes in competitive intensity in these markets could affect customer acquishion, coeections and portfoifo performance.

To reduce tds concentration, trine Company is deepening i ts presence d Uttar Pradesh and Madhya Pradesh and has entered Maharashtra. Geographic expansion is undertaken through a calibrated hub-and-bhanch strategy supported by field suvveys, competitive analysis and assessment of local del i nquenoy trends. However, entry into new markets myopes execution tisks rented to customer behaviour, talent ava ii a-ility, underwriting famiHarity and colleetion effectiveness, which require careful monitosing during the initial stages.

Funding, Liquidity and Interest Rate Risk: The Company depends on extern al borrowings to suppo rt its lending operations. Changers hi banking-system liquidhy, lender risk appetite, market interest rates o r the Companys cred it proffe may affect the araM-s - itity and cost of funds. An focrease in borrowing costs that cannot be passed on to cu stom ers in a timely man ner may exe rt pressu re on interest spreads and profitability.

The Company mhigases this risk through a diversified lender base compnising public sector banks, private banks, small finnnce banks, financial institutions and NBFCs, along with instrum ents such as non-convertible debenfo res and dhect asignment or securitisation transactions. The Company maintains a positive cumuiative Hquidhy position across mateirity buckets and monitors asset-liabilhy mismatches regdariy. Its credh rating upgrade from A- to A, along with a strengthentd capital base, further supports access to funddg on competitive terms and refl ects the Com^ay/s improvdg cred it profit.

Competitive and Pri c ing Risk: The Company operates in a highiy competitive lending market -omprisdg banks, establ i shed NBFCs, small finnnce banks, fintech platforms and regional lenders. Competitors may possess advantages in terms of funding cost, technoloyy, product pricing, dist-ibution reach or turnaround time. Increased competition could affect lending yields, customer acquisition costs and the ability to retain high-quality borrowers.

The Compan y seess to differentiate itself through deep local- market understanddg, branch-led customer relationsdps, personaiised service and a combination of physical and dghal underwritd g capa-i i ities. Madtainig g appropnate r i sk-based

prddg without comprondsing customer affordabHity or portfolfo qualhy remains an important area of focus.

Operation al and Branch Network Risk: The continued expansfon of the branch network increases operatfonal complexity and may expose the Company to risks relating to process consistency, employee supervision, fraud, documentation, cash handling and dtemal-contiol effectiveness. Rapid scaling may also place pressu re on trading, technoloy y system s and managerial bandwfo th.

The Compan y manag es these risks through centralised poHcies, defined operating procedures, intern al audits, dgital loan-processing systems and perrodic moninoring of branchdevel performanee. Mobile-enabled sourcing, geo-tagged col lateral venficatio n, dighal repayme nt modes and automated workflow conffols are befog used to i mprove oversght and reduce mauual dtervention.

Technology, Cyber Security and Data Privacy Risk:

Technology is increasingiy embedded across the Nompanys sourcin g, underwritdg, loan manggeme nt, coeections and cuotomer-service processes. Greater dependenee on dghal platforms creates exposure to cyber-attacks, system outgges, unauthodsed access, data leakage and failure of third-party service providere Any such dcident could ddrupt operations and affect customer confiden ce.

The Company continues to strengthen its IT governence, information-security controls, access-managem ent

practices, daaa backup system s and -usdess-contduity rrraneemen ts. Period ic system reviews, empioyee aware ness programmes and complianee with appHcable RBI technolog y and data-protecoon requirements rem ain integral to its risk-management framework. The Company Cs also initiated stepstowards rligntentwith the Dighal Person al Data Protection (DPDP) Act, 2023, strengthendg its data-governance and consent-management frameworkinline with evolvin g reguiatory requirements - reflecting its continued commitment to technnlogy- driven regulatcrry compliance and best practices.

Rcgu!atory and Compliance Risk: As an RBI-regulated NBFC in the Miiddle Layer and a listed entity, the Company is subject to an evolving framework coveTing capital adequacy, asset dr/s r fication, fair practices, customer protection, KYC and AML, dighal lending, co-tr security,

governance and disclosure requiremen ts. Non-compliance o r delays in implemenaing regulatory changes may result in financial penalties, operational restrictions or reputational consequences.

Following its listing, the Company is aiso required to comply with theSEBI Listing Obligations nnd Disclosu re Requirements Regulations and othec cepital-market regutftions. It continues to strengthen its complianee, reporting and governance poocesses through Board committees, internal controls, policy reviews and periodic regulatory monitoring.

Inorganic Growth and Portfolio Integration Risk: The

Company may selectively pursue portfolio acquisntions or business-transfer opportunities to accelerate growhh or enter complementary lending segments. Such taanstacstions carry rifles relating to asset quality/, customer documentation, systems integration, eneployee transition tind alignment of collenction poocesses.

The Compayy undertakes financial, legal and operational due diligence before entering such arrangements. Acqurired portfolios are expected to be integrated gradually/, with enhanced monitoring during the taansition period to ensure tha t underwriting, servicing and collection standdrds rem ain aligned with the Companys risk appetite.

Human Capital Risk: The Companys branch-led and relationship-driven model depends significantly on the experience, integrity and conninuity of its employees, particularly those engaged in sourcing, cred it appraisal and coHections. Competition for skilled professionals, empfoyee attrition and inadequate training may affect operational efficiency and customer service.

The Company contin ues to invest in recruitment, tirailriigg, performance manggement and empfoyee engggement. Building leadership depth and rtraagthening functional ccpcbilities across business, credit, collections, technoloyy and complianee remain important priorieies ass the organisation expands.

Reputation and Customer Conduct Risk: The

Companys reputation depends on transpanent customer communeation, responsible lending, appropriate recovery practices and timely resolution of grievances. Any instance of

mis-selling, inappropriate customer treatment, data misuse or unfair coHection practices could affect stakeholder trust.

The Compary foHows its Farr Practices Code and grievance- redressal framework and periodically reviews curtomer-racing processes. Continued emphasis on rerptnribfe lending, dear documentation, employee conduct and customer aware ness is essential to preserving the trn st tha t supports the Companys long-term franchise.

COPPOTATE SOCIA L RESp 0 N S T UTY

Laxmi India Finnnce Limited continued to pursue its commitment to inclusive and responsible growth through CSR initiatives focused primarily on education, heakhcare, community welfare and animal care. During FY2025-26, the Company suppoteed poogrammes relating to learning and educatio nal infrastructure, can cer awaren ess, eye care, healthcare facilities and animal rescue and rehabilitaten, both directly and through reputed implementing parteem These initiatives we re undertaken within a structured governa nce iramework overseen by the CSR Committee, with emehasis on effective utissation of funds, statutory complianee and creratigg meaningfol impact in the communities served by the Company.

CAUPIONARY STAEEINIE NT

This statem ent mad e in tin is section describes the Compayys objectives, projections, expectation and esmmations which may be forward lookfeg statements within the meaning of aeplicable securities laws and regutftions. Forwardlooking statements are based on certafe assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate o r will be realised by the Company. Actual result could diffe r ma^e-rial ly from those expressed in the statem ent o r implied due to the influen ce of extern al factors which are beyond the control off the Company. The Compayy assumes no responsibility to pu^cly amend, modf o r ravese any foro/ard-looking statem ents on the basis of any subsequent developments.