Laxmi India Finance Ltd Management Discussions

Economic growth and evolution of the NBFC landscape

India expected to remain one of the fastest growing economies in the world The Indian economy was among the fastest-growing in the world prior to onset of the Covid-19 pandemic. In the years leading to the global health crisis which disrupted economic activities, the country?s economic indicators posted gradual improvements owing to strong local consumption and lower reliance on global demand. Despite global geopolitical instability, India continues to maintain its position as one of the fastest-growing economies globally. In May 2024, the National Statistical Office (NSO) in its provisional estimate of national income estimated the real GDP to have grown at 8.2% year-on-year in fiscal 2024, while in Q4 FY24, growth was much stronger at 7.8% than 5.9% factored in in the second advance estimates in February 2024. Going forward, CRISIL MI&A expects a moderation in GDP growth rate to 6.8% in Fiscal 2025, largely due to various factors like Government?s focus on fiscal consolidation, which is likely to lead to moderation in investments, which is a key factor for economic growth. Additionally, the incomplete transmission of past rate hikes to lending rates and regulatory measures by the RBI to control risky lending could further affect credit support for consumption. Slower global growth and possible spikes in commodity price, especially crude oil may also contribute to moderation in economic growth of India. However, the prediction of an above normal monsoon offers hope for the rural economy, potentially reducing food inflation and enhancing purchasing power

Indian Economy to be a major part of the world trade

Along with being one of the fastest growing economies in the world, India ranked fifth in the world in terms of nominal GDP according to IMF forecasts (World Economic Outlook -October Update). India overtook UK to become the fifth largest economy in the world in CY2022. In terms of purchasing power parity ("PPP"), India is the third largest economy in the world, only after China and the United States.

Repo rate remains unchanged, with phase of aggressive rate hikes behind us

Globally, major central banks are currently cautious about cutting rates, amid slower disinflation and strong growth whereas in the September meeting US cut the federal funds rate by 50 basis points. On the domestic front, while the forecast of an above-normal monsoon bodes well for disinflation, freak weather events and crude oil prices are the lurking risks. The Reserve Bank of Indias (RBI) MPC in its October 2024 meeting voted to keep the policy rates unchanged. However, it changed the policy stance to ‘neutral? from ‘withdrawal of accommodation?. The repo rates increased by 250 basis points from Q4FY22 to Q4FY23 and remained at 6.50% in Q2FY25, standing deposit facility (SDF) at 6.25%, and marginal standing facility (MSF) at 6.75%. SBI MCLR has increased by 155 basis point from Q4FY22 to Q2FY25

Consumer Price Index ("CPI") inflation to average at 4.5% in FY25

Consumer price index (CPI) inflation accelerated to a 14-month high of 6.2% in October from 5.5% in September. Food inflation rose to 10.9%, its highest since July 2023. Core inflation rose to 3.8% from 3.5% due to rising goods inflation. CRISIL MI&A expects CPI inflation to continue to soften in FY25 to 4.5% from 5.4% in FY24, supported by healthy Kharif sowing, softer domestic demand, and benign global oil prices

Source- Industry Report

NBFC credit to grow faster than systemic credit

Over the past decade, banking credit growth lagged systemic credit growth for several years as NBFCs grew at a much faster pace. However, the NBFCs suffered a blow after IL&FS defaulted in September

2018. NBFCs not having the advantage of size, rating and/or parentage had to grapple with a liquidity crisis and as raising funding became difficult. Initially, post the IL&FS crisis, banks were expected to fill the space left out by NBFCs.

In the fourth quarter of Fiscal 2020 and the first quarter of Fiscal 2021, with the outbreak COVID-19 pandemic, challenges had intensified for both banks and NBFCs. NBFCs were hit harder in terms of demand, and they also turned cautious as they lend to borrowers with relatively weaker credit profile. In the second half of Fiscal 2021, the Indian economy showed signs of improvement, the effect of which was seen in the credit growth.

In Fiscal 2022, the second wave of the COVID-19 pandemic led to weak demand for credit in the first quarter of the year. However, the pace of credit recovered, with overall credit growing by 9% and retail credit increasing by 11.3% year-on-year as of March 2022. With the effect of COVID-19 waning, vaccination coverage progressively improving, the situation and growth improved further.

The credit growth of NBFCs which has trended above India?s GDP growth historically, is expected to continue to rise at a faster pace. NBFCs have shown remarkable resilience and gained importance in the financial sector ecosystem, reaching Rs. 412,000,000 lakhs at the end of Fiscal 2024. During fiscals 2019 to 2024, NBFC credit is estimated to have witnessed a growth at CAGR ~11%. Rapid revival in the economy is expected to drive consumer demand in Fiscal 2025, leading to healthy growth in NBFCs.

Going forward, CRISIL MI&A expects NBFC credit to grow at 15-17% between Fiscal 2024 and Fiscal 2027 driven by growth in retail segment, and MSME loans in the wholesale segment continuing to be the primary drivers.

Source-Industry report

NBFC credit to grow at 14% - 17%

From Rs 24.4 trillion in Mar?20, NBFCs credit grew to Rs 39.7 trillion in Mar?24, The growth has been particularly robust in the post-pandemic years, with NBFC credit rising by 17.1% in Mar?23 and 18.4% in Mar?24, driven by revival in economy. For Mar?25, credit is estimated to reach Rs 45 trillion, marking a projected year-on-year growth of 13.3%. NBFC credit is expected to grow further to Rs 6672 trillion by Mar?28, implying a strong CAGR of 14%-17% from Mar?25 to Mar?28. This reflects the increasing role of NBFCs in meeting the credit needs of various segments.

Share of NBFC credit in retail loans increased from 30.9% in Mar?19 to 39.9% in Mar?24, and is projected to rise further to 41.7% by Mar?25. Adversely, the share of corporate loans has declined from 69.1% in FY19 to an estimated 58.3% in FY25.

The shift is also validated by the strong year-on-year growth in retail credit. After a sharp surge of 66.5% in FY19, retail credit growth moderated to 22.7% in FY20, followed by a period of subdued expansion during the pandemic. However, it rebounded strongly with double-digit growth rates of 27.6% in FY23, 31.1% in FY24, and is expected to grow at 18.9% in FY25. This sustained growth reflects rising demand for personal loans, housing finance, vehicle loans, and other consumer credit products.

The shifting dynamics in the credit portfolio of non-banking financial companies (NBFCs) from Mar?20 to Mar?24 Expected reveal significant trends, particularly in the retail loans segment, which has increased its market share from 29.8% in Mar?20 to an expected 36.4% in Mar?25. NBFCs are more agile in reaching underserved or rural segments of the population. While banks tend to focus on larger, more creditworthy customers, NBFCs usually cater to small and medium-sized borrowers or those with limited credit history. This growth highlights the increasing reliance on consumer financing as a key driver of credit expansion.

As NBFCs strategically shift their focus from the industrial sector to the retail segment, they are capitalizing on the robust demand for consumer loans. This transition not only enhances their market presence but also presents opportunities for diversification within their portfolios. By prioritizing retail financing, NBFCs can support overall credit growth and better position themselves in a rapidly evolving market, ultimately shaping the future landscape of the NBFC sector.

MSME Credit in India

As per the MSME Development Act 2007, Micro enterprises are classified as enterprises with investment in plant and machinery or equipment not more than Rs. 1 crore and annual turnover not more than Rs. 5 crores. Small enterprises are enterprises with investment in plant and machinery or equipment not more than Rs. 10 crores and annual turnover not more than Rs. 50 crores. While medium enterprises are classified as enterprises with investment in plant and machinery or equipment not more than Rs. 50 crores and annual turnover not more than Rs. 250 crores. As of March 31, 2022, there are approximately 70 million MSMEs in India contributing to a substantial portion of the national GDP and total workforce. The MSME sector contributes to India?s socio-economic development by providing huge employment opportunities in rural and backward areas, reducing regional imbalances, and assuring equitable distribution of national wealth and income. The Government expects that MSMEs? contribution to GDP to increase from 29.2% in FY2022 to 40-50% by FY2030. As of FY24, 45.7% of India?s exports are by MSMEs thus supporting economic development and growth. As per Ministry of Micro, Small and Medium Enterprises, 57 million MSMEs are registered on Udyam Registration Portal and Udyam Assist Platform (UAP) providing employment to about 241.4 million people as of December 2024.

According to the National Sample Survey?s 73rd round dated June 2016, micro segment accounted for as much as approximately 99.47% of total estimated number of MSMEs in India. Small and medium sector accounted for 0.52% and 0.01%, respectively of the total estimated MSMEs. At a region level, rural regions accounted for marginally higher share of 51% as compared to urban region. Out of 63.05 million micro MSMEs, 51% micro MSMEs are present in rural areas. MSMEs units are largely dominated by bigger states including Uttar Pradesh, Rajasthan, Tamil Nadu, Maharashtra, and Gujarat. In terms of constitution, close to 94% of the entities in the MSME universe in India are estimated to be sole proprietorship firms, wherein a small business undertaking is run and managed by the business owner and the business, and the owner can virtually not be separated.

As of July 2024, micro enterprises accounted ~97.1% of total registered MSMEs in India. Small and medium enterprises accounted for 2.6% and 0.3%, respectively of the total registered MSMEs. Maharashtra, Tamil Nadu and Uttar Pradesh account for the highest number of registered MSMEs in the country, with Maharashtra accounting for 17%, followed by Tamil Nadu and Uttar Pradesh accounting for 10% each. In terms of constitution, close to 94% of the entities in the MSME universe in India are estimated to be sole proprietorship firms, wherein a small business undertaking is run and managed by the business owner and the business, and the owner can virtually not be separated.

Behavioural shift in MSMEs

Due to various initiatives and schemes by the Government, MSMEs have witnessed a behavioural shift which is expected to help them in gaining more access to credit.

Formalization of MSMEs - Around 38% of total estimated number of MSMEs in India are registered under Udyam system

There has been a large push for formalization of MSMEs in recent years with an exponential increase in the number of MSMEs registered on the Udyam portal (similar government portals) from FY2016 to FY2024. Udyam certificate is required by MSMEs for taking benefit of any scheme of the Central government. The Udyam portal is also integrated with the Government e-Marketplace ("GeM") and the Trade Receivables and Discounting System ("TReDS") so that enterprises can participate in government procurement and have a mechanism for discounting their bills.

Evolution in NBFC categorisation

NBFCs significantly contribute to Indias economic growth, particularly in under-banked areas. Over the past decade, NBFCs have grown significantly in number, size, complexity and interconnectedness within the financial sector. Many entities have grown and become systemically significant, which fuelled by a lighter regulatory framework may pose potential systemic risks.

To align the regulatory framework for NBFCs keeping in view their changing risk profile, the RBI issued the ‘Scale Based Regulation — A revised regulatory framework for NBFCs? (the Framework?) which has been effective from 01 October 2022.

With the increase in net owned funds from INR2 crore to INR10 crore, the Framework has categorised NBFCs into four buckets based on the asset size, business activity and perceived risk.

The lowest layer exhibiting the least risk i.e. based on an asset size of less than INR1,000 Crore, shall be termed as ‘NBFC-Base Layer? followed by the ‘NBFC-Middle Layer? with an asset size of more than INR 1,000 Crore.

‘NBFC-Upper Layer? i.e. the third bucket which poses a sizeable amount of systemic risk shall comprise of NBFCs that are specifically identified by the RBI as warranting enhanced regulatory requirement based on a set of parameters and scoring methodology prescribed in the Framework. The top bucket i.e. ‘NBFC-Top Layer? is ideally expected to be empty and shall be populated only if RBI is of the opinion that there is a requirement to move an NBFC from upper layer to top layer keeping in mind the potential systemic risk arising from the specific NBFC.

Based on categorisation, the regulatory framework shall differ with NBFC-Base Layer being least regulated and NBFC-Upper Layer attracting bank-like regulations. The Framework for NBFCs is expected to structurally benefit the sector from the risk management and stakeholders? perspective. However, in the short-term, there could be some effects on business due to rising capital requirements, the introduction of Common Equity Tier-1 requirement of 9 per cent for NBFC-UL and the introduction of the Internal Capital Adequacy Assessment Process.

Along with changes in the categorisation of NBFCs from a regulatory perspective, corresponding changes are also brought into the provisions of Income-tax Act, 1961 (the Act) to provide necessary reliefs.

Source: Confederation of Indian Industry report Key reasons for growth

> Deep demographic and addressable market understanding: With their operations in the unorganized and underdeveloped segments of the economy, NBFCs have created a niche for themselves by understanding what customers want from them and guaranteeing last-mile delivery of goods and services.

> Tailored product offerings: NBFCs have adapted their product offering to meet the specific characteristics of a customer group and are focused on meeting appropriate needs by carefully analyzing this target segment and customizing pricing models.

> Wider and effective reach: NBFCs are now reaching out to Tier 2, Tier 3 and Tier 4 markets, distributing the loan across several customer touchpoints. In addition, they are building a connected channel experience that provides an omnichannel, seamless experience of sales and service 24 hours a day, seven days a week.

> Technology advancements and growing fintech ecosystem for improved efficiency and enhanced experience: The use of technology is helping NBFCs customise credit assessment.

> Co-lending: RBI, in November 2020, issued co-lending norms that enable banks and NBFCs to collaborate for priority sector lending (PSL).

> Government and central bank Initiatives: The Government of India also unveiled several initiatives aimed at addressing some of the structural issues stressing the small business lending segment. These include granting licenses to account aggregators, initiating the PradhanMantri Mudra Yojana (PMMY), launching UPI platforms, unveiling platforms such as TReDS, GeM and Open Network for Digital Commerce (ONDC) and implementing GST.

After a moderation in growth post the COVID-19 pandemic, NBFCs are back on track with an expected credit growth of 13-143 per cent during FY24. The industry is expected to continue to witness the emergence of newer NBFCs catering to specific customer segments. The COVID-19 pandemic and consequent acceleration in both adoption of technology and change in consumer habits, as well as increasing availability of data for credit decision-making, has made it possible to build an NBFC lending business without investing large sums to have brick-and-mortar presence on the ground. Overall, between FY23 and FY25, research shows NBFC credit will increase at a CAGR of 13-153 per cent

Source-https://assets.kpmg.com/

Key factors driving competitiveness of NBFCs Better presence in rural markets

Rural demand is expected to aid two-wheeler growth in the long term, and this will be backed by rising farm incomes and improving rural infrastructure, especially as the government continues to invest in developing rural roadways. Greater ability of NBFCs (generally smaller NBFCs) to tap specific markets and/or customer segments by offering financing at much lower rates than the unorganized sector will enable them to retain their strong market position.

Better LTV and schemes by NBFC players

NBFC?s offers a wide range of schemes and promotions such as low-down payment, attractive EMI options, no charge on processing fees to attract more customers. Moreover, with increase in the cost of acquisition caused by BS-VI and other regulations, customers are looking for financing options with higher LTV and schemes.

STATE OF COMPANY AFFAIRS

Your Company is registered as a non-deposit taking Non-Banking Financial Company (NBFC) pursuant to the Certificate of Registration No. B-10.00318 dated February 07, 2025, issued by the Reserve Bank of India under Section 45-IA of the Reserve Bank of India Act, 1934. It is classified as an NBFC - Investment and Credit Company (NBFC-ICC) under the Middle Layer (NBFCs-ML) in accordance with the Master Direction - Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023.With over 20 years of experience in the asset finance business, the Company is primarily engaged in offering a range of lending products including MSME loans, vehicle loans, construction loans, and other credit solutions tailored to meet the diverse financial needs of its customers.

The Company has a network of 158 branches across Rajasthan, Madhya Pradesh, Uttar Pradesh, Gujarat and Chhattisgarh.

OPPORTUNITIES & THREATS Opportunities

• Growth in the commercial vehicles,

• passenger vehicle and tractors market.

• Penetration into rural markets for financial, commercial vehicles and farm equipment.

• To boost the infrastructure sector, higher budgetary allocation by the Government. This will create a massive demand for Commercial vehicles.

• Digital empowerment

Threats

• Increasing competition from finance companies & banks.

• Ever-rising inflation.

• The rising cost of funds.

RISK MANAGEMENT

The Company is exposed to various environmental risk factors such as pandemic risk, economic risk, interest rate risk, liquidity risk, technology risk, credit risk, etc. However, our risk management framework involves risk identification, risk assessment and risk mitigation planning.

The terms of reference of the Risk Management Committee, which primarily consists of the Board of Directors, include a periodical review of the risk management policy, risk management plan, implementation, evaluation and monitoring.

The Company has taken steps to mitigate the operation risk by using a customer centric approach and up-skilling its human resources. Our expertise in credit appraisal and collections developed over the past helps mitigate credit risk. To reduce operation risk, we continuously monitor our internal processes and systems. We have resorted to long-term funding instruments and securitization to reduce liquidity risk. To mitigate cash management risk, we continue to lay thrust on the use of digitalization. We have a robust cash management service network, and we have started engaging with the customers actively through the Digital mode of collection. We have also collected NACH mandates from a few customers.

FINANCIAL SUMMARY AND HIGHLIGHTS

The Company?s performance for the financial year ended March 31, 2025 is summarized as below:

PARTICULARS	Year ended 31st March, 2025	Year ended 31st March, 2024
Revenue from Operations	24,571.26	17,313.75
Other Income	232.51	188.15
Total Expenditure (excluding Finance Cost & Depreciation)	8,415.47	6,043.42
Profit Before Finance Cost & Depreciation	16,388.30	11,458.48
Less: Finance Cost	11,462.74	8,342.05
Less: Depreciation	190.05	152.98
Profit Before Tax	4,735.51	2,963.45
Total Tax Expenses (Current & Deferred)	1,135.07	716.88
Profit After Taxation	3,600.44	2,246.57
Other Comprehensive Income (Net of Tax)	-9.42	15.23
Total Comprehensive Income for the period	3,591.02	2,261.80
APPROPRIATION: -
Dividend on Equity Shares	-	-
Dividend on Preference Shares	-	-
Tax on Dividend	-	-
Transfer to General Reserve	-	-
Transfer to Statutory Reserve Fund	720.088	449.39
EPS: -
Basic	8.78	6.11
Diluted	8.78	5.66

KEY INDICATORS

• Gross income for the year increased by 41.72% to Rs. 24,803.77 Lakhs as compared to Rs. 17,501.90 Lakhs in 2023-24.

• Profit before tax for the year is Rs. 4,735.51Lakhs as compared to Rs. 2,963.45 Lakhs in 2023-24, showing a significant growth of 37.42 %.

• Profit after tax for the year is Rs. 3,600.44 Lakhs as compared to Rs. 2,246.57 Lakhs in 2023-24, showing a significant growth of 37.60 %.

OPERATIONAL HIGHLIGHTS

a. Disbursement

The Company offers a wide range of MSME Loans (Loan Against Property-backed up with registered mortgage of property), Auto Loans (Used car loans, Commercial Vehicle Loans, Tractor Loan and Two-Wheeler Loans), Business Loans (MSME) and Personal Loans. Disbursement in Financial Year 2024-25 aggregated to Rs. 71,853 Lakhs as compared to Rs. 52,500 Lakhs in Financial Year 202324.

b. Assets Under Management (AUM)

During the period under review, the AUM of the Company stood at Rs. 1,27,702 Lakhs as on March 31, 2025 against Rs. 96,100 Lakhs as on March 31, 2024.

c. Performance review

Laxmi India is emerging as the leading Financing Solutions provider and a one-step for customer providing a suite of financing and leasing solutions across varied assets. Laxmi India aspires to scale up the business through strategic initiatives and leveraging a strong foothold in the Commercial Finance Business. The Commercial Finance Business is committed to being a complete financial solutions partner to its customers, through high quality service and innovative products, which provide value to its customers.

Going forward, Laxmi India plans to grow its MSME business as well as a continued focus on Commercial Vehicle, Light Commercial Vehicle and Two-Wheeler Loans. Additionally, it continues to focus on high NIM (Net Interest Margin) products, increase customer acquisition, especially through expanding its customer Durables Loans business, balancing its product mix, ramping up fee based income, optimizing operating costs and improving collection efficiency for further enhancing its profitability. Laxmi India also plans to leverage analytics capabilities to explore opportunities in the market and offer unique products and solutions to new as well as existing customers. There are plans to automate several processes to ensure Quick Turnaround.

While fulfilling our mission of Financial Inclusion, your Company has also built a deep knowledge of customers with micro-data points ranging from income, payment behaviors, socio-economic status and other indirect data. The Company is successfully mining this data by building a powerful analytics models extended through digital platforms for customer acquisition, collections, NPA management, customer engagement, forecasting business trend, etc.

During the year, your Company further expanded its geographical presence by reaching out to untapped villages and increased its footprints by opening new branches and making it more accessible to its customers.

The Company?s total income grew by 41.72 % to Rs. 24,803.77 Lakhs from Rs. 17,622.23 Lakhs

during the reporting period. Judicious pricing decisions coupled with alterations in the product mix designed to provide the optimum risk benefit led to an increase in yields during Financial Year 202425.

d. Capital Adequacy

During the financial year under review, the paid-up share capital of the Company increased from Rs. 1986.27 lakhs to Rs. 2090.715 lakhs.

As a result of increased net worth, your Company was able to enhance the Capital to Risk Weighted Assets (CRAR) to 20.80 % as on March 31, 2025 well above the minimum requirement of 15.00% CRAR prescribed by the Reserve Bank of India. Out of the above, Tier I capital adequacy ratio stood at 19.98 % and Tier II capital adequacy ratio stood at 0.82 % respectively.

RESOURCE MIX

• Borrowings

The Company has diversified funding sources from Public Sector Banks, Private Sector Banks, and Financial Institutions etc. Funds were raised in line with Company?s Resource Planning Policy through Term Loans. The details of funds raised during the year are as below:

S. Borrowings / Security Type No.	Credit Rating	Amount Raised (In Lakhs)
1. Term Loan from Banks and Financial Institutions (including overdraft)	Rated	7,005
2. Assignment	Unrated	5,115
3. Non-Convertible Debentures	Rated	3,000

No Interest payment or principal repayment of the Term Loans was due and unpaid as on March 31,

2025. The assets of the company which are available by way of security are sufficient to discharge the claims of the banks and debenture holders as and when they become due.

• Securitization/Assignment

During the year, your company had assigned a loan portfolio having a total principal amount of Rs. 5,115 Lakhs under Direct Assignment route. In previous year, the company had assigned a loan portfolio having a total principal amount of Rs. 6,411 Lakhs under Direct Assignment route.

• Debt to Equity ratio (Leverage ratio)

As on March 31, 2025, the debt-to-equity ratio of the Company stood at 4.41 times against 3.87 times as on March 31, 2024. The leverage ratio of an applicable NBFC (except NBFC-MFI and NBFC-IFCs) shall not be more than 7 at any point of time and our leverage ratio is under better position.

• Non-Convertible Debentures

During the Financial year 2024-25, your company has issued 3000 rated, listed, unsubordinated, secured, transferable, redeemable, taxable, non - convertible debentures (‘NCDs") denominated in Indian Rupees having a face value of Rs. 1,00,000 each aggregating to Rs. 30,00,00,000/- on a private placement basis and these NCDs are listed on the Wholesale Debt Market segment of BSE Limited.

As specified in the term sheet, the funds raised from NCDs were utilized to originate small business loans and used commercial vehicle loans. Details of the end use of funds were furnished to the Stock Exchange on a quarterly basis.

The brief details of NCDs issued on a private placement basis during the year 2024-25 are mentioned below:

S ISIN r. N o.	Date of Issu e	Date of Allot ment	Secure d/ Unsec ured	Coup on Rate	Listed/Un listed	No. of Debent ures	Matu rity date	Issue price (in Rs)	Amo unt (in lakh)
1 INE06WU 07064	June 27, 2024	June 28, 2024	Secure d	11.48 7%	Listed	3000	June 28, 2027	1,00, 000	3000

The Company has been regular in making payments of principal and interest on all the NCDs issued by the Company on a private placement basis. There are no NCDs which have not been claimed by investors or not paid by the Company after the date on which the NCDs became due for redemption. The assets of the Company which are available by way of security are sufficient to discharge the claims of the debt security holders as and when they become due.

CREDIT RATING

The Company?s financial discipline and prudence is reflected in the credit ratings ascribed by rating agencies. Below table depicts the credit ratings of the Company as on March 31, 2025.

Particulars	Name of credit Rating Agency	Date of Rating Agencies	Rating valid upto	Rating
Non-Convertible Debentures (NCD)	Acuite Ratings & Research Limited	August 02, 2024	March 08, 2025	A-
Bank Loan Ratings	Acuite Ratings & Research Limited	August 02, 2024	March 08, 2025	A-

SOCIAL & RELATIONSHIP CAPITAL (HUMAN RESOURCES)

The Company recognized people as its most valuable assets and it has built an open, transparent and meritocratic culture to nurture this asset. Laxmi India?s mission of creating a high performance culture has been further strengthened through areas such as building a capability model (identification of critical competences) nurturing talent through interventions such as coaching, competency based training programs and cross-functional projects.

Your Company has a work environment that inspires people to do their best and encourages an ecosystem of teamwork, continuous learning and work life balance. Your Company believes that people perform to the best of their capability in organization to which they feel truly associated. Your Company focuses on widening organizational capabilities and improving organizational effectiveness by having a competent and engaged workforce. Our people are our partners in progress and employee empowerment has been critical in driving our organizational growth to the next level.

The Company had 1434 employees on the rolls of the company as on March 31, 2025 as compared to 1144 as on March 31, 2024.

NETWORK EXPANSION (BRANCHES)

The Company is experiencing rapid growth and is continuously expanding its business in the states of Rajasthan, Gujarat, Madhya Pradesh, Chhattisgarh and Uttar Pradesh. During the financial year, the Company opened new branches as follows: 2 branches in Rajasthan, 11 branches in Madhya Pradesh, 7 branches in Gujarat, and 4 branches in Uttar Pradesh. As of the close of the financial year ending March 2025, the Company operates a total of 158 branches across these five states. Additionally, during the period under review, the Company closed 1 branch in Gujarat. The details of branches are as mentioned below:

State	Branches
Rajasthan	91
Gujarat	24
Madhya Pradesh	35
Chhattisgarh	4
Uttar Pradesh	4
Total	158

Apart from above branches, we are having one office in Delhi for administrative purpose.

SWOT ANALYSIS:

Strengths:

> Strong Governance - Board of Directors comprising eminent professionals across broad array of disciplines

> Strong Management team with superior understanding of mid-market segment and a strong network

> Strong internal controls systems and processes

> Backed by marquee investors and promoters

> Quick response time along with strong risk mitigation framework

> Ability to leverage on the capabilities/expertise of various business units of Ambit Group

Weaknesses:

> Concentration risk due to Structured Finance portfolio (although backed by strong asset quality parameters and currently on de-growth mode to improve granularity of the overall loan book)

> Low seasoning of the SME portfolio (although backed by strong asset quality parameters) Opportunities:

> Well capitalized balance sheet with substantial growth capital

> Strong gearing profile, good asset quality parameters, and a strong credit rating -favorably positioned to tap credit markets

Threats:

> Uncertainty associated with the depth of pandemic led economic crisis which may impact credit quality

ROADMAP FOR THE CURRENT FINANCIAL YEAR:

While we brace for another year of challenging economic environment, we would adopt a cautious approach towards lending. However, our strong balance sheet and liquidity profile puts us in an advantageous position as compared to many of our peers, enabling us to take meaningful strides in our growth journey.

Going forward, we will continue to and add more branches to deepening our footprint across existing states to create a strong sourcing engine. We also aim to up-scale our co-lending and Business Correspondence (BC) arrangement business further with addition of more partners in the current year.

On the liability side, our key focus area for this year will be diversifying our liability mix both through the addition of new lenders as well as explore alternate liability channels such as Direct Assignment (DA) and PTC securitization.

KEY RISKS AND CONTROLS:

LIFL is engaged in lending business and is exposed to the following key risks:

1. Credit Risk:

This is the risk associated of recovery of capital from counterparty. The Company has a robust credit risk framework in place which includes sectoral guardrails, strong policy and compliance framework, comprehensive due-diligence and risk assessment process, prudent approval process, robust monitoring process and strong governance to mitigate the risk.

2. Market Risk:

This is the risk associated with adverse market movements. The Company has robust monitoring process to track key market parameters to contain interest rate risk, concentration risk and risk associated with asset liability mismatch through internal risk models which is reviewed by the relevant committee from time to time to take appropriate actions.

3. Operational Risk:

This is the risk associated with inadequate processes and internal controls. The Company has robust processes and strong compliance framework in place to mitigate the same. Our audit and compliance team periodically monitor the adequacy of processes, ensure adherence to the same and strengthen the internal controls.

4. Liquidity Risk:

The Company has adopted a cautious approach towards liquidity management. We maintain adequate liquidity to meet any unforeseen event. In addition, we adhere to strict internal guidelines to appropriately manage Asset Liability Mismatch (ALM) and remain compliant with the regulatory requirements.

5. Compliance Risk

Compliance risk is exposure to legal penalties, financial forfeiture and material loss an organization faces when it fails to act in accordance with industry laws and regulations, internal policies or prescribed best practices.

6. Technology Risk:

Technology is rapidly changing the way financial services entities operate and is a key disruptor for the industry.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has its own process driven framework for internal financial controls. The Board is of the opinion that the Company has sound internal financial controls commensurate with the nature and size of its business operations; wherein controls are in place and operating effectively and no material weaknesses exist.

The Company has appointed Mr. Priya Kadyan, to carry out internal audit on a regular basis that includes monitoring and evaluation of the efficacy and adequacy of internal financial controls, accounting procedures and policies and statutory compliances of the Company. The reports of the internal auditors are presented to the Audit Committee/Board which oversees the implementation of any corrective actions required.

CAUTIONARY STATEMENT

This report contains forward-looking statements extracted from reports of Government Authorities/ Bodies, Industry Associations, etc., available in the public domain, which may involve risks and uncertainties including, but not limited to, economic conditions, government policies, dependence on specific businesses, and other factors. Actual results, performances, or achievements could differ from those expressed or implied in such forward-looking statements. This report should be rest in conjunction with the financial statement included heron and the notes thereto. The Company does not undertake to update these statements.