Manba Finance Ltd Management Discussions

1. Company Overview

Manba Finance Limited (MFL) is a leading India-based non-banking financial company (NBFC) committed to empowering aspirations through innovative and accessible financing solutions. Headquartered in Mumbai, MFL operates across six states spanning 73 locations, serving over 900,000 customers in partnership with 1,200+ trusted dealers and supported by a dedicated team of 1,483 professionals. For decades, we have been at the forefront of vehicle and consumer financing, blending deep industry expertise with robust business practices and sound financial fundamentals.

2. Economic Scenario Global Economy

In 2024, the global economy experienced a mix of recovery and emerging headwinds. Inflation eased from multidecade highs, though unevenly·core goods inflation ticked up late in the year, while services inflation trended downward. Labour markets stabilised, with unemployment returning to pre-pandemic levels. However, global trade faced disruptions due to widespread US tariffs, triggering historic equity market corrections, surging bond yields, and heightened policy uncertainty. Despite this, robust Chinese exports and rising US imports highlighted the resilience and adaptability of economies navigating shifting policy landscapes.

Outlook

In 2025, the global economy is projected to face mounting headwinds, with growth moderating to 2.8%. Persistent trade tensions are expected to dampen investment sentiment, while widespread tariffs continue to fuel inflationary pressures. Advanced economies will likely see slower growth, constrained by subdued consumption and tighter fiscal conditions. Emerging markets are set to experience uneven progress, as domestic vulnerabilities and structural challenges weigh on recovery in parts of Asia.

Inflation is forecast to decline gradually, though risks remain elevated due to ongoing supply chain disruptions and volatile commodity prices. Conversely, faster disinflation and stronger demand in major economies could lift global activity above expectations.

Despite persistent uncertainties around trade policies and inflation, proactive fiscal measures and international cooperation are anticipated to help mitigate risks. By harnessing innovation, strategic investments, and policy realignments, the global economy remains positioned to sustain growth and unlock new opportunities.

Indian Economy

Indias economy expanded by 6.5% in FY 2024-25, underscoring a resilient rebound driven by strong private consumption, robust public infrastructure outlays and a buoyant services sector. Retail inflation moderated to

3.34% in March 2025, its lowest level in over five years, and is expected to average around 4% for the fiscal year, providing room for accommodative monetary policy. The government aims to narrow the fiscal deficit to 4.8% of GDP in FY 2024-25, down from 5.6% in the previous year, signalling continued fiscal prudence amid targeted capital expenditure and social spending.

Outlook

India is projected to remain one of the worlds fastest- growing major economies, with real GDP growth forecast at 6.5% in FY 2025-26. Continued public and private investment in infrastructure, the expansion of production- linked incentive schemes, and the rapid digitalisation of the economy will serve as key growth drivers. The services sector is expected to remain a significant contributor, driven by robust demand in technology, fintech, and infrastructure services. Inflationary pressures are likely to stay manageable, supported by stable commodity prices and proactive monetary policy measures.

Looking ahead, India is well-positioned to benefit from global supply chain realignments and growing engagement from international investors seeking stability and scale, given the countrys established trade linkages. India is not only shaping its own growth trajectory but also playing a pivotal role in the future of the global economy. The path forward is rich with opportunity, driven by ambition and a commitment to inclusive progress.

3. Industry Review

3.1 NBFC Sector

Indias NBFC sector has undergone significant transformation, driven by the rapid growth of segments such as housing finance, microfinance, and consumer finance. This expansion is fuelled by a rising middle class, enhanced financial inclusion, and supportive policy measures, alongside a favourable regulatory environment and stable macroeconomic conditions.

NBFCs have become a vital source of credit for underserved segments, including SMEs and individuals lacking access to traditional banking. Their deep local understanding, wide reach, and quick turnaround times have enabled them to serve diverse financial needs efficiently. They have played a key role in advancing financial inclusion and supporting the growth of millions of MSMEs and self- employed individuals.

The sector has seen the emergence of diverse business models, with digital innovations reshaping the financial services landscape. Increased adoption of UPI, mobile banking, digital authentication, and neo-banking platforms has led to the modularisation of credit delivery, further enhancing accessibility and reach.

Growth drivers

1. Digital transformation

NBFCs are rapidly adopting super apps, digital sourcing platforms, and fintech partnerships to boost efficiency, reduce fraud, and enhance customer engagement.

2. Regulatory reforms

The RBIs Scale-Based Regulation, updated risk weights for bank credit, and new operational risk guidelines have strengthened oversight and improved financial stability.

3. Budgetary initiatives

Key measures·like raising FDI in insurance to 100%, credit enhancement facilities, Grameen Credit Scores, tax relief, and incentives for auto and EV sectors·are fuelling credit demand and investment.

4. Focus on key segments

Robust growth in retail lending, MSME financing, and vehicle loans is supported by favourable demographics, rising incomes, and targeted solutions for small businesses.

5. Financial inclusion and green financing

NBFCs are expanding access to credit in rural areas and tapping opportunities in sustainability and EV financing, aligning with Indias push for financial inclusion and clean energy.

6. Healthy asset quality

Despite some risks in unsecured lending, strong risk management, digital monitoring, and portfolio diversification are helping maintain asset quality and stability.

Performance

Non-Banking Financial Companies (NBFCs) significantly outperformed commercial banks in credit growth during FY25, according to a Boston Consulting Group report. NBFCs posted a robust 20% credit growth, well above the banking sectors 12%, with Gold Loan NBFCs driving much of this momentum. Total net advances rose 20% year-on-year to C24.5 lakh crore, expanding the sectors overall balance sheet to C28.2 lakh crore. Borrowings also increased sharply by 22% to C19.9 lakh crore, underscoring strong funding activity to fuel growth.

Profitability across the sector improved modestly, with absolute profits rising 8%. However, Microfinance Institutions (MFIs) faced severe headwinds, recording a 95% plunge in Profit After Tax. Operational efficiency strengthened slightly, as the cost-to-income ratio declined from 36.7% to 36.2%. Asset quality saw marginal improvement, with Gross Non-Performing Assets dipping by 10 basis points, although MFIs reported higher NPAs during the period.

Larger and more diversified NBFCs remain highly valued in the market, even as banks have delivered stronger investor returns over the past three years. Funding strategies are evolving, with some NBFCs increasing their reliance on bank loans and others tapping public deposits and alternative sources. Additionally, the sector is seeing rising focus on personal and vehicle lending, reinforcing NBFCs critical role in Indias financial ecosystem.

l.Taper Tantrums of 2013 refers to foreign investors pulling out money from equities and bonds in merging markets as a reaction to US Fed announcement of reducing/coming t bond purchase program this led to a tightening of liquidity available in the market, impacting both banks &NBFCs

Note: Analysis has been made based on 31 NBFCs (9 HFCS, 2 Gold, 3 NFT, 1 Cards and 16 Diversified NBFCs] and 37 Banks (12 PSB, 10 Private-New 10 Private-Old Banks and Small Finance Banks)

Source: Capitaline, Quarterly Results, Investor Presentation, Annual Report, BCG Analysis

Outlook

Indias NBFC sector is poised for sustained growth, driven by a robust economy, strong balance sheets, and diversified portfolios. Its strength lies in resilience, agility, and a sharp focus on last-mile credit delivery- positioning it as a key contributor to Indias economic development. With rising retail credit demand and Indias GDP projected to grow at 6.7% (FY25-FY31), the sector is well-placed to capitalise on upcoming opportunities.

RBIs efforts to align NBFC regulations with banks are encouraging better governance and risk management among larger players, further enhancing stability. Rapid digital adoption is improving outreach, onboarding, and credit assessment-especially in underserved regions.

While challenges remain-such as rising borrowing costs, funding constraints for smaller NBFCs, and growing fintech competition·the sectors adaptability, supportive regulation, and strong demand fundamentals continue to reinforce its critical role in financial inclusion.

3.2 Vehicle Financing

Indias automotive sector recorded strong growth in FY25, with passenger vehicle sales rising 4.9% year-on-year and total vehicle registrations reaching 26 million. This expansion was driven by robust two-wheeler and three- wheeler demand in rural markets, reflecting higher rural incomes and strong consumer sentiment.

Advancements in auto components, tyres, natural gas, and steel further accelerated growth by improving cost- efficiency, vehicle performance, and sustainability. These developments are strengthening Indias competitiveness globally and fostering a more innovative automotive ecosystem.

Looking ahead, the sector is set for transformative growth, underpinned by 5G M2M connectivity and AI integration. In-vehicle computing powered by generative AI and cloud technologies will enable real-time data processing, optimising navigation and predictive maintenance. With the passenger car market projected to reach USD 55 billion by 2027, these innovations will be central to shaping the future of mobility in India.

Domestic Sales

Source: Society of Indian Automobiles Manufacturers (SIAM]

Outlook

Looking ahead to FY26, Indias automotive sector is set for sustained growth, driven by new model launches and rising consumer interest in electric vehicles. While expansion across two-wheelers, passenger vehicles, and commercial vehicles remains strong, market dynamics will be influenced by access to financing, evolving consumer preferences, and potential U.S. tariff developments. Strengthening EV infrastructure, scaling green manufacturing, and advancing technology integration will be vital to mitigate these risks.

Alongside supply-side advancements, implementing robust consumer-focused strategies·such as attractive financing options and strong after-sales support-will be critical to build trust and accelerate adoption of emerging trends. These efforts can position India as a strategic global automotive hub, promoting economic growth and environmental responsibility.

The sector is expected to maintain momentum, supported by stable macroeconomic conditions, proactive government policies, infrastructure spending, and a normal monsoon forecasted for 2025. Recent personal income tax reforms and RBIs rate cuts will improve financing accessibility and boost demand.

3.3 Two-wheeler Industry

Two-wheelers stood out in FY25 as the only automotive segment to record strong single-digit volume growth. Robust rural demand and a wave of new launches revived momentum in a segment still recovering from the pandemic slump. The year also saw healthy domestic demand complemented by rising exports and growing adoption of electric models and premium offerings.

According to SIAM, domestic two-wheeier dispatches reached 19.61 million units, up 9.1% year-on-year. Federation of Automobiie Deaiers Associations (FADA) data showed retail sales rising 7.1% to 18.88 million units, driven largely by rural markets, which expanded 8.39%· outpacing the 6.77% growth in urban areas. This recovery underscores the criticai roie of rurai India, where two- wheelers remain essential for affordable mobility.

Outlook

Looking ahead, FY26 could see the industry surpass its aii-time sales record of 24 million units set in 2018-19. Crisii projects 8-10% volume growth, fuelled by higher rural incomes, increased demand for premium ICE and eiectric modeis, and stronger exports to Africa, Latin America, and other emerging markets. Anaiysts point to four main drivers: resilient rural demand, premiumisation in urban centers, expanding exports, and the rise of new categories and modeis.

3.4 Three-wheeler Industry

Despite weak March figures, Indias three-wheeier segment closed FY2025 with a healthy 4.54% growth over the previous year, underscoring its resilience in providing iast-miie connectivity and goods transport across urban and rural markets. However, the latter half of the year saw a clear slowdown, with three consecutive months of declining performance, culminating in a 5.67% YoY drop in March 2025.

Subsegment performance varied sharply. While goods carriers posted robust 41.77% YoY growth in March, e-rickshaw passenger carriers siipped 3.38%, and passenger carriers feii 6.93%, pressured by growing competition from ride-haiiing services and expanding metro networks. Electrification continued to transform the market, with EVs accounting for nearly 60% of aii three-wheeier sales in March and 57.3% penetration for the full fiscal year, up from 54.2% in FY2024. Rural markets remained stronger, recording 8.70% annuai growth compared to stagnation in urban areas.

Outlook

Looking to FY2026, modest growth is expected, driven by rising EV adoption and expanding demand for goods carriers. However, financing constraints for individual buyers and possible regulatory shifts in cities couid weigh on momentum. The revivai of passenger carriers and deeper integration with ride-haiiing piatforms wiii be criticai factors shaping the segments trajectory. Despite challenges, the three-wheeier sector remains a key piiiar of affordabie transportation and grassroots economic activity in India.

3.5 Small and Medium Enterprise SME Financing Industry

The Micro, Smaii, and Medium Enterprises (MSME) sector is a cornerstone of Indias economy, contributing substantiaiiy to empioyment, manufacturing, and exports. With over 5.9 crore registered MSMEs empioying more than 25 crore peopie, the sector accounted for 45.8% of totai exports in FY2025. Despite its importance, SMEs continue to face a persistent credit gap that iimits their growth, technoiogicai adoption, and iong-term resiiience. To address this, the Government has roiied out targeted initiatives to expand credit access, inciuding measures announced in the FY2026 Union Budget. These initiatives focus on revised classification norms, stronger credit guarantees, customised financiai products, and flagship programmes like Udyam Registration, PM Vishwakarma, PMEGP, and the Pubiic Procurement Poiicy, supported by new institutionai frameworks and mission- based schemes.

Outlook

The outiook for FY2026 is optimistic, underpinned by sustained poiicy support for digitai transformation, export promotion, and integration into giobai vaiue chains. Ongoing trade agreements and manufacturing incentives are expected to acceierate MSME growth, whiie piatforms iike Udyam Assist and expanded credit access wiii heip formaiise micro-enterprises. As India advances toward its $5 triiiion economy vision, MSMEs are projected to contribute over $2 triiiion, driving inciusive growth and economic deveiopment across the country.

3.6 Personal Loan Industry

The personai ioan market in India is expanding rapidiy, driven by a iarge consumer base, rising fintech startups, and the growing popuiarity of peer-to-peer iending piatforms.

According to Markets and Data Research, the market was vaiued at USD 29.29 biiiion in FY2024 and is projected to reach USD 77.72 biiiion by FY2032, growing at a CAGR of 15.83%. Data from CRIF High Mark shows personai ioan outstandings grew 25.6% year-on-year, with active ioans rising from 95.18 miiiion to 127.78 miiiion between FY2023 and FY2024.

Urbanization, digitai adoption, and higher consumer spending on iifestyie, travei, and weddings are key growth drivers. The market has evoived from iengthy paperwork to instant digitai approvais and disbursais within days. With over 1.4 biiiion peopie, India offers a vast customer base, presenting significant opportunities for lenders and fintech players nationwide.

4. Our Offerings:

We specialise in customised finance solutions across a diverse range of products:

• Two-Wheeier Loans: Financing for new and pre- owned two-wheeiers, inciuding eiectric vehicies.

• Three-Wheeier Loans: Loans for new and eiectric three-wheeiers.

• Pre-Owned Car Loans: Tailored solutions to help customers upgrade to their desired vehicles.

• Personal Loans: Quick and hassle-free credit for personal needs.

• Small Business Loans (Manba Vyapar Loans): Funding support for micro, small, and medium enterprises (MSMEs) such as kirana stores, medical shops, carpenters, tailors, small manufacturers, and other similar businesses.

5. Human Resources

At Manba Finance, our people are the foundation of every initiative. Guided by this philosophy, our HR policies are designed to be deeply employee-centric. We foster a positive work environment that promotes growth, learning, and inclusion. As part of our commitment to diversity, equity, and inclusion, we have adopted best- in-class practices that respect and celebrate the unique contributions of every employee. We prioritise building diverse teams where every voice is heard, valued, and considered in shaping the companys future.

6. Information Technology

As customer engagement evolves, digital is no longer just a channel·it is becoming the core of business operations. At Manba Finance, we have implemented robust systems and processes across sales, risk management, and collections, leveraging a mix of in-house solutions and trusted third-party platforms.

Our cloud-based CRM streamlines workflows and enhances monitoring and quality control, reducing turnaround times for loan approvals and disbursements. We collaborate with TU CIBIL for credit ratings and verification, while Salesforces automation tools drive targeted marketing campaigns. For secure and efficient transactions, our p aymen t systems are i n te grated wi th Razo rp ay an d leading virtual banking partners.

7. Risk Management

I n an increasingly volatile and unpredictable global environment, the Company has adopted a proactive risk management and mitigation framework. The Risk Management Committee supports the Board in identifying, assessing, and monitoring diverse risks. It regularly reviews exposures and the effectiveness of mitigation measures, with periodic diligence exercises and implementation of corrective actions as needed.

8. Internal control

We have established an adequate internal control mechanism to safeguard all our assets and ensure operational excellence. The mechanism also meticulously records all transaction details and ensures regulatory compliance. We have multiple policy frameworks to ensure adequate controls on business processes. Further, Risk and Control dashboards have been defined and are periodically updated for all important operational processes. At periodic intervals, the management team and statutory auditors ensure that the defined controls are operative. Reputed audit firms also ensure that all transactions are correctly authorised and reported in accordance with the relevant regulatory framework. The reports are reviewed by the Audit Committee of the Board. Wherever necessary, internal control systems are strengthened, and corrective actions are initiated.

9. Cautionary statement

Certain statements in the Management Discussion and Analysis describing the Companys objectives, and predictions may be forward-looking statements within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and Government policies that may impact the Companys business as well as its ability to implement the strategy. The Company does not undertake to update these statements.