Mega Corporation Ltd Management Discussions

Global Economic Review

The global economy during FY 2025-26 demonstrated resilience despite operating in an environment characterized by heightened geopolitical uncertainty, evolving trade dynamics, elevated public debt, and persistent macroeconomic challenges. Ongoing geopolitical conflicts, fluctuations in energy prices, disruptions to global supply chains, and increased policy uncertainty continued to influence economic activity across both advanced and emerging market economies. At the same time, rapid technological advancements, particularly in artificial intelligence and digital transformation, provided support to productivity and investment in several sectors.

According to the International Monetary Fund (IMF), global economic growth is projected at 3.0% in 2026, with a moderate improvement to 3.4% in 2027. While the global economy has remained relatively resilient, the pace of expansion continues to be below historical averages, reflecting the combined impact of geopolitical tensions, trade fragmentation, higher commodity prices, and cautious business sentiment.

Inflationary pressures have moderated in several major economies compared with previous years; however, the disinflation process has slowed amid rising energy costs, supply-side uncertainties, and persistent services inflation in certain jurisdictions. Central banks have generally maintained a cautious and data-driven monetary policy approach, balancing the objective of price stability with the need to support economic growth and financial stability.

Global financial markets experienced intermittent volatility during the year, driven by geopolitical developments, shifts in monetary policy expectations, and uncertainty surrounding international trade and fiscal policies. Although financial conditions improved in certain markets, elevated sovereign debt levels, geopolitical risks, and periodic fluctuations in commodity and currency markets continued to pose challenges to the global economic outlook. Nevertheless, sustained investment in technology, digital infrastructure, and innovation remained a key source of optimism for medium-term global growth.

Overall, while the global economic environment remains subject to external risks and uncertainties, continued policy coordination, structural reforms, technological innovation, and resilient domestic demand across several major economies are expected to support sustainable global growth over the medium term.

The Indian economy continued to demonstrate remarkable resilience and macroeconomic stability during FY2025-26, despite persistent global uncertainties arising from geopolitical developments, volatile commodity prices, evolving trade policies, and uneven global growth. Supported by robust domestic demand, sustained public capital expenditure, healthy corporate balance sheets, and continued policy reforms, India retained its position among the fastest-growing major economies in the world.

According to the International Monetary Fund (IMF), Indias real Gross Domestic Product (GDP) is projected to grow by approximately 6.4% in 2026, supported by strong domestic consumption, resilient investment activity, improving services sector performance, and favourable demographic fundamentals. The Indian economy continues to benefit from structural reforms, digital transformation, expanding manufacturing capabilities, and increasing formalization of the economy.

Private consumption remained a significant driver of economic growth during the year, supported by improving rural demand, steady urban consumption, higher employment generation, and continued government initiatives aimed at strengthening household income and economic activity. Public and private sector investments also remained healthy, particularly in infrastructure development, manufacturing, renewable energy, logistics, and digital infrastructure, reinforcing the countrys long-term growth prospects.

Indias external sector remained resilient despite challenging global trade conditions. Merchandise and services exports continued to receive support from the countrys competitive services industry, while government initiatives under various production-linked incentive (PLI) schemes and export promotion measures further strengthened Indias manufacturing and export ecosystem. Although global demand remained uneven, Indias diversified export base and expanding domestic market helped mitigate external risks.

The financial sector continued to exhibit strength, supported by well-capitalized banks, improved asset quality, adequate liquidity, and stable credit growth across key sectors. Inflationary pressures moderated during the year owing to prudent monetary policy measures, easing supply-side constraints, and stable food and energy prices, enabling a balanced approach between inflation control and economic growth.

Indias capital markets remained resilient throughout FY2025-26, supported by sustained domestic institutional participation, increasing retail investor confidence, and improving corporate earnings. The Indian Rupee experienced periodic volatility in response to global developments; however, it remained broadly stable due to strong foreign exchange reserves, sound macroeconomic fundamentals, and proactive policy measures undertaken by the Government of India and the Reserve Bank of India.

Overall, Indias strong macroeconomic fundamentals, continued policy reforms, expanding digital economy, infrastructure-led development, favourable demographic profile, and resilient financial system position the country well to sustain its long-term growth trajectory and strengthen its role as one of the leading global economies.

The Non-Banking Financial Company (NBFC) sector continued to play a pivotal role in strengthening Indias financial ecosystem during FY2025-26 by expanding access to credit, supporting financial inclusion, and catering to the financing needs of underserved customer segments. The sector remained resilient despite evolving macroeconomic conditions, supported by healthy capitalization, prudent risk management practices, improved governance standards, and a stable regulatory environment.

During FY2025-26, the NBFC sector witnessed balanced growth, driven by steady demand across retail, MSME, vehicle finance, housing finance, and infrastructure financing segments. While the pace of credit expansion moderated compared to previous years due to regulatory measures and prudent lending practices, the overall quality of loan portfolios remained stable. Most NBFCs continued to maintain comfortable capital adequacy levels, adequate provisioning, and healthy liquidity buffers, contributing to the overall resilience of the sector.

The asset quality of the sector remained broadly stable during the year, supported by disciplined underwriting standards, effective collection mechanisms, and improving borrower repayment behaviour. The gradual normalization of credit costs and strengthened risk management frameworks enabled NBFCs to sustain profitability while maintaining financial stability.

The Reserve Bank of India (RBI) continued its calibrated and risk-based regulatory approach during FY2025-26 with the objective of strengthening the resilience of the financial sector while ensuring adequate credit availability to productive sectors of the economy. The regulatory framework continued to emphasize enhanced governance standards, stronger risk management practices, improved transparency, and greater operational resilience across NBFCs.

The RBI also continued refining the regulatory architecture through periodic policy measures relating to capital adequacy, liquidity management, digital lending, customer protection, cybersecurity, outsourcing arrangements, and governance practices. These initiatives are expected to further strengthen confidence in the NBFC sector while promoting responsible and sustainable lending practices.

Credit demand remained healthy across various economic sectors, although lending growth was relatively measured compared to previous years as financial institutions adopted a more prudent approach towards underwriting and portfolio quality. Retail lending, MSME financing, secured lending, and infrastructure-related credit continued to remain important growth drivers for the sector. Increasing digital adoption, data-driven credit assessment models, and technology-enabled customer on boarding further enhanced operational efficiency and improved customer experience across the industry.

NBFCs also continued to diversify their funding profile through bank borrowings, capital market instruments, securitisation, co-lending arrangements, and other financing avenues, thereby strengthening liquidity management and reducing concentration risks.

The NBFC industry continued to work closely with regulators, industry associations, and financial institutions to support the development of a robust and inclusive financial ecosystem. Ongoing policy discussions focused on balancing financial stability with the need to improve credit penetration, encourage innovation, strengthen digital finance, and enhance financial inclusion, particularly for MSMEs, rural borrowers, and underserved customer segments.

The outlook for the NBFC sector remains positive, supported by Indias strong macroeconomic fundamentals, rising domestic consumption, continued infrastructure development, increasing formalization of the economy, and expanding digital financial services. While global uncertainties and evolving regulatory expectations may continue to present challenges, the sector is well-positioned to sustain long-term growth through prudent risk management, technological innovation, improved governance standards, and customer-centric business models. The continued support of the Reserve Bank of India and the Government of India is expected to further strengthen the resilience, stability, and sustainable growth of the NBFC sector in the years ahead.

The financial statements have been prepared in accordance with the requirement of the Companies Act, 2013 and applicable Accounting Standards issued by the Institute of Chartered Accountant of India.

(a) Diverse Product Portfolio and Market Reach:
The NBFC sector has developed a well-diversified portfolio of financial products and services catering to the evolving needs of individuals, MSMEs, corporates, and rural customers. NBFCs provide a wide range of financing solutions, including personal loans, business loans, vehicle finance, housing finance, gold loans, loan against property, MSME financing, supply chain finance, infrastructure finance, microfinance, consumer durable loans, and other customized credit products. Their ability to serve niche and underserved segments, where traditional banking penetration remains limited, continues to be one of the sectors key competitive strengths, thereby promoting greater financial inclusion and supporting economic development.

(b) Digital Transformation and Technological Innovation:
Technology has emerged as a key growth driver for the NBFC sector. Increasing adoption of digital platforms, artificial intelligence (AI), machine learning (ML), cloud computing, data analytics, automation, and digital payment infrastructure has significantly enhanced operational efficiency and customer experience. NBFCs are leveraging technology across the credit lifecycle, including digital customer onboarding, e-KYC, credit underwriting, fraud detection, loan processing, disbursement, collections, customer servicing, and risk monitoring. These technological advancements have enabled faster decision-making, reduced operating costs, improved portfolio quality, and enhanced accessibility of financial services, thereby strengthening the sectors competitiveness in an increasingly digital financial ecosystem.

(a) Evolving Regulatory Environment and Compliance Requirements
The NBFC sector operates within a dynamic and continuously evolving regulatory framework. The Reserve Bank of India (RBI) regularly introduces prudential norms, governance standards, digital lending guidelines, capital adequacy requirements, cybersecurity measures, and risk management frameworks to strengthen the resilience of the financial system. While these regulatory initiatives enhance transparency, financial stability, and customer protection, they also require NBFCs to continuously upgrade their internal controls, technology infrastructure, governance practices, and compliance mechanisms.

The increasing regulatory expectations often result in higher compliance, operational, and technology-related costs, particularly for small and mid-sized NBFCs. Continuous adaptation to regulatory changes may impact operational efficiency and profitability in the short term; however, these measures contribute to building a stronger, more resilient, and sustainable NBFC sector over the long term.

The NBFC sector continues to offer significant growth opportunities, supported by Indias expanding economy, increasing financial inclusion, rapid digitalization, favourable demographic profile, and rising demand for diversified financial products and services. The Company remains focused on identifying emerging business opportunities, strengthening its technological capabilities, enhancing customer experience, and developing innovative financial solutions to achieve sustainable long-term growth.

• Expanding its presence in the MSME, retail, and emerging business segments by leveraging technology-driven lending models and customized financial solutions.
• Strengthening collaborations with FinTech companies, digital platforms, and ecosystem partners to enhance customer reach, improve operational efficiency, and accelerate digital transformation.
• Developing innovative and customer-centric financial products to address the evolving financing requirements of individuals, entrepreneurs, and businesses.
• Capitalizing on the rapid growth of the digital economy, e-commerce ecosystem, and embedded finance, creating new avenues for credit delivery and financial services.
• Diversifying the Companys lending portfolio by entering high-growth and profitable market segments while maintaining prudent risk management practices.
• Leveraging increasing formalization of the economy, Government initiatives promoting financial inclusion, digital payments, and MSME development to expand the customer base.
• Utilizing advanced technologies such as Artificial Intelligence (AI), Machine Learning (ML), data analytics, and digital underwriting to enhance credit assessment, improve customer experience, and strengthen portfolio quality.
• Benefiting from the growing entrepreneurial ecosystem, start-up culture, and rising demand for business financing, thereby creating new opportunities for sustainable credit growth.

The NBFC sector operates in a highly competitive and regulated business environment. The Company continuously monitors emerging risks, market developments, and competitive dynamics, and undertakes appropriate strategic initiatives to strengthen its market position, enhance operational resilience, and effectively manage potential challenges.

• Increasing cost of funds resulting from changes in interest rates, liquidity conditions, and evolving funding market dynamics, which may affect lending margins and profitability.
• Credit risk associated with borrowers, particularly arising from economic slowdowns, sector-specific stress, or deterioration in the repayment capacity of customers, which may impact asset quality.
• Intensifying competition from banks, other NBFCs, FinTech companies, digital lending platforms, and emerging financial service providers, leading to pressure on pricing, customer acquisition, and market share.
• Evolving regulatory framework and increased compliance requirements prescribed by the Reserve Bank of India (RBI), which may result in higher operational and compliance costs.
• Cybersecurity and technology-related risks, including data security, digital fraud, and operational disruptions, owing to the increasing reliance on digital platforms and technology-enabled financial services.
• Macroeconomic and geopolitical uncertainties, including inflationary pressures, interest rate fluctuations, global economic volatility, and supply chain disruptions, which may adversely affect credit demand and repayment behaviour.
• Funding concentration and liquidity risks, particularly during periods of market stress or constrained access to capital markets.
• Operational risks, including fraud, process failures, and evolving customer expectations, requiring continuous strengthening of governance, internal controls, and risk management systems.

The Company remains committed to proactively identifying, assessing, and mitigating these risks through prudent lending practices, diversified funding sources, robust risk management frameworks, strong governance standards, and continuous investment in technology and compliance systems.

Effective risk management is an integral part of the Companys governance framework and strategic decision-making process. The Company has established a comprehensive risk management framework designed to identify, assess, monitor, mitigate, and report risks that may impact the achievement of its business objectives. The framework adopts both qualitative and quantitative approaches to risk assessment and is supported by appropriate internal controls, periodic reviews, and continuous monitoring to ensure effective risk mitigation.

The Companys Risk Management Framework has been approved by the Board of Directors and is periodically reviewed to ensure its continued relevance in line with the evolving regulatory environment, business requirements, and market conditions. The Board and its Committees oversee the implementation and effectiveness of the risk management framework, while the Management continuously monitors the Companys overall risk profile and takes appropriate corrective actions wherever necessary.

The Company is primarily exposed to Credit Risk, Market Risk, Liquidity Risk, Operational Risk, Fraud Risk, Compliance Risk, Information Technology & Cybersecurity Risk, and Strategic Risk. Appropriate policies, standard operating procedures, internal controls, and governance mechanisms have been established for effective management of these risks.

Credit risk represents the possibility of financial loss arising from a borrowers inability or unwillingness to meet its contractual obligations. Considering that lending constitutes the core business of the Company, effective credit risk management remains one of its highest priorities. The Company has implemented Board-approved Credit Policies, credit appraisal processes, delegated approval authorities, exposure limits, portfolio monitoring mechanisms, and early warning systems to ensure prudent lending practices. Credit exposures are regularly reviewed at both the individual borrower level and portfolio level to maintain the overall quality of the loan book.

The Company follows a prudent and disciplined approach towards managing market and liquidity risks. Appropriate policies and risk limits have been established for monitoring interest rate movements, funding requirements, liquidity positions, and market exposures. The Company maintains adequate liquidity buffers and diversified funding sources to meet its financial obligations while ensuring business continuity under varying market conditions.

Operational risk refers to the possibility of losses arising from inadequate or failed internal processes, human error, technology failures, fraud, or external events. The Company has implemented robust internal controls, documented operating procedures, maker-checker mechanisms, process automation, business continuity plans, and periodic internal audits to minimize operational risks. Continuous monitoring and periodic reviews enable timely identification and mitigation of operational vulnerabilities.

The Company has established a comprehensive Fraud Risk Management Framework aimed at preventing, detecting, investigating, and responding to fraud-related incidents. Appropriate preventive controls, surveillance mechanisms, employee awareness programmes, whistle-blower mechanisms, and investigation protocols have been implemented to safeguard the Companys assets, financial resources, and reputation. Any identified instances are promptly investigated, and corrective actions are taken to strengthen the control environment.

The Company maintains a strong compliance culture supported by a comprehensive compliance management framework to ensure adherence to all applicable laws, regulations, circulars, and regulatory guidelines issued by the Reserve Bank of India (RBI), the Ministry of Corporate Affairs (MCA), SEBI (where applicable), and other statutory authorities. The Compliance function continuously monitors regulatory developments and facilitates timely implementation of applicable legal and regulatory requirements across the organization.

With increasing digitalization of financial services, the Company places significant emphasis on information security and cybersecurity. Appropriate IT governance policies, cybersecurity controls, data protection measures, access management systems, disaster recovery arrangements, and periodic vulnerability assessments have been implemented to protect the Companys information assets and ensure the confidentiality, integrity, and availability of critical business systems.

The Companys risk governance framework promotes an appropriate balance between business growth and prudent risk management. The Board of Directors, through its Committees and the senior management team, periodically reviews the Companys risk profile, risk appetite, emerging risks, and the effectiveness of mitigation measures. The risk appetite framework provides strategic guidance in evaluating business opportunities while ensuring that the Companys risk exposure remains within acceptable limits.

The Company continues to strengthen its risk management capabilities through technology-driven monitoring tools, data analytics, enhanced governance practices, and continuous improvement of internal controls. This proactive approach enables the Company to effectively respond to changing business conditions, safeguard stakeholder interests, maintain financial stability, and support sustainable long-term growth.

The Company has established an adequate and effective system of internal controls commensurate with the size, scale, nature, and complexity of its business operations. The internal control framework is designed to ensure the orderly and efficient conduct of business, safeguard the Companys assets, maintain the accuracy and reliability of financial and operational information, promote operational efficiency, and ensure compliance with applicable laws, regulations, and internal policies.

The Company has implemented a robust Internal Financial Control (IFC) framework in accordance with the provisions of Section 134(5)(e) of the Companies Act, 2013. The framework is intended to ensure the accuracy and completeness of accounting records, timely preparation of reliable financial statements, prevention and detection of frauds and errors, effective utilization of resources, and adherence to established policies and procedures.

The Internal Audit function provides an independent and objective assessment of the adequacy and effectiveness of the Companys internal control systems, governance processes, and risk management framework. During the financial year 2025-26, the internal audit of the Company was carried out by M/s. HCO & Co., Practicing Chartered Accountants, in accordance with the internal audit plan approved by the Audit Committee.

The Internal Auditors periodically review the effectiveness of key business processes, operational controls, financial reporting systems, statutory compliances, and risk management practices. Their observations and recommendations are presented to the Audit Committee, which monitors the implementation of corrective actions by the Management. The Board believes that the existing internal control systems and internal financial controls are adequate and are operating effectively.

The Company remains committed to providing a safe, healthy, and secure working environment for its employees while ensuring uninterrupted business operations. Appropriate health and workplace safety practices continue to be implemented in accordance with applicable statutory requirements and industry best practices.

The experience gained during the COVID-19 pandemic has significantly strengthened the Companys business continuity and operational resilience. The accelerated adoption of digital technologies, cloud-based infrastructure, secure remote working capabilities, and technology-enabled customer service platforms has enhanced operational efficiency, improved customer experience, and strengthened organizational agility.

The Company continues to maintain a comprehensive Business Continuity Management (BCM) framework and Disaster Recovery (DR) mechanisms to effectively respond to unforeseen disruptions arising from public health events, natural disasters, cyber incidents, technology failures, or other operational contingencies. Regular reviews and testing of business continuity plans are undertaken to ensure preparedness and operational resilience.

Recognizing the evolving business environment, the Company also continues to strengthen its cybersecurity framework, digital infrastructure, and operational risk management practices to address emerging technological and business risks. The Management remains focused on ensuring business continuity, protecting stakeholder interests, and sustaining long-term operational excellence through proactive planning and continuous improvement.

The Company is committed to maintaining the highest standards of regulatory compliance, corporate governance, and ethical business practices. A robust compliance management framework has been established to ensure adherence to all applicable laws, regulations, guidelines, and circulars issued by the Reserve Bank of India (RBI), the Ministry of Corporate Affairs (MCA), and other statutory and regulatory authorities.

The Compliance function continuously monitors regulatory developments and evaluates their applicability to the Companys operations. Appropriate systems and processes are in place to facilitate timely implementation of regulatory changes and ensure the accurate and timely submission of all statutory returns, regulatory filings, and disclosures as prescribed under the applicable legal and regulatory framework.

The Company has implemented a comprehensive internal control and governance framework comprising clearly defined policies, delegated authority matrices, standard operating procedures (SOPs), and maker-checker controls across all business functions. These controls are designed to promote operational efficiency, safeguard the Companys assets, strengthen accountability, and ensure compliance with internal policies and regulatory requirements.

The effectiveness of the internal control environment and compliance framework is regularly reviewed through ongoing management oversight, internal audits, compliance reviews, and independent audits, wherever applicable. The Company also periodically evaluates its risk management processes and internal governance mechanisms to ensure that they remain aligned with the evolving regulatory landscape, business requirements, and industry best practices.

The Board and the senior management remain committed to continuously strengthening the Companys governance, compliance, and risk management practices to support sustainable growth, protect stakeholder interests, and uphold the highest standards of integrity and transparency.

The Company firmly believes that its employees are its most valuable asset and the cornerstone of its sustained growth and long-term success. It remains committed to attracting, developing, engaging, and retaining a talented workforce by fostering an inclusive, collaborative, and performance-driven work environment that supports the achievement of its strategic objectives.

The Companys Human Resource philosophy is founded on the principles of meritocracy, equal opportunity, diversity, integrity, and continuous learning. It strives to create a workplace that encourages innovation, professional excellence, and mutual respect, while ensuring a fair and transparent environment free from discrimination and bias.

The Companys human resource development initiatives are designed to:

(a) Enhance employees technical, managerial, and functional competencies to effectively meet present and future business requirements;
(b) Encourage continuous learning, professional development, and leadership capabilities to enable employees to realize their full potential; and
(c) Foster a culture of collaboration, teamwork, knowledge sharing, and employee engagement that strengthens organizational effectiveness and promotes long-term career growth.

The Company continues to invest in learning and development through structured training programmes, digital learning platforms, leadership development initiatives, and skill enhancement programmes. Employees are encouraged to embrace innovation, adopt emerging technologies, and continuously upgrade their professional capabilities to meet the evolving demands of the financial services industry.

Employee well-being remains an important priority for the Company. Various initiatives relating to employee engagement, health and wellness, recreational activities, recognition programmes, team-building exercises, and leadership interactions are organized throughout the year to promote a positive work environment, strengthen employee morale, and reinforce a culture of collaboration and inclusiveness.

The Company continues to leverage technology to improve employee experience, strengthen internal communication, and enhance operational efficiency. Digital HR processes and collaborative platforms have enabled greater organizational agility, improved productivity, and seamless interaction across various business functions.

The Company believes in developing future leaders through succession planning, internal talent development, and merit-based career progression. Continuous performance evaluation, employee recognition, and leadership engagement help build a motivated, agile, and future-ready workforce capable of supporting the Companys long-term growth strategy.

As on 31st March, 2026, the Company had 9 employees on its rolls. The Company continues to maintain cordial industrial relations, and no material employee-related issues were reported during the financial year.

This Management Discussion and Analysis Report contains certain forward-looking statements concerning the Companys business prospects, growth strategies, future plans, financial performance, operational objectives, and industry outlook. These statements are based on the Managements current expectations, assumptions, estimates, and projections regarding future events and are subject to various known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in such statements.

Factors that may influence the Companys actual performance include, among others, changes in economic conditions, regulatory and policy developments, interest rate movements, inflation, competitive pressures, technological advancements, availability of capital and skilled resources, customer preferences, geopolitical developments, and other risks associated with the Companys business operations and the NBFC industry.

The forward-looking statements contained in this Report should therefore be viewed in the context of these uncertainties and should not be regarded as a guarantee of future performance. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required under applicable laws and regulations.

This Report should be read in conjunction with the Companys audited financial statements, the accompanying notes thereto, and other sections of the Annual Report.

For and on behalf of the Board of Directors
Mega Corporation Limited