Moongipa Capital Finance Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

The global economy during FY 2025-26 continued to witness heightened uncertainty arising from geopolitical tensions, evolving trade policies, inflationary pressures, and volatile financial market conditions. Although inflationary trends moderated across several economies, global growth remained below long-term historical averages due to weaker trade activity, cautious investment sentiment, and ongoing policy uncertainties.

According to the International Monetary Fund ("IMF") World Economic Outlook (April 2025), global economic growth is projected at 2.8% in CY2025 and 3.0% in CY2026, which remains below the historical average growth rate of 3.7% recorded during the period 2000 2019. The IMF has further projected global headline inflation to decline to 4.3% in CY2025 and 3.6% in CY2026, reflecting gradual easing of inflationary pressures and stabilizing monetary conditions across economies.

During the year, the global economic environment was significantly impacted by trade-related uncertainties following the announcement of reciprocal tariffs by the United States on several countries, including India, along with substantially higher tariffs imposed on Chinese imports. These developments led to increased concerns regarding global trade disruptions, weakening export demand, adverse foreign exchange movements, and potential moderation in GDP growth across major trading economies. Although the United States temporarily paused implementation of higher tariffs for certain countries to facilitate trade negotiations, uncertainty surrounding global trade policies and possible retaliatory measures by affected nations continued to impact market sentiment and global economic outlook.

Despite global headwinds, India continued to remain one of the fastest-growing major economies globally. The IMF has projected Indias real GDP growth at 6.5% for both FY2025 and FY2026, which is higher than most major global economies, including China. Indias growth momentum continued to be supported by strong domestic consumption, government capital expenditure, infrastructure development, improving manufacturing activity, resilient services sector performance, digital transformation, and policy-driven economic reforms.

As per the Second Advance Estimates released by the National Statistical Office ("NSO") on 28 February 2025, Indias real GDP growth for FY2025 has been estimated at 6.5% as against 9.2% recorded in FY2024. Real Gross Value Added ("GVA") growth for FY2025 has been estimated at 6.4% compared to 8.6% in FY2024. The moderation in growth reflects the impact of global economic uncertainties, tighter financial conditions, and slower external demand.

The Indian financial sector, including banks and NBFCs, continued to play a vital role in supporting economic growth by ensuring adequate credit flow to retail, MSME, and infrastructure sectors. Stable banking liquidity, increased formalization of the economy, rising digital adoption, and continued focus on financial inclusion are expected to support long-term economic expansion.

Overall, notwithstanding external uncertainties and evolving geopolitical developments, Indias macroeconomic fundamentals remain relatively strong, supported by robust domestic demand, policy reforms, infrastructure investments, and a stable financial system, thereby providing a positive medium to long-term outlook for the economy.

NBFC: INDUSTRY OVERVIEW

The Non-Banking Financial Company ("NBFC") sector continues to play a significant role in the Indian financial system by expanding access to credit and financial services, particularly to underserved and unbanked segments of the economy. NBFCs have complemented the traditional banking system by offering flexible, technology-driven, and customer-centric financial solutions tailored to diverse borrower requirements, including MSMEs, self-employed individuals, and retail customers.

Over the years, NBFCs have emerged as an important pillar of financial inclusion and economic growth. Their operational agility, localized understanding of customer needs, faster credit delivery mechanisms, and increasing adoption of digital technologies have enabled them to strengthen their presence across various lending segments. The sector has continued to witness steady expansion in Assets Under Management ("AUM") and retail credit penetration.

The Indian NBFC sector has demonstrated resilience despite global economic uncertainties, inflationary pressures, evolving regulatory requirements, and changing interest rate environments. The growth in retail and MSME lending, increasing digital adoption, and rising formalization of the economy have continued to support the sectors long-term growth prospects.

According to industry reports and the Reserve Bank of India Financial Stability Report, credit growth in the NBFC sector moderated during FY2025 primarily due to higher base effects, tightening regulatory measures, and revised risk weight norms applicable to certain lending segments. Nevertheless, the asset quality position of the sector continued to improve, supported by prudent underwriting standards, improved collections, and strengthening risk management practices.

The Gross Non-Performing Asset ("GNPA") and Net Non-Performing Asset ("NNPA") ratios of NBFCs showed continued improvement during the year, reflecting the sectors operational resilience and focus on maintaining healthy asset quality. At the same time, regulatory authorities continued to emphasize governance standards, compliance frameworks, responsible lending practices, and strengthened risk management systems to ensure sustainable sectoral growth.

Post-pandemic economic recovery, rising consumption demand, infrastructure development, and increased financial awareness have further contributed to growth in retail credit and financing activities across the sector. NBFCs continue to play a critical role in supporting credit availability for retail borrowers and small businesses, thereby contributing significantly to economic development and financial inclusion in India.

As the NBFC sector continues to gain systemic importance in the Indian financial ecosystem, the Reserve Bank of India ("RBI") has further strengthened its regulatory and supervisory framework to enhance financial stability, governance standards, and customer protection. The regulatory focus during FY2025-26 remained on strengthening risk management practices, improving asset quality monitoring, enhancing cybersecurity preparedness, and ensuring responsible lending across the sector.

Over the past few years, the RBI has introduced several regulatory measures relating to asset-liability management ("ALM"), liquidity management frameworks, digital lending guidelines, scale-based regulations, governance standards, and enhanced disclosure and reporting requirements for NBFCs. These measures have resulted in NBFCs increasingly aligning their operational and compliance frameworks with banking sector standards.

The regulatory approach of the RBI continues to be guided by key principles including responsible financial innovation, accountable conduct, sound governance practices, customer protection, and strengthening systemic resilience within the financial sector.

During FY2025-26, the RBI continued to focus on strengthening the regulatory architecture surrounding digital financial services, fintech collaborations, co-lending arrangements, and technology-driven lending models. The regulator also emphasized prudent underwriting standards, data privacy safeguards, cyber risk management, and responsible recovery practices in order to maintain financial discipline and customer confidence.

Further, the RBI announced additional policy and regulatory measures aimed at improving financial sector efficiency and enhancing credit delivery mechanisms. These included proposals relating to securitisation of stressed assets through market-based mechanisms, expansion of co-lending arrangements among regulated entities, harmonisation of lending norms for gold-backed loans, and review of transaction limits and safeguards within digital payment systems such as Unified Payments Interface ("UPI").

The evolving regulatory environment is expected to further strengthen transparency, governance, operational discipline, and long-term sustainability of the NBFC sector. The management of Moongipa Capital Finance Limited continues to closely monitor regulatory developments and remains committed towards maintaining robust compliance standards, strengthening internal controls, prudent risk management practices, and ensuring adherence to all applicable regulatory requirements.

INDIAN ECONOMIC OVERVIEW

India continued to remain one of the fastest-growing major economies during FY 2025 26 despite persistent global economic uncertainties, geopolitical tensions, and trade-related disruptions across several regions. Strong domestic consumption, sustained government focus on infrastructure development, improving manufacturing activity, rising private investments, and increasing digital adoption supported overall economic growth during the year. Continued policy reforms, growth in the services sector, and expansion in formal financial systems further strengthened Indias macroeconomic resilience.

During the year, inflationary pressures moderated gradually due to easing commodity prices, improved supply chain conditions, and policy measures undertaken by the Reserve Bank of

India ("RBI"). The RBI continued to maintain a balanced and cautious monetary policy approach aimed at supporting economic growth while ensuring financial stability and controlling inflationary risks. The Indian banking and financial system remained stable, adequately capitalized, and supported by healthy liquidity conditions and improving credit demand.

The Non-Banking Financial Company ("NBFC") sector continued to play an important role in credit delivery and financial inclusion, particularly across retail, MSME, and underserved borrower segments. The sector witnessed steady growth in retail financing, MSME lending, vehicle financing, and capital market-linked activities. Increasing penetration of digital financial services, wider adoption of technology-driven lending models, and growing customer acceptance of fintech-enabled solutions continued to create growth opportunities for NBFCs.

Further, supportive regulatory initiatives, improving digital infrastructure, rising formalization of the economy, and increasing demand for customized financial products contributed positively towards sectoral growth. NBFCs continued to complement the banking sector by providing flexible and faster credit solutions tailored to diverse customer requirements.

However, the sector continued to remain exposed to various challenges and risks including volatility in capital markets, fluctuations in interest rates, tightening liquidity conditions, cybersecurity and technology-related risks, asset quality pressures in certain borrower segments, and evolving regulatory and compliance requirements. Increased regulatory scrutiny on digital lending practices, consumer protection, governance standards, and risk management frameworks also led to enhanced compliance obligations for NBFCs.

Despite these challenges, the overall outlook for the Indian economy and NBFC sector remains positive, supported by strong domestic fundamentals, rising credit demand, infrastructure-led economic growth, increasing financial inclusion, and continued policy support from the Government and regulatory authorities.

MOONGIPA CAPITAL FINANCE LIMITED AN OVERVIEW

Moongipa Capital Finance Limited is a Non-Banking Financial Company ("NBFC") primarily engaged in the business of investment and trading in securities, providing unsecured loans and advances, and making investments in listed and unlisted securities and other financial instruments. The Company operates with a focus on delivering sustainable financial solutions while maintaining prudent risk management and regulatory discipline.

The Company is registered with the Reserve Bank of India as a Non-Systemically Important Non-Deposit Taking NBFC bearing Registration No. 14.01051 dated August 10, 1998. Over the years, the Company has continued to strengthen its operational framework in line with evolving regulatory requirements and industry best practices.

The Companys business model is focused on maintaining a balanced approach towards investments, lending activities, and capital allocation. Through prudent investment strategies and disciplined financial management, the Company aims to optimize returns while ensuring adequate liquidity, asset quality, and long-term value creation.

During the year under review, the Company continued to focus on strengthening its financial position, improving operational efficiencies, and maintaining a cautious approach towards risk management amidst evolving market conditions and regulatory developments. The management remains committed towards maintaining transparency, corporate governance standards, and strong internal control systems.

The Company also continues to evaluate growth opportunities in the financial services sector, supported by increasing financial inclusion, digital adoption, and growing demand for credit across retail and MSME segments. At the same time, the Company remains focused on maintaining regulatory compliance, prudent underwriting practices, portfolio diversification, and sustainable business growth.

With its experienced management team, disciplined operational approach, and focus on governance and compliance, Moongipa Capital Finance Limited remains committed to creating long-term value for its stakeholders while adapting to the dynamic business and regulatory environment.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The NBFC sector in India has emerged as an important pillar of the financial system by providing credit support to underserved and unbanked segments of the economy. Increasing retail credit demand, digital transformation and expansion of financial services have positively contributed towards the growth of the sector.

NBFCs continue to play an important role in providing customized financial solutions, faster credit assessment and operational flexibility as compared to traditional financial institutions. Increasing adoption of technology-driven financial services, digital lending platforms and AI-based credit assessment tools has improved operational efficiency and customer outreach.

The Company continues to maintain a cautious and balanced approach in its investment and financing activities considering prevailing market volatility and global economic uncertainty.

OPPORTUNITIES AND THREATS

The NBFC sector continues to offer significant growth opportunities driven by increasing financial inclusion, rising demand for retail and MSME credit and growing participation in capital markets.

Rapid technological advancements, digital lending platforms and improved access to financial services are expected to create additional opportunities for NBFCs in expanding their customer base and improving operational efficiency.

However, the sector also faces various challenges including:

Volatility in capital markets;

Geopolitical uncertainties and global conflicts;

Fluctuations in interest rates and liquidity conditions;

Increasing regulatory compliance requirements;

Cyber security and operational risks; and Intense competition from banks and fintech companies.

The Company continuously monitors market developments and adopts prudent risk management practices to mitigate potential risks.

SEGMENT-WISE / PRODUCT-WISE PERFORMANCE

The Company is primarily engaged in NBFC activities and operates as a single reportable segment.

FINANCIAL PERFORMANCE

During FY 2025 26, the Company reported Total Income of 1,182.12 Lakhs as against 909.43 Lakhs in the previous financial year.

Profit Before Tax stood at 77.30 Lakhs as compared to 211.17 Lakhs during FY 2024 25. Profit After Tax for the year stood at 72.78 Lakhs as against 137.70 Lakhs in the previous year.

The Companys Net Worth increased to 2,358.77 Lakhs as on March 31, 2026 from 2,285.99

Lakhs as on March 31, 2025.

The Debt Equity Ratio improved to 0.22 during FY 2025 26 as compared to 0.31 in the previous financial year, reflecting strengthening of the Companys capital structure. Book Value per share increased to 25.74 as against 24.94 in the previous year. The Company continued to maintain adequate liquidity and financial discipline during the year under review

FUTURE OUTLOOK

The Company intends to diversify and strengthen its lending portfolio by entering into retail financing, initially focusing on Electric Commercial Vehicles (ECVs), including passenger and loader electric three-wheelers, in the initial geographies of Uttar Pradesh, Uttarakhand and Madhya Pradesh. The Company aims to cater to first-time entrepreneurs, fleet operators, self-employed individuals and MSMEs engaged in last-mile mobility and logistics through a technology-enabled lending model supported by strategic tie-ups with EV manufacturers and authorised dealers, digital onboarding, e-KYC/CKYC and robust credit assessment and collection mechanisms.

The Company will maintain a prudent risk management framework, with the financed vehicles being hypothecated in favour of the Company, an indicative Loan-to-Value (LTV) of approximately 80% 85%, and a maximum loan tenure aligned with the guarantee/warranty period provided by the battery OEMs. This initiative is expected to diversify the Companys asset portfolio, enhance interest income and customer reach, while supporting the growing electric mobility ecosystem in India and creating sustainable long-term value for stakeholders.

RISK AND CONCERN

While risk is an inherent aspect of any business, the Company is conscious of the need to have an effective monitoring mechanism and has put in place appropriate measures for its mitigation including financial risk, legal risk and internal process risks. The Company has made appropriate provisions for mitigation of risk factors which may occur from Borrowers. Apart from this, Company has taken necessary measures to safeguard its assets/interests etc.

There are a lot of uncertainties on the interest front in the economy and there is the likelihood of the hardening of interest and the said situation may create a lot of turmoil in the market.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The company has adequate internal control systems commensurate with the Size of the business duly supplemented with an internal audit to ensure against any unauthorized use or disposition of assets. The internal controls are periodically reviewed by the Audit Committee to ensure their adequacy and effectiveness. Rule 8(5)(viii) of Companies (Accounts) Rules, 2014 requires the information regarding adequacy of Internal Financial Controls with reference to the financial statements to be disclosed in the Boards report. To ensure effective Internal Financial Controls the Company has laid down the following measures the Company has a well placed, proper and adequate IFC system which ensures that all assets are safeguarded and protected and that the transactions are authorised, recorded and reported correctly.

According to Section 134(5)(e) of the Companies Act, 2013 the term Internal Financial Control (IFC) means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

FINANCIAL YEAR OF THE COMPANY

The Financial Year of the Company continues to remain of twelve months starting with 1^st April of every financial year.

OPERATIONS

Your Company continuously taking effective steps in broad basing of its range and activities. During the year, your company shows a good profit and it has the further potential to make huge profits in the future. Apart from financial term, it is immense pleasure to inform you that your company render service to pan India basis and recorded a sound numerous of satisfactory customers.

HUMAN RESOURCES

The Company seeks respects and values of the diverse qualities and background that its people bring to it and is committed to utilizing the richness of knowledge, ideas, experience that this diversity provides.

The proper training and Personality Developments sessions were conducted for upgradation of employees, so that employees can get familiar with Companys rules and regulations. The

Company has built a resource base and cross-functional managers to take care of multi dimensional businesses Your Company has required manpower to manage its activities keeping in view its emphasis on cost reduction. The Company recognizes the importance of human resources in achieving success in its commercial pursuits and follows a good man management policy.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Particulars	FY 2025-26	FY 2024-25
Debtors Turnover	12.09	9.07
Inventory Turnover	1.15	1.19
Interest Coverage Ratio	2.15	28.90
Current Ratio	90.62	94.61
Debt Equity Ratio	0.22	0.31
Operating Profit Margin (%)	6.5%	23.2%
Net Profit Margin (%)	0.06	0.15
Return on Equity Ratio	0.03	0.09
Return on Capital Employed / Net Worth	0.05	0.07

During the year, the Company has not entered into any transaction of material nature with its promoters, the Directors or the management, their subsidiaries or relatives, etc. that may have potential conflict with the interest of the Company at large.

CAUTIONARY STATEMENT

Statements in this "Management Discussion and Analysis Report" describing the Company objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and India demand supply conditions, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, and economic developments within India.