Moongipa Capital Finance Ltd Management Discussions

ANNEXURE-B

GLOBAL ECONOMIC OVERVIEW

The global economy entered FY 2024-25 with early signs of stabilization after several years of heightened volatility driven by the COVID-19 pandemic, supply chain disruptions, and geopolitical conflicts. Inflation, which had touched multi-decade highs across most advanced and emerging economies, began to show a gradual- though uneven- decline, aided by the tightening of monetary policy by central banks worldwide. Labor markets exhibited resilience, with unemployment rates and job vacancies moving closer to pre-pandemic levels, reflecting ongoing recovery in employment and wage growth.

Notwithstanding these positive indicators, several developments have clouded the global economic outlook. In particular, the United States introduced a wide range of new tariffs, taking tariff levels to their highest in over a century. Key trading partners responded with retaliatory measures, creating renewed tensions and uncertainty in global trade flows. This escalation in trade barriers is expected to weigh on cross-border investment and supply chains in the short to medium term.

At the same time, advanced economies are experiencing tighter financial conditions and slowing credit growth due to higher interest rates, while several emerging economies, including India, continue to demonstrate relative resilience driven by robust domestic demand, digital adoption, and structural reforms. Global institutions such as the IMF and World Bank project that while overall global growth will moderate, emerging Asia will remain the key growth driver of the world economy in FY 2024-25 and beyond.

Against this backdrop, Non-Banking Financial Companies (NBFCs) in India continue to benefit from favorable macroeconomic fundamentals, a strong regulatory framework, and deepening financial inclusion, although they remain exposed to potential global spillovers such as capital flow volatility, currency fluctuations, and elevated commodity prices.

INDIAN ECONOMIC OVERVIEW

India remained one of the worlds fastest-growing major economies through FY 2024-25, supported by strong domestic demand, sustained public capex, and continued formalization of the economy. The IMFs July 2025 update places Indias FY 2025 growth projection at 6.4%, underscoring continued outperformance versus most advanced economies.

Inflation eased within the RBIs tolerance band during 2024-25, aided by better supplies and a normalizing commodity cycle. Headline CPI readings through mid-2025 softened (official July 2025 release), providing space for a calibrated policy pivot.

Reflecting the disinflation trend and a growth-supportive stance, the RBI reduced the policy repo rate cumulatively to 5.50% in 2025 and then held it unchanged in August 2025 with a neutral stance, aiming to balance growth and inflation dynamics. Transmission remains ongoing across credit products.

During FY 2024-25, the Indian economy continues to demonstrate resilience relative to global peers. This macroeconomic backdrop, coupled with structural reforms and rising digital adoption, presents both opportunities and challenges for Non-Banking Financial Companies (NBFCs).

Key Implications:

Growth Prospects

Sustained GDP growth of over 6% provides NBFCs with a strong demand environment, particularly in retail credit, MSME financing, and infrastructure-linked lending.

Expanding rural consumption and increasing financial inclusion create new market opportunities.

Interest Rate & Liquidity Impact

Persistently high global interest rates may increase cost of borrowings for NBFCs, especially those accessing external commercial borrowings (ECBs).

Domestic liquidity conditions, supported by RBI measures, are expected to remain stable, ensuring continued access to refinancing avenues.

Regulatory Developments

The RBIs Scale-Based Regulation (SBR) framework and SEBI LODR requirements for listed NBFCs demand stronger governance, disclosures, and risk management practices.

Focus areas include capital adequacy, asset-liability management, and customer protection.

Digital Transformation

NBFCs leveraging UPI, digital lending platforms, e-KYC, and AI-driven credit analytics are likely to achieve operational efficiency and deeper customer penetration.

Digital adoption also mitigates operational risks and enhances compliance monitoring.

Risk Factors

Global uncertainties including trade disruptions, volatile capital flows, currency fluctuations, and elevated commodity prices pose spillover risks.

Rising borrowing costs could impact credit demand and repayment capacity in vulnerable sectors.

MOONGIPA CAPITAL FINANCE LIMITED - AN OVERVIEW

Moongipa Capital Finance Limited (‘MCFL or ‘the Company) is a growing Non-banking Financial Company (“NBFC”) undertaking the business of trading in securities, providing unsecured financing (Corporate and Personal Finance), and investing in shares of Listed and Unlisted Companies and other securities.

The Company serving the credit requirements and financial assistance to industries by way of advance, deposit or lend money, securities and properties to or with any company, body corporate, firm, person or association whether falling under the same management or otherwise.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Your Company is engaged in the business of investment and trading in equity shares, preference shares, stocks, debentures (convertible and non-convertible), and Government Securities, including Government Bonds, Loans, units and all other Financial Instruments and providing retail loans and advances for industrial and other purpose. MCFL is registered with the Reserve Bank of India (RBI) as a Non- Systematically important, non-deposit taking NBFC, bearing Registration No. 14.01051 dated 10th Day of August, 1998.

The activities of Finance and investment Companies in India have undergone qualitative changes over the years. They have become prominent in a wide range of activities. By now, there role as effective financial intermediaries has been well recognized as they have inherent ability to take inherent decisions, assume greater risks, apply innovative marketing strategies and customize their products and services according to the needs of the clients. In order to have a healthy financial and investment sectors in a country like ours, there has to be a sustainable marriage between the primary lending institutions (Banks and FIIs) and the intermediaries so that both of them stick to their core competencies and not to compete with other unnecessarily.

Your company has built a strong presence in the market through its cumulative experience as well as sound systems and processes.

OPPORTUNITIES AND THREATS

The NBFC sector in India continues to play a pivotal role in bridging the credit gap, particularly in segments that remain underserved by the traditional banking system. With rising demand for retail credit, MSME financing, and consumer loans, NBFCs are well-positioned to capture growth opportunities in both urban and semi-urban markets. The rapid adoption of digital technologies, fintech collaborations, and AI-driven credit assessment tools has further enabled NBFCs to enhance customer outreach, improve efficiency, and reduce operational costs. In addition, supportive regulatory initiatives, growing investor participation, and increasing financial literacy are creating a conducive environment for NBFCs to expand into new business segments such as wealth management, co-lending, and structured finance. NBFCs engaged in capital market activities, including trading in shares and securities, also stand to benefit from the deepening of Indian capital markets and increasing retail participation.

At the same time, the sector faces certain challenges and threats that could impact its growth trajectory. The harmonization of regulatory norms with those applicable to banks, including stricter capital adequacy, provisioning, and exposure requirements, may increase compliance costs for NBFCs. NBFCs engaged in trading activities are also exposed to volatility in financial markets arising from geopolitical tensions, currency fluctuations, and global recessionary trends.

Moreover, growing reliance on digital platforms exposes NBFCs to operational and cyber security risks. Intense competition from banks, fintechs, and payment banks is also expected to exert pressure on margins. These factors underscore the need for NBFCs to adopt prudent risk management, diversify funding sources, and strengthen operational resilience in order to sustain growth.

SEGMENT WISE / PRODUCT WISE PERFORMANCE

The Company engaged in investment, trading and credit activities during the year under review, hence the requirement of segment-wise reporting is considered irrelevant.

FUTURE OUTLOOK

The Company continues to remain well-positioned to leverage the significant opportunities in the NBFC sector, supported by increasing demand for credit, strengthening financial inclusion, and expanding capital markets. In the previous year, the Company successfully raised funds through a Rights Issue, which were strategically deployed to expand lending operations and investment activities. This has enhanced the Companys capital base and operational resilience.

As part of its growth strategy, the Company is also seeking shareholders approval in the forthcoming Annual General Meeting (AGM) for an increase in its Authorised Share Capital. This will enable the Company to raise further equity capital in the future, thereby supporting expansion plans, enhancing lending capacity, and strengthening balance sheet flexibility.

Looking ahead, while the external environment may continue to witness global uncertainties, capital market volatility, and evolving regulatory dynamics, the Companys focus on prudent risk management, portfolio diversification, and digital adoption will help it sustain growth momentum. With a stronger capital structure and forward-looking strategy, the Company is confident of delivering sustainable long-term value for its 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 polic ies, 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.

DISCUSSION OF FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial statements are prepared in compliance with the requirements of the Companies Act, 2013 and the Indian Accounting Standards prescribed by the Institute of Chartered Accountants of India.

At the operating level, the Company registered a Profit before Finance Cost, Depreciation and Tax of ^2,23.64 lakhs as against ^2,01.20 lakhs in the previous year, reflecting better cost efficiency and prudent resource management. Finance costs increased to ?7.57 lakhs from ^0.11 lakhs, attributable to higher fund utilization, while depreciation marginally declined to ?4.90 lakhs from ?6.17 lakhs.

Consequently, the Net Profit before Tax stood at ^2,11.17 lakhs as compared to ^1,94.92 lakhs in FY 2023-24, indicating a growth of nearly 8.3%. However, higher provisioning for Current Tax (^47.88 lakhs) and Deferred Tax (^25.59 lakhs) impacted the bottom line, leading to a Net Profit after Tax of ^137.70 lakhs against ^174.51 lakhs in the previous year.

The Earnings Per Share (EPS) was reported at ?3.01 (face value of ?10 per share) compared to ?5.71 in FY 2023-24, reflecting the impact of increased equity base due to the Rights Issue. On a positive note, the Book Value per share strengthened to ^24.94 from ^20.97 in the previous year, indicating an enhancement in shareholder value and stronger balance sheet fundamentals.

From an operational perspective, the Company continued to pursue a cautious strategy in its capital market operations, focusing on long-term trends and avoiding leveraged positions. The infusion of equity through the Rights Issue was effectively deployed in strengthening lending activities and expanding investment operations, thereby enhancing operational capacity.

The focus remains on optimizing portfolio strategies, improving efficiency, and strengthening financial stability to deliver sustainable value to stakeholders.

FINANCIAL YEAR OF THE COMPANY

The Financial Year of the Company continues to remain of twelve months starting with 1st 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 2024-25	FY 2023-24
Debtors Turnover	9.07	57.61
Inventory Turnover	1.19	3.27
Interest Coverage Ratio	28.90	1716.09
Current Ratio	94.61	82.11
Debt Equity Ratio	0.31	0.00
Operating Profit Margin (%)	23.2%	20.3%
Net Profit Margin (%)	0.15	0.18
Return on Equity Ratio	0.09	0.32
Return on Capital Employed / Net Worth	0.07	0.30

DISCLOSURES

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.