Mufin Green Finance Ltd Management Discussions

[Schedule V Regulation 34(3) of SEBI (LODR) Regulations, 2015]

Management Discussion and Analysis mainly comprise of the statements which, inter-alia, involve predictions based on perceptions and may, therefore, be prone to uncertainties. It is the sum total of the Companys expectations, beliefs, estimates and projections which are forward looking within the meaning of applicable laws and regulations.

The actual results could differ materially from those expressed herein specifically or impliedly.

The Indian economy in the year 2024-25 was marked by significant inflationary pressures, geopolitical tensions, and volatile global financial markets. This posed substantial risks to inflation and economic stability. The Central Governments commitment to fiscal consolidation presented challenges in balancing growth and inflation control. Despite these hurdles, the Indian economy demonstrated resilience, achieving robust GDP growth at 6.5% for FY 2024-25, driven by strong private consumption, increased government spending on infrastructure and continuing monetary easing. The general elections in 2024 resulted in a decisive victory for the incumbent government, which continued its focus on economic reforms and infrastructure development. This political stability boosted investor confidence,supporting sustained economic growth. However, the Indian economy faced liquidity challenges in most part of the of FY25. CPI inflation #uctuated, peaking at 6.2% in October 2024 before moderating to 3.6% by February 2025. The rupee faced depreciation risks due to external uncertainties, impacting import costs and contributing to imported inflation. The RBI maintained a cautious stance, keeping the policy repo rate unchanged at 6.50% till January 2025 to balance inflation control with growth support. To manage liquidity, the RBI conducted Open Market Operations (OMOs) and dollar/rupee swaps to stabilise the rupee, which faced depreciation pressures due to global uncertainties. The Liquidity Adjustment Facility (LAF) corridor was actively used to manage short-term liquidity mismatches, ensuring adequate liquidity in the banking system. These measures helped lower borrowing costs and stimulated investment. In Q4, RBI adopted a fresh perspective to monetary policy, focussing on balancing growth and inflation control. In response to economic challenges and the needtocontaininflationwithin the target range, RBI reduced the repo rate by 25 bps in February 2025 and an additional 25 bps in April 2025 taking the repo rate to 6%. The Policy stance has also been changed from neutral to accommodative. The rate cuts are expected to encourage lending and investment, stimulate demand, and strengthen overall economic activity.

Indias economy has exhibited steadygrowthandstabilityduringFY25,reaffirmingits position as one of the fastest-growing major economies globally. According to the Second Advanced Estimate (SAE) data from the National Statistical Office (NSO), the Real Gross Domestic Product (GDP) is estimated to grow by 6.5% for FY25, following an impressive 9.2% growth as per the First Revised Estimates from the prior financial year. The positive growth in Indias exports can be attributed to the countrys sustained economic activity, bolstered by ongoing momentum in both the manufacturing and services sectors. This ongoing growth trend highlights the nations solid economic foundations, beneficial government policies, a flourishing services sector, and domestic demand, all of which promote confidence in Indias long-term growth trajectory.

E - Estimated : P - Projected

Indias economic expansion is expected to be propelled by several key factors. Strong domestic demand is projected as a significant medium-term contributor. Furthermore, anticipated capital spending on infrastructure and asset development is likely to enhance growth through multiplier effects.

Future capital expenditures should also benefit from government support, including tax buoyancy, simplified structures, tariff reassessment, and digital tax filing. Finally, a governments focus on capital expenditure, progress in the Production-Linked Incentive (PLI) & ‘Make in India schemes, stronger corporate balance sheets, and a well-capitalized banking sector with low levels of non-performing assets (NPAs).

Indias improving economic status now places it as the worlds fourth-largest economy by nominal Gross Domestic

Product (GDP). Ambitious national targets aim for a $7 trillion economy by FY30 and $30 trillion by 2047, to be achieved through substantial infrastructure investments, ongoing reforms, and widespread technological integration.

Indian Financial Services Industry Overview

FY2025 witnessed robust growth in Indias financial sectors, marked by improved banking metrics, significant financial inclusion, thriving capital markets, and strong macroeconomic fundamentals.

Indias monetary and financial sectors displayed resilience and stability, fostering inclusive growth and economic development with 6.5% GDP growth in FY2025.

• Banking sector performance grew steadily with credit growth aligning with deposit growth, while scheduled commercial banks improved profitability, evidenced by declining gross non-performing assets and a higher capital-to-risk weighted asset ratio.

RBIs Financial Inclusion Index rose significantly from 53.9 in March 2021 to 64.2 in March 2024, driven by government-backed infrastructure financing.

• Indian stock markets reached new highs by Dec 2024, outperforming other emerging markets despite global uncertainties. Market growth was fuelled by strong macroeconomic fundamentals, healthy corporate earnings, supportive institutional investment and robust SIP inflows (35% up

Indias financial sector has demonstrated strength midst challenging geopolitical conditions, showcasing robust performance across banking, capital markets, insurance, and pensions. System liquidity remains in surplus, while banks exhibit strong financial health, evidenced by narrowing credit-deposit growth gaps and improved profitability. The financial sector is undergoing a transformation, characterised by rising consumer credit, increased non-bank financing, and the surging popularity of equity-based financing. These trends signify diversification and innovation in financial services but also pose incremental regulatory challenges. The expansion of consumer debt, unsecured lending, and the influx of young investors into equity markets highlight the need for balanced growth and stability in the sector. While these developments mark a new era for Indias financial landscape, they require careful oversight to ensure stability and sustainability amidst rapid change.

India, as one of the fastest growing and largest economies globally, presents a conducive environment for the expansion of its credit market. The total NBFC credit outstanding stood at approximately 52 trillion as of December

2024 and is projected to cross 60 trillion by FY2026, reflecting the sectors continued expansion. Amongst banks, NBFC and All India Financial Institutions, NBFCs have maintained 21-24% share of credit from FY2017 to FY2024. As India targets becoming a $5 trillion economy in the coming years, the demand for financing is set to increase, underscoring the vital role of NBFCs in supporting economic growth and development.

Retail loans, which accounted for 58% of total NBFC credit in December 2024, remain the cornerstone of growth. Unsecured business loans accounted for 28% of retail NBFC credit in December 2024. Earlier, RBI had raised risk weights by 25 bps to 125% on unsecured retail loans, due to its indiscriminate growth, especially in personal loans and credit cards. Asset segments such as microfinance, personal loans, credit cards and unsecured business loans witnessed higher stress in FY2025, leading to higher delinquencies and write-offs.

Over the years, NBFCs have significantly strengthened their balance sheets, marked by reduced leverage and improved asset quality, with a notable shift towards the retail segment. NBFCs are effectively utilising digital data to improve credit assessments and operational efficiency. The interest of equity investors remains strong and there is vast pool of debt capital overseas which is largely untapped. With such a stable foundation, the sector remains well-positioned to navigate the evolving regulatory environment while maintaining momentum.

1. Digital Transformation and Technological Advancements

NBFCs are increasingly leveraging digital technologies to enhance operational efficiency, manage fraud, and improve customer engagement. The adoption of super apps, digital sourcing platforms, and strategic partnerships with fintech firms is driving innovation and reshaping the lending landscape.

2. Focus on Key Segments i. Retail Loans: The retail lending sector remains a key driver of growth, with strong demand for home loans, vehicle financing,and personal loans. Favourable demographic trends, rapid urbanisation, and rising disposable income are further driving growth in this segment. ii. Micro, Small and Medium Enterprises (MSME) Financing: The strength of the MSME sector presents significant opportunities for NBFCs, particularly through tailored financialsolutions such as factoring, supply chain financing, and unsecured business loans.

3. Financial Inclusion

India has made significant progress in financial inclusion, with a total of 55.1 crore beneficiaries under the

Pradhan Mantri Jan Dhan Yojana (PMJDY) Scheme as of March 2025. NBFCs play a crucial role in bridging the credit gap for underserved and unbanked populations. By leveraging technology and customised product offerings, they are driving financial inclusion across rural and remote regions, ensuring wider access to credit and banking services.

4. Sustainability and EV Financing

The Governments push for eco-friendly projects, including solar energy, waste management, and sustainable infrastructure, has opened new avenues for NBFCs in green financing and impact investing. With the rapid adoption of electric vehicles in India, NBFCs are capitalising on emerging opportunities in green finance.

5. Healthy Asset Quality Levels

While concerns persist over rising household indebtedness and asset quality risks in unsecured lending (such as personal loans and microfinance), NBFCs that prioritise proactive risk management, digital credit monitoring, and diversified lending portfolios are better positioned to maintain financial b) OPPORTUNITIES & THREATS

Rising government incentives and subsidies for EVs and renewable energy adoption.

Increasing ESG-driven investments from domestic and international institutions.

Expanding charging infrastructure and technological innovations in EV batteries.

Untapped financing potential in Tier-II and Tier-III cities for e-mobility and rooftop solar projects.

Potential to bundle vehicle finance, battery leasing, and solar rooftop loans as integrated products.

The Company has only one line of business, i.e., Financing and Investment Activities during the year under review, hence no segment wise information is required. The Company has no activity outside India. Therefore, there is no geographical segment.

1. Electric Vehicle (EV) Financing

The electric mobility sector is poised for exponential growth, with India targeting 30% EV penetration by 2030. Government incentives under FAME-II, state subsidies, and tax benefitsare driving adoption across two-wheelers, three-wheelers, and fleet operators. At the same time, e-commerce, ride-hailing, and logistics players are increasingly shifting to electric fleets to reduce costs and meet ESG goals. Financing remains a critical enabler, as upfront EV costs are still high compared to ICE vehicles.

Demand for innovative financingproducts such as battery leasing, pay-as-you-drive models, and digital-first loan approvals will rise. Strategic tie-ups with OEMs, fleet operators, and charging companies will create new avenues for growth.

2. Solar Financing

The solar energy market continues to be one of the fastest-growing renewable energy segments, supported by Indias ambitious target of 500 GW of non-fossil fuel capacity by 2030. Rooftop solar,

SME installations, and community solar projects present strong financing potential.

Residential and SME adoption of rooftop solar is accelerating due to falling panel costs, net-metering benefits, and ESG-linked financing.

Tailored products such as long-tenure rooftop loans, lease-based financing, and blended finance with institutional investors will play a key role. Partnerships with EPC players and developers will further boost disbursement volumes.

3. Insurance Premium Financing (IPF)

Insurance penetration in India remains low but is steadily rising due to regulatory push, rising financial awareness, and digitization of insurance distribution. For corporates, large-ticket insurance policies (marine, fire, health, liability) often involve significant upfront premium payments.

Insurance Premium Financing (IPF) allows businesses and individuals to pay insurance premiums in installments, improving affordability and liquidity.

With increasing demand for health insurance, cyber risk cover, and ESG-linked liability insurance, IPF will gain traction. For the retail segment, bundling IPF with motor/EV loans will open a new growth channel.

The convergence of EV adoption, solar energy expansion, and insurance awareness creates a multi-pronged opportunity for the Company. Over the next 3 5 years, the focus will be on:

• Expanding into Tier-II and Tier-III cities with digital-first credit assessment tools.

• Strengthening risk management through credit scoring, asset monitoring, and diversified customer base.

Innovating in product structuring to offer bundled finance solutions, such as EV + Insurance + Charging packages or Solar + Battery + Insurance financing .

The Company envisions becoming a leading Green Finance and Risk Solutions Partner, enabling Indias transition to a low-carbon economy. By offering innovative financing for EVs, solar adoption, and insurance premium management, the Company will not only achieve sustainable growth but also contribute to national energy security and climate goals.

Performance-wise, as of March 2025, NBFCs reported a Capital to Risk (Weighted) Assets Ratio (CRAR) of

30.88%, a Gross Non-Performing Assets (GNPA) ratio of 2.48%, and a Return on average Assets (ROAA) of 2.08%. These indicators suggest a stable financial position, although the sector continues to navigate challenges related to consolidation, capital raising, and profitability pressures. The RBIs regulatory focus in the coming year will likely include a closer examination of licensing requirements and supervisory actions against non-compliant NBFCs, ensuring that the sector remains resilient and capable of supporting Indias economic growth.

The Companys Board of Directors has overall responsibility for the establishment and oversight of the Company risk management framework. Company is exposed to specific risks environment within which it operates including economic cycle, market risk, interest rate risk, liquidity risk, regulatory & compliance risk and credit risks. Managing risk effectively also helps in achieving the desired outcome, while fixing responsibility and accountability. The Company is especially focused on improving sensitivity to assessment of risks and improving methods of computation of risk weights. f) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has appointed M/s J Mandal & Co., Chartered Accountants, a third-party agency as its Internal

Auditors, who conduct internal audit for various activities. The Company has developed adequate internal control system commensurate to its size and business. Personnel of the Internal Auditor conduct periodic audits in all the areas to ensure that the Companys control mechanism is properly followed and all statutory requirements are duly complied with. The reports of Internal Auditors are submitted to the Audit Committee which further reviews the adequacy of Internal Control System.

The operating performance of the Company has been discussed in the Directors Report under the head financial summary and state of Company affairs/operations. The Profit/(Loss) Before Tax for the year 2024-25 was Rs. 2,732.29 lakhs as against 2175.70 lakhs in the year 2023-24. This has been an impressive performance over the year, bolstered by streamlined processes and a more robust team. Your directors are expecting to maintain the good performance of the Company in coming years as the company has expended its business in the current financial year.

Its asset quality, increase its Gross Non-Performing Assets (GNPA) from 1.73% in FY24 to 2.48% in FY25, while Net Non-Performing Assets (NNPA) increased from 1.47% to 2.11% over the same period. The Company has a judicious balanced portfolio of Debt and Equity which has given good returns during the year. The Portfolio is constantly reviewed and adjusted as per market trends and expectations.

The Company attaches importance to the dignity of employee irrespective of position and highly values the cultural diversities of employees. Human Resource is valued as an extremely important and strategic resource and your Company believes in employee empowerment across the entire organization in order to achieve organizational effectiveness. As on March 31, 2025, the Company had 536 employees.

Your Company is continuously reviewing the evolving situation and playing a responsible role in minimising the adverse impact of the pandemic on its businesses and the stakeholders interests. Company continued to focus on sustainability of performance with steady margins, stable asset quality and focused growth by increasing the proportion of our existing good profile customer.

Your Company will continue to allocate its capital between Equity and Debt. Management will evaluate and select investments based on high quality governance, sustainability and strength of the investee companys balance sheets.

During the year, the significant changes in the financial compared to the previous year are summarized below:-

Estimates and expectations stated in this Management Discussion and Analysis may be "forward-looking statement" within the meaning of applicable laws and regulations. Actual results may differ materially those expressed or implied.