Mukesh Babu Financial Services Ltd Management Discussions

Mukesh Babu Financial Services Ltd. ("MBFSL" or "the Company") is a nondeposit taking Non-Banking Financial Company (NBFC-ND) registered with the Reserve Bank of India (RBI). The Company is classified as an NBFC- Investment and Credit Company (NBFC- ICC) and has been categorized as a Base Layer NBFC (NBFC-BL) under the RBIs Scale Based Regulation (SBR) framework since 2022. The Company has one Subsidiary-Mukesh Babu Securities Limited. The Company is engaged in financing and investment activities and continues to focus on prudent business practices with emphasis on operational discipline and financial sustainability.

During the year under review, the Company adopted a conservative approach toward business expansion considering market conditions and evolving regulatory requirements. Priority was given to maintaining healthy recoveries, monitoring existing exposures, controlling operating costs, and strengthening compliance processes.

Despite challenging market conditions, the Company was able to report a modest profit for the financial year through disciplined financial management and careful deployment of resources. The Management continues to evaluate selective growth opportunities while maintaining a balanced risk approach.

The management wishes to present its Analysis Report.

During FY 2025-26, the Company recorded stable operational performance. Revenue generation remained moderate in line with the scale of operations and cautious lending strategy adopted during the year.

During the year under review Income from Operations has increased from Rs. 89,351 Thousands to Rs. 1,25,918 Thousands (increase of 40.92%) and Profit after Tax has increased from Rs. 22,344 Thousands to Rs. 39,722 thousand (increase of 77.77%).

The Company has implemented internal control systems appropriate to the size and nature of its operations. These controls are designed to ensure proper recording of financial transactions, safeguarding of assets, compliance with applicable regulations, and reliability of financial reporting.

Periodic reviews and monitoring mechanisms are carried out to strengthen operational and financial controls. The Audit Committee reviews observations and recommendations to ensure timely corrective actions wherever required.

The year 2025 was challenging as geopolitical conflicts, trade tensions, and persistent policy uncertainty cast a shadow over the global economy and the financial system. Yet Indias tenacity was visible in strong macro fundamentals, a large domestic economy, and a responsive policy framework that has improved the economys ability to absorb external shocks. The Indian economy and the financial system, remained robust and resilient through FY2025-26, supported by strong growth, benign inflation, healthy corporate balance sheets, sizeable buffers, and prudent policy reforms.

India remained one of the fastest- growing major economies, supported by sustained public investment, expansion in manufacturing and services sectors, and increasing formalisation of the economy. The banking and financial services sector continued to witness steady credit demand, particularly from retail customers, small businesses, and emerging enterprises.

Looking ahead, the outlook for the Indian economy remains positive, supported by improving economic fundamentals, increasing digitisation, infrastructure development, and growth in consumption-led sectors. While external risks such as global slowdown, inflation volatility, and financial market uncertainties may continue to impact business sentiment, the long-term growth prospects of the Indian financial services sector remain encouraging.

The Company remains cautiously optimistic and will continue to focus on prudent financial management, operational efficiency, and sustainable business practices while evaluating growth opportunities in line with market conditions and regulatory requirements.

NBFCs continue to play a significant role in the Indian financial system by extending credit access to underserved and unbanked segments. Their flexible business models, faster turnaround time, and customer-centric approach have enabled them to complement the banking sector effectively.

The sector also experienced higher regulatory focus on governance, asset quality, compliance standards, and liquidity management.

Mid-size and Smaller NBFCs operated in a competitive environment during the year and adopted cautious lending and recovery strategies to maintain financial stability and preserve capital.

The industry continued to focus on:

• strengthening governance frameworks,

• improving risk management practices,

• maintaining adequate liquidity,

• leveraging technology for customer servicing and collections, and

• enhancing operational efficiency.

Indias growing demand for financial services, especially in semi-urban and emerging markets, continues to provide opportunities for NBFCs. Increasing adoption of digital financial systems and improving financial awareness are expected to support long-term industry growth.

The Company intends to focus on:

• strengthening customer relationships,

• improving operational efficiency,

• selective expansion in lending activities,

• improving recovery mechanisms, and

• maintaining asset quality.

The Management remains cautiously optimistic about future business prospects while continuing to adopt a prudent and risk-aware approach. As a financial services company, the business is exposed to various risks including credit risk, liquidity risk, operational risk, regulatory risk, and market competition. The Company continuously reviews its risk management practices to ensure that risks are identified and addressed in a timely manner. The Company follows a cautious approach in credit evaluation and regularly monitors receivable positions and recovery performance.

Changes in regulatory guidelines, economic slowdown, or volatility in financial markets may impact future business performance. However, the Management believes that the existing control systems and conservative business approach will help mitigate these risks to a reasonable extent.

This Management Discussion and Analysis (MD&A) contain forwardlooking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed or implied in these statements due to various factors, including economic conditions, regulatory changes, market dynamics and other unforeseen circumstances. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are advised to exercise caution and not to place undue reliance on these forwardlooking statements.

(Data Sources: Reserve Bank of India (RBI) - Financial Stability Report & Monetary Policy Updates, International Monetary Fund (IMF)-World Economic Outlook Reports, Economic Surveys, Rating Agency reports, World Bank-India Development Updates, National Statistical Office (NSO) - Economic Indicators and GDP Estimates)