Nikki Global Finance Ltd Management Discussions

1. Industry Structure and Developments

The Non-Banking Financial Company (NBFC) sector continues to play a critical role in Indias financial ecosystem by serving segments that are often underserved by traditional banks. During FY 2024-25, the sector witnessed a gradual recovery despite global economic headwinds, inflationary pressures, and fluctuating interest rates. The RBIs continued regulatory support and focus on liquidity management contributed to strengthening the sectors resilience.

Indias GDP growth moderated to 6.5 per cent in 2024-25, after registering a healthy average growth of 8.8 per cent over the preceding three years. This was driven by a moderation in urban demand as inflation and elevated interest rates weighed on discretionary spending, growth in fixed investments remained muted, and government spending was off to a slow

start due to union and state elections in the first half of 2024- 25.

That said, Indias domestic economy remains resilient and its financial system sound to navigate global headwinds. Moreover, proactive monetary and fiscal support are likely to provide further support to growth in Financial Year 2025-26.

Although the company reported a loss this year, it is important to highlight the substantial progress made, successfully reducing the net loss from ?14.62 lakh in the previous year to ?3.38 lakh in the current year. With a clear forward-looking vision and confidence in our foundation, we are turning past challenges into new opportunities — paving the way for

sustainable growth, operational excellence, and long-term success.

We envision a more financially inclusive future, and our company is actively contributing toward making that vision a reality. Our focus on niche and underbanked segments not only promotes financial accessibility but also fosters

economic empowerment. Guided by a well-defined market strategy, strong regulatory compliance, and performance- driven goals, we continue to expand our impact in the financial sector, delivering solutions that are as inclusive as they are effective.

The NBFC sector is expected to witness continued transformation driven by technology, regulatory reforms, and consolidation. The Company remains optimistic about growth prospects, with a focus on strengthening its underwriting standards, digital processes, and recovery mechanisms. In FY 2025-26, the Company aims to enhance its loan book cautiously, improve asset quality, and target a return to profitability.

During the financial year 2024-25, the Company reported a net loss of ?3,37,965, which marks a significant improvement compared to the net loss of ?14,62,240 recorded in the previous year. This positive shift is primarily the result of enhanced operational efficiency, better

cost control, and improved asset quality. The Company also strengthened its recovery mechanisms and adopted a more cautious, focused approach to disbursements, especially in lower-risk segments. While the business has not yet returned to profitability, the substantial reduction in loss reflects the Companys strategic move towards sustainable growth and prudent financial management.

The Indian economy displayed resilience in FY 2024-25, supported by steady GDP growth, improved consumption, and government-led infrastructure spending. Despite global headwinds, inflationary pressures were managed effectively, and the RBI maintained a balanced monetary policy approach. The financial services sector benefited from enhanced liquidity and increasing credit penetration, particularly in underbanked and semiurban regions.

Key risks include credit risk, arising from the potential default of borrowers, and

liquidity risk, which may occur due to mismatches in asset-liability tenures or limited access to funding during periods of market stress.

Interest rate volatility also poses a significant risk, as it can affect net interest margins (NIMs) and borrowing costs. Regulatory risks remain high in the NBFC sector, given the evolving compliance landscape under the supervision of the Reserve Bank of India (RBI) and other regulatory bodies. Any tightening of norms or changes in provisioning requirements could affect profitability and capital adequacy.

For an NBFC, strong internal control systems are vital to ensure the accuracy, reliability, and integrity of financial reporting, regulatory compliance, and overall operational effectiveness. These systems help mitigate risks such as credit defaults, operational lapses, financial misstatements, and regulatory noncompliance — areas that are particularly critical in the financial services sector.

Our Company has established a robust internal control framework These controls are designed to safeguard the companys assets, ensure prudent lending practices, and support efficient decision-making. They also help in maintaining high standards of transparency, accountability, and risk management.

In the NBFC sector, human capital is a key enabler of growth, compliance, and customer-centric service delivery. It encompasses the skills, knowledge, experience, and commitment of the workforce that directly contribute to the organizations ability to manage financial risk, ensure regulatory compliance, drive operational efficiency, and foster innovation in lending and financial services.

For an NBFC, disclosures play a critical role in maintaining transparency, regulatory compliance, and stakeholder confidence. As a financial institution operating under the regulatory purview of the Reserve Bank of India (RBI), the

Company is committed to sharing accurate, timely, and comprehensive information on its financial position, operational performance, risk management practices, and governance framework.

The Company ensures that all material information, including any changes in accounting policies, related party transactions, governance structures, or significant business risks, is communicated transparently and responsibly to all stakeholders through periodic reports, investor updates, regulatory filings, and public disclosures.

Certain statements in the Management Discussion and Analysis may constitute forward-looking statements within the meaning of applicable laws and regulations. These statements reflect the Companys current expectations, assumptions, and projections about future events, strategies, and performance, particularly within the context of the NBFC sector.