NPR Finance Ltd Management Discussions

India demonstrated strong economic resilience during financial year 2024-25.

Europe faces both political and economic uncertainties. Europes biggest economic engine, Germany, experienced economic contraction for two successive years. France has had political uncertainty due to developments in the wake of the snap elections. The United Kingdom had a change of government. In general, Europe is facing competitiveness pressures amidst much higher energy costs caused, in part, by the transition towards renewable energy.

To a large extent, these developments have affected the global economy.Despite global geopolitical instability, India continues to maintain its position as one of the fastest-growing economies globally.

China has become a manufacturing colossus in the past few years – in contrast, India faces limitations in producing critical goods at the scale and quality required to serve the infrastructure and investment needs of an aspiring economy.

On the technological front – we will require appropriate skilling and education for Indias youth to take advantage of technological advances such as Artificial Intelligence, enabling its population to stay one step ahead of technological developments. Policy action on this front is already underway, with the budgets reflecting the importance oftechnology driven economy.

The Union Budget 2025-26("the Budget")has clearly portrayed the Governments continued focus on reform measures with the guiding spirit of Inclusivity in achieving the destination of Viksit Bharat. The Budget has emphasised on the following Engines of Development:

Agriculture MSME Investment Exports

This is evident from the Budgets focus on development measures in supporting MSMEs and furthering Make in India – (a) Credit Cards for Micro Enterprises, (b) Loan assistance through Scheme for first time entrepreneurs ; (c) Manufacturing mission with the mandate to focus on (i) Ease and cost of doing business; (ii) Future ready workforce for in demand jobs; (iii) A vibrant and dynamic MSME sector; (iv) Availability of technology; (v) Quality products; (vi) Clean tech manufacturing for climate-friendly development; (d) various measures for labour intensive sectors; (e) Development measures focusing on Garib, Youth, Annadata and Nari – i.e. investing in people, economy and innovation. This includes developing Centre of Excellence in Artificial Intelligence for education with a total outlay of 500 crore; (f) various financial sector reforms; (g) Tax reforms; (d) Regulatory reforms (with focus on Light-touch regulatory framework based on principles and trust to unleash productivity and employment), etc.

The Indian economy seeks to steady and sustain the growth momentum that the economy has experienced post-Covid – however, globalization is on the retreat.

Today, Non-Banking Financial Companies (NBFCs) play a vital role in providing banking and financial services especially in rural India as well as from Micro, Small and Medium Enterprises (MSME) sector. Traditional Banks have often presented challenges for MSMEs in securing loan due to stringent eligibility criteria.

Increasing importance is being placed on MSMEs every year – recognized as a vital engine of growth. Customised Credit Cards for micro enterprises registered on the Udyam Portal has been introduced in the Budget. Also the Governments planned revision in classification of MSMEs by enhancing the investment and turnover limits is aimed to provide more confidence to MSMEs so as to enable their further growth and generate employment for the youth.

The Governments commitment to promote financial inclusion through various initiatives has further elevated the importance of NBFCs. These initiatives position NBFCs as vital implementers in providing credit access to the unbanked and under-banked segments.

The Reserve Bank of Indias (RBIs) support to growth is expected to ensure adequate liquidity in financial markets. While RBI has been bringing about changes in the regulatory norms from time to time – these changes primarily aim at bring about transparency in the functioning of NBFCs and in protecting the interest of public and consumer at large.

Costly funding, challenges associated with effective liquidity management, Asset Quality concerns, threats to consumer safety and privacy associated with Digital Lending Apps, intense competition within the NBFCs and banking sectors – are major challenges for the NBFC sector.

However, by aligning with regulatory expectations, embracing technology, diversifying funding and prioritizing customer-centric strategies, NBFCs can chart a path of sustainable growth and innovation.

While growth opportunities abound, NBFCs must also prepare for economic uncertainties, fluctuating interest rates and market disruptions. Building financial resilience through robust risk management frameworks, diversified portfolios is the key.

The Real Estate Sectors prospects are positively related to the rise in economic well being of the people. As infrastructure expands,the Real Estate sector promises flourishing future. However, this segment is subject to challenges associated with rising costs, ESG compliance, digital transformation and market adaptation. Adapting to new technologies is no longer optional. Companies that embrace change will stay ahead, while those that dont, risk falling behind.

Segment-wise or product wise performance data is enumerated in accordance with IND AS-108 in Note No. 33 of the "Notes to the Financial Statement" section of the Annual Report.

The NBFC sector in India is poised for growth in the upcoming years.

The increasing focus on regulatory compliance is a hallmark of the financial landscape. Enhanced frameworks for risk management, capital adequacy and transparency reflect a commitment to a stable financial system. The compliances for NBFC is not a constraint – rather an enabler of long term credibility and investor confidence.

The financial services landscape is becoming increasingly customer-driven, with digital natives demanding personalised experiences and seamless interactions. For NBFCs, this requires shift from product-centric approaches to customer-centric strategies that prioritise convenience, transparency and trust.

Our Company is following a slow and cautious approach in identifying new customers in approving loan disbursement considering the unsecured nature of the segment.

As the Real Estate Sector continues to demonstrate resilience and adaptability – A supportive regulatory environment has enhanced transparency and institutionalization in the real estate sector. With sustained confidence of domestic and international investors widely anticipated to remain unabated, rapid urbanization, key infrastructure project completion are expected to create new growth opportunities. Furthermore, the integration of technology and sustainability will shape the future of real estate development, reinforcing the sectors role as a cornerstone of Indias economic growth.

NBFCs stand at the threshold of a transformative era, driven by digital innovation, supportive government policies, and an increasing emphasis on sustainability. As NBFCs scale to serve India and beyond - their exposure to credit, liquidity, operational, and reputational risks has grown exponentially. Further, with increasing reliance on technology grows,cyber security and data privacy become paramount– which has subjected NBFCsto data loss risk. NBFCs must invest in robust security measures to safeguard from this loss. Your Company manages credit risks through stringent credit norms to verify the identity of an individual and also determining their intent and ability to repay a loan. Further, Interest Rate Risk and liquidity risk are managed through regular monitoring of maturity profile. Besides, operational risks in the form of risks of incurring losses due to manual errors, fraud or system failure, can be monitored through an effective internal control system management and its periodic assessment.

The Real Estate Sector is adversely affected by market price fluctuations, high construction costs, etc.

The risk management plan of the Company is monitored by the Risk Management Committee in accordance with the Risk Management Policy of the Company.

The Company duly acknowledges that the maintenance of an effective control system is very important for NBFCsin detection of frauds and errors, ensuring integrity in conducting its business and also for the accuracy and completeness in maintaining accounting records. The Company thus strives to continuously upgrade its Internal Control System to commensurate with its size and the nature of its operations.

a) Turnover and Profit

Company has recorded turnover at 716.80 lakhs during the financial year under review in comparison to 945.40 lakhs of the previous year. The fall in turnover is primarily due to fall in (i) Proceeds of sale of shares and securities;and(ii) interest income from financing coupled with lower processing fee income resulting from reduced financing.

Company has recorded during the financial year under review - non-operating income of 48.42 lakhs on account of interest on refund of Income Tax against total non-operating income of 1.97 lakhs of previous year.

Profit before Tax was recorded at 75.79 lakhs as against 147.75 lakhs in the previous financial year. The reduction in profit is by and large attributable to exceptional income totaling to 114.41 Lakhs booked in previous year under the following two account:-

-profit on sale of office at Mumbai amounting to 101.54 lakhs

-income booked for profit on redemption of preference shares amounting to 12.87 lakhs

Operating profit was recorded at 27.37 lakhs against 31.37 lakhs of previous year that is lower by 13% approx.

Profit after Taxation was recorded at 59.28 lakhs against loss of 108.63 lakhs in the previous year. As per the requirement of IND AS, total Comprehensive income during the year under review has been recorded at 257.17 lakhs (loss of 258.23 lakhs recorded in the previous year).

Owned Fund of the Company stands at 5,008.05 lakhs as against 4,724.75 lakhs, recorded in previous year. b) Financing Segment

Income from Financing under Loans has gone down by 41.39 lakhs approx. due to lower interest income.

d) Employee Benefit Expenses, Finance Cost and other Operating expenses

Employee Benefit Expenses have gone down by 4% due to fall in employee strength on account of reduced operation.

Financial Expense during the year under review has gone down by 15.12 lakhs (28.80%) in comparison to the previous Year due to scheduled repayments of Inter-corporate Deposits.

Other expenses excluding write-offs have gone down by 7.58% approx.

The success of an organization largely depends on the productivity of its employees. A positive work environment boosts employee productivity.

Employees relations continued to be harmonious throughout the year with the management. Number of employees on roll was 58as on 31^st March, 2025(previous year: 79).

The details of the key financial ratios in which there has been a significant change (i.e. change of 25% or more)along with detailed explanations thereof:

Further, there was no significant change (i.e. change of 25% or more) in the following financial ratio:

10. Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof

Return on Networth (in %) :

The comparative decrease is on account of lower Profit after Tax (PAT) vis-?-vis Networth. PAT of previous financial year includes exceptional income of 114.41 lakhs whereas in FY 2024-2025 same is recorded at Nil.

11. Cautionary Statement

This Management Discussion and Analysis Report contain statements which are based on certain assumptions, risks, uncertainties and expectations of future events. Investors are advised to exercise due care and caution while interpreting these statements.The actual results, performance or achievements can thus differ materially from those projected in any such statements depending on various factors including: the demand supply conditions, change in government regulations, tax regimes, economic development within the country and abroad and such other incidental factors over which, the Company does not have any direct control.