Pro Fin Capital Services Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

As the world continued its recovery from the lingering aftereffects of the COVID-19 pandemic, the Russia- Ukraine conflict persisted, leaving behind lasting economic, social, and political repercussions. Global inflation, which had touched multi-decade highs of over 8% during the crisis, showed signs of easing in 2024-25, though many developed economies continued to battle elevated price levels and tighter monetary conditions. Central banks across the globe maintained a cautious stance, with interest rates remaining at relatively higher levels to anchor inflation expectations.

The prolonged conflict continued to disrupt global trade flows and energy markets, although supply adjustments and diversification strategies have somewhat softened the earlier shocks. Europe, still grappling with energy security challenges, accelerated its transition towards alternative and renewable sources.

This environment has reinforced the critical need for energy self-reliance worldwide. Consequently, countries have fast-tracked climate action plans and expanded renewable capacity at scale. While supply chain pressures and commodity price volatility remain intermittent challenges, the thrust of low-carbon investments has shifted towards building resilient, localized supply ecosystems and strengthening green infrastructure.

INDIAN ECONOMIC OVERVIEW

Indias economy continued to demonstrate resilience, recording a growth of 7.6% year-on-year in FY 2024-25, supported by robust domestic demand, strong services sector performance, and government-led infrastructure spending. On a sequential basis, quarterly growth has remained steady, reflecting sustained momentum across multiple sectors despite global uncertainties.

Industrial output growth remained moderate at 3.2% in October 2024, compared with 3.1% in the previous month. However, subdued performance in the capital goods and consumer goods segments constrained overall industrial expansion. The slowdown in the base effect also contributed to reduced momentum compared to the double-digit growth observed during the first half of CY 2024. November witnessed broad-based improvements in output across most sectors, with the exception of electricity, capital goods, and consumer durables.

While consumption and investment activity are gradually recovering, a durable and broad-based pick-up is still awaited. Structural challenges such as weak private investment appetite, demand-side pressures, and rising input costs continue to weigh on growth. Global headwinds, including elevated interest rates, geopolitical uncertainties, and volatile commodity prices, add to the external risks.

Nevertheless, Indias medium-term outlook remains positive, supported by a stable financial system, government reforms, and rising investor confidence. The economy is projected to remain one of the fastest-growing major economies in 2025, with GDP growth expected in the range of 6.8%-7.0%.

OVERVIEW OF THE FINANCIAL SERVICES INDUSTRY

Non-Banking Financial Companies (NBFCs) demonstrated resilience through 2024 and are expected to sustain growth momentum in 2025. The sector continues to benefit from an improving macroeconomic environment, stronger balance sheets, higher provisions, and improved capital adequacy positions. Growth is further supported by rising credit demand, government infrastructure push, and deeper financial penetration across semi-urban and rural markets.

However, the pace of near-term expansion is tempered by global headwinds such as elevated interest rates, geopolitical uncertainties, and commodity price volatility. Domestically, demand drivers are gradually strengthening, positioning NBFCs for steady growth in the medium term. Indias real GDP is projected to expand by 6.8%-7.0% in FY 2024-25, underpinning sectoral opportunities.

On the asset quality front, NBFCs continue to face pressure. Following the Reserve Bank of Indias (RBI) revised NPA recognition and upgradation norms under its scale-based regulatory framework, gross NPAs are expected to see a rise in the short term. As per CARE Ratings November 2024 report, gross NPAs could increase by up to 300 basis points, though the impact on shorter-tenure retail loans is expected to be limited.

According to a CRISIL report, the worst of the asset-quality stress appears to be behind the sector, and NBFCs are poised to benefit from the broader economic upturn. The Assets Under Management (AUM) of NBFCs is expected to grow by 8-10% in FY 2025, compared to 6-8% in the previous year, supported by diversification of funding sources and improved investor confidence.

BUSINESS & OPERATIONAL OVERVIEW

Your Company continues to follow a customer-centric business philosophy, with its growth strategy anchored in transparency of offerings, product suitability, and a wide range of choices tailored to meet diverse customer needs.

A key strength of the Company remains its diversified funding sources, which enable optimization of funding costs, protection of interest margins, and maintenance of a balanced funding portfolio. During FY 2024-25, this approach has further strengthened the Companys funding stability and liquidity position, while contributing to a reduction in average borrowing costs and enhancing overall financial resilience.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Income during the financial year ended 31st March 2025 is 3169.12 Lakhs compared to Rs. 2179.24 Lakhs. The profit for the year for the financial year ended 31st March 2025 is Rs. 291.96 lakhs compared to loss for the previous year Rs. 25.69 lakhs.

ACCOUNTING RATIO

Particulars	31.03.2025	31.03.2024
Capital to risk-weighted assets ratio (CRAR)	10.56%	7.61%
Tier I CRAR	10.56%	7.61%
Tier II CRAR	-	-
Liquidity Coverage Ratio	1.98	1.12

OPPORTUNITIES AND THREATS

1. Non-Banking Financial Companies (NBFCs) continue to form an integral part of the Indian financial ecosystem. By extending secured and unsecured credit to millions of underbanked and unbanked individuals and businesses across the country, NBFCs play a crucial role in driving financial inclusion and enabling wider participation in the formal financial system.

2. However, the NBFC lending model remains exposed to several internal and external challenges, which could impact sustainability, profitability, and growth prospects. The key risks are as follows:

3. Operational Risk

4. Risk arising from inadequate processes, systems, or internal controls, which may disrupt continuity of business operations, damage reputation, and adversely affect profitability.

5. Credit Risk

6. Risk of default or non-repayment of loans by borrowers, leading to monetary loss in terms of both principal and interest income. This remains a critical risk given the diverse borrower base.

7. Business Risk

8. Exposure to external risks such as industry dynamics, competitive pressures, and macro-economic volatility, which can directly influence sustainability and profitability. Fluctuations in demand and sectoral outlook may also result in impairment of loan assets.

9. Regulatory Risk

10. Risk of material impact on operations due to changes in laws, regulations, or RBI guidelines under the evolving scale-based regulatory framework for NBFCs.

11. Human Capital Risk

12. Risk arising from the gap between organisational goals and workforce skills. Continuous upskilling, talent retention, and leadership development remain essential to align human resources with business objectives.

SEGMENT - WISE PERFORMANCE

The Company is engaged in financial services during the year under review, hence the requirement of segment-wise reporting is considered irrelevant.

OUTLOOK

With the long term India growth story intact, we continue to remain enthused about the growth prospects of financial services sector in India. However given the inherent linkage of most of our business with the economy and capital markets, our financial performance is subject to fluctuations depending on the pace of economic growth and activity in the capital market. The last financial year has been year of new initiatives for company. The new financial year will see a lot of our initiatives taking shape and being deployed.

HUMAN RESOURCES

For enhanced performance of any organization, it is important that its human resources are abreast of new developments and possess relevant skill sets. To realize this, the emphasis on training and development activities has been increased.

During this uncertain times facility of work from home has been adopted by the Company for the welfare and wellbeing of its employees.

INTERNAL CONTROL SYSTEMS

Your Company has an adequate system of internal controls for business processes, operations, financial reporting, fraud control, and compliance with applicable laws and regulations, among others. Your companys Management Assurance and Audit function is headed by a senior management personnel with reporting lines to the Audit Committee of the Board and a dotted line reporting to the Managing Director.

COMPLIANCE

The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance department of the Company is continued to play a pivotal role in ensuring implementation of Compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis.

New instructions / guidelines issued by the regulatory authorities were disseminated across the Company to ensure that the business and the functional units operate within the boundaries set by regulators and that compliance risks are suitably monitored and mitigated in their course of their activities and processes. New products and process launched during the year were subjected to scrutiny from compliance standpoint and proposals of financial services were screened from risk control prospective.

The company has complied with all requirement of regulatory authorities. No penalties / strictures were imposed on the Company by the stock exchanges or SEBI or any statutory authority on any matter related to capital market during the year.

CAUTIONARY STATEMENT

Certain statements under "Management Discussion & Analysis " describing the Companys objectives, projects, estimates, expectations and predictions may forward looking statement within the meaning of applicable securities laws and regulations. Although the expectations are based on reasonable assumptions, the actual results could materially differ from those expressed or implied, since the companys operations are influenced by many external and internal factors beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.

Mumbai
Date: 02.09.2025	For and on behalf of the Board of Directors
	Sd\-
	(Anupam N Gupta)
	Managing Director