Qgo Finance Ltd Management Discussions

Management Discussion and Analysis

Qgo Finance Limited- An Overview

QGO Finance Limited (the Company) has emerged as a progressive and growth-oriented NonBanking Financial Company (NBFC) over the past six years. The Company is primarily engaged in financing construction projects. In accordance with the Scale Based Regulation (SBR) framework issued by the Reserve Bank of India (RBI), it is classified as a Base Layer NBFC (NBFC-BL). The Company is also an equity listed entity with its shares listed on BSE.

Over the period from FY 2018 to FY 2025, the Companys asset size has grown from Rs. 4 Crore to over Rs. 100 Crore, a 25-fold expansion that underscores QGOs strong execution capabilities, disciplined growth strategy, and its ability to capture emerging opportunities within the project finance segment.

Key Strengths

• In-depth knowledge: With constant research and practical experience in the industry, we have gathered a comprehensive understanding of the construction projects market.

• Strong customer base: Our strength lies in our expanding satisfied customer base. It is a testimony to our continued commitment to enhance the infrastructural development in the rural & semi-urban areas & to help support Indias growth.

• Employee strength: We recruit candidates who are capable, and have deep local insight. We regularly train and motivate our employees to gather industry-relevant knowledge and strengthen their relationships with business partners and existing and potential customers.

• Faster disbursal: We have put in place an accelerated loan disbursement process, which is powered by technology. With minimal documentation and utmost flexibility, our loans are usually disbursed expeditiously.

• Zero NPA Track Record: The Company has maintained a 0% Non-Performing Asset (NPA) record since inception, reflecting prudent credit practices and disciplined underwriting standards.

Forward - Looking Statements:

This Report contains "Forward - Looking Statements". Any statement that addresses expectations or predictions about the future, including but not limited to statements about the Companys strategy and growth, product development, market position, expenditures and financial results, are forward looking statements. Forward looking statements are based on certain assumptions and expectations of future growth. The Company cannot guarantee that these assumptions are accurate and will be realised.

The Companys actual results, performance or achievements could thus differ materially from those projected in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on basis of any subsequent developments, information or events.

• Industry Structure and Development:

As per the Economic Survey 2024-25, Indias GDP growth rate is projected at 6.5% in FY 2024-25. This positions the country among the fastest-growing major economies globally, despite prevailing global uncertainties. The growth is largely fuelled by strong domestic demand, higher capital expenditure, private investment and a resilient services sector.

*Projected

Agricultural output is expected to rise by 3.8% in FY 2024-25, supported by favourable monsoons, higher Kharif production and improved Rabi sowing. Rising rural incomes are reflected in growing sales of two-wheelers and tractors. Higher Minimum Support Prices (MSP) and a decline in demand for MGNREGA jobs further indicate strengthening financial conditions across the rural economy. As rural demand remains strong and urban consumption remains constant, private spending is anticipated to sustain overall economic expansion going forward.

A major contributor to this growth is the revival of private consumption. Private Final Consumption Expenditure (PFCE), at constant prices, rose by 7.3% as of January 2025, compared to 4.0% in the previous financial year. This improvement reflects stable household spending.

The growing middle class, rising incomes and aspirational spending trends are reshaping consumption patterns. A growing number of consumers are choosing premium products and experiences, propelling demand in sectors such as luxury goods, automobiles and lifestyle services. The governments decision to raise the income tax exemption limit to Rs. 12 Lakhs in the Union Budget

FY 2025-26 is likely to further support consumer sentiment and discretionary spending in retail, apparel and luxury segments.

The services sector remains the backbone of Indias economic performance, with services exports projected to expand at 12.8% YoY in FY 2024-25. Government initiatives like Unified Payments Interface (UPI) and Open Network for Digital Commerce (ONDC) are promoting and facilitating digital transactions, with UPI alone recording Rs. 23.24 Lakh Crore in transactions in December 2024, up from Rs. 707.93 Crore in December 2016. This rapid digital transformation is advancing financial inclusion and reshaping consumer behaviour.

Inflation is anticipated to remain stable, supported by prudent fiscal and monetary policies. Headline in Inflation, measured by the Consumer Price Index (CPI), moderated to 3.16% in April 2025, compared to 5.4% in FY 2023-24. This decline is primarily due to a sharp reduction in food price index, which decreased to 1.78% in April 2025. The Reserve Bank of India (RBI) further reduced the repo rate by 25 basis points to 6% as of April 2025. This move is expected to stimulate economic activity by making borrowing cheaper, thereby encouraging spending and investment. As of April 2025, the Monetary Policy Committee (MPC) also changed its stance from neutral to accommodative, signalling that, going forward-absent any shocks-the MPC would consider only two options: maintaining the status quo or implementing a rate cut.

Infrastructure investments and manufacturing incentives under the Production Linked Incentive (PLI) scheme are expected to further strengthen economic momentum. To realise the long-term ambition of Viksit Bharat by 2047, India aims to sustain an 8% annual growth rate. This objective is supported by policy measures such as Ease of Doing Business 2.0/ systemic deregulation, labour law simplification, tax rationalisation and digital governance.

Additionally, MSMEs continue to drive innovation and contribute to the diversification of Indias manufacturing base. In line with this, the Union Budget for FY 2025-26 introduced several measures to strengthen the sector. These include higher investment and turnover thresholds, improved credit access, targeted support for first-time entrepreneurs and productivity-linked initiatives across key industries. With these structural reforms and a continued emphasis on innovation and investment, India is well-positioned for sustained and inclusive growth.

On the infrastructure front, the government maintained strong focus by allocating 11.2 Tn for capital expenditure in the Union Budget FY 2025-26. This substantial outlay is directed towards transportation, energy and digital infrastructure projects. Urban development is also seeing growth, with projections indicating that Indias urban population is expected to reach approximately 500 Mn in 2025. To meet growing housing needs, the government remained committed to affordable housing initiatives, including the Pradhan Mantri Awas Yojana, which aims to ensure housing for all.

• Outlook

Indias economic outlook remains strong, driven by stable domestic consumption, rising infrastructure investment and a dynamic services sector. Inflation is expected to stabilise enabling a more accommodative monetary policy, while robust credit growth and strong banking fundamentals continue to support private sector expansion and capital formation. The digital economy and formalisation of financial services continue to unlock new opportunities, particularly in Tier-II and Tier-Ill markets, while a booming start-up ecosystem continues to prosper. With a youthful workforce, accelerating digital adoption and targeted policy reforms in manufacturing, MSMEs and favourable taxation are expected to enhance productivity and long-term competitiveness. Over the coming decade, India is expected to play a pivotal role in shaping global economic momentum, contributing meaningfully to innovation, supply chain diversification and sustainable development worldwide.

The Company is mainly engaged in the business of financing and investment in "bodies corporate" in order to yield greater revenue for its stakeholders. The Company is planning to expand and diversify the operational activities in the coming years ahead in order to tap higher revenues.

• Industry Overview

The Indian Non-Banking Financial Companies (NBFC) sector remains a critical pillar of financial inclusion and economic growth. Over the years, NBFCs have demonstrated remarkable endurance, expanding their prominence within the financial ecosystem. The sectors assets under management (AUM) have grown significantly, from less than Rs. 2 Tn at the turn of the century to Rs. 41 Tn by the end of FY 2023-24. Between FY 2018-19 and FY 2023-24, NBFC credit has expanded at a compound annual growth rate (CAGR) of approximately 11%.

Despite this significant expansion, AUM growth is expected to moderate, with year-on-year growth projected at 15-17% in FY 2024-25 and FY 2025-26, compared to 23% in FY 2023-24. This deceleration is primarily attributed to rising delinquencies, funding constraints and heightened regulatory oversight.

However, certain lending segments, including SME loans, loans against property (LAP) and used vehicle financing are expected to maintain strong growth. This underscores the strength of specific market verticals. The MSME sector continues to offer strong growth potential supported by growing demand for alternate credit. Additionally, government initiatives aimed at promoting digital financial inclusion and expanding access to credit will further support the sectors growth. In this context, NBFCs have remained instrumental in widening credit outreach in underserved areas, especially in Tier-II and Tier-Ill cities, enabled by the rise of fintech partnerships and embedded finance ecosystems.

The Reserve Bank of India (RBI) has recently reduced the risk weight on bank loans to NBFCs to 100%, thus reinstating the previous framework. This revision is poised to expand banks lending capacity, offering NBFCs enhanced access to bank funding. Consequently, NBFCs are likely to rebalance their funding mix, increasing reliance on bank loans and reducing their dependence on short-term commercial papers. This strategic shift is anticipated to enhance funding stability and facilitate longterm growth. Simultaneously, the regulatory expectations have risen sharply, particularly for larger NBFCs under the RBIs Scale- Based Regulatory (SBR) framework. NBFCs in the Upper layer now face stricter governance, capital adequacy, risk management and disclosure norms, aligning them more closely with the regulatory standards set for banks. This represents a significant shift in the supervisory approach towards systemically important NBFCs.

• Opportunities & Threats:

The Company is expecting good opportunities in the upcoming financial year. However, threats are perceived from its existing and prospective competitors in the same field also the changes in the external environmental may also present threats to the industry i.e. Inflationary pressures, slowdown in policy making and reduction in household savings in financial products, Competition from local and multinational players, Execution risk, Regulatory changes, Attraction and retention of human capital are the major setbacks for NBFCs.

• Segment /Product wise performance:

The Company operates in single business segment i.e. NBFC, it has witnessed considerable growth in the last few years and is now being recognised as complementary to the banking sector due to implementation of innovative marketing strategies, introduction of tailor-made products, customer- oriented services, attractive rates of return on deposits and simplified procedures, etc.

• Technology-Driven Transformation:

Digital innovation is driving enhanced efficiency and customer engagement across the NBFC sector. At the core of this transformation is the adoption of cloud-based infrastructure, enabling greater scalability, data security, and real-time access to information.

Advanced technologies such as data analytics are being leveraged to streamline credit assessments, detect fraud proactively, and accelerate customer onboarding. These digital tools enable faster loan approvals and more personalized financial solutions, significantly improving the borrower experience.

In addition, cloud-enabled systems contribute to reducing operational costs and increasing process automation, thereby strengthening the overall competitiveness of NBFCs in the evolving financial ecosystem.

• Diversification of Funding Sources

Expanding funding channels will be crucial for mitigating liquidity risks and ensuring financial stability. Co-lending with Non-Banking Financial Companies (NBFCs), banks and Housing Finance Companies (HFCs) will offer alternative capital sources, thereby reducing reliance on traditional funding avenues.

A diversified financial structure will enable NBFCs to adapt to market shifts and sustain long-term growth. Furthermore, a strategic tilt towards longer-tenure borrowings, diversified debt instruments, and calibrated co-lending models will be essential to building a resilient funding architecture in a dynamic interest rate and regulatory environment.

• Customer-Centric Strategies

Personalised financial solutions will set NBFCs apart in a competitive market. Dynamic credit scoring and data-driven decision-making will help address diverse customer needs, improving satisfaction and retention. Therefore, by harnessing real-time insights, NBFCs will strengthen customer relationships, drive growth and improve their market positioning.

• Sustainability and ESG Financing

While formal ESG regulatory frameworks are currently not applicable to QGO Finance Limited, the Company continues to demonstrate its commitment to environmental responsibility through several internal initiatives. QGO has installed solar panels to reduce its reliance on non-renewable energy sources, maintains a green office environment with extensive plantation, and actively promotes reduced paper usage across its operations to minimise waste.

Across the broader NBFC sector, ESG considerations are increasingly shaping lending strategies, with a growing emphasis on green financing and sustainable investments. By aligning portfolios with ESG principles, NBFCs can enhance their credibility and attract responsible capital.

Despite facing headwinds from asset growth deceleration and regulatory shifts, the sector⁷s ability to innovate and adapt will define its long-term trajectory. With the right mix of technology adoption, policy alignment, and financial prudence, NBFCs will continue to play a pivotal role in Indias financial ecosystem—driving inclusive growth and expanding credit access across diverse segments.

While the evolving regulatory landscape brings transitional challenges, it is also laying a strong foundation for greater transparency, institutional maturity, and structural resilience—ensuring longterm alignment with Indias financial goals.

• Focus on Tier-II and Tier-Ill Cities

As urban markets mature, NBFCs are increasingly expanding into semi-urban and rural areas, where financial services remain under penetrated. To capture this high-growth market and drive sustainable long-term growth, offering region-specific products, leveraging digital outreach, and providing vernacular language support will be essential.

QGO Finance Limited is focused on strengthening its presence in Tier-II and Tier-Ill cities, with a strategic emphasis on the Navi Mumbai region. The area is witnessing rapid infrastructure development, particularly with the upcoming Navi Mumbai International Airport, which is expected to unlock significant growth potential across real estate, logistics, and allied sectors. This creates promising opportunities for project financing, in line with QGOs core business focus.

• Risk and Concerns:

Due to stiff competition in the finance field where the companys activities are centred in, the overall margins are always under pressure, but maintainable with the constant effort and good services rendered by the company.

• Internal Control Systems and their Adequacy:

The Company has in place adequate internal control systems covering all its operations. Proper accounting records highlight the economy and efficiency of operations, safeguarding of assets against unauthorised use or losses, and the reliability of financial and operational information.

Some of the significant features of internal control system are: ^•

• Financial and Commercial functions have been structured to provide adequate support and control of the business.

• Risk Management policy has been adopted by the Company.

• The Company has an Internal Audit System conducted by the Internal Auditor of the Company. Standard operating procedures and guidelines are reviewed periodically to ensure adequate control

• Overview:

During the financial year under review, operational revenue rose from Rs. 14,04,49,701/- in the 2023-24 financial year to Rs. 16,40,27,905/- in the 2024-25 financial year.

• Analysis of Financial Conditions and Results of Operations:

The Financial Statements have been prepared in accordance with the requirements of Indian Accounting Standards as prescribed by the Institute of Chartered Accountants of India.

The Management believes that it has been objective and prudent in making estimates and judgments relating to the Financial Statements and confirms that these Financial Statements are a true and fair representation of the Companys Operations for the period under review.

• Development on Human Resource Front:

At QGO our human resources are critical to our success and carrying forward our mission. With their sustained, determined and able work efforts we were able to cruise smoothly through the hard time of the economic volatility and rapidly changing market conditions. The requirement of the markets given the economic scenario has made this even more challenging. Attracting new talent with the drive, training and upgrading existing skill sets and getting all to move in a unified direction will definitely be a task in the company. Plans to execute the mandate on this count are already underway and we should see it impacting the results from the next financial year.

By creating a conducive environment for career growth, your Company is trying to achieve the maximum utilisation of employees skills in the best possible way.

There is a need for and the company is focused on retaining and bringing in talent keeping in mind our ambitious plans. The company also believes in recognizing and rewarding employees to boost their morale and enable them to achieve their maximum potential. The need to have a change in the management style of the company is one of the key focus areas this year.

• Industrial Relations:

Industrial Relations throughout the year continued to remain very cordial and satisfactory.

• Key financial ratios:

Sr. No	Particulars of Ratio	31.03.2025	31.03.2024	Explanation for change in Ratios
1.	Debtors Turnover (in times)	10.67	16.94	Increase in collection efficiency & increase in new loans given
2.	Inventory Turnover	-	-	-
3.	Interest Coverage Ratio (in times)	1.43	1.40	Due to efficient loan disbursals
4.	Current Ratio (in times)	9.62	10.27	Increase in Loan & Advances
5.	Debt Equity Ratio (in times)	5.24	5.58	Due to Issue of NCDs during the year
Sr. No	Particulars of Ratio	31.03.2025	31.03.2024	Explanation for change in Ratios
6.	Operating Profit Margin (%)	24.46%	23.96%	Due to increased volume of operations
7.	Net Profit Margin (%)	18.69%	18.90%	Due to increased volume of operations

Return on Net Worth (RoNW):

Particulars	FY 2024-25	FY 2023-24
Return on Net Worth (%)	18.27%	15.82%

Note: RoNW is computed as Net Profit After Tax divided by average Net Worth for the respective year.

• Capital Management:

The Companys capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. As on March 31,2025, the Capital to Risk Assets Ratio ("CRAR") of your Company was 18.15% which is above the minimum requirement of 15% CRAR prescribed by the Reserve Bank of India.

Sr no	Particulars	Amount
1.	Tier 1 Capital is Total Equity including reserves	18,11,05,150/-
2.	Tier 2 Capital	0
	Total Capital (A)	18,11,05,150/-
3.	Weighted Risk Assets is Loans Given at 100 % weightage (B)	99,80,16,215/-
4.	Capital Adequacy Ratio = (A)/(B)*100	18.15%

• Details pertaining to Net-worth of the Company:

Particulars	31.03.2025	31.03.2024	Explanation for change in Net-worth
	(In Rs.)	(In Rs.)
Net-worth	18,11,05,150 /-	15,44,08,688 /-	Increase in Reserves

• Disclosure of Accounting Treatment:

The Company has prepared its Financial Statements in accordance with the Indian Accounting Standards (Ind AS) as prescribed under Section 133 of the Companies Act, 2013, read with the relevant rules issued thereunder, and other accounting principles generally accepted in India.

For and on behalf of Board of QGO Finance Limited

Rear Admiral Vineet Bakhshi (Retired)

Chairman and Director

DIN: 02960365

Address: 137, Shakti Nagar, Dadabari,

Kota - 324009 Rajasthan, India

Date: August 4, 2025