Rita Finance and Leasing Ltd Management Discussions

Your directors are pleased to present the Management Discussion and Analysis Report for the year ended 31^st March, 2026.

NBFC Company:

The financial statements are prepared in accordance with the Companies Act, 2013 and Indian Accounting Standards (Ind AS), along with applicable RBI guidelines for NBFCs. Estimates and judgments have been made prudently to ensure the financials present a true and fair view of the Companys affairs. This report may include forward-looking statements involving risks such as regulatory changes, economic shifts, or strategy execution. Actual results may materially differ.

ECONOMIC OVERVIEW:

Global Economy:

Global economic conditions remain volatile, challenged by geopolitical tensions, inflationary pressures, and strained trade relations. Amidst uncertainty, Indias resilient domestic demand and reform-driven momentum continue to stand out.

Indian Economy:

Indias economy continued to demonstrate resilience and strong growth momentum during FY 2025-26, supported by robust domestic demand, easing inflation and a stable macroeconomic environment. Real GDP growth is expected to remain at around 6.5%, reinforcing Indias position as one of the fastest-growing major economies globally. The economy entered FY 2025-26 on a strong footing, with real GDP growth of 7.4% recorded in Q4 FY 2024-25, despite prevailing global uncertainties and geopolitical headwinds. Inflationary pressures moderated significantly, with retail CPI inflation declining to 2.82% in May 2025, providing relief to consumers and supporting economic activity. In response to the evolving macroeconomic environment, the Reserve Bank of India adopted an accommodative policy stance, including reductions in policy rates and reserve requirements, with the objective of strengthening domestic demand and sustaining the growth cycle. Indias external sector also remained resilient, supported by healthy foreign trade, exports and capital inflows. The upgrade of Indias sovereign credit rating by S&P Global Ratings to BBB in August 2025 further reflected growing confidence in the countrys economic resilience and policy framework. Looking ahead, sustaining a higher growth trajectory will require continued focus on infrastructure development, productivity enhancement, private investment and export competitiveness. A parliamentary panel has also highlighted the need to raise the investment rate to around 35% of GDP to support a sustained growth trajectory of 8% over the coming decade. Overall, Indias favourable domestic fundamentals, improving inflation dynamics and policy support provide a strong foundation for sustained economic growth during FY 2025-26 and beyond.

Outlook:

The Government of India continued to pursue fiscal consolidation while maintaining a strong focus on capital expenditure to support infrastructure development and long-term economic growth. The fiscal deficit is budgeted at 4.4% of GDP for FY 2025-26, down from the revised estimate of 4.8% in FY 2024-25, reflecting the Governments commitment to a prudent fiscal path. Capital expenditure has been budgeted at 11.21 lakh crore, equivalent to 3.1% of GDP, with effective capital expenditure estimated at 15.48 lakh crore or 4.3% of GDP. The Reserve Bank of India approved a record surplus transfer of 2.69 lakh crore to the Central Government for FY 2024-25, significantly higher than the 2.10 lakh crore transferred in the previous year and above the budgeted estimate of 2.56 lakh crore. The higher-than-budgeted surplus transfer provides additional fiscal headroom and is expected to support fiscal consolidation, while also contributing to favourable liquidity conditions and potentially moderating government borrowing costs and bond yields.

INDUSTRY OVERVIEW:

Financial Services Industry:

The Non-Banking Financial Companies (NBFCs) sector remained an important contributor to Indias financial ecosystem during FY 2025-26, supported by resilient retail credit demand, increasing financial inclusion and continued formalisation of credit. NBFC credit growth moderated from the exceptionally high levels witnessed in earlier years, reflecting a more calibrated approach to lending, particularly in unsecured segments. Retail lending continued to be the key growth driver, with Retail Assets under Management (AUM), excluding Housing Finance Companies, estimated to have grown by approximately

17 19% during FY 2025-26. Growth was supported by strong performance in gold loans, vehicle finance and other secured retail segments, while unsecured lending and microfinance remained relatively subdued amid asset-quality concerns and tighter underwriting standards. ICRA expects the NBFC-Retail segment to grow at 16 18% during FY 2026-27, with Retail AUM expected to cross 30 lakh crore by FY 2027, indicating continued but more measured expansion.

NBFCs in India:

Indias Non-Banking Financial Companies (NBFCs) sector continued to demonstrate resilience and sustained growth during FY 2025-26, supported by robust retail credit demand, increasing financial inclusion and the continued formalisation of the financial ecosystem. Retail Assets under Management (AUM), excluding Housing Finance Companies, are estimated to have grown by approximately 17 19% during FY 2025-26, although the pace of expansion moderated from the elevated levels witnessed in previous years as lenders adopted a more calibrated approach to credit growth. Asset quality showed signs of stabilisation during the year, supported by improved collections, prudent underwriting and tighter risk-management practices, although pockets of stress continued to persist in microfinance and certain unsecured retail portfolios. NBFCs continued to strengthen their role in Indias credit ecosystem, with retail lending, vehicle finance, gold loans and MSME financing remaining key growth segments, supported by technology-led distribution and strong last-mile reach. Looking ahead to FY 2026-27, the sector is expected to maintain a healthy but measured growth trajectory, with Retail AUM projected to grow by approximately 16 18%. The outlook remains supported by resilient domestic consumption, improving asset quality and sustained demand for formal credit, while funding costs, competitive intensity, credit costs and regulatory requirements will remain important factors influencing sector profitability and growth. Overall, NBFCs are expected to continue gaining strategic importance in Indias financial ecosystem by complementing the banking sector, addressing credit gaps and supporting inclusive economic growth.

COMPANY OVERVIEW:

During the year under review, your Company, being a Non-Banking Financial Company (NBFC), continued to primarily earn income from its financing activities. The Revenue from Operations for the financial year ended March 31, 2026 stood at 132.59 Lakhs, as compared to 102.84 Lakhs for the previous year ended March 31, 2025. The slight decrease is mainly on account of moderation in lending operations and cautious deployment of funds in line with prudent risk management practices.

Including other income, the Total Revenue of the Company during FY 2025-26 was 132.59 as against 106.44 in FY 2024-25. Other income during the year comprised mainly of interest income and miscellaneous receipts, whereas the previous year had an additional contribution from profit on sale of fixed assets.

On the expenditure side, the Total Expenses were 40.55 Lakhs in FY 2025-26 as compared to 41.59 Lakhs in FY 2024-25. The reduction was primarily due to significant rationalization of other operating expenses, even though finance costs were incurred in the current year on account of borrowings mobilized to support lending operations. Employee benefit expenses also increased in line with business expansion and regulatory requirements.

As a result, the Profit before Tax (PBT) increased to 92.04 Lakhs during the year under review as against 64.85 Lakhs in the previous year. After providing for current tax of 22.56 Lakhs, the Profit after Tax (PAT) stood at 69.48 Lakhs in FY 2025-26, registering a healthy growth over 60.31 Lakhs reported in FY 2024-25.

Further, after considering other comprehensive income/(loss), the Total Comprehensive Income for the year was 69.48 Lakhs, as against 60.31 Lakhs in FY 2024-25. The improvement in profitability demonstrates the Companys focus on strengthening its credit underwriting standards, efficient cost management, and disciplined approach to fund deployment.

OPPORTUNITIES & THREATS:

Opportunities:

Strong domestic demand, financial inclusion, and low credit penetration (~70% Credit-to-GDP) signal vast potential.

Rapid growth in retail and MSME segments presents expanding market scope.

Technology and customer reach provide competitive advantage for agile NBFCs.

Upgraded sovereign rating, stable inflation, and policy reforms build favorable macro environment.

Threats:

Tightening credit conditions or global trade tensions may dampen demand. Rising delinquencies in unsecured retail and microfinance could impact margins. Regulatory shifts and capital costs remain key risks to profitability.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has adequate internal controls and standardized operating processes that are envisaged to protect assets and business efficiency. The Company has established strong and well-entrenched internal control procedures commensurate with its size and operations and relevant to its broad domain of the lending business.

HUMAN RESOURCES:

The Company continues to maintain robust internal control frameworks and operational processes appropriate to its scale. These ensure asset safety, compliance, and business efficiency.

We value our workforce and foster an inclusive work culture that motivates employees and drives retention, recognizing their pivotal role in the companys success.

OUTLOOK:

NBFCs will remain crucial in extending credit to underserved segments. Rita is well-positioned to benefit from expanding opportunities, provided asset quality is vigilantly monitored and digital/retail strategies are leveraged. A stable macroeconomy with manageable inflation and supportive regulatory environment augurs well for future performance.

FINANCIAL REVIEW

Key ratios of Rita on a consolidated Basis:

The Operating Profit Ratio for the year ended 31st March, 2026 stood at 69.42% as compared to 63.06% in the previous year. The improvement is primarily attributable to a reduction in overall operating expenses, particularly other administrative costs, despite incurring finance costs in the current year.

The Return on Capital Employed (ROCE) was 5.29% in FY 2025-26 as against 3.94% in FY 2024-25. The marginal decline is due to moderation in revenue from operations and higher deployment of borrowings, even though profitability remained stable.

The Earnings Per Share (EPS) increased to 0.69 in FY 2025-26 from 0.60 in FY 2024-25, reflecting an improvement in the Companys net profitability and value creation for shareholders.

CAUTIONARY STATEMENT

This MD&A contains forward-looking statements within the meaning of securities laws. Actual outcomes may differ due to risks including economic variability, regulatory changes, asset quality shifts, and strategic execution. The Company disclaims any obligation to update these statements.