RSD Finance Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

The Non-Banking Financial Company sector continues to play an important role in India s financial system by extending credit to segments that are often underserved by the formal banking sector. NBFCs support consumption, business activity, vehicle finance, housing finance, small enterprise lending, and other retail and wholesale credit requirements. The sector has remained resilient, though it operates in a more tightly supervised and competitive environment than before.

The RBI has strengthened the supervisory and regulatory framework for NBFCs through scale-based regulations and updated prudential directions. These directions cover capital adequacy, exposure norms, governance, asset classification, liquidity management, and disclosure requirements, and they apply in addition to other applicable laws, rules, and regulations.

2. NBFC SECTOR OUTLOOK

The outlook for the NBFC sector remains broadly positive, supported by continued credit demand in retail and small business segments, financial inclusion, and the gradual deepening of India s credit market. Growth in the sector is expected to remain healthy, although it is likely to be more measured than the sharp expansion seen in earlier periods. NBFCs with strong asset quality, sound funding access, and disciplined risk management are better placed to benefit from this environment.

At the same time, the sector faces headwinds from funding cost pressures, regulatory compliance burden, asset quality risks in some lending segments, and volatility in money and capital markets. Accordingly, a prudent and conservative operating approach remains essential.

3. REGULATORY ENVIRONMENT

NBFCs are governed primarily by the Reserve Bank of India under the Reserve Bank of India Act, 1934, as well as the relevant directions issued from time to time. The RBI s framework now places greater emphasis on scale, business model, customer interface, funding profile, and systemic relevance.

The current regulatory regime includes requirements relating to net owned funds, capital adequacy, concentration limits, asset classification, provisioning, governance, and compliance reporting. Certain NBFC categories are also subject to additional requirements or exemptions depending on their size and business model, including the updated scale-based approach and, where applicable, the revised registration and deregistration framework.

For a company like RSD Finance Limited, this means that management must continuously monitor the applicability of RBI directions, maintain proper records, ensure timely regulatory filings, and preserve adequate internal controls. The provisions of the RBI directions operate in addition to other applicable statutes, including the Companies Act, 2013 and the rules made thereunder.

4. OPPORTUNITIES

The NBFC sector continues to offer opportunities in retail lending, small-ticket finance, and niche credit segments where demand is steady and customer reach can be improved through focused underwriting. NBFCs with flexible operating models and efficient credit appraisal systems can serve borrowers that may not receive timely credit from traditional channels. There is also scope for prudent deployment of surplus funds in liquid and relatively diversified investment avenues, subject always to RBI norms, board-approved policies, and internal risk limits. In a competitive environment, NBFCs that maintain strong governance, capital discipline, and customer-centric processes are likely to build durable value.

5. Threats and Risks

The business of an NBFC is exposed to credit risk, liquidity risk, interest rate risk, market risk, operational risk, and regulatory risk. Volatility in Companies Act 2013 ( the Act ) read with the interest rates or funding availability can affect Companies (Indian Accounting Standards) margins, while deterioration in borrower quality Rules, 2015. can affect asset performance and profitability. Balance Sheet

The RBI has continued to strengthen supervision Net worth increased to Rs. 80.84crores as on because of the systemic importance of NBFCs and March 31, 2026as compared to Rs. 77.96 crores the need to avoid excessive risk-taking. As a result, as on March 31, 2025. compliance standards have become more stringent, and any weakness in internal controls, The Borrowings for FY 2025-26 is 91.83 lakhs reporting, or governance can have an adverse compared to NIL borrowings during FY 2024-impact. 25.

For a NBFC Company that invests surplus funds, Profit and loss statement market volatility also creates valuation risk and liquidity risk. Accordingly, investment decisions Total income for FY 2025-26 stood decreased to should remain conservative and aligned with the Rs. 7.49crores as compared to Rs. 8.79 crores in Company s approved policy, risk appetite, and FY 2024-25. business objective. Total expenses for FY 2025-26 stood increased

6. FINANCIAL PERFORMANCE to Rs. 3.24 crores as compared to Rs. 2.15 crores in FY 2024-25. The Company follows accrual basis of accounting under the historical cost convention. Depreciation and amortization decreased to Rs. It has adopted Indian Accounting Standards 39.83 lakhs in FY 2025-26 compared to Rs. 5.27 ( Ind AS ) notified under section 133 of the lakhs in FY 2024-25.

7. FINANCIAL RATIOS

Following are ratios for the current financial year and their comparison with preceding financial year, along with explanations where the change has been 25% or more when compared to immediately preceding financial year:

Summary of Key Financial Metrics and Key Ratios

KEY METRICS	STANDALONE		CONSOLIDATED
	FY2025-2026	FY2024-2025	FY2025-2026	FY2024-2025
Revenue from Operations	527.61	875.12	3758.17	13000.62
Other Income	221.75	4.50	732.42	499.70
Total Expenses	325.20	214.94	2392.67	10964.02
Profit/(Loss) before Tax	424.16	664.68	2097.89	2536.30
Profit/(Loss) After Tax	269.46	512.24	1545.85	1781.47
EPS (Rs. per share)	2.28	3.75	11.63	13.96

Significant Ratios

The Disclosure w.r.t. details of significant changes in key financial ratios as stipulated under Regulation 34(3) read with Schedule V Clause B of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are as follows:

On a consolidated basis, the Investment and Financial Segment has posted a revenue of Rs.1701.33 lakhs (Previous Year Rs. 1699.43 lakhs), Job Work segment has posted a revenue of Rs. 100.72 lakhs (Previous Year Rs. 94.87 lakhs) and Hotel business segment has posted a revenue of Rs. 2722.77 lakhs (Previous Year Rs. . 2726.10 lakhs) including inter segmental revenue of Rs. 34.26 Lakhs for the FY 25-26.

During Q1 FY 2025-26, the stake of Precision Automotive Private Limited in Sigma HTS LLP was reduced from 65% to 19%. Consequently, Sigma HTS LLP ceased to qualify as a subsidiary or associate under Ind AS and was therefore excluded from the Company s consolidated financial statements for FY 2025-26. Accordingly, the consolidated financial statements are not directly comparable with the previous year, as the earlier period included Sigma HTS LLP s financial results.

On a standalone basis, the Investment and Financial Segment posted segment revenue of Rs. 648.64lakhs (Previous Year revenue of Rs. 784.75lakhs) and the Job Work segment recorded a profit of Rs. 100.72lakhs (Previous Year profit of Rs. 94.87lakhs).

The Company operates only in India, hence there is no other significant geographical segment that requires disclosure.

8. RISKS AND CONCERNS

NBFCs in India operate in a dynamic and complex risk landscape comprising of plethora of challenges and opportunities. Indian NBFCs confront a multifaceted risk landscape that necessitates robust risk management practices, stringent regulatory compliance, and proactive adaptation to changing market conditions to ensure their stability and sustainability in this dynamic environment. Various risk management strategies employed by your company, and the strategies impact their financial stability and growth trajectory. Using a combination of industry reports, annual financial data, regulatory frameworks, and case-based analysis, the study focused on the evolving role of risk governance in a post-crisis NBFC environment. Additionally, RBI s Scale-Based Regulation framework has played a crucial role in pushing NBFCs toward more structured governance and accountability. The NBFC sector s average GNPA reduction from 6.3% to 5.2%, along with CRAR improvement to 23.7%, serves as numerical evidence of better risk alignment in recent years. Further, change in regulatory requirements for NBFCs from time to time, can have a bearing on the running of the Company. The overall economic fluctuations/ slowdown and its impact on service sector are also a cause of concern.

9. INTERNAL CONTROL SYSTEM

Effective internal controls are necessary for building up an efficient organization. Your Company has in place, an adequate internal control and internal audit system managed by qualified and experienced people to ensure the compliances under statutory regulations. Corporate policies are made to figure out the weaknesses persisting in the system and suggest remedial measure for the same. The system is improved and modified continuously to meet with the changes in business condition, statutory and accounting requirements. Internal controls are supplemented by an effective Internal Audit being carried out by M/s. S.K. Naredi & Co., LLP Chartered Accountant and are periodically reviewed by the management.

The Audit Committee also met the Company s statutory auditors to ascertain their views on the financial statements, including the financial reporting system, compliance to accounting policies and procedures, the adequacy and effectiveness of the internal control and systems followed by the Company.

10. HUMAN RESOURCES MANAGEMENT

The Company always regards human resources as its most valuable asset and ensures friendly work environment that encourages initiatives by individuals and recognizes their performance. Total 8 employees were employed during the financial year.

To maintain competency and to improve the analytical abilities of employees for gearing them to face challenges, proper training and development is imparted by the Company before the employee takes up any responsibility. Our Company has always valued its employees whose dedication and contribution have helped us to reach the levels of excellence and rewarded them appropriately during the appraisal.

11.DISCLOSURE UNDER THE SEXUAL

HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during the year 2025-26.

Number of complaints received: NIL Number of complaints disposed off: Nil

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Company s objectives, projections, estimate, expectations may be forward-looking statements within the meaning of applicable securities laws and regulations. Important factors that could make a difference to the Company s operations include changes in Government regulations, tax regimes, economic developments within India and other such factors over which the Company does not have any direct control.

	For and on behalf of the Board
	Sd/-	Sd/-
	Rajeev Singh Dugal	UpneetDugal
	Managing Director	Director
	DIN: 00052037	DIN:07680726
Place: Jamshedpur
Date: 05.09.2026