S R G Securities Finance Ltd Management Discussions

ECONOMIC OVERVIEW

The global economy experienced notable growth amidst rising uncertainty and changing geopolitical circumstances in 2024. The economy grew by 3.3%, following a strong 3.5% increase in the previous year of 2023. The positive performance can be attributed to resilient consumer demand, proactive policy measures, and a greater focus on sustainable development.

Emerging Markets and Developing Economies (EMDEs) signi icantly surpassed global growth rates, achieving a robust expansion of 4.3%, largely fueled by strong performances from India and Southeast Asian countries. Meanwhile, advanced economies showed a modest growth of 1.8%, facing ongoing challenges such as supply chain issues and in lationary pressures.

In the U.S., the economic landscape remains strong, bolstered by consistent consumer spending and a healthy labor market. Conversely, the Eurozone is grappling with signi icant challenges, including energy supply constraints and low industrial output, while Chinas recovery continues to be uneven, primarily hindered by ongoing weaknesses in its property market.

INDIAN ECONOMY

In comparison to global counterparts, the Indian economy has demonstrated signi icant resilience in the face of global uncertainty, positioning itself as one of the fastest-growing major economies worldwide. Key factors driving this economic growth include robust domestic demand, substantial structural reforms, and effective policy support. According to the Second Advance Estimates, Indias GDP growth is projected at 6.5% for FY25, markedly lower than the 9.2% growth recorded in FY24. This deceleration is indicative of various domestic challenges, such as a sluggish manufacturing sector, persistent food in lation, subdued urban demand, an expanding trade de icit, and a decline in private investment activity.

INDUSTRY STRUCTURE AND DEVELOPMENT

The NBFC sector in India demonstrated continued resilience amid a challenging macro- financial landscape in FY 2024 25. Credit growth surged ahead of banks, with NBFCs recording a 20% increase in credit growth, compared to approximately 12% for commercial banks, underscoring the sectors expanding role in bridging the credit gap.

Despite this strong momentum, bank inancing to NBFCs moderated, with bank credit rising modestly by 5.7%, reaching 16.4 lakh crore by end-March 2025. This has compelled NBFCs to diversify their funding sources, ramping up bond issuances and overseas borrowings.

According to the RBIs Ffinancial Stability Report, stressed assets in the NBFC sector rose to 5.9% by March 2025 (up from 3.9% in September 2024), and write-offs surged dramatically with upper-layer NBFCs seeing write-offs climb to 72.9%, and middle-layer NBFCs to 38.7% raising the combined average to 46.4%. Despite pressures on asset quality, NBFCs sustained meaningful growth: CRISIL projects AUM growth at 15 17% in FY 2025, only slightly moderating from the 23% growth seen in FY 2024. Credit growth also remained robust RBI reports show loans and advances by NBFCs growing 18.5% in FY 2023-24 (up from 17.4% in FY 2022-23), while upper- and middle-layer NBFCs together saw credit growth of 20.7% by March 2025.

Looking ahead, the NBFC sector is expected to remain a cornerstone of Indias credit ecosystem, supported by continued infrastructure push, rising vehicle and equipment inancing demand, and digital adoption. While moderation in AUM growth is anticipated, steady double-digit expansion in credit is likely, backed by economic recovery, government capex initiatives, and greater penetration in under-served customer segments. At the same time, heightened regulatory focus on governance, liquidity, and risk management will drive more resilient business models. Diversi ication of funding sources through securitisation, capital markets, and co-lending partnerships is expected to mitigate funding concentration risks. Fintech-NBFC collaboration and technology-driven underwriting are also set to expand credit access while strengthening operational ef iciencies. Despite near-term pressures on asset quality, the sector is well-positioned for sustainable growth and deeper financial inclusion in the medium to long term.

STRENGTHS

High Capital Adequacy Ratio

Diversi ied Product & Customer Pro ile

Adequate Internal Control System

Experienced Promoters

Brand Name of SRG Group in Rural Sector

Speedy processing and sanctioning of loan

Hassle-free documentation process offering maximum lexibility to the Customers

OPPORTUNITIES & THREATS

SRGFFL witnessed signi icant opportunities driven by the continued growth of the Indian economy and the increasing demand for tailored financial solutions in underserved markets. The adoption of digital financial services and innovative intech partnerships have enabled us to enhance customer experience and broaden our reach. However, the sector also faced notable challenges, including heightened regulatory scrutiny, evolving compliance requirements, and the rising threat of cyber risks. According to a recent RBI report, the Department of Supervision will focus on examining licensing requirements for NBFCs and initiating supervisory actions against non-compliant NBFCs in the iscal year 2024-25. The year 2024 saw many regulatory changes impacting the business model of NBFCs.

SEGMENT REPORTING

The Company is exclusively engaged in the Finance business and revenues are mainly derived from this activity. Accounting Standard 17 regarding Segment-wise Reporting issued by the Institute of Chartered Accountants of India and noti ied under the Companies (Accounting Standards) Rules, 2006 does not apply to your Company since revenues are derived from only one segment i.e. From inance activity.

RISKS AND CONCERNS

Your Company is exposed to internal and external risks. The internal risks relates to the risks within the Company due to change in management, personnel and policies, lapses / inadequacy in existing infrastructure facilities, delinquencies on the part of employees, staff attrition, misfeasance etc. The external risks can be associated to those factors which are not within the control of the Company like change in interest rates, government regulations, competition from others operating in similar business, etc.

RISK MANAGEMENT

Comprehensive risk management practices form an integral part of the operations at SRGFFL. The nature of business the Company is engaged in exposes it to a slew of complex and variable risks. The rapid and continuous changes in the business environment have ensured that the organization becomes increasingly risk focused to achieve its strategic objectives. SRGFFLs policies ensure timely identi ication, management and mitigation of relevant risks, such as credit Risk, liquidity risk, interest rate risk, operational risk, reputational and regulatory risks, which help the company move forward with vigour.

INTERNAL CONTROL SYSTEMS & ADEQUACY

SRGFFL has an adequate system of internal control in place which has been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliance with regulations and for ensuring reliability of financial reporting. SRGFFL has documented procedures covering all financial and operating functions.

SRGFFL has robust internal audit programme, where the internal auditors, an independent irm of chartered accountants, conduct a risk-based audit with a view to not only test adherence to laid down policies and procedures but also to suggest improvements in processes and systems. Internal audit observations and recommendations are reported to the Audit Committee, which monitors the implementation of such recommendations.

INFORMATION TECHNOLOGY

Pursuant to RBI Master Direction - Information Technology Framework for the NBFC Sector, the Company having asset size below 500 crores, adopted the measures as mentioned under Section-B of Master Direction - Information Technology Framework for the NBFC Sector. The board has approved the Information technology policy. The Company has adopted various measures for physical/ logical access controls, well-de ined user role, a Maker-checker concept to reduce the risk of error and misuse and to ensure reliability of data/information, information security and cyber security, BCP Policy etc. Your Company is currently using in-house software for operations and accounting. Adequate arrangements have been made for backup of data.

DISCUSSION ON FINANCIAL PERFORMANCE AND OPERATIONAL HIGHLIGHTS

The financial and other operational performance of the Company for the year under review has been discussed in detail in the Directors Report. The Cash-Flow Statement and the Balance Sheet are annexed to this Annual Report.

KEY CHANGES IN FINANCIAL INDICATORS

The Key financial ratios of the company are as under:

Return on Average Equity was decreased due to decrease in revenue.

RETURN ON NET WORTH

Return on net worth as on 31^st March 2025 is 2.39% as compared to 3.32% of previous year. Decrease of 28.01%.

HUMAN RESOURCES

The Company places signi icant emphasis on human resource management, recognizing its critical role in driving organizational growth and operational excellence. As of March 31, 2025, the company employed total of 4 individuals.

The companys HR strategy focuses on attracting, retaining, and developing talent aligned with its mission to provide affordable housing inance. This involves creating a supportive work environment that fosters both personal and professional growth. Regular training and development programs are conducted to enhance employees skills and knowledge, ensuring they are well-equipped to meet the companys objectives.

RELATED PARTY TRANSACTIONS:

Transactions with related parties entered into by the company in the normal course of business were placed before the audit committee. None of the transactions with any of the related parties were in con lict with the interests of the company. The details of transactions with the company and related parties are given for information under notes to accounts.

LOAN PRODUCTS AND PROCESS:

SRGFFL is primarily engaged in the business of providing Vehicles, construction and mining equipments and Business Loan by offering: (i) Equipment Finance (ii) Vehicle Finance (iii) Business Loan and (iv) Loan Against Property. Entire operations of the Company are handled at the Registered Of ice in Udaipur, Rajasthan along with the branch/Satellite of ices of Group Companies.

Company has a well-established and streamlined credit appraisal process. The loan approval & Disbursement process mainly consists of four simple steps (i) Appraisal (ii) Security Evaluation (iii) Loan Sanction (iv) Loan Disbursement.

LOAN SANCTIONS AND DISBURSEMENTS:

The company is currently making efforts to regularize outstanding portfolio and looking for new opportunities in the market.

ACCOUNTING STANDARDS:

Your Company has complied with the Accounting Standards issued by the ICAI, Accounting Standards and Schedule III of Companies Act, 2013.

OTHER COMPLIANCES:

As required under Section 215 of the Insolvency and Bankruptcy Code, 2016, the Company has registered itself with National e-governance Services Limited (NeSL) authorized by IBBI obtained and an agreement is executed with NESL.

The Company has complied with all the applicable Regulations of Companies Act, 2013 and related Rules thereunder, SEBI (LODR) Regulations and circulars, noti ications etc. issued by SEBI.

Other related statutory Guidelines/ Directions as applicable to the Company from time to time have also been strictly adhered to. Compliance of all Regulatory guidelines of RBI/other statutes is periodically reviewed at Audit Committee/Board.

CAUTIONARY STATEMENT:

Statements in this Directors Report and Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be “forward-looking statements” within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. These statements are based on certain assumptions and expectations of future events over which the Company has no direct control. Important factors that could make a difference to the Companys operations include performance of the overall economy; rate of interest position in the economy; performance of the real estate market and other relevant external and internal factors.

Statements in this report, describing the companys objectives, estimations, projections, expectations are “forward looking statements” based on the managements current expectations and beliefs concerning future developments and their potential effect upon the Company. Several factors could make signi icant difference to the companys operations. These include economic conditions affecting demand and supply, Government regulations and taxation, natural calamities, etc. over which the company does not have any direct control. SRGFFL assumes no responsibility in case the actual results differ materially due to change in internal or external factors

OUTLOOK:

As we move into FY 2024-25, we remain cautiously optimistic about the future. The economic landscape presents both opportunities and challenges, with anticipated growth in key sectors such as SME lending, and digital financial services. Our focus will be on leveraging technology to enhance operational ef iciency, deepen customer engagement, and expand our product offerings. We will continue to prioritize compliance, risk management, and governance to ensure sustainable growth in a dynamic regulatory environment. By fostering innovation and maintaining our customer-centric approach, we are well-positioned to capitalize on emerging trends while navigating potential uncertainties in the market.