Sakthi Finance Ltd Management Discussions

INDIAN ECONOMY

During the Financial Year ("FY") 2026, the Indian economy grew by a better-than-expected 7.8 per cent in the March 2026 quarter from a year earlier, belying fears of West Asia war hurting the economy, lifting the indias Gross Domestic Product ("GDp") growth to 7.7 per cent. The GDP growth in March 2026 quarter is due to growth in consumption and investment.

The retail inflation touched 4.04 per cent in June 2026, an 18 month high and has crossed the RBIs 4 per cent target. This reflects persistent inflationary pressures arising from global geopolitical uncertainties and supply chain disruptions. It is expected that inflation would increase in July 2026 also due to increase in retail food prices.

The Indian Automobile sector, one of the indicators of our economy, has registered a broad-based 13.30 per cent year-on-year growth in FY 2026, with Commercial Vehicle segment registering a growth of 11.7 per cent. The strong contributors to this growth have been the positive sentiments created through GST 2.0 reforms and multiple repo-rate cuts during this year.

OPPORTUNITIES AND THREATS

The outlook for the automobile sector for FY 2026-27 looks promising, which is supported by strong macroeconomic fundamentals and healthy domestic demand. However, the geopolitical developments in Middle East continue to pose risks through their supply chain impact, vehicle products, commodity prices, freight increase etc. An early resolution to Middle East conflict would bring growth momentum to this sector.

As our company has been involved in financing of pre-owned Commercial vehicles only, the impact will not be much in the coming years.

FORECAST ECONOMY IN FINANCIAL YEAR 2026-27

The International Monetary Fund ("IMF") has projected Indias FY 2027 growth outlook to be 6.4 per cent, however, the country remains among the worlds fastest-growing major economies. The IMF attributed this to Indias resilience and to strong private consumption and services activities. India is also expected to post the highest growth among advanced economies as well as emerging markets and developing economies in the current and next fiscal year.

KEY REGULATORY CHANGES

RBI has, on 28 November 2025, amended and issued several Master Directions ("MDs") applicable to NBFCs.

Based on the Reserve Bank of India (Non-Banking Financial Companies - Registration, Exemptions and Framework for

Scale Based Regulation) Directions 2025, your Company has been classified under "Middle Layer" ("ML"). Your Company has complied with the various requirements specified under the NBFC Directions within the prescribed timelines.

PERFORMANCE AND FINANCIAL REVIEW

For the financial year ended 31 March 2026, your company disbursed Loans to the extent of 74,258 lakhs. As on 31st March 2026, the total deposits held by your company stood at 20,872.26 lakhs as compared to 18,336.79 lakhs as at the end of last year. The total income for the financial year 2025-26 stood at 21,089.53 lakhs and the net profit after tax for the year at 1,724.90 lakhs, being 3.59 per cent higher than the previous year, mainly due to decrease in current tax expenses. The company accounted for depreciation, amortization and impairment of an amount of 619.11 lakhs in the statement of profit and loss.

KEY FINANCIAL RATIOS

The Key Financial Ratios of the Company for the financial year 2025-26 as compared to the financial year 2024-25 are given below:

Note: There is no significant change in the above ratios (25 per cent or more) as compared to the previous financial year.

RISKS AND CONCERNS

Your Company, like any other NBFC, has been subject to normal industry risks such as credit, market, interest and operational risks. Your company always proactively takes prudent risk management practices to mitigate the above risks.

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Risk Management Committee and Audit Committee of the Board also periodically reviews the policies in relation to risk so that they are in line with your Companys strategic needs.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

Your company has sound and adequate system of internal controls to monitor and regulate all the activities. Further, your company adheres strictly with all internal control policies and procedures and other regulatory requirements. The Companys external Internal Auditor submits his report directly to the audit committee on a periodical basis. Suitable action, wherever necessary, is promptly taken to rectify the deficiencies, if any.

PROSPECTS

The prospects for growth depends on several factors. Internal demand drivers are expected to remain steady with rural and urban consumption, sustained public capital expenditure and a gradual revival in private investment which will augur well for indias economy.

! By increased presence in our operational areas with new c branch network, your Company hopes to increase its business operations and profitability in the coming years.

HUMAN RESOURCES DEVELOPMENT

l Your Company had a very harmonious and cordial relationship , with all its employees during the financial year ended l 2025-26. 659 permanent employees were on the rolls of . the company as on 31st March 2026. The human resources t policy of the company aims to establish and build a strong ! performance-oriented and competency-driven culture with ! higher sense of accountability and responsibility among all its employees. Your company takes pro-active steps to strengthen the organizational competency through various training . programmes at all levels on a regular basis to its employees.

Cautionary Statement

Certain statements made in the Management Discussion and Analysis Report describing the Companys objectives, predictions may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may vary significantly from forward-looking statements contained in this report due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, change in interest rates, new regulations and Government policies that may impact the Companys business as well as its ability to implement the strategy.