Sangam Finserv Ltd Management Discussions

Economic Overview

During FY 2025-26, the Indian economy demonstrated resilience and maintained its position among the fastest-growing major economies despite continuing global economic uncertainties, geopolitical developments, volatility in international commodity prices and changing global financial conditions. Domestic consumption, investment activity, infrastructure development and the continued expansion of the services sector remained important drivers of economic activity.

The macroeconomic environment remained broadly supportive, with moderation in inflationary pressures and improving financial conditions providing support to domestic demand. The Governments continued focus on infrastructure development, manufacturing, financial inclusion and digitalisation further supported economic activity and created opportunities across various segments of the financial services industry.

The financial services sector continued to play a significant role in supporting economic growth by facilitating credit availability to individuals, businesses, MSMEs and underserved sections of society. The Reserve Bank of India (RBI) continued to focus on maintaining financial stability, strengthening regulatory and supervisory frameworks, improving governance standards and ensuring responsible growth of credit. The Economic Survey 2025-26 also highlighted the continued strengthening and evolution of Indias financial intermediation ecosystem.

For NBFCs, the operating environment during FY 2025-26 remained constructive, supported by continued demand for retail and business credit, increasing formalisation of the economy, wider digital penetration and greater access to financial services in semi-urban and rural markets.

The RBIs monetary and regulatory measures continued to balance economic growth with financial stability. During the year, the regulatory environment remained focused on asset quality, capital adequacy, liquidity management, customer protection, governance, risk management, KYC/AML compliance and responsible digital lending.

Industry Structure and Developments

The Non-Banking Financial Company (NBFC) sector in India has evolved into a critical pillar of financial inclusion, catering to retail, SME, and underserved segments. In FY 2025-26:

Regulatory focus remained on prudential norms, transparency, and digital governance. Technology adoption in credit assessment, KYC compliance, and service delivery accelerated. There was a growing emphasis on ESG (Environmental, Social, and Governance) compliance in lending and investment operations.

The Company operates in this dynamic environment, aligning its strategies to comply with SEBI, RBI, and other applicable regulations.

For NBFCs engaged in lending and investment, FY 2025-26 presented a mixed operating environment. While credit growth remained healthy, challenges emerged in the form of elevated borrowing costs, intensified competition from banks and FinTechs, and evolving regulatory requirements under the Reserve Bank of Indias scale-based regulatory framework.

The investment landscape remained volatile due to global monetary tightening and market fluctuations. However, NBFCs with diversified portfolios and prudent risk management were able to navigate these shifts effectively. The shift towards digital lending, enhanced risk modelling, and strategic co-lending partnerships with banks continued to redefine the operating model for NBFCs.

Looking ahead, the sector is expected to benefit from policy stability, increased focus on infrastructure and manufacturing, and growing credit demand from underbanked segments. However, maintaining asset quality, managing liquidity, and ensuring compliance with the evolving regulatory landscape will be critical for sustainable growth.

Industry Structure and Developments

The Non-Banking Financial Company (NBFC) sector has established itself as an important component of Indias financial system and continues to complement the banking sector by addressing the financing requirements of retail customers, MSMEs, self-employed individuals, commercial enterprises and other underserved segments.

During FY 2025–26, the NBFC industry continued to witness structural transformation driven by:

• Increasing formalisation of credit and financial services;
• Continued growth in retail, MSME and secured lending;
• Expansion of financial services into semi-urban and rural markets;
• Increased adoption of digital lending and technology-enabled underwriting;
• Greater use of data analytics and alternative credit assessment models;
• Increased focus on asset quality and prudent underwriting;
• Continued emphasis on liquidity and diversified funding sources;
• Strengthening of corporate governance and risk management practices; and
• Increasing integration of technology into customer servicing, collections, KYC and compliance processes.

The RBIs Scale Based Regulation framework continued to be an important element of the regulatory architecture for NBFCs, with regulatory requirements calibrated according to the size, complexity and systemic importance of entities. Supervisory attention also remained focused on risk-based KYC/AML supervision, governance, compliance and resilience of NBFCs.

The industry continued to face competition from scheduled commercial banks, small finance banks, housing finance companies and FinTech platforms. Accordingly, NBFCs increasingly focused on customer-centric products, faster turnaround times, technology-enabled processes, differentiated underwriting capabilities and efficient collection mechanisms.

Bank credit data also indicated continued expansion in credit to services and other financial-sector segments, although the pace of growth in credit to NBFCs moderated compared with the exceptionally high levels seen in earlier periods.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Share Capital:

The paid up equity share capital of the Company as on 31st March 2026 stands at Rs. 46,61,27,500/- divided into 46,61,2750 equity shares of Rs. 10/- each fully paid up.

Net Worth:

The Net Worth of the Company increased to Rs. 136.40 Crore from Rs. 133.20 Crore.

Revenue & Profit:

Companys Revenue from operations as on 31st March, 2026 was Rs.1562.56 Lakhs against Rs.1701.48 Lakhs recorded in the previous year.

Considerable Net Profit (after tax) of the Company of Rs. 325.76 Lakhs as against Net Profit of Rs. 659.72 Lakhs of previous year.

SEGMENT WISE PERFORMANCE:

The Company is engaged in the business of financing industrial enterprises and accordingly this is the only single reportable segment.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company maintains an adequate internal control framework designed to safeguard its assets, ensure accuracy and reliability of financial reporting, promote operational efficiency and ensure compliance with applicable laws and regulations.

Internal controls are periodically reviewed and strengthened based on business requirements, regulatory developments and identified areas of risk. Internal audit and compliance functions provide independent monitoring and assurance to the management and the Board.

The Company remains committed to maintaining a strong control environment and ensuring that its operations are conducted in accordance with applicable statutory and regulatory requirements.

Pursuant to the provisions of Section 138 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, the Company has also appointed M/s. NVS& Co., Chartered Accountants as an Internal Auditor of the Company. The Company has in place adequate internal financial control systems with reference to the Financial Statements.

The Internal Audit Reports are discussed with the Management and are reviewed by the Audit Committee of the Board which also reviews the adequacy and effectiveness of the internal controls in the Company. During the year, Companys Internal Controls were tested and no reportable weakness in the system was observed.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:

Human capital continues to be an important contributor to the Companys growth and operational effectiveness. The Company seeks to build a culture focused on customer service, ethical conduct, accountability, compliance and continuous learning.

During FY 2025-26, the Company continued to focus on employee capability development, technology adoption, regulatory awareness and strengthening functional expertise. The Company believes that an appropriately skilled and engaged workforce is essential for sustainable business growth.

OPPORTUNITIES AND THREATS:

The Company sees significant opportunities arising from growing demand for retail and MSME credit, increasing financial inclusion, expansion into semi-urban and rural markets, and rapid adoption of digital lending and technology-enabled services. However, the Company remains mindful of challenges such as increasing competition from banks, NBFCs and FinTech companies, credit and asset quality risks, changes in interest rates and cost of funds, liquidity and ALM risks, evolving regulatory requirements, cybersecurity threats and broader macroeconomic uncertainties. The Company will continue to focus on prudent lending, effective risk management, portfolio diversification, technology adoption and regulatory compliance to achieve sustainable growth.

FUTURE OUTLOOK:

The outlook for Indias financial services sector remains positive, supported by economic growth, increasing formalisation, infrastructure and investment activity, digitalisation and rising demand for credit.

For NBFCs, the medium- to long-term growth opportunity remains significant, particularly across retail, MSME, secured lending and financially underserved customer segments. At the same time, sustainable growth will require disciplined credit underwriting, prudent liquidity management, diversified funding, strong governance and effective regulatory compliance.

The Company remains focused on pursuing responsible and sustainable growth while maintaining a strong balance between business expansion, profitability, asset quality and risk management.

Management believes that the Companys focus on prudent underwriting, customer-centric products, technology adoption, operational efficiency and robust governance will enable it to respond effectively to emerging opportunities and challenges.

CAUTIONARY NOTE:

Management discussion and analysis report contains Statements which are forward looking based on assumptions. Actual results may differ from those expressed or implied due to risk and uncertainties which have been detailed in this report. Several factors as listed in this report could make significant difference to the Companys operations. Investors, therefore, are requested to make their own independent judgments and seek professional advice before taking any investment decisions.

By order of the Board of Directors For Sangam Finserv Limited

Vinod Kumar Sodani Chairman (DIN: 00403740)