Sangam Finserv Ltd Management Discussions

Economic Overview

During FY 2024-25, the Indian economy continued its growth momentum, supported by robust domestic demand, increased capital expenditure, and stability in the financial sector. The Reserve Bank of India maintained a balanced monetary policy stance to manage inflation while fostering economic growth. The financial services sector benefited from improved liquidity conditions, stronger credit demand, and digital transformation in lending and investment services.

The Indian economy remained resilient in FY 2024-25, demonstrating robust fundamentals amid global headwinds. With a projected GDP growth of 6.8%-7.0%, India continued to maintain its position as one of the fastest-growing major economies globally. This growth was supported by stable macroeconomic indicators, moderating inflation, and strong domestic consumption and investment trends.

The financial services sector, including Non-Banking Financial Companies (NBFCs), played a crucial role in driving credit expansion and financial inclusion, particularly in semi-urban and rural geographies. The NBFC sector experienced sustained demand across retail, MSME, and infrastructure segments, aided by government initiatives, improved customer sentiment, and digital financial access.

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 2024-25:

• 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 2024-25 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 modeling, 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.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Share Capital:

The paid up equity share capital of the Company as on 31^st March 2025 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. 133.20 Crore from Rs. 127.13 Crore.

Revenue & Profit:

Companys Revenue from operations as on 31^st March, 2025 was Rs. 1701.48 Lakhs against Rs.1856.67 Lakhs recorded in the previous year.

Considerable Net Profit (after tax) of the Company of Rs. 659.72 Lakhs as against Net Profit of Rs. 790.35 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 is maintaining an efficient and effective system of Internal Financial Control for the facilitation of speedy and accurate compilation of financial statements. The Companys internal control system is designed to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with laws and regulations and procedures.

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:

The Company recognizes that human capital is integral to achieving its long-term objectives. It fosters a culture of learning, transparency, and accountability. Employee development initiatives continued during FY 2024-25 to enhance skill sets in finance, compliance, and technology.

OPPORTUNITIES AND THREATS:

The evolving financial ecosystem in India presents a favourable backdrop for Sangam Finserv Limited to strengthen its position. With the rapid shift towards formal credit channels and increasing financial literacy, the Company is well-placed to cater to the rising aspirations of retail and SME clients. Government initiatives to promote digital finance, along with the expanding reach of internet

connectivity, provide a fertile ground for innovative lending models and personalized financial solutions. At the same time, the Companys experience and compliance-oriented culture allow it to build trust in emerging markets where financial penetration is still low.

On the other hand, the business environment remains sensitive to regulatory shifts, and stricter prudential norms could necessitate adjustments in business strategy. Fluctuations in the macroeconomic climate, such as volatile interest rates, inflationary trends, or liquidity constraints, may also influence operational performance. Furthermore, the surge of agile fintech players with technology-led offerings is intensifying competition, pushing traditional NBFCs to innovate faster while safeguarding asset quality and maintaining operational discipline.

FUTURE OUTLOOK:

The Company remains committed to sustainable growth by strengthening its financial position, enhancing risk management practices, and leveraging technology to improve operational efficiency. FY 2025-26 will focus on expanding the client base, diversifying product offerings, and maintaining prudent asset quality.

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.