Sidh Automobiles Ltd Management Discussions

OVERVIEW

This Management Discussion and Analysis (MD&A) aims to provide a comprehensive narrative through the lens of the Company?s management, offering insights into operational performance, financial position, and strategic outlook. Prepared in accordance with Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with Schedule V(B) thereto, this Report is intended to supplement the audited financial statements of the Company for the financial year ended March 31, 2025. It should therefore be read in conjunction with the accompanying financial statements and the notes forming part thereof, to facilitate a holistic understanding of the Company?s overall performance and direction.

ECONOMIC OVERVIEW

India?s economy sustained its strong growth trajectory in FY 2024-25, underpinned by resilient domestic demand, policy-driven reforms, and robust public capital expenditure. Preliminary estimates from the Ministry of Finance indicate that the real GDP growth for FY 2024—25 is projected to be around 7%, maintaining Indias position as one of the fastest-growing major economies globally.

This growth was bolstered by continued government thrust on infrastructure, with capital expenditure allocations rising steadily across sectors such as transportation, energy, and digital infrastructure. Key initiatives such as the expansion of urban housing schemes for middle-income groups and support for micro, small and medium enterprises (MSMEs) played a pivotal role in broad-based economic participation.

The manufacturing sector witnessed recovery led by easing global commodity prices and improved supply chain efficiency. Meanwhile, the services sector—especially financial, IT, and real estate— registered robust performance, driven by strong domestic demand and technological adoption. The agricultural sector showed modest gains, supported by a largely normal monsoon and rural-focused government schemes.

India?s external sector faced mixed trends. While exports experienced pressure due to subdued demand from advanced economies, this was partly offset by a recovery in services exports and inward remittances. Imports remained elevated due to firm domestic demand, resulting in a current account deficit estimated at around 1.7% of GDP. Foreign direct investment flows remained stable, with increased interest in infrastructure, digital services, and green energy.

On the fiscal front, the government continued its path of fiscal consolidation, targeting a fiscal deficit of 5.1% of GDP for FY 2024—25, down from 5.8% in the previous year. This reflects improved revenue collections, disinvestment receipts, and prudent expenditure management, allowing more headroom for private sector credit expansion.

According to the Ministry of Finance?s outlook, India remains on track to become a USD 5 trillion economy by FY 2027, with the potential to scale up to USD 7 trillion by 2030, provided current structural and macroeconomic trends continue. Contributing factors include a growing digital economy, expanded physical infrastructure, improved ease of doing business, and a favourable demographic dividend.

While the outlook remains positive, risks such as global geopolitical tensions, oil price volatility, and climate-related disruptions to agriculture continue to warrant close monitoring. Nonetheless, with a stable political framework, sound macroeconomic policies, and a clear reform agenda, India is well- positioned to sustain momentum into FY 2025—26 and beyond.

For Sidh Automobiles Limited, a Non-Banking Financial Company — Investment and Credit Company (NBFC-ICC) registered with the Reserve Bank of India, the economic climate

in FY 2024-25 was largely conducive to steady growth. The easing of inflation, accommodative monetary policy, and rising rural and semi-urban consumption patterns supported demand for retail and small-ticket credit, especially in the vehicle financing and short-term working capital segments where the Company is actively engaged.

Continued regulatory clarity and a stable interest rate regime further enhanced access to funding, while digital transformation across the financial services sector enabled greater operational efficiency and customer outreach. As an NBFC-ICC, Sidh Automobiles Limited remains committed to expanding its presence across underserved markets, strengthening its asset quality, and delivering responsible and scalable credit solutions aligned with its long-term strategic goals.

INDUSTRY STRUCTURE AND DEVELOPMENT - OVERVIEW

The global Non-Banking Financial Company (NBFC) market is poised for significant expansion over the forecast period from 2024 to 2031, driven by increasing financial inclusion, digital transformation in lending practices, and evolving credit demands across emerging economies. Having demonstrated steady growth in preceding years, the sector is expected to accelerate as regulatory frameworks mature and market participants adopt technology-led innovations to serve broader demographic segments.

In India, the NBFC sector continues to play an essential role in the financial ecosystem by catering to segments often underserved by traditional banking institutions. These include retail borrowers, small and medium enterprises, and consumers in semi-urban and rural areas. The sector has witnessed remarkable growth over the past decade, underpinned by structural reforms, enhanced regulatory oversight, and rising demand for flexible, accessible credit solutions. The growing integration of digital platforms in origination, underwriting, and collections is further transforming the sector, enabling better risk assessment, faster disbursement, and wider outreach.

India?s long-term vision to emerge as a developed economy by 2047 is intrinsically linked to the creation of world-class, climate-resilient infrastructure. In FY 2024, the government allocated approximately 3.3% of GDP to infrastructure, underscoring its commitment to building inclusive, sustainable cities and transport systems. Roads and highways continue to receive the largest share of investment, followed by railways and urban public transport.

The budgetary outlay for infrastructure-related ministries rose from about INR 3.7 lakh crore in FY 2022-23 to INR 5 lakh crore in FY 2023-24, offering abundant opportunities for private sector participation across multiple sub-sectors. Public-Private Partnerships (PPPs) have emerged as a preferred model for delivering infrastructure projects, particularly in transportation and logistics. The policy environment continues to encourage private investment through targeted schemes and facilitative reforms aimed at improving ease of doing business.

While industrial growth remains concentrated in infrastructure, retail, and services, innovation across high-technology sectors is still evolving. Efforts in MSME cluster development have gained traction, fostering grassroots-level entrepreneurship and competitiveness. However, the linkage between research institutions, academia, and industry remains an area requiring further strengthening. Private enterprises—especially non-MNCs—have exhibited higher innovation intensity compared to government-owned firms or multinational subsidiaries focused on global mandates.

India?s GDP is projected to grow by approximately 6.5% in 2024, supported by resilient domestic consumption, public investment, and rising exports. The strategic shift by multinational corporations to diversify their manufacturing supply chains into India is expected to provide a further boost to the industrial and export landscape.

FY 2024-25 witnessed a cautiously optimistic environment for the non-banking financial sector. A stable interest rate regime, resilient GDP growth, and easing inflation created favourable conditions for credit expansion and improved financial intermediation. Continued emphasis by the government on infrastructure development and digital transformation presented meaningful opportunities for NBFCs

to deepen market penetration and enhance customer engagement through technology-driven platforms.

The role of NBFCs in India?s financial system has grown significantly over the past decade. In 2013, NBFCs accounted for approximately one-sixth of the total volume of credit extended by banks. Today, that share has increased to nearly one-fourth, underscoring the sector?s increasing relevance and penetration.

These functions serve as the institutional safeguards ensuring that growth does not come at the expense of sound governance or regulatory non-compliance.

The Reserve Bank of India continues to actively engage with NBFCs on matters concerning governance, operational prudence, and systemic safety. It has underscored the critical role played by assurance functions in fostering an ethical, stable, and resilient financial ecosystem. For NBFCs, reinforcing these pillars is not only a regulatory necessity but also a strategic imperative for building long-term trust and sustainability.

Sidh Automobiles Limited, in alignment with industry best practices, remains committed to maintaining a robust risk governance framework, enhancing operational resilience, and continuously evolving its technology and credit infrastructure. The Company recognises that sustainable growth must be underpinned by disciplined risk management, strong internal controls, and a culture of compliance at every level of operation.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has a proper and adequate system of internal control in all spheres of its activities to ensure that all its assets are safeguarded and protected against loss from unauthorized use or disposition and that the transactions are authorized, recorded and reported diligently.

The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines.

Also, the Company has an adequate system of internal control to ensure that the resources are used efficiently and effectively so that:

• Other data are appropriate for maintaining the accountability of assets.

The internal control system is supplemented by an extensive internal audit programme, review by management, documented policies, guidelines and procedures

Key strategic goals include expanding the national highway network to 2 lakh kilometres by 2025, increasing the number of operational airports to 220, operationalising 23 inland waterways by 2030, and developing 35 Multi-Modal Logistics Parks (MMLPs).

NBFCs have emerged as vital credit enablers for underserved segments, particularly small businesses, rural borrowers, and self-employed individuals, due to their agility, customer-centric models, and physical outreach capabilities. The rapid adoption of digital solutions has further enhanced credit assessment, turnaround times, and portfolio scalability

However, this transformation has also introduced new dimensions of systemic risk, especially in terms of increased interlinkages with banks and financial markets. The Reserve Bank of India has intensified its supervisory focus on the sector to ensure that growth is accompanied by commensurate governance and risk management standards. Managing concentration risks, funding mismatches, and exposure thresholds has become critical to preserving financial stability and institutional resilience.

Cybersecurity has emerged as a foremost operational risk in the digital age. NBFCs face persistent threats in the form of data breaches, malware intrusions, ransomware attacks, and phishing schemes.

These cyber incidents not only jeopardise operational continuity but can also lead to reputational harm, regulatory scrutiny, and financial loss. A proactive, enterprise-wide approach to cybersecurity is now imperative. This includes the deployment of advanced protection systems such as firewalls, encryption protocols, intrusion detection tools, and continuous monitoring frameworks. In addition, fostering a culture of cybersecurity awareness through employee training and regular audits has become essential to mitigating these risks.

The increasing adoption of rule-based credit engines and automated underwriting tools is another notable trend across the sector. While such models enhance efficiency and scalability, overdependence on algorithmic decision-making carries the risk of overlooking contextual credit nuances, especially in evolving or volatile market conditions. NBFCs must therefore invest in the continuous validation of their credit models and ensure that decision-making frameworks are supplemented by qualitative judgement and human oversight.

Liquidity risk remains a core area of concern, particularly arising from reliance on limited funding sources and maturity mismatches in asset-liability management. As NBFCs grow in scale and complexity, strengthening internal assurance functions—including risk management, compliance, and internal audit—is imperative.

FINANCIAL AND OPERATIONAL PERFORMANCE/ SEGMENT-WISE OR PRODUCT- WISE PERFORMANCE:

The Company is a Non-Banking Finance Company (NBFC). It has only one segment in the Company. Please refer Directors Report for financial performance.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT NUMBER OF PEOPLE EMPLOYED:

Your Company has cordial relations with its employees. The Company commends the commitment, dedication and competence shown by its employees in all aspects of business. With the growing requirements of the Company, Company has taken necessary initiatives to ensure not only the retention of the employees but also their growth and development.

FUTURE OUTLOOK

During FY 2024—25, the Non-Banking Financial Companies (NBFC) sector in India continued to build on its remarkable trajectory, firmly cementing its position as a key pillar within the country?s financial ecosystem. Over the years, the sector has undergone notable transformation, with verticals such as housing finance, microfinance, and consumer lending serving as prominent drivers of its sustained expansion. This growth was supported by a broadening middle class, increased emphasis on financial inclusion, and a series of enabling policy interventions.

NBFCs, backed by strong operational fundamentals and adaptive business models, were well- positioned to seize emerging opportunities despite an evolving regulatory landscape. A significant shift was observed in the composition of loan portfolios, with the share of unsecured retail loans having increased from 15% to 25% over the last decade. Although regulatory tightening around unsecured consumer credit introduced certain capital implications, the sector demonstrated resilience, with industry forecasts projecting a 14% compounded growth over the ensuing two years.

Specifically, NBFC Assets Under Management (AUM) were estimated to have grown by 16—18% in FY 2023—24 and by 14—17% in FY 2024—25, crossing the INR 32 trillion mark by March 2025.

Unsecured loans accounted for approximately 12-14% of total AUM, growing at a moderate pace due to recent regulatory recalibrations.

Nevertheless, the sector remained fundamentally strong, characterised by prudent provisioning coverage for Stage 2 and Stage 3 assets, low leverage levels, and a readiness to support broad-based credit expansion.

Additionally, the industry witnessed significant diversification, with more than half of NBFCs venturing into new product segments. Profitability held steady, underpinned by controlled credit costs and stable operating expense ratios, which contributed to a healthy financial outlook.

NBFCs played a transformative role in the Indian financial landscape by bridging gaps left by traditional banking institutions and offering customised solutions to underserved sectors. Their contribution to micro, small, and medium-sized enterprises (MSMEs) continued to be critical, with growing credit penetration enabling grassroots economic development. As per Reserve Bank of India data, the NBFC share in total credit extended to the economy rose markedly—from 16.4% in December 2022 to 29.1% by February 2023—underscoring the sector?s expanding footprint.

According to estimates by Research and Markets, the NBFC sector was projected to grow at a CAGR of 18.5% between 2021 and 2026. FY 2024—25 reaffirmed the sector?s role as a driver of inclusive financial growth, supporting India?s economic ambitions while reinforcing its position as a trusted enabler for individuals and enterprises alike.

CAUTIONARY STATEMENT:

The Board of Directors have reviewed the Management Discussion and Analysis prepared by the Management. Statements in this report of the Companys objective, projections, estimates, expectations, and predictions are forward-looking statements subject to the applicable laws and regulations. The statements may be subject to certain risks and uncertainties. The companys operations are affected by many external and internal factors which are beyond the control of the management.

Thus, the actual situation may differ from those expressed or implied. The Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.

ACKNOWLEDGEMENT

Your directors take this opportunity to place on record their appreciation to all employees for their hard work, spirited efforts,dedication and loyalty to the Company.