Smart Finsec Ltd Management Discussions

Overview

Smart Finsce Limited is registered with Reserve Bank of India (RBI) as non-deposit accepting NBFC. In terms of the Scale Based Regulatory Framework for NBFCs notified by RBI, the Company falls under the category of Base Layer NBFC (NBFC-BL).

The global economy remained resilient during FY 2025-26, although the operating environment was characterised by heightened geopolitical uncertainty, evolving trade policies and volatility in commodity and financial markets. Global economic activity continued to be supported by resilient consumption and investment, while geopolitical tensions, trade fragmentation and disruptions to critical trade and shipping routes increased uncertainty around energy prices, supply chains and global financial conditions.

The global outlook remains one of moderate growth, with the pace of expansion expected to remain below historical averages. Geopolitical developments, trade-policy uncertainty and commodity-price movements, particularly crude oil, remain key risks to the global economic outlook. At the same time, moderating inflation and continued investment in technology and productive capacity provide support to global economic activity.

India remained among the fastest-growing major economies during FY 2025-26, supported by resilient domestic demand, private consumption, investment activity and continued government-led infrastructure expenditure. As per the latest provisional estimates released by the National Statistical Office (MoSPI), Indias real GDP is estimated to have grown by 7.8% in FY 2025-26, compared with 6.5% in FY 2024-25. The growth momentum was supported by domestic consumption and investment, while services, manufacturing and agriculture contributed to overall economic activity.

Domestic demand continued to provide a strong foundation for economic activity. Private consumption benefited from moderating inflation and improving purchasing power, while investment remained supported by public capital expenditure, infrastructure development and improving capacity utilisation. The Governments continued focus on infrastructure and capital expenditure, together with structural reforms and increasing formalisation of economic activity, is expected to support Indias medium-term growth prospects.

Inflation conditions remained favourable through a significant part of FY 2025-26, supported by moderation in food prices, improved agricultural supply and favourable base effects. The relatively benign inflation environment provided room for monetary easing and supported financial conditions.

The Reserve Bank of India reduced the policy repo rate during 2025, with the rate reaching 5.25% by December 2025. The Monetary Policy Committee subsequently maintained the repo rate at 5.25% and continued with a neutral stance, while keeping a close watch on evolving growth, inflation and external risks. The moderation in inflation and easing monetary conditions provided a supportive backdrop for economic activity, while volatility in international commodity prices, particularly crude oil, remained an important upside risk to inflation and financial conditions.

The outlook for the Indian economy remains constructive, supported by resilient domestic demand, government-led capital expenditure, infrastructure development, investment activity and the continued formalisation of the economy. Indias strong domestic fundamentals are expected to provide resilience against external volatility and support sustainable economic growth.

At the same time, the outlook remains subject to risks arising from geopolitical developments, crude oil and commodity-price volatility, global trade disruptions, movements in the Indian Rupee and volatility in international financial markets. The balance between domestic growth momentum and these external risks is expected to shape the economic environment during FY 2026-27. Continued policy support, infrastructure investment and robust domestic consumption are expected to remain important drivers of economic activity.

The Non-Banking Financial Companies (NBFCs) sector plays a significant role in the Indian financial system. NBFCs have become a key financial provider for a large segment of the population including small and medium-sized enterprises (SMEs) and economically unserved and underserved people. The sector remained subject to a strengthening regulatory framework, with emphasis on prudent underwriting, capital adequacy, liquidity management, asset-liability management, governance and risk management. The evolving interest-rate and liquidity environment also remained relevant for the sectors funding costs and credit growth.

Against this backdrop, the Company did not undertake any lending activities during FY 2025-26 and accordingly did not have an active loan portfolio or lending customer base during the year.

Indian capital markets witnessed a mixed and volatile environment during FY 2025-26, influenced by geopolitical uncertainties, global trade developments, movements in crude oil prices and changing investor sentiment. Despite periods of market volatility, domestic investor participation continued to provide resilience to the Indian capital markets, while activity in the equity derivatives segment remained significant. The regulatory environment also continued to evolve, with greater emphasis on risk management, investor protection and strengthening the framework governing derivatives and market participants.

Against this backdrop, the Companys activities in the capital markets, including F&O trading and jobbing, remained subject to prevailing market conditions, liquidity, volatility and regulatory requirements. The Company earned a profit of 67.74 lakh from F&O activities during FY 2025-26, as compared with 96.38 lakh during FY 2024-25.

The Indian real estate sector continued to remain an important contributor to economic activity during FY 2025-26, supported by urbanisation, infrastructure development, economic growth and sustained demand across residential and commercial segments. The sector remained influenced by factors such as interest rates, construction costs, regulatory developments and overall economic conditions.

The Companys involvement in the real estate segment remained limited and primarily comprised letting out its properties, with rental income being the principal source of revenue from this segment during the year.

Continued development of the Indian financial services and NBFC sector, along with evolving regulatory and market conditions, may provide opportunities for the Company to selectively explore suitable business activities in line with its risk appetite. Continued development of Indian capital markets and increasing investor participation may provide opportunities in F&O trading and jobbing activities. Adoption of digital platforms can drive operational efficiency, improve customer engagement, and support innovation in product development. Working with fintech companies or other financial firms can bring new technology, more customers, and diversified service offerings.

Rising competition from traditional banks, fintech players, and other NBFCs poses a challenge to market positioning and customer retention. As digital transformation accelerates, so do cybersecurity threats- demanding stronger safeguards to protect financial data and systems. Cybersecurity threats and technology-related disruptions may affect trading operations and information security. Volatility in equity and derivatives markets may adversely affect trading performance. Changes in the regulatory environment applicable to NBFCs and financial services may increase compliance requirements and operational costs.

The Company is a Non-Banking Finance Company (NBFC) engaged in investment in shares and securities, capital market activities and the real estate segment. During FY 2025-26, the Companys activities primarily comprised investment/capital market activities and income from its real estate assets. The Company did not undertake lending activities during the year.

During the year under review, the Company continued its activities in F&O trading and jobbing. Profit from F&O / Jobbing stood at 67.74 lakh, as compared with 96.38 lakh in FY 2024-25. The Company also undertook transactions in shares during the year, with performance dependent on prevailing market conditions. Interest income comprised interest earned on margin deposits, tax-free bonds and income tax refund. Interest on margin deposits stood at 84.05 lakh, compared with 73.95 lakh in the previous year, while interest on tax-free bonds and income tax refund amounted to 0.77 lakh and 0.03 lakh, respectively. The Companys activities in the real estate segment remained limited to letting out its properties. Rental income during FY 2025-26 stood at 29.69 lakh, compared with 28.97 lakh in FY 2024-25.

Overall, the Company recorded a net profit of 97.96 lakh during FY 2025-26 as compared with 117.39 lakh in FY 2024-25.

The outlook for the Company remains closely linked to the evolving economic environment, capital market conditions and regulatory developments. Indias continued economic growth, increasing domestic participation in financial markets and development of market infrastructure provide a supportive backdrop for the Companys investment and capital market activities.

The Company will continue to focus on prudent management of its resources, disciplined participation in capital market activities and effective risk management, while remaining responsive to changing market conditions and regulatory requirements. The Company will also continue to optimise the utilisation of its existing assets and generate stable rental income from its properties.

While market volatility, geopolitical developments, regulatory changes and broader economic uncertainties may pose challenges, the Company remains committed to maintaining sound governance and prudent financial management while pursuing opportunities consistent with its risk appetite and long-term objectives.

The nature of the Companys activities exposes it to various risks, including market risk, interest rate risk, liquidity risk, regulatory and compliance risk and operational risk. Given the Companys involvement in capital market activities, fluctuations in market prices and volatility may have a direct impact on its financial performance.

The Company continues to monitor and manage risks associated with its business activities through prudent decision-making, appropriate risk management practices and compliance with applicable regulatory requirements. The Company remains focused on identifying, assessing and mitigating risks on an ongoing basis.

The Company has proper and adequate system of internal controls commensurate with its size and nature of operations to ensure accuracy of accounting records, compliance with applicable laws, rules & regulations, and ensure that all its assets are safeguarded and protected against loss from unauthorized use and disposal.

The paid up equity share capital of the Company as on March 31, 2026 stands at Rs. 3,00,000,00 divided into 30,00,000,00 equity shares of Rs. 1/- each fully paid up.

The Companys financial performance, for the year ended 31st March, 2026 is summarized as below:

The Company values Human Resource as an extremely important and strategic resource and focuses on building a high-performance culture with a growth mindset where employees are engaged and empowered to be the best they can be in order to achieve organizational effectiveness. There was no Material Development in Human Resources front.

This Report contains Forward-Looking Statement. Any explanation that tends to form assumptions or forecasts about the future, including however not restricted to articulations about the Companys strategy and growth, product development, market position, expenditures and financial results, are forward looking Statements. Forward looking Statements are based on specific presumptions and assumptions for future development. The Company cant ensure that these presumptions are precise and will be realized. The Companys actual results, performance or achievements could thus differ materially from any such forward-looking Statements.