SRG Housing Finance Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

The global economy experienced notable growth amidst rising uncertainty and changing geopolitical circumstances in 2024. The economy grew by 3.3%, following a strong 3.5% increase in the previous year of 2023. The positive performance can be attributed to resilient consumer demand, proactive policy measures, and a greater focus on sustainable development.

Emerging Markets and Developing Economies (EMDEs) significantly surpassed global growth rates, achieving a robust expansion of 4.3%, largely fueled by strong performances from India and Southeast Asian countries. Meanwhile, advanced economies showed a modest growth of 1.8%, facing ongoing challenges such as supply chain issues and inflationary pressures.

In the U.S., the economic landscape remains strong, bolstered by consistent consumer spending and a healthy labor market. Conversely, the Eurozone is grappling with significant challenges, including energy supply constraints and low industrial output, while Chinas recovery continues to be uneven, primarily hindered by ongoing weaknesses in its property market.

GLOBAL ECONOMIC GROWTH

Outlook

The global economic outlook for 2025 presents a multifaceted array of challenges and opportunities, influenced by the evolution of trade dynamics and the recalibration of policy priorities. While advanced economies are positioned to achieve their inflation targets relatively soon, Emerging Market and Developing Economies (EMDEs), particularly China and India, are projected to uphold a steady growth

trajectory. However, intensifying trade tensions, particularly those arising from recent tariffs imposed by the United States and subsequent retaliatory measures, present significant risks to global trade, with the potential to exacerbate inflationary pressures and impede overall economic activity.

Global GDP is forecasted to increase by 2.8% in 2025 and by 3.0% in 2026, reflecting a deceleration compared to previous years. Advanced economies are anticipated to expand at a rate of 1.4% in 2025 and 1.5% in 2026, thereby continuing a trend of modest growth. In contrast, EMDEs are expected to experience a more vigorous growth rate of 3.7% in 2025 and 3.9% in 2026. Nonetheless, amid these prevailing headwinds, advancements in technology and proactive policy initiatives are anticipated to underscore economic resilience in the forthcoming period.

(Source: IMF - World Economic Outlook April 2025)

INDIAN ECONOMIC OVERVIEW

In comparison to global counterparts, the Indian economy has demonstrated significant resilience in the face of global uncertainty, positioning itself as one of the fastest-growing major economies worldwide. Key factors driving this economic growth include robust domestic demand, substantial structural reforms, and effective policy support. According to the Second Advance Estimates, Indias GDP growth is projected at 6.5% for FY25, markedly lower than the 9.2% growth recorded in FY24. This deceleration is indicative of various domestic challenges, such as a sluggish manufacturing sector, persistent food inflation, subdued urban demand, an expanding trade deficit, and a decline in private investment activity.

Indian GDP Growth Rate (in %)

Source: *MOSPI Report dated 28th February 2025,

"Reserve Bank of India (RBI) Monetary Policy Committee (MPC) report dated 9^th April 2025.

Despite this slowdown, India has maintained a stable growth trajectory, propelled by a thriving services sector and increased infrastructure investment. Government initiatives aimed at fostering digital transformation, enhancing financial inclusion, and facilitating ease of doing business have further bolstered growth. Efforts to diversify trade relations and establish new free trade agreements (FTAs) have also mitigated external risks. Furthermore, rising urbanization and a burgeoning middle class have contributed to heightened consumer spending.

Inflation remains a pressing concern for FY25, influenced by global supply chain disruptions and volatile commodity prices. In response to changing economic conditions, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) unanimously resolved to lower the repo rate by 25 basis points twice since February 2025, reducing it from 6.5% to 6% on April 9, 2025, while maintaining an accommodative stance toward the economy. The Consumer Price Index (CPI) inflation is estimated at 4.9% for FY25, a decline from 5.4% in the previous year, with projections suggesting a further reduction to 4.0% in FY26.

The agricultural sector remains in a positive position, bolstered by healthy reservoir levels and strong crop production, which are anticipated to sustain rural demand. The manufacturing sector is also displaying early signs of recovery, supported by improved business sentiment, while the service sector continues to exhibit resilience.

Investment activity is gaining momentum due to higher capacity utilization, the ongoing government emphasis on infrastructure development, and the robust balance sheets of banks and corporations. While service exports are expected to remain stable, merchandise exports may encounter challenges stemming from global uncertainties and trade disruptions.

Outlook

Driven by government initiatives viz. promoting digital transformation, financial inclusion, substantial investment, and improvements in the ease of doing business, the Indian economy is projected to demonstrate strong resilience. As per RBI estimates, the Indian economy is expected to grow by 6.5% in FY26. Favorable agricultural incomes resulting from normal monsoon conditions, a recovery in industrial activity, and enhanced household consumption supported by tax relief measures in the Union Budget

2025-26 are anticipated to underpin economic growth in FY26.

Source: RBI, 2nd advance estimates of Statistics and Programme Implementation (MOSPI)

INDUSTRY OVERVIEW Housing Finance Sector

The Indian housing finance sector is poised for a significant transformation, characterized by sustained growth, enhanced asset quality, and robust demand. It is projected to attain a compound annual growth rate (CAGR) of 15-16% between FY25 and FY30, thereby establishing a clear trajectory for considerable expansion. As of FY24, housing credit stands at approximately 33 trillion, with forecasts indicating that this figure is expected to more than double, reaching between 77 and 81 trillion by FY30. This underscores the substantial potential and opportunities that exist within this sector.

Housing Loan Industry Size

Housing Loan Industry Size

The housing finance sector consists of both public and private sector banks, alongside Housing Finance Companies (HFCs). Public sector banks hold the largest share of the housing loan market at 40%, with private sector banks following closely at 34.5%. Meanwhile, HFCs represent approximately 19% of the total market. While banks primarily target urban borrowers with higher loan amounts, HFCs focus more on underserved demographics, including self-employed individuals and low- to middle-income groups, especially in semi-urban and rural regions. This strategic focus allows HFCs to meet specific needs in Tier 2 and Tier 3 cities, where there is a growing demand for affordable and mid-range housing options. Additionally, smaller HFCs and non-banking financial companies (NBFCs) are pioneering innovative credit assessment methods, utilizing non-traditional data sources to gauge the repayment abilities of informal-sector borrowers, thus enhancing financial inclusion and creating new business opportunities.

Government programs like the “Pradhan Mantri Awas Yojana (PMAY)”, along with incentives from the “Housing for All” mission, have played a crucial role in stimulating this demand. Factors such as increasing urbanization, the rise of nuclear families, and a widespread desire for home ownership across various income levels have contributed positively to the residential real estate and housing finance markets.

A promising development in the housing finance landscape is the significant enhancement in asset quality. By the end of FY24, the Gross Non-Performing Assets (GNPA) ratio for HFCs dropped to 2.2%, a notable decrease from the 4.3% recorded in FY22. This considerable improvement can be attributed to several elements, including refined underwriting practices, a more cautious lending approach following the COVID pandemic, and an economic recovery that has strengthened borrowers repayment capabilities.

Asset Quality of HFCs

Source: CareEdge Ratings

Furthermore, the quality of both retail and wholesale loan books has improved. The provision coverage ratio for Stage 3 assets, a key measure of financial resilience, stood at a healthy 49.7% as of March 2024. This indicates that HFCs have strengthened their financial buffers against credit risks, putting them in a stronger position to weather potential future shocks.

GROWTH DRIVERS

1. Rising Urbanization and Household Formation

Rapid urbanization and the steady migration of populations from rural to urban and semi-urban areas are significantly increasing the demand for housing. Simultaneously, India is witnessing a rise in nuclear families, which translates into a higher number of households and a broader base of potential homebuyers seeking financial assistance.

2. Demographic Advantage

Indias young population and growing middle class are central to long-term housing demand. With a median age of around 28 years, a large section of the population is entering the home-buying phase of life. This cohort, often financially aspirational and credit-ready, is fueling demand for residential properties and, by extension, housing loans.

3. Government Policy Support

Initiatives such as Pradhan Mantri Awas Yojana (PMAY), interest subsidies under the Credit-Linked Subsidy Scheme (CLSS), and tax incentives for homebuyers have significantly boosted affordable housing uptake. Additionally, infrastructure status for affordable housing projects has helped developers and lenders access funding at competitive rates.

4. Expansion into Tier 2 and Tier 3 Cities

With rising land and property costs in major metros, developers and lenders are increasingly focusing on smaller cities, where demand is robust and competition is moderate. These markets offer growth opportunities for HFCs and NBFCs that specialize in affordable housing and have built expertise in lending to self-employed or informally employed borrowers.

5. Improving Affordability and Credit Access

Despite recent interest rate hikes, home loan EMIs remain relatively affordable due to long loan tenures and competitive pricing. Moreover, the availability of housing loans across diverse borrower profiles - salaried, self-employed, and informal segment - has expanded, driven by credit scoring innovations and digital underwriting.

6. Technological Advancements and Digitization

The adoption of digital platforms for loan origination, credit assessment, and disbursement has streamlined the lending process. Tech-enabled models have reduced turnaround times, lowered operational costs, and allowed lenders to penetrate underserved geographies with better risk control.

7. Stabilizing Real Estate Sector

The real estate sector, which had been under stress for several years due to regulatory changes (RERA, GST) and COVID-19 disruptions, is showing signs of stabilization. Improved transparency, reduced unsold inventory, and a shift toward end-user demand have revived confidence in the residential market.

8. Strong Performance of Affordable Housing Segment

Affordable housing continues to be the engine of growth for the housing finance industry. The segment has a large unmet need and benefits from government backing and social urgency. Specialized HFCs that serve this segment are reporting higher disbursement growth and improving asset quality due to better underwriting and focused operations.

9. Favorable Regulatory Oversight

The regulatory framework under the Reserve Bank of India has brought more consistency and prudence to housing finance. Measures like uniform capital adequacy norms, loan-to-value ratio caps, and NPA recognition norms have strengthened lender balance sheets and improved investor confidence.

10. Co-lending and Partnerships

Collaborations between banks and HFCs/NBFCs under co-lending models are expanding credit reach while optimizing costs and risk-sharing. These models enable banks to tap into the specialized origination capabilities of HFCs while maintaining regulatory and capital efficiency.

REAL ESTATE AND HOUSING SECTOR

The Indian real estate sector plays a crucial role in driving economic growth, accounting for about 7% of the GDP and creating substantial employment opportunities. In addition to supporting more than 250 related industries directly, the sector also facilitates urban development, catering to the increasing demand for housing, infrastructure, and commercial spaces. This makes it essential for inclusive and sustainable national progress.

In 2024, the residential real estate market in India saw a slight slowdown in sales and new launches. Housing sales across the top seven cities totaled nearly 4.60 lakh units, reflecting a 2% decrease from the 4.77 lakh units sold in 2023. However, even with this decrease in volume, the overall value of housing sales experienced a significant increase of 16% year-on- year, rising to 5.68 lakh crore in 2024, up from 4.90 lakh crore in the previous year.

The launch of new projects experienced a 7% decline, totaling approximately 4.13 lakh units compared to 4.46 lakh units in the previous year. This decrease can be attributed to delays in project approvals, particularly during the election period, which led developers to postpone their new launches.

On a positive note, the inventory overhang, which indicates the time required to sell the existing stock, improved to 14 months by the end of Q1 2024, down from 20 months in Q1 2023. This reduction indicates a healthy market, showcasing a better equilibrium between demand and supply.

In the Mumbai Metropolitan Region (MMR), the market continued to excel, with both supply and absorption rates. It accounted for over 30% of new project launches and 33% of total sales. Meanwhile, the National Capital Region (NCR) maintained impressive sales figures despite significant price appreciation, largely driven by demand in the luxury segment and infrastructure improvements.

Bengaluru stood out with its robust performance, highlighted by the lowest inventory overhang, indicating a balanced market. Both Pune and Hyderabad experienced steady demand, with Hyderabad specifically noting a 10% price increase in Q1 2024. In contrast, Chennai and Kolkata displayed relative stability, characterized by moderate sales and price fluctuations.

Affordable Housing

Affordable housing and finance are pivotal for promoting inclusive urban development and improving the living conditions of low-income groups in India. The sector plays a critical role in addressing the countrys housing deficit, fueling economic growth, and generating employment opportunities. In recent years, the Indian government has made significant strides to tackle the challenges associated with affordable housing, catering to both urban and rural poor populations through various interventions. The flagship initiatives, such as the Rajiv Awas Yojana (2009), Pradhan Mantri Awas Yojana (2015), and Affordable Rental Housing Complexes (ARHCs) exemplify the governments commitment to this cause.

Furthermore, in 2024, the government introduced PMAY 2.0, which aims to construct 10 million affordable housing units in urban areas and 20 million in rural areas over the next five years. While a substantial portion of this initiative builds upon the previous iteration, PMAY 2.0 has reinstated the interest rate subsidy scheme (ISS), formerly known as the Credit Linked Subsidy Scheme (CLSS), and has made specific revisions to its target demographic.

India ranks among the fastest-growing economies, making significant strides across various sectors. In the upcoming years, as the country aims to meet its ambitious economic growth objectives, urban areas are expected to expand rapidly, resulting in swift urbanization. Despite the implementation of recent policies to bolster demand and promote affordable housing, a substantial shortage remains. According to Knight Franks report, there is a deficit of approximately 10.1 million affordable housing units in India.

Assessing existing affordable housing shortage

Shortage as per	Units (In mn)
(i) 11th 5-year plan (2007-12)	24.7
(ii) Technical Group on Urban Housing, TG-12 (2012-17)	18.8
(iii) PMAY U- completed (until Oct 7, 2024)	8.7
(iii)-(ii) Deficit	-10.1

Source: Knight Frank

According to the report, driven by urbanization and the availability of employment opportunities, India will require approximately 22.2 million units of housing in urban centers. A remarkable 95.2% of this demand, amounting to 21.1 million units, is expected to be concentrated within the affordable housing segment. Currently, there exists an acute shortage of 10.1 million housing units. When considering both the existing shortfall and the anticipated demand, the total requirement for affordable housing in India is projected to reach 31.2 million units by the year 2030.

Furthermore, the Knight Frank Survey reveals that 77% of households earning an annual income of less than 1 million rely on loans to finance their home purchases. The overall portfolio of the affordable housing loan market in India is estimated at 13 trillion, with Housing Finance Companies (HFCs) contributing 6.9 trillion and Scheduled Commercial Banks (SCBs) holding a share of 6.2 trillion. This data underscores the critical need for comprehensive strategies to bridge the housing gap, particularly in the affordable sector, to support the burgeoning urban population effectively.

In consideration of the increasing demand for affordable housing, it is anticipated that the consumer loan market in this sector will experience significant

growth. Among the three housing categories - affordable, mid-range, and premium - the affordable housing segment demonstrates the highest reliance on loans. Our analysis indicates that the cumulative shortfall of affordable housing in India is projected to reach 31.2 million units by the year 2030, with the market size estimated at 67 trillion. Based on a loan dependency rate of 77% and various Loan-to- Value (LTV) ratios applied across different loan thresholds, the potential financing opportunity for banks and Housing Finance Companies (HFCs) in the affordable housing segment is estimated to be approximately 45 trillion.

Addressable Market for Affordable

Housing Finance

	Total housing shortage	Housing shortage (Ex HIG)	Area	Cost of dwelling	Average cost	Market Size	Potential home loan market	Financing Opportunity
	Units in mm	Units in mm	Sq. ft	mn	mn	tn	tn	tn
EWS	15.0	15.0	150-300	<1.5	1.2	17.4	13.4	11.8
LIG	10.9	10.9	300-600	1.5-3.0	2.3	25.2	19.4	17.2
MIG	5.3	5.3	600-1200	3.0-5.5	4.6	24.6	18.9	14.9
HIG	1.1
Total	32.3	31.2				67.2	51.7	43.9

The housing finance market is relatively well-served in the MIG+ segment by commercial banks and larger, more established housing finance companies, while affordable HFCs primarily cater to the LIG and EWS segments.

COMPANY OVERVIEW

SRG Housing Finance Limited (hereafter referred to as “The Company”) is a distinguished housing finance institution in India, dedicated to providing affordable housing solutions to underserved populations. Established in 1999 under the name Vitalise Finlease Pvt. Ltd., the organization underwent a rebranding to SRG Housing Finance and transitioned to a public limited company in 2004. Headquartered in Udaipur, Rajasthan, the Company has broadened its operations across various 6 states and a union territory, including Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Karnataka, Andhra Pradesh and Delhi, with a network comprising over 90 branches and a workforce of more than 850 people.

The core mission of the Company is to serve low- and middle-income individuals, particularly those with limited access to formal banking services. The companys extensive product portfolio features a variety of housing loans, such as those for home construction, purchase, renovation, and extension.

Additionally, it provides loans against property for both residential and commercial purposes. Companys customer profile includes EWS, LIG and MIG class of groups.

The Company became the first Indian entity to migrate from the BSE SME platform to the BSE Main Board in 2015, reflecting its significant growth trajectory. To enhance its market position, the Company got listed on the National Stock Exchange (NSE) in August 2023.

Operational Highlights

• The Companys Assets under Management (AUM) has increased to 759.36 crores as on March 31, 2025, as compared to 601.59 crores as on March 31, 2024, achieving a growth of 26% from the previous year

• I n FY25, the Company focused on expanding its branch network, resulting in strong growth in AUM primarily driven by disbursements from new and existing branches

• The Companys housing loan portfolio share from total loan book has increased to 73.06% as on March 31, 2025 as compared to 69.84% as on March 31, 2024

• The Companys Loan against Property portfolio share from total loan book has decreased to 26.94% as on March 31, 2025 as compared to 30.16% as on March 31, 2024

• Total Income increased by 22% to reach 154.54 crores in FY25 as compared to 126.66 crores in FY24

• Total Loan sanctions reached 338.51 crores in FY25 from 312.07 crores in FY24, a growth of 8.47%

• Total loan disbursements were 304.96 crores in FY25 as compared to 283.62 crores in FY24 reflecting growth of 7.52% yoy

• The Companys average loan tenure was 8.07 years, with stringent credit underwriting protecting against credit and collateral risks, resulting in a 44.29% AUM LTV ratio

• The average lending rate was 21.56% against a borrowing cost of 11.14%, leading to a robust loan spread of 10.42%

Geographical Presence

As of March 2025, SRG operates in seven states and one Union Territory, maintaining its registered and head office in Udaipur, Rajasthan, alongside a corporate office situated in Mumbai, Maharashtra. Over the past four years, the Company has significantly expanded its branch network, increasing from 37 to 90 branches, thereby enhancing its customer reach and accessibility. The current distribution of branches is as follows: Rajasthan (32), Madhya Pradesh (13), Gujarat (22), Maharashtra (14), Karnataka (5), Andhra Pradesh (3), and Delhi (1).

No. of Branches during last 4 Years

In the Fiscal Year 2025, Rajasthan accounted for 44.47% of the total loans, followed by Gujarat at 39.11%, Madhya Pradesh at 8.74%, and a collection of other states - including Maharashtra, Andhra Pradesh, and Karnataka - totaling 7.68%. In Fiscal Year 2024, Rajasthans share was higher at 54.35%, with Gujarat contributing 35.01%, Madhya Pradesh at 10.39%, and Maharashtra at a marginal 0.25%.

Marketing and Distribution

The Company meets the financial needs of the Low and Middle Income (LMI) market, establishing strong brand recognition in Tier II and Tier III regions through a robust business network. SRG Housing employs Direct Selling Agents (DSAs) and sales executives to provide tailored door-to-door services.

To enhance marketing and distribution, the Company focuses on local consumer touchpoints, digital media, and cost-effective engagement methods, including:

- Social Media Marketing

- WhatsApp Marketing

- Telesales Marketing

- SRG Mitra Application

- Offline Campaigns (e.g., wall paintings and dealer boards)

Advertisements are placed in high-traffic areas, and pamphlets and banners are distributed regularly, along with monthly loan program promotions.

For five years, SRG Housing has utilized the SRG Sales Application to streamline the approval process through the Lead Management System (LMS) and Sales Login File. Funds are directly deposited into clients bank accounts after document verification, with no cash transactions. The collection and recovery processes have been digitized for increased efficiency.

Currently, 100% of prospective customers pay their login fees online, 88.33% business is in-house and 11.67% from DSA.

The Loan process is as below:

• Loan Origination

In-House sales team will visit the field, marketing the product(s) of company and sourcing through only villages, identify the needs and offer products to the customer through mobile sales app at the customer place, to login file. By collecting all KYC mandatory documents.

• Appraisal Process

Instant KYC verification and initial scrutiny of docs, income, eligibility as per state-of-the-art and dynamic credit parameters. Keeping everything within the stated timelines.

• Security Assessment

Thorough technical and legal analysis by empaneled lawyers and valuators. Our empaneled lawyers deeply analyze the property and give suitable legal suggestion, same as our technical valuator deeply evaluate the market condition, property evaluation with comprehensive checks and balances.

• Loan Sanctioning

Considering there are no major issues with your income verification and credit checks, we will provide sanction for loan. Sanctioning powers are delegated to authorities such as Branch Managers/Credit Manager, Chief Financial Officer/Director/Managing Director, depending on the sanction limits. a loan sanction letter with the terms of the sanction is communicated to the borrower and at this point the borrower is required to submit original title deeds in relation to the security.

Finally, the prospective borrower executes the requisite loan documents and security documents for mortgaging of the property either he sign physically, also he can sign using Aadhaar-based e-sign biometric machine. The title deeds deposited by the borrower are kept at Bank lockers and returned to the borrowers upon satisfaction of all dues.

• Disbursement

For loans availed for construction of property, the disbursement is made in stages based on the progress of the construction. It is mandatory for our personnel to visit the property, verify construction progress and report the same before further disbursements are made at every stage. Prior to loan disbursement, our Company also completes other formalities such as collection of post-dated cheques from borrowers in respect of the monthly installment, activate ECS of the borrowers Asset Quality.

We have implemented a robust collections management system. As of March 2025, over 96% of our customers are enrolled in an automated debit facility. Our system includes a dedicated collection module to track installment payments. We follow a structured collection process, sending automated reminders via calls and text messages to prompt customers to maintain sufficient account balances by their due dates. Additionally, we use predictive analytics to assess the likelihood of payment failures, enabling us to take proactive measures to mitigate associated risks.

We have convenient omni-channel payment options via Card, UPI, Net banking, etc.

Collection Reviews at Head Office:

- At each designated due date, the diligent central team of the Company receives and scrutinizes

a comprehensive list of delinquent customers - those who have missed their payment deadlines.

- This dedicated and centralized team takes the lead in follow-up actions to ensure that these customers are encouraged to make timely payments and that any lingering issues are swiftly resolved

- Once the delinquent customer list is in hand, the collection team springs into action, reaching out through SMS notifications, engaging phone calls, and personal visits to foster communication and prompt action for collections.

Collection Executives:

- Collection executives are strategically assigned cases based on Tehsil, accompanied by a detailed list of delinquent customers

- With precision and efficiency, they handle the collection amounts, generating receipts seamlessly through the intuitive Collection App, ensuring that every transaction is recorded accurately and promptly

Review of Collection Performance:

- The performance of the collection team is rigorously assessed on a daily basis, ensuring that all efforts are aligned with the Companys goals.

- To motivate and reward hard work, monthly bonuses tied to performance incentives are granted in line with the established Collection policy, recognizing exceptional contributions.

Credit Underwriting Process:

To provide the customer hassle-free experience of loan

process, we have revamped the whole loan process to

provide quicker and easy loan approval with best-inclass tech-enabled platform.

Collections process carried out at the call center

SRG Housing issues possession notices to tenants who fail to meet their payment obligations per the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act). Most of the companys loans are housing loans, prompting customers to make diligent efforts to repay them and avoid losing their homes. Given that many loans are small, borrowers often seek financial support from friends and family during times of cash shortages. Loans that remain delinquent for over seven years without sufficient collateral are written off by the company, 0.89 crores were written off in FY25.

As of March 31, 2025, SRG Housing had set aside adequate provisions for unexpected situations, resulting in gross non-performing assets (NPA) of 13.98 crores, which is 1.84% of the total. The company allocated 9.40 crores in provisions for FY25, surpassing the regulatory requirement of 6.15 crores.

Loans are classified as non-performing assets (NPAs) when borrowers miss a payment for 90 days. By March 31, 2025, the companys net NPA (NNPA) was 0.61%, a slight improvement from 0.69% the previous year. The quality of assets is upheld through careful customer screening and collateral that is approximately double the loan amount, resulting in a stable loan-to-value (LTV) ratio of 44.29%. In rural and semi-urban areas, societal norms encourage customers to avoid defaulting on loans to maintain their social standing. SRG Housing follows strict recovery procedures at all collection stages to reduce loan write-offs and keep NPAs low.

Funding Sources

Shareholders Fund: Our Shareholders Funds as on Mar25 stood at 263.95 crores (P.Y.- 159.67 crores), Company has raised 80 crores from Preferential issue of Equity Shares and conversion of warrant.

ESOP allotment: In line with our inclusive growth philosophy, we make our employee part of the growth journey of SRG by making them beneficiaries of our ESOP schemes. During FY25, the company issued and allotted 31,575 equity shares to eligible employees through the exercise of stock options under its ESOP scheme

Borrowings: As we continue to scale up our operations, we aim to further diversify our borrowing sources. The Companys total borrowings increased slightly from 491.26 crores in FY24 to 584.33 crores in FY25.

During the year, the company successfully raised 274 crores in funding out of which 194 crores was raised from lenders. During FY25, the Company has not issued any Commercial Paper or any Short-Term Instrument. Accordingly, the Companys Commercial Paper outstanding was NIL as at Mar25. Our liability management strategy emphasizes prudent diversification across 32 lending partnerships, we do not have direct assignment and co-lending as on Mar25.

Borrowing Mix:

Borrowing Profile (%)	FY25	FY24
Banks(%) 1	46.46%	49.41%
FI (%)	47.59%	39.17%
NHB (%)	5.95%	11.42%

Asset-Liability Management (ALM)

The Companys robust Asset-Liability Management (ALM) Policy, approved by the Board of Directors, ensures efficient management of assets and liabilities in line with regulatory criteria. This policy serves as a comprehensive guide, helping the experienced team effectively manage ALM risks. The Asset-Liability Management Committee (ALCO), which includes the Managing Director and Senior Management members, regularly reviews the ALM position. Owing to a strong policy and the expertise of the management team, the Company has avoided significant cash flow mismatches in its operations.

SRG Housing maintains its ALM position based on maturity buckets, ensuring adequate credit availability when needed and avoiding challenges related to asset-liability mismatches. The Company has a strong ALM stance, achieved through a strict policy that guarantees a consistent surplus across all buckets. During the year under review, SRG Housing maintained a cumulative surplus of 242.68 crores.

SWOT ANALYSIS Strengths:

• Strong presence in affordable housing finance in semi-urban and rural India

• Focused customer base with personalized loan offerings

• High capital adequacy ratio reflecting financial stability

• Robust collection management system led by front-end teams

Weaknesses:

• Limited geographic diversification restricts growth opportunities

• High operational cost per unit due to personalized service model

Opportunities:

• Expanding demand for affordable housing in Tier II and III cities

• Government incentives and policy push for housing for all

• Potential to expand into underserved rural markets

• Digital transformation and fintech partnerships for efficiency

• Extending network into existing geographies, expansion into new geographies

Threats:

• Changing interest rates and market conditions

• Intense competition from larger HFCs and banks entering rural markets

• Any adverse movement in the industry / macroeconomic environment

• Economic downturns and natural disasters affecting portfolio quality

FINANCIAL REVIEW

The Financial Results for FY25 were prepared per

Indian Accounting Standards (Ind AS). Below are the

key financial highlights:

• The Companys Total Income has grown to 154.54 crores in FY25 as compared to 126.66 crores in FY24, achieving growth of 22%

• Profit Before Tax (PBT) amounted to 30.05 crores in FY25, as compared to 26.10 crores in FY24

• Profit After Tax (PAT) was 24.39 crores in FY25, as compared to 21.06 crores in FY23, achieving growth of 16%

• Net Interest Income (NII) rose by 23.24%, reaching 72.33 crores in FY25 from 58.69 crores in FY24. However, the Net Interest Margin (NIM) on aggregate Assets Under Management (AUM) decreased to 10.63% in FY25 from 11.29% in FY24

• However, the Companys loan spread remained robust at 10.42% for FY25

MANAGEMENT OUTLOOK

The Company has set an ambitious growth trajectory, driven by a strong focus on expanding its lending book and strengthening its presence in underserved markets. The company aims to grow its Assets Under Management (AUM) to approximately 1,000-1,100 crores in FY26, up from 759 crores recorded in FY25. This is part of a broader two-year plan to reach 1,500 crores in AUM. Additionally, the company is targeting total loan disbursements of 400 crores in FY26, reflecting a steady rise from the 305 crores disbursed in the previous financial year.

On the profitability front, the Company expects a faster growth in its bottom line, with the goal to achieve a Return on Assets (ROA) of over 3.5% in FY26, with an aspirational target of reaching 4% in the subsequent years. This improved profitability will be supported by enhanced operational efficiencies and an optimized branch network.

The company has expanded its footprint to 90 branches in FY25, up from 67 in FY24, and plans to exceed the 100-branch mark in FY26. New branches are planned in key states, including Maharashtra, Karnataka, Tamil Nadu, Telangana, and Andhra Pradesh, as part of its strategy to tap into new and underserved markets.

The latest capital infusion will provide the necessary financial flexibility to fuel branch expansion, technology investments, and lending operations. The company remains focused on maintaining asset quality, leveraging its rural-centric, secured lending model.

Overall, the Companys outlook remained centered around sustainable growth, financial prudence, and deeper market penetration in Indias affordable housing finance sector.

RISK MANAGEMENT

Risk identification and management are essential practices that enable the Company to maintain operational stability and achieve sustainable growth. By continuously evaluating internal and external factors, the company ensures that its business remains resilient and adaptable. Strong due diligence, secured lending practices, and a customer-focused approach support its ability to address potential challenges effectively. Regular monitoring systems are in place to detect early signs of stress, enabling timely intervention and resolution.

The importance of a sound risk management framework lies in its ability to protect financial performance, build investor trust, and ensure long-term viability. The Company also focuses on strategic expansion and operational diversification to reduce dependency on specific markets or conditions. By maintaining regulatory compliance and strengthening capital buffers, the company enhances its ability to absorb shocks and navigate uncertainties. This proactive approach is key to fulfilling its mission of delivering affordable housing finance while preserving financial integrity.

Risks	Mitigation
Liquidity Risk: Short-term borrowing can lead to asset-liability mismatch risk and liquidity risk, resulting in:	Mitigation: The ALCO team rigorously monitors and manages the asset-liability position with a clear focus on maturity timelines. The Company effectively eliminates asset-liability mismatches by strategically managing asset maturities, funding liabilities, and repayment schedules.
• Impacted earnings
• Liquidity crisis
• Loss of income that could harm the Companys reputation
Credit Risk: Customer defaults can lead to credit risk. Other causes and impacts of credit risk include:	Mitigation: The Company manages credit risk through secured lending backed by property assets, rigorous borrower assessments, and prudent underwriting practices. It emphasizes loan-to-value discipline, regular monitoring of repayments, and early warning systems to identify stress.
• Inadequate credit
• Liquidity crunch
• Impact on AUM
• Increase in NPA
• Lower earnings
Operational Risk: Failures or mismanagement in areas such as law, human resources, technology, or customer relations can negatively impact the Companys operations, leading to:	Mitigation: The Company manages operational risk through robust internal controls, periodic internal and external audits, comprehensive employee training, and clearly defined standard operating procedures. The company leverages technology to streamline operations, minimize human error, and enhance data accuracy, while ensuring strict compliance with regulatory standards across all branches and functional areas.
• Adverse impact on brand equity
• Loss of earnings
• Business closure
Competition Risk: The highly fragmented housing finance markets significant growth potential attracts competition, which may lead to:	Mitigation: The Company manages competition risk by focusing on underserved rural and semiurban markets, offering personalized services, and maintaining strong customer relationships. It differentiates through localized operations, efficient cost structures, and leveraging government housing schemes to remain competitive against larger housing finance companies.
• Decreased revenue growth
• Loss of market share
Interest Rate Risk: Unanticipated fluctuations in interest rates and repo rates may adversely affect the loan spread, resulting in:	Mitigation: The Company manages a blended mix of variable and fixed rates, while only lending at fixed rates, creating a natural hedge. With a Net Interest Margin (NIM) of 10.63%, there is sufficient flexibility to manage any unexpected interest rate fluctuations.
• Decreased income
• Decreased profitability
Attrition Risk: Human resources are crucial to the success of any HFC. Thus, the Company must maintain a high rate of employee retention. Loss of personnel can adversely impact:	Mitigation: The company manages attrition risk by fostering a positive work environment, offering career development opportunities, and implementing performance-based incentives. It emphasizes employee engagement, regular training, and internal promotions to retain talent and build a loyal, skilled workforce aligned with organizational goals.
• Business growth
• Brand equity
• Operations
Technology Risk: Failure to update processes to reflect the latest technological developments in the industry can lead to:	Mitigation: The Company manages technology risk by investing in secure, scalable IT infrastructure, ensuring regular data backups, and implementing cybersecurity measures. It conducts periodic system audits, provides employee training, and partners with reliable technology providers to maintain operational continuity and protect sensitive financial data.
• Increased cyber-attacks
• Information and cyber security threats
• Data breaches
• Reputational damage
• Operational failures
Regulatory Risk: As part of the housing finance sector, the Company must comply with various applicable laws and regulations. Any deviation in interpretation or failure to comply may impact:	Mitigation: The Company manages regulatory risk by closely monitoring policy changes, maintaining strict compliance with all legal requirements, and engaging with regulatory bodies. It conducts regular audits, updates internal policies accordingly, and trains staff to ensure adherence to evolving financial and housing finance regulations.
• Brand equity
• Penal consequences
• Legal non-compliance

Internal Control System and their Adequacy

The Company has established a comprehensive internal control system designed to ensure operational efficiency, regulatory compliance, and the safeguarding of assets. These controls are embedded across all key functions, including credit appraisal, loan disbursement, collection, financial reporting, and customer service. The system is supported by clearly defined roles, responsibilities, and standard operating procedures, which help minimize the risk of errors, fraud, and operational lapses.

The Company conducts periodic internal audits through independent professionals to assess the effectiveness of internal controls and identify areas for improvement. These audits cover branch operations, financial transactions, documentation, and compliance processes. Audit findings are regularly reviewed by the Audit Committee and management, and corrective actions are promptly implemented to address any gaps or deficiencies.

The Company also leverages technology to automate key processes, reduce manual intervention, and enhance control over data accuracy and workflow

management. Regular staff training and awareness programs are conducted to ensure adherence to internal policies and regulatory guidelines.

Human Resources

The Company places significant emphasis on human resource management, recognizing its critical role in driving organizational growth and operational excellence. As of March 31, 2025, the company employed a total of 866 individuals across its expanding network in India.

The companys HR strategy focuses on attracting, retaining, and developing talent aligned with its mission to provide affordable housing finance. This involves creating a supportive work environment that fosters both personal and professional growth. Regular training and development programs are conducted to enhance employees skills and knowledge, ensuring they are well-equipped to meet the companys objectives.

The Companys HR policies are designed to promote a productive work culture. The company implements motivational programs and timely rewards and

recognition to maintain high retention rates. Initiatives are also in place to instil strong business ethics and social responsibility among employees.

POSH (Prevention of Sexual Harassment) policy, applicable to all employees, customers, suppliers, and contractors. This policy aims to provide a work environment free from sexual harassment and discrimination.

Segment Reporting

The Companys main business is providing loans for the purchase, construction, repair, and renovation of residential houses, flats, and colonies. All other activities of the Company are centered around

this core business of financing against properties. Therefore, there are no separate reportable segments, as per IND AS 108 on Operating Segments specified under Section 133 of the Companies Act, 2013.

Related Party Transactions

The Audit Committee, Board, or Shareholders, as applicable, have approved the Companys transactions with related parties. The Companys policy on related party transactions is posted on its website for the benefit of all parties involved. The Companys interests remained fully protected and were not at risk during these transactions. The notes to the accounts contain all necessary information and specifics about transactions with the Company and its related entities.

Key Financial Ratios, along with explanation

Ratios	FY25	FY24
Net Interest Income to average loans	10.63%	11.29%
Average Return on Equity	11.52%	14.38%
CRAR	47.75%	35.67%
Tier-I	47.23%	35.19%
Tier-II	0.52%	0.48%
Gross NPA	1.84%	2.29%
Net NPA	0.61%	0.69%
Provision Coverage Ratio	88.56%	84.74%
EPS (in )	17.45	16.18
Interest Coverage Ratio	1.48	1.51
Debt Equity Ratio	2.21	3.08
Net Profit Margin %	15.78%	16.63%
Cost to Income	65.78%	63.74%
Opex to Avg Asset	7.90%	8.17%
Profit to Avg Asset	3.17%	3.56%
Operating Profit Margin (%)	59.83%	61.25%
Return on Net Worth
Ratios	Amount ( In Cr.)	% Growth
FY25	263.95	65.31%
FY24	159.67	19.82%

Cautionary Statement

Basis the managements current outlook and views concerning future developments and their potential impact upon the Company, the report contains “forward-looking statements” describing the Companys objectives, estimations, projections, and expectations. Various dynamics may have a potentially significant impact on the operations of the Company. The Company does not have any control over many such incidences like macroeconomic factors impacting demand and supply, Government regulations and taxation, natural calamities, etc. Due to changes in internal or external factors, in case the actual results differ materially, the Company assumes no responsibility.