Supra Pacific Financial Services Ltd Management Discussions

Directors are pleased to present the Management Discussion and Analysis Report for the year ended 31st March, 2025.

The Management Discussion and Analysis have been included in consonance with the Code of Corporate Governance as approved by The Securities and Exchange Board of India (SEBI). Investors are cautioned that these discussions contain certain forward-looking statements that involve risk and uncertainties including those risks which are inherent in the Companys growth and strategy. The company undertakes no obligation to publicly update or revise any of the opinions or forward looking statements expressed in this report consequent to new information or developments, events or otherwise.

The management of the company is presenting herein the overview, opportunities and threats, initiatives by the Company and overall strategy of the company and its outlook for the future. This outlook is based on managements own assessment and it may vary due to future economic and other future developments in the country.

Steering through challenges in the previous year, the global economy reflected a mix of resilience and uncertainty, shaped by geopolitical developments, evolving trade policies and shifting market dynamics. Geopolitical tensions, including the Russia-Ukraine war, conflict in West Asia and trade disputes continued to influence global stability and investment decisions. While inflationary pressures eased, they remained a concern in certain regions, driven by supply chain adjustments and fluctuations in energy markets. At the same time, global trade volumes rebounded, growing by 3.6% in CY 2024, as economies adapted by diversifying trade routes and strengthening supply chains, highlighting the evolving nature of global commerce.

The International Monetary Fund (IMF) forecasts global growth to stabilise at 3.3% in both CY 2025 and CY 2026, indicating steady, albeit below historical average, expansion. Advanced economies are expected to grow by 1.9% in CY 2025 and 1.8% in CY 2026 as monetary policy easing and fiscal consolidation shape economic conditions. In contrast, emerging market and developing economies (EMDEs) are projected to expand by 4.2% in CY 2025 and 4.3% in CY 2026, supported by strong domestic consumption and infrastructure development.

Global headline inflation is anticipated to decrease from 4.2% in CY 2025 to 3.5% in CY 2026, with advanced economies likely reaching target inflation levels sooner than their emerging market counterparts. As major central banks, including the US Federal Reserve and European Central Bank, shift towards more accommodative policies, they are expected to reduce interest rates to support economic activity. Global Financial conditions are expected to ease supporting credit growth and investment sentiment across regions. However, trade uncertainties and geopolitical risks continue to influence investment sentiment, leading to varied economic expansion across different regions. Currency volatility remains a significant concern, as fluctuations in the US Dollar continue to impact capital inflows. On a positive note, global Foreign Direct Investment (FDI) inflows have shown a moderate 3.8% recovery with investments, favouring sectors such as clean energy, digital infrastructure and advanced manufacturing.

Sectoral performance shows marked disparities across regions with services consistently surpassing manufacturing, fuelled by robust consumer demand and a strong recovery in post-pandemic tourism. In contrast, the manufacturing sector faces challenges, hindered by trade tensions, restructured supply chains and sluggish global demand. At the same time, the energy market is adapting to evolving geopolitical dynamics, with oil prices forecasted to decline by 2.6%, while non-fuel commodities are expected to experience a modest increase of 2.5% in CY 2025.

Looking ahead, monetary policies in advanced economies are anticipated to ease, fostering improved global liquidity and credit availability. Conversely, emerging markets are likely to adopt a more measured approach, balancing inflation control with growth objectives. Ongoing tariff escalations, including the sharp rise in cross-border duties in April 2025, have added to trade uncertainties, impacting global commerce and production strategies.

Technological innovations and AI-led automation are increasingly becoming central to industrial strategies. Climate resilience and ESG compliance are also becoming pivotal in global investment decisions. As economies adapt to structural shifts, geopolitical developments, evolving financial conditions, technology, sustainability and policy reforms will remain critical in shaping long-term economic momentum and resilience.

As per the Economic Survey 2024-25, Indias GDP growth rate is projected at 6.4% in FY 2024-25. This positions the country among the fastest-growing major economies globally, despite prevailing global uncertainties. The growth is largely fuelled by strong domestic demand, higher capital expenditure, private investment and a resilient services sector. As rural demand remains strong and urban consumption remains constant, private spending is anticipated to sustain overall economic expansion going forward.

The growing middle class, rising incomes and aspirational spending trends are reshaping consumption patterns. A growing number of consumers are choosing premium products and experiences, propelling demand in sectors such as luxury goods, automobiles and lifestyle services. The governments decision to raise the income tax exemption limit to TI2 Lakhs in the Union Budget FY 2025-26 is likely to further support consumer sentiment and discretionary spending in retail, apparel and luxury segments.

Indias economic outlook remains strong, driven by stable domestic consumption, rising infrastructure investment and a dynamic services sector. Inflation is expected to stabilise enabling a more accommodative monetary policy, while robust credit growth and strong banking fundamentals continue to support private sector expansion and capital formation. The Reserve Bank of India (RBI) further reduced the repo rate by 25 basis points to 6% as

of April 2025. This move is expected to stimulate economic activity by making borrowing cheaper, thereby encouraging spending and investment.

Over the coming decade, India is expected to play a pivotal role in shaping global economic momentum, contributing meaningfully to innovation, supply chain diversification and sustainable development worldwide.

The Indian Non-Banking Financial Companies (NBFC) sector remains a critical pillar of financial inclusion and economic growth. Over the years, NBFCs have demonstrated remarkable endurance, expanding their prominence within the financial ecosystem. Additionally, government initiatives aimed at promoting digital financial inclusion and expanding access to credit will further support the sectors growth. In this context, NBFCs have remained instrumental in widening credit outreach in underserved areas, especially in Tier-II and Tier-III cities, enabled by the rise of Fintech partnerships and embedded finance ecosystems.

The Reserve Bank of India (RBI) has recently reduced the risk weight on bank loans to NBFCs to 100%, thus reinstating the previous framework. This revision is poised to expand banks lending capacity, offering NBFCs enhanced access to bank funding. Consequently, NBFCs are likely to rebalance their funding mix, increasing reliance on bank loans and reducing their dependence on short-term commercial papers. This strategic shift is anticipated to enhance funding stability and facilitate long-term growth.

Simultaneously, the regulatory expectations have risen sharply, particularly for larger NBFCs under the RBIs Scale-Based Regulatory (SBR) framework. NBFCs in the Upper Layer now face stricter governance, capital adequacy, risk management and disclosure norms, aligning them more closely with the regulatory standards set for banks. This represents a significant shift in the supervisory approach towards systemically important NBFCs.

The Company sees good opportunities and development in coming years.

Non-banking financial companies (NBFCs) have the potential to seize growth opportunities by catering to underserved segments of the population, such as small businesses and low-income households. Embracing technology to streamline their operations and expand their customer base, collaborating with fintech companies and government initiatives promoting financial inclusion and digital payments further create room for NBFCs to explore.

NBFCs have played a significant role in boosting credit flow to MSMEs, especially in underbanked areas of the country. These companies have adopted innovative tools, unconventional risk modelling and personalised offerings to cater to the specific requirements of small businesses. Additionally, NBFCs have leveraged technology for data analytics and streamlined their processes for faster disbursement of credit.

Overall, while the NBFC sector in India presents significant opportunities for growth, it also faces challenges that need to be addressed. Effective risk management, innovation, and compliance with regulations will be key for NBFCs to capitalise on opportunities and navigate potential threats, ensuring their continued role as a vital source of financing for underserved populations and a driver of economic growth. Despite the challenges, the sectors ability to adapt and embrace change will be critical for its sustained success.

NBFCs must also contend with several threats, such as borrower defaults, competitive pressure from traditional banks and fintech startups and regulatory changes that can impact their operations and profitability. Moreover, rising interest rates and inflation leading to an increase in the cost of funds for NBFCs poses pressure on margins. To mitigate risks, NBFCs may consider prioritising strong underwriting practices, diversifying their portfolios and enhancing their risk management systems to minimize borrower default risks.

Presently your Company is dealing in the following segments:

1. Gold Loan,

2. Vehicle Loan,

3. Microfinance,

4. Traders Loan,

5. Personal Loan.

The growing economy and ever-increasing capital market provide a good scope of expansion of financial service sector. Your Company is very well prepared to grab the opportunities. As the market and customer expectations mature, differentiated customer acquisition and deeper customer engagement through the lifecycle assumes importance. With the economy projected to continue growing, the Company with its diversified product portfolio, broad reach through its network of branches across the country and the management is very optimistic about the future of the Company.

The Company as a participant in the financial service industry is faced with various risks including credit, operational, liquidity, and information security risks. A robust risk management framework has been put in place to ensure effective assessment, measurement and monitoring of these risks. The Board of Directors oversees all risks and has established specific committees to provide focused oversight of identified risks. The Company has adopted a focused approach towards risk management in the form of a corporate insurance program which has the goal of optimizing the financing of insurable risks by using a combination of risk retention and risk transfer. The ultimate goal is to achieve an optimal balance of return for the risk assumed while remaining within acceptable risk levels.

The program covers all potential risks relating to business operations of the Company at its various locations.

The Companys business critical software is operated on a server with regular maintenance and back-up of data, connected with two physically separated servers. The systems parallel architecture overcomes failures and breakdowns. Reliable and permanently updated tools guard against virus attacks. Updated tools are regularly loaded to ensure a virus free environment.

The Company has implemented a comprehensive system of internal control and risk management systems for achieving operational efficiency, optimal utilization of resources, credible financial reporting and compliance with local laws. These controls are regularly reviewed by both internal and external agencies for its efficiency and effectiveness. Management information and reporting system for key operational activities form part of overall control mechanism.

The Company has achieved a turnover of Rs. 4741.97 Lakh and the profit of Rs. 114.31 Lakh during the year under review.

Your company has been able to employ and retain qualified professionals by offering the challenging work environment and compensation. The Company provides in house training to its employees.

i. The Management believes in maintaining cordial relations with its employees. The management recognizes the importance of Human Resources and effective steps will be taken to strengthen the same depending on the requirements.

ii. The Company provided excellent working environment so that the individual staff can reach his/her full potential.

iii. The Company is poised to take on the challenges and march towards accomplishing its mission with success.

iv. The Company maintained good Industrial/Business relation in market, which enhanced the market reputation of the company and acceptance among the clientele we are targeting and serving.

The Company has insured its assets and operations against all insurable risks including fire, earthquake, flood, and etc. as part of its overall risk management strategies

Statements in this report on management discussion and analysis describing the companys objectives, projections, estimates, expectations and predictions are based on certain assumptions and expectations of future events. Actual result could differ materially from those expressed or implied. The Company assumes no responsibility to amend, modify or revise any of the statements on the basis of subsequent developments, information or events.