TCI Finance Ltd Management Discussions

Industry Structure and Developments Business Environment

TCI Finance Limited (TCIFL or the Company), is a non-deposit taking Non-Banking Financial Company (NBFC) registered with RBI and classified as an NBFC-non deposit taking Company. TCIFL engaged in the business of financial services. 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.

Indias economic outlook remains strong, driven by stable domestic consumption, rising infrastructure investment and a dynamic services sector. Inflation is expected to stabilize enabling a more accommodative monetary policy, while robust credit growth and strong banking fundamentals continue to support private sector expansion and capital formation. 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. A major contributor to this growth is the revival of private consumption. Private Final Consumption Expenditure (PFCE), at constant prices, rose by 7.3% as of January 2025, compared to 4.0% in the previous Financial year. This improvement reflects stable household spending.

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

Rs 12 Lakhs in the Union Budget FY 2025-26 is likely to further support consumer sentiment and discretionary spending in retail, apparel and luxury segments.

The services sector remains the backbone of Indias economic performance, with services exports projected to expand at 12.8% YoY in FY 2024-25. Government initiatives like Unified Payments Interface (UPI) and Open Network for Digital Commerce (ONDC) are promoting and facilitating digital transactions, with UPI alone recording Rs 23.24 Lakh Crore in transactions in December 2024, up from Rs 707.93 Crore in December 2016. This rapid digital transformation is advancing financial inclusion and reshaping consumer behavior.

Inflation is anticipated to remain stable, supported by prudent fiscal and monetary policies. Headline inflation, measured by the Consumer Price Index (CPI), moderated to 3.16% in April 2025, compared to 5.4% in FY 2023-24. This decline is primarily due to a sharp reduction in food price index, which decreased to 1.78% in April 2025. 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. As of April 2025, the Monetary Policy Committee (MPC) also changed its stance from neutral to accommodative, signaling that, going forward-absent any shocks-the MPC would consider only two options: maintaining the status quo or implementing a rate cut.

The digital economy and formalisation of Financial services continue to unlock new opportunities, particularly in Tier-II and Tier-III markets, while a booming start-up ecosystem continues to prosper. With a youthful workforce, accelerating digital adoption and targeted policy reforms in manufacturing, MSMEs and favourable taxation are expected to enhance productivity and long-term competitiveness. 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.

In terms of challenges, from a macroeconomic standpoint, NBFCs operate within a landscape susceptible to external factors viz. political developments, geopolitical tensions, systemic liquidity constraints, fiscal uncertainties, and inflationary pressures which may influence interest rates and borrower behavior. These factors necessitate robust risk management frameworks and diversified funding strategies to withstand shocks and sustain growth.

NBFCs continue to face an increasingly competitive environment. Margin pressures persist due to competitive lending rates, especially as banks further deepen their reach and intensify their focus on retail and MSME lending, compressing spreads for NBFCs. Smaller NBFCs, in particular, struggle with limited access to affordable and stable funding sources, which constrains their ability to scale operations and maintain liquidity buffers. Additionally, rising borrower overleveraging remains a key concern, with the potential to impact asset quality. This underscores the importance of rigorous credit underwriting and proactive portfolio monitoring to mitigate risks. Continued regulatory scrutiny further demands NBFCs to maintain high standards of governance, compliance, and operational transparency.

The Company is a NBFC. However, no activity is carried on either in the business of financing or investing in the Company. Hence, the results for the year under review contains no operating income.

The Companys total Revenue during the year were Rs. 673 Lakhs and the net profit is Rs. 358 Lakhs as against Rs. (48) lakhs respectively in the previous year.

The Company being an investment company seeks opportunity in the capital market. The Volatility in stock indices represents both an opportunity and challenge for the company. We continue to see significant opportunities in the market for long term.

The company carry shares and securities in its books. The effect of mark to market thereon have been taken into account for the year. The Company will continue to monitor for any material changes to future economic conditions.

The Company recognizes that risk is an integral and unavoidable component of business and is committed to managing the risk in a proactive and effective manner. The Company is an NBFC Company registered under RBI and categorized as a Loan Company. In todays challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks for the Company are financial risks, credit risk, liquidity risk, market risk, etc.

Risk mitigation is also an exercise aiming to reduce the loss or injury arising out of various risk exposures. The Company adopts a systematic approach to mitigate risks associated with accomplishment of objectives, operations, revenues and regulations. The Company believes that this would ensure mitigating risks proactively and help to achieve stated objectives. The NBFC industry in general faces the risk of re-entry and new entry of players and existence of several unorganized regional players increasing the competition which mainly affects the asset quality. This is further characterized by captive NBFCs floated by other business houses. The ever existing systemic and delinquency risks and fluctuations in interest rates and risk weight make the companies more vulnerable. Deployment of funds in sensitive and volatile sectors increases the risk exposure while concentration risk increases dependency.

Internal Control measures and systems are established to ensure the correctness of the transactions and safe guarding of the assets. The Management ensures adherence to all internal control policies and procedures as well as compliance with regulatory guidelines. The audit committee of the Board of Directors reviews the adequacy of internal controls. This has improved the management of the affairs of the Company and strengthened transparency and accountability.

The Companys Internal Financial Control System is commensurate with the size, scale and complexity of its operations. The Company has in place policies and procedures required to properly and efficiently conduct its business, safeguard its assets, detect frauds and errors, maintain accuracy and completeness of accounting records and prepare financial records in a timely and reliable manner. Further, your Companys Internal Financial Controls (IFC) has been reviewed and actions have been taken to strengthen financial reporting and overall risk management procedures. Detailed procedural manuals are in place to ensure that all the assets are safeguarded, protected against loss, proper prevention & detection of frauds & error, the accuracy and completeness of the accounting records, and all transactions are authorized, recorded and reported correctly.

The Internal Auditors monitor and evaluate the efficiency and adequacy of Internal Financial control system in the Company, its compliance with operating systems, accounting procedures and policies. To maintain its objectivity and independence, the Internal Auditors report directly to the Chairman of the Audit Committee of the Board, all the significant audit observations and follow up actions thereon. Both Statutory Auditor on quarterly basis and Internal auditor on annually basis have sessions with the Audit committee. The Internal audit reports are placed before the Audit committee on annual basis and all findings and observation, if any are recorded thereon. The said observation and comments, if any of the Audit Committee are placed before the board. The Internal Auditor is a permanent invitee to the Audit Committee Meetings. The Audit Committee advises on various risk mitigation exercises on a regular basis.

The audit committee also reviews reports submitted by the management and audit reports submitted by internal auditors and statutory auditors on periodic basis. Suggestions for improvement are considered and the audit committee follows up on corrective action. The audit committee also meets companys statutory Auditor to ascertain, inter alia their views on the adequacy of internal control systems and keeps the board of directors informed of its major observations, if any, periodically.

Your Board is of the opinion that the Internal Financial Controls, affecting the Financial Statements of your Company are adequate and are operating effectively.

TCI Finance Limited follows accrual basis of accounting under the historical cost convention. It has adopted Indian Accounting Standards ("Ind AS") notified under section 133 of the Companies Act 2013 ("the Act") read with the Companies (Indian Accounting Standards) Rules, 2015 from April 1, 2019 and the effective date of such transition is April 1, 2018. Your company is a small sized, BSE and NSE listed, Non Banking Financial Company (NBFC).

The Companys total Revenue from Operations during the year were Rs. 673 Lakhs and the net profit is Rs. 358 Lakhs as against Rs. (47.97) lakhs respectively in the previous year.

The loss in the current year is mainly on account of provision for impairment of its investment in and loans granted to Mahendra Investment and Advisors Private Limited.

The Company is in the process of identifying various alternatives/ new areas to venture into for reviving the Company.

The Company always considers its human resources as a valuable asset and is committed towards their development for continuous growth. Focus on training to enhance the skill-sets of employees in line with the business and market requirements continued throughout the year and it confers rewards and recognition based on merit.

The employee relations have continued to be harmonious throughout the year. The Company has 4 permanent employees as on 31st March 2025.

1. Debtor turnover: Not Applicable

2. Interest Coverage Ratio: The reduction in Profit has been mainly on account of non recognition of interest due to write off of loans

3. Debt Equity ratio: There has been a reduction in debt equity ratio in the current year on account of write off of Godavari Commercial Services Private Limited Loan

4. Operating Profit Margin: There has been a reduction in the operating margin on account of no operating income during the current year

5. Net Profit Margin: There has been a reduction in Net profit margin on account of no turnover during the current year

The Company recorded a profit of Rs. 358 Lakhs for FY 2024-25 as compared to the loss of Rs. 47.97 lakhs for FY 2023-24. The Net Worth of the Company Rs. (7517.58 Lakhs) as of 31st March 2025 as compared to Rs. (6335.98 Lakhs) as of 31st March 2024. Due to adverse developments in the entities to whom the company has advanced loans / given guarantees / investments made, the Company had incurred these losses and adversely affect the future income from operations. These factors substantially affected the operations of the Company.

Statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of the applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could influence the Companys operations include economic and political conditions in which the Company operates, interest rate fluctuations, changes in Government/ RBI regulations, Tax laws, other statutes and incidental factors.