Transwarranty Finance Ltd Management Discussions

Background:

Transwarranty Finance Limited is a non-deposit accepting Non-Banking Finance Company (“NBFC”), holding a license from the Reserve Bank of India (“RBI”) engaged in a wide spectrum of financial services, both advisory and fund-based lending. The Company is headquartered in Mumbai and has a capital market Associate engaged in equity / commodities / currency broking and Merchant Banking activities.

Global Economic Overview:

Global macroeconomic situation remains fragile amid West Asian geopolitical crisis. According to the International Monetary Fund’s (IMF) World Economic Outlook (April 2026), global growth is projected at 3.1% in 2026, to improve marginally to 3.2% in 2027, under the assumption that the Middle East conflict remains limited in duration and scope. Global inflation is expected to increase to 4.4% in 2026 before declining to 3.7% in 2027. This is due to higher commodity prices pressures, firmer inflation expectations and tighter financial conditions in the short term. However, the external environment remains uncertain, with higher trade barriers, geopolitical fragmentation and renewed trade tensions continuing risk sentiments for supply chains and capital flow. Renewed escalating tensions in the Middle East may pose upside risks to oil & energy prices. This may reignite global inflationary pressures and may adversely affect trade flows as well as overall economic activity.

The outlook is also clouded by the transition to a new geopolitical reality characterised by tariffs, retaliatory measures, protectionism, fragmentation, uncertainty and higher market risks. For financial services firms, this environment necessitates a focus on agile policy responses and the restoration of fiscal buffers to navigate what the IMF describes as a “major test” of global economic resilience.

Indian Economic Overview:

Against this backdrop, India continues to exhibit relative macroeconomic resilience. As per IMF projections, India’s growth is expected to be moderate at 6.5% in both 2026 and 2027. Domestically, the Second Advance Estimates released by the National Statistical Office (NSO) in February 2026 place real Gross Domestic Product (gDp) growth at 7.6% in FY2026, up from 7.1% in FY2025, driven by the twin engines of private consumption and investment.

India remains the fastest-growing major economy, underpinned by resilient domestic demand, with private final consumption expenditure. Consumer Price Index (CPI) declined during 2025, well below the inflation target band, aided by food price deflation. In response, the RBI reduced the repo rate cumulatively from 6.50% in December 2024 to 5.25% by December 2025. On the external front, the current account deficit narrowed to 0.8% of GDP in the first half of FY 2026, supported by strong services exports. However, key risks stem from geopolitical led commodity price shocks and renewed trade disruptions, which may lead to moderate inflation and a narrowing Current Account Deficit.

Industry Overview:

The financial services sector in India is a diversified sector consisting of commercial banks, insurance companies, nonbanking financial companies, housing finance companies, co-operatives, pension funds, mutual funds and various other smaller financial entities. Banking sector is crucial for the growth of economy. As per the RBI data, bank credit increased by 16% year-on-year in FY 2025-26. Total deposits stood at Rs.267.8 lakh crore, while bank credit, or advances, was at Rs.219 lakh crore. The Indian banking system has achieved its best financial health in over a decade, with improvement in asset quality and in profitability.

NBFCs are key pillars of India’s financial intermediation ecosystem. Their specialised underwriting, product innovation and last-mile delivery capabilities, supported by increasing digital origination and servicing, have facilitated greater access to finance for MSME sector, self-employed borrowers and microfinance-linked households, thereby advancing financial inclusion. The NBFC credit as a proportion of GDP has increased steadily over the past decade from 8.9% in FY2015 to 14.6% in FY2025.

The regulatory landscape for NBFCs has continued to evolve towards a more proportionate, risk-aligned framework under the Reserve Bank of India’s (RBI’s) scale-based regulation (SBR), which applies differentiated requirements based on size, complexity, activity profile and systemic importance across base, middle, upper and top layers, with enhanced governance, prudential and disclosure expectations for upper- layer entities.

In May 2025, the RBI issued digital lending directions that formalise and consolidate regulatory expectations for the digital credit ecosystem. These measures reinforce conduct standards and customer safeguards by improving transparency, accountability and controls over data practices and servicing as digital first lending models expand.

During the year the RBI has undertaken a significant rationalisation of its regulatory framework, including the significant consolidation of regulatory instructions into a few Master Directions for Non-Banking Finance Companies (NBFCs). This simplification enhances regulatory clarity, reduces interpretational complexity and supports more efficient engagement with the regulator.

The credit growth for NBFCs, reached 21.3% year-on-year as of September 2025. Asset quality has further improved, with the overall gross non-performing assets (GNPA) ratio declining to 2.9%, which reflects continued strengthening in portfolio performance, underwriting discipline and collection outcomes.

Review of operations of the Company:

The Company achieved total revenue of Rs. 877.05 lakh in FY 2025-26 as compared to Rs. 712.70 lakh in previous year. On consolidated basis, revenue stands at was Rs. 1622.99 lakhs during the year as compared to Rs. 1574.07 lakhs in the previous year.

The Company has been in the personal and consumer lending business on digital platform. It has developed its own digital lending OROBORO app as well. The Company has collaborated with many channel partners and have accelerated lending activities. The number of disbursements during the year have increased substantially to 3651.29 Lakhs (22322 No. of loans). The Company has taken necessary steps to further upgrade the technology platform and has put in place the systems to cater to higher scale of operations. The business activity is very encouraging and there is huge potential to scale up the business.

Strengths, Weakness, Opportunities and Threats (SWOT) analysis:

Strengths:

• Professional and ethical management

• Availability of adequate funding

• Various Channel partners

• Stringent cost control

• Follows risk management systems

• Strong collection field force

• Strong Technological base Weakness:

Limitations in getting adequate scale of business Opportunities:

• Scalability of digital lending business

• Leveraging technology for ease of operations

• Distribution of various financial products

• Wealth management Threats:

• Exposed to systemic risks and economic risks

Business Outlook:

The Company is active in a wide gamut of Financial Services like Corporate Finance, Project Finance, Trade Finance, Stock / Commodities / Currencies / Other Derivatives Broking, Merchant Banking, Investment Banking etc. Excellent domain expertise combined with a strong client and institutional relationship network nurtured over last 30+ years has ensured that all the companies in the Group are well poised to unlock value for its shareholders in the fast-evolving financial landscape in India.

The Company has collaborated with multiple channel partners for lending. This will accelerate the scale up in fund based digital lending business. The Company strives to be an important player in pocket loans segment. The Company has been coordinating with various banks to secure more funds needed for the working capital. It is also exploring possibilities of raising equity capital from strategic / financial investors to finance the growth in its lending business.

The Company has developed OROBORO app for seamless digital lending. It is in the process of integrating it with other technology platforms for complete automation. Application Program Interface (API) based integrations and full set of digital payment options and the integration with partner networks is likely to improve operational efficiency.

Transwarranty conducts all capital market activities through its Associate company, Vertex Securities Limited. This includes broking into equity & equity derivatives, commodities and currency broking and for distribution of third-party products.

FINANCIAL REVIEW:

The following table presents Company’s standalone abridged financials for the year 2025-26 as per IND-AS along with comparatives for the previous year restated as per IND-AS:

		(Rs. In Lakh)
Particulars	March 31, 2026	March 31,2025
Revenue from operations	755.33	707.81
Other income	121.72	4.89
Total income	877.05	712.70
Fees and commission expense	141.12	91.27
Employee Benefit expenses	237.09	222.11
Finance costs	337.73	353.35
Depreciation, amortization and impairment	23.41	23.49
Impairment on financial instruments	95.88	57.24
Other expenses	199.41	160.08
Total expenses	1034.64	907.34
Loss before exceptional items and taxes	( 157.59)	(195.03)
Less: Exceptional items (net) - income / (expense)	42.48	210.20
Profit before tax	(200.07)	(405.23)
Tax expenses	4.46	63.66
Profit /loss for the year	(204.52)	(468.89)
Other Comprehensive Income	(0.04)	1.32
Total Comprehensive Income	(204.56)	(467.57)

Key Ratios

Particulars	2025-26	2024-25
Interest Service Coverage Ratio	0.98	-0.28
Current Ratio	1.75	3.14
Net Profit Margin (%)	-27.08	-66.24
PBT/Total Income (%)	-26.49	-57.25
Return on Equity (%)	(0.06)	(0.13)
Debt/ Equity	0.90	1.12
Tier I Capital	1932.73	2063.24
Tier II Capital	519.52	845.00
CRAR ( Tier I + Tier II)	51.86	51.33

RISK MANAGEMENT:

Risk Management is an integral part of the Company’s business strategy. The Company is exposed to specific risks that are peculiar to its business including interest rate volatility, economic cycle, market risk and credit risk. The Management continuously assesses the risk and monitors its business and risk management policies to mitigate risk.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company’s internal control system is designed to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with laws and regulations. The internal control system is supported by an internal audit process for reviewing the adequacy and efficacy of the Company’s internal controls, including its systems and processes and compliance with regulations and procedures. Internal Audit Reports are discussed with the Management and are reviewed by the Audit Committee of the Board which also reviews the adequacy and effectiveness of the internal controls in the Company.

HUMAN RESOURCE DEVELOPMENT:

The Company believes that the human resources play a vital role in giving the company a competitive edge. The Company’s philosophy is to provide congenial work environment, performance-oriented work culture, knowledge acquisition / dissemination, creativity and responsibility. As in the past, the Company has enjoyed cordial relations with the employees at all levels. Our employee strength is 42 as on 31^st March, 2026.

CAUTIONARY STATEMENTS:

Statements in the Management Discussion and Analysis Report describing the Company’s objectives, projections, estimates, expectations may be forward looking statements within the meaning of applicable Securities Laws and Regulations. Actual results could differ materially from those expressed or implied.

For and on behalf of the Board of Directors
	Kumar Nair
	Chairman
Date: July 31,2026	DIN 00320541
Place: Mumbai