TruCap Finance Ltd Management Discussions

We are pleased to share the Management Discussion and Analysis (MD&A) Report for the financial year ended March 31, 2026. This section provides an overview of the macroeconomic context, the performance of your Company, and the managements strategic outlook. It outlines TruCap Finances operational and financial highlights, industry trends, and the key risks and opportunities that shape the Companys future direction.

ECONOMIC REVIEW

Global Economy

The global economy entered Fiscal 2026 with greater resilience than anticipated. Despite elevated trade barriers and persistent policy uncertainty, calendar year 2025 ended on an upbeat note, with global growth holding at approximately 3.3%, supported by adaptive private-sector behaviour, lower-than-announced tariffs in the United States, fiscal support in several economies, favourable financial conditions and a technology-led investment boom. However, this momentum was interrupted towards the close of the fiscal year by the outbreak of conflict in the Middle East, which has pushed up commodity prices, firmed inflation expectations and tightened financial conditions.

Under its reference forecast, which assumes the conflict remains limited in duration and scope, the International Monetary Fund (IMF) projects slow global growth at 3.1% in 2026 before recovering modestly to 3.2% in 2027 — below recent outcomes and well under pre-pandemic averages. Global headline inflation is projected to rise to about 4.4% in 2026 before resuming its decline in 2027, with pressures concentrated in emerging market and developing economies, particularly commodity importers. The IMF has flagged that risks to the outlook are decisively on the downside: a longer or broader conflict, deepening geopolitical fragmentation, a reassessment of expectations around AI-driven productivity, renewed trade tensions, elevated public debt and eroding policy buffers could further weaken growth and unsettle financial markets.

For lenders serving small businesses, the principal transmission channels of this global environment are energy prices, imported inflation and the cost of capital — all of which bear on the cash flows of micro and small enterprises and on the funding conditions of non-banking financial companies.

Source: - International Monetary Fund, World Economic Outlook, April 2026 — "Global Economy in the Shadow of War"

Indian Economy

Against a turbulent global backdrop, India remained the worlds fastest-growing major economy for the fourth consecutive year. As per the provisional Estimates released by the Ministry of Statistics and Programme Implementation (MoSPI) under the new National Accounts series (base year

2022-23), real GDP grew 7.7% in FY 2025-26, up from 7.1% in FY 2024-25, with real GDP reaching ^323.12 lakh crore and nominal GDP growing 8.9% to ^346.36 lakh crore. Growth was broad-based: manufacturing expanded by 10.7%, private final consumption expenditure accelerated to 7.7%, and gross fixed capital formation grew 8.2%, reflecting sustained capacity creation and infrastructure spending.

The year was equally notable for benign inflation: headline CPI inflation averaged well below the Reserve Bank of Indias 4% target for most of the year (1.7% during April-December 2025), aided by favourable food supply conditions and GST rate rationalisation effective September 2025. This allowed the RBI to cut the policy repo rate by a cumulative 125 basis points from February 2025, to 5.25%, materially easing the cost of funds across the financial system. In its June 2026 policy review, however, the monetary policy Committee held rates and retained a neutral stance, raising its FY 202627 inflation projection to 5.1% and lowering its GDP growth projection to 6.6%, citing the West Asia conflict, elevated energy prices and monsoon uncertainty.

Looking ahead, the Economic Survey 2025-26 projects real GDP growth of 6.8-7.2% for FY 2026-27, while the IMFs April 2026 World Economic Outlook places Indias growth at 6.5% — in each case retaining Indias position as the fastest-growing major economy, anchored by domestic demand, a rising working-age population and continued public capital expenditure.

industry overview

Lending to the MSME Sector

micro, small and medium enterprises remain the backbone of the Indian economy, contributing over 30% of manufacturing output and close to 46% of exports, with MSME exports having risen from ^3.95 lakh crore in FY 2020-21 to ^12.39 lakh crore in FY 2024-25. Despite this, formal credit penetration remains strikingly low. As per Deloitte Indias published "State of Financial Services in India (SOFSI)" report (June 2026), only about 14% of MSMEs have access to formal credit, leaving the majority — mostly micro-enterprises — dependent on informal, usurious financing; the report estimates the MSME credit gap — the difference between credit demand and formal supply — at approximately ^25 lakh crore as of March 2025, and notes that, based on the sectors contribution to GDp and a healthy credit-to-GDp ratio, the gap could

be well over T50 lakh crore. This is consistent with the Parliamentary Standing Committee on Finances earlier estimate of a T20-25 lakh crore credit gap in its report on strengthening credit flows to the MSME sector.

This structural gap continues to be addressed disproportionately by NBFCs. RBI data shows NBFC MSME loan portfolios growing at 21.2% and 42.4% in FY23 and FY24 respectively, well ahead of banks, and industry estimates place MSME lending growth at around 14% in FY 2025-26, driven by manufacturing, trade and services. The NBFC sectors assets under management crossed T50 lakh crore in FY25 and are projected to reach T70 lakh crore by FY27. Structurally, the industry is shifting from collateral- based underwriting towards cash-flow-based lending built on digital public infrastructure — GST filings, bank statements, UPI transaction trails and account aggregator data — which is expanding the addressable borrower base in tier 2, tier 3 and tier 4 markets.

Sources: Deloitte India — "State of Financial Services in India (SOFSI)" report, June 2026, Parliamentary Standing Committee on Finance — "Strengthening Credit Flows to the MSME Sector", RBI Report on Trend and Progress of Banking in India — NBFC MSME portfolio growth

Gold Loan Business

FY 2025-26 was an exceptional year for organised gold lending in India. Sustained strength in gold prices raised the collateral value of household jewellery, while borrower preference shifted visibly towards secured credit. The organised gold loan market, which stood at approximately T11.8 lakh crore of AUM as of March 2025, is estimated to have grown to around T15 lakh crore by March 2026. As per the RBIs Financial Stability Report, gold loans grew about 54.5% year-on-year in FY26 at the industry level, with NBFC gold loan books nearly doubling (up 96.5%), taking gold loans to roughly 17.4% of NBFC retail portfolios. Over FY24-FY26, gold loans compounded at approximately 42% annually — nearly twice the pace of other non-housing retail credit.

The year also brought a landmark regulatory reset. The RBIs Lending against Gold and Silver Collateral Directions, 2025 harmonise norms across all regulated entities effective April 1, 2026, prescribing tiered loan-to-value caps (85% for loans up to T2.5 lakh, 80% for T2.5-5 lakh and 75% above T5 lakh for consumption loans), tighter bullet-repayment and renewal conditions, standardised valuation and auction processes, and time-bound return of pledged collateral. While the directions raise compliance intensity, they are expected to level the playing field between banks and NBFCs, deepen borrower trust and support the continued formalisation of gold-backed credit. System-level risk buffers remain healthy, with average LTVs below 60% and only around 6% of originations to new-to-credit borrowers, although the RBI has cautioned that volatile gold prices warrant close monitoring.

Three-Wheeler (3W) EV Loans Business

Electric mobility crossed a decisive threshold in FY 202526, and nowhere more visibly than in the three-wheeler segment. As per Federation of Automobile Dealers Associations (FADA) retail data, electric three-wheelers accounted for 60.9% of all three-wheeler registrations in FY26, up from 57.2% in FY25 — making EVs default purchase in the category rather than the alternative. the overall three-wheeler segment posted its third consecutive record year (up 11.7%), while total EV retail across categories reached 24.52 lakh units, a 24.6% expansion. The economics are structural: for daily commercial use in last-mile passenger and cargo movement, the total cost of ownership of an electric three-wheeler is now clearly superior to internal combustion alternatives, reinforced by GST on EVs at 5%, the PM E-DRIVE scheme (T10,900 crore outlay) and state-level incentives.

Financing is the critical enabler — and the largest bottleneck

— of this transition. Indias EV financing market is estimated at about USD 3.6 billion in 2026 and is projected to grow at over 50% CAGR to nearly USD 29 billion by 2031, with commercial three-wheelers expected to be the fastest- growing sub-segment (over 53% CAGR). NBFCs already finance over 60% of Indias EVs. At the same time, Institute for Energy Economics and Financial Analysis (IEEFA) notes that commercial EV borrowers — typically first-time entrepreneurs, driver-owners and small fleet operators

— still face interest rates of 15-33%, reflecting perceived asset and borrower risk; blended structures combining credit guarantees, residual-value protection and co-lending could bring these towards 8-12%. This underserved, income-generating borrower profile sits squarely within the Companys core customer segment, and lenders with cluster-level distribution, telematics-informed underwriting and OEM/fleet partnerships are best placed to capture the opportunity.

Sources: FADA — FY26 and March26 Vehicle Retail Data press release, Mordor Intelligence — India EV Financing Market, IEEFA — "Capital flows in Indias electric transport sector", IBEF — Electric Vehicle Industry in India

BUSINESS & FINANCIAL PERFORMANCE

As of March 31, 2026, the Companys Assets Under Management (on- and off-book) stood at T 339.5 crore, as against T 833.8 crore as of March 31, 2025. The movement in AUM during the year reflects the calibrated moderation of disbursements amid the funding environment faced by the Company / portfolio rundown in identified segments, with the book comprising 49% MSME business loans, 8% gold loans and 43% EV financing. Off-book AUM under co-lending / L-a-a-S arrangements stood at 13% of total AUM.

Since commencing lending operations in 2018, the Company has cumulatively disbursed over T 5,734 crore and served more than 4.59 lakh customers. The active borrower base stood at approximately 26,000 as of March 31, 2026. The Company continues to serve underserved and under-banked micro-entrepreneurs in Tier 2, Tier 3 and Tier 4 towns through its network of 23 branches.

FINANCIAL SUMMARY - STANDALONE BASIS

The decline in revenue and the widening of loss during FY 2025-26 primarily reflect the contraction of the loan book, elevated impairment provisions on the identified stressed portfolio, and the funding constraints faced by the Company.

OPPORTUNITIES AND THREATS

Opportunities

The structural opportunity in the Companys chosen

segments remains intact and, in several respects, has strengthened. The T25 lakh crore MSME credit gap, the rapid formalisation of small-business cash flows through GST and digital payments, and the expansion of guarantee-backed lending create durable demand for last- mile secured and unsecured MSME credit. the gold loan markets growth to an estimated T15 lakh crore, together with the harmonised regulatory framework effective April 2026, favours organised lenders with established branch infrastructure and vaulting capability. In electric mobility, the three-wheeler segments transition past the 60% EV- penetration mark, supported by PM E-DRIVE and 5% GST, positions specialised EV financiers to serve a fast-growing, income-generating asset class where formal credit supply remains scarce. A softening interest-rate environment

— with the repo rate 125 bps below its early-2025 level

— should, over time, ease the cost of funds for the sector. For the Company specifically, the proposed capital infusion along with the debt restructuring plan under discussion with lenders, would recapitalize the balance sheet and restore the Companys ability to participate in this opportunity.

Threats

The Company faces both sector-level and entity-specific threats. At the sector level: heightened competition in gold and MSME lending from banks and large NBFCs; compliance intensity under the new gold-lending directions; the sensitivity of gold-backed portfolios to a correction in bullion prices; the vulnerability of small-business borrowers to fuel-price and input-cost shocks emanating from the West Asia conflict; and a projected rise in inflation in FY27 that could delay further monetary easing. At the entity level, the material threats are the outcome and timing of the impending open offer / change-in-control matter which is currently with SEBI, the Companys constrained access to incremental debt funding following the rating downgrade to D and the defaults on debt obligations, elevated gross NPAs, potential attrition of employees and customers during the transition.

OUTLOOK

The macroeconomic setting for FY 2026-27 is one of moderating but still-robust domestic growth: the RBI projects real GDP growth of 6.6% and the Economic Survey 6.8-7.2%, with inflation projected at 5.1% amid elevated global uncertainty. the industries in which the Company operates — MSME credit, gold-backed lending and commercial EV financing — are each supported by long- duration structural drivers that are largely independent of near-term cycles.

For the Company, FY 2026-27 will be a year of stabilisation and rebuilding. The immediate priorities are: (i) resolution of the capital and ownership matters, including the outcome of impending open offer and the completion of the proposed restructuring plan with lenders, including the contemplated debt-to-equity conversion; (ii) preservation of asset quality and intensive collections on the existing portfolio; (iii) retention of the branch network, employee base and lender

relationships that constitute the Companys core franchise; and (iv) a calibrated resumption of disbursements in gold loans and MSME business loans as and when funding normalises.

RISK MANAGEMENT & INTERNAL CONTROL SYSTEMS

As a lending firm, we are exposed to various types of risks, including market risk, credit risk, interest rate risk and operational risk. The Company has implemented a robust risk management process to proactively identify and mitigate risks that could significantly affect our business objectives. These risks are carefully assessed and managed to safeguard the interests of our stakeholders.

The Board of Directors of the Company has constituted a Risk Management & Strategy Committee to develop, implement, and oversee the Companys risk management plan. This Committee is tasked with reviewing and ensuring the effectiveness of the risk management strategy. It takes into account risks that could impact on the Companys midterm to long-term objectives, including reputational risks.

the Company has an extensive risk charter and a comprehensive Risk management policy. Additionally, the Audit Committee provides further oversight in areas related to financial risks and controls.

The Board has adopted comprehensive policies and procedures to ensure the orderly and efficient conduct of business. These measures include adherence to the Companys policies, safeguarding assets, preventing and detecting fraud and errors, ensuring the accuracy and completeness of accounting records, and timely preparation of reliable financial disclosures.

The Companys internal control systems are designed to be commensurate with the nature of its business and the size and complexity of its operations. This system is supported by an internal audit process that reviews the design, adequacy, and efficacy of the Companys internal controls, systems, and processes, ensuring compliance with regulations and procedures. Internal Audit Reports are discussed with Management and reviewed by the Audit Committee of the Board, which also evaluates the adequacy and effectiveness of the Companys internal controls.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT INCLUDING NuMBER OF PEOPLE Employed

the Company continued to invest in human resources during the year, even as the broader liquidity stress in the operating environment posed challenges to employee retention and

engagement. The tightening of cash flows and delays in certain receivables impacted our ability to incrementally enhance compensation and variable pay, leading to an increase in attrition, particularly in customer-facing and mid-management roles. In response, management has focused on non-monetary retention levels, including enhanced communication on business priorities, role clarity, flexible work practices where feasible, and strengthened learning and development initiatives aligned to our nearterm strategic objectives.

We have also intensified succession planning and internal talent mobility to minimize disruption to operations and safeguard critical skills. While overall attrition during the year was elevated versus our historical levels, the Company has maintained continuity in key positions and is committed to progressively rebuilding its talent base as liquidity conditions improve.

As of March 31, 2026, the Company employed 437 permanent staff members.

DETAILS OF SIGNIFICANT CHANGES (I.E., change OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS

cautionary STATEMENT

the statements made in management Discussion and Analysis describing the Companys expectations and estimations may be forward looking within the meaning of applicable securities laws and regulations. these statements are based on certain assumptions and expectation of future events. The actual results may differ from those expressed or implied in this report due to the influence of factors beyond the control of the Company. The Company assumes no responsibility in respect of forward-looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events. Readers are cautioned not to place undue reliance on the forward looking statements.