U. Y. Fincorp Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

Global Economy

During the FY 2024-25, the global economy demonstrated modest growth amid ongoing geopolitical tensions, persistent inflationary pressures, and monetary policy adjustments. While advanced economies like the U.S. and the Eurozone experienced slower growth due to high interest rates and weakened consumer spending, emerging markets, particularly in Asia, maintained better economic momentum, driven by domestic demand and technology sector growth. Inflationary pressures eased in most economies through the course of the year.

The outlook has weakened further after January 2025, pursuant to the announcement of a series of new tariff measures by the Trump administration in the United States and counter measures by its trading partners. These trade tariff measures have heightened uncertainties surrounding the global economic outlook, creating additional challenges for growth and inflation across regions. Financial markets reacted with a sharp decline in the dollar index, equity sell-offs, and notable drops in bond yields and crude oil prices.

Indian Economy

Despite the global uncertainties, the Indian economy registered a healthy growth in FY 2024-25 relative to the global economy. According to the Second Advance Estimates (SAE) by the National Statistics Office (NSO), real Gross Domestic Product (GDP) is estimated to have grown at 6.5% in FY 2024-25, on top of a 9.2% growth in FY 2023-24. The predicted slowdown in growth is aligned to the pervasive uncertainty in the global economy.

NBFCs have emerged as the crucial source of finance for a large segment of the population, including SMEs and economically unserved and underserved people. They have managed to cater to the diverse needs of the borrowers in the fastest and most efficient manner, considering their vast geographical scope, understanding of the various financial requirements of the people and extremely fast turnaround times. Nonbank money lenders have played an important role in the financial inclusion process by supporting the growth of millions of MSMEs and independently employing people.

The sector has grown significantly, with a number of players with heterogeneous business models starting operations. The last few years have seen a transformation in the Indian financial services landscape. The increasing penetration of neo-banking, digital authentication, rise of UPI and mobile phone usage as well as mobile internet has resulted in the modularisation of financial services, particularly credit.

NBFCs are leveraging their superior understanding of regional dynamics and customised products and services to expedite financial inclusion in India. Lower transactions costs, quick decision making, customer orientation and prompt service standards have typically differentiated NBFCs from banks. Considering the reach and expanse of NBFCs, they are well-suited to bridge the financing gap in a large country like India.

OPPORTUNITIES & THREATS

The success of our organisation depends on our ability to identify strengths & opportunities and leverage them while mitigating the risks that arise while conducting our business. Your Company has taken these factors into account in drawing up its plans for the year, without losing sight of its core markets and segments. Your company expects to manage this through financing an appropriate mix of higher and lower yielding assets, while ensuring that asset quality continues to remain best in class.

Some of the opportunities for the business of your Company includes Demographic changes and under penetrated market, Use of digital solutions for business/collections and Economic Upliftment.

Changes happening in the external environment also impact the NBFC industry like Slow industrial growth, Stiff competition within the NBFC and banking sectors, entry of many banking and non-banking companies and various industrial risks like - credit risk, interest rate volatility, economic cycle etc.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The business of the Company predominantly falls within a single primarily business segment viz. “Financial and Related Services” and hence the disclosure requirement under applicable Accounting Standard w.r.t. “Segment Reporting” is not applicable.

BUSINESS OVERVIEW AND OUTLOOK

Your Company is a non-deposit taking non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI) since April 20, 1998, with Registration No. B-05.01596 and classified as NBFC-Investment and Credit Company (NBFC-ICC) pursuant to circular DNBR (PD)CC.No.097/03.10.001/2018-19 dated February 22, 2019. Under the scale-based regulations for NBFCs, the Company has been classified as NBFCBL (Base layer) by the RBI vide press release dated September 30, 2022.

We are NBFC with more than 31 years of business, we directly operate across 3 States i.e. West Bengal, Uttar Pradesh and Maharashtra through our branch network under the branding of GrowU, and through collaboration with Fintech Cloud Private Limited (FCPL) under Fundobaba branding. Our financing product primarily includes: (i) corporate loans, (ii) micro-enterprise loans (business loans); (iii) personal loans, (iv) loan against property.

We had disbursed loan to more than 3,800 customers, across more than 2 Customer Locations in Uttar Pradesh, served through our

network of 2 branches, & 6 Business Correspondents.

The following table sets forth certain details of lending distribution geographical wise in term of AUM as of Fiscal 2025 and 2024:

( in Lakhs)

The following table sets forth the contribution of each product type to our revenue from operations for the periods presented:

( in Lakhs)

Our financing products include:

a) Corporate Loans: We offer unsecured corporate loans at a competitive interest rate, with ticket sizes of up to 25 Crores. This product is targeted at mid-sized and corporates seeking efficient capital for working capital, project expansion, or structured refinancing. Our focuses on cash flow visibility, ensuring low default risk and healthy returns. This offering positions us to capitalize on growing demand for formal credit in the mid-market segment while maintaining a strong risk-adjusted yield profile. As on March 31, 2025, our AUM from this segment was 22,662.22 lakhs which represented 82.48% of our total AUM. The Corporate loans grew from 16,988.22 lakhs as on March 31, 2024 to 22,662.22 lakhs as on March 31, 2025.

b) Micro-Enterprise Loans: We provide micro-enterprise loans self-employed individuals engaged in small, medium level business. As on March 31, 2025, our AUM from this segment was 893.22 lakhs which represented 3.25% of our total AUM.

c) Personal Loans: We provide loans to individuals for satisfaction of their personal needs. As on March 31, 2025, our AUM from this segment was 3,885.25 lakhs which represented 14.14% of our total AUM.

d) Loan against Property: The LAP product operations were started in Fiscal 2025. Under this segment, we provide micro-enterprise loans up to 10,00,000 to customers that do not have easy access to banks or other modes of financing for immediate short- or medium-term funding requirements. Our team reach out directly to such customers and visit them at their doorstep to carry out loan origination and credit evaluation.

In addition to our sales team, with an adequate number of sourcing correspondents, including commission based DSAs. As of March 31, 2025, we had entered into arrangements with 1 sourcing intermediaries for our personal loan segment.

In the rapidly evolving landscape of fintech, the Company emerged as a formidable player, setting new benchmarks for growth and innovation. As the company reports its latest financial performance for the stock exchange, it is evident that strategic vision, technological prowess, and customer-centric approaches have propelled the Company to new heights.

Several strategic initiatives have been pivotal to the Companys impressive performance:

1. Technological Advancements: Continuous investment in AI and machine learning has enhanced the platforms capabilities, offering users personalized financial advice and predictive analytics.

2. Partnerships and Alliances: Strategic partnerships with financial institutions and tech companies have expanded the Companys service offerings and market reach.

3. Customer-Centric Approach: By focusing on user experience and customer support, the company has achieved high customer satisfaction and retention rates.

Your Company strong financial performance has solidified its position as a leader in the fintech & NBFC sector. The companys innovative solutions and strategic foresight position it well to capitalize on emerging trends in digital finance. Looking ahead, several factors are expected to drive further growth:

l Expansion into New Markets: Plans to enter new geographical markets and diversify service offerings are likely to open up new revenue streams.

l Enhanced Product Offerings: Upcoming product launches and enhancements are set to attract a wider audience and increase user engagement.

l Sustainability Initiatives: A focus on sustainable finance and ethical investing is expected to resonate with socially conscious investors and users.

For investors, the Company represents a promising opportunity. The companys consistent growth, innovative approach, and robust financial health make it an attractive proposition. As the fintech & NBFC industry continues to evolve, the Company is well-positioned to leverage its strengths and deliver sustained value to its shareholders.

Your Company has developed a new strategic plan for growth in order to achieve transformation in its preparation for the future. The Company intends to continue its efforts of mainstreaming financial inclusion and providing affordable credit to customers in the lower half of the socio-economic pyramid. The Company aims to create value for its customers, employees, and shareholders, by expanding operations in existing areas, expanding to newer geographies through organic, as well as inorganic opportunities and exploring new ways in its journey to the next.

RISK MANAGEMENT

The risk management strategy of your Company is based on a clear understanding of various risks, and adherence to well-laid out risk policies and procedures that are benchmarked with industry best practices. Your Company continues to lay emphasis on risk management, especially in an environment which is characterised by increasing uncertainties. Your Company has developed robust systems and embraced adequate practices for identifying, measuring and mitigating various risks business, strategic, operational, market, credit, liquidity, reputational and process risks and ensuring that they are contained within pre-defined threshold levels.

Your Company has a strong framework for the appraisal and execution of credit facilities that involves a detailed evaluation of industry, business, financial, project and management factors including sponsors financial strength and experience. A team of well qualified and experienced individual examine the proposals at various levels and evaluate all information which are gathered from relevant sources during the assessment process to facilitate credit decisions. This process ensures that the expertise in lending operations acquired by the Company over the period is put to best use and acts to mitigate credit risks.

Liquidity risk and interest rate risk arising out of maturity mismatch of assets and liabilities are managed through regular monitoring of the maturity profiles. In addition, to manage operational risk prudently, Know Your Customer (KYC) and Anti-Money Laundering (AML) Policy are in place, which helps to prevent your Company from being used intentionally or unintentionally by criminal elements for money laundering.

Your Companys risk management framework emphasises proper analysing and understanding the underlying risks before undertaking any transactions and changing or implementing processes and systems. This enables a proper assessment of all risks and ensures that the transactions and processes conform to your Companys risk appetite and regulatory requirements.

INTERNAL CONTROL SYSTEM

Your Company has put in place adequate internal controls system to ensure that all assets are protected, with documented procedures. Systems of internal controls are designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls and compliance with applicable laws and regulations. Your Companys Internal Control System is commensurate with the nature of its business and the size and complexity of its operations and ensures compliance with policies and procedures. The Internal Control Systems are being constantly updated with new/revised standard operating procedures.

The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate governance structure, while maintaining excellence in services to all its stakeholders. Furthermore, the Audit Committee of your Company evaluates and reviews the adequacy and effectiveness of the internal control systems and suggests improvements. Significant deviations are brought to the notice of the Audit Committee and corrective measures are recommended for implementation. The critical audit observations are shared with the Audit Committee on a quarterly basis for an effective monitoring of controls and implementation of recommendations. The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures. All these measures help in maintaining a healthy internal control environment.

Kindly refer to “Annexure-A” of the Statutory Auditors Report dated 22nd May, 2025 on this matter.

FINANCIAL PERFORMANCE

During the year under review, your Company achieved revenue from operations of 11,104.61 lakhs as against 12,185.29 lakhs in the previous year and recorded profit before tax of 1,693.88 lakhs as against 8,437.63 lakhs in the financial year 2023-24.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

During the financial year ended 31st March 2025, there were changes of 25% or more in key financial ratios because the company made less sale of securities/investment and Decrease in Trade Receivable in comparison with the previous year.

HUMAN RESOURCES

To U. Y. Fincorp Limited, its people are a very valuable resource. In an increasingly competitive market for talent, UYFL continues to focus on attracting and retaining right talent. It is committed to provide right opportunities to employees to realise their potential. Your Company focuses on widening organisational capabilities and improving organisational effectiveness by having a competent and engaged workforce. Our people are our partners in progress and employee empowerment has been critical in driving our organisations growth to the next level.

For your Company, all employees form part of an extended family and your Company has continued in its efforts to encourage wellness in mind, body and spirit. Talent Management and Development plays a pivotal role to attract and build people capability for their growth and through them for the growth of the organization.