Veefin Solutions Ltd Management Discussions

Global Economy

The global economy continues its recovery phase post-pandemic, with mixed growth rates across regions. Developed markets are seeing moderate growth, while emerging markets are witnessing faster recovery fuelled by technology adoption and infrastructure investments. However, geopolitical uncertainties, such as trade wars and supply chain disruptions, remain key challenges for global economic stability.

In terms of global trade, robust demand from emerging economies and the surge in digitalization have driven growth. Technological innovation is expected to continue being a primary catalyst for economic expansion, especially through advancements in Al, automation, and digital finance.

Key challenges persist with inflationary pressures and the tightening of monetary policies by central banks across major economies. The effects of climate change are also starting to influence policy decisions, with governments focusing more on sustainability and green finance initiatives.

Future Outlook

The global economic landscape will likely be shaped by Al-driven automation, climate change policies, and international trade dynamics. Recovery in global trade is expected to stabilize by the mid-2020s, but geopolitical tensions could create volatility. Growth in emerging markets will outpace developed nations, making them key drivers of global growth.

Indian Economy Overview

Indias economy has shown resilience despite global uncertainties. The nation remains one of the fastest-growing economies, supported by a thriving service sector and an expanding manufacturing base. The governments push for digitalization, alongside the Make in India initiative, has resulted in strong foreign direct investment (FDl) inflows and an uptick in the countrys manufacturing output. The agriculture sector continues to play a significant role, contributing to both domestic consumption and export revenues. Additionally, the financial services sector, led by innovations in fintech, is evolving rapidly, providing a diverse range of credit solutions for small and medium enterprises (SMEs). Key challenges include managing inflation, creating job opportunities for a large working-age population, and ensuring equitable growth across all sectors of society. The governments focus on infrastructure development, digital transformation, and rural sector growth is expected to drive sustained economic momentum.

Future Outlook

Indias future economic trajectory is positive, underpinned by strong consumer demand, an expanding middle class, and continued reforms in labour and taxation. The push for sustainable infrastructure, along with increased investments in technology and education, is expected to provide a long-term economic boost. Indias GDP is expected to grow at 6-7% annually, making it one of the top contributors to global growth in the coming years.

India will continue to enhance its digital and financial ecosystems, driving further adoption of financial inclusion initiatives, especially in rural and underserved urban areas. The manufacturing sector, alongside green energy investments, will become key focus areas for sustainable growth.

Industry Overview

Technology

The Indian Information Technology (IT) industry has become a global leader, significantly contributing to the countrys economy. It accounts for approximately 7% of Indias GDP and around 53% of service exports. This sector is recognized for its large-scale employment opportunities, with an estimated 5.4 million people working in the industry. India has maintained a dominant position, adding 23 unicorns in 2022 and being the second-highest country in terms of the number of new unicorns. Strategic initiatives by the Ministry of Electronics and Information Technology have bolstered Indias IT leadership. These initiatives focus on skill development, infrastructure enhancement, and support for R&D in emerging technologies like Al, cybersecurity, and blockchain. Furthermore, the Indian telecom market offers the worlds second-highest number of internet subscribers, contributing to the IT sectors robust growth.

With the governments policies favouring up to 100% FDI in several tech-related services and Indias reputation as a top destination for outsourcing, the IT industry continues to thrive. The introduction of affordable data services and the focus on technology-driven solutions across sectors further enhances Indias position in the global IT space.

In summary, the Indian IT industry is a cornerstone of the countrys economic growth, offering substantial contributions in exports, employment, and technological innovations. The sectors development has been supported by government policies and initiatives aimed at expanding Indias global footprint in IT and digital services.

Working Capital

Global Market Overview • Market Segments:

oWorking Capital Loans: Valued at USD 1.2 trillion in 2023, with projections to reach USD 2.5 trillion by 2033, growing at a CAGR of 7.6%.

•Working Capital Loan Market: Valued at USD 1.38 trillion in 2023, projected to reach USD 3.32 trillion by 2032, with a CAGR of 10.25% .(DataHorizzon Research, Introspective Market Research)

•Trapped Liquidity: S&P 1500 companies reported approximately $707 billion of trapped liquidity in working capital, up 40% from pre-pandemic levels .(jPMorgan Chase)

•Technological Adoption: A significant shift towards cloud-based solutions and the integration of advanced technologies such as artificial intelligence and machine learning for predictive analytics and automation of financial processes is observed .(Linkedln)

India Market Insights

• Private Credit Market: The Indian private credit market witnessed 15-16% growth in value and volume in 2024, with a forecasted growth rate of about 25-30% .(PwC)

• Venture Debt Market: Indias venture debt market grew at a 58% CAGR, reaching USD 1.23 billion in 2024, up from USD 80 million in 2018 .(The Economic Times)

• Economic Outlook: Indias GDP growth was 6.5% in fiscal 2024-2025, driven by strong private consumption expenditure and investments .(Deloitte)

Market Size & Demand

•Annual Working Capital Requirement: Indian corporates are projected to require between $70 billion to $100 billion annually over the next two years to fund growth, refinancing, and shareholder payouts .(Credable)

•MSME Contribution: MSMEs contribute approximately 29% to Indias GDP, accounting for 45.73% of exports as of FY2024 .(HDB Financial Services)

0 Working Capital Loan Market •Market Size: In 2024, the working capital loan market was valued at $1.5 trillion, with projections to reach $2.8 trillion by 2033, growing at a CAGR of 7.5% .(Verified Market Reports)

• Loan Segments:

• Term Loans: Estimated at $1.84 trillion in 2024, with CAGR of 4.82% .

• Lines of Credit: Estimated at $1.24 trillion, growing CAGR of 5.1%.

• Invoice Financing: Estimated at $567.8 billion, with CAGR of 5.6%.

• Factoring: Estimated at $456.7 billion, growing at CAGR of 5.3%.(Market Research Future)

• Lender Segmentation:

o NBFCs: Fastest-growing segment with a CAGR of 15.8% from FY2019 to FY2025.

o Private Sector Banks: Held the highest share in credit outstanding, approximately 51% .(HDB Financial Services)

MSME Financing Landscape

• Digital Adoption: Approximately 12% of Indias 64 million MSMEs have achieved digital maturity, leveraging technologies for transparency and efficiency .

• Government Schemes:

• PM SVANidhi: Provides micro-credit loans up to 510,000 to street vendors, promoting financial inclusion.

• CGTMSE: Offers credit guarantees up to f 5 crore for micro and small enterprises, facilitating easier access to working capital.

Growth Drivers

• Digital Transformation: The adoption of digital tools, including Unified Payments Interface (UPl), has led to increased operational efficiency and business growth among MSMEs .(The Economic Times)

• Fintech Innovation: The rise of fintech startups is revolutionizing working capital management by offering Al-driven solutions for credit assessment and financial planning .(The Times of India)

• Government Initiatives: Policies aimed at enhancing digital infrastructure and financial literacy are fostering a conducive environment for MSME growth and working capital access

Future Outlook

Indias working capital market is poised for robust growth, driven by the increasing demand for financing solutions, particularly among MSMEs. The integration of digital technologies and supportive government policies are expected to further enhance the accessibility and efficiency of working capital management, positioning India as a dynamic hub for business growth and innovation.

Company Overview

Veefin Solutions Ltd, the parent company of the Veefin Group, is a prominent player in the banking and financial technology (fintech) sector. Since its inception, the company has been at the forefront of revolutionizing working capital solutions, offering a comprehensive suite of digital products that span the entire working capital lifecycle. These include Supply Chain Finance (SCF), Digital Lending, automated financial statement analysis, debt securitization, and more. Veefin is bridging the financial technology gap with its innovative solutions that cover digital lending, trade finance, cash management, and other critical aspects of the financial ecosystem.

Founded in 2020 and headquartered in Mumbai, Veefin has rapidly expanded its operations with regional offices in Ahmedabad, Dhaka, and Singapore. The companys success lies in its unique approach·combining cutting-edge technology with deep financial expertise. This strategy has enabled Veefin to address complex financial challenges while fostering inclusive growth opportunities across diverse sectors. The companys ability to provide white-labelled solutions for SCF and digital lending, including an end-to-end lending stack, smart credit decisioning, business intelligence, analytics, and omnichannel onboarding, has positioned it as a go-to partner for banks, financial institutions, fintechs, B2B marketplaces, and corporates globally.

A standout aspect of Veefins offerings is its innovative Software-as-a-Service (SaaS) pricing model. This flexible and cost-efficient model removes the traditional barrier of high upfront costs, enabling financial institutions of all sizes - from small fintechs to large FIs - to engage in SCF. By democratizing access to SCF, Veefin has contributed significantly to the expansion of the global market. This SaaS approach allows clients to scale operations quickly and realize immediate returns on investment, creating a competitive advantage over traditional high-cost enterprise solutions. As Veefin continues its global expansion, its SaaS model positions the company for widespread adoption and future success.

Today, Veefin is not only a recognized leader in India but is rapidly gaining traction across Southeast Asia, the Middle East, and Africa. The company continues to broaden its product offerings and extend its global reach, ensuring its role as a key player in the working capital solutions market. With a relentless focus on delivering customizable and scalable solutions that meet the evolving needs of businesses, Veefin is poised to maintain its leadership in the fintech industry and make a lasting impact on the global working capital landscape.

Opportunities

Global Expansion and Market Penetration Veefin Solutions Ltd. is already a recognized leader in India, and its rapid expansion into Southeast Asia, the Middle East and Africa presents significant growth opportunities. The fintech space is booming globally, especially in emerging markets where access to working capital solutions is limited. By leveraging its technology-driven approach and understanding of local markets, Veefin can continue to penetrate new geographies. The global demand for digital and automated financial services, including SCF and digital lending, offers an expanding market that Veefin is well-positioned to capture. Furthermore, Veefins ability to customize solutions for different markets makes it an attractive partner for financial institutions worldwide.

SaaS Model for Widespread Adoption:

The introduction of the SaaS pricing model allows Veefin to eliminate traditional barriers to entry, such as high upfront costs, for financial institutions of all sizes. This model is particularly valuable for fintech companies and small to medium-sized financial institutions that typically cannot afford large-scale, on-premise solutions. By removing these financial barriers, Veefin is tapping into a much larger pool of potential clients, particularly in emerging markets where there is a significant gap in access to working capital financing. This opens the door for rapid market adoption, accelerating global revenue growth.

Increased Adoption of Supply Chain Finance (SCF): SCF is a powerful solution for addressing the working capital gap, especially in emerging economies where SMEs often struggle to access financing. As global businesses continue to move towards digitization and automation, the demand for SCF solutions will only increase. Veefins technology is positioned well to meet this need. Additionally, the convergence between SCF providers and fintech ecosystems is creating opportunities for innovative collaborations and partnerships, helping Veefin extend its reach and enhance its product offerings. The companys growing footprint and strategic positioning make it a key player in the rapidly expanding SCF market.

Deep-Tier Supply Chain Finance (DTSCF):

The evolution of deep-tier SCF, which extends financing to Tier 2 and Tier 3 suppliers, creates an excellent opportunity for Veefin. By integrating DTSCF into its platform, Veefin can enhance the liquidity and cash flow for SMEs that are crucial to the supply chain. As traditional financial institutions are often hesitant to extend credit to lower-tier suppliers due to data and risk challenges, Veefins tech-driven approach can bridge this gap, offering both large corporations and small suppliers a win-win situation. This can become a key differentiator for Veefin in the competitive SCF market.

Threats

Cybersecurity Risks

As a provider of financial solutions, Veefin must implement and maintain robust cybersecurity measures to safeguard sensitive data and prevent breaches or cyberattacks, which could severely damage its reputation and incur substantial costs. Threats such as phishing, Trojans, and hacking attempts are particularly concerning. To mitigate these risks, Veefin must focus on continuously educating customers on data security while strengthening its cybersecurity infrastructure to detect and prevent such attacks.

Technological Disruptions

The rapid pace of technological advancements and the emergence of new fintech solutions present a constant threat to market stability. To stay competitive, Veefin must embrace continuous innovation and adapt its technology to meet evolving customer demands. Failing to keep pace with technological developments could risk the company being outpaced by more agile competitors offering superior solutions.

Economic Downturns and Market Volatility Global economic factors such as uncertainties, recessions, and market volatility could negatively affect Veefins growth prospects. These conditions may lead businesses to limit investments, thereby impacting Veefins revenue generation. To safeguard against such risks, the company must develop strategies to remain resilient during periods of economic turbulence.

Regulatory Changes and Compliance Challenges As financial regulations evolve across different regions, compliance with new rules and regulations remains a significant challenge. Veefin must stay ahead of these changes and invest in the necessary systems to ensure it meets regulatory requirements. A proactive approach to compliance will help mitigate potential risks associated with regulatory violations and help Veefin maintain its market credibility.

Cloud Migration Risks

While cloud migration offers numerous advantages, it also brings several challenges, including data security concerns, integration issues, and potential operational disruptions. A well-planned transition strategy, supported by thorough risk assessments and contingency plans, is essential for ensuring a smooth migration process and minimizing disruptions that may impact business operations.

Protecting Intellectual Property (IP) Rights Safeguarding intellectual property (IP) is critical for Veefins revenue generation. However, challenges such as IP infringements, piracy, or unauthorized usage pose significant risks. To effectively protect its IP, Veefin must register its assets in countries with robust IP protection laws and implement continuous monitoring systems to detect and address potential violations promptly. This proactive approach will help mitigate the risk of unauthorized use and preserve the companys competitive advantage.

Risk Management

Staying Ahead of Technological Advancements Veefin understands the critical importance of staying at the forefront of technological advancements to maintain its competitive advantage. The company ensures this by investing in continuous research, market analysis, and fostering a strong innovation and development team. This approach allows Veefin to anticipate and adapt to emerging technologies, enabling it to stay agile in a rapidly evolving fintech landscape.

Efficient Management of Operating Costs To optimize its operational costs, Veefin focuses on process improvement and adopts lean growth models. By maintaining a strong commitment to high-quality standards, the company strives for maximum efficiency in its operations. Cost-effectiveness remains a core priority, ensuring the business continues to scale sustainably while minimizing unnecessary expenditure.

Adapting to Changing Consumer Preferences Recognizing the need to respond to evolving consumer preferences, both locally and globally, Veefin regularly conducts market research, engages with customers, and collaborates with industry experts. This enables the company to stay informed about emerging technologies and trends, ensuring its products and services remain aligned with the changing demands of its diverse clientele.

Attracting and Retaining Skilled Talent Veefin is committed to fostering a positive and growth-oriented work environment. By offering professional development opportunities, recognizing employee contributions, and promoting a culture of continuous learning, the company ensures that its workforce remains motivated and engaged. This strategy helps retain top talent, which is essential for driving innovation and achieving long-term success

Segment-wise or product-wise performance

During the year, Veefin continued to deliver strong segment-wise and product-wise performance, driven by its vision of building a comprehensive, technology-driven financial ecosystem. Anchored by its flagship Supply Chain Finance (SCF) and Digital Lending platforms, the company has established a robust foundation for solutions that streamline supply chain finance, lending, and risk management for corporates, banks, and fintechs. Over the past nine months, Veefin has further strengthened this portfolio through the strategic acquisition and integration of complementary businesses, creating a powerful, interconnected suite of offerings. This synergy has not only enhanced the companys product depth across segments but also accelerated its ability to provide seamless, end-to-end financial solutions to a diverse and expanding global client base.

According to the Indian Generally Accepted Accounting Principles (GAAP), specified under Section 133 of the Companies Act, 2013, there are no reportable operating or geographical segments applicable to the Company at Standalone level. Whereas segment reporting at Consolidated level is presented under two categories - Services and Product

The consolidated gross revenue from operations as considered in the profit and loss account for FY 2025 is Rs. 7,859.76 Lakhs out of which Rs. 4609.85 is from Product and Rs. 3,249.91 is from Services.

Discussions on Standalone Financial Performance concerning Operational Performance:

Veefin Solutions Limited	Standalone
Particulars	2024-25	2023-24	YOY Growth in %
Total revenue from operations (including other income) (in Rs. Lakhs)	3,780.55	2,078.21	82%
Total expenses (in Rs. Lakhs)	2,144.04	1,199.58	79%
Profit before depreciation and Taxes (in Rs. Lakhs)	1,636.51	878.63	86%
Depreciation and Amortisation (in Rs. Lakhs)	231.34	87.55	164%
Profit before tax (in Rs. Lakhs)	1,405.17	791.08	78%
Income tax expenses (in Rs. Lakhs)	290.13	227.23	28%
Profit after tax (in Rs. Lakhs)	1,115.04	563.85	98%
EPS
Basic (in Rs)	4.93	2.74	80%
Diluted (in Rs.)	4.51	2.51	80%

Discussions on Consolidated Financial Performance concerning Operational Performance:

Veefin Solutions Limited	Consolidated
Particulars	2024-25	2023-24	YOY Growth in %
Total revenue from operations (including other income) (in Rs. Lakhs)	8,044.37	2,499.42	222%
Total expenses (in Rs. Lakhs)	5,482.91	1,438.48	281%
Profit before depreciation and Taxes (in Rs. Lakhs)	2,561.46	1,060.94	141%
Depreciation and Amortisation (in Rs. Lakhs)	509.99	94.10	442%
Profit before tax (in Rs. Lakhs)	2,051.47	966.84	112%
Income tax expenses (in Rs. Lakhs)	425.55	227.49	87%
Profit after tax (in Rs. Lakhs)	1,625.92	739.35	120%
EPS
Basic (in Rs)	5.92	3.60	64%
Diluted (in Rs.)	5.41	3.29	64%

Financial Review

During the year under review, the Company reported exceptional financial performance driven by strategic expansion and increased product adoption in the digital lending and supply chain finance space. Below is the breakdown of the key metrics:

The Company on a standalone basis has recorded a year-on-year revenue growth of 80%, with a Profit After Tax (PAT) of INR 11.15 crores (30% margin) and an EBITDA of INR 17.43 crores (46% margin).

• Revenue Growth Drivers

o Client Expansion: Our client base has grown from 58 to 83, reflecting strong market adoption.

o Faster Go-Lives: With shorter implementation cycles, a higher number of clients have gone live, enabling earlier revenue realization.

o Recurring Revenue: Currently on a standalone basis, 75% of revenue is recurring,

o SAAS-led Growth: In FY 25, we signed 25 new clients, all on SAAS contracts. Overall, 87% of our client base comprises SAAS clients.

o These factors collectively have driven our strong revenue growth and overall performance

• Our Earnings Per Share (EPS) has increased from INR 2.74 to INR 4.93 on a standalone basis, and to INR 5.92 on a consolidated basis.

Key Performance Indicators of our Company

As per Standalone Financials

Particulars		Standalone
	2024-25	2023-24	YOY Growth in %
Revenue split between domestic and exports
Domestic market (in Rs. Lakhs)	2,294.48	1,197.90	92%
Export market (in Rs. Lakhs)	1,437.45	878.08	64%
Domestic market (%)	0.61	0.58	7%
Export market (%)	0.39	0.42	-9%
Key Ratios
Debtors Turnover (times)	2.71	2.46	10%
Current Ratio (times)	2.90	4.68	-38%
Debt Equity Ratio (times)	0.18	0.05	260%
Return on equity (ROE) (%)	7.19%	4.63%	55%
Return on capital employed (ROCE) (%)	8.26%	6.36%	30%

As per Consolidated Financials

Particulars		Consolidated
	2024-25	2023-24	YOY Growth in %
Revenue split between domestic and exports
Domestic market (in Rs. Lakhs)	3,562.88	1,370.85	160%
Export market (in Rs. Lakhs)	4,296.87	1,126.35	281%
Domestic market (%)	0.45	0.55	-17%
Export market (%)	0.55	0.45	21%
Key Ratios
Debtors Turnover (in times)	2.65	2.90	-9%
Current Ratio (in times)	2.92	4.66	-37%
Debt Equity Ratio (in times)	0.03	0.04	-25%
Return on equity (ROE) (%)	3.47%	5.95%	-42%
Return on capital employed (ROCE) (%)	4.37%	7.63%	-43%

Notes to Ratios Debtors Turnover Ratio:

The Debtors turnover Ratio is the average number of days that recoveries are made from the time of raising the Invoice. A shorter ratio results in a higher Working Capital available to the company.

Current Ratio:

The current ratio, which indicates a companys ability to meet short-term obligations, has declined during the year primarily due to an increase in short-term borrowings and trade payables. Despite this shift, the Company continues to maintain liquidity at levels comfortably above industry benchmarks.

Debt-Equity Ratio:

The Debt-Equity Ratio reflects the proportion of borrowings to shareholders funds. The variance during the year is attributable to the Company leveraging its resources by opting for debt funding, which remains within prudent financial practices. Importantly, the borrowings primarily comprise inter-corporate debt within the group companies; as a result, at the consolidated level, the overall ratio stands reduced.

Return of Equity Ratio:

The Return on Equity (ROE) ratio signifies the earnings generated for shareholders on their invested funds. On a standalone basis, the ROE has improved, reflecting higher operating margins, cost efficiencies, and the benefit of scale from increased revenues. On a consolidated basis, however, the ratio does not present a true picture for the year under review, as this was a transition year with acquisitions completed during the period. Consequently, the consolidation of revenues and profitability was only for part of the year, impacting the overall ratio.

Return on Capital Employed:

The Return on Capital Employed reflects the income generated by the Company in relation to the assets deployed to generate that income. Improved asset utilization and better economies of scale have contributed to stronger profitability. The increase in the standalone ratio highlights more efficient use of both debt and equity in delivering higher returns. As mentioned above, the consolidated ratio does not present a true picture for the year under review, as this was a transition year with acquisitions completed during the period.