Viji Finance Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

GLOBAL ECONOMIC OVERVIEW

The global economy demonstrated resilience during FY 2025-26 despite persistent geopolitical tensions, trade policy uncertainties, evolving monetary policy cycles and elevated financial market volatility. Economic activity remained supported by resilient labour markets, gradual moderation in inflation, improving supply chain conditions and sustained investments in digital transformation and infrastructure. However, growth across regions remained uneven owing to differences in domestic demand, fiscal conditions, productivity trends and policy responses.

Looking ahead, the global economic outlook remains cautiously optimistic. While inflation is expected to moderate further and monetary conditions may gradually become more accommodative, global growth is likely to remain below long-term historical averages. Key risks include geopolitical conflicts, elevated public debt levels, financial market volatility, climate-related events, cyber threats and trade fragmentation.

In this environment, financial institutions with strong governance standards, prudent risk management practices, diversified funding sources, adequate capital buffers and continued investments in technology are expected to be better positioned to capitalize on growth opportunities while effectively managing emerging risks.

INDIAN ECONOMY

India continued to remain among the fastest-growing major economies during FY 2025-26, supported by strong domestic demand, sustained public capital expenditure, infrastructure development, manufacturing expansion and rapid digitalization across sectors.

Key drivers of economic growth included:

• Strong public infrastructure spending.

• Growth in manufacturing and services.

• Expansion of digital financial services.

• Rising financial inclusion across urban and rural markets.

• Continued policy reforms to improve ease of doing business.

• Increasing formalization ofthe economy.

The Indian financial system remained stable and well-capitalized, supported by healthy credit growth across retail, MSME, housing, vehicle finance and consumer lending segments. Continued regulatory reforms and digital adoption further strengthened the financial ecosystem.

NBFC INDUSTRY OVERVIEW AND OUTLOOK

The NBFC sector continues to play a critical role in Indias financial ecosystem by complementing traditional banking institutions and addressing credit requirements of underserved and unserved segments.

NBFCs have emerged as significant contributors to:

• Retail financing

• MSME financing

• Vehicle financing

• Affordable housing finance

• Rural and semi-urban credit penetration

• Financial inclusion initiatives

The sector benefited from increasing digital adoption, enhanced underwriting capabilities, improved analytics-driven credit assessment and growing customer preference for faster and more accessible financing solutions.

The Reserve Bank of India (RBI) continues to strengthen the regulatory framework for NBFCs through enhanced governance standards, Scale-Based Regulation (SBR), stronger risk management practices, liquidity monitoring, capital adequacy requirements and customer protection measures. These reforms are expected to improve long-term stability, transparency and resilience of the sector.

The Company continues to align its business strategy with the evolving regulatory environment while maintaining prudent lending practices and disciplined risk management.

OPPORTUNITIES AND THREATS

Opportunities

The Company identifies the following opportunities for future growth:

1. Growing Credit Demand

Indias expanding middle class, increasing entrepreneurship, and rising consumption continue to create substantial demand for credit across retail and MSME segments.

2. Financial Inclusion

A large segment of the population remains underserved by formal banking channels, providing significant opportunities for NBFCs to expand their customer base.

3. Digital Transformation

The rapid adoption of digital technologies, AI-based underwriting, alternative credit assessment mechanisms, and paperless loan processing can enhance customer experience and operational efficiency.

4. MSME Sector Growth

Government support and increasing formalization of MSMEs are expected to generate sustained demand for business financing solutions.

5. Infrastructure and Economic Development

Continued investments in infrastructure and industrial development are likely to stimulate economic activity and increase financing requirements across sectors.

6. Strategic Partnerships

Collaborations with fintech companies, co-lending arrangements, and digital platforms present opportunities for business expansion and customer acquisition.

THREATS AND RISKS

1. Credit Risk

The Companys financial performance depends significantly on the quality of its loan portfolio. Economic slowdown, inflationary pressures, borrower-specific challenges or sectoral stress may adversely impact repayment capacity and asset quality.

2. Interest Rate Risk

Fluctuations in interest rates can affect borrowing costs, net interest margins, and profitability.

3. Liquidity Risk

Maintaining adequate liquidity remains critical, particularly during periods of market uncertainty or economic stress.

4. Competitive Risk

The Company faces competition from:

• Commercial Banks

• Small Finance Banks

• Fintech Companies

• Housing Finance Companies

• Other NBFCs

Intense competition may exert pressure on lending yields, customer acquisition costs and market share

5. Regulatory Risk

The NBFC sector operates under an evolving regulatory framework. Changes in RBI guidelines relating to capital adequacy, provisioning norms, governance standards, customer protection or liquidity requirements may influence business operations and compliance obligations.

6. Cyber Security and technology Risk

Increasing dependence on digital platforms exposes financial institutions to cyber threats, data breaches, operational disruptions and technology-related risks. The Company continues to strengthen its information security framework through periodic monitoring, technology upgrades and cybersecurity controls.

7. Macroeconomic and Geopolitical Risks

Global economic uncertainties, geopolitical developments, inflationary pressures, commodity price volatility and financial market disruptions may indirectly impact borrower behaviour, funding costs and overall credit demand.

SEGMENT-WISE PERFORMANCE

The Company operates primarily in a single business segment, namely financing activities. Accordingly, there are no separate reportable business segments as required under the applicable accounting standards.

REGULATORY ENVIRONMENT AND CHALLENGES

The NBFC sector continues to operate under an evolving regulatory framework prescribed by the Reserve Bank of India.

Key regulatory areas include:

Scale-Based Regulation

Implementation of RBIs Scale-Based Regulatory Framework has increased compliance expectations relating to governance, risk management, capital adequacy, and disclosures.

Fair Lending Practices

Enhanced focus on transparency, customer protection, and fair lending practices necessitates continuous strengthening of internal processes.

Data Privacy and Cyber Security

Increasing regulatory emphasis on information security and customer data protection requires ongoing investments in technology infrastructure.

Compliance and Governance

The Company continues to strengthen compliance mechanisms and governance standards to align with evolving regulatory requirements.

Despite increasing regulatory obligations, the Company views regulatory reforms as positive measures that enhance long-term sector stability and investor confidence.

OUTLOOK

Indias medium- to long-term economic outlook remains positive, supported by favorable demographics, increasing urbanization, infrastructure development, digital adoption, and rising financial inclusion.

The NBFC sector is expected to continue playing a vital role in meeting the financing needs of retail customers, MSMEs and underserved segments.

The Companys strategic priorities include:

• Expanding its lending portfolio prudently.

• Maintaining high asset quality.

• Strengthening risk management practices.

• Enhancing digital capabilities.

• Improving operational efficiency.

• Diversifying funding sources.

• Maintaining adequate liquidity and capital buffers.

• Delivering sustainable value to all stakeholders.

Management believes that these strategic initiatives will enable the Company to achieve sustainable growth while creating long-term value for stakeholders.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has established adequate internal control systems commensurate with the size and nature of its business. These systems provide reasonable assurance regarding:

• Effectiveness and efficiency of operations.

• Protection and safeguarding of assets.

• Compliance with applicable laws, regulations and RBI guidelines.

• Accuracy and reliability of financial reporting.

• Prevention and detection of frauds and errors.

• Risk identification and mitigation.

The internal audit function periodically evaluates the effectiveness of internal controls and submits its observations to the Audit Committee of the Board, which regularly reviews the adequacy of the internal control environment

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Companys financial performance during FY 2025-26 is discussed in detail in the Directors Report and the audited Financial Statements forming part of the Annual Report. The Companys operational performance reflects prudent lending practices, disciplined cost management and effective risk monitoring.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

HUMAN RESOURCES

The Company recognizes its employees as valuable assets and continues to focus on talent development, employee engagement, training, performance management, and fostering a culture of integrity, professionalism, and accountability.

As on March 31,2026, industrial relations remained cordial throughout the organization.

INDUSTRIAL RELATIONS

Companys Industrial relations continued to be healthy, cordial and harmonious during the period under review.

DETAILS OF SIGNIFICANT CHANGES IN THE KEY RATIOS AND RETURN ON NET WORTH

As per the amendment made under Schedule V to the Listing Regulations read with Regulation 34(3) of the Listing Regulations, details key financial ratios and any changes in return on net worth of the Company are given below:

Particulars	2025-26	2024-25	Change	Reason for Change
Debtors turnover ratio	N.A.	N.A.	N.A.	N.A.
Inventories turnover ratio	N.A.	N.A.	N.A.	N.A.
Interest coverage ratio	6.04	1.47	140.96%	Due to increase in profit during the year
Current ratio	1.15	2.55	253.85%	Due to increase in other payable during the year
Debt-Equity ratio	0.31	0.59	58.69%	Due to repayment of debt during the year
Operating profit margin (%)	60.41	23.30	2269.59%	Due to increase in turnover during the year
Net profit margin (%) or sector-specific equivalent ratio as applicable	37.68	5.76	538.32%	Due to increase in turnover during the year

DETAILS OF CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR

There is an increase of 71% in Return of Net Worth as compared to previous Financial Year due to increased turnover.

CAUTIONARY STATEMENT

This report contains forward-looking statements extracted from reports of Government Authorities / Bodies, Industry Associations etc. available on the public domain which may involve risks and uncertainties including, but not limited to, economic conditions, government policies, dependence on certain businesses and other factors. Actual results, performance or achievements could differ materially from those expressed or implied in such forward-looking statements. This report should be read in conjunction with the financial statements included herein and the notes thereto. The Company does not undertake to update these statements.