| 58 Annual Report | 2025-2026 INCOME STATEMENT ANALYSIS Revenue a) Break-up of Revenue for FY 2026 Revenue has de-grown marginally by 8% from FY 2025 to FY 2026 which was mainly due to de-growth in average AUM during the current financial year over the previous financial year. Expenditure Interest expenses have decreased by 17 % y-o-y while the outstanding borrowings have increased by 26% in FY 2026 over FY 2025. With the employee count decreasing from 10,252 in FY 2025 to 9,654 in FY 2026, employee costs marginally increased from INR 389 Cr in FY 2025 to INR 396 Cr in FY 2026 due to increased field incentive resulted from increased disbursement. The administrative costs have increased by 17% from the previous year in mainly due to provisions for CGFMU in line with increased disbursement. Ratios FY 2026 FY 2025 Variance Yield 22.57% 23.71% -4.81% Finance cost 10.59% 11.52% -8.07% Qualifying assets 66.22% 75.90% -12.75% Opex 9.02% 8.00% 12.75% CRAR 27.61% 34.09% -19.01% Leverage 2.73 2.32 17.67% BALANCE SHEET ANALYSIS a) Loan Portfolio Arohan had a 24% growth in the Gross Loan Portfolio from the previous year and stands at INR 7,426 Cr. b) Net Worth & Outstanding Borrowings: Outstanding borrowing has been decreased by 26% due de-growth in average AUM. Funding Business Growth - Industry Context and Macroeconomic Environment FY 2026 marked a period of strategic consolidation for the microfinance industry, once again demonstrating the sector’s inherent resilience. Following external macroeconomic headwinds, such as the general elections, extreme weather conditions, and instances of customer overleveraging, the preceding FY 2026 concluded with relatively higher delinquency and Non-Performing Asset (NPA) levels. In a proactive response to these challenges, the industry successfully implemented MFIN Guardrails 2.0 to restrict lending to delinquent and overleveraged borrowers. While this crucial intervention led to moderated disbursements and a 13% reduction in the industry’s Gross Portfolio (from INR 3.75 lakh Cr in FY 2025 to INR 3.25 lakh Cr in FY 2026), it significantly improved overall portfolio health. Consequently, institutional lending to NBFC-MFIs experienced initial caution, with overall outstanding microfinance borrowings decreasing from INR 1.00 Lakh Cr in March 2025 to INR 0.96 lakh Cr by September 2025. However, as portfolio quality rebounded post-Guardrails 2.0, lender confidence was restored. This resulted in renewed funding momentum from banks and financial institutions, driving total outstanding industry borrowing to INR 1.09 Lakh Cr by March 2026, supported largely by non-bank financial institutions and a higher reliance on securitization instruments. AROHAN’S FINANCIAL PERFORMANCE AND INTRINSIC RESILIENCE Despite the broader industry volatility, Arohan navigated the fiscal year with exceptional financial discipline. Validating our robust operational foundation, the Company maintained its credit rating for borrowing facilities at ICRA A (Stable). Arohan closed the year with a highly competitive Capital Adequacy Ratio (CAR) of Interest Income Fee Income Other Income 6% 93% 1% Net Worth INR in Crs 7000 5,900 2,158 2,025 4,704 6000 5000 4000 3000 2000 1000 0 Debt Outstanding Net Worth FY 2026 FY 2025 Gross Loan Por olio in INR Crs 8000 7000 6182 55 629 296 264 6000 5000 4000 3000 2000 1000 0 FY 2026 Term Loan Buyout Organic Sourcing & Collec on Off Book Management Discussion & Analysis
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