Financial Performance Highlights
Northern Arc Capital Limited reported its highest-ever annual performance for FY 2025-26, achieving a Profit After Tax of ₹406 crore, representing 33% YoY growth. Assets Under Management reached ₹16,594 crore with 22% YoY growth, driven by strong Direct-to-Customer lending portfolio growth to 59% of total AUM at ₹9,792 crore. The company maintained robust asset quality with Net NPAs at 0.6%, Return on Assets at 2.8%, and credit costs reduced by 42 bps to 2.8%. Capital adequacy remained strong at 22.56% with gearing ratio increasing to 3.08 from 2.78.
Corporate Governance and AGM Matters
The company issued notice for its 18th Annual General Meeting scheduled for August 18, 2026, to be conducted through video conferencing. Key agenda items include adoption of financial statements, appointment of Mr. Vijay Nallan Chakravarthi as director, appointment of M/s. R. Subramaniyan and Company LLP as Joint Statutory Auditors, creation of charges for borrowings up to ₹17,000 crores, issuance of NCDs up to ₹5,000 crores, and revision in remuneration for key management personnel.
MD & CEO Ashish Mehrotra received total remuneration of ₹10.66 crore, including a ₹2.10 crore special discretionary payout requiring shareholder ratification. The board established a comprehensive ESG Committee with broad oversight responsibilities including ESG strategy, green bond monitoring, and impact measurement aligned with Sustainable Development Goals.
Risk Management and Financial Disclosures
The company maintained extensive risk management frameworks covering credit, liquidity, and market risks. Gross loans stood at ₹12.80 lakh crore with ECL provisions of ₹31,115 lakhs. Level 3 financial assets totaled ₹6.29 lakh crore while derivatives amounted to ₹21.84 lakh crore. Borrowings included term loans, debt securities, and securitization liabilities totaling ₹12.25 lakh crore, all secured against standard receivables with interest rates ranging from 6.25% to 11.50%.
Auditors provided an unmodified opinion with emphasis on ECL calculation changes incorporating Default Loss Guarantee benefits per RBI amendment. The company reported no regulatory penalties during FY26 and maintained ICRA AA- (Stable) and IND AA-/Stable ratings throughout the year.
Business Segment Performance and Technology
Direct-to-Customer lending showed strong growth across segments: MSME Finance AUM grew 43% YoY to ₹3,691 crore, Consumer Finance AUM grew 50% YoY to ₹5,092 crore serving 24 lakh customers, and Rural Finance AUM reached ₹1,009 crore with 99.6% collection efficiency. The company operated through 432 branches and 57 digital partners, leveraging technology platforms including nPOS processing 15,000-20,000 loans daily, NuScore analytics platform, and Altifi retail bond platform with 95,000+ registered investors.
Subsidiaries performed well with Northern Arc Investment Managers maintaining AUM of ₹3,092 crore across AIFs and PMS, while Pragati Finserv served 3.59 lakh microfinance clients with AUM of ₹1,166 crore. The company received an outstanding ICRA ESG rating of 81 and reported impacting 140 million lives across 680 districts.