Fusion Microfinance Annual report 2025 Highlights

🧭 Key Industry Insights (from CEO & MD commentary)

❗ Microfinance Industry in FY25:

• The industry experienced severe stress and a credit downcycle in FY25.

• Gross Loan Portfolio (GLP) declined 13.9% YoY to ₹3.81 lakh crore.

• Disbursements fell 38% YoY to ₹71,500 crore as of March 2025.

• Delinquency remained high, especially in the PAR180+ bucket, but early delinquency (PAR1–30) showed improvement:

  • PAR1–30 dropped to 1.4% by March 2025 (from 2.1% in Sept 2024).

  • PAR31–180 dropped slightly to 6.2% by March 2025.

Key takeaway: The sector was hit hard by overleveraging and external shocks, but early signs of recovery were visible in Q4FY25.

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🏦 Fusion’s Response & Strategy

💡 Proactive Steps:

• Fusion was one of the first MFIs to acknowledge sectoral stress and initiate corrective actions ahead of peers.

• Introduced guardrails beyond MFIN standards:

  • Limited exposure to borrowers with more than two concurrent lenders.

  • Calibrated lending, enhanced credit policies, and stronger branch-level controls.

💼 Business Restructuring:

• AUM declined to ₹8,980 crore in FY25 (vs ₹11,476 crore in FY24) due to conservative lending.

• Total disbursements were ₹6,971 crore in FY25 (down from ₹10,294 crore in FY24).

• Gross NPAs peaked at 12.58% in Q3 but declined sharply to 7.92% by Q4.

• Net NPAs improved to 0.30%, indicating effective provisioning and clean-up.

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📉 Financial Snapshot (FY25):

Metric	Value
Total Income	₹2,369 crore
Pre-Provision Operating Profit	₹736 crore
Net Loss (FY25)	₹1,225 crore
Net Loss (Q4FY25)	₹165 crore
Credit Cost (Q4FY25)	₹253 crore (↓ from ₹571 crore in Q3)

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🔧 Key Operational Improvements

• Collection Efficiency (CE):

  • Rose to 98.44% in March 2025.

  • CE for loans issued under the new lending guardrails was 99.67%.

• Customer Quality:

  • Proportion of clients with >3 lenders reduced from 31% to 18%.

  • Increased focus on Fusion+0 and Fusion+1 customers (i.e., new or low-leverage clients).

• Tech-Driven Discipline:

  • Branch-level controls, analytics, and early warning systems played a strong role.

  • Increased digital repayment share from 7.4% to 18% during the year.

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🔮 Outlook & Management Tone

• MD (Devesh Sachdev): “Fusion remains resilient despite the storm. Rights issue and lender support amid covenant breaches reflect trust.”

• CEO (Sanjay Garyali): “The worst is behind us. We’ve stabilized operations and are shifting focus to profitability and digital transformation.”

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🧠 Summary for Investors:

Factor	Interpretation
Industry Stress	Real and widespread—but early signs of stabilization.
Fusion’s Strategy	Conservative, proactive, and tech-led.
Financial Health	Net loss but strong recovery trend by Q4.
Governance & Transparency	High—board-led capital raise, full disclosure of stress.
Management Quality	Transition managed smoothly; focused on continuity.

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