Amrapali Capital and Finance Services Ltd Management Discussions

Annexure - D

GLOBAL ECONOMIC VIEW

The global economy during the financial year 2024 25 experienced modest growth amidst a challenging and evolving macroeconomic landscape. Despite easing inflationary pressures and resilient consumer demand in advanced economies, the overall growth momentum slowed compared to the previous fiscal year. According to the United Nations Department of Economic and Social Affairs (UN DESA), global GDP growth decelerated to approximately 2.4% in 2025 from 2.9% in 2024, primarily due to persistent geopolitical tensions, supply chain disruptions, and weakened investment sentiment. The International Monetary Fund (IMF), in its World Economic Outlook update released in mid-2025, projected global growth to be slightly stronger at 3.3%, although still below the historical average of 3.7%. One of the defining features of FY 2024 25 was the continued disinflation across major economies. Global inflation fell to an estimated range of 4.0% to 4.2%, down from higher levels witnessed in the aftermath of the pandemic and energy price shocks. However, disinflation remained uneven across regions, with emerging markets still facing price instability due to currency volatility and food supply constraints. Central banks in most developed markets maintained a cautious stance, gradually easing interest rates while maintaining vigilance against inflation resurgence. International trade and investment trends were subdued during the year. Global trade volume growth, which stood at 3.4% in 2024, declined sharply to about 1.6% in 2025, as per UN estimates. This contraction was largely attributable to rising protectionism, tariffs, and regulatory divergences that dampened cross-border flows. Investment activity showed moderate gains, particularly in the Asia-Pacific region, though investor confidence remained tempered by global risk factors and higher cost of capital. Looking ahead to FY 2025 26, global economic activity is projected to recover at a measured pace. The IMF forecasts global GDP growth to improve slightly to around 3.0% to 3.1% in 2026, underpinned by anticipated policy support, stabilizing commodity prices, and improved investor sentiment. Inflation is expected to continue its downward trajectory, reaching levels closer to central bank targets by the end of the fiscal year. However, the outlook is far from assured. Trade tensions remain a significant downside risk, especially with the resurgence of tariffs and ongoing geopolitical instability. Fiscal constraints in many economies may also limit the ability of governments to stimulate growth, while debt sustainability concerns continue to weigh on emerging markets. In this context, the global economy enters FY 2025 26 with cautious optimism. While the trajectory of growth appears positive, the recovery remains fragile and uneven. Sustained progress will depend on effective policy coordination, structural reforms, and a stable geopolitical environment. The coming year is expected to test the adaptability of both advanced and developing economies as they navigate the balance between growth, stability, and long-term resilience.

OUTLOOK

The outlook for the global economy in the financial year 2025 26 remains cautiously optimistic, shaped by a mix of encouraging indicators and persistent structural challenges. Major international institutions, including the International Monetary Fund (IMF) and the World Bank, have maintained a moderate growth projection for the global economy, citing improved macroeconomic stability, falling inflation, and resilience in labor markets. However, the global recovery is expected to be uneven across regions and sectors, with emerging markets and low-income economies likely to lag behind due to limited fiscal space, elevated debt burdens, and vulnerabilities to external shocks. Advanced economies are expected to witness stable, albeit modest, growth during the year. With inflation gradually converging towards central bank targets, there is growing room for monetary easing, which could stimulate private investment and consumer demand. Fiscal policies are expected to remain generally neutral or mildly expansionary, depending on the country-specific context. The United States and parts of the Eurozone are forecasted to maintain steady momentum, supported by resilient domestic consumption and easing financial conditions. Meanwhile, Japan is likely to continue its slow recovery trajectory, as structural reforms and demographic constraints remain pressing concerns. Emerging and developing economies are projected to contribute significantly to global growth in FY 2025 26, led by

China, India, and Southeast Asia. Chinas economy is expected to stabilize following a period of structural adjustment and policy support aimed at stimulating domestic demand and restoring investor confidence. India, benefiting from robust domestic consumption and infrastructure-led investments, is poised to remain one of the fastest-growing major economies in the world. However, these economies are not without risks. Capital outflows, currency volatility, and exposure to commodity price fluctuations could temper the pace of expansion. Inflationary pressures are likely to continue easing globally, with commodity prices stabilizing and supply chains normalizing further. Nonetheless, the disinflationary trend may not be uniform. Some economies may still contend with persistent core inflation driven by labor market tightness or sector-specific supply constraints. The trajectory of inflation will remain a key determinant of monetary policy, especially in economies where interest rates have remained elevated for an extended period. Geopolitical risks, including ongoing conflicts and strategic tensions between major economies, continue to pose downside threats to the outlook. Disruptions to global trade, sanctions regimes, and fragmented supply chains have already altered the contours of globalization. In addition, climate-related risks and extreme weather events may further strain vulnerable economies, especially those dependent on agriculture and natural resources. In summary, the global economy in FY 2025 26 is expected to maintain a path of gradual recovery, with improved macroeconomic fundamentals offering a base for stability. However, the outlook remains subject to considerable uncertainty, and the pace of progress will depend largely on effective policy implementation, geopolitical developments, and the continued commitment of economies to structural reform and sustainable growth. Resilience, adaptability, and multilateral cooperation will be essential for translating this cautiously positive outlook into meaningful economic advancement.

INDIAN ECONOMIC REVIEW

Indias economic outlook for the financial year 2025 26 reflects a nuanced picture shaped by strong fundamentals, moderating momentum, and emerging external headwinds. According to a recent Reuters poll of economists, Indias GDP growth is estimated to have slowed to approximately 6.7% in Q1 FY2026, down from 7.4% in the preceding quarter. This moderation is linked to subdued industrial output, stalled private investment, and restrained consumer demand, despite offsetting measures such as elevated government capital expenditure and a 75 basis-point reduction in the RBIs repo rate. The poll suggests a further gradual slowdown, with growth projected to ease to 6.5% in the July September quarter and 6.2% by January March, culminating in a full-year average of about 6.3% the slowest growth in approximately five years. This softening is further reinforced by the Reserve Bank of India (RBI), which anticipates resilient momentum in Q1 supported by robust rural demand and the services sector. The RBIs own growth forecast for FY 2026 stands at

6.5%, aligning closely with consensus expectations.

International institutions offer a slightly more optimistic outlook. The International Monetary Fund (IMF) has revised its forecast upward, now projecting GDP growth of 6.4% for both FY2025 and FY2026, citing a more benign global environment, continued structural reforms, healthy domestic consumption, and strong public investment as supportive pillars. Fitch Ratings has also affirmed its forecast, maintaining Indias sovereign rating at ‘BBB and estimating GDP growth at 6.5% for FY26, reflecting sustained domestic demand even in the face of trade-related headwinds. However, the external environment poses significant risks. The recent imposition of 50% tariffs by the U.S. on a wide range of Indian exports spurred by geopolitical factors has raised concerns about export competitiveness. Analysts from Nomura suggest that these tariffs could shave 30 80 basis points off GDP growth this fiscal year, especially affecting labor-intensive sectors like textiles, gems, and marine products. Despite these challenges, structural measures implemented by the government such as elevated public spending, tax reforms, and policy incentives are expected to cushion the economy. Analysts note that these interventions could partially offset the negative impact of slowing consumption and weak private investment.

In summary, the outlook for Indias economy in FY 2025 26 remains cautiously optimistic. Growth is expected to moderate to between 6.3% and 6.5%, supported by resilient rural demand, sustained public investment, and domestic policy support. Nonetheless, the projections reflect mounting external risks, particularly from trade tensions, which could curb export growth and investor confidence. Indias continued trajectory will depend critically on effective policy calibration, acceleration of structural reforms, and global economic stability.

INDUSTRY STRUCTURE AND DEVELOPMENT

The financial services industry in India, particularly the segments related to capital markets, commodity trading, and non-banking financial intermediation, has undergone notable transformation over the past few years. The sector continues to evolve in response to regulatory changes, technological advancements, and shifting investor behaviour. The fiscal year 2024 25 witnessed significant developments that are expected to shape the operational and strategic direction of industry participants in the years ahead. The capital market ecosystem remained dynamic, with both institutional and retail participation expanding steadily. Retail investors, in particular, have emerged as a powerful force in equity and derivative markets, facilitated by low-cost digital broking platforms, simplified onboarding procedures, and widespread financial literacy initiatives. This shift has led to heightened competition among broking houses, pushing the industry towards further innovation, cost-efficiency, and value-added services. The growing prominence of algorithmic trading and automated risk management systems has further transformed the way trades are executed and monitored across segments. In the commodity derivatives market, the integration and regulation under the Securities and Exchange Board of India (SEBI) continued to bring greater transparency and efficiency. Commodity exchanges saw increased participation from corporate and hedging entities, especially in the agri-commodities, metals, and energy segments. The expansion of product offerings, such as options and index-based instruments, has allowed traders and hedgers to manage their risk exposures more effectively. However, the sector also experienced volatility, influenced by global commodity price fluctuations and supply chain dynamics, underscoring the need for prudent risk management and compliance frameworks. The margin funding and lending segment remained a key area of interest within financial intermediation. With increased investor appetite for leveraged positions in equity markets, lending for margin trading witnessed growth, albeit under the close scrutiny of regulators. SEBIs enhanced disclosure requirements and stricter client segregation norms have prompted broking and lending firms to bolster their operational frameworks, ensuring better governance and compliance. As interest rates moderated, the cost of capital reduced marginally, offering some relief to lenders operating in this space. Nonetheless, risk management practices remained central to sustaining growth in a highly sensitive and cyclical segment. Technology has continued to be a key enabler across all verticals of the financial services industry. The proliferation of artificial intelligence, predictive analytics, and cloud-based infrastructure has allowed firms to streamline operations, reduce turnaround times, and enhance client experiences. At the same time, this increasing reliance on digital infrastructure has necessitated heightened investments in cybersecurity and data protection, especially given the growing volume of sensitive financial information being processed and stored online. Regulatory oversight during the year remained robust and proactive. Both SEBI and the Reserve Bank of India continued to issue circulars and guidelines aimed at strengthening market integrity, enhancing investor protection, and ensuring systemic stability. This has resulted in a business environment that, while more compliant, also requires greater adaptability and investment in regulatory technology (RegTech) solutions by industry players.

In conclusion, the financial services industry in India, particularly the segments of broking, commodity trading, and margin-based lending, continues to present opportunities for sustained growth. However, firms operating in this space must remain agile and forward-looking, with a strong emphasis on compliance, risk management, and technological integration to remain competitive in an increasingly complex and regulated market landscape.

OPPORTUNITIES AND THREATS

The evolving landscape of Indias financial services sector, particularly within the realms of capital markets, commodity trading, and margin-based lending, presents a complex interplay of promising opportunities and emerging threats. As market participation broadens and regulatory frameworks mature, industry participants find themselves at a pivotal juncture where innovation, scale, and compliance converge to define future growth trajectories. One of the most significant opportunities arises from the deepening penetration of financial markets among retail investors. The increasing shift in household savings from traditional instruments towards market-linked products has created sustained demand for brokerage and investment facilitation services. This trend is further reinforced by growing financial literacy, the proliferation of low-cost trading platforms, and ease of access to capital markets through mobile and internet-based technologies. As participation increases not just in equities but also in derivatives and commodities, broking houses are well-positioned to leverage this expanding base through tailored products, advisory services, and technology-led execution models. In the commodity derivatives space, the formalisation and continued regulatory integration under SEBI have opened new avenues for growth. The expansion of the product universe to include commodity options, indices, and newer hedging instruments has enhanced the markets appeal to corporates, small and medium enterprises, and even sophisticated retail investors. This diversification has created opportunities for broking firms and trading members to strengthen their offerings and cater to more nuanced risk management needs. Margin funding, as a segment, continues to see demand from active traders and high-net-worth individuals seeking leveraged exposure to equity markets. With greater awareness of margin products and a stable interest rate regime, financial lending arms have an opportunity to scale operations, provided that risk metrics remain tightly controlled. Additionally, digital lending platforms and data-driven credit assessments have the potential to improve the speed and quality of lending decisions, thereby increasing both reach and profitability. Simultaneously, the regulatory push towards increased transparency, investor protection, and risk containment has encouraged firms to invest in governance and compliance infrastructure. While such measures may appear restrictive in the short term, they offer long-term reputational advantages and foster investor trust a critical currency in financial intermediation. However, the industry is not without its threats. The rising intensity of regulatory scrutiny, especially in areas such as margin reporting, client segregation, and financial disclosures, has led to increased compliance costs and reduced operational flexibility. Any lapses, even inadvertent, may attract significant penalties and reputational damage. This necessitates constant upgradation of internal controls, training, and reporting systems. Moreover, the broking and lending industries continue to face intense competition, particularly from low-cost digital-first players that operate on wafer-thin margins and rely heavily on technology to scale. This has compressed brokerage incomes and forced many mid-sized firms to rethink their business models or consolidate. Without differentiation in service quality, research capability, or technological edge, sustaining profitability can become increasingly challenging. The macroeconomic environment also poses systemic risks. Fluctuations in interest rates, currency volatility, and unexpected regulatory interventions particularly those affecting capital flows or tax policies can significantly impact investor sentiment and, by extension, trading and lending activity. Additionally, geopolitical tensions, global monetary policy shifts, and disruptions in commodity supply chains have a direct bearing on market dynamics, thereby affecting revenue predictability in commodity and equity-linked businesses.

Lastly, cyber threats and data privacy concerns have emerged as material risks, especially as more transactions and customer interactions shift to digital platforms. Ensuring cybersecurity readiness is no longer optional but fundamental to maintaining business continuity and client confidence. In summary, the financial services sector remains fertile with growth potential, particularly for firms that are agile, well-governed, and technologically forward. However, realising these opportunities requires a conscious and strategic effort to navigate the rising tide of regulatory expectations, competitive pressures, and systemic uncertainties.

RISK AND CONCERN

The financial services sector, by its very nature, operates within a dynamic environment characterised by volatility, regulatory stringency, and market sensitivity. For entities engaged in capital market broking, commodity trading, and margin-based financial lending, risk is not merely incidental but intrinsic to the business model. Recognising, anticipating, and mitigating these risks is therefore critical to ensuring long-term sustainability and stakeholder confidence. One of the principal risks facing the company arises from market volatility. Fluctuations in equity indices, commodity prices, interest rates, and exchange rates can have a direct bearing on trading volumes, investor behaviour, and overall market sentiment. During periods of heightened uncertainty or macroeconomic instability, client activity typically contracts, affecting revenue from brokerage, margin lending, and transaction facilitation. Additionally, abrupt price movements can expose both the company and its clients to mark-to-market losses, thereby increasing credit risk and operational stress. Another area of concern is the credit risk associated with margin funding. While margin-based lending remains a lucrative product line, it exposes the company to the risk of client default, particularly during adverse market conditions. A sudden decline in the value of pledged securities can result in under-collateralisation, forcing the company to liquidate positions or absorb losses. Although rigorous internal credit assessment protocols and exposure limits are in place, the inherently leveraged nature of such lending warrants constant vigilance. Regulatory compliance risk is increasingly significant, particularly given the evolving and complex nature of the framework governing financial intermediaries. The company operates under the purview of various regulatory bodies, including SEBI, stock exchanges, and financial intelligence units. Non-compliance with prescribed norms such as those relating to client asset segregation, disclosure requirements, margin reporting, or anti-money laundering can invite substantial penalties, suspensions, or reputational damage. The increasing volume and pace of regulatory changes also present the risk of non-alignment or delayed implementation.

Operational risk, particularly from technological disruptions, continues to demand attention. As the companys operations become increasingly digital, the risk of cyberattacks, data breaches, and system downtimes has grown substantially. Any lapse in data protection or transactional security could compromise client trust and regulatory standing. Moreover, operational bottlenecks whether in clearing and settlement, margin management, or client servicing can impact efficiency, regulatory compliance, and profitability. Liquidity risk is another area that warrants careful monitoring. In times of market stress or economic downturns, the ability to access funds to meet margin calls, client withdrawals, or clearing obligations can be tested. The reliance on external borrowings or short-term funding sources amplifies this risk if not managed within prudent thresholds. Ensuring a stable and diversified funding base, alongside strong treasury controls, remains essential. Competitive risk also looms large, particularly with the entry of agile, tech-driven fintech platforms that offer low-cost, self-directed investment solutions. This has led to significant margin compression in the broking industry. The commoditisation of services and the growing preference for do-it-yourself investment tools present a threat to traditional broking models that rely on research, advisory, or margin-linked income.

Additionally, reputational risk remains a pervasive and often interconnected concern. A single compliance breach, system failure, or unresolved client grievance can significantly undermine stakeholder trust and brand equity. In a highly regulated and public-facing sector, reputation is both an asset and a vulnerability. In light of these challenges, the company has instituted a robust risk management framework that encompasses financial, operational, compliance, and strategic dimensions. Periodic audits, stress testing, scenario analysis, and real-time monitoring tools are employed to identify and mitigate emerging risks. The Board and management remain committed to fostering a risk-aware culture that balances opportunity with prudence, ensuring the companys continued resilience and integrity in a competitive and complex environment.

INTERNAL FINANCIAL CONTROL SYSTEMS

The company places paramount importance on establishing and maintaining a robust system of internal controls, designed to safeguard its assets, ensure accuracy and reliability in financial reporting, and promote operational efficiency. Given the complexities inherent in the financial services industry, especially in the domains of broking, commodity trading, and margin lending, these controls are critical to mitigating risks and complying with the stringent regulatory framework. The internal control framework is structured around comprehensive policies and procedures that cover all key operational areas including trade execution, client onboarding, margin financing, settlements, risk management, and compliance monitoring. These controls are periodically reviewed and updated to keep pace with regulatory changes, emerging risks, and evolving business needs. The company has implemented automated systems and software applications that facilitate real-time monitoring of transactions, margin requirements, and exposure limits, thereby enabling swift identification of anomalies and prompt corrective actions. These technological solutions are complemented by well-defined authorization protocols, segregation of duties, and physical safeguards, which collectively enhance the integrity and security of the companys operations.

An independent internal audit function plays a vital role in periodically assessing the effectiveness of internal controls. The internal audit team conducts regular audits across various departments and functions, evaluates compliance with internal policies and regulatory requirements, and recommends improvements wherever necessary. Audit findings are reviewed by the Audit Committee of the Board, which oversees the implementation of corrective measures and ensures accountability at all levels. In addition, the company invests significantly in training and capacity building to ensure that employees at all levels are aware of internal control policies and best practices. Continuous education and awareness programs are conducted to foster a culture of compliance and risk awareness, which is essential in a rapidly changing regulatory and business environment.

Overall, the internal control systems in place are deemed adequate and effective for the companys current scale and complexity of operations. The management remains committed to continuously strengthening these controls to enhance operational resilience, protect stakeholder interests, and uphold the highest standards of governance and transparency.

FINANCIAL HIGHLIGHTS

(in Lakhs)

HUMAN RESOURCE POLICY

The company acknowledges that its greatest asset is its people. In a sector as dynamic and fast-paced as financial services, especially in areas such as commodity trading, share broking, and margin lending, attracting, developing, and retaining talent is critical to sustaining competitive advantage and delivering superior client service. During the financial year 2024 25, the company continued to focus on building a skilled, motivated, and agile workforce capable of meeting the evolving demands of the industry. Efforts were made to foster a collaborative and inclusive work environment that encourages innovation, accountability, and professional growth. Regular training programs, workshops, and certification courses were organized to enhance employees technical expertise, regulatory awareness, and soft skills, enabling them to stay ahead in a highly regulated and technology-driven environment.

Talent acquisition remained aligned with the companys strategic objectives, focusing on bringing in specialists with expertise in risk management, compliance, technology, and client relationship management. The company also prioritizes internal talent development, promoting meritocracy and providing clear career progression pathways to nurture leadership from within. Employee engagement initiatives were undertaken to strengthen organizational culture, enhance job satisfaction, and promote well-being. Transparent communication, recognition programs, and feedback mechanisms have been institutionalized to create an environment where employees feel valued and motivated to contribute their best. In the face of growing competition for skilled professionals in the financial services industry, the company remains committed to retaining its talent pool through competitive compensation frameworks, performance-linked incentives, and a strong emphasis on work-life balance. These efforts contribute not only to operational excellence but also to building a resilient organization capable of adapting to future challenges. The management expresses its sincere appreciation for the dedication and professionalism demonstrated by all employees, whose collective efforts underpin the companys success and growth.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR

CAUTIONARY NOTE

Statements in this Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results may be different from those expressed or implied since the Companys operations are affected by many external and internal factors, which are beyond the control of the management. Hence the Company assumes no responsibility in respect of forward looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.