Ashima Ltd Management Discussions

Economic Overview and Outlook Global Economy

FY 2025–26 was marked by a sharp reconfiguration of global trade. The United States introduced sweeping tariff measures in early 2025, prompting retaliatory responses from major trading partners and accelerating the fragmentation of established supply chains. Multilateral institutions, including the IMF, revised global growth forecasts downward, reflecting heightened policy uncertainty. Further, geopolitical conflicts have played a disruptive role almost across the world, disturbing global trades. Against this backdrop, AI-driven capital expenditure surged globally, reshaping technology investment patterns and productivity outlooks, while clean energy transitions attracted sustained institutional capital.

India has navigated well in the times of global stress and more importantly, adverse factors like the US tariffs. It has managed to continue its position as one of the worlds most dynamic and largest growing major economies. Retail inflation — particularly food prices — receded from elevated levels of the prior year, supporting purchasing power. Meaningful personal income tax relief and rationalisation of GST rates provided impetus to consumption. Manufacturing output stayed positive, bolstered by Production-Linked Incentive policy. Continued policy focus on several key sectors including renewable energy sector and manufacturing of complex electronic chips will help the country in its march towards sustainable growth and self-reliance.

The operational performance of the company was subdued during the year on account of lower profitability of both Real Estate Division and Investment Division.

With the closure of cotton textile operations during the previous year, its performance is presented as "discontinued operations" as per requirements of IND AS 105. Performance analysis for Real Estate and Investment segments during the year is presented as follows:

The Division is currently advancing two active projects — "Swan Lake", a plotted development project, and "The Sovereign", a premium high-rise residential apartment project. Both projects continue to see steady momentum in their construction and development phases. During the year, the Division recorded revenue of J 566 lacs.

The investment portfolio of the Company is managed by its wholly owned subsidiary, Ashima Capital Management Limited (ACML), as part of its Portfolio Management Services (PMS). ACML is registered with SEBI as a PMS entity.

Performance of the Division was affected due to volatile and sluggish stock market during the year. The Division has reported a profit of J 61 lacs compared to J 389 lacs in the previous year. The division has outperformed the benchmark indices in terms of TWRR over time. The performance for the year in terms of TWRR was at 5.66% compared to -3.12% of the benchmark and it was 17.68% from the date of transition to PMS, compared to 3.67% of the benchmark.

ACML follows the philosophy of value investment, with investments being made in equity shares with a long-term perspective. As per accounting norms, periodic performance is reported based on realised profits and incomes as well as market value of shares held at the end of the period.

The Company has reported a loss of J 2164 lacs for the year, which shows a decline in performance compared to a loss of J 1888 lacs for the previous year. The amount of reported profitability is after considering a negative impact of J 479 lacs on account of deferred tax asset for the year under review, compared to positive amount (credit) of J 1486 lacs in the previous year.

Operational performance of Real Estate business declined compared to the previous year. Salary cost of the Division went up, as it strengthened the team to keep pace with faster execution of both the projects. Also, its interest income on deployment of surplus funds was on the lower side, since it deployed funds in projects during the year. As regards Investment Division, its performance was affected by volatile and sluggish stock market.

Significant changes in financial ratios and explanations thereon are appearing at note no. 48 to the Financial Statements.

The Company expects its Real Estate business to witness sustained growth in the coming years, supported by significant opportunities across various market segments in Ahmedabad. The city has demonstrated consistent expansion in the real estate sector over the past several years, and the Company believes that this positive growth trajectory is likely to continue. As regards its Investment Division, the PMS in which the Company has invested is managed by its wholly owned subsidiary. There is a time tasted strategy in place, which is likely to continue performing well in the time to come.

The Real Estate sector continues to offer sound long term growth opportunities for the Company in the years to come. With respect to its Investment Division, the Company believes that the expanding economy and strong performance of corporates are expected to continue creating attractive investment opportunities with the potential to generate healthy returns over the long term.

The Real Estate business does not face any major threats, considering the region and sectors that the Company operates in. However, rising land and construction costs may exert upward pressure on overall property costs, which could adversely impact demand of properties as well as profit margins.

The Company has established a robust and dynamic risk management framework that enables timely identification, assessment, and monitoring of potential risks. This structured approach assists the management in implementing appropriate and effective mitigation measures in a proactive and timely manner.

Over the years, the Company has established sound internal control systems commensurate with the size and nature of its business activities, ensuring that the interests of the Company are adequately safeguarded. The Board of Directors and Audit Committee are responsible for ensuring that the internal control systems laid down by the Company are appropriate, compliant with regulatory requirements and are operating effectively, for which they review the same at regular intervals.

Human resources constitute the cornerstone of the Companys long-term success and sustainable growth. Recognising employees as its valuable asset, the Company remains committed to fostering a safe, secure, and conducive work environment that promotes professional development, employee well-being, and operational excellence. This continued focus enables the Company to attract, nurture, and retain high-quality talent essential for achieving its strategic objectives and enhancing overall organizational performance. As of March 31, 2026, the Company had 52 permanent employees on its roll.

Statements of Management Discussion and Analysis Report hereinabove contain certain forward-looking objectives, based on various assumptions on the Companys present and future business strategies and the environment in which we operate. Actual results may differ substantially or materially from those expressed or implied due to risk and uncertainties. The operations of the Company could be influenced by various factors such as domestic and global demand and supply conditions affecting sales volumes and selling prices of finished goods, input availability and cost, new regulations and Government policies, Tax Laws within the country and other factors like litigation and industrial relations of the Company.