Birla Capital & Financial Services Ltd Management Discussions

1. Industry Overview and Economic Environment

The financial services industry witnessed continued transformation in FY 2024?25, marked by increased adoption of digital lending, evolving regulatory frameworks, and a tightening monetary policy environment. Central banks across major economies raised interest rates to combat inflation, impacting credit demand and market liquidity. Despite these headwinds, credit offtake in India remained strong, particularly in the retail and SME segments, supported by government-led initiatives and improving consumption trends.

2. Company Overview and Strategic Direction

Birla Capital and Financial Services Limited to focus on the Debt Syndication and Investment Banking. Indian capital markets, one of the most dynamic and high growth organised markets in the world. We shall leverage our deep domain knowledge across sectors and products combined with vast experience of our core team in banking and merchant banking services to provide strategic advisory and capital markets solutions to diverse and marquee clientele which shall include corporates, financial sponsors, institutional investors and family offices.

3. Financial Performance

a. Revenue and Profitability

During the year company was not able to generate revenue. However, with better opportunity and foreseeing growth in Financial Industry, company proposes to develop an efficient business plan, which will enable Company to generate revenue in upcoming years.

b. Cost Efficiency

Company is achieving its efficiency gain through digitization and scale benefits, contributing to improved operating leverage.

4. Future Business Review

Company is in process for procuring Merchant Banking License, Once license is in place, company proposes to carry out following services:

a. Capital Raising - Helping companies raise funds through equity (IPO, FPO, private placements) or debt (bonds, debentures, loans).

b. Mergers & Acquisitions (M&A) - Advising clients on buying, selling, or merging businesses, including valuation, structuring, and negotiation.

c. Underwriting - Guaranteeing the sale of securities by purchasing them from the issuer and reselling to investors.

d. Sales & Trading - Assisting institutions and high-net-worth individuals in trading securities, derivatives, currencies, and commodities.

Other Services:

a, Advisory Services - Strategic advice on restructuring, expansion, divestment, or financial planning.

b. Research - Providing market insights, company analysis, and industry reports to guide investment decisions.

5. Liquidity and Capital Adequacy

Company is going lo maintain strong capital buffers, well above the regulatory requirement, ensuring ample headroom for future growth.

6. Risk Management

A comprehensive Enterprise Risk Management (ERM) framework is in place covering:

• Credit Risk: Strengthened credit scorecard models and real-time monitoring.

• Market Risk: Conservative ALM practices and interest rate hedging strategies.

• Operational Risk: Upgraded cyber risk protocols and system redundancy measures.

Company has implemented a new fraud detection engine using machine learning to monitor digital transactions in real time.

7. Technology and Innovation

Our digital transformation efforts were focused on:

• Launch of Al-powered chatbots for customer service.

• API integrations with fintech partners for credit scoring.

• Enhanced mobile app for loan tracking and document upload.

In coming years majority of services will be processed end-to-end digitally.

8. Future Outlook

Looking ahead to FY 2025-26, we expect steady demand for credit, continued adoption of digital financial services, and rising investor interest in wealth management products. Our focus will be on:

• Deepening our footprint in tier 2 and tier 3 markets.

• Launching co-lending models with fintech and NBFC partners.

• Strengthening ESG commitments, especially in responsible lending and governance.

9. Cautionary Statement

This MD&A contains forward-looking statements, which are based on current expectations, forecasts, and assumptions. Actual results may differ materially due to various factors including economic conditions, interest rate movements, regulatory changes, and competitive dynamics.