BNR Udyog Ltd Management Discussions

For the Financial Year 2025-2026 (April 1, 2025 - March 31,2026)

1. Overview

During the financial year 2025-26 under review, the Company incurred a loss and its performance remained below expectations due to challenging market conditions and increased operating costs. Management is taking appropriate measures to improve operational efficiency, control costs, and enhance business performance. The Company remains committed to achieving sustainable growth and improved results in the coming years.

2. Industry Structure and Developments

The Company operates in three business segments, namely Business Support Services, Financial Investments, and Real Estate. During the financial year 2025-26, all three segments faced challenging market conditions, which adversely impacted the overall performance of the Company.

The Business Support Services segment primarily caters to Government departments and public sector entities. The sector witnessed intense competition during the year, with aggressive pricing by market participants resulting in significant pressure on margins. Consequently, the Company was unable to secure certain contracts at commercially viable rates, affecting revenue generation from this segment.

The Real Estate sector in Telangana experienced a slowdown during the year due to subdued market sentiment, reduced transaction volumes, and cautious investor participation. These factors adversely affected the Companys real estate operations and limited opportunities for growth during the period.

The Financial Investments segment was impacted by volatility in the capital markets. As of 31 March 2026, the equity markets witnessed a significant decline, resulting in a substantial reduction in the fair value of the Companys investment portfolio. Accordingly, the Company recorded a comprehensive loss on account of mark-to-market valuation of its investments.

3. Opportunities and Threats

The Indian Governments National e-Governance Plan (NeGP) provides a long-term growth opportunity for companies engaged in IT and ITES. The ongoing digital transformation efforts across central and state governments continue to open up significant prospects in the e-governance domain.

Opportunities:

• Growth of digital governance initiatives

• Increased demand for remote working infrastructure and IT solutions

• Scope in public sector digitization for the next two decades

Threats:

• Changes in government policies or regulations

• Economic uncertainties and market volatility

• Project delays or payment issues from public sector clients

4. Segment-wise or Product-wise Performance

The Company has identified the following as primary reportable segments:

• IT & ITES

• E-Governance Projects

• Business Support Services

• Financial Investments

• Real Estate

5. Outlook

The Company remains focused on improving operational efficiency and exploring new opportunities across its business segments.

In the Business Support Services segment, management continues to pursue contracts that offer sustainable margins while maintaining a disciplined approach to bidding. In the Real Estate segment, the Company expects business activity to improve upon stabilization of market conditions in Telangana. In the Financial Investments segment, the Company remains confident in the long-term potential of its investment portfolio and will continue to monitor market developments closely.

While short-term challenges persist, the management believes that the Companys diversified business model and prudent investment approach will support future growth and value creation.

6. Risks and Concerns

The Company is exposed to various risks, including:

- Intense competition and pricing pressure in Government-related business support services.

- Cyclical fluctuations in the real estate market.

- Market risks arising from volatility in equity and financial markets.

- Changes in economic conditions, regulatory policies, and investor sentiment.

The management continuously monitors these risks and takes appropriate measures to mitigate their impact on the Companys operations and financial position.

7. Internal Control Systems and Their Adequacy

The Company has adequate internal control systems commensurate with the size and nature of its business. These controls are designed to ensure efficient operations, safeguarding of assets, compliance with applicable laws and regulations, and accuracy of financial reporting. The management periodically reviews the effectiveness of internal controls and implements necessary improvements wherever required.

8. Financial Performance

During the year under review, the Companys performance was affected by adverse conditions across all operating segments.

Business Support Services revenues were impacted due to the inability to obtain contracts at sustainable rates amidst intense competition.

The Real Estate segment continued to face challenging market conditions in Telangana, resulting in lower business activity.

The Financial Investments segment reported a decline in the fair value of investments owing to the correction in equity markets as on 31 March 2026.

The comprehensive loss reported during the year primarily reflects the fair valuation impact on the investment portfolio. However, the Company has not liquidated these investments and continues to hold them with a long-term perspective. Therefore, the decline represents an unrealized loss arising from market fluctuations as of the reporting date.

Particulars	FY 2025-26	FY 2024-25
Total Income	Rs167.82 Lakhs	Rs166.65 Lakhs
Net Profit/(Loss)	(Rs53.47 Lakhs)	(Rs54.84 Lakhs)

The significant decline in income and profitability is attributed to the steep fall in market value of shares and overall adverse economic conditions during the year.

9. Human Resources and Industrial Relations

There have been no material developments in human resources or industrial relations during the year.

Particulars	FY 2025-26	FY 2024-25
Staff	10	10
Workmen	--	--
Third Party	--	--
Total	10	10

10. Key Financial Ratios - Significant Changes

RATIOS:
Particulars	2025-26	2024-25	Remarks
Debtors Turnover	10.66	5.15	Due to speed up in the realization of trade receivables
Inventory Turnover	---	—
Interest Coverage Ratio	---	—
Current Ratio	21.42	19.43	Due to decrease in Non-Current Investments
Debt Equity Ratio	—	—
Operating Profit Margin (%)	-53%	-64%	Adverse market impact on share value
Net Profit Margin (%)	-40%	-35%	Substantial decline in investment returns
Change in Return on Net Worth (%)	0.00	-1.62	Results of losses due to market downturn

Note: Inventory Turnover, Interest Coverage Ratio, and Debt-Equity Ratio are not applicable or not material for reporting.

11. Disclosure of Accounting Treatment

During the preparation of Financial Statements for the FY 2025-26, the treatment as prescribed in the Accounting Standards have been followed by the Company.

There are significant changes in Accounting Treatment as followed by the Company in current financial year as compared to previous financial year except as stated hereunder.

The Company has reassessed the classification of certain equity investments previously presented under Non-Current Investments and measured at Fair Value Through Other Comprehensive Income (FVTOCI). Based on the revised assessment, it was determined that these investments are held for trading and, therefore, should be classified as Current Investments and measured at Fair Value through Profit or Loss (FVTPL), in accordance with the principles of Ind AS 109 Financial Instruments.

An investment in shares which was previously shown under Non-Current Investment is reclassified into current investments in the current financial year considering the nature of investments.

12. Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, or predictions may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to various factors including economic conditions, market developments, regulatory changes, and other risks beyond the Companys control.

DECLARATION ON CODE OF CONDUCT AS REQUIRED BY SCHEDULE V OF SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015

I, Kamal Narayan Rathi, Managing Director of BNR Udyog Limited ("the Company") hereby state and affirm Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 the members of board of directors and senior management personnel have affirmed compliance with the code of conduct of board of directors and senior management of the company during Financial Year 2025-2026.