Dhruva Capital Services Ltd Management Discussions

FY 2025 represents the fiscal year 2024-25, from 1 April 2024 to 31 March 2025, and analogously for FY 2025 and previously such labelled years.

GLOBAL ECONOMY

The global economy is holding steady, although the degree of grip varies widely across countries. Global GDP growth in the third quarter of 2024 was 0.1 percentage point below that predicted in the October 2024 WEO, after disappointing data releases in some Asian and European economies. Growth in China, at 4.7 percent in year-over-year terms, was below expectations. Faster-than-expected net export growth only partly offset a faster- than-expected slowdown in consumption amid delayed stabilization in the property market and persistently low consumer confidence. Growth in India also slowed more than expected, led by a sharper-than-expected deceleration in industrial activity. Growth continued to be subdued in the euro area (with Germanys performance lagging that of other euro area countries), largely reflecting continued weakness in manufacturing and goods exports even as consumption picked up in line with the recovery in real incomes. In Japan, output contracted mildly owing to temporary supply disruptions. By contrast, momentum in the United States remained robust, with the economy expanding at a rate of 2.7 percent in year-over-year terms in the third quarter, powered by strong consumption.

Where inflation is proving more sticky, central banks are moving more cautiously in the easing cycle while keeping a close eye on activity and labour market indicators as well as exchange rate movements. A few central banks are raising rates, marking a point of divergence in monetary policy.

Global financial conditions remain largely accommodative, again with some differentiation across jurisdictions (see box below) Equities in advanced economies have rallied on expectations of more business friendly policies in the United States. In emerging market and developing economies, equity valuations have been more subdued, and a broad-based strengthening of the US dollar, driven primarily by expectations of new tariffs and higher interest rates in the United States, has kept financial conditions tighter.

Economic policy uncertainty has increased sharply, especially on the trade and fiscal fronts, with some differentiation across countries (see box below). Expectations of policy shifts under newly elected governments in 2024 have shaped financial market pricing in recent months. Bouts of political instability in some Asian and European countries have rattled markets and injected additional uncertainty regarding stalled progress on fiscal and structural policies. Geopolitical tensions, including those in the Middle East, and global trade frictions remain elevated.

The Outlook

Energy commodity prices are expected to decline by 2.6 percent in 2025, more than assumed in October. This reflects a decline in oil prices driven by weak Chinese demand and strong supply from countries outside of OPEC+ (Organization of the Petroleum Exporting Countries plus selected non-member countries, including Russia), partly offset by increases in gas prices as a result of colder-than-expected weather and supply disruptions, including the ongoing conflict in the Middle East and outages in gas fields. Nonfuel commodity prices are expected to increase by 2.5 percent in 2025, on account of upward revisions to food and beverage prices relative to the October 2024 WEO, driven by bad weather affecting large producers. Monetary policy rates of major central banks are expected to continue to decline, though at different paces, reflecting variations in growth and inflation outlooks. The fiscal policy stance is expected to tighten during 2025-26 in advanced economies including the United States and, to a lesser extent, in emerging market and developing economies.

Global growth is expected to remain stable, albeit lacklustre. At 3.3 percent in both 2025 and 2026, the forecasts for growth are below the historical (2000-19) average of 3.7 percent and broadly unchanged from October. The overall picture, however, hides divergent paths across economies and a precarious global growth profile (see the box below). Among advanced economies, growth forecast revisions go in different directions. In the United States, underlying demand remains robust, reflecting strong wealth effects, a less restrictive monetary policy stance, and supportive financial conditions. Growth is projected to be at 2.7 percent in 2025. This is 0.5 percentage point higher than the October forecast, in part reflecting carryover from 2024 as well as robust labour markets and accelerating investment, among other signs of strength. Growth is expected to taper to potential in 2026.

In the euro area, growth is expected to pick up but at a more gradual pace than anticipated in October, with geopolitical tensions continuing to weigh on sentiment. Weaker-than-expected momentum at the end of 2024, especially in manufacturing, and heightened political and policy uncertainty explain a downward revision of 0.2 percentage point to 1.0 percent in 2025. In 2026, growth is set to rise to 1.4 percent, helped by stronger domestic demand, as financial conditions loosen, confidence improves, and uncertainty recedes somewhat.

In other advanced economies, two offsetting forces keep growth forecasts relatively stable. On the one hand, recovering real incomes are expected to support the cyclical recovery in consumption. On the other hand, trade headwinds—including the sharp uptick in trade policy uncertainty— are expected to keep investment subdued.

Source: World Economic Outlook, Update Growth: Divergent and Uncertain, International Monetary Fund

OVERVIEW OF THE INDIAN ECONOMY

India is poised to lead the global economy once again, with the International Monetary Fund (IMF) projecting it to remain the fastest growing major economy over the next two years. According to the April 2025 edition of the IMFs World Economic Outlook, Indias economy is expected to grow by 6.2 per cent in 2025 and 6.3 per cent in 2026, maintaining a solid lead over global and regional peers.

The April 2025 edition of the WEO shows a downward revision in the 2025 forecast compared to the January 2025 update, reflecting the impact of heightened global trade tensions and growing uncertainty Despite this slight moderation, the overall outlook remains strong. This consistency signals not only the strength of Indias macroeconomic fundamentals but also its capacity to sustain momentum in a complex international environment. As the IMF reaffirms Indias economic resilience, the countrys role as a key driver of global growth continues to gain prominence.

(Source: India: Fastest-Growing Major Economy, Ministry of Finance, Posted On: 23 APR 2025 4:40PM by PIB Delhi)

The recent GDP growth figures of 5.4% year over yearl for the second quarter of fiscal year 2024 to 2025 probably caught markets off guard (it was significantly below the Reserve Bank of Indias projection of 6.8%). Slower growth in the first half of the fiscal (6%) led the RBI to bring down the annual projection to 6.6% (down from an earlier projection of 7%). However, its essential not to let the headline numbers overshadow the nuanced story beneath: GDP is just one lens to evaluate economic health, and this quarter reveals resilience in certain pockets that are worth noting.

Rural consumption has remained robust, supported by strong agricultural performance, while the services sector continues to be a key driver of growth. Manufacturing exports, particularly in high-value-added components (such as electronics, semiconductors, and pharmaceuticals), have displayed strength, underscoring Indias growing role in global value chains. We believe the slow growth in the secondary sector3 is temporary (due to disruptions caused by monsoons).

Deloitte has revised its annual GDP growth projection for India to between 6.5% and 6.8% in this fiscal year, and between 6.7% and 7.3% in the following one. A tempered global growth outlook and a delayed synchronized recovery in the industrial economies amid changing trade and policy regulations—compared to what was previously expected—will likely weigh on Indias exports and outlook for the next fiscal year. India will have to adapt to the evolving global landscape and harness its domestic strengths to drive sustainable growth.

Decoding the slowdown in the second quarter

On the expenditure side, the slowdown in investments and exports were key factors weighing on the economy. Gross fixed capital formation (GFCF), a key driver of economic growth, slowed down to 5.4%. This was partly due to slower government capex utilization, which was at 37.3% in the first half of this year, lower than last years 49%.

Geopolitical uncertainties and disruptions in global supply chains, particularly in the Red Sea region, continued to weigh on exports. Petroleum product exports experienced a consistent decline across all three months of the quarter, averaging an approximate 30% contraction. As a result, total export growth slowed to 2.8%. At the same time, imports were higher due to a rise in oil and gold imports.

On the production side, gross value added grew by 5.6% in the second quarter, down from 6.8% in the previous one, primarily due to poor performance in the secondary sector. The slowdown in the industrial sector was somewhat expected as the index of industrial production showed signs of slowing across multiple sectors, particularly in mining and electricity. Mining contracted by 0.1%, while electricity and other utilities grew by just 3.3% (a sharp decline from the previous quarters 10.4%). The construction sector grew 7.7%—its lowest since the last quarter of fiscal 2021 to 2022. Growth in manufacturing was modest, at 2.2% (down from 7%).

We believe these sectoral declines are temporary due to monsoon-driven disruptions (8% above-normal rainfall)4 and restrictive spending during elections. What is concerning is we also suspect the possibility of higher dumping from neighboring countries. Imports of goods such as plastics, organic chemicals, iron and steel products, machinery, and electronic components have seen a sharp jump in recent months and pose a significant threat in the months ahead amid restrictive trade regulations in industrialized nations.

Amid this growth slowdown, there were a few emerging trends that pointed to inert resilience.

• Robust rural consumption: Agricultural growth hit a five-quarter high of 3.5%, aided by a strong monsoon season. Indicators like rising sales of fast-moving consumer goods and declining numbers of jobs demanded through the Mahatma Gandhi National Rural Employment Guarantee Act (more commonly, MGNREGA) confirm strength in rural demand. With healthy kharif5 harvests and improved rabi sowing, rural consumption is expected to remain strong, further boosted by festive season spending.6

• Strong services sector growth: Services grew by 7.2%, driven by public administration and defense (9.1%) and finance, insurance, and real estate (7.2%). Services exports surged 21.3%. Between April and October 2024, total services exports stood at US$216 billion, compared to US$192 billion in 2023. This growth is crucial given the sectors significant contribution to Indias GDP and employment, specifically for the urban middle-income population.

• High-value manufacturing exports: Exports of electronics, engineering goods, and chemicals have grown significantly, now comprising 31% of total merchandise exports. Given that micro, small, and medium enterprises are significant contributors to manufacturing supply chains and exports, rising performance of these enterprises points to healthy growth in this export segment.

• Controlled fiscal deficit: The fiscal deficit stood at 4.4% of GDP in the second quarter of this fiscal year, accounting for 29.4% of the budget estimate, and standing 10% lower than last year. This gives government some room to ramp up spending to boost demand. With lower capital expenditure in the first half of this fiscal year, the government is poised to ramp up spending in the coming half, supporting demand and crowding in private investments. A significant uptick in government spending is expected in the second half of this fiscal year to meet budgetary targets, which may provide additional support to the economy and boost investment by crowding in private investments.

Indias near-term outlook

We now expect India to grow between 6.5% and 6.8% in fiscal year 2024 to 2025, in our baseline scenario. Although admittedly lower than previously estimated, because of a slower first half of the year, we expect strong domestic demand in the second half, driven by a significant uptick in government spending).

This will be followed by growth between 6.7% and 7.3% in fiscal year 2025 to 2026, with significant downside risks (hence a wider range; figure 1). Indias growth projections in the subsequent year will likely be tied to broader global trends, including rising geopolitical uncertainties and a delayed synchronous recovery in the West than anticipated. Disruptions to global trade and supply chain due to intensifying geopolitical uncertainties will also affect demand for exports.

(Source: https://www2.deloitte.com/us/en/insights/economy/asia-paciJic/india-economic-outlook.html)

INDIAS GROWTH IN GLOBAL CONTEXT

India is projected to remain the fastest-growing large economy for 2025 and 2026, reaffirming its dominance in the global economic landscape. The countrys economy is expected to expand by 6.2 per cent in 2025 and 6.3 per cent in 2026, outpacing many of its global counterparts. In contrast, the IMF projects global economic

growth to be much lower, at 2.8 per cent in 2025 and 3.0 per cent in 2026, highlighting Indias exceptional outperformance.

The IMF has also revised its growth estimates for other major global economies. Chinas GDP growth forecast for 2025 has been downgraded to 4.0 per cent, down from 4.6 per cent in the January 2025 edition of the World Economic Outlook. Similarly, the United States is expected to see a slowdown, with its growth revised downward by 90 basis points to 1.8 per cent. Despite these revisions, Indias robust growth trajectory continues to set it apart on the global stage.

(Source: India: Fastest-Growing Major Economy, Ministry of Finance, Posted On: 23 APR 2025 4:40PM by PIB Delhi)

INDUSTRY OVERVIEW

THE NON-NBANKING FINANCE SECTOR

The banking system in India, evolved over several decades, is well established and has been serving the credit and banking needs of the economy. The major role of banks is to intermediate resources from the depositor to the lender for their mutual benefit while allocating them in an efficient manner, thereby contributing to economic growth through enhanced efficiency in usage of resources. There are multiple layers in todays banking structure to cater to the specific and varied requirements of different customers and borrowers. The banking ecosystem is providing impetus to economic growth and development of the country and catering to the specific and varied financial requirements of different customers and borrowers.

The structure of the banking system of India can be broadly divided into scheduled banks, non-scheduled banks and development banks. Banks that are included in the second schedule of the Reserve Bank of India Act, 1934 are considered to be scheduled banks. Presently, 135 scheduled commercial banks are providing banking services in India. In addition, co-operative banks and local area banks are also providing banking services in various segments in different locations of the country. For the purpose of lending to specific sectors / segments, around 9,306 Non-Banking Financial Companies (registered with RBI as on 30.6.2024) and 5 All India Financial Institutions are also catering the needs of the borrowers.

Non-Banking Financial Corporations (NBFCs) have emerged as the primary source of financing for a vast section of the population including small and medium-scale enterprises as well as the economically unserved and underserved individuals. They have been able to meet the diverse requirements of borrowers in the most efficient and timely approach considering their wide geographic reach, comprehension of the numerous financial needs of people, and extremely swift turnarounds. Therefore, non-bank lenders have contributed significantly to the cause of financial inclusion in this process and have also been a key component in fostering the expansion of millions of MSMEs and self-employed people.

Key Features of the Sector in 2025

Feature	Details
Growth Rate	CAGR of 15-18% in leading economies
Primary Focus Areas	MSMEs, retail loans, personal finance, vehicle finance, housing
Top Segments	NBFC-Investment & Credit Companies (NBFC-ICCs), NBFC-MFIs, NBFC-HFCs
Funding Sources	Bank borrowings, market instruments (NCDs, CPs), securitization
Regulator (India)	Reserve Bank of India (RBI) under the Scale-Based Regulation (SBR) framework

Market Outlook (2025-2030)

• NBFCs will continue to be vital credit enablers, especially in rural and semi-urban regions.

• Sector expected to grow in synergy with fintech platforms.

• Increasing consolidation expected as smaller NBFCs merge or exit under compliance pressure.

• Focus shifting towards data-driven risk management and customer-centric digital ecosystems.

Challenges

• Liquidity Management: Many NBFCs face challenges in securing stable, long-term funding.

• Asset Quality Pressure: Especially in unsecured lending and MSME-focused portfolios.

• Regulatory Compliance: Adhering to capital adequacy and governance norms.

• Competition: From fintechs, digital banks, and payment platforms.

MARKET SIZE

A new report by Mavenark Advisors suggests that Non-Banking Financial Companies (NBFCs) are expanding faster than Indias overall economic growth. From FY19 to FY24, credit growth by NBFCs is estimated to have grown by a compounded annual growth rate (CAGR) of 12%. Their assets under management (AUM) have significantly increased from less than Rs. 2,00,000 crore (US$ 23.74 billion) around the year 2000 to Rs. 43,00,000 crore (US$ 510.39 billion) by the end of FY24. This trend is expected to continue in FY25, supported by a rapid revival in the Indian economy and rising consumer demand. Unlike banks, which primarily focus on wholesale lending to large corporates, services, and agriculture sectors, NBFCs have entered retail lending, with 48% of their total credit going to the retail segment, compared to only 34% of total bank credit in FY24.

NBFCs have played a crucial role in driving financial inclusion in India. With strong grassroots connections, they cater to people in rural and semi-urban areas who are either unbanked or underbanked. They also lend to those without formal credit histories, such as workers in the informal sector. This focus on individual borrowers, especially those from low-income or riskier profiles, makes them an important part of the countrys financial ecosystem. The report suggests that NBFCs will continue to grow rapidly, playing a critical role in bridging financial access gaps across the country and supporting the governments broader financial inclusion goals.

The credit growth of the non-banking financial companies (NBFCs) is expected to ease to 13-15 per cent in financial year 2025 (FY25) and FY2026 from the 17 per cent in the previous two fiscals, rating agency ICRA said in a report.

Overall, NBFC credit stood at about Rs 52 trillion in December 2024, and it is set to exceed Rs 60 trillion by FY2026. The retail assets, which accounted for 58 per cent of the overall NBFC credit in December 2024, have been the key growth drivers, while other wholesale and infrastructure credit expanded at a stable rate of 10-12 per cent during FY2023-FY2025.

The rating agency expects retail assets to grow at a relatively slower 16-18 per cent CAGR during FY2025 and FY2026. Given the high base created in the post-COVID expansion of this segment and concerns of borrower overleveraging, it has impacted loan quality in some asset segments within this space.

Asset segments like microfinance, personal loans, credit cards and unsecured business loans are witnessing higher stress in FY2025, leading to elevated delinquencies and write-offs. Unsecured business loans account for nearly 28 per cent of retail NBFC credit in December 2024.

While the stress is largely confined to the unsecured loans at present, in a constricted credit flow environment, the refinancing ability of some of the borrower segments shall get adversely impacted. Thus, performance- secured loans availed by these borrowers, namely small-ticket vehicle loans and micro and small-ticket mortgage loans, etc., shall remain a key monitorable, said Karthik Srinivasan, Group Head Financial Sector Ratings, ICRA Limited.

The rating agency said that while most of the regulatory actions are expected to have some near-term impact on growth, they augur well for the sector in the long term, and most entities have the ability to absorb the near-term impact, if any, considering their strong balance sheets and healthy earnings profiles.

Moderate loan growth expectations, along with limited dependence on short-term funding at present, bode well for sectoral liquidity, which is expected to remain adequate, but access to the commensurate funding remains key, said the report.

The debt issuances improved in FY2025 are expected to remain healthy in the current fiscal year, supported by a favourable outlook on interest rate cuts.

However, competitive pressures shall remain elevated, which will impact margins, notwithstanding the reduction in the cost of funds.

As growth slows down, ICRA anticipates a rise in credit costs in line with increasing delinquencies, especially in unsecured loan segments.

Overall, the profitability of NBFCs, barring housing finance companies (HFCs), shall witness some headwinds, with return on average managed assets (RoMA) projected to decline by about 30-50 bps in FY2025-FY2026 visa-vis FY2024 levels.

While the HFCs performance has remained relatively stable, the impact of portfolio seasoning on credit cost remains to be seen, said the report.

Increase in Small and Medium Enterprises (SMEs) to Enhance Market Growth

The expansion of SMEs has been one of the prime factors leading to the growth of the micro lending market in India. SMEs form a sizeable part of the countrys economy in terms of job availability and gross domestic product. Increasingly, the demand for micro-loans has been propelled due to expanding industries, investing in new technologies, or managing cash flow. Traditional banks hold back from giving loans to small-scale businesses due to a lack of adequate collateral. This gap has been positioned to be filled by micro lenders, such as micro finance institutions (MFIs). Indeed, it has distinguished them as they can provide customized loans and flex repayment terms that apply specifically to the needs of small or medium enterprises to grow their businesses in such a competitive business world. The Budget 2024 documents indicate that the MSME Ministry has been allocated USD 2.65 billion, which is the same as last years allocation. Meanwhile, the budget for central sector schemes supporting MSMEs has seen a slight increase, reaching USD 2.62 billion.

In addition, many micro lending portals rely on sophisticated data analytics to check the borrowers creditworthiness, enabling them to close loan applications faster. Such time and ease factors suit small-scale entrepreneurs who seek loans urgently. Additionally, government policies toward SMEs, such as offering incentive schemes of various types, make them more viable and increase the scope of micro-lending as a viable source of funding. It generally promotes the scale of SMEs. The growing SMEs would increase the demand for microloans. This has the effect of promoting quick economic growth, generally incorporating SMEs into the micro-lending landscape in India.

Well-established regional players with in-depth knowledge of micro markets and low-cost distribution serve MSMEs beyond the Tier I cities, focussing on tailored credit underwriting. These NBFCs have attracted both equity and debt capital, given the promise in the sector also leading to co-lending partnerships with banks.

These NBFCs serve MSMEs through (i) differentiated credit underwriting that takes into account multiple sources of data (formal and informal) in the absence of credit ratings/formal data, seasonality of cashflows, industry and cluster risks, as well as a 360 degree view of the borrower, (ii) designing product offerings that are best suited to their target segment (for example, flexible collateral structures, customised products tailored to their working capital cycles), (iii) risk-pricing exposures, and (iv) reduced turn-around times from credit appraisal to disbursement through standardised processes and use of technology . The NBFCs difference in approach to underwriting MSME credit has been made possible by their focus or specialisation in MSME- lending by sector, geography, client segment, or a combination of these features and their calibrated operations and distribution designed to best serve their clients.

Lending models that cater to the MSME segment can be broadly classified under three heads - (i) lenders to informal / small businesses, (ii) lenders focussed on asset financing, and (iii) lenders focussed on secured lending. Northern Arc works with many specialised NBFCs offering credit to identified client constituents- ranging from micro enterprise loans, loans against property, unsecured business loans, school finance, and supply chain financing.

In addition to the steady growth of specialised lenders described above, technology-enabled lending (Fintech) has emerged as a major trend in recent times. Fintech lenders have capitalized on emerging sources of digital data as well as surrogates to evaluate credit-worthiness of borrowers and have combined this with technology- enabled analytics for more efficient underwriting. Given the complementary strengths, we are also seeing the evolution of partnership models between NBFCs leveraging their distribution strength and superior customer understanding with larger NBFCs and banks who are able to efficiently aggregate and further distribute the risk.

These innovative approaches help in creating greater outreach and in more reliable, efficient access to credit to borrowers who may otherwise be excluded from the formal system.

In addition to the emergence and growth of differentiated lending models and evolving co-lending partnerships, the MSME segment is poised to receive a shot in the arm through increasing banking system and policy interventions - a much needed stimulus for not only the growth of the MSME sector but also for the ideal of sustainable and inclusive growth.

Types of Loans offered by NBFCs to Small Businesses

The various types of Small Business Loans offered by Non-Banking Finance Companies are;

• Short Term Business Loan

• SME & MSME Business Loan

• Small Business Loans for Women

• Unsecured Working Capital Loans

• Unsecured Machinery Loan

Technologies defining a new paradigm for FinTechs and NBFC

Fin Techs have been creating a strong buzz across value chains in the Indian financial space. They have also become a part of the Indian governments mission of financial inclusion for the last few years. Because of its vast potential to disrupt the current and traditional banking system, the FinTech space is now gaining traction in the areas of lending, asset management, deposits and credit system. Present-day FinTech companies are efficiently making use of new-age technologies to overcome challenges and build products and services such as last mile reach and delivery, alternative credit models, fraud detection, regulatory compliance, enterprise automation for accounting, treasury and reconciliation for traditional NBFCs.

Traditionally, lenders have adopted a one size fits all approach, evaluating all types of customers against a single credit policy, resulting in the exclusion of a large population of creditworthy customers. With FinTechs adopting and building models on AI combined with ML and advanced analytics, NBFC lenders can adopt a personalised approach to underwriting by incorporating segment-definitive guidelines, empowered by alternative data sources, and apply scorecard-based credit decisions. The approach should help broaden the customer base, allowing sales teams to target a large pool of prospective customers and offer relevant products, as per their credit scores.

Some NBFCs are moving forward in testing and deploying solutions in collaboration with FinTech software as a service (SaaS), to automate back-end and middleware software applications, which shall make the origination and underwriting process swift, structured and transparent.

The technology-driven business model of NBFCs, which aims to reduce dependency on manual tasks and is built on the capabilities of RPA, leads to wider inclusion, cost-effectiveness, prowess in credit quality and a quicker turnaround time than traditional lending models of banks. Rather than having key resources scan pages of documentation to assess creditworthiness and risks involved in lending to an individual, technologies like RPA can enable such resources to focus on core business needs.

Technologies like AI and RPA can also aid NBFCs with on-the-spot decision making. Technologically advanced NBFCs can transform the manual, time-consuming, human judgement-based underwriting process to provide instant, real-time approvals. The transformation shall benefit NBFCs lenders differentiate from fellow players and traditional banks, improve customer experience, ensure uniform application of credit policies and reduce costs.

AI and ML can also help in continuous evaluation of the underwriting and risks model. A periodic re-evaluation helps determine the efficiency and effectiveness (e.g. service delivery, risk management, cost efficiency) in dynamic scenarios, and therefore, determines remediation steps to improve performance.

Advanced analytics and AI can power NBFCs with robust collections of payments and monitoring decisions. NBFCs have relied on customer account balances and credit scores to prioritise non-performing and delinquent accounts and formulate strategies for collections. But with the next level of growth slated to come from accounts with little or no credit history, NBFCs would need to leverage wider data sets and big data processing ability to derive and synthesise insights from existing and previously used data sets of non-performing or delinquent accounts, by looking at large sets of information.

Company overview

The Company is a Non-Banking Financial Company (NBFC), which is engaged in the business of Investment and Financing. The company is registered with Reserve Bank of India as an NBFC, not accepting public deposits u/s 45-IA of the Reserve Bank of India Act, 1934, vide registration number - 10.00098 dated 01.09.1999.

The Equity Shares of the company are listed on the Bombay Stock Exchange Limited (BSE Ltd.). The Company was incorporated as a public company on 31.1.1995, and its Corporate and Registered offices are situated in Udaipur. The major business activities are undertaken within and around Udaipur only.

The Company is neither a subsidiary company of any holding company, nor it has any subsidiary company.

The highlights of the financial results for the year ended March 31, 2025 and the corresponding figure for the previous year are as under:

(Rs in Lakhs except EPS)

Particulars	Standalone
	2024-25	2023-24
Revenue from Operations	212.74	114.73
Other Income	25.78	436.98
Total Income	238.66	551.71
Total Expenditure	68.28	24.34
Profit before tax	170.38	443.43
Current Tax	44.29	17.98
Income tax Adjustment	-	-
Deferred Tax Adjustment	-	(0.22)
Profit after Tax	(110.84)	(425.67)
Basic Earnings per share (in ?)	(2.73)	10.46

KEY RATIOS

Particulars	FY 2025	FY2024
Revenue (Rs. in Lacs)	212.74	113.40
Net Profit After Tax (Rs. in Lacs)	126.09	425.67
Earnings per share (in Rs.)	(2.73)	10.48
EBITDA (Rs. in Lacs)	170.38	443.43
Net Profit Margin (%)	59.26	371.09
Return on Net worth	(2.73)	10.46
Current Ratio (times)	11.45	35.01
Debtors Turnover(times)	6.85	50.39
Debt-equity (times)	106.44	-
Interest Coverage Ratio(times)	3408	6.29

CA UTIONAR Y STA TEMENT

Statements in this Management Discussion and Analysis report detailing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand supply conditions, raw material prices, finished goods prices, cyclical demand and pricing in the Companys products and their principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries with which the Company conducts business and other factors such as litigation and / or labor negotiations.

Additional Shareholders Information

FY2025 represents fiscal year 2024-25, from 1 April 2024 to 31 March 2025, and analogously for FY2024 and previously such labelled years.

1. General Body Meetings

Below table gives the details of date, time, location and business transacted through special resolution at last three Annual General Meetings:

Financial Year	Date & Time	Location	Special Resolution(s) Passed
2023-24	September 30, 2024 at 2.00 P.M	AGM Conducted Through Other AudioVisual Means (OAVM) at Registered office of the Company	NA
2022-23	September 30 2023 at 11.30 A.M	AGM Conducted Through Other AudioVisual Means (OAVM) at Registered office of the Company	NA
2021-22	November 30, 2022 at 11.30 A.M	AGM Conducted Through Other AudioVisual Means (OAVM) at Registered office of the Company	NA

Resolution(s) passed through Postal Ballot

During the year, the Company did not pass any special resolution through postal ballot.

Annual General Meeting (AGM):

As per the Circulars issued by the Ministry of Corporate Affairs and the SEBI, from time to time, the 31 st Annual General Meeting of the Company is scheduled to be held on Tuesday, September 23, 2025, at 1.00 P.M through Video Conference /Other Audio-Visual Means (VC/OAVM) facility. The venue of the AGM shall be deemed to be the registered office of the Company at 003-A, Circleview, Apartment-169, Fatehpuria, Nearsukhadia Circle, Udaipur, Rajasthan- 313001. The detailed instruction for participation and voting at the meeting is available in the notice of the 31 st AGM.

Proposal to Conduct Postal Ballot for any Matter in the Ensuing Annual General Meeting

There is no proposal to conduct a postal ballot for any matter in the ensuing Annual General Meeting.

2. Book Closure Date:-

From September 17, 2025 to September 23, 2025 (both days inclusive).

3. Dividend

To strengthen the financial position of the Company and to augment working capital, your directors do not recommend any dividend for the FY 2025.

4. Financial Calendar

The financial year of the Company starts on 1 st April every year and ends on 31 st March subsequent year. Indicative calendar of events for the financial year 2025-26 are as under

For the first half-year ending 30 September 2025	First / Second week of November 2025
For the quarter and nine months ending 31 December 2025	First / Second week of February 2026
AGM for the year ending 31 March 2026	First week of September 2026

5. Listing of Stock Exchange and Stock Codes

Listing Department,

BSE Limited P.J. Towers,

Dalal Street Mumbai-400001

Trading Symbol- 531237

Annual Listing fees to the National Stock Exchange of India have been paid for the FY 2025-26. The Custodian fee for NSDL & CDSL has also been paid for the FY 2025-26.

6. The International Security Identification Number (ISIN)

ISIN is a unique identification number of traded scrip. This number has to be quoted in each transaction relating to the dematerialized securities of the Company. The ISIN of the Companys equity shares is INE972E01014.

7. Market Price Data

Monthly High and Low Prices of the Equity Shares of the Company for the year ended 31st March, 2025: (Source: www.bseindia.com)

Month	BSE
	High	Low
Apr-24	452.20	400.20
May-24	466.95	395.00
Jun-24	433.20	354.70
Jul-24	407.00	316.20
Aug-24	454.60	297.05
Sep-24	446.00	359.00
Oct-24	452.55	351.05
Nov-24	407.95	355.10
Dec-24	415.00	336.00
Jan-25	415.00	242.05
Feb-25	286.90	177.10
Mar-25	241.50	200.90

8. Performance in comparison to board based indices

Performance of Equity Shares of the Company in comparison to BSE

9. Registrar and Share Transfer Agents

M/s. Bigshare Services Pvt. Ltd, 1st Floor, Bharat Tin Works Building, Opp. Vasant Oasis, Makwana Road,Marol, Andheri (East),Mumbai,Maharashtra,400059 is the Registrar and Share Transfer Agent of the Company, both for Physical & Demat Shareholders. Accordingly, all communications on matters relating to Share Transfers, Dividend etc. may be sent directly to them. Complaints, if any, on these matters may also be sent to the Compliance Officer of the Company.

10. Share Transfer System

As on date, the 96.18% of the issued and subscribed capital are held in dematerialised form and 3.82% of the issued and subscribed capital are held in Physical Mode.

11. Description of Voting Rights

All shares issued by the Company carry equal voting rights, and one share confirms one vote.

12. Nomination Facility

Shareholders may contact their respective Depository Participant (DP) to avail nomination facility.

13. Shareholding Pattern as on 31st March 2025:

Distribution of shareholdings on the basis of ownership

	As on 31 March 2024		As on 31 March 2025
	No. of shares	% of total	No. of shares	% of Total	% change
Promoter\u2019s Holding
- Individuals	13,58,000	33.43	22,00,800	54.18	--
- Companies	8,42,800	20.75
Sub-Total	22,00,800	54.18	22,00,800	54.18	-
Indian Financial Institutions
Banks
Mutual Funds	-		-	-	-
Foreign holdings
-Foreign Institutional Investors
- Non-Resident Indians	505	0.01	1,726	0.05	0.04
- ADRs / Foreign Nationals	-		-	-	-
Sub total
Indian Public and Corporate	18,60,395	45.81	18,59,174	45.77	(0.04)
Total	40,61,700	100	40,61,700	100

14. Distribution of shareholding as on March 31, 2025

Range	No. of Shareholders	% of Total Shareholders	No. of Shares	% of Total Shares
1 - 5000	940	83.85	1,06,802	2.62
5001 - 10000	94	8.38	78,784	1.93
10001 - 20000	27	2.40	40,924	1.00
20001 - 30000	16	1.42	39,834	0.98
30001 - 40000	4	0.35	14,399	0.35
40001 - 50000	3	0.26	14,800	0.36
50001 - 100000	13	1.15	92,940	2.28
100001 & Above	24	2.14	36,73,217	90.43
Total	1,121	100	40,61,700	100

15. Outstanding ADRs & GDRs, Warrants or any other convertible instruments, conversion date and likely impact on equity shares

During the year under review, the Company has not issued any ADRs & GDRs, Warrants or any other convertible instruments. The Company has at present no outstanding ADRs/GDRs/Warrants to be converted that has an impact on the equity shares of the Company.

16. Commodity Price Risk or Foreign Exchange Risk

The Company is exposed to the risk of price fluctuation of raw materials as well as finished goods. The Company proactively manages these risks through forward booking Inventory management and proactive vendor development practices. The Companys reputation for quality, products differentiation and service, coupled with existence of powerful brand image with robust marketing network mitigates the impact of price risk on finished goods.

17. Credit Rating

The Company has not availed any Credit Rating.

18. Dematerialization of Shares

The Companys scrip forms part of the compulsory dematerialization segment for all investors. To facilitate easy access of the dematerialized system to the investors, the Company has signed up with both the depositories namely National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL) - and has established connectivity with the depositories through its Registrar and Transfer Agents, MAS Services Limited.

The breakup of dematerialized shares and shares in certificate form as on March 31, 2025 as under:

Physical	NSDL	CDSL
1,55,225	26,34,987	12,71,488

19. Other Disclosures

Disclosures on materially significant related party transaction

The statements containing the transactions with related parties were submitted periodically to the Audit Committee. The details of Related Party Transaction are discussed in detail in Note No. 36 of Notes to the Financial Statements.

All the contracts/ arrangements/transactions entered by the Company during the financial year with related parties were in its ordinary course of business on an Arms Length Basis.

None of the transactions with any of related parties were in conflict with the Companys interest.

Details of non-compliance(s) by the company

There were no strictures or penalties imposed by either SEBI or the Stock Exchanges or any Statutory Authority for Non-Compliance of any matter related to the Capital Markets

Whistle Blower Policy/Vigil Mechanism

The Board of Directors of the company has adopted Whistle Blower Policy. The management of the Company, through the policy envisages encouraging the employees of the Company to report the higher authorities any unethical, improper, illegal, or questionable acts, deeds & things which the management or any superior may indulge in. This policy has been circulated to the employees of the Company. However, no employee has been denied access to the Audit Committee.

Details of Compliance with mandatory requirements and adoption of the non-mandatory requirements

The Company is exempted from compliance with the mandatory requirements of Corporate Governance under listing Regulations However, the Company has complied with the corporate governance requirement, particularly in relation to appointment of independent directors including woman director on the Board, constitution of an Audit Committee and Nomination and Remuneration Committee.

Disclosure of Accounting Treatments

The financial statements of the Company have been prepared in accordance with Indian Accounting Standard (IndAS) to comply in all material aspects under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 (the 2013 Act)/ Companies Act, 1956 (the Act 1956), as applicable. These financial statements have been prepared on an accrual basis and under the historical cost conventions.

20. Name, Designation & Address of Compliance Officer and RTA for Complaints & Correspondence

Mrs. Priti Lakhotia

Company Secretary & Compliance Officer Dhruva Capital Services Limited 003-A, Circleview,Apartment-169,

Fatehpuria,Near Sukhadia Circle Udaipur, Rajasthan, India-313001 Telephone: +91 91 0294 2424907

Registered / Corporate Office Address for Correspondence

Dhruva Capital Services Limited

003-A, Circleview, Apartment-169,

Fatehpuria,Near Sukhadia Circle Udaipur, Rajasthan, India-313001 Tel: 0294-2425555,2527907 Email Id: dhruvacapital@gmail.com CIN: L67120RJ1994PLC008593

Registrar & Share Transfer Agents

M/s. Bigshare Services Private Limited Pinnacle Business Park, Office No S6-2,

6 th Floor, Mahakali Caves Road, Next to Ahura Centre, Andheri East,

Mumbai, Maharashtra-400093, India;

Tel: 9122 6263 8200 Fax: 9122 6263 8299 Email: mohan@bigshareonline.com URL: https://dhruvacapital.com/

21. Disclosure with respect to demat suspense account/unclaimed suspense account

SL No.		Applicability
1.	Aggregate number of Shareholder and the outstanding shares in the suspense account lying in the beginning of the year	Nil
2.	Number of Shareholder who approached the Company for transfer of shares from suspense account during the year	Nil
3.	Number of Shareholders to whom shares were transferred from suspense account during the year	Nil
4.	Aggregate number of shareholders and the outstanding shares in the suspense account lying at the end of the year	Nil
5.	That the voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares	Nil

22. Transfer of Unpaid / Unclaimed Amounts and Shares to Investor Education and Protection Fund

Your Company did not declared any dividend hence the above provisions is not applicable.

23. Reminder to Investors:

As there is no unpaid / unclaimed dividends, no reminders for such unclaimed shares and unpaid dividends to be sent to shareholders. The Company shall ensure compliance as and when applicable.

	For and on behalf of the Board of Directors
	Dhruva Capital Services Limited
Place: Udaipur	Rachna Suman Shaw	Shreeram Bagla
Date: May 16, 2025	Whole Time Director	Whole Time Director
	DIN No.: 10414115	DIN No.: 01895499