Dhunseri Investments Ltd Management Discussions

i. Industry Structure and Developments:

Global economy

The global economy in 2025 is navigating a landscape of modest growth and declining inflation amid policy uncertainties and structural challenges. Global growth is projected at 3.3% for both 2025 and 2026, below the historical average of 3.7%. Global headline inflation is expected to decline to 4.2% in 2025 and to 3.5% in 2026, with advanced economies expected to reach their inflation targets earlier than emerging markets. According to the International Monetary Fund (IMF), the outlook faces medium-term downside risks and requires careful policy management to balance inflation and growth. The global NBFC Market was valued USD 850 billion in 2024. Over the forecast period from 2024 to 2033, the market is projected to expand at a CAGR of 7%, reaching an estimated valuation of around USD 1600 billion by 2033.

Industry Overview

Non-Banking Financial Companies (NBFCs) have significantly outpaced commercial banks in credit growth during Fiscal Year 2025, according to a report by Boston Consulting Group (BCG).

The report reveals that NBFCs recorded a robust 20% credit growth, a substantial margin over the 12% growth observed in the banking sector. This accelerated expansion by NBFCs, particularly driven by the Gold NBFC category.

Indias NBFC sectors total net advances mirrored this growth, also increasing by 20% year-on-year to reach Rs. 24.5 lakh crore. This propelled the overall balance sheet size of the NBFC industry to Rs. 28.2 lakh crore, marking a 20% rise from the previous fiscal year. Total borrowings by NBFCs also saw a significant uptick of 22% to Rs. 19.9 lakh crore, reflecting increased funding activity to support their expanding operations.

The report also sheds light on other critical aspects of the NBFC sectors health. While overall profitability showed an 8% year-on-year increase in absolute profit for the sector, the Microfinance Institutions (MFI) category faced a sharp decline in Profit After Tax (PAT) by 95%.

This contrasts with the broader NBFC trend, where a marginal improvement in the Cost to Income ratio from 36.7% in FY 24 to 36.2% in FY 25 indicates enhanced operational efficiency.

ii. Opportunities and Threats:

The Company being a Non-Banking Financial Company is primarily engaged in the business of making investments in shares and securities. On account of Government of Indias efforts to improve economic growth in the Country by pr oviding opportunities for start-up and infrastructure development is giving hopes to entrepreneurs for exploring new opportunities. The Company is looking forward to use the opportunity at the right moment. In a volatile stock market, the Company is exposed to the risk of fluctuation in share prices. This however is not likely to affect the working of the Company as a major part of the investments are held on long term basis and temporary fluctuations of those shares in the stock market do not have much financial implication to the Company.

However, the company gives continuous effort to frequently examine the ups and downs of the market particularly taking into consideration that the Company being a small size NBFC and there are plenty of hindrances which may hamper its growth.

iii. Segment Wise Performance:

The Company operates under the following segments the details with respect to each of the reported business segments are as follows:

a) Treasury- The treasury operations relates to holding treasury assets for capital appreciation and other related gains.

b) Tea- Tea segment comprise revenue from tea operations and revenue from investments in equity instruments of tea companies and consequently assets and liabilities related to tea segment.

iv. Outlook:

The Indian economy is getting insulated to world and creating a mark on global level. The Management has to regularly monitor the changing market conditions and the trends. Further, any slowdown of the economic growth or volatility in the financial market could adversely affect the companys performance. However, the nature of capital market in which the Company operates is not predictable with certainty.

v. Risk and Concern:

The very nature of the Companys business makes it susceptible to various kinds of risks. The Company encounters market risk, credit risk and operational risks in its daily business operations. The Company has framed a comprehensive Risk Management Policy which inter-alia lays down detailed process and policies in the various facets of the risk management function. The risk management review framework provides complete oversight to various risk management practices and process. The framework and assessment remains dynamic and aligns with the continuing requirements and demands of the market.

vi. Internal Control System & their adequacy:

The Company maintains a system of internal controls design to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the reliability of financial controls and compliance with applicable laws and regulations.

The Company has put in place an adequate system of Internal Controls that commensurate with its size, requirements and the nature of operations. It ensures operational efficiency, accuracy in Financial Reporting and Compliance of applicable Laws and Regulations. The Company has in place policies and procedures required to properly and efficiently conduct its business, safeguard its assets, detect frauds and errors, maintain accuracy and completeness of accounting records and prepare financial reports in a timely and reliable manner. The system is also reviewed from time to time. During the year such controls were tested by the Internal and Statutory Auditors with reference to financial statements and no reportable material weakness on the designs or operations were observed. A seamless system has been put in place to ensure that any major discrepancies or lapse in controls are reported to the Audit Committee and Board of Directors of the Company and action is taken to control any breach.

vii. Discussion on Financial Performance with respect to Operational Performance:

This section is covered in the Boards Report under the section of Financial Results and Operations.

viii. Material Developments in Human Resources/ Industrial Relations front including number of people employed:

There is no Material Development in Human Resources front. The Company maintains harmonious relationship with its employees. The Company is having 6 persons employed currently.

ix. Details of Key Financial Ratios and Significant Changes:

Sl. No. Particulars	F.Y. 2023-24	F.Y. 2022-23	Variance (%)	Reason
a. Current Ratio	69:10	19.08	(62.07)	Increase in Current Assets, i.e. Investment, Current Tax Assets & Assets held for Sale
b. Operating Profit Margin (in %)	69.85%	82.78%	(12.93%)	Reduction in revenue from Treasury & Tea during the year.
c. Net Profit Margin (in %)	51.66%	69.54%	(17.88%)	Reduction in revenue from Treasury & Tea during the year.
d. Return on Net worth (in %)	2.22%	7.23%	(249.28%)	Reduced profit from Treasury & Tea.

x. Change in return on Net Worth:

The return on Net Worth for the F.Y. 2024-25 is 2.22% and for F.Y. 2023-24 is 7.23% resulting in decrease in the return on net worth by 5.01% due to decrease in the net profit of the Company in absolute terms in F.Y. 2024-25 as compared to F.Y. 2023-24.

xi. Cautionary Statement:

Statements in this Management Discussion and Analysis Report describing the Companys projections, estimates and expectations have been made in good faith and may be forward looking statements within the meaning of applicable laws and regulations. Many unforeseen factors may come into play and affect the actual results, which may differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in the industry-global or domestic or both, significant changes in political and economic environment in India, applicable statues, litigations etc.