Easun Capital Markets Ltd Management Discussions

OVERVIEW

Pursuant to the Reserve Bank of India (Non-Banking Financial Companies - Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025 dated November 28, 2025, as amended from time to time, the Company is categorised as NonSystematically Important Non-Deposit Accepting NBFC - Base Layer and it continues to be under the same category till date. The relevant disclosures applicable under the RBI Master Directions have been made in the Annual Financial Statements and Annual Report for the financial year ended March 31, 2026. The Company is listed with the Bombay Stock Exchange and the Calcutta Stock Exchange. We invested in mutual funds, perpetual bonds, NCDs, equity shares of quoted and unquoted companies & fixed deposits and also provide loan and advance to other entities. In navigating the complexities of the global market landscape, our commitment remains steadfast in delivering sustainable value and preserving shareholder interests. Our investment strategies emphasize diversification with a balanced approach to capitalize on emerging trends while safeguarding against potential risks. The management views on various factors and the Companys comparative position is discussed in this report.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The global economy demonstrated flexibility through 2024-25, despite moderating activity, policy uncertainty and geopolitical tensions. The International Monetary Fund (IMF) projected global GDP growth at steady but moderate expansion. In emerging market and developing economies, growth is expected to slow down to 3.7% in 2026 and 3.9% in 2026. Global headline inflation is expected to decline, reaching 4.3% in 2026 and 3.6% in 2026, with notable upward revisions for advanced economies and slight downward revisions for developing economies in 2026.

Overall economic growth remained steady during the year, large economies showing resilience, high interest rate and other contingencies. Further strict financial measures have also impacted the global business development and industrial production in this financial year. Global trade is expected to be heavily effected by new US tariffs and countermeasures from trading partners, which may negatively impact economic growth projections. The global landscape is expected to change as countries are bound to re-align their priorities and policies in response to these new developments.

Global macroeconomic conditions remain broadly resilient but uneven, amid elevated policy and geopolitical uncertainty. According to the International Monetary Funds (IMF) World Economic Outlook (April 2026), global growth is projected at 3.1% in 2026 and 3.2% in 2027, under the assumption that the Middle East conflict remains limited in duration and scope. Global headline inflation is expected to increase to 4.4% in 2026 before declining to 3.7% in 2027, reflecting renewed commodity prices pressures, firmer inflation expectations and tighter financial conditions. However, the external environment remains fragile, with higher trade barriers, geopolitical fragmentation and renewed trade tensions continuing to shape risk sentiments, supply chains and capital flow.

The outlook is uneven: The war shock is weighing on energy importers and vulnerable economies, while AI-driven demand is lifting countries integrated into the global technology value chain. Global disinflation has stalled. Risks are now more balanced than in April, but downside risks from renewed conflict and financial market repricing persist. Policymakers should preserve price stability, rebuild fiscal space, and strengthen adaptability.

As the Middle East conflict drives sharp energy price increases, global growth is projected to slow, with emerging market and developing economies (EMDEs) facing the weakest per capita income growth since COVID. Risks remain skewed to the downside and include escalating hostilities, further commodity market disruptions, and additional geopolitical strains, while broader AI adoption offers some upside. Policy action is critical: globally to safeguard energy and food security and advance the energy transition, and domestically to control inflation, strengthen fiscal sustainability, and support job creation.

INDIAN ECONOMIC SCENARIO

Indian economy in 2025-26 remains the fastest-growing major global economy, with real GDP growth estimated between 7.4% and 7.7%. Driven by strong private consumption, robust public and private investments, and low headline inflation, the nation continues its steady climb toward long-term developmental goals.

Indias real GDP growth for the 2026-27 fiscal year is projected to moderate to between 6.4% and 6.8%. While cooling from the faster pace seen in previous years due to a higher base effect and global headwinds, India maintains its position as one of the fastest- growing major economies. RBI have projected 7, 6.4, 6.5 and 6.8% GDP growth quarter- wise in 2026-27. Average retail inflation is projected to be 4.9% in 2026-27, as compared to 2% in 2025-26. The current account deficit is expected to raise to 1.5% of GDP as compared to 0.6% in 2025-26.

India continues to exhibit relative macroeconomic resilience. As per IMF projections, Indias growth is expected to moderate to 6.5% in both 2026 and 2027, following an estimated 7.3% expansion in 2025. Domestically, the Second Advance Estimates released by the National Statistical Office (NSO) in February 2026 place real Gross Domestic Product (GDP) growth at 7.6% in FY2026, up from 7.1% in FY2025, driven by the twin engines of private consumption and investment.

Real GDP expanded to Rs.322.6 trillion in FY2026, while real Gross Value Added (GVA) reached Rs. 294.4 trillion, supported by services-led growth and a recovery in manufacturing. Inflation dynamics in India have been benign, which has created space for calibrated monetary easing. Consumer Price Index (CPI) declined sharply through 2025, reaching a trough of 0.25% in October 2025 before bouncing up to 1.33% in December 2025, well below the inflation target band, aided by food price deflation and favourable base effects. In response, the RBI reduced the repo rate cumulatively from 6.50% in December 2024 to 5.25% by December 2025, while maintaining a neutral stance, reflecting limited but targeted policy space.

On the external front, the current account deficit narrowed to 0.8% of GDP in the first half of FY2026, supported by strong services exports, providing a buffer against global volatility. Key risks stem from geopolitical led commodity price shocks and renewed trade disruptions, while low inflation, a narrowing Current Account Deficit (CAD), and robust domestic demand remain critical macroeconomic buffers.

? The outlook for the Indian economy remains bright, underpinned by strengthening macroeconomic fundamentals, robust financial and corporate sectors, and a resilient external sector.

? The governments continued thrust on capex and fiscal consolidation, along with consumer and business optimism, bode well for investment and consumption demand.

? The prospects for agriculture and rural activity appear favorable, with the expected above-normal southwest monsoon and government initiatives to support the agriculture sector.

? Emerging sectors like renewable energy and semi-conductors are expected to advance rapidly, supported by government initiatives and budget allocations.

? The service sector showing increasing potential to became a global hub.

A refined corporate governance framework forms the foundation for consistent business performance. By nurturing transparency, accountability, and ethical practices, such governance structures instil confidence helping attract affordable capital. This influx of capital fuels growth, enabling the organization to invest in innovation and expansion thereby enhancing its competitiveness in the market. As a result, a robust ecosystem emerges characterised by the symbiotic relationship between the organisation and its stakeholders. Thus, better governance not only drives consistent performance but cultivates growth and prosperity over the long term. India is an example of the same.

During the year the Reserve Bank of India has undertaken a significant rationalisation of its regulatory framework, including the consolidation of over 9,000 regulatory instructions into 238 Master Directions out of which 35 Master Directions were issued for Non-Banking Finance Companies (NBFCs). The RBI further completed a similar consolidation exercise covering all supervisory instructions, reinforcing consistency and ease of compliance across regulated entities. This simplification enhances regulatory clarity, reduces interpretational complexity and supports more efficient engagement with the regulator. These measures are to strengthening the operating environment for well-governed NBFCs and being aligned towards disciplined approach to compliance, governance and risk management.

The NBFC sector performance indicators have remained supportive of GDP growth. Credit growth for NBFCs in the aggregate upper and middle layers reached 21.3% year-on-year as of September 2025.

Non-Banking Finance Companies (NBFCs) are an integral part of the countrys financial system, catering to a large market of niche customers, and have emerged as one of the major patron to the retail and SME credit in India. Nonbanking financial institutions, including NBFCs in India, serve market segments to which commercial banks do not offer services because of higher risk and lower returns. Because of their inherent characteristics, NBFCs are an indispensable part of an economys financial sector. Your company is proud to mark its contribution in the field.

Your companys position

Your Company remains embedded to its core values and conventional investing and financing. Risk minimisation and wealth creation is the focus of the management. The activities are primarily focused on investing and acquiring shares, stocks, debentures, and/or other securities issued by any Government, incorporated bodies or authority, which have the potential of remunerative returns and wealth prospect.

As a trusted and customer-centric, one-stop financial services provider, the Company caters to the diverse needs of corporate customers, across various areas of business. Providing financial assistance and accommodation to other group entities is the recurring source of income for the company. We prefer risk minimisation rather than aggressive outlay.

OPPORTUNITIES AND THREATS

NBFCs continue to play a vital role in driving financial inclusion and supporting economic growth by offering customised financial services to underserved customer segments. Todays NBFCs face competitiveness through lean operations, rapid digital adoption, the use of artificial intelligence (AI) and data analytics to improve efficiency and risk management.

FY2026-27 will likely see further segmentation within NBFCs: larger, well-capitalised players are aligning more closely with banks under RBIs scale-based regulation, while smaller NBFCs face margin compression and funding constraints. Co-lending models between banks and NBFCs are gaining traction, helping manage risk while extending credit reach. The regulatory push is toward stronger governance, better provisioning, and systemic stability.

Opportunities

Indias financial services sector remains a key engine of economic growth, supported by favourable demographics, rising disposable incomes and a growing culture of savings and investment. Rapid adoption of digital channels — including mobile banking, wallets and UPI — has widened financial inclusion, while government initiatives promoting a cashless economy and other innovation have accelerated this transformation.

Expanding MSME Credit Market

MSMEs contribute nearly 30% of Indias GDP, with the government aiming to increase this to 50% by 2030. Despite the sectors importance, a significant credit gap of approximately INR 103 trillion exists, primarily due to the lack of formal documentation and credit history. With only 25 million of 63 million MSMEs accessing formal credit, there is a substantial opportunity for NBFCs to fill this void by offering tailored credit solutions through innovative underwriting models.

Co-Lending Framework

The RBIs co-lending framework allows NBFCs to partner with banks to jointly lend to priority sectors, enabling NBFCs to reach a wider customer base while sharing credit risk. This approach not only improves capital efficiency for NBFCs but also leverages the larger balance sheets of banks to offer more competitive lending rates.

Supportive Government Initiatives

Unlocking the full potential of the sector will require continued investment, greater financial literacy together with agile and transparent regulatory practices. Multiple Government Programs have made credit accessible to the grass root sectors. These programs provide NBFCs a strong base to expand reach and impact.

Threats

Credit Rating and Cost of Capital

The borrowing costs and access to the debt capital markets depend significantly on the credit ratings of India and the Company. Any downgrade in either could lead to reduced access to capital markets or higher borrowing costs, which may adversely impact the ability of the Company to raise additional financing.

Intensifying Competition

The lending segment is attracting heightened competition from banks and new-age NBFCs. While the market is large and underpenetrated, maintaining a competitive edge will require continuous investment, updating and customer service excellence.

Macroeconomic and Market Volatility

Economic slowdowns, rising interest rates, or global uncertainties could dampen investor sentiment. A downturn in the Indian economy could impact loan performance and increase delinquency levels, affecting the profitability and asset quality of NBFCs.

Regulatory and Policy Risks

NBFCs are subject to evolving regulatory frameworks. Recent changes, such as increased risk weights on bank exposures to NBFCs, have affected borrowing costs. Unexpected regulatory interventions or compliance requirements may also constrain growth strategies or raise operational costs. In addition, global macroeconomic challenges, including inflationary pressures, monetary policy shifts and geopolitical uncertainties, could impact credit demand and investment flows.

Tariff changes

The Tariff war, wedged by America, is bound to change political alignments and countermeasures. It may adversely affect the spending pattern, resulting in lower cash flow for servicing.

Strengths

Strong Client Base

The Company enjoys a very strong and loyal customer base which has shown un-wavering loyalty time and again. The company has been able to leverage its base to grow its businesses, build relationships and attract and retain talented individuals.

Experienced top management

The promoters, are professionally qualified persons with gamut of experience each in the financial services industry. The top management team comprises qualified and experienced professionals, with a successful track record. The company believes that its managements entrepreneurial spirit, strong technical expertise, leadership skills, insight into the market and customer needs provide it with a competitive strength, which ultimately helps in implementing business strategies.

Strong risk management

Risk exposure is monitored and controlled through a robust financial, credit, operational, compliance and legal reporting systems. Risk management department analyses this data in conjunction with the companys risk management policies and takes appropriate action where necessary to minimize risk.

Financial prudence

The Companys operating margins continue to remain stable despite the fluctuations in market volumes and revenues due to our robust business model that can withstand the cyclical fluctuations in business volumes and simultaneously capture the opportunities provided by the structural growth of India.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The company is primarily engaged in the single business of Financing and Investment.

RISKS AND CONCERNS

The Company is exposed to market risk and credit risk. The Companys senior management oversees the management of these risks and is supported by professionals who advises on risk control and minimisation with appropriate financial risk governance framework for the Company. The Audit Committee and Risk Management Committee oversee risk management policies and procedures. It reviews credit and operational risks and investment strategy and other risks like interest rate risk and liquidity risk. It provides assurance to the Companys senior management that the Companys financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and mitigated in accordance with the Companys policies and risk objectives. It is the Companys policy that no trading in derivatives for speculative purposes be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks which are summarized under Note No. 45(C) of the attached Financial Statements.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal Control System are implemented in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting and the Standards on Auditing issued by ICAI to safeguard the Companys assets from loss or damage, to keep a constant check on the cost structure, to prevent revenue leakages, to provide adequate financial and accounting controls and implement accounting standards. M/s Chaudhuri, Ray & Associates, Chartered Accountants, have conducted the Internal Audit of the Company. The report thereof is placed before the Audit Committee for evaluation of internal financial controls and risk management systems.

The Management continuously reviews the Internal Control Systems and procedures for the efficient conduct of the Companys business. The Company adheres to the prescribed guidelines with respect to the transactions, financial reporting and ensures that all its assets are safeguarded and protected against losses.

The Compliance Officer of the Company is designated as the Chief Investor Relations Officer ("CIRO") to ensure that fairness and transparency is maintained while dealing with unpublished price sensitive information.

Your Board is of the opinion that the Internal Financial Controls, affecting the Financial Statements of your Company are adequate and are operating effectively.

OUTLOOK OF THE COMPANY

Optimism among small firms remained positive. Concerns over high borrowing costs and softening export demand dampened medium firms capital-expenditure (CapEx) plans, though large firms regained confidence as global inflation eased and potential monetary easing on the horizon. Small enterprises showed modest CapEx optimism but remained wary of financial risks.

Indias goal of attaining high-income status by 2047 requires inclusive growth that benefits the entire population. Reforms focused on growth need to be accompanied by the creation of quality jobs that keep up with the influx of new entrants into the labour market. As we look forward, our strategic priorities remain firmly centred around scalable growth, technology-led innovation, prudent risk management, and delivering superior value to all stakeholders. We are committed to deepening our presence in existing segments while selectively exploring new avenues for expansion that align with our long-term vision. Your Directors are optimistic that it shall also translate into a better performance vis-a-vis the year gone by for most of the leading financial services institutions including NBFCs.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

Business landscape across the world is marked by fast evolving dynamics. These demand agile responses while keeping the long term focus intact. Your Company is led by highly experienced and successful business leaders with proven track record of delivering sustainable growth in demanding business environment. As of March 31, 2026, your

Company has complied with requirement of KMP and Directors during the year and other statutes to the extent applicable with a robust team competing on the strength of our people, all of us are bonded together by core values of Pride, Integrity, Discipline and Ambition. We thrive in this climate of Right People for Right Culture. Your Company has consciously built an entrepreneurial and empowering culture of Results, Not Reasons. Our culture emphasises on having a workforce that is diverse, agile, eager to learn and driven to succeed. We have modelled ourselves as a learning organization -by focusing on Stretch - Learn and Grow with Theme Respect for all with parameters like Capacity Building performance management.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS AND FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

An analysis of key analytical ratios have been made in Note 43 of the attached Financial Statements including the % of variance of such ratios with respect to ratios of the previous financial year as at March 31, 2026. As outlined, there is no material variance in the Capital to Risk Weighted Assets Ratio (CRAR).

We strive to achieve market leadership in scale and profitability, wherever we compete.