GSB Finance Ltd Management Discussions

Your Directors are pleased to present the Management Discussion and Analysis Report for the year ended 31st March, 2025.

Statements in this Management Discussion and Analysis of financial condition and results of operations of the Company describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise forwardlooking statements on the basis of any subsequent developments, information or events. The statements involve risk and uncertainties including those risks which are inherent in the Companys growth and strategy.

The management of the company is presenting herein the overview, opportunities and threats, initiatives by the Company and overaII strategy of the Company and its outlook for the future. This outlook is based on managements own assessment and it may very due to future economic and other future developments in the country.

A. Industry Structure And Development:

The Indian economy maintained steady momentum in FY 2024-25, supported by resilient domestic demand, strong financial markets, and stable monetary policy. The capital markets witnessed moderate volatility driven by global macro-economic factors, but overall liquidity remained supportive.

The NBFC sector, particularly investment NBFCs, played an important role in channelizing capital into equities, debt securities, and other financial instruments. Regulatory oversight by the RBI continued to strengthen, with a focus on governance, transparency, and financial discipline across NBFC layers.

B. Business Overview:

GSB Finance Limited is registered as a Base Layer Investment NBFC with the Reserve Bank of India.

The Company is primarily engaged in:

Making long-term and short-term investments in listed and unlisted securities, including equity shares, preference shares, mutual funds, and debt instruments.

Generating income through dividends, interest, and capital appreciation.

Maintaining a conservative and disciplined approach to risk, with a focus on value creation for shareholders.

The Company does not undertake public deposits and continues to comply with all applicable regulatory requirements.

C. Financial Performance:

Profitability: Despite revenue contraction, the Company maintained profitability on account of prudent cost management and selective investment strategies.

Balance Sheet: Interest income constituted as the major portion of income with no material leverage. Liquidity remained comfortable.

Expenses: Operating expenses remained controlled, reflecting a focused business model.

D. Opportunities And Threats:

Opportunities:

•Expanding Capital Markets:

Growing retail participation and institutional flows present opportunities for higher investment income.

•New Investment Instruments:

Introduction of innovative financial products (REITs, InvITs and ETFs) broadens the universe for investment NBFCs. •Digital Platforms:

Increasing use of digital channels for research, analytics, and execution enhances operational efficiency.

•Government & Regulatory Push:

Policies promoting financial inclusion and capital formation provide tailwinds for investment companies.

E. Threats, Risks and Concerns:

•Market Volatility:

Sudden downturns in equity or debt markets directly impact the Companys portfolio value and income.

•Regulatory Changes:

Stricter compliance under RBIs scale-based regulation framework may increase compliance costs.

•Liquidity Risks:

Tightening in financial markets could impact timely monetization of investments.

•Competition:

Increasing participation by large investment funds and institutions may limit return opportunities.

•Macroeconomic Risks:

Inflation, interest rate changes, or global market disruptions could affect valuations.

F. Segment-Wise / Product Wise Performance:

G. Outlook:

Going forward, the Company will continue to pursue prudent investment strategies aimed at generating sustainable returns. With stable macroeconomic fundamentals and growing financial markets, GSB Finance Limited is well- positioned to strengthen its portfolio, optimize returns, and deliver value to stakeholders while maintaining regulatory compliance and robust governance standards.

H. Risk And Concerns:

The challenge for the niche financial service provider companies today is the consideration of what they wish to keep from the changes they made due to the pandemic. There has been a paradigmatic shift of geopolitics, data governance, operational resilience and ever evolving technologies are key concerns for board room discussion. The company survives in a highly competitive environment. Timely and effective risk management is of prime importance to our continued success. The sustainability of the business is derived from the following:

- Identification of the different threats looked by the Company.

• The development of effective risk management framework to measure and analyse them.

• Risk management through proper reduction methodologies inside the strategy system.

• A constant vigil upon the advancements and changes in the environment and frequent exposure to audits.

• Reporting these jeopardy reliefs of risk management results to the appropriate levels of authority.

• Your Board has taken major initiatives like focus on cost reduction through inventory management techniques, manufacturing process without compromising quality of products, retaining talented employees and promotional activities like advertising, participation on trade exhibition, strategic partnership, customer relations etc.

There always sustains the danger of misfortune from insufficient or bombed frameworks, cycles or systems.

I. Internal Control Systems And Adequacy:

The Company has an adequate system of internal controls, commensurate with its size and nature of business. These controls ensure proper authorization, recording, and reporting of financial transactions, safeguarding of assets, and compliance with applicable laws and regulations. The Audit Committee regularly reviews the effectiveness of these controls.

J. Material development in HR:

As an investment NBFC, GSB operates with a lean organizational structure. The Company values its employees as its key assets and fosters a culture of integrity, accountability, and performance. Employee relations remained cordial during the year.

K. Details Of Significant Changes In Key Financial Ratios:

Ratios	24-25	23-24
Asset Turnover	0.12	0.22
Interest Coverage Rates	8.24	6.45
Quick Ratio	122.54	88.31
Current Ratio	122.54	86.27
P/E	28.73	72.38
Operating Margin (%)	53.22	51.62
Net Profit Margin (%)	40.30	34.23

L. Cautionary statement:

Statements in this report on 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. These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied since the Companys operations are influenced by many external and internal factors beyond its control. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, based on any subsequent developments, information, or events. Readers are cautioned that the risks outlined here are not exhaustive. Readers are requested to exercise their judgement in assessing the risks associated with the Company.