Hercules Investments Ltd Management Discussions

Hercules Investments Limited (HIL) (formerly known as Hercules Hoists Limited) is an unregistered Core Investment Company (CIC). The Company is primarily engaged in the business of holding strategic investments, predominantly in group companies, with the objective of creating long-term value through capital appreciation, dividend income, and prudent capital allocation. HIL maintains a diversified portfolio comprising equity investments in listed group companies, along with holdings in mutual funds across various sectors.

Pursuant to the Scheme of Arrangement and Demerger, which became effective during the financial year 2024-25, the Companys business operations were reorganized, and its name and objects clause were subsequently altered with effect from September 2025 to reflect its primary role as an investment holding company. Following the restructuring, HIL has continued to focus exclusively on investment management and capital deployment activities, enabling a sharper strategic focus on maximizing shareholder value through efficient portfolio management.

The Companys investments are primarily strategic and long-term in nature and are not held for trading purposes. The investment portfolio is periodically reviewed with a view to enhancing returns, preserving capital, and ensuring alignment with the Groups long-term business objectives. The Directors believe that these investments are well-positioned to generate sustainable value over the medium to long term through dividend income, capital appreciation, and growth in the underlying businesses.

HILs investment decisions are guided by a disciplined and structured evaluation process that includes comprehensive internal assessment, financial and operational due diligence, market intelligence, and analysis of domestic and global macroeconomic developments. The Company continuously monitors economic indicators, regulatory developments, interest rate movements, inflation trends, and capital market conditions to identify opportunities and manage investment- related risks effectively.

The Indian economy continues to demonstrate resilience despite global economic uncertainties, supported by robust domestic demand, ongoing infrastructure development, policy reforms, and increasing digitalization. These factors are expected to provide a conducive environment for long-term investment growth. Leveraging its strong financial position and strategic investment approach, HIL remains focused on identifying value-accretive opportunities and strengthening its investment portfolio while maintaining a prudent risk management framework.

The Company remains committed to safeguarding stakeholder interests through disciplined capital allocation, sound governance practices, and sustainable value creation.

Opportunities and Threats

The World Economic Outlook Report of April 2025 issued by the IMF describes the global economy as being at “a critical juncture amid policy shifts.” The report notes that, after a prolonged period of shocks, the global economy had largely stabilized with steady but modest growth. However, increasing trade tensions, higher tariff barriers, uncontrollable global policy uncertainties, and war tensions have created a more challenging environment. As a result, global growth forecasts have been revised downward, while downside risks have intensified. Although inflation is expected to continue moderating, it is likely to decline at a slower pace than previously anticipated. The IMF emphasizes the need for international

cooperation, stable trade policies, and structural reforms to support sustainable growth and economic stability.

The IMFs forecast for Indias growth is supported by factors like strong domestic demand, sustained public investment in infrastructure, a resilient financial sector, continued progress in digital transformation, and prudent macroeconomic policies. The IMF, in its April 2026 World Economic Outlook, projects global growth at 2.8% in 2025 and 3.0% in 2026, while global headline inflation is expected to increase to 4.4% in 2026 and decline to 3.7% in 2027, marking upward revisions for both years. Despite the challenging global environment, India is expected to remain the fastest-growing major economy, with growth projected at 6.5% in both 2026 and 2027, supported by strong domestic demand, continued infrastructure investments, digital transformation and sound macroeconomic fundamentals.

At the same time, geopolitical tensions, including the ongoing Russia-Ukraine conflict and the Israel, Iran and United States conflict, continue to pose risks to global economic stability. These developments have increased uncertainty in global trade and supply chains, heightened volatility in financial markets and exerted upward pressure on energy prices. Concerns over potential disruptions in the Strait of Hormuz have further intensified risks to global oil supplies, with analysts indicating that crude oil prices could exceed USD 100 per barrel in the event of prolonged disruptions.

The resulting volatility has impacted investor sentiment globally, including in India, where equity and foreign exchange markets have experienced periods of heightened uncertainty. During the escalation of the Israel-Iran conflict, investors reportedly witnessed an erosion of nearly Rs. 2 lakh crore in market capitalization in a single trading session. While sustained geopolitical instability and elevated energy prices may adversely affect inflation, corporate profitability and economic growth, Indias resilient economic fundamentals, diversified economic base and prudent policy framework are expected to support continued growth and stability over the medium term. The escalation of hostilities in the Middle East resulted in significant economic and military costs. Various estimates suggest that the Israel-Iran conflict imposed direct military expenditures ranging from approximately US$200 million to US$725 million per day, while also contributing to volatility in global energy and financial markets.

A summarized position of the Companys portfolio of investments is given below:

Non-Current Investments

(Rs. in Lakhs)

Particulars	Face Value	Qty	Opening Value as on 1 Apr 2025	Closing Value as on 31 Mar 2026
Bajaj Holdings & Investment Ltd.	10	4,15,516	51,816.92	36,341.03
Bajaj Auto Ltd.	10	1,82,590	14,377.87	16,034.14
Bajaj Finserv Ltd.	1	11,05,630	22,178.38	18,041.67
Bajaj Electricals Ltd.	2	6,24,596	3,408.42	2,109.57
BAJEL Projects Ltd. #	2	6,24,596	1,021.21	857.38
Total Non-Current Investments			92,802.80	73,383.80

Note: The values of the investments held by the Company are derived solely based on prevailing market prices as on the reporting date. These valuations reflect fluctuations in the stock market and are subject to change based on market dynamics. No revaluation or adjustment has been made other than those arising from observable market movements.

Mutual Fund Investment Movement

(Rs. in Lakhs)

Particulars	Opening Value as on 1 Apr 2025	Investment Made During the Year	Investment Sold During the Year	Change in NAV	Closing Value as on 31 Mar 2026
Axis Liquid Fund — Direct Growth (CFDGG)	1,014.18	—	—	63.67	1,077.85
Bajaj Finserv Money Market Fund — Direct Plan-Growth	—	797.96	(25.00)	23.22	796.18
Total Current Investments	1,014.18	797.96	(25.00)	86.89	1,874.03

Note: The mutual fund investment is maintained primarily to manage the Companys short-term liquidity requirements and to meet day- to-day operational expenses. The fund is readily encashable and is monitored regularly to ensure optimal cash flow management.

Outlook

Following the approval and implementation of the Scheme of Demerger, HIL has become a non-registered Core Investment Company. Going forward, the managements focus will be on strengthening the Companys investment portfolio.

HIL aims to enhance its earnings primarily through income generated from dividends, interest, and capital appreciation on its investment holdings. The Company will continue to adopt a prudent and strategic approach in managing its investments, with the objective of creating sustainable long-term value for its shareholders.

The management remains optimistic about leveraging market opportunities and navigating economic conditions to optimize returns from its portfolio, thereby supporting steady growth in operating income and dividend distributions, but strictly through compliance with CIC norms.

Risks and Concerns

In todays dynamic and often volatile global business environment, unforeseen risks can significantly impact companies across sectors. Recognizing this, Hercules Investments Limited has adopted a proactive risk management and mitigation framework to effectively identify, assess, and manage potential risks.

The Risk Management Committee plays a vital role in assisting the Board of Directors by continuously reviewing and analysing the Companys risk exposures. This committee ensures that appropriate risk mitigation measures are in place and monitors their effectiveness.

Regular periodic diligence is conducted to evaluate emerging risks and vulnerabilities. Based on these assessments, the Committee recommends corrective actions and process improvements, which are then implemented with oversight from the Board.

This structured and ongoing approach to risk management enables the Company to remain resilient and agile, safeguarding stakeholder interests and supporting sustainable business continuity.

Internal Control Systems and Their Adequacy

The Company upholds robust internal control systems tailored to its scale and business operations. In reinforcement of these endeavours, the Company has engaged a reputable internal audit firm. Oversight of the audit process is diligently conducted by both the Audit Committee and the Board, ensuring the effectiveness of internal control systems and adherence to regulatory standards.

Management takes a proactive approach in rectifying any identified gaps or areas for improvement, swiftly implementing corrective measures based on recommendations from both the internal auditor and the Audit Committee.

Through a steadfast commitment to transparency and accountability, the Company upholds the highest standards of corporate governance, safeguarding the integrity of its operations.

Discussion on Financial Performance with Respect to Operational Performance

The Company is an Unregistered Core Investment Company (CIC) and, as such, does not engage in any operational, service or manufacturing activities. Its primary business activity involves holding investments in group companies and providing strategic support, including financial assistance strictly within the Group, as and when required.

As the Company is principally engaged in investment and financing activities, its financial performance is directly linked to the returns generated from its investment portfolio and treasury operations. The revenue and profitability of the Company during the year are primarily influenced by:

• Dividend income received from investments,

• Interest income from loans and advances extended to group companies, if any,

• Interest income from Bank Deposits or Debt Instruments invested in Sovereign Government Securities,

• Fair valuation of investments in Group Companies, and

• Fair valuation of investments in liquid and / or money market mutual funds.

For the financial year under review, the Companys financial results reflect the performance of its investment portfolio and treasury operations. Given the passive nature of its business model, operational performance indicators such as production volume, capacity utilization, or cost of goods sold are not applicable.

Material Development in Human Resources / Industrial Relations Front

HIL places significant importance on the welfare of its employees, reflecting the strength and stability of the Company. The Company continuously strives to enhance HR processes, including performance management, learning and development, workforce planning, and employee welfare. Hercules Investments Limited fosters a work environment that champions performance, role clarity, cooperation, and mutual respect, backed by significant investments aimed at enriching the lives of its employees. Through this culture, the Company nurtures a sense of unity, valuing each employee for their skills and expertise.

Furthermore, HIL is committed to empowering its team to achieve their personal goals and contribute their best towards organisational objectives. As of 31st March, 2026, the Companys team comprises 3 employees, which are currently sufficient to manage the affairs of the Company.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor.

The Company is primarily engaged in investment and financing activities. Accordingly, certain conventional operational ratios that are generally relevant to manufacturing, trading or service businesses may not be applicable or may not provide meaningful insights into the Companys performance. The Companys financial performance is more appropriately evaluated based on investment income, returns on investments, net worth, profitability and the performance of its investment portfolio.

The Company, being an Unregistered Core Investment Company, does not have any trade receivables or inventories; hence the computation of such ratios is not applicable to the Company.

There have been significant changes in the ratios as compared to the previous financial year. The same, along with the reason for change, is mentioned below:

Sr. No.	Particulars	31 Mar 2026	31 Mar 2025	Change (%)	Reason for Change
1	Current ratio (in times)	168.96	14.62	1,055.83	Significant increase due to higher current assets coupled with reduction in current liabilities.
2	Return on equity ratio (in %)	1.00%	0.71%	41.70	Due to increase in earning before exceptional items.
3	Return on investment (in %)	1.05%	0.66%	58.90	Increase due to higher return on investment.

The financial performance of the Company is largely dependent on dividend income and fair valuation of investments in liquid mutual funds, which do not lend themselves to conventional ratio analysis.

Details of Change in Return on Net Worth

The Companys investments are held under the Fair Value through Other Comprehensive Income (FVOCI) category in accordance with applicable accounting standards.

During the year under review, there has been no material change in the Return on Net Worth as compared to the immediately preceding financial year. The marginal fluctuations observed are attributable to changes in the market value of the Companys investments, which are primarily in listed Bajaj Group companies.

These changes are purely market-driven and reflect movements in the share prices of the underlying investee companies. As the Company follows a conservative investment strategy, with a minor portion (approximately 2.5%) of the total portfolio held in liquid mutual funds for meeting day-to-day operational expenses, the overall impact on Return on Net Worth due to such short-term investments is negligible.

Given the nature of the Company as a Core Investment Company, and in the absence of any operational revenue or leverage, the Return on Net Worth does not reflect operational performance but rather the market performance of its strategic investment portfolio.

Disclosure of Accounting Treatment

The Company confirms that the accounting treatment adopted in the preparation of its financial statements is in compliance with the applicable Indian Accounting Standards (Ind AS) notified under the Companies Act, 2013 and other accounting principles generally accepted in India. No accounting treatment has been adopted that is inconsistent with the requirements of the applicable Accounting Standards.

Cautionary Statement and Safe Harbor

Statements in the Management Discussion and Analysis, describing the Companys growth prospects, are forward-looking statements. The actual results may vary, depending upon economic conditions, raw-material prices that might be affecting companies in which HIL has investment(s), government policies,regulations, tax laws and other incidental factors since such factors may influence markets and in turn the investments portfolio of HIL.