Industrial Investment Trust Ltd Management Discussions

Since last few years, global economy has been facing rising uncertainty due to heightened political tensions, trade restrictions and tariffs, supply chain disruptions. During the fiscal year 2025 26, the global economy continued to navigate through rough weather. It entered a critical phase with sudden outbreak of war in West Asia adversely affecting the global growth. There were continuous disruptions in the Strait of Hormuz, the main waterway from where the oil tankers and vessels pass through. There were blockades. Due to the closure, most of the countries suffered oil shortage which led to chain of disruptions in the already battered economy. The conflicts impact was not localised but was felt across geographies.

Global growth remained supported by strong demand in major economies, continued investment in IT Sector, accommodative financial conditions. Amidst such crises International Monetary Fund (IMF) projected global GDP growth at 3.1% in 2026. Inflationarypressures which had eased through previous financial year, renewed the risks due to higher energy prices and supply side disruptions. Apart from geo-political conditions, other factors weighing on economic prospects are protectionist trade policies adopted by countries across the global, elevated public debt in several major economies and increasing environmental and demographic pressures.

INDIAN ECONOMIC SCENARIO:

The financial year 2025-2026 was a turbulent year for Indian economy. The economy was already battered by the impact of tariff levied by US in 2025 and was later significantly impacted by West Asia crisis.

The crisis squeezed the Corporate margins / profit and disrupted trade. It affected Indias economic landscapes in several areas. The surge in crude prices dented the economy and worsened the inflation. Avoidance of usage of Strait of Hormuz from where Indias LPG import travel lengthened the transit time drastically, spiked insurance and freight cost. This choked the supply lines and triggered panic buying forcing the Indian Government to impose strict rationing and hoarding measures. Indias real GDP growth for FY 2025-2026 is estimated at 7.4% - 7.6% backed by domestic demand and sustained public expenditure. The West Asia crisis severely impacted Indias economy by triggering imported inflation and supply chain bottle necks. Shipping lines were re-routed adding 15-20 days of transit time and pushing up freight charges. The crisis spiked the LPG prices and increased the subsidy burden on Government. The Indian Rupee faced substantial pressure slumping nearly 5% against the dollar and forcing aggressive intervention by Reserve Bank of India to stabilise market. The RBI kept thebenchmarkrepo application for striking rate unchanged at 5.25%. In March 2026 the Indian government extended RELIEF scheme to support exporters affected by war related disruptions in Gulf and West Asia.

INDIAN CAPITAL MARKETS:

During the FY 2025-2026 Indian Capital markets exhibited a strong decoupling trend. Turbulence was constant during the last six months when markets had to grapple with one headwind after another. While foreign outflows continued, relentless - domestic inflows spearheaded by SIPs provided critical support and prevented major market crashes. The West Asia conflict impacted the Indian stock markets primarily through souring crude oil prices, supply chain disruptions and currency depreciation.

These pressures increased inflation risks and triggered foreign institutional outflows and high volatility across benchmark indices. There were massive sell offs. BSE Sensex Nifty saw massive intraday crashes wiping out billions in market capitalisation. FPIs withdrew approximately 2.74 trillion from Indian equities in the first half of Institutional Investors supported the market with the net inflow of 4.63 trillion during the said period. There was also a downward pressure on the Indian Rupee. The Indian government and the RBI have taken multiple steps to absorb the external shock and support the capital markets.

BUSINESS OVERVIEW OF THE COMPANY & ITS SUBSIDIARIES:

Your Company is registered with Reserve Bank of India (RBI) as a Non-Deposit taking Non- Banking Financial Company (NBFC) and is classified as a NBFC-Investment and Credit Company (NBFC-ICC). Since October 01, 2022, it has been categorized as a Base Layer NBFC (NBFC-BL) pursuant to the Scale Based Regulation (SBR) put forth by the RBI. It is primarily a Holding Company, holding investments in its subsidiaries. The activities of the Company comprises of Investment in equity shares, quoted as well as unquoted, units of mutual funds, Fixed deposits with renowned banks, Corporate loans. The Chairman alongwith the Managing Director, the Committee of Investments / Loans is entrusted with the power to make investments and grant loans and the Board of Directors is apprised of the investments / loans made by the Company and monitors the deployment of resources on regular basis.

Subsidiary Companies :

The Company through its subsidiary viz., IITL Projects Limited (IITLPL) is in the business of real estate. The two subsidiaries IIT Investrust Limited and IITL Management and Consultancy Private Limited merged with Industrial Investment Trust Limited, the holding Company in March 2025. The effective date of Merger was April 01, 2025. On January 16, 2025, the Company incorporated a subsidiary company, IITL Investment Advisors Private Limited (IITLIAPL) in Mumbai, Maharashtra, inter-alia to conduct the business of launching AIF category II fund in real estate sector. The subsidiary Company did not commence any business.

Pursuant to Section 248 of Companies Act, 2013 the said off and removal of its name subsidiaryfiled from Register of Companies. IITL Investment Advisors Private Limited has been struck off from the Register of Companies w.e.

June 22, 2026 and the said company stands dissolved.

RISKS AND CONCERNS:

As an NBFC, IITL is mainly exposed to credit, liquidity, operational, market and interest rate risk. At the highest level, the Board of Directors has established a Risk Management Committee (RMC), which assists the Board in maintaining an oversight and review of the risk management principles and policies, strategies, risk appetite, processes and controls. This is enabled by a robust governance system and review mechanisms which include quarterly risk management review. The RMC meets four times in a Financial Year.

Besides that, the equity markets become extremely volatile due to various other factors like policy changes, capital inflows/ outflows etc. The Company manages these risks by maintaining conservative financial profile and by following prudent business and risk management practices.

The Company manages the risks through proper frame work of policy and procedures approved by the Board of Directors from time to time. The Company has formulated a Risk Management evaluates, Policy. The Risk Management Committee identifies, analyses and prioritize risks in order to address and minimize such risks. This exercise facilitates identifying high level risks and implement appropriate solutions for minimizing the impact of such risks on the business of the Company. The Company is exposed to Credit risk which can be on account of loss of interest income and the Companys inability to recover the principal amount of the loan disbursed to the borrowers.

The assets are classified from time to time as performing and non-performing in accordance with RBI guidelines. Provisions are made on standard, sub-standard and doubtful assets at rates prescribed by RBI. An asset is classified as non-performing if any amount of interest or principal remains overdue for the number of stipulated days. The Company has an asset - liability management framework and maintains enough liquidity to meet its repayment obligations and emerging credit demand.

SIGNIFICANT FINANCIAL RATIOS

As per the provisions of SEBI Listing Regulations, 2015, the significant financial ratios are given below:

FINANCIAL PERFORMANCE:

The Company has reported a post-tax loss of 1,332.21 lakhs during the year compared to profit of 321.13 lakhs in the previous year. The Companys total income was negative at 1,715.79 lakh during the year, compared with total income of 1,496.27 lakh in the previous year, mainly due to the net loss on fair value changes in investments.

After initial recognition, the Company measures its investments in quoted financial assets, other than investments in subsidiaries, at fair value through profit or loss. During the current year, the Company recognised a net loss on fair value changes of 3,528.80 lakh, as compared with a net loss of 758.94 lakh in the previous year, primarily due to adverse movements in the market value of quoted investments.

HUMAN RESOURCE:

Your company considers Human Resource as key drivers to the growth of the Company. The Company has performance based appraisal system. As on March 31, 2026 the total number of employees including subsidiaries was 21.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company maintains appropriate systems of Internal Control, including monitoring procedures, to ensure that all assets are safeguarded against loss from unauthorised use or disposition. Company policies, guidelines and procedures provide for adequate checks and balances and are meant to ensure that all transactions are authorized, recorded and reported correctly. The Company has established appropriate Internal control framework in its operations and financial accounting and reporting practices to ensure due adherence to the Internal Financial Control over Financial Reporting under section 143(3) of The Companies Act 2013.

The Board of Directors have adopted Related Party Transactions Policy and Whistle Blower /Vigil Mechanism for ensuring efficient conduct of the business of the Company, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

The internal control is supplemented by an effective internal audit carried out by an external firm of Chartered Accountants. The management regularly reviews the findings of the Internal Auditors and takes appropriate steps to implement the suggestions and observations made by them. The management ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines. The Audit Committee of the Board of Directors reviews the adequacy of Internal Controls. The Internal Auditors are present at the Audit Committee Meetings where Internal Audit Reports are discussed alongside of management comments and the final observation of the Internal Auditor. All these measures assist in timely detection of any irregularities and remedial steps that can be taken to avoid any pecuniary loss.

OUTLOOK:

Global economic growth is projected roughly at 3.1% for 2026 and 3.2% for 2027. Currently the world is facing the spill over of a new war. This being the latest shock which comes less than a year since the shift in US trade policies and the transition to new international trade system. In addition to human toll the economic effects of the war in the middle east are global and will hit the poorest and most vulnerable countries the hardest. The World is recalibrating with geo-political realignments, shifting trade regimes, the aggressive march of ArtificialIntelligence and enduring conflict in West Asia. The global economic impact will crucially depend on conflicts duration, intensity and scope which are unpredictable as on date.

Developments surrounding the US-Iran conflict, shipping activity through the Strait of Hormuz and movements in crude oil prices will remain key drivers of global risk sentiment.

Indias economy is navigating a transition phase. The GDP growth for 2026-27 is projected between 6.6% - 6.9% on account of headwinds from global trade uncertainties and geo-political conflicts.Economists highlight the prolonged middle east conflict, fluctuations in crude oil prices and the potential impact of weather anomalies like El nino on agricultural output and food prices. While temporarily the crude oil prices have cooled, there is still a lot of uncertainty, a renewed escalation in conflict could reignite commodity prices volatility, tighten the financial conditions and worsen the economy in low income countries.

DISCLAIMER:

The information and opinion expressed in this section of the Annual Report may contain certain statements, which the Management believes are true to the best of its knowledge at the time of its preparation. The Company and the Management shall not be held liable for any loss, which may arise as a result of any action taken on the basis of the information contained herein.

On Behalf of the Board of Directors,