ISL Consulting Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian economy demonstrated resilience during the financial year 2025-26 despite heightened geopolitical tensions, global trade uncertainties, volatile financial markets, and evolving macroeconomic conditions. Strong domestic demand, healthy government capital expenditure, resilient services sector growth, and sustained public investment supported overall economic activity. The Reserve Bank of India (RBI) estimated Indias real GDP growth at around 6.5% for FY 202526, while inflation moderated during the year, creating room for calibrated monetary policy actions. The RBI accordingly adopted an accommodative monetary policy stance with calibrated reductions in the policy repo rate to support economic growth while maintaining price stability. Overall, Indias macroeconomic fundamentals remained robust, supported by strong foreign exchange reserves, fiscal consolidation efforts, and a stable financial system.

The Non-Banking Financial Company (NBFC) sector continued to play a significant role in promoting financial inclusion and providing credit to sectors that remain relatively underserved by the traditional banking system. NBFCs continued to support retail borrowers, MSMEs, infrastructure, and capital market activities while complementing the formal banking sector in meeting the diverse financing requirements of the economy. The RBI continued to strengthen the regulatory framework for NBFCs by focusing on governance standards, risk management, cyber resilience, climate-related financial risks, customer protection, and technology-driven supervision under the Scale-Based Regulatory Framework, thereby enhancing the overall resilience and stability of the sector.

Investment and Credit Companies (NBFC-ICCs) continued to remain an important segment of the financial ecosystem by facilitating credit intermediation and supporting economic development through financing activities across various sectors. Well-capitalised NBFCs with prudent underwriting standards, sound governance practices, and effective risk management frameworks continued to demonstrate resilience amidst evolving market conditions. The sector is expected to benefit from increasing formalisation of the economy, growing digital adoption, expanding financial inclusion initiatives, and sustained demand for diversified credit products.

The Company continues to monitor the evolving economic and regulatory environment and remains committed to maintaining prudent lending practices, strengthening risk management systems, ensuring regulatory compliance, and leveraging emerging opportunities to deliver sustainable growth and long-term value to its stakeholders.

OPPORTUNITIES & THREATS

The Indian financial services sector continues to present significant growth opportunities, supported by sustained economic expansion, increasing financial inclusion, rapid digital transformation, regulatory reforms, and growing participation in the formal financial system. The continued focus of the Government and the Reserve Bank of India on strengthening the financial ecosystem, improving credit accessibility, and promoting digital lending and financial innovation is expected to create a favourable business environment for Non-Banking Financial Companies (NBFCs).

As a Category-I Non-Deposit Taking Non-Banking Financial Company (NBFC-ND), ISL Consulting Limited is well-positioned to leverage these opportunities by providing timely and efficient financial solutions. Increasing demand for credit from individuals, MSMEs, and emerging businesses, coupled with expanding investment opportunities and greater adoption of technology-driven financial services, offers significant potential for sustainable business growth. The Company remains committed to identifying prudent lending and investment opportunities while maintaining a balanced approach towards risk and return.

The Company also continues to strengthen its operational capabilities through sound corporate governance practices, prudent financial management, effective risk management systems, and continuous monitoring of the evolving regulatory landscape. Its focus on maintaining adequate capital, strong internal controls, and disciplined credit appraisal processes provides a solid foundation for long-term value creation.

At the same time, the Company operates in an environment that is subject to various risks and uncertainties. Factors such as fluctuations in interest rates, liquidity constraints, inflationary pressures, changes in monetary and fiscal policies, evolving regulatory requirements, heightened competition, cybersecurity risks, geopolitical developments, global

economic uncertainties, and deterioration in asset quality across the financial sector may adversely impact business performance and profitability.

The Company continuously monitors these emerging risks and has established appropriate risk mitigation and internal control mechanisms to safeguard its business interests. A diversified business approach, prudent underwriting standards, effective asset-liability management, and a strong compliance framework enable the Company to respond proactively to changing market conditions.

The management remains optimistic about the long-term growth prospects of the NBFC sector and believes that the Companys strategic initiatives, experienced management team, sound governance practices, and customer-centric approach will enable it to capitalize on emerging opportunities while effectively managing potential risks, thereby creating sustainable value for all stakeholders.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company operates in single segment, i.e. Securities Trading. The revenue from operations from the aforesaid segment during the year was Rs. 1,857.81 Lakhs.

OUTLOOK

The outlook for the Indian economy and the Non-Banking Financial Company (NBFC) sector remains positive, supported by strong macroeconomic fundamentals, increasing formalisation of the economy, expanding digital financial infrastructure, favourable demographic trends, and sustained policy initiatives aimed at enhancing financial inclusion and credit accessibility. The growing demand for retail and MSME financing, coupled with continued regulatory support for a resilient financial system, is expected to create significant opportunities for well-managed NBFCs. ISL Consulting Limited remains optimistic about its future growth prospects and is well-positioned to capitalise on emerging business opportunities. The Company intends to pursue sustainable growth and disciplined risk management practices. The management continues to evaluate new business opportunities and strategic investments that are aligned with the Companys long-term objectives and are expected to generate sustainable returns for shareholders.

The Company remains focused on maintaining high standards of corporate governance, strengthening its internal financial controls, enhancing operational efficiency, and ensuring strict compliance with the applicable regulatory framework. Continuous monitoring of the business environment, prudent cost management, effective treasury operations, and technology-driven process improvements will continue to support operational excellence and long-term value creation. While the business environment may continue to witness uncertainties arising from macroeconomic developments, regulatory changes, interest rate movements, geopolitical events, and market volatility, the Company believes that its strong governance framework, sound financial position, experienced management team, and robust risk management practices will enable it to effectively navigate these challenges.

The management remains confident that the Companys strategic initiatives, customer-centric approach, prudent financial discipline, and focus on sustainable growth will strengthen its competitive position and create long-term value for its shareholders and other stakeholders.

RISK MANAGEMENT & INTERNAL CONTROL SYSTEMS

ISL Consulting Limited recognizes that an effective risk management and internal control framework is fundamental to achieving its strategic objectives, safeguarding stakeholders interests, and ensuring sustainable business growth. The Company has established a comprehensive risk management framework that facilitates the systematic identification, assessment, monitoring, and mitigation of strategic, operational, financial, credit, market, liquidity, compliance, and technology-related risks arising from its business activities.

Being a Category-I Non-Deposit Taking Non-Banking Financial Company (NBFC-ND), the Company operates in a highly regulated environment and therefore places significant emphasis on prudent risk management practices, sound governance standards, and regulatory compliance. The management continuously monitors the Companys risk profile and implements appropriate mitigation measures to address emerging risks arising from changes in the economic environment, regulatory framework, interest rates, market conditions, and technological developments.

The Company has implemented an adequate internal financial control system commensurate with the size, nature, and complexity of its operations. The internal control framework is designed to safeguard the Companys assets, ensure the accuracy and reliability of financial and operational information prevent and detect frauds and errors, promote operational efficiency, and ensure compliance with applicable laws, regulations, and internal policies.

The Internal Audit function, operating independently under the oversight of the Audit Committee, periodically reviews the adequacy and effectiveness of the internal control systems, risk management framework, and governance processes. The Audit Committee regularly reviews the findings of the Internal Auditors, monitors the implementation of corrective actions, and provides strategic guidance for strengthening the overall control environment. Significant observations and recommendations are placed before the Board of Directors for its review and oversight.

The Board is satisfied that the Companys risk management framework and internal financial control systems are adequate, effective, and commensurate with the scale and nature of its business operations. The Company remains committed to continuously strengthening its governance practices, enhancing operational resilience, and adopting industry best practices to effectively manage risks and create sustainable value for all stakeholders.

FINANCIAL PERFORMANCE AND OPERATIONAL REVIEW

Directors of your Company are confident in enhancing company performance and delivering better results next financial year, adding value to shareholders. They aim to improve turnover, bottom line, and overall revenue ahead. Financial Highlights with respect to Operational Performance is as under:

During the financial year ended March 31, 2026, the Company recorded Revenue from Operations of Rs. 1,857.81 lakhs as against Rs. 2,447.24 lakhs in the previous financial year, representing a decrease of approximately 24.70%. Other Income during the year stood at Rs. 6.04 lakhs, as compared to Rs. 9.53 lakhs in the previous year. Accordingly, the Total Income of the Company for the financial year 2025-26 stood at Rs. 1,863.85 lakhs, as against Rs. 2,456.77 lakhs in the financial year 2024-25. The total expenditure during the year decreased to Rs. 2,067.82 lakhs from Rs. 2,629.70 lakhs in the previous year.

The Company incurred a Loss before Tax of Rs. 203.97 lakhs during the financial year 2025-26, as compared to a loss before tax of Rs. 172.92 lakhs in the previous financial year. After considering tax expenses of Rs. 0.28 lakhs, the Company reported a Net Loss after Tax of Rs. 204.24 lakhs for the year under review, as against a net loss of Rs. 173.11 lakhs in the previous year.

The Earnings per Share (EPS) stood at (Rs. 0.85) for the financial year 2025-26 as compared to (Rs. 0.72) in the financial year 2024-25.

The overall financial performance reflects a decline in the Companys operating revenue during the year under review. Although the Company has reduced its total expenditure compared with the previous year, the reduction in revenue has resulted in an increase in the net loss for the year. The management continues to focus on improving operational efficiency, strengthening revenue generation and taking appropriate measures to improve the financial performance of the Company in the coming years.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

Human resources continue to be one of the Companys most valuable assets and a key driver of its sustainable growth and long-term success. ISL Consulting Limited firmly believes that the knowledge, commitment, integrity, and capabilities of its employees are fundamental to achieving its strategic objectives and delivering value to all stakeholders. The Company is committed to fostering a professional, inclusive, and performance-oriented work environment that promotes equal opportunity, mutual respect, collaboration, innovation, and continuous learning. Employees are encouraged to enhance their professional competencies through ongoing skill development, knowledge enhancement, and capability-building initiatives, enabling them to effectively respond to the evolving business and regulatory landscape. The Company strives to maintain a culture of transparency, accountability, ethical conduct, and employee engagement while providing opportunities for professional growth and career development. It also places significant emphasis on employee well-being, workplace safety, and compliance with all applicable labour laws and regulatory requirements.

During the financial year under review, there were no material developments in the human resources function that adversely affected the Companys operations. The Company continued to maintain cordial and harmonious industrial and employee relations throughout the year and remains committed to strengthening its human capital as a strategic enabler of sustainable business growth.

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF

The Return on Net Worth (RoNW) of the Company during the financial year under review was impacted primarily due to the losses incurred during the year and the effect of accumulated losses from previous financial years. Consequently, the Company was not able to generate a significant return on its net worth during the year.

The management continues to focus on improving operational efficiency, strengthening revenue generation, maintaining prudent cost controls, and enhancing the overall quality of its assets and investments. The Company remains committed to implementing appropriate business strategies and identifying growth opportunities that are expected to improve its financial performance and generate sustainable returns for its stakeholders in the coming years.