JSW Holdings Ltd Management Discussions

1. Background

The global economic landscape is undergoing rapid transformation. Recent trade tariff actions have heightened uncertainty across regions, creating fresh challenges for both global growth and inflation. Financial markets have reacted with notable volatility marked by a sharp decline in the dollar index, widespread equity sell-offs, and significant easing in bond yields and crude oil prices.

Amid these global headwinds, India continues to strengthen its standing as one of the worlds fastest- growing economies. The International Monetary Fund projects Indias real Gross Domestic Product (GDP) growth at a solid 6.2% for 2025, signaling economic resilience. Key developments such as the anticipated signing of the UK-India Free Trade Agreement alongside strong domestic demand, regulatory reforms, technological advancements, and the sustained focus on the Make in India initiative, are expected to propel the country toward continued prosperity.

According to the National Statistics Office, Indias real GDP growth is estimated at 6.5% for FY 2024-25, following a strong 9.2% growth in FY 2023-24. The Monetary Policy Committee of Reserve Bank of India maintained steady interest rates through most of FY 2025 but opted for a 25 basis point reduction in the policy repo rate to 6% in April 2025. It also shifted its policy stance from neutral to accommodative, aligning with its medium-term objective of containing CPI inflation at 4%, within a tolerance band of ?2%, while fostering economic growth.

Retail inflation, measured by the Consumer Price Index (CPI), eased to an encouraging 4.6%, reflecting the effectiveness of ongoing monetary and fiscal measures.

Your Company is a Core Investment Company ("CIC") with an asset size of above 100 Crore. As the Company is not accessing public funds, it is not required to be registered under Section 45IA of the Reserve Bank of India, 1934 and is termed as Unregistered CIC in terms of the Core Investments Companies (Reserve Bank) Directions, 2016 ("Directions"). Your Company continues to carry on the business permitted to Unregistered CIC in terms of the said Directions and as a pre-requisite continues to hold at least 90% of its investments, loans, advances, etc. in Group Companies with significant investment in equity shares of JSW Steel Limited.

As of March 31, 2025, your Company holds 7.42% equity share capital of JSW Steel Limited, the market value of which stands close to 19,000 Crore. The Company also holds other strategic investment in Group Companies, the details of which are provided in this Annual Report.

2. Overview of Financial and Operational Performance

Your Company has recorded good performance during the F.Y. 2024-25 on standalone as well as consolidated basis. This Report should be read in conjunction with the Companys financial statements and other information included elsewhere in this Annual Report. The quantitative overview of the financial and operational performance of your Company during F.Y. 2024-25 is as follows:

A. Standalone Performance For the financial year under review, your Company earned a total revenue on Standalone basis of Rs.24,808.99 Lakh, comprising of income by way of dividend of Rs.13,356.86 Lakh, interest of Rs.10,499.53 Lakh, pledge fees of Rs.171.15 Lakh, management advisory services of Rs.472.50 Lakh and gain on fair value changes of Rs.308.95 Lakh. The Profit before interest, depreciation and tax was Rs.23,403.77 Lakh and after providing for Tax of Rs.5,934.01 Lakh and the Net Profit for the year was Rs.17,469.76 Lakh.

B. Consolidated Performance

During the year under review, your Company earned the total Consolidated Revenue of Rs.24,808.99 Lakh, comprising of income by way of dividend of Rs.13,356.86 Lakh, interest of Rs.10,499.53 Lakh, pledge fees of Rs.171.15 Lakh, management advisory services of Rs.472.50 Lakh and gain on fair value changes of Rs.308.95 Lakh. Your Company has two Associate Companies and after considering the share of profit from associates of Rs.2,112.89 Lakh, the consolidated profit after tax for the year was Rs.19,582.83 Lakh.

C. Significant changes in Key Financial Ratios

As compared to previous year, there were no significant change (i.e. change of more than 25%) in key financial ratios.

3. Economic Overview & Future Prospects

A. Economic Overview

The global economy has shown strong resilience amidst multiple headwinds such as the ongoing Russia-Ukraine war, geopolitical tensions in the Middle East, and the cost-of-living crisis in several economies. The recession was avoided by the resilient banking system and several major emerging markets economies performed better than expected. The manufacturing activity, however, has remained subdued, but services have exhibited strength.

According to International Monetary Funds World Economic Outlook, global economy is expected to grow at the rate of 3.3% both in 2025 and 2026.

5.9% in 2024 to 4.5% in 2025 and 3.6% in 2026 with advanced economies returning to their inflation targets sooner than developing economies. Falling inflation should allow interest rate cuts in the near term which will further support economic recovery.

Indias economic growth momentum continues to remain strong, driven by the industrial sector and robust capital formation. Strong government spends on infrastructure and anticipated private capex recovery are contributing to the momentum. The outlook for housing, auto and renewables remain robust. An expected rural recovery, aided by above-normal monsoons forecasted for 2025, will provide further tailwinds to economic growth. Indias overall macro-economic profile remains strong, buoyed by healthy forex reserves and a positive outlook on capital inflows, despite escalating geopolitical risks.

In India, healthy steel demand growth continues, aided by ongoing infrastructure spends by the government and tailwinds from major steel consuming sectors and increase in demand from crucial sectors such as construction, infrastructure, automobile, engineering and defence.

B. Future Prospects

In the US, economic growth is holding up reasonably well with resilient labour markets and consumption. In China, GDP was driven by strong growth in industrial production and infrastructure investments. Excess industrial capacity in China remains a concern and likely to push up trade tensions. In the Eurozone, while there is weakness in consumption and manufacturing, overall economic growth appears to be bottoming out.

India remained the fastest growing major economy in the world in FY24-25. The Indian economy remains on a transformative growth path, demonstrating its inherent strength and resilience. Building on the strong foundations, India appears to be well on track to become the third largest economy over the next three years. The Union Budget announced cuts in personal income tax amounting to Rs. 1 Trillion aiming at boosting consumption and stimulating economic growth. The focus on infrastructure development continues, with central government capex is budgeted at Rs. 11.2 Trillion in for FY 2025-26 to drive sustained economic growth, which is likely to continue having a multiplier effect.

Most multilateral agencies, including the IMF and World Bank, have upgraded Indias growth forecasts for 2025 and 2026, amidst caution surrounding geopolitical tensions. Elevated consumer confidence, coupled with easing inflation, will support consumption growth. Indias out performance is expected to continue, with positive trends across key sectors and a resilient macroeconomic profile

India is the second-largest producer of crude steel in the world. In FY24-25, the Indian Steel Sector has demonstrated unprecedented performance, achieving its highest level of production and consumption. The production of crude steel was 159 Million Tonne (MnT) and finished steel consumption was 162 MnT driven by robust domestic demand on the back of the Governments continued spend on infra and housing, the increasing share of manufacturing in GDP, and strong demand from automotive sector. However, margins of domestic steelmakers were under pressure due to volatile commodity and energy costs, and the surge in low-cost imports putting more pressure on steel prices.

4. Opportunities, Threats and Developments

India has emerged as the fastest growing major economy in the world and is currently the fifth largest economy of the world and is on track to become the third largest economy over the next three years. Despite the geopolitical tensions due to Russia-Ukraine War, Middle East, the economic growth of India was ensured by the government through various financial stimulus packages and the focus on infrastructural development. India is poised to fortify its position as a global hub for innovation and research. Government support for initiatives emphasizes the pivotal role of Research and Development (R&D), such as positioning the nation as a manufacturing stronghold to make India self-reliant.

The Company, being a CIC, holds significant investments in equity shares of JSW Steel Limited, besides certain other investments in other Group Companies, as a result of which it remains less affected by the overall environment in the Non-Banking Finance (NBFC) Sector. The Company recognizes that there is a significant potential for increase in steel demand in India. JSW Steel Limited, one of the major investments of your Company and has domestic as well as overseas operations to reap benefits in the long term.

All these factors point towards a high growth potential for Indian steel industry within India and a bright prospect for Indian Steel Manufacturers. As a result of which, the Company is looking forward for a sustainable growth in its investee Companies in the coming years which would enhance the shareholders value. The Company expects to enhance its entrenched value for the benefit of the shareholders at large.

5. Government Initiatives

The Government of India has implemented a series of strategic measures to propel the growth of the domestic steel industry and bolster industrial development. Central to these efforts is a policy that prioritizes domestically manufactured iron and steel products in government procurement processes. This move not only promotes the utilization of locally produced steel but also provides a significant impetus to the fast-growing industrial landscape of the country. The Government has allocated increased funds towards critical infrastructure projects, including rail transport networks, dedicated freight corridors, high-speed railway tracks, affordable housing initiatives, and power transmission networks. These investments are aimed at fostering a robust ecosystem for steel production and consumption, thereby stimulating economic growth and employment opportunities across various sectors.

Furthermore, the introduction of targeted initiatives such as the Production Linked Incentive (PLI) scheme for specialty steel has incentivized investments in value-added steel production and export-oriented manufacturing. This scheme has facilitated the execution of 57 Memorandums of Understanding, amounting to an investment of Rs. 29,500 Crore and creating an additional capacity of 25 million tonnes for producing specialty steel grades. Complementing these efforts are policy frameworks like the National Steel Policy 2017, which lays down key imperatives to ensure the readiness of the Indian steel sector to meet the evolving demands of modern India while promoting sustainable growth. Initiatives like Make in India and PM Gati-shakti National Master Plan further aim to enhance steel usage, overall demand, and investment in the sector, positioning India as a prominent player in the global steel market.

To strengthen the quality and competitiveness of domestically manufactured steel, the government has introduced the Steel Quality Control Order, which has notified 151 Indian Standards to promote Made in India steel and steel products for government procurement. Additionally, the establishment of the Project Development Cell underscores the governments commitment to facilitating new investments in the sector by identifying and fast-tracking critical projects. These comprehensive measures reflect Indias proactive approach towards enhancing its steel industrys capabilities, fostering innovation, and driving sustainable growth in alignment with the broader national development agenda.

6. Industry Structure

The NBFC sector is undergoing significant transformation, shaped by regulatory reforms, funding challenges, and evolving market dynamics. With the implementation of Scale Based Regulations, NBFC have been segregated into four layers, namely, Base Layer, Middle Layer, Upper Layer and Top Layer based on size, activity, and the perceived level of risk. NBFC are an integral part of the Indian financial system and have emerged as powerful engines of growth. NBFC sector in India has undergone remarkable resilience and growth and has consistently outpaced that of banks.

Credit growth among NBFCs, which has consistently outpaced Indias GDP, is expected to maintain its upward trajectory and play an increasingly pivotal role in the countrys financial ecosystem.

7. Risks & Concerns

Your Company holds significant investments in equity shares of JSW Steel Limited, therefore, the business prospects of the Company largely depends on the business prospects of JSW Steel Limited and the steel industry in general Global steel prices influenced by Chinas production, pose a long-term risk to Indias steel demand and imports, compounded by geopolitical conflicts such as the escalating Middle East tension, potentially impacting crucial projects and fiscal stability.

Steel and raw material prices were broadly lower in FY 2024-25 compared to the previous year. This reflected the weak macro sentiment through much of the year. With Chinas production not adjusting adequately to the moderation in its steel demand and operating with negative spreads through a substantial part of the year, Chinas steel exports continued to trend upwards in 2024. This exerted downward pressure on steel prices. In the US, however, steel prices increased towards the end of FY 2024-25, mainly reflecting the tariffs.

Government initiatives to boost infrastructure, including increased budget allocations for rail transport networks, dedicated freight corridors, and affordable housing projects, provide a strong impetus to domestic steel demand. Additionally, the Production Linked Incentive scheme for specialty steel incentivizes investments in value-added production, enhancing both domestic output and export competitiveness. Despite external pressures and geopolitical uncertainties, Indias steel industry is poised to remain resilient, contributing significantly to the nations economic growth and development aspirations.

The Company continuously evaluates its investments in group companies to ensure that the same meets the objective of ensuring maximisation of value to all its stakeholders in a prudent manner. The Company expects to make full use of the growth opportunities available to it as a CIC, however, the challenge remains on being able to leverage these initiatives to carve out a space in the competitive industry, within the regulatory and compliance framework.

8. Material Developments in Human Resource/ Industrial Relations Front

There have been no material developments in Human Resource and Industrial Relations front. Given the nature of business your Company is engaged in, your Company employed three employees during F.Y. 2024-25 to look after the business and administration of the Company.

9. Internal Controls, Audit and Internal Financial Controls

A. Overview

Our Management holds the primary responsibility for establishing and maintaining an effective system of internal control over financial reporting. This framework is designed to offer reasonable assurance that financial and operational information is accurately recorded and presented to the Board of Directors.

Our internal-control structure is comprehensive and robust anchored by clear policies, documented Standard Operating Procedures, and consistent implementation across all operational areas. It is tailored to align with the Companys size and business characteristics, and forms a cornerstone of our corporate governance framework.

B. Risk Management

Managing risk is at the heart of the financial services industry as it underpins both consistent profitability and long-term stability. In todays fast- evolving economic, geopolitical, regulatory, and market landscape, your company has continued to build on its robust risk management strengths. Effective risk management involves a structured framework for identifying, evaluating, managing, and monitoring risks that could hinder the organizations goals. The company employs both top-down and bottom-up approaches to spot risks and opportunities, consolidating and calibrating findings to develop a comprehensive enterprise wide view. Of course, not all risks are intentional some emerge unexpectedly from internal decisions or external developments. Recognizing this, the company considers risk management a core expertise, striving to identify, assess, and address threats proactively. At the centre of this effort is a risk management framework that aligns closely with capital management and business strategy, safeguarding shareholders and stakeholders alike. This framework keeps the company on course toward its objectives and supports sustainable growth. Oversight comes from the Risk Management Committee, chaired by Independent Director Mr. N. K. Jain. The committee regularly reviews risk trends, evaluates exposures, and discusses their potential impact on company operations.

C. Compliance

The Company is committed to adhere to the highest standards of compliance with respect to regulatory matters as well as its internal norms and guidelines. The Company Secretary, assist the Management in designing the compliance framework, risks and manage these by framing appropriate policies, procedures etc. The Company periodically reviews policies and has in place the required framework for transactions monitoring and testing the implementation of the regulations, ensuring right governance structures and handling the regulatory relationships, including proactively engaging with the Regulators for industry level initiatives. The Whole-time Director, CEO & CFO, places before the Board, at each meeting, a certificate of compliance with the applicable laws. The Company Secretary also confirms compliance with Company law, SEBI Regulations and other corporate laws applicable to the Company.

D. Internal Control

The Company is dedicated to upholding the highest standards of compliance, both in regulatory matters and its internal policies and guidelines. The Company Secretary supports Management in crafting and implementing a compliance framework identifying, assessing, and addressing risks through tailored policies and procedures. This framework is regularly reviewed and enhanced to ensure that transactions are effectively monitored, regulatory implementations are tested, and governance structures are robust. The Company maintains proactive engagement with regulators, participating in industry-level initiatives. Additionally, at each Board meeting, the Wholetime Director, CEO & CFO certifies compliance with applicable laws. The Company Secretary further confirms adherence to Company Law, SEBI regulations, and other relevant corporate laws.

E. Internal Audit

The Company maintains a seasoned internal audit function that adopts global best standards and practices from leading international organizations. To preserve impartiality, the internal audit team reports functionally to an expert Audit Committee of Independent Directors ensuring full objectivity. Their mandate, scope, and authority are clearly outlined in an Internal Audit Charter, and they have unrestricted access to all organizational information.

Each year, the internal audit team develops a risk- based audit plan approved by the Audit Committee. The frequency and focus of audits are determined by the risk rating of various areas and functions. The plan is dynamic and periodically updated to reflect emerging industry trends, corporate expansion, internal feedback, and external developments.

Upon completing audits, observations are reported to respective areas, and corrective actions are implemented to strengthen controls. Significant findings and remediation updates are presented to the Audit Committee. Additionally, the Committee holds independent sessions with statutory auditors and management to assess the adequacy and effectiveness of internal financial controls.

F. Internal Financial Controls

Under Section 134(5)(e) of the Companies Act, 2013 (Act), the Board of Directors is accountable for instituting and maintaining a robust system of internal financial controls. This system offers reasonable assurance about the adequacy and effectiveness of controls related to financial reporting, operations, and regulatory compliance

The Company has established a comprehensive internal financial control framework, incorporating:

• Clear delegation of authority, well-defined policies and procedures, and IT systems tailored to business requirements

• Risk-based internal audits aligned with a dynamic risk management framework

• A whistle-blower mechanism to enhance transparency and accountability

In adherence to regulatory standards, entity- level policies-such as anti-fraud measures, confidentiality, whistle-blower safeguards, insider trading, HR and organization-structure policies- are supplemented by detailed Standard Operating Procedures for each process area.

During the year, controls were rigorously tested, and no material weaknesses in design or operational effectiveness were identified. Management, statutory auditors, and internal auditors all performed due diligence on the control environment and confirmed the absence of any significant deficiencies impacting financial reporting.

G. Governance Context and Best Practices

• Section 134(5)(e) of the Act mandates that directors confirm they have implemented adequate internal financial controls and that they are functioning effectively

• Internal financial controls encompass policies and procedures to ensure orderly business conduct, asset protection, error/ fraud prevention, accurate record-keeping, and timely preparation of reliable financial information

• The auditors report must confirm both the existence and operating effectiveness of these controls, reinforcing transparency in financial reporting

10. Cautionary Statement

Statements made in this Management Discussion and Analysis (MD&A) describing the Companys objectives, projections, estimates and expectations may be forward looking within the ambit of applicable laws and regulations. Actual results may differ from those expressed or implied owing to successfully implement our strategies, our growth and expansion, global & Indian economy, political stability, stock performance on stock markets, changes in government regulations, tax regimes, economic developments and other incidental factors. Except as required by law, the Company does not undertake to update any forward-looking statements to reflect future events or circumstances. This MD&A should not be considered as a recommendation that any investor should subscribe for or purchase any of the Companys shares. The Company makes no representation or warranty, express or implied, as to and does not accept any responsibility or liability with respect to the fairness, accuracy, completeness or correctness of any information or opinions contained herein. Investors are advised to exercise due care and caution while interpreting these statements.