JSW Holdings Ltd Management Discussions.

1. BACKGROUND

Your Company, JSW Holdings Limited, is a Core Investment Company ("CIC") with an asset size of above Rs 100 crores but not accessing public funds. Accordingly, it is not required to be registered under Section 45IA of the Reserve Bank of India Act, 1934 and is termed as Unregistered CIC? in accordance with the Core Investments Companies (Reserve Bank) Directions, 2016, as amended (Directions?). Your Company continues to carry on the business permitted to be undertaken by an Unregistered CIC in terms of the said Directions and as a prerequisite continues to hold 90% of its investments, loans, advances, etc. in Group Companies.

Your Company continues to hold significant investments in equity shares of JSW Steel Limited, besides holding investments in other companies of JSW Group. As of March 31, 2022, your Company holds 7.50% equity shares of JSW Steel Limited, the market value of which, stood over Rs 13,000 crores as on the said date. The details of other strategic investment in JSW Group are provided elsewhere in this report. The Company will continue to focus on making long-term strategic investments in various new ventures promoted by JSW Group, besides consolidating the investments in the existing companies.

2. OVERVIEW OF FINANCIAL AND OPERATIONAL PERFORMANCE

Your Company has recorded very good performance during the Financial Year 2021-22 on Standalone as well as Consolidated basis. Below is a quantitative overview of the financial and operational performance of your Company during the reporting period. This Report should be read in conjunction with the Company?s financial statements and other information included elsewhere in this Annual Report.

A. Standalone:

For the financial year under review, your Company earned a total revenue on Standalone basis of Rs 18,614.21 lakhs, comprising of income by way of dividend of Rs 11,828.01 lakhs, interest of Rs 5,805.81 lakhs, pledge fees of Rs 980.39 lakhs. The Profit before interest, depreciation and tax is Rs 18,038.76 lakhs and after providing for depreciation of Rs 1.47 lakhs and Tax of Rs 4,577.01 lakhs, the Net Profit for the year is Rs 13,460.28 lakhs as against Rs 6,570.52 lakhs in the previous year, indicating an increase of around 104.86%.

B. Consolidated:

During the year under review, your Company earned a total Consolidated Revenue of Rs 18,614.21 lakhs, comprising of income by way of dividend of Rs 11,828.01 lakhs, interest of Rs 5,805.81 lakhs, pledge fees of Rs 980.39 lakhs. Your Company has two Associate Companies and after considering the share of profit from associates of Rs 1,701.33 lakhs, the consolidated profit after tax for the year is Rs 15,161.61 lakhs as against Rs 7,521.50 lakhs in the previous year, indicating an increase of around 101.58%.

C. Significant changes in Key Financial Ratios

As compared to the figures of previous year, there was significant change in following ratios:

1) There was increase in debtor?s turnover ratio by 31% due to increase in turnover as well as debtors.

2) Current ratio of the Company has also increased by 65% due to increase in current assets and decrease in current liabilities.

Except for this, there is no significant change (i.e. change of more than 25%) in any other key financial ratios during the current financial year as compared to immediately preceding financial year.

3. OUTLOOK & FUTURE PROSPECTS

A. Global Economy

Currently, the global economy poses two major challenges; firstly, recovery of the economy from the after effects of COVID-19 pandemic and secondly the ongoing geo political tension in Europe. The negative impact of the pandemic and war on the various economies of the world will continue in the near future and has contributed to a significant slowdown in global growth in 2022. Rising inflation, tightening fiscal policy, uncertain environment, high food and energy prices, increased defence expenditure, etc. have made it difficult to maintain fiscal sustainability. Beyond 2023, global growth is forecasted to decline to about 3.3 percent over the medium term. In emerging markets and developing economies, increases in food and fuel prices could significantly increase the risk of social unrest. A sustainable and fast economic revival of the world economy can be achieved by striving to achieve global peace and ability to manage debt distress. Even as policymakers focus on cushioning the impact of the war and the pandemic, attention will need to be maintained on longer- term goals viz. reskilling workers, digital transformation, achieve net zero carbon emissions, investment in renewables and compensation for those adversely affected by the transition, which can help hasten the needed green transition. Developing nations and emerging economies will need to carefully calibrate fiscal and monetary policy to maintain balance with risk and economic growth and outlook. Another longterm goal will be to improve the resilience of global supply chains for which multilateral cooperation remains essential.

B. Indian Economy

The herculean efforts of the Government of India, dedicated economic measures and financial stimulus packages and the contribution of other stakeholders and the nation as a whole, helped the Indian Economy to survive and gradually grow in the aftermath of COVID-19 pandemic. The broad vaccine coverage, fiscal and regulatory reforms reinforced strength in the upward trajectory of the Indian Economy. After a poor economic performance during F.Y.2020-21 with GDP contraction to 7.3%, F.Y. 2021-22 started on a very slow note and poised for a rise and increased to grow by 9.2%. The GDP is expected to grow by 8-8.5% in 2022-23. The industry has also been showing robust growth, particularly in the second -half of 2021-22. The index of Industrial Production (IIP) grew at 17.4 percent (YoY) during April- November 2021 as compared to (-)15.3 percent in April-November 2020. However, the effects of geo-political tension triggered by the conflict between Russia and Ukraine added with economic crisis in neighbouring countries, F.Y. 2021-22 has ended on a note of clouds of uncertainty hovering around economic growth. The Indian equity markets remains no indifferent to these developments and have remained highly volatile during this period. The country witnessed biggest single day fall of market indices in two years on February 24, 2022 as the Sensex was down 2,702.15 points at 54,529.91 points and Nifty by 815.30 points at 16,248 points. The market indices saw huge volatility during the last quarter of the F.Y. 2021-22 due to uncertain global cues and worsening inflation and a correction is expected in coming times.

C. Steel Industry

A vibrant steel industry lays the foundation for a nation?s growth & development and can play an integral role in steering India towards USD 5 trillion economy by F.Y. 2025. India is currently the 3rd largest steel producer in the world and 2nd largest producer of crude steel with production of crude steel and finished steel of 98.39 MT and 92.82 MT, respectively, during the year. The Indian steel industry accounts for about 2% of the country?s GDP and is one of the core sectors, deriving its demands from sectors like automobiles, consumer durables and infrastructure. In line with the National Steel Policy 2017, India?s finished steel consumption is anticipated to reach 230 MT by 2030-31 with per capita consumption projected to 160 Kgs, which is much lower than the global average of 208 Kg. With the introduction of reforms and production linked incentives, India?s steel demand is expected at 114 million tonne (MT) in 2022 compared with 106 MT a year earlier.

As of March 2022, India?s installed stainless steel capacity is at 6.6-6.8 MT. The capacity utilisation is estimated to have improved from 50 % in 2021 fiscal year to 58-60 % in 2022. The GOI has announced a new budget for 2022-23 of 39.45 trillion rupees with major focus on infrastructure projects. The intensified infrastructure developmental activities through dedicated freight corridors, rail transport network, metro connectivity, industrial parks, the Gati Shakti plan focusing on highways, the Awas Yojna plan in rural and urban areas, etc. promise faster economic development in coming year. Further by promoting energy-efficient and environmentally friendly steel industry, expansion of capabilities of domestic steel plants, enabling supply through best-in-class greenfield and brownfield capacity addition and setting up value adding coast-based steel clusters for logistical transformation, the future of steel industry looks settled in the years to come. Consumption of steel by India?s infrastructure segment is expected to increase to 11% by FY26 and steel demand from the automotive sector is expected to increase due to rise in the demand for automobiles. The new vehicle scrappage policy will help in reducing steel prices as the policy enables recycling of materials used in old vehicles. The Smart Cities? Affordable Housing and industrial corridors are a few more of the government initiatives to boost the steel industry. This demand will be supported by economic recovery, government spending and enhanced liquidity.

Home to fifth-highest reserves of iron ore in the world and the availability of cost- effective labour, the growth in the Indian steel sector is yet to achieve its peak, indicating the fact that there is much room for growth in the industry. The industry is witnessing consolidation of players, which has led to investment by entities from other sector. The ongoing consolidation also presents an opportunity to global players to enter the Indian market.

4. OPPORTUNITIES, THREATS AND DEVELOPMENTS

I ndia has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships. Despite the persistence of slowdown in global manufacturing trade growth, COVID-19 Pandemic followed by lockdown and social distancing norms and uncertainty looming over due to ongoing geopolitical crisis, the economic growth of India was ensured by the government through various financial stimulus packages, robust policy, proactive and aggressive fiscal measures. The stimulus measures and reforms initiated by the Government and liquidity measures by the RBI are expected to support industrial activity and demand. The movement of various high frequency indicators in recent months, points towards broad based resurgence of economic activity. However, the recent development in Ukraine has dealt a major shock to markets, altering global patterns of trade, production and consumption in ways that will keep prices at historically high levels in the coming time. These developments have started to raise the spectre of stagflation. The magnitude of the impact of this conflict will vary across regions, depending upon their proximity and dependence towards the region. The impact will also be felt globally via higher energy and commodity prices especially raw materials for steel production and continued supply chain disruptions. Furthermore, global decarbonisation measures, financial market volatility and heightened uncertainty will undermine investment in the sector.

The Company, being a CIC, holds significant investments in equity shares of JSW Steel Limited, besides certain other investments in other Companies of JSW Group, as a result of which it remains less affected by the overall environment in the NBFC Sector. The Company recognizes that there is a significant potential for increase in steel demand in India. Various government initiatives, including Make in India?, Aatmanirbhar Bharat? Vocal for Local? projects, increased spending on infrastructure and increased focus on rural development are likely to support increase in domestic demand for steel, providing opportunities for domestic steel player. Government has taken various steps to boost the sector including the introduction of National Steel Policy, 2017 and allowing 100% Foreign Direct Investment (FDI) in the steel sector under the automatic route. With the Country looking to modernize, expand and accommodate the aspirations of a growing population through urbanization and industrialization, the steel consumption growth is expected to rise on account of government expenditure on infrastructure and manufacturing in the long run.

JSW Steel Limited, one of the major investments of your Company, is in the capacity expansion mode. In October 2021, JSW Steel invested Rs 150 billion (US$ 19.9 million) to build a steel plant in Jammu and Kashmir and boost manufacturing in the region. In the next three years JSW Steel is planning to invest Rs 47,457 crores (US$ 6.36 billion) to increase Vijayanagar?s steel plant capacity by 5 MTPA and establish a mining infrastructure in Odisha. It has also undertaken capacity expansion at its Dolvi unit in Maharashtra and investing around Rs 15,000 crores (US$ 2.24 billion) to double the capacity of its plant to 10 MT. All these factors point towards a high growth potential for Indian steel industry within India and a bright prospect for Indian Steel Manufacturer. 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 to boost the fast growing industrial development of the country introduced the National Steel Policy, 2017 laying down a road map for building a globally competitive industry with a crude steel capacity of 300 MT by 2030-31. The Government also revised its policy for providing preference to domestically manufactured Iron S Steel Products in Government procurement. Recovering from the setback of the pandemic, the Government of India gave an impetus to industry growth and continuity by introducing various initiatives to promote the development of domestic steel industry by infusing finance in infrastructure projects, including rail transport network, dedicated freight corridors, high-speed railway tracks, affordable housing projects and low- cost power transmission. The increased budget allocation and financial focus of the government on Ministry of Transport and Highways and Railway ministry will provide a positive impetus to the steel demand of the country.

In a move towards becoming self-reliant, Indian steel companies have started boosting steel production capacity. The initiatives under Atma Nirbhar Bharat including introduction of various Production linked incentive schemes designed to attract investments in sectors of core competency and cutting edge technology, Make-in-India? initiatives boosting domestic manufacturing capacity, reduction of corporate tax rate, etc. have helped the industrial sector to recover and slowly achieve Pre-COVID levels. The Government has also implemented Domestically Manufactured

Iron and Steel Products (DMISSP) Policy, Quality Control Order (QCO) covering carbon steel, alloy steel, tin plate, tin free steel and stainless steel and a Research S Development scheme namely "Promotion of RSD in Iron S Steel Sector" to address the technological issues faced by the sector with an aim to strengthen the industry and to ensure that increase in production of steel is achieved in a sustainable manner. The Ministry of Steel is also facilitating the setting up of an industry driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies to spearhead research and development activities in the iron and steel industry at an initial corpus of Rs 200 crores (US$ 30 million).

Some of the other recent Government initiatives in this sector are as follows:

• Under the Union Budget 2022-23, the government allocated Rs 47.00 crore (US$ 6.2 million) to the Ministry of Steel. The budget?s focus is on creating infrastructure and manufacturing to propel the economy.

• In October 2021, the government announced guidelines for the approved specialty steel production-linked incentive (PLI) scheme.

• In October 2021, India and Russia signed an MoU to carry out RSD in the steel sector and produce coking coal (used in steel making).

• In July 2021, the Union Cabinet approved the production-linked incentive (PLI) scheme for specialty steel. The scheme is expected to attract investment worth ~Rs 400 billion (US$ 5.37 billion) and expand specialty steel capacity by 25 million tonnes (MT), to 42 MT in FY27, from 18 MT in FY21.

• In June 2021, Minister of Steel S Petroleum S Natural Gas, Mr. Dharmendra Pradhan addressed the webinar on Making Eastern India a manufacturing hub with respect to metallurgical industries?, organised by the Indian Institute of Metals and plans to invest US$ 70 million in the eastern region of the country through accelerated development of the sector.

• In January 2021, the Ministry of Steel, Government of India, signed a Memorandum of Cooperation (MoC) with the Ministry of Economy, Trade and Industry, Government of Japan, to boost the steel sector through joint activities under the framework of India-Japan Steel Dialogue.

6. INDUSTRY STRUCTURE

With a size of around 15% of Scheduled Commercial Banks? combined balance sheet, the NBFC sector has been growing robustly in recent years, providing an alternative source of funds to the commercial sector in the face of slowing bank credit. NBFC-ND-SI (Systematically Important Non-Deposit accepting NBFCs) comprise 85.4% of the total balance sheet size of the NBFC sector. Whereas the balance 14.6% is accounted by NBFC-D (Deposit accepting NBFCs). Although in the FY 2021-22, the concerns surrounding the sector due to debt defaults amidst temporary asset liability mismatches arose, the inherent strength of the sector, coupled with the Reserve Bank?s continuing vigil on the regulatory and supervisory front, will ensure that the growth of the sector is sustained and liquidity fears are allayed.

Speaking in particular about the Indian Steel Industry, the steel demand is derived from other sectors like automobiles, consumer durables and infrastructure, its fortune is dependent on the growth of these user industries. The Indian steel sector enjoys advantages of domestic availability of raw materials and cheap labour. Iron ore is also available in abundant quantities. This provides major cost advantage to the domestic steel industry.

The Competition in Indian Steel Sector is very high owing to a presence of a large number of players in the unorganized sector, imports from China, Russia and FTA (Free Trade Agreement) Countries such as Japan and South Korea.

7. RISKS & CONCERNS

The financial year started with an unprecedented second wave of COVID-19 pandemic which has already had and continues to have a devastating impact on the world economic growth and ended with global tensions on account of geo-political scenario between Russia and Ukraine. Financial market remained highly volatile with global supply chain and world trade being impacted negatively, energy and commodity prices rose and uncertainty hovered over investments.

The World Steel Association forecasts steel demand to increase up by 4% in the year 2022 i.e. upto 1.84 billion MT and grow a further 2.2% in 2023 to 1.88 billion MT. The growth in global steel demand is expected to slowly increase in 2022 and witness a sharp rise. The industry growth forecast is highly uncertain given the geo-political tensions rising between Russia and Ukraine and suggests a possible moderation in business confidence and investment, given its impact on the major economies of US and EU and proximity of India to the conflicting areas. Uncertainty over the global trade environment and volatility in the financial markets have poised up amid war tensions and pose downside risks to this forecast. The economic fallout of the crisis is only gradually unfolding and its full impact may be witnessed in the months to come.

The operations of JSW Steel Limited (JSL) have a major impact on the profitability of the Group and that of your Company. The Company continuously evaluates its investments in such companies to ensure that the same meet 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 during the F.Y. 2021-22. Given the nature of business your Company is engaged in; it does not require Human Resources at a large level. Your Company continues to employ two employees to look after the business and administration of the Company. The Company has engaged service of a Consultant on contractual basis during the year 2021-22.

9. INTERNAL CONTROLS, AUDIT AND INTERNAL FINANCIAL CONTROLS

Overview

The Management is responsible for establishing and maintaining adequate internal control over financial reporting within the organization for providing reasonable assurance with respect to recording and providing reliable financial and operational information to the Board of Directors. The Company has robust system of internal controls framework with laid down standard operating procedures and policies embedded at each of its functions / operations.

Risk Management

Managing risk is fundamental to financial services industry and a basic key to ensure sustained profitability and stability. In a rapidly changing economic, geo-political, regulatory and financial environment, your Company has continued to leverage on its strong risk management capabilities. Risk management involves a systematic approach to identify, assess, manage and monitor risks that can affect the organisations ability to achieve its objectives and both top-down and bottom-up approaches are taken for assessing risks/opportunities, which is then consolidated/calibrated to get an overview of the entire organisation. The Companys Risk Management framework aligns risk and capital management to its business strategies, aimed to protect its financial strength, reputation and ensures support to business activities for adding value to customers while creating sustainable shareholder value. The Risk Management Committee is chaired by Mr. N. K. Jain, Independent Director. The Committee reviews and discusses the risk trends, exposure and potential impact on the operations of the Company.

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. An independent Compliance function, headed by the Company Secretary, has been set up to assist the Management in designing the compliance framework and risk and manage these by framing appropriate policies, procedures, oversight, etc. It also provides advisory support by reviewing policies and products rolled out by the Company 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 Company continues to exhibit "zero tolerance" towards any non-compliant behaviour and violations have attracted disciplinary consequences, in line with the companys stress on "Clean Business Everywhere, Every time". The Whole-time Director, CEO S CFO, places before the Board, at each meeting, a certificate of compliance with the applicable laws. The Company Secretary (Corporate S Compliance) also confirms compliance with Company law, SEBI Regulations and other corporate laws applicable to the Company.

Internal Control

The Company has a proper and adequate system of internal controls, commensurate with the size and nature of its business to overview the Companys policy and to maintain an adequate check S balance mechanism. Internal control systems are integral to corporate governance. Some significant features of the internal control systems are:

• Adequate documentation of policies, guidelines, authorities and approval procedures covering all the important functions of the Company.

• Ensuring complete compliance with laws, regulations, standards and internal procedures and systems.

• De-risking the Companys assets/ resources and protecting them from any loss.

• Ensuring the integrity of the accounting system and a proper and authorised recording and reporting of all transactions.

• Preparation and monitoring of annual budgets.

• Ensuring a reliability of all financial and operational information. Audit Committee, a sub-committee of the Board of Directors, comprising of Independent Directors. The Audit Committee regularly reviews audit plans, significant audit findings, adequacy of internal controls, compliance with Accounting Standards, etc.

• The internal control systems and procedures are designed to assist in the identification and management of risks, the procedure-led verification of all compliances as well as an enhanced control consciousness.

Internal Audit

JSW Holdings Limited has an internal audit function that inculcates global best standards and practices of international measures into the Indian operations. The Company has a strong internal audit department reporting to the Audit Committee comprising Independent Directors who are experts in their fields. The Company extensively practices delegation of authority across its team, which creates effective checks and balances within the system to arrest all possible gaps. The internal audit team has access to all information in the organization. The scope and authority of the Internal Audit function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.

The Internal Audit Department prepares a risk- based audit plan, which is approved by the Audit Committee. The frequency of the audit is decided by risk ratings of areas/functions. The audit plan is carried out by the internal team and reviewed periodically to include areas that have assumed significant importance in line with the emerging industry trend and the aggressive growth of the Company. In addition, the Audit Committee also places reliance on internal feedback and other external events for inclusion into the audit plan. Based on the report of internal audit function, process owners undertake corrective action(s) in their respective area(s) and thereby strengthen the controls. Significant audit observations and corrective action(s) thereon are presented to the Audit Committee. Also, the Audit Committee at frequent intervals has independent sessions with the statutory auditor and the management to discuss the adequacy and effectiveness of internal financial controls.

Internal financial controls

As per Section 134(5)(e) of the Companies Act, 2013, the Directors have an overall responsibility for ensuring that the Company has implemented a robust system and framework of internal financial controls. This provides the Directors with reasonable assurance regarding the adequacy and operating effectiveness of controls with regards to reporting, operational and compliance risks. The Company has devised appropriate systems and framework, including proper delegation of authority, policies and procedures; effective IT systems aligned to business requirements; risk- based internal audits; risk management framework and a whistle blower mechanism.

The Company had already developed and implemented a framework for ensuring internal controls over financial reporting. This framework includes entity-level policies, processes and Standard Operating Procedures (SOP). The entity- level policies include antifraud policies (such as code of conduct, confidentiality and whistle blower policy) and other polices (such as organization structure, insider trading policy, HR policy, etc.). The Company has also prepared SOP for each of its processes. During the year, controls were tested and no reportable material weakness in design and effectiveness was observed. To make the controls more robust and comprehensive, IFC standardisation & rationalisation project was undertaken in FY 2021-22 which has ensured comprehensive coverage cutting across all functions of the Company. The management, statutory auditors and internal auditors have also carried out adequate due diligence of the control environment of the Company through rigorous testing.

10. CAUTIONARY STATEMENT

Statements made in this Management Discussion and Analysis describing the Company?s 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 successful implementation of our strategies, our growth and expansion, global S 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 MDA should not be considered as a recommendation that any investor should subscribe for or purchase any of the Company?s 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.