Ladderup Finance Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS INDIAN ECONOMY

Indias economy demonstrated strong momentum, with the provisional estimate for full-year GDP growth for FY25 standing at 6.5%, supported by easing monetary policy and lower tax burdens. Over the past five years, growth has remained robust, rising from 6.1% in FY19 to 8.2% in FY24. Export performance has surged, with total exports reaching an all-time high of US$ 824.9 billion in FY25, marking a 6.01% growth over the previous years figure of US$ 778.11 billion in FY24. Indias global export ranking improved from 20th to 17th. The Union Budget 2025-26 emphasizes balanced regional development, prioritizing agriculture, MSMEs, infrastructure, and manufacturing, with an 11.1% increase in capital expenditure. Inflation based on the CPI has eased to a provisional 2.10% in June 2025. This marks the lowest retail inflation rate since January 2019, primarily driven by a decline in food prices. Financial indicators such as GST collections, UPI transactions, FDI inflows, and forex reserves reflect positive economic health. As global conditions stabilize, India is poised for continued economic expansion, building toward its long-term goal of becoming a middle-income economy. The Indian capital market mirrored this economic strength. Equity indices remained buoyant, backed by healthy corporate earnings and expanding retail participation. The debt market too remained vibrant, with active issuances by both institutional and retail investors. Regulatory enhancements from SEBI and RBI further reinforced market integrity and investor confidence.

The Indian financial sector has undergone a major transformation, with NBFCs emerging as key drivers of credit growth and financial inclusion. By addressing gaps left by banks, they have expanded retail lending across personal, vehicle, SME, and microfinance segments. As of 2025, NBFC advances stood at nearly 25% of scheduled commercial banks credit, with retail loans forming a significant share. While near-term growth will be supported by falling interest rates and improved liquidity, banks are expected to benefit more in the medium term as margins and deposit repricing normalize.

GLOBAL OUTLOOK

According to the IMFs World Economic Outlook (WEO) released in January 2025, global economic growth is projected at 3.2% for 2025 (and 3.1% for 2024), slightly below the historical average of 3.7% (2000-2019). It is then expected to edge up slightly in the medium term.

Emerging markets, particularly in Asia, show resilience, with India projected at 6.5% for 2025 and China projected at 4.1% for 2025 (4.6% for 2024).

Global inflation is expected to decline to 4.4% in 2025 (and 5.8% in 2024) and 4.2% in 2026, with advanced economies reaching central bank targets sooner. The IMF emphasizes the need for a balanced policy mix to ensure price stability and rebuild fiscal buffers, while structural reforms are critical to address demographic shifts and boost medium-term growth.

BUSINESS & FINANCIAL PERFORMANCE OF THE NBFC SECTOR AND CAPITAL MARKETS

By 2025, the NBFC sector is expected to achieve robust growth, with retail loans continuing to dominate their portfolios. Analysts predict a compound annual growth rate (CAGR) of 13-17% for the sector in FY2025 and FY2026, driven by digital innovation, expanded customer bases, and favorable policy support. The RBI, after a series of rate cuts in 2025, including a 25 basis point reduction in April 2025 that brought the repo rate to 6.00%, further reduced the repo rate to 5.50% in June 2025. This signals the continuation of a rate-cut cycle that is expected to be shallow but beneficial for NBFCs. The move comes after a challenging period marked by high borrowing costs, regulatory tightening, and macroeconomic headwinds. The RBIs commitment to maintaining sufficient systemic liquidity will aid NBFCs, ensuring a stable credit environment that fosters growth and expansion.

Overall, the NBFC sector remains healthy with sizable capital buffers where Capital to Risk-Weighted Assets Ratio (CRAR) stood at 23.4% and improving asset quality where Gross Non-Performing Assets (GNPA) ratio stood at 2.9% as of March 31, 2025.

The Indian capital markets witnessed a year of relative resilience in FY 2024-25 amidst global macroeconomic uncertainties, inflationary pressures, and evolving monetary policies. Despite bouts of volatility triggered by geopolitical tensions and fluctuating global interest rates, the equity markets sustained investor confidence. Domestic retail participation continued to grow, supported by increasing demat account openings, SIP inflows into mutual funds, and deepening financial literacy.

During the year, the Nifty 50 delivered a return of 5.34%, while the Sensex posted similar moderate gains, reflecting a year of cautious optimism. However, Foreign Institutional Investors (FIIs) were significant net sellers, recording an all-time high outflow of 1.54 trillion from Indian equities. Despite this, the tide began to turn in the final quarter, with FIIs re-entering Indian markets in April and May 2025, bringing in over 40,000 crore, signaling restored confidence amid improving global cues and Indias stable macro fundamentals.

Looking ahead, Indias structural growth story, backed by strong domestic consumption, supportive government reforms, and a focus on manufacturing and infrastructure, continues to position it as a preferred investment destination among emerging markets.

BUSINESS STRATEGIES & FINANCIAL PERFORMANCE OF THE COMPANY

Ladderup Finance Limited ("LFL") is a residuary NBFC, registered with RBI as Non-Deposit Taking Non-Banking Financial Company. It is listed on the BSE Limited and primarily engaged in the business of investing in securities of listed and unlisted companies,predominantly for medium to long term. The Companys investment portfolio is diversified across various sectors, such as financial services, healthcare, retail, packaging, QSR, information technology, infrastructure, energy, Oil & Gas and real estate etc.

The diversified nature of the Companys investment, both strategic and financial investments, have performed reasonably well and it is expected to do even better in the following years. We are confident on our long-term business strategies and our underlying investment are mostly long-term in nature and we believe that these investments shall gradually create value through realization of profit in the combination of dividends and capital gains over a period of time.

The Company is continuously evaluating new opportunities for Investments, during the year it has invested in various Companies. As the nature of the companys business is to invest, hold and exit, the profit so materialized during the year may not essentially reflect the true picture of performance. The accrued profits/loss is being recognized in the year of sale.

The details with respect to financial performance has been included in detail in financial statements of the Company and in the Boards Report.

The Company have one Subsidiary Company and one Joint Venture Company, the financial performance of those Companies are as follows:

FINANCIAL PERFORMANCE OF LADDERUP ASSET MANAGERS PRIVATE LIMITED (FORMERLY LADDERUP WEALTH MANGEMENT PRIVATE LIMITED (SUBSIDIARY COMPANY)

Ladderup Asset Managers continues to demonstrate robust performance and sustained growth within the wealth management industry. Over the past few years, the company has achieved a significant increase in assets under management (AUM), consistently surpassing industry averages·a testament to the strong trust and long-term relationships it has built with clients.

The company has also outperformed several industry peers on key performance indicators, particularly in terms of investment returns and client satisfaction. Its differentiated approach, centered around comprehensive financial planning, in-depth risk assessment, and customized investment strategies, has contributed meaningfully to its continued success and positioned it as a trusted advisor in the space.

Ladderup Asset Managers continues to operate a niche business focused on guiding clients toward optimal investments across asset classes. The organization has consistently prioritized capital preservation while aiming to enhance client returns, thereby shielding investors from adverse market movements. On the financial front, the Company reported a Profit After Tax (PAT) of 317.11 lakhs for FY 2024-25, compared to 222.54 lakhs in the previous financial year·reflecting strong and consistent growth. The Company remains committed to adopting industry best practices and continuously evolving its service offerings. Its client-centric approach is underpinned by integrity, transparency, and professional competence, forming the cornerstone of its long-term relationships.

FINANCIAL PERFORMANCE OF WATERPROOF CORPORATION PRIVATE LIMITED (WACO), (JOINT VENTURE COMPANY)

Waterproof Corporation Private Limited (WACO), is a pioneer in the adhesive tapes industry in India. Over the years, it has emerged as the largest manufacturer and supplier of high-quality, high-performance Gummed Paper Tapes and allied products in the country. With a presence in over 50 countries, WACO has established itself as a globally recognized brand in the Water-Activated Gummed Paper Tapes segment. Its flagship brands, WACO and TACO, are widely regarded for their trust, quality, and adherence to fair business practices.

WACO serves diverse industries including packaging, plywood, and gypsum board, and has built a solid reputation for its consistent product quality and customer-centric approach. The company operates a 35,000 sq. ft. manufacturing facility in central Mumbai, equipped with an in-house laboratory, engineering design, and workshop capabilities. Notably, the technology used in manufacturing gummed paper tapes has been developed internally, showcasing its commitment to innovation and self-reliance.

During the financial year 2024-25, the Honble National Company Law Tribunal (NCLT), Mumbai Bench, approved the Scheme of Amalgamation between Annapurna Pet Private Limited (Transferor Company) and Waterproof Corporation Private Limited (Transferee Company) vide its order dated 27th August 2024, with the appointed date being 1st April 2022. Following the filing of the said order with the Registrar of Companies on 20th September 2024, Annapurna Pet Private Limited was dissolved.

During the financial year 2024-25, it has achieved growth in its revenue as compared to the previous year. The Company generated total revenue of INR 8398.49 Lacs as compared to INR 8391.48 Lacs in the previous year. The profit before tax in the financial year 2024-25 INR 766.04 Lacs as compared to INR 43.04 lacs in the previous year.

The Consolidated Revenue as on 31st March, 2025 stood at INR 8945.49 Lacs as compared to 8977.14 Lacs in the previous year. The profit before tax in the financial year 2024-25 was INR 775.10 Lacs as compared to INR 68.84 lacs in the previous year.

FINANCIAL PERFORMANCE OF SHREE VINAYAK ORGANIC PVT. LTD. ("SVO") (WHOLLY OWNED SUBSIDIARY OF WATERPROOF CORPORATION PRIVATE LIMITED)

The SVO is a leading manufacturer of special purpose solvent based and water based acrylic adhesives and emulsions. It Produces ~18 varieties of adhesives which are primarily used in production of pre coating foam, metalized PET, PVC Stickers, medicated strips, paper labelling, BOPP, wet lamination, and prosthesis. SVO has received several awards for its consistency and quality of products.

During the financial year 2024-25, the Company generated total revenue of INR 553.90 Lacs as compared to INR 594.85 Lacs in the previous year. The profit before tax in the financial year 2024-25 INR 22.02 Lacs as compared to INR 25.80 lacs in the previous year.

OPPORTUNITIES AND THREATS FOR THE COMPANY

Opportunities

• The number of retail investors in India continues to grow, driven by rising financial literacy and the rapid adoption of online trading platforms.

• Leveraging big data and analytics offers significant potential to identify market trends and enable more informed investment decisions.

• Regulatory reforms by SEBI (Securities and Exchange Board of India) aimed at increasing transparency and protecting investor interests are expected to further strengthen investor confidence.

• Scalable business models that can swiftly adapt to evolving market conditions and regulatory landscapes provide long-term sustainability.

• Growing interest from corporates in consolidation, acquisitions, and restructuring presents increasing opportunities for the corporate advisory segment.

THREATS

Despite great opportunities, there are significant factors presenting threats to our businesses viz.

• Regulatory tightening by the regulators, aimed at strengthening governance and risk frameworks, may pose compliance challenges, particularly for resource-constrained NBFCs.

• Stricter capital adequacy norms require NBFCs to maintain higher capital levels, which can impact growth flexibility.

• Keeping pace with rapid technological advancements demands continuous investment, which may strain financial resources.

• Attracting and retaining skilled talent remains a challenge due to increasing competition and financial constraints in the talent market.

Nonetheless, the Company remains well aware of these potential threats and has proactively implemented robust internal policies and mitigation strategies. These initiatives have strengthened its resilience and positioned the business to effectively navigate challenges.

RISK MANAGEMENT AND CONCERN

The management of the Company has made policies and processes for risk identification, risk assessment and risk mitigation planning for business, strategic, operational, and financial and compliance related issues.

The Directors have formed a committee which is known as Risk Management Committee. The Board of Directors with the Aid of such Risk Management committee review and monitor Business risks for your Company. Moreover, the management also periodically reviews the policies and procedures and formulates plans for control of identified risks and improvements in the systems.

A risk/compliance update report is regularly placed before the Audit Committee /Board of Directors of the Company. The Directors/ Audit Committee review the risk/ compliance update reports and the course of action taken or to be taken, to mitigate and manage the risks is taken.

HUMAN RESOURCES

The Human Resources initiative focuses on structured training programs (both in-house and external) intended to equip employees at all levels, with the necessary knowledge and experience in order to demonstrate high levels of performance. The Company takes further necessary steps to use its human resources in effective manner as well as to provide good working environment as well good infrastructure to the Employees of the company. It focuses on the Growth of Employees in terms of monetary as well as non-monetary terms.

Our organization is committed and focused on identifying and retaining the right talent to meet the overall business strategy and objective. The broad range of activity includes viz. robust manpower planning process in line with the business objective, enhancement of employee skill-sets by identifying training and development needs, retention programs, reward and recognition, learning and development.

INTERNAL CONTROL AND THEIR ADEQUACY

The Companys internal control system is designed to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with laws and regulations.

The Company, being in the lending and investment industry, has put in place an adequate internal control system to safeguard all assets and ensure operational excellence. The system also meticulously records all transaction details and ensures regulatory compliance.

The Companys internal control system is commensurate with the size, nature, and operations of the Company.

DISCLOSURE OF ACCOUNTING TREATMENT

Your company follows the same accounting procedure and makes the financial statement as per the accounting standard, IND - AS, as well as the other laws applicable with respect to financial statements. Your company has not changed its accounting policy. However, changes in the accounting treatment.

The company followed the Fair Value Through Other Comprehensive Income (FVOCI) method for accounting its investments until March 31, 2024. Under this method, gains or losses were recorded in Other Comprehensive Income and not in the profit and loss account. Effective April 1, 2024, the company has decided to apply the Fair Value Through Profit or Loss (FVTPL) method for its investments. This change aims to provide investors with a more transparent view of the companys financial performance.

As a result, the company will now use two different accounting methods:

FVOCI for investments made before April 1, 2024 (as this method is irrevocable),

FVTPL for investments made on or after April 1, 2024.

Further, effective October 1, 2025, the company has introduced a classification policy:

1. Current Investments - All securities not intended to be held long-term will be classified as inventory under financial assets and treated as stock-in-trade (securities held for trading).

2. Long-Term Investments - Securities intended to be held for more than one year, whether listed or unlisted shall be held as investment.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations, or predictions may be “forward-looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied, depending on various external and internal factors. Key risks include economic and political developments, interest rate fluctuations, changes in regulatory frameworks (including those by the Government, RBI, SEBI, or Tax Authorities), and other unforeseen circumstances. The report also includes information sourced from publicly available documents and reports issued by regulatory authorities and industry bodies.