Lakshmi Finance & Industrial Corporation Ltd Management Discussions

REVIEW OF THE ECONOMY:

The global economy during FY 2025-26 continued to face a mixed macroeconomic environment characterized by geopolitical tensions, inflationary pressures, and changing monetary policies across major economies. While global growth moderated compared to previous years, resilience in several emerging markets, easing inflation in some regions, and gradual normalization ofsupply chains supported economic activity.

Governments and central Banks across the world continued to adopt appropriate fiscal and monetary measures to maintain economic stability and support sustainable growth. The International Monetary Fund (IMF) has projected moderate global economic growth, supported by improving investorconfidence and stable financial conditions.

The performance of the Company during the year under review decreased substantially mainly on account of the start of US - Iran war in early March 2026 and consequently the disruption resulted in unfavourable stock market conditions and energy crisis around the world. The stock market Sensex which was at 85,220 as on 31.12.2025 fell to 80,238 as on March 1^st, 2026 and further decreased to 71,943 as on 31.03.2026. Consequently, the Companys valuation of investments fell in line with Sensex.

With announcement of ceasefire between US and Iran, and the consequent ease of geopolitical tensions, the world economy and the energy crisis appear to be on recovery path.

The Indian economy remained one of the fastest-growing major economies, with GDP growing around 6.5%, driven by strong domestic demand, increased public capital expenditure, robust manufacturing and services sectors, and continued policy reforms.

These factors and the present eco-system provide favourable environment for the growth of Indian economy and consequently benefit the performance of the financial services sector / stock market conditions. As on the date of this report, the stock market sensex recovered to the level of 78,500. The Company is hopeful of improved financial performance in the coming years.

INVESTMENTS:

The total investments ofthe Company as on March 31,2026, amounted to Rs. 45,21,01,696 excluding Fixed Deposits and Government Bonds of Rs. 3,25,00,000 as compared to investments of Rs. 48,12,12,773 excluding Fixed Deposits and Government Bonds of Rs. 6,25,00,000 as on March 31,2025.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has established adequate internal control systems commensurate with the nature and size of its business. These systems are designed to ensure the safeguarding of assets, accuracy and completeness of accounting records, compliance with applicable laws and regulations, and the efficient conduct of business operations.

The adequacy and effectiveness ofthe internal control systems are reviewed periodically. The CEO and CFO certification forming part of this Annual Report confirms the adequacy of the Companys internal control systems and procedures.

KEY FINANCIAL INDICATORS (LAST THREE YEARS):