Nahar Capital & Financial Services Ltd Management Discussions

Industry Structure and Developments

Your Company is registered with the Reserve Bank of India as a “Non-Banking Financial Company-Investment and Credit Company (NBFC-ICC)”. As per the Reserve Bank of India (Non-Banking Financial Companies - Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025, your Company stands classified as an NBFC - Middle Layer (NBFC-ML) entity for the financial year ended March 31,2026, a step up from its earlier classification, bringing with it a correspondingly higher level of governance, prudential and disclosure expectations. Your Company is predominantly an investment company, deploying its resources across the financial market with a long-term perspective, while also undertaking trading and lending activities. In addition, the Company is also doing real estate activities, which the Company continues to pursue for higher and steady yields.

Amongst the diverse set of players that forms the Indian financial services sector, the Non-Banking Financial Companies (NBFCs) segment has carved out a distinct and increasingly influential role and have steadily grown into one of the most important intermediaries in Indias financial ecosystem, bridging the credit gap left by traditional banking channels. Over the years, this sector has meaningfully contributed to employment generation, rural credit penetration, transportation financing, wealth creation, and bridge/emergency financing needs across the economy, cementing its place as a critical pillar of inclusive growth.

The broader NBFC sector continued to expand led by strong demand from retail borrowers and Micro, Small and Medium Enterprises (MSMEs) and supported by the Reserve Bank of Indias accommodative stance. Heading into FY 2026-27, we expect that this momentum would persist, underpinned by continuing credit demand, softer funding costs and sustained Government focus on widening formal credit access through the NBFC channel.

Economic Overview

Indian economy recorded a robust growth during FY 2025-26 with real GDP estimated to have grown by 7.7% as per the Provisional Estimates released by the Ministry of Statistics and Programme Implementation (MoSPI) in June 2026, higher than the growth of 7.1% recorded in financial year 2024-25. This growth performance reinforces Indias continued standing as one of the fastest-growing major economies in the world, notwithstanding the prevailing uncertainties in the global economic and political environments. The underlying growth story remains anchored in strong domestic fundamentals including resilient private consumption and healthy investment activity supported by rising real incomes and improving rural and urban demand, an ongoing pipeline of economic reforms and incentives.

Looking ahead to FY 2026-27, both domestic and multilateral projections point to some moderation, though India is expected to outpace its global peers. The International Monetary Fund, in its World Economic Outlook Update of July 2026, projected Indian growth at 6.4% for the year, while continuing to rank India as one of the fastest-growing major economies even as global growth slows amid elevated trade tensions. The rapid adoption of AI and Gen-AI technologies are providing better analytical results but add a further complication ? promoting productivity and growth on one hand, while raising legitimate questions about their effect on employment on the other. These are risks that need to be actively managed rather than assumed away. Nevertheless, the broader trajectory for the Indian economy remains constructive, supported by resilient domestic demand, prudent macroeconomic management and continuing policy reforms and incentives.

Opportunities and Threats

The Company, being primarily engaged in investment activities, is well-positioned to benefit from the sustained buoyancy in Indian capital markets. A resilient macroeconomic backdrop, coupled with strong corporate earnings growth across sectors, offers opportunities to optimise returns on the Companys investment portfolio. The continued expansion and diversification of the Indian financial markets including growth in mutual funds, debt instruments and other investment avenues, provides scope for prudent portfolio diversification and risk- adjusted returns. The Companys strategic holdings in Group Companies also position it to benefit from the growth trajectory and value creation within the Group. Your Company identifies profitable investment opportunities in the entire financial markets, commodity markets and also in real estate segment, diversifies its revenue stream and scale up its operations in a prudent manner, while maintaining adequate risk management systems and profitability. Your Company is exploring other investment options and investing directly in Commodity Funds and ETFs, Quant based MLDs linked to commodities and equity markets, NCDs of reputed industrial and real estate companies as well as in Alternative Investment Funds (AIFs) like Credit

Opportunity Funds, Private Equity Funds, Real Estate Funds, Venture Funds etc. for better profitability.

At a broader level, geopolitical uncertainty, global economic slowdown, elevated energy prices, foreign investment outflows and volatility in foreign exchange rates remain external risks that are influencing capital market conditions, thereby affecting the value and yield of the Companys investments. Your Company foresees and is cautious of these risks and exercises due caution while making new investments. Your Company is more cautious in investing i.e. by increasing fund allocations to safer and high rated securities, REITs, INVITs, Multi Asset Funds, Balance Advantage Funds and Digital Disruptive Technology Funds/securities etc. like Electric Vehicles (EVs), Artificial Intelligence (AI), 5-6G/Satellite Networking, Cloud Computing, Data Centres for AI operations etc. Your Company has built a strong and diversified investment base which continues to mitigate the adverse impact of any near term uncertainty while positioning it well to benefit from the financial markets momentum and the broader economic recovery expected over the coming years.

Future Outlook

Indias medium-to-long-term trajectory continues to be shaped by its stated ambition of becoming a fully developed, high-income economy by 2047 - a "Viksit Bharat" built on both physical infrastructure and grassroots financial empowerment. On the back of sustained GDP growth and manageable public debt and reserve levels, Indias financial market is projected by the Government to expand meaningfully over this horizon. However, global developments such as trade disruptions, sanctions, diplomatic tensions, the ongoing conflicts in the West Asia and Russia-Ukraine region, and shifts in domestic policy or regulations, could introduce periods of volatility along the way. Notwithstanding these challenges, Indias economic growth is expected to moderate somewhat compared to strong performance of FY 2025-26, with elevated energy prices and geopolitical uncertainty flagged as key risks to watch.

Your management expects that the Indian financial market retains its underlying resilience through the cycles ahead. The Companys outlook is anchored in continuity rather than dramatic change - a predominantly investment-led portfolio, calibrated across financial, commodities and real estate market instruments as opportunities and risks evolve. The Company continues to act as a responsible corporate citizen, holding itself to high standards of corporate governance, transparency, and regulatory compliance and channelling its resources and strategic focus towards its long-term objective. The Company will continue to monitor the evolving macroeconomic and regulatory environment closely, adapting its strategy where necessary to safeguard business continuity and competitiveness with the overarching objective of delivering consistent, superior and sustainable returns to shareholders without compromising on safety.

Risks and Concerns

The Company recognizes that risk is an integral and unavoidable component of business and it remain committed to identifying, assessing, and mitigating these risks in a proactive and structured manner. Being an investment Company, the business of the Company is exposed to several risks viz; market risk, global risk, regulatory risk, credit risk, liquidity risk, operational risk, competition risk, interest rate risk, technology disruption risk, cyber security risk etc. which can affect the returns on Companys investments and financial business in unexpected way. However, the risks are well managed through a diversified investment portfolio spread across various financial market instruments like mutual funds (both debt and equity), bonds/debentures, REITs, AIFs, InvITs, VC/PE funds, Multi Asset/Balanced/Hybrid Funds, diversified ETFs and equity shares (both listed and unlisted). The Companys balanced approach to portfolio management, together with continuous review and monitoring, has enabled it to identify early warning signals and take timely corrective measures. The Company uses information technology extensively in its operations and invests through professionals for ensuring effective and informed decision-making. Sustained efforts to strengthen the risk framework and portfolio quality have yielded consistently better outcomes for the Company.

In order to monitor and manage the risks associated with its investment business, the Company has developed and implemented a Risk Management Policy, which sets out the framework for identification and mitigation of risks and is available on the Companys website. The Company has also constituted the Risk Management Committee comprising three Non-Executive Directors to monitor risk tolerance limits, review and analyze risk exposure related to specific issues and provide oversight of risk across the organization. The Risk Management Committee met four times during the financial year under review to oversee the effectiveness of this framework.

Internal Control Systems and Their Adequacy

The Company has in place adequate Internal Financial Control System commensurate with the nature of its business and the size and complexity of its operations. 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 and procedures. Further, the statutory auditors of the Company also verify the systems and processes and confirmed that the internal financial controls system over financial reporting is operating effectively.

Pursuant to the provisions of Section 138 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, the Company has also appointed M/s. Piyush Singla & Associates, Chartered Accountant as Internal Auditor of the Company. They test the adequacy and effectiveness of Internal Control Systems laid down by the management and to suggest improvement in the systems. The internal control framework covers all key areas of operations, including investment decision- making, accounting and financial reporting, compliance with regulatory requirements applicable to the Company. They also identify and address technology and IT-related security issues commensurate with the nature and complexities of its operations. The Internal Audit Reports are discussed with the Management and are reviewed by the Audit Committee which also reviews the adequacy and effectiveness of the internal controls in the Company. During the year, Companys Internal Controls were tested and no reportable weakness in the system was observed.

Apart from this, an Audit Committee consisting of three non-executive directors has been constituted. All the significant audit observation and follow up action thereon are taken care of by the Audit Committee. The Audit Committee met four times during the financial year under review. The Company has also established a Vigil Mechanism as per Section 177(9) of Companies Act, 2013 read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules, 2014.

Segment wise Financial/Operational Performance

We would like to inform you that as per Ind-AS 108 Operating Segments, Companys activities can be classified under two segments namely; Investment/Financial Activities and Real Estate

Segment. During the year, the Company achieved a total income of Rs. 5182.59 Lakhs with a profit before tax of Rs. 3701.58 Lakhs. The segment wise detailed performance has already been discussed in the Directors Report under the column Financial Review.

Your Company continued to reward shareholders with regular dividends. The Board of Directors, considering the growth and profitability of the Company, has proposed a dividend of Rs. 1.50/- per equity share (i.e. 30%) for the year ending March 31,2026.

Human Resources/Industrial Relations

The Company recognizes people as its most valuable asset and it has built an open, transparent and meritocratic culture to nurture this asset. The Company is of firm belief that the Human Resources are the driving force that propels a Company towards progress and success. The Company has a team of able and experienced professionals to look after the affairs of the Company. The total employees strength of the Company was 20 as on 31st March 2026.

Key Financial Ratios

The Company has identified the following ratios as applicable key financial ratios:-

Ratios	31.03.2026	31.03.2025
Capital to Risk-Weighted Assets Ratio (CRAR) %	92.68	95.03
CRAR - Tier I Capital (%)	92.67	95.02
CRAR -Tier II Capital (%)	0.01	0.01

Cautionary Statement

Though the statement and views expressed in the above said report are on the basis of best judgment but the actual future results might differ from whatever is stated in the report.

For and on behalf of the Board of Directors
	Jawahar Lal Oswal
Place: Ludhiana	(Chairman)
Date: August 5, 2026	DIN: 00463866