Nalwa Sons Investments Ltd Management Discussions

BACKGROUND

The objective of this report is to convey the Managements perspective on the external environment and industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities and internal control systems and their adequacy in the Company during the FY2025- 26. This Report should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Integrated Report and Annual Accounts 2025-26.

The Companys financial statements have been prepared in accordance with Indian Accounting Standards ( Ind AS ) complying with the requirements of the Companies Act, 2013, as amended and regulations issued by the Securities and Exchange Board of India ( SEBI ) from time to time.

Your Company is registered as a Non Banking Financial Company (NBFC) with Reserve Bank of India under the provisions of Section 45 IA of the Reserve Bank of India Act, 1934. It is classified as an NBFC - Middle layer (not accepting / holding public deposits and having an asset size of more than Rs.1000 crores) In accordance with the Reserve Bank of India (Non-Banking Financial Companies Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025[RBI Directions] having total assets of Rs. 16,709.6 Crore.

OVERVIEW OF FINANCIAL AND OPERATIONAL PERFORMANCE

Your Company s financial and operational performance during the Financial Year 2025-26, on Standalone as well as Consolidated basis, is summarised below:

Standalone Results

During the year under review, your Company earned a total revenue on Standalone basis of Rs. 6,745.80 lakh, comprising of Interest Income of Rs. 2,277.12 lakh, dividend income of Rs. 3,447.61 lakh and Net gain/(loss) on fair value changes Rs. 1,021.07 lakh. The Profit before tax was Rs. 6,209.10 lakh and after providing for Tax of Rs. 1,574.42 lakh and the Net Profit for the year was Rs. 4,634.68 lakh.

a) Consolidated Results:

During the year under review, your Company earned the total Consolidated Revenue of Rs.10,114.83 lakh, comprising of income by way of Interest of Rs. 3,596.24 lakh, Dividend of Rs. 3,447.68 lakh, Net gain on fair value changes of Rs. 1,029.56 Lakh, Net gain on derecognition of financial instruments of Rs. 16.94 Lakh and sale of goods of Rs. 2,024.41 Lakh. The Profit before tax was Rs 7,615.75 lakh and after providing for Tax of Rs. 1,946.84 lakh and the Net Profit for the year was Rs. 5,668.91 lakh.

b) Significant Change in Key Financial Ratios

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

i. Return on Net Worth increased from 7.39% to 8.48%, representing a increase of 14.79%. The change was primarily attributable to the increase in profit after tax and net worth during the year.

ii. Operating Profit Margin increased from 58.86% to 92.10%, representing a increase of 56.46%. The change was mainly due to an increase in operating profit and a decrease in sales during the year.

iii. Net Profit Margin increased from 41.43% to 68.70%, representing a increase of 65.83%. The change was primarily attributable to the decrease in sales and increase in profit after tax during the year.

iv. Debtors Turnover Ratio increased from 0.006 to 0.007, representing a increase of 32.28%. The change was mainly due to the decrease in sales during the year.

v. Current Ratio decreased from 142.29 to 92.25, representing a decrease of 35.17%. The change was primarily attributable to the increase in current liabilities during the year.

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.

ECONOMICS OVERVIEW:

a) Global Economy

The global economy remained broadly stable during CY25 despite facing multiple challenges, including geopolitical tensions, persistent inflationary pressures, uneven demand recovery, and evolving trade dynamics. Global GDP growth stood at 3.4% in CY25, supported by the resilience of emerging markets and a gradual improvement in economic activity across advanced economies. The relative stability in currency movements and cross-border capital inflows created space for several central banks to gradually recalibrate their monetary policy. In some countries, reductions in interest rates helped sustain economic activity.

Inflationary pressures remain relatively contained despite periodic volatility. Global headline inflation is projected to rise from 4.1% in 2025 to 4.4% in 2026 before easing to 3.7% in 2027, reflecting the near-term impact of elevated energy prices, geopolitical uncertainty, and evolving trade policies. Energy markets are expected to remain sensitive to supply-side disruptions and geopolitical developments, particularly in key producing regions. Nevertheless, improving supplychain efficiencies, moderating input costs, and ongoing policy normalization are expected to support a gradual return to greater price stability over the medium term.

The United States economy remained resilient despite high interest rates and tighter financial conditions, supported by continued infrastructure spending, manufacturing activity, and private investment. Meanwhile, Emerging Markets and Developing Economies (EMDEs) grew by 4.4%, outperforming advanced economies. Asia remained the primary growth engine; China recorded 5.0% growth, supported by strong exports and manufacturing activity. However, weak domestic demand and continued challenges in the property sector moderated its overall growth. Meanwhile, India remained the fastest-growing major economy in 2025 with 7.1% growth, supported by strong domestic consumption, sustained public infrastructure spending, expanding manufacturing activity, and a resilient services sector. Government initiatives focused on infrastructure development, industrial growth, and ease of doing business continued to strengthen economic momentum, reinforcing Indias position as a key driver of global growth.

Despite the improvement in global economic conditions, geopolitical tensions in the Middle East and the broader West Asia region continued to create uncertainty during CY25 and early CY26. Concerns over possible disruptions to key trade routes, including the Strait of Hormuz, led to fluctuations in crude oil prices and shipping costs. In addition, higher tariffs, supply chain disruptions, and tighter financial conditions continued to affect global trade and business confidence.

Source:

IMF April 2026 Report

Outlook

Central banks across major economies maintained a cautious and increasingly divergent monetary policy stance. In the United States, the Federal Reserve is poised to gradually reduce interest rates, with the federal funds rate projected to decline to around 3.1% by CY27 from 3.50% 3.75% in mid CY26. In Europe, the ECB kept its benchmark policy rate at 2.15%, alongside a 2% deposit rate and a 2.40% marginal lending rate. In Japan, interest rates are projected to rise gradually toward 1.5% as the country continues to normalise monetary policy. Central banks across emerging economies complemented interest rate actions with targeted foreign exchange and liquidity measures to contain currency volatility and preserve financial system stability. At the same time, structural growth drivers remained intact, with AI-driven capital expenditure expected to support productivity gains and sustained investment in compute-intensive infrastructure. This is also likely to increase electricity demand, reinforcing the energy intensity of digital economies and creating new investment opportunities despite a challenging macroeconomic environment.

Escalating trade frictions, persistent geopolitical flashpoints, and elevated public debt could tighten global financial conditions and dampen economic momentum.

In addition, any reorientation of expectations around productivity gains from artificial intelligence-led investments may trigger market volatility and temper business and investor sentiment. Conversely, broader and faster adoption of artificial intelligence and other emerging technologies could enhance productivity, improve resource efficiency, and provide an upside to global growth prospects over the medium term.

Structural headwinds may also influence the pace of growth. The benefit of technological progress remains unevenly distributed across regions and sectors, limiting their trickle-down impact. In this context, policymakers are prioritizing the rebuilding of fiscal buffers, preserving macro-financial stability, and advancing structural reforms aimed at boosting productivity, strengthening competitiveness and supporting sustainable long-term growth.

Source:

IMF World Economic Outlook, April 2026

b) Indian Economy

Indias economy maintained its steady growth momentum in FY 2025-26, expanding by 7.7%. This can be attributed to a confluence of factors, such as stable macroeconomic fundamentals, continued policy support and steady expansion across crucial sectors. Despite external economic turbulence, India remained one of the fastest-growing major economies worldwide. Inflation eased during the year to 2.8%, which was well within the Reserve

Bank of India (RBIs) target range of 2% to 6%. This decline in price pressures provided greater policy flexibility and allowed the Monetary Policy Committee to reduce the repo rate by 100 basis points YoY to 5.25%. The sequential cuts in repo rate are expected to support credit conditions and fuel financial sector activity. Policy initiatives also supported domestic demand. The GST 2.0 rationalisation helped reduce input costs for the Micro, Small and Medium Enterprises (MSMEs) and also eased the indirect tax burden on consumers. These measures contributed to stronger consumption, elevated purchasing power and increased credit demand. Further, under the Pradhan Mantri Mudra Yojana (PMMY), the government is funding micro and small enterprises in manufacturing, trading, services and related agricultural activities, disbursing around Rs. 36.18 Lakhs crore across 55.45 crore loan accounts.

Collectively, these developments bring the resilience of the economy to the fore. Robust domestic demand and strong fundamentals are expected to sustain the growth momentum.

Source:

https://www.mospi.gov.in/uploads/latestReleases/latest_release_1770891893893_6b458c0a-c327-4fef-a554-41131ea67273_Press_Relase_of_CPI_for_Jan26.pdf https://rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/0BUL2002206F396B049E0627497EAEF853A3FD2B7F79.PDF https://www.pib.gov.in/PressReleasePage.aspxRsPRID=2219907®=3&lang=2

Outlook

Indias growth outlook remains favourable. GDP is expected to grow by 6.6% in FY 2026-27 despite external turbulence. Growth is likely to be supported by moderating inflation and favourable supply-side conditions, which are anticipated to strengthen domestic demand and support investment activity.

Investment momentum is also foreseen to remain steady, supported by healthy financial conditions, robust credit growth and continued infrastructure spending. Policy measures outlined in the Union Budget 2026 27 aim to further support manufacturing activity by strengthening the MSME sector, easing cost pressures and encouraging domestic production of critical technologies to enhance competitiveness and scalability.

The year ahead is foreseen to be a year of calibrated adjustments. Domestic demand and investment activity are envisioned to be the primary growth drivers. During the year, India continued to broaden its trade engagement through multiple trade agreements with partner nations. The recently concluded FTA with EU is expected to expand market access, strengthen supply chain integration and support overall economic momentum.

Overall, domestic demand resilience, reform continuity and targeted fiscal support position the country well for the year ahead, notwithstanding external uncertainties.

c) Industry Overview

Non-Banking Financial Companies (NBFCs) are an integral part of the Indian financial system.

The NBFC sector continues to exhibit notable resilience, attributable to steady capitalisation and a strong growth momentum. Even as episodic asset-quality pressures and macroeconomic uncertainty moderated the pace of expansion, retail assets under management grew by nearly 17% in FY 2025-26. This performance reaffirmed the sectors position as one of the fastest-growing segments within the financial system.

Promoting Ease of Doing Business for NBFCs: Regulatory measures aimed at simplifying operational requirements are also envisioned to support sectoral expansion. NBFCs without public funds and customer interface, with asset size below Rs. 1,000 crore, may no longer need to register. Additionally, some NBFCs might not require prior approval to open more than 1,000 branches, which would make it easier to expand. This move could significantly ease geographic expansion and improve credit penetration across underserved regions.

Source:

https://rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/0BUL2002206F396B049E0627497EAEF853A3FD2B7F79.PDF

COMPANY PROSPECTS

Your Company is registered as a NBFC with Reserve Bank of India under the provisions of Section 45 IA of the Reserve Bank of India Act, 1934.It is classified as an NBFC - Middle layer (not accepting / holding public deposits and having an asset size of more than Rs.1000 crore) in accordance with the RBI Directions, having total assets of Rs. 16,709.6 Crore.

Your Company holds significant investments in equity shares of steel manufacturing companies of O.P. Jindal group. The performances of the Investee Companies are expected to improve in the current financial year, which would result in higher dividend payouts in the coming year. The Company will focus on making long term strategic investments in various new ventures promoted by O.P. Jindal group, besides consolidating the existing investments through further investments in the existing companies.

OUR SUBSIDIARIES AND ASSOCIATES:

As on March 31, 2026, the Company has the following subsidiaries and associates, brief details of whose performance are, given below:

Jindal Steel & Alloys Limited (JSAL): Jindal Steel & Alloys Limited (JSAL) is a subsidiary of the Company, in which the

Company holds 99.99% of the equity share capital.

Jindal Steel & Alloys Limited is principally engaged in the manufacturing, processing, trading and distribution of steel, metal and alloy products, including ferrous and non-ferrous metals, castings, forgings, pipes, tubes and allied industrial products. The Company is also involved in the development and operation of industrial, infrastructure and energy projects, and undertakes activities relating to mining, automobiles, electric vehicles, batteries, real estate development, commodity trading and strategic investments.

During the year under review, JSAL reported total income of Rs. 2902.50 lakh as against Rs. 3039.10 lakh in FY 2024-25 and Net profit of Rs. 905.29 lakh as against a Net Profit of Rs. 1,326.94 lakh in FY 2024-25.

Nalwa Trading Limited(NTL): Nalwa Trading Limited (NTL) is a subsidiary of the Company, in which the Company holds 86.95% of the equity share capital. NTL is currently engaged in the business of trading in steel(metal) products.

During FY 2025-26, the RBI approved NTLs application for voluntary surrender of its Certificate of Registration (CoR) and cancelled its NBFC registration with effect from March 19, 2026. Accordingly, NTL ceased to be an NBFC from the said date and is no longer subject to the regulatory framework applicable to NBFCs under the Reserve Bank of India Act, 1934.

During the year under review, NTL reported total income of Rs. 466.27 lakh as against Rs. 563.57 lakh in FY 2024-25 and Net profit of Rs. 1,678.09 lakh as against a Net loss of Rs. 547.87 lakh in FY 2024-25.

Brahmaputra Capital & Financial Services Ltd(Brahmaputra): Brahmaputra Capital & Financial Services Limited

(Brahmaputra) is a subsidiary of the Company, in which the Company holds 50.10% of the equity share capital.

Brahmaputra is a registered NBFC engaged in the business of making investments.

During the year under review, Brahmaputra reported total income of Rs. 0.25 lakh as against Rs. 0.86 lakh in FY 2024-25 and a Net loss of Rs. 2.42 lakh as against a Net loss of Rs.2.37 lakh in FY 2024-25.

Jindal Equipment Leasing and Consultancy Services Ltd. (JELCO): Jindal Equipment Leasing and Consultancy Services

Ltd.(JELCO) is an associate of the Company, in which the Company holds 25.52% in JELCO, comprising 19.90% held directly and 5.62% held indirectly through Nalwa Trading Limited. JELCO is a registered NBFC engaged in the business of making investments.

During the year under review, JELCO reported total income of Rs. 537.36 lakh as against Rs. 599.19 lakh in FY 2024-25 and a Net profit of Rs. 372.87 lakh as against a Net profit of Rs. 438.48 lakh in FY 2024-25.

OPPORTUNITIES AND THREATS

Every business carried out by any Company are full of challenges and risk and the success of any business always depend upon the ability of the Company how it faces the challenges and survive in the highly competitive market.Your Company holds significant investments in Equity Shares of O.P. Jindal Group of Companies, therefore the business prospects of the Company largely depends on the business prospects of O.P. Jindal Group of Companies and the steel industry.

Your company is developing various systems and strategies to face the challenges in the competitive market. The Challenges are not from the competitors but from the domestic and global economic scenario. Your company is talking all precautions to offset the associated risks. 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.

RISKS AND CONCERNS

NSIL acknowledges the presence of various risks that could potentially impact its operations, given the dynamic and challenging environment it operates in.

The Companys business is exposed to many internal and external risks and it has consequently put in place robust systems and processes, along with appropriate review mechanisms to actively monitor, manage and mitigate these risks

The Company aims to operate within an effective risk management framework to actively manage various risks (including reputation risk, the inherent nature of the product, credit risk, and historical performance of similar clients, among others, the tenure of the borrower relationship, repayment track record and future potential) faced by an NBFC, in a manner consistent with its risk appetite. Accordingly, it has adopted a Risk Management Policy which aims to establish a risk culture and risk governance framework, under the guidance of its Board of Directors, to enable identification, measurement, mitigation and reporting of risk within the Company.

The Company has an active Risk Management Committee which reviews various risks faced by an NBFC & their impact and mitigation thereto.

The Company continuously evaluates its investments in such company 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, 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.

ADEQUACY OF INTERNAL CONTROL SYSTEM

The internal controls of the Company are commensurate with the business requirements, its scale of operation and applicable statutes to ensure orderly and efficient conduct of business. These controls have been designed to ensure assurance regarding maintaining proper accounting controls, substantiation of financial statement, safeguarding of resources, prevention and detection of frauds and errors, ensuring operating effectiveness, reliability of financial reporting, compliance with applicable regulations and relevant matters covered under section 134 (5) (e) of the Companies Act, 2013.

The policies and procedures adopted by NSIL takes into account the design, implementation and maintenance of adequate internal financial controls, keeping in view the size and nature of the business. The internal financial controls ensure the efficient conduct of its business. The controls encompass safeguarding of assets, strict adherence to policies and prevention and detection of frauds and errors against any unauthorized use or disposition of assets and misappropriation of funds. These controls help to keep a check on the accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures.

The Audit Committee of the Board of Directors, periodically reviews the internal audit reports, covering findings, adequacy of internal controls, and ensure compliances. The Audit Committee also met the Companys Statutory

Auditors to ascertain their views on the financial statements, including the financial reporting system, compliance to accounting policies and procedures, the adequacy and effectiveness of the internal control and systems followed by the Company. statutory auditors provide their recommendations to the Committee members for improvements in control and compliance measures. This systematic approach ensures that Nalwa Sons Investments Limited maintains rigorous oversight and continuously enhances its internal control framework, promoting transparency, accountability, and adherence to best practices within the organisation. The Management acted upon the observations and suggestions of the Audit Committee.

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 also ensures that employees are regularly trained and sensitised on internal control protocols to maintain high standards of compliance and accountability.

During the year under review, no material or serious observations has been observed for inefficiency or inadequacy of such controls.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCE/INDUSTRIAL RELATIONS FRONT

The Companys employees are its greatest assets form the foundation of the organization. It is committed to fostering an inclusive and supportive environment that promotes continuous growth and learning.

With the role of human resources evolving, the Company is focused on optimising efficiency and maintaining minimal staffing levels at its location through strategies like multitasking and automation to achieve continuous reductions in the workforce. The pivotal role of its employees is evident in the execution of all business operations and the

Companys human resource policies are designed to attract, develop and retain top talent.

There have been no material developments in Human Resource and Industrial Relations front during the F.Y. 2025-26, given the nature of business your Company is engaged in.

As on March 31, 2026, there are three Whole-time Key Managerial Personnel and one general staff in the Company. The Company will strengthen its operative staff as and when the need arises. Details of the Directors re-appointed during the FY 2025-26 are given in the annual report.

CAUTIONARY STATEMENT

This Management Discussion and Analysis contains forward-looking statements related to guidance, industry outlook and anticipated future operational or financial performance. Terms such as anticipates, believes, expects, intends and similar expressions are used to indicate these statements. These forward-looking statements represent managements current views and involve inherent uncertainties. Actual results could differ materially from those expressed or implied owing to successful implementation of 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.

This MDA 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.