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 FY2024-25. 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 2024-25.

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) having total assets of Rs. 18,561.66 Crore.

Your Company has recorded good performance during the Financial Year 2024-25 on Standalone as well as Consolidated basis. The quantitative overview of the financial and operational performance of your Company during F.Y. 2024-25 is as follows:

During the year under review, your Company earned a total revenue on Standalone basis of Rs. 8919.18 lakh, comprising of Interest Income of Rs. 2,600.06 lakh, dividend income of Rs. 5,528.92 lakh and Net gain/(loss) on fair value changes Rs. 790.20 lakh. The Profit before tax was Rs. 5,248.13 lakh and after providing for Tax of Rs. 1,552.86 lakh and the Net Profit for the year was Rs. 3,695.27 lakh.

During the year under review, your Company earned the total Consolidated Revenue of Rs.12,522.41 lakh, comprising of income by way of Interest of Rs. 3,844.20 lakh, Dividend of Rs. 5,528.99 lakh, Net gain on fair value changes of Rs. 790.73 Lakh, Net gain on derecognition of financial instruments of Rs. 671.89 Lakh and sale of goods of Rs. 1,686.60 Lakh. The Profit before tax was Rs 6,500.35 lakh and after providing for Tax of Rs. 1,901.54 lakh and the Net Profit for the year was Rs. 4,598.81 lakh.

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

i. Return on Net-worth for the year has (decreased) from 10.02% to 7.39% by 26.30% owing to significant decrease in profit after tax and increase in net worth for the year. ii. There was an decrease in Operating profit Margin from 96.36% to 58.86% by 38.91% due to decrease in operating profit and increase in Sales for the year. iii. There was an decrease in Net profit Margin from 70.63% to 41.43% by 41.34% due to decrease in profit after tax and increase in sales for the year. iv. There was increase in debtors turnover ratio from 0.01% to 0.01% by 26.09% due to increase in sales. v. There was an increase in current ratio from 734.37% to 142.29% by 80.62% due to increase 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.

The global economy continued to witness volatility in 2024 navigating a complex landscape shaped by evolving geopolitical developments, shifting trade dynamics and monetary policy adjustments. Global GDP grew by 3.3% in 2024, maintaining a steady pace compared to 3.5% in 2023, despite global headwinds.

While geopolitical tensions such as the ongoing Russia- Ukraine conflict, developments in the Middle East and regional border dynamics introduced uncertainty, their economic impact was managed through timely responses. These included coordinated fiscal and monetary policy actions aimed at stabilising energy markets, sustaining supply chains and reinforcing investor confidence. Central banks maintained a vigilant stance on inflation, initially keeping interest rates elevated before gradually easing policy as price pressures moderated. Governments also provided calibrated fiscal support through measures such as infrastructure spending and targeted subsidies, contributing to broader economic stability.

The U.S. economy showed resilience, while the Eurozone faced continued pressure from high energy costs. In 2024, the US grew by 2.8%, but growth is expected to slow to 1.8% in 2025 and 1.7% in 2026 due to policy uncertainty and trade tensions. While the Euro Area expanded by 0.9% in 2024 and expected a modest recovery to 0.8% in 2025 and 1.2% in 2026.

Chinas growth moderated as its property sector remained under strain and export demand weakened. However, fiscal stimulus measures, structural reforms, rising consumer demand and growing investments in infrastructure helped support momentum, keeping growth at 5.0% in 2024. The pace is projected to ease to 4.0% in both 2025 and 2026 amid ongoing structural and external challenges.

Rising financial system fragility continues to be a growing concern, especially among Non-Bank Financial Intermediaries (NBFIs). Equity markets remain volatile, asset valuations stretched, and corporate debt levels elevated, contributing to an increasingly uncertain financial landscape. Central banks are faced with the difficult task of containing inflation without inadvertently triggering broader financial instability, a delicate balancing act that will define the near-term outlook.

The global economy is expected to continue its recovery, with growth projected at 2.8% in 2025 and 3.0% in 2026, despite lingering uncertainties across regions. Advanced economies are likely to see moderate growth around 1.4% in 2025 and 1.5% in 2026, supported by steady domestic demand and cautious policy adjustments. In contrast, emerging markets are expected to grow at a faster pace, with forecasts of 3.7% in 2025 and 3.9% in 2026, driven by ongoing structural reforms, favourable demographics and expanding consumer markets. According to the Short-Term Energy Outlook (STEO) report, the average Brent crude oil price stood at USD 81 per barrel in 2024. It is projected to moderate to USD 69 per barrel in 2025 and further to USD 58 per barrel in 2026, supported by improved supply dynamics and a more stable geopolitical environment, contributing to a balanced and resilient global energy market. Trade tensions are expected to continue to add pressure, especially with the imposition of U.S. tariffs, which have made imports costlier, pushed up inflation and dampened consumer spending. In turn, retaliatory tariffs from other countries have heightened global trade frictions and disrupted supply chains. Even with these ongoing challenges, the longer-term outlook for the global economy remains positive. With continued innovation, smart policy choices and stronger collaboration between countries, the global economy is well-positioned to navigate challenges and promote more inclusive, sustainable growth.

It is further expected that despite geopolitical turmoil; smart government spending and careful budgeting will play a crucial role in bolstering economic strength. Looking forward, the global economy landscape presents both challenges and opportunities. A keen policy in balancing trade-offs between inflation and real activity, rebuilding buffers and lifting medium-term growth prospects will lead towards a more balanced future.

https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/worldeconomic-outlook- april-2025 https://www.iea.org/reports/global-energy-review-2025/globaltrends

India registered a robust GDP growth of 9.2% in FY24, driven by a favorable base effect and strong domestic fundamentals. While growth moderated to 6.5% in FY25 due to the higher base, it still reflects solid economic momentum, underpinned by ongoing structural reforms, increased infrastructure spending, and the continued strength of the services sector.

For most of the year under review, CPI inflation remained under control, hovering around 4.8%, comfortably within the RBIs target range of 2-6%. In a steadfast commitment of the Government towards ‘Ease of Doing Business, the Indian government is proposing changes to soften compliance, expand services, build a strong regulatory environment and promote international and domestic investment.

Further, the RBI reduced its repo rate from 6.5% to 6%, making borrowing easier and supporting private investments. India maintained its fiscal deficit between 4.4% and 4.5% of GDP, helping in enhancing investment in areas such as housing, infrastructure and business-friendly reforms. Further, bank credit has grown at a steady rate with credit growth converging towards deposit growth. The banking sector exhibits improvement in asset quality, robust capital buffers and strong operational performance. With smart policies and strong investments, India is poised to sustain its growth momentum.

Indias economy will remain supported by the Governments efforts to accelerate growth, secure inclusive development and invigorate private sector investments. With recent tax cuts, it is anticipated to boost middle-class household savings and consumption. Further, as inflation declines, it is expected to bolster consumer spending and support economic growth.

The government is streamlining business operations by reducing regulations and encouraging private investment, aiming to create a more conducive environment for economic growth and development. Sectors such as retail and digital services are well-positioned for significant growth due to rising disposable incomes and increased internet access, driving demand for both goods and services. With rising investor trust and robust government support,

Indias future looks optimistic.

MoSPI Second Advances Estimates https://www.rbi.org.in/Scripts/BS_ViewBulletin.aspx https://pib.gov.in/PressReleasePage.aspx?PRID=2106921#

The NBFC sector is undergoing significant transformation, shaped by regulatory reforms, funding challenges, and evolving market dynamics. With the implementation of Scale Based Regulations, NBFC have been segregated into four layers, namely, Base Layer, Middle Layer, Upper Layer and Top Layer based on size, activity, and the perceived level of risk. NBFC are an integral part of the Indian financial system and have emerged as powerful engines of growth. NBFC sector in India has undergone remarkable resilience and growth and has consistently outpaced that of banks. Credit growth among NBFCs, which has consistently outpaced Indias GDP, is expected to maintain its upward trajectory and play an increasingly pivotal role in the countrys financial ecosystem.

The Indian NBFCs sector is experiencing robust growth, driven by a rising middle class, enhanced focus on financial inclusion and supportive government policies. These institutions cater to underserved segments, offering services in areas such as business loans, housing finance, microfinance and consumer finance. The ability to understand diverse customer needs and provide tailored products has resulted in their increased contribution to the nations economic growth.

The adoption of digital technologies has further enabled NBFCs to streamline operations and enhance customer experiences. By leveraging tools such as super apps, data analytics and digital platforms, NBFCs have improved processes in credit assessment, loan disbursement and collections.

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) having total assets of Rs. 18,561.66 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.

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.

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.

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.

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. 2024-25, given the nature of business your Company is engaged in.

As on March 31, 2025, 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 appointed and ceased during the FY 2024-25 are given in the annual report.

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.