Naperol Investments Ltd Management Discussions

1. Economic Review

Global Economy

Despite navigating a recessionary threat, geopolitical uncertainties, trade disruptions, and inflationary pressures, global growth in 2024 remained subdued, with world GDP growth forecasted at 3.3%. This growth was uneven, largely driven by the strong performance of the US economy. Central banks of developed economies, led by the US, implemented strategic rate cuts as inflation began to moderate, though they remain cautious in their approach.

Amid political and economic uncertainties, including elections in key democracies, the global economy demonstrated resilience, but significant risks persist. These include the intensification of geopolitical tensions, persistent inflation, and potential volatility in financial markets. However, ongoing transitions in green energy and digitalisation present new opportunities for innovation and economic growth. Coordinated global efforts will be essential in navigating these challenges and driving sustainable development.

Outlook

The International Monetary Fund (April 2025) has revised global growth projections for 2025 downward to 2.8%, from a previous forecast of 3.3%. This slowdown is primarily attributed to the direct and indirect effects of new trade measures, heightened uncertainty, and deteriorating sentiment. Despite persistent uncertainties surrounding trade policies and inflation, proactive fiscal measures and enhanced international cooperation are expected to cushion downside risks. As countries recalibrate strategies in response to evolving global dynamics, a combination of innovation, strategic investments, and targeted policy realignments is creating pathways for resilience. While challenges remain, these coordinated efforts position the global economy to sustain moderate growth and unlock new opportunities across emerging and developed markets alike.

Global growth forecast

		Projections
Particulars	2024	2025	2026
World Output	3.3%	2.8%	3.0%
Advanced Economies	1.8%	1.4%	1.5%
- United States	2.8%	1.8%	1.7%
- Euro Area	0.9%	0.8%	1.2%
Emerging Markets & Developing economies	4.3%	3.7%	3.9%
- China	5.0%	4.0%	4.0%
- India	6.5%	6.2%	6.3%

Source: International Monetary Fund (IMF)

Indian Economy

Indias economy demonstrated resilience amid global uncertainty, underpinned by strong domestic consumption and sustained government expenditure.

Easing inflation and stabilizing liquidity supported by effective policy measures have further reinforced macroeconomic stability. In the March 2025 quarter, GDP grew by a robust 7.4% year-on-year, surpassing market expectations. For the full fiscal year 2025, the economy expanded by 6.5%, in line with the governments February forecast. However, external risks persist, including foreign portfolio outflows and pressure on the rupee. Overall, Indias macroeconomic fundamentals remain sound, supported by healthy corporate and financial sector balance sheets. To sustain and accelerate long-term growth, especially in an era of declining globalisation, India must capitalise on its demographic dividend through structural reforms and deregulation, paving the way for a more competitive and dynamic economy.

Outlook

The International Monetary Fund (IMF) projects Indias GDP to grow by 6.2% in 2025 and 6.3% in 2026, supported by strong performance in agriculture and industry, resilient rural demand, and rising consumer confidence. Despite persistent external risks including trade barriers, supply chain disruptions, and geopolitical tensions Indias growth outlook remains robust. The nations ability to adapt to global shifts while leveraging its domestic strengths will be critical to sustaining long-term, inclusive, and sustainable growth.

Indias GDP Growth Trend (%)

FY22	FY23	FY24	FY25
9.1	7.2	8.2	6.5

Source: Ministry of Statistics and Program Implementation (MoSPI)

2. Investment Market Overview

Global

Recent market conditions have been marked by a broad rotation into risk assets, as equities and high-yield credit rebounded amid easing trade tensions and improved investor sentiment. The partial rollback of protectionist measures helped alleviate recession concerns, offering a boost to market confidence. However, with inflation remaining elevated and fiscal vulnerabilities rising, the overall outlook remains delicately balanced.

In this environment, it is advocated for a well-diversified portfolio capable of navigating two sided risks: persistent inflation on one hand, and the potential for slower economic growth on the other. As the macroeconomic landscape continues to evolve, diversification across asset classes and geographies remains essential.

India

Indias investment landscape is thriving, driven by strong economic growth, technological advancements, and an expanding investor base. The country continues to attract foreign investments, supported by domestic consumption, infrastructure development, and ongoing reforms. The equity market has shown resilience, with consistent growth in the BSE Sensex and Nifty 50, bolstered by strong corporate earnings and an expanding mutual fund ecosystem. Retail participation is rising due to better awareness, technological accessibility, and a low-interest-rate environment.

Key sectors such as infrastructure, manufacturing, and technology are witnessing increased investments, fuelled by government initiatives like "Make in India" and digital transformation. Additionally, Indias focus on renewable energy and urbanisation creates long-term opportunities. Foreign direct investment

(FDI) remains strong, benefiting from reforms like

GST and labour changes. Despite challenges such as global uncertainties and domestic inflation,

Indias diverse economy and growing middle class provide a solid foundation for sustained growth and investment potential.

3. Equity Market Overview

In the three years following the Covid-19 pandemic, the Indian economy experienced a strong and sustained recovery, fuelled by government capital expenditure, tax growth, and healthy exports. The Economic Survey 2025 underscores that, over the long term, the Indian market has delivered exceptional growth, solidifying its position as one of the worlds top-performing markets.

This growth is driven by robust profitability, rapid digital financial infrastructure adoption, an expanding investor base, and significant reforms in products and processes.

The survey highlights several key factors that have propelled the market, including healthy corporate earnings, stable macroeconomic fundamentals, and a highly efficient technology infrastructure supporting seamless trading, clearing, and depository systems. Additionally, the trust established by mutual funds and online digital investment platforms has encouraged broader participation in capital markets.

Despite a volatile second half, FY25 concluded on a positive note, with the BSE Sensex rising 5.1%, Nifty 50 increasing by 5.2%, and the NSE Midcap 100 climbing

7.3%. The financial year saw two distinct market phases: the first half reached record highs due to strong investor confidence and favourable economic conditions, while the second half experienced a notable correction, driven by shifting market sentiment and increased volatility. Notably, Nifty 50 remained in the red for five consecutive months from October

2024 to February 2025. While large-cap valuations are aligned with their long-term averages, mid and small-cap valuations remain elevated, contributing to the market correction.

Key drivers of growth

• Consumption and premiumization: Domestic consumption remains the cornerstone of Indias near-term recovery and long-term growth prospects. A combination of favourable demographics driven by a youthful population and sustained income growth is fuelling rising demand for goods and services. Consumers are increasingly opting for premium products, contributing to a structural increase in discretionary spending. This shift is evident in the growing share of discretionary spending in Indian households, which is expected to drive a compound annual earnings growth (CAGR) of 17.3% in the consumer discretionary sector from FY24 to FY26, the highest among all sectors.

• Digitalisation and technology: Indias digital transformation is a key driver of its economic growth, supported by strong government policies and multi-year investment opportunities across diverse sectors. From online retail and food delivery to IT consulting and outsourcing, digitalization is propelling investments in a wide array of industries. With continued workforce growth, government backing, and infrastructure development, Indias IT sector is poised to thrive.

Furthermore, investments in artificial intelligence and automation are set to further boost demand for Indias technology expertise.

Infrastructure development: Large-scale infrastructure projects, including roads, railways, ports, and airports, are fuelling economic growth in India. Government initiatives such as the National Infrastructure Pipeline (NIP) and smart city projects are transforming the countrys physical and digital infrastructure, driving economic productivity, improving connectivity, and creating jobs. These developments are expected to further support the nations long-term growth trajectory.

• Renewable energy and sustainability: The push towards clean and renewable energy sources is driving investments in the solar, wind, and electric vehicle sectors. Indias commitment to reducing carbon emissions, along with government incentives for green technology and sustainable practices, is creating long-term growth opportunities in these industries. Renewable energy investments not only support environmental goals but also create new economic sectors and job opportunities.

• Foreign Direct Investment (FDI): India has emerged as a preferred destination for foreign direct investment due to its large consumer market, skilled workforce, and improving ease of doing business. The government has also introduced several initiatives to attract FDI, including sector-specific reforms and incentives.

As global businesses look for emerging market opportunities, India remains a key player in attracting international investments.

Outlook

India is set to benefit from continued political stability and ongoing socioeconomic reforms. Prioritising infrastructure and manufacturing investments, India aims to become a global industrial hub, supported by strong domestic consumption for self-sustaining growth.

Key drivers of Indias long-term growth include:

1. Macroeconomic stability: Improving terms of trade, a declining primary deficit, and lower inflation.

2. Earnings growth: Projected mid- to high-teens annual earnings growth over the next 3-5 years, driven by private capital expenditure, corporate balance sheet re-leveraging, and rising discretionary consumption.

Looking ahead, global uncertainties remain, but their exact impact is still uncertain. What works in Indias favour is a weaker U.S. dollar, renewed foreign portfolio inflows, and relative stability despite ongoing tariff issues. Being a consumption-driven economy, India is somewhat shielded from external shocks.

. Corporate Leasing Market Overview

Indias commercial office market saw a record absorption of 66.4 million square feet in 2024, reflecting a 14% year-on-year growth. The demand is expected to remain strong, reaching 65-70 million square feet in 2025, according to a FICCI-Colliers report. Bengaluru led the market with 21.7 million square feet absorbed, while Hyderabad saw the highest growth at 55%.

The market has shifted from being supply-driven to occupier-driven, with leasing volumes exceeding 50 million square feet for three consecutive years. Sustainability is now a key focus, with over 70% of leasing happening in green-certified buildings, a number expected to rise to 80-85% in 2025. In 2025, the market is expected to see new supply of 60-65 million square feet, vacancy rates falling to 15-16%, and average rental values reaching Rs 110 per square foot per month.

5. Trading Business

In the FY 2024 25, Naperol Investments Limited strategically expanded into the trading sector, focusing on the import and export of both basic and specialty chemicals. This new venture is designed to cater to a wide range of industries by delivering high-quality chemical products to both domestic and international markets. The chemicals industry is a cornerstone of Indias industrial and economic landscape. With a market size of around USD 220 billion in 2023, it is set for rapid expansion, projected to reach USD 400?450 billion by 2030 and USD 850?1,000 billion by 2040, according to a NITI Aayog report. India ranks as the worlds sixth-largest and Asias third-largest chemicals producer, supplying vital raw materials to sectors including pharmaceuticals, textiles, automotive, and agriculture.

Key drivers fuelling the growth of Indias chemical trading industry include:

• Rising domestic demand, with specialty chemicals expected to grow at a CAGR of 10?20%.

• Shifts in the global supply chain, as the China+1 strategy creates new opportunities for Indian producers.

• Government incentive policies supporting manufacturing and exports.

• Specialty chemicals focus, with this segment projected to grow at a 12% CAGR and reach USD 64 billion by 2025.

The optimistic growth outlook for Indias chemical industry presents significant opportunities, positioning the country for global prominence. Supported by strong demand, favourable policies, and robust key metrics, India is on track to emerge as a leading chemical manufacturing hub in the coming decades.

6. Company Overview

Naperol Investments Limited (referred to as ‘Naperol Investments, ‘Naperol or ‘the Company), was formerly known as National Peroxide Limited, a public Limited

Company established in 1954 and listed on BSE

Limited, Mumbai. Following the Composite Scheme of

Arrangement, which became effective on September

11, 2023, the Company underwent significant changes. The chemical business was transferred and vested in National Peroxide Limited (formerly known as NPL Chemicals Limited), with this transfer being retroactively effective from April 01, 2022. Additionally, the Company acquired the long-term investment through the amalgamation of the erstwhile Naperol

Investments Limited.

Currently, Naperol Investments Limited primarily focuses on its investment, trading and leasing business operations, wherein the Company has commenced its business operations in trading business focusing on both basic and specialty chemicals in the FY 2024-25.

7. Human Resources

At Naperol, our employees are at the heart of everything we do. We value and foster strong, positive relationships with our people, consistently launching engagement initiatives aimed at enhancing well-being andcultivatingamotivated,high-performingworkforce. We actively promote a culture of continuous learning and development by offering a diverse array of training programmes focused on building both technical expertise and leadership capabilities. These efforts empower our employees to thrive in their roles and make meaningful contributions to our dynamic work environment.

Ongoing initiatives also focus on enhancing the workplace experience and supporting a healthy work-life balance, which we believe is essential to the well-being and long-term success of our people. During the year, the employee strength stood at 3.

8. Risk Management

We recognise that managing risk effectively is integral to executing our strategy. In order to deliver our strategy and achieve excellence through our business model, both operationally and financially, we must ensure we maintain the right balance between safeguarding against potential risks and taking advantage of potential opportunities. Our aim is to foster a culture of effective risk management by encouraging appropriate and monitored risk-taking in order to achieve the Groups strategic priorities.

Nature of Risks	Definition	Mitigating factors
Trading risk	Trading risk in the chemical business refers to the potential for financial loss due to price volatility, supply-demand imbalances, counterparty defaults, or logistic disruptions.	The Company employs a disciplined trading strategy, including risk-based pricing, supplier diversification, real-time market tracking, and strong due diligence on counterparties. Contracts include protective clauses to reduce exposure.
Operational risk	Operational risk refers to the potential loss arising from inadequate or failed internal processes, systems, people, or external events.	Regular monitoring of procedures ensures that high standards are maintained across business processes. Staff training, internal audits, containment units, and assessment processes play a key role in fostering clear communication, tracking changes, and effectively managing transaction risks.
Market risk	Market risk arises from fluctuations in the market environment that can lead to an increase in the value of liabilities or a decrease in the value of assets. These changes can significantly impact an organizations financial position and performance.	The Company is committed to safeguarding its financial stability and liquidity by proactively identifying and mitigating market risks. This approach ensures the Company can meet its financial obligations, even amid periods of market volatility.
Reputation risk	Reputation risk arises from unexpected losses due to negative public perception or customer experiences, potentially affecting trust and brand value.	The Company has established a strong corporate governance and compliance framework to mitigate reputational risk, embedding it across all business operations.
Technology risk	Technology risk refers to the potential for loss resulting from system failures, disruptions, or technological malfunctions.	The Companys governance framework incorporates robust information technology practices to effectively manage and mitigate technology risks.
Regulatory risk	Regulatory risk is the potential for economic or reputational loss arising from non-compliance with applicable laws, regulations, or regulatory expectations.	The Company strictly complies with all relevant rules and regulations, ensuring full adherence and avoiding any violations.

9. Financial and Operational Performance

(D in lakhs)

	FY 2024-25	FY 2023-24
Total Revenue	2,013.92	192.04
EBITDA	1,172.19	(60.96)
EBITDA Margin (%)	58.20%	(31.74)%
PAT	1,055.43	(36.55)
PAT Margin (%)	52.41%	(19.03)%
Net Worth	1,16,356.09	1,05,475.33
Long-term Debt	Nil	Nil
Cash and Cash	337.16	92.05
Equivalent

Segment wise performance/product wise performance

The Company has two reportable segments, i.e. Investment segment and Trading Segment for the financial year ended March 31, 2025. The segment-wise information is given under Financial Statements forming part of the Annual Report.

Key Financial Ratios

As per provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the key financial ratios are given below:

Ratio	As of March 31, 2025	As of March 31, 2024	Variance	Explanation in case of variance is more than 25%
Debtors Turnover	73.55	0	73.55%	No trading transactions in FY 2023-24. Hence, debt to turnover ratio was 0 in FY 2023-24.
Current Ratio	6.74	1.51	347.05%	The current ratio has increased due to increase in cash and cash equivalents.
Debt-Equity Ratio	0	0	-	-
Debt Service Coverage Ratio	0	0	-	-
Return on Equity Ratio	0.01	(0.00)	2198.49%	Receipt of higher dividend in FY 2024-25 contributed to high PBT in comparison to the previous FY when PBT was negative.
Inventory Turnover Ratio	0	0	-	-
Net Capital Turnover Ratio	0.53	0	100.00%	Net capital turnover ratio has increased since there was no trading income in FY 2023-24.
Net Profit Ratio	0.52	(0.19)	375.35%	Net profit ratio is positive because of higher dividend income in FY 2024-25.
Return on Capital Employed	0.01	(0.00)	1815.45%	ROCE is positive due to profit earned in FY 2024- 25.
Return on Investment	0.10	0.06	59.59%	Return on investment ratio has increased due to receipt of dividend income
Adjusted Operating Profit Margin (%)	58.19%	(31.74%)	283.33%	Due to receipt of dividend, profitability became positive.

10. Resources and Liquidity

The Company meets its long-term and working capital needs by internally generated cash.

11. Internal Controls

The Company has developed an internal control system that is tailored to the Companys size, scope, and operational complexities. Internal audits are performed by M/s. PKF Sridhar and Santhanam

LLP, who thoroughly assess the effectiveness and appropriateness of Companys internal controls, ensuring adherence to operational systems, accounting procedures, and policies. The Companys Audit Committee regularly evaluates reports and findings from internal auditors, as well as the overall internal control framework. Process owners implement corrective actions within their respective domains based on internal audit insights to strengthen these controls. Significant audit observations and resulting corrective measures are presented to the Boards Audit Committee for review.

12. Cautionary Statement

The Management Discussion and Analysis Report acknowledges that certain statements regarding the Companys goals, forecasts, estimates, expectations, or predictions may qualify as ‘forward-looking under relevant securities laws and regulations.

Actual outcomes could vary significantly from these statements, whether expressed or implied. Key factors influencing these outcomes include the availability and cost of raw materials, fluctuations in demand and pricing in the Companys main markets, regulatory changes and tax policies, fluctuations in the US Dollar/

Indian Rupee exchange rate, economic developments in India and other countries where the Company operates, as well as other incidental factors impacting its operations.