Naperol Investments Ltd Management Discussions

1. Economic Review

Global

The global economy remained resilient during the year despite ongoing geopolitical tensions, supply chain challenges, and evolving trade dynamics. Recent developments in the Middle East have heightened uncertainty, impacting trade routes and contributing to volatility in energy and commodity prices, thereby increasing inflationary pressures across several economies.

Global trade and investment flows continue to adapt to shifting supply chains, changing trade policies, and growing geoeconomic fragmentation. While domestic demand and policy support have sustained growth in many regions, economic conditions remain uneven amid elevated uncertainty. Inflation is expected to face near-term pressure from higher energy and food prices before gradually moderating over the medium term.

GDP Growth Rate

	2025	2026 (Projections)	2027 (Projections)
World	3.4%	3.1%	3.2%
Advanced Economies	1.9%	1.8%	1.7%
United States	2.1%	2.3%	2.1%
Euro Area	1.4%	1.1%	1.2%
Emerging Markets and Developing Economies	4.4%	3.9%	4.2%
Emerging and Developing Asia	5.5%	4.9%	4.8%
China	5.0%	4.4%	4.0%
India	7.6%	6.5%	6.5%

(Source: World Economic Outlook by IMF, April 2026)

Outlook

The global outlook remains cautious amid ongoing geopolitical tensions, supply chain disruptions, and volatility in energy and commodity markets. Global growth is projected to remain stable at around 3.1% in 2026 and 3.2% in 2027, supported by resilient domestic demand and continued policy support across major economies.

However, emerging and developing economies may continue to face challenges arising from inflationary pressures, external uncertainties, and climate-related disruptions affecting trade and commodity supply chains. Despite these headwinds, the medium-term outlook remains supported by gradual economic stabilisation and improving global demand conditions.

India

India continued to demonstrate strong economic resilience in FY 2025-26, maintaining its position among the worlds fastest-growing major economies, with GDP growth at 7.7%. Growth was supported by robust domestic demand, sustained government infrastructure spending, and a gradual recovery in private sector investment despite a challenging global environment.

Infrastructure development remained a key growth driver, while steady urban consumption and improving rural demand supported overall economic activity. The services sector continued to lead growth, aided by digitalisation and strong performance in IT and business services, while manufacturing and agriculture provided stable support to the economy.

Inflation remained within the Reserve Bank of Indias target range, supported by moderating food prices and stable core inflation. The banking sector remained healthy, characterised by strong credit growth, improved asset quality, and adequate capitalisation. Despite global trade uncertainties and evolving tariff regimes, Indias external sector remained resilient, supported by strong services exports.

Indian Economy GDP Growth Rate (in %)

Year	FY 2021-22	FY 2022-23	FY 2023-24	FY 2024-25	FY 2025-26
GDP Growth Rate	8.7	7.0	8.2	6.5	7.7

Outlook

Looking ahead, Indias growth outlook remains positive, underpinned by sustained infrastructure investments, favourable demographics, and a stable policy environment, notwithstanding potential challenges arising from geopolitical developments and global trade uncertainties. Over the long term, the countrys growth trajectory is expected to be supported by continued advancements in infrastructure, digital transformation, clean energy initiatives, and financial inclusion. The expansion of digital ecosystems, increasing renewable energy adoption, growing electric vehicle penetration, and ongoing financial sector reforms are strengthening the foundations of the economy. Backed by a resilient banking sector, healthy credit growth, and robust foreign exchange reserves, India is well positioned to maintain sustainable growth and adapt effectively to evolving global dynamics.

2. Investment Market Overview

Global

Global financial markets remained influenced by geopolitical developments, policy uncertainty, and evolving macroeconomic conditions during the year. Volatility in energy prices, currency movements, and interest rate expectations continued to shape investor sentiment. Nevertheless, resilient economic activity across major economies and supportive policy measures helped sustain investment activity and market participation.

Investor interest increasingly gravitated towards longterm structural growth themes, including technological innovation, digital transformation, artificial intelligence, energy transition, and infrastructure development. At the same time, global capital flows reflected a growing emphasis on diversification across regions and sectors as investors sought to navigate elevated valuations and evolving market risks. International markets delivered healthy returns during the year, with the MSCI Pacific Index gaining approximately 20%, highlighting improving investor appetite for non-U.S. markets and broader global diversification opportunities.

India

India remains a structurally attractive investment destination, supported by favourable demographics, rising consumer demand, and a policy framework focused on manufacturing, digitalisation, and infrastructure development. India is projected to become the worlds second-largest consumer market, with consumer spending expected to reach USD 4.3 trillion by 2030, nearly doubling from 2024 levels.

The countrys attractiveness is further reinforced by ongoing reforms, increasing ease of doing business, and strong foreign investor confidence, with global FDI commitments reaching approximately USD 135 billion in 2025. Strong domestic fundamentals, including expanding infrastructure, healthy credit growth, and rising consumption, continue to attract investments across sectors such as technology, renewable energy, electric mobility, and digital financial services.

Supported by increasing global corporate participation, a more transparent regulatory environment, and sustained policy support, India remains well positioned for long-term capital deployment and economic growth.

(Source: https://www.bakermckenzie.com/en/insight/publications/2026/01/whats-on-the-horizon-for-business-with- india0)

3. Equity Market

Indian equity markets remained resilient during FY26 despite a challenging external environment marked by geopolitical tensions, heightened global risk aversion, fluctuating commodity prices, and volatile foreign capital flows. Investor sentiment was periodically affected by concerns over global growth, rising energy costs, and selling pressure from overseas investors, resulting in broad-based market corrections across sectors. However, the strength of domestic economic fundamentals, supported by moderating inflation, a supportive policy environment, and sustained domestic investment participation, helped offset external pressures. The continued participation of domestic investors and the relative resilience of defensive sectors further reinforced market confidence, helping markets absorb external shocks and maintain stability amid a challenging global backdrop.

Despite these headwinds, strong domestic institutional investor (DII) participation provided meaningful support, with record net inflows of approximately ?8.5 lakh crore during the year, aided by robust SIP contributions. Consequently, the Nifty 50 declined 5.1% during FY26, while broader market performance remained mixed, with the Nifty Midcap Index gaining 1.6%, and the Nifty Smallcap 250 and Nifty Microcap 250 declining 5.4% and 8.7%, respectively.

Market sentiment improved towards the beginning of FY27, supported by easing geopolitical concerns, moderating bond yields, continued domestic inflows, and more attractive valuations following the market correction, contributing to a recovery in benchmark indices.

Source: NSE, Market Pulse, April 2026

Annualized growth rate (based on market capitalisation) for listed companies

Country	5-Year	10-Year	15-Year	20-Year	25-Year	30-Year
US	11.6%	13.2%	12.3%	9.7%	8.6%	11.2%
China	3.4%	6.9%	8.4%	14.7%	13.1%	16.4%
Japan	3.1%	5.1%	5.3%	3.4%	5.1%	4.2%
India	16.4%	14.0%	8.9%	12.7%	16.7%	15.2%

Source: LSEG Workspace, NSE EPR

Note: Data for companies listed in Hong Kong has been included under China

Outlook

• Earnings Recovery: Corporate earnings are expected to improve, supported by resilient domestic demand, infrastructure spending, and continued economic growth.

• Valuation Comfort: Following recent market corrections, valuations have moderated closer to long-term averages, creating a more balanced investment environment.

• Strong Domestic Flows: Continued participation from domestic institutional investors and retail investors is expected to provide stability and support market liquidity.

• Supportive Policy Environment: Ongoing reforms, infrastructure investments, and policy continuity are likely to reinforce investor confidence and economic momentum.

• Macroeconomic Stability: Moderating inflation, healthy credit growth, and stable economic conditions are expected to support corporate performance and equity market prospects over the medium term.

4. Corporate Leasing Market Overview

Indias office real estate market maintained strong momentum in CY 2025, with gross leasing reaching a record 83.3 million sq. ft. and net absorption touching 57.0 million sq. ft., reflecting sustained occupier demand across major markets. Bengaluru and Delhi NCR remained the leading demand centres, while Global Capability Centers (GCCs) continued to be a key growth driver, accounting for nearly half of active space requirements.

On the supply side, new completions reached approximately 53 million sq. ft., up 17% year-on-year, helping ease availability constraints in key office markets. Global companies remained significant contributors to demand, reinforcing Indias position as a preferred destination for business operations and expansion. Supported by a strong leasing pipeline, growing GCC activity, and continued corporate expansion, the office market remains well positioned for sustained medium-term growth.

Source: https://www.jll.com/en-in/newsroom/india-s-office-market-scales-unprecedented-highs-with-gross-leasing- activity-at-83-3-million-sq-ft-for-the-year-2025-jll

Outlook

The outlook for Indias office real estate market remains positive, supported by sustained leasing demand, continued expansion of Global Capability Centers (GCCs), and growing participation from multinational corporations. A healthy supply pipeline across key markets is expected to support future demand while maintaining market stability. Backed by strong economic growth, urbanisation, digital transformation, and Indias position as a preferred global business destination, the office sector remains well positioned for sustained growth over the medium to long term.

5. Trading Business

Indias chemical industry continues to demonstrate strong long-term potential despite a challenging global operating environment marked by overcapacity, pricing pressures, and subdued demand across several markets. Supported by robust domestic consumption, a competitive cost structure, and increasing participation in global supply chains, India remains well positioned to strengthen its role in the global chemicals landscape.

The industry is projected to grow at a CAGR of 8-9%, expanding from an estimated market size of USD 155165 billion in 2025 to USD 230-255 billion by 2030. Growth is expected to be driven by rising demand from consumer goods, packaging, infrastructure, construction, automotive, and other industrial sectors, alongside emerging opportunities in renewable energy, semiconductors, and advanced manufacturing.

Indias sizeable chemical trade deficit also presents significant opportunities for import substitution and domestic capacity expansion. While global competitive pressures, particularly from excess international supply, continue to impact margins across segments, companies focused on specialty chemicals, innovation, operational excellence, and value-added products are expected to be better positioned to capture future growth opportunities.

Source: https://ddnews.gov.in/en/india-chemical-market-to-grow-8-9-cagr-amid-global-pressures-mckinsey/

6. Company Overview

Naperol Investments Limited ("Naperol” or "the Company”), formerly known as National Peroxide Limited, is a public limited company established in 1954 and listed on the BSE.

Pursuant to the Composite Scheme of Arrangement, effective September 11, 2023, the Company underwent a significant restructuring. Its chemical manufacturing business was transferred and vested in National Peroxide Limited (formerly NPL Chemicals Limited), with effect from April 1, 2022. Simultaneously, the Company acquired long-term investments through the amalgamation of the erstwhile Naperol Investments Limited.

Following this restructuring, the Companys primary focus is on investment, trading, and leasing activities. Further, the Company has expanded its trading operations by entering the basic and specialty chemicals segment, marking a new avenue for business growth.

7. Human Resources

At Naperol, our employees are central to our success. We are committed to fostering a positive and inclusive work environment through employee engagement, continuous learning, and capability-building initiatives.

We also place strong emphasis on employee well-being and work-life balance, recognising their importance in building a motivated and high-performing workforce. As of the end of the year, the Company had an employee strength of 5.

8. Risk Management

Effective risk management is fundamental to the successful execution of our strategy and long-term value creation. We seek to maintain an appropriate balance between mitigating potential risks and pursuing growth opportunities, ensuring operational and financial resilience. Through a structured risk management framework, we foster a culture of informed and responsible decision-making that supports the achievement of our strategic objectives.

Nature of Risks	Definition	Mitigating factors
Trading risk	Trading risk refers to the possibility of financial losses arising from price volatility, supply-demand imbalances, counterparty defaults, or disruptions in logistics and supply chains.	The Company follows a disciplined trading strategy supported by risk-based pricing, diversified supplier networks, continuous market monitoring, and comprehensive counterparty due diligence. Contractual safeguards are also incorporated to minimise potential exposure.
Operational risk	Operational risk relates to potential losses arising from inadequate or failed internal processes, systems, human error, or external events.	The Company has implemented robust operational controls, including regular process reviews, internal audits, monitoring mechanisms, and structured assessment procedures to ensure operational efficiency and effective risk management.
Market risk	Market risk arises from fluctuations in market conditions that may adversely impact asset values, liabilities, or the overall financial performance of the Company.	The Company adopts a proactive approach towards identifying, monitoring, and mitigating market exposures to preserve financial stability, maintain liquidity, and manage volatility effectively.
Reputation risk	Reputation risk refers to the possibility of adverse business impact arising from negative stakeholder perception, customer dissatisfaction, or reputational concerns.	The Company maintains a strong corporate governance and compliance framework supported by ethical business practices, transparency, and accountability across all functions.
Technology risk	Technology risk pertains to potential losses arising from system failures, cyber threats, technological disruptions, or inadequacies in information technology infrastructure.	The Company has established robust information technology systems and governance practices aimed at ensuring operational continuity, data security, and effective management of technology-related risks.
Regulatory risk	Regulatory risk refers to the potential financial or reputational impact arising from non-compliance with applicable laws, regulations, or regulatory expectations.	The Company maintains a strong compliance culture and regularly reviews its policies and procedures to ensure adherence to all applicable statutory and regulatory requirements.

9. Financial Performance

(Rs in lakhs)

	FY 2025-26	FY 2024-25
Total Revenue	2,679.75	2,013.92
EBITDA	1,111.41	1,172.19
EBITDA Margin (%)	41.47%	58.20%
PAT	1,068.91	1,055.43
PAT Margin (%)	39.88%	52.41%
Net Worth	91,691.79	1,16,356.09
Long-term Debt	Nil	Nil
Cash and Cash Equivalent	85.58	337.16

Segment wise performance/product wise performance

For the financial year ended March 31, 2026, the Company operated through two reportable segments, namely the Investment Segment and the Trading Segment. Details relating to segment-wise performance are provided in the 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 n March 31, 2026 1	As of March 31, 2025	Variance	Explanation in case of variance is more than 25%
Debtors Turnover	54.38	73.55	-26.06%	The Debtors Turnover Ratio improved during the year primarily due to a significant increase in sales, with revenue being generated more evenly throughout the year. Consequently, trade receivables at year-end were proportionately lower relative to annual sales compared to the previous year, resulting in an improved ratio.
Current Ratio	8.33	6.74	23.67%	The increase in the Current Ratio was primarily attributable to substantial growth in sales during the year, resulting in higher current assets, particularly investments, trade receivables and other current assets. The corresponding increase in current liabilities was comparatively lower, leading to an improvement in the Current Ratio.

 

Ratio	As of 1 March 31, 2026	As of March 31, 2025	Variance	Explanation in case of variance is more than 25%
Debt-Equity Ratio	0	0	0	Not applicable
Debt Service Coverage Ratio	0	0	0	Not applicable
Return on Equity Ratio	0.01	0.01	7.99%	-
Inventory Turnover Ratio	0	0	0	-
Net Capital Turnover Ratio	0.72	0.53	37.36%	The Net Capital Turnover Ratio improved primarily due to a substantial increase in sales during the year, resulting in more efficient utilization of capital employed.
Net Profit Ratio	0.40	0.52	-23.89%	Revenue registered year-on-year growth; however, the increase in operating and input costs was proportionately higher than the growth in revenue. This resulted in margin compression and a consequent decline in the net profit ratio.
Return on Capital Employed	0.01	0.01	24.45%	Return on Capital Employed improved compared to the previous year due to an increase in profit, while the decline in the market value of equity investments reduced the capital employed, thereby enhancing the ratio.
Return on Investment	0.09	0.10	-7.99%	-
Adjusted Operating Profit Margin (%)	41.47%	58.19%	-28.73%	The Adjusted Operating Margin declined during the year despite higher revenue, primarily due to a proportionately higher increase in the cost of goods sold. Consequently, profit after tax was lower compared to the previous year, resulting in a reduction in the margin.
Interest Coverage Ratio	0 0	0		Not applicable

10. Resources and Liquidity

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

11. Internal Control

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 the 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 reports 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.