Navigant Corporate Advisors Ltd Management Discussions

Macro-Economic Environment-Indian Economy at large

The Indian economy sustained its growth momentum during the year under review and continued to be among the fastest growing major economies in the world. As per the Provisional Estimates of National Income released by the Ministry of Statistics and Programme Implementation, real Gross Domestic Product grew by 7.7% in FY 2025-26 as against 7.1% in Fy 2024-25, with growth in the fourth quarter at 7.8%. Growth was supported by resilient private consumption, sustained public capital expenditure, double digit expansion in manufacturing and construction and a broad-based recovery in contact-intensive and financial services. During the year the national accounts were also rebased to 2022-23, aligning Indias statistical framework with the structure of a rapidly transforming economy.

Nominal Gross Domestic Product for FY 2025-26 is estimated at approximately Rs. 346 lakh crore, and gross fixed capital formation grew by over 8%, reflecting a continuing investment cycle. Inflation remained broadly within the tolerance band, and financial market conditions stayed supportive of capital formation. While external headwinds, including geopolitical developments in West Asia and global trade and tariff uncertainty, remain a risk to the pace of growth in the coming year, the medium-term outlook for the Indian economy and for domestic capital markets continues to be constructive.

Source: https://www.mospi.gov.in and https://www.ibef.org/economy/indian-economy-overview

Our Company is SEBI registered Category I Merchant Banker. Company mainly participates into SME Segment of Primary market issues, Valuation Advisory besides handling various assignments on Rights Issue, Delisting, Open Offers, for Companies on Disseminations Board and various valuation exercise including ESOP advisory.

The SME Platform offers an entrepreneur and investor friendly environment, which enables the listing of SMEs from the unorganized sector scattered throughout India into a regulated and organized sector. The platform provides an opportunity to SME entrepreneurs to raise equity capital for growth and expansion. It also provides an opportunity for investors to identify and invest in good SMEs at an early stage. Over the last few years the SME segment has emerged as one of the most active parts of the Indian primary market, with the number of SME issues in several years exceeding the number of main board issues.

SEBI adopts the principle of a consultative approach for making rules and regulations best suited for the capital market, with the objective of developing and regulating the Indian securities market as well as protecting the interest of investors. During the year under review, the SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2025 notified on 3rd March, 2025 significantly recalibrated the SME IPO framework.

The key changes include a minimum operating profit (EBITDA) of Rs. 1 crore in at least two of the three preceding financial years, a cap of 20% of the issue size on the offer for sale component together with a restriction on any selling shareholder offering more than 50% of its pre-issue holding, a phased lock-in on promoter holding in excess of the minimum promoter contribution, a cap on the general corporate purposes component at 15% of the issue size or Rs. 10 crore whichever is lower, a prohibition on the use of issue proceeds to repay loans from promoters and the promoter group, and the extension of related party transaction norms applicable to main board companies to SME listed entities. SME listed entities are also now permitted to undertake further issues of capital beyond the erstwhile threshold without mandatory migration to the main board, subject to compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulation s, 2015 as applicable to main board companies. These measures have shifted the SME segment from volume towards quality, moderating deal flow in the near term while, in the view of the management, improving the credibility and durability of the segment over the medium term.

In addition to that, as per Rule 11UA (2) (b) of the Income Tax Rules, 1962, whenever an Indian unquoted company issues equity shares at a price other than book value it has to obtain a certification from Merchant Bankers on the fair value of unquoted equity shares on a discounted cash flow basis. Your Company had identified this opportunity and was providing services to companies across India including large corporates. However, pursuant to the Finance Act, 2024, Section 56(2)(viib) of the Income Tax Act, 1961 is no longer applicable, and accordingly valuation of shares and securities may no longer be required for the issuance of shares and securities. This has had a substantial adverse effect on the total revenue of your Company, the full year impact of which has been reflected in the results for the year under review.

• Sustained activity in the Indian equity markets and continued interest in the SME segment support demand for merchant banking services.

• Growth in private equity, venture capital and strategic investments into Indian companies, together with a widening equity investment culture, continues to generate demand for valuation and fairness opinion assignments.

• Fund raising, restructuring, open offer, buy-back, delisting and ESOP related transactions continue to require the services of

a merchant banker, and the recalibrated SEBI framework favours established intermediaries with strong due diligence capability.

Despite opportunities, there are significant factors presenting threats to our business viz:

• Uncertainty and low business confidence due to inflationary concerns will adversely impactthe business.

• Capital Market gets affected by events such as interest rate hikes, monsoon performance, tax concerns, other global events & domestic political events such as interim & state elections.

• Continuous downward pressure on the fees and commissions caused by heightened competition and willingness of most players to deliver services at very lowfees.

• The effect of any of the adverse events on the capital market would pose a threat for the process of capital formation and resource raising.

• Change in Regulatory Policy

The Company has an Internal Control System commensurate with its requirement and size of business to ensure that the assets and interest of the Company assets are safeguarded. The adequacy and effectiveness of the internal control across various activities, as well as compliance with laid down system and policies are comprehensively and frequently monitored by your Companys management at all the levels of the originations. The Company has established well defined policies and process across the originations covering all major activities including authority for approvals in all cases where monetary decisions are involved, various limits and authorities are in place.

The Audit Committee of the Board of Directors review the existing audit procedures and internal systems of control on an ongoing basis keeping in mind the organizations requirements, growth prospects and ever evolving business environment.

They also review the internal audit findings and recommendations and ensure that corrective measures are implemented.

India remains one of the most vibrant global economies, supported by robust banking, insurance and capital market infrastructure and by a sustained domestic investment cycle.

The Indian equity market continues to expand in terms of listed companies and market capitalisation, widening the playing fie ld for intermediaries. The regulatory changes introduced in the SME segment during the year are expected to moderate issue volumes in the near term while improving the quality of issuers coming to market.

With increasing retail participation and growing financial awareness, there remains significant potential in the market. Your Company intends to consolidate its position in valuation advisory and transaction related assignments, strengthen its due diligence and compliance capability in line with the revised regulatory framework, and pursue a broader mix of mandates so as to reduce dependence on any single revenue stream.

Risk is an integral part of the business and we aim at delivering superior shareholder value by achieving an appropriate balance between risks and returns. Our senior management identifies and monitors the risks on an ongoing basis and evolves process/ systems to monitor and control the same to contain the risks to minimum levels. Ongoing monitoring by our officials help in identifying risks early. The financial services industry is subject to continuously evolving legislative and regulatory environment due to increasing stringent regulatory framework.

Navigant Corporate Advisors Limited is part of dynamic and progressive group that actively fosters a challenging work environment and encourages Entrepreneurship. With trust being the critical part of our business belief, we lay a strong emphasis on integrity, teamwork. Our Professional staff with diverse backgrounds brings varied talent, knowledge and experience to the Group, helping our business to remain competitive, achieve greater success and newer milestone.

During this year Company has carried out various other assignments such as Open Offers, Rights Issues, Preferential Issue and valuation exercise induding ESOP advisory. The total Revenue from operations during the year has decreased to Rs. 464.07 Lacs as compared to Rs. 779.51 Lacs witnessed in 2024-25. Company has also been able to provide valuation services to few large corporates. The overall financial performance of the Company was impacted by lower volumes of transaction based mandates during the year, following the withdrawal of Section 56(2)(viib) of the Income Tax Act, 1961 and the recalibration of the SME IPO framework. The Company continues to focus on valuation and advisory services.

We consider investor relations to be an important aspect of our business as we believe in building transparent and open relationship with our stakeholders. As a listed Company, we are now laying even greater emphasis on our investor relations program to provide o ur investors, analysts and other stakeholders with a complete and accurate picture of the Companys past and current performance and the prospects and strategies for the future.