Nirlon Ltd Management Discussions

1. Overview:

During the year under review, the Company continued to successfully license and manage all five phases of Nirlon Knowledge Park (NKP), comprising approx. 30.8 lakh sq. ft. of licensable area.

The completed development across phase 1-5 stands at approx. 47.63 lakh sq.ft

The Company recognised license fees from all five phases in the Profit & Loss Account for the financial year 2025-26.

Operations Summary: Industrial Park / Information Technology Park - Goregaon (East), Mumbai:

a. Occupancy & Licensee Fee Renewals/ Escalations:

Supported by sustained demand for well-located, professionally managed Grade A commercial real estate in established Indian metros, the Company maintained an occupancy level of 99.1% across the chargeable area of phases 1-5 of NKP during FY 2025-26. The Company has licensed the premises to well-regarded and predominantly institutional occupants, resulting in stable and regular license fee collections for all five phases.

A major occupant in NKP had vacated approx. 4,50,000 sq. ft. in a phased manner and had moved out of NKP between f.y. 2024-25 and F.Y. 2025-26. The vacated area has been relicensed to a combination of existing and new licensees at commercially competitive rates, reflecting the continued strength of demand for quality commercial office space.

Escalations of license fees (approx. 15% every three years) took effect substantially as contracted during the year under review. Renewals of expiring licenses with existing licensees, as well as fresh licenses were successfully executed

during the year. These renewals / fresh licenses / escalations contributed to the Companys continued strong financial performance. As on June 30, 2026 approx. 99.9% of the licensable area in NKP has been successfully committed or licensed.

b. Loan Repayments:

The Company has availed a Green Loan of 1,230/- crore with a sub - limit of 80/- crore by way of an Overdraft facility from The Hongkong and Shanghai Banking Corporation Limited (“HSBC”). The outstanding loan amounts as on March 31, 2026 aggregated to 1,150/- crore (as per IGAAP).

The Company executed and registered a Mortgage Deed and other facility documents with HSBC through which it created a first and exclusive charge of the Companys immovable property, comprising of the land, situated at Goregaon (East), Mumbai 400 063, building and structures on the land.

This Loan facility is rated and re-affirmed as AA+/Stable by Crisil Rating as on the date of this Report.

c. Profitability and Cash Flow:

The Company recorded another year of stable occupancy, accompanied by growth in both gross income and profitability. The improvement was primarily driven by license fee escalations and license renewals, most of which were concluded on improved commercial terms during FY 2025-26.

During the year under review, the Companys Revenue increased from 636.07 crore to 669.17 crore and Profit before tax increased from 338.41 crore to 371.94 crore as compared to the previous year (as per Ind AS).

The Company continued to generate strong and improved free cash flows during the year under review after accounting for all expenses including payment of interest to its lender.

After considering the Companys available free cash flows, improved profitability and close to full occupancy levels, and pursuant to suitable deliberation, the Board of Directors have recommended for shareholders consideration a final dividend of 15/- per share (@150%) for the Year under review, in addition to the interim dividend of 15/- per share (@150%) already paid during the year under review.

d. Priorities

Key priorities for the Company during f.y. 2026-27 are as follows:

i. To ensure that the new licensees are able to occupy and commence their operations as contracted.

ii. To proactively pursue the renewal of all other licenses due for renewal in the normal course and at competitive rates;

iii. To ensure the full occupancy across all 5 phases of NKP by maintaining and operating NKP to the highest possible standards, and continuing to satisfy the requirements of existing licensees;

iv. To ensure timely servicing of its loans;

v. To further strengthen and enhance the Companys ESG initiatives;

vi. To continue reducing the Companys carbon footprint by increasing the share of its electrical power sourced from renewables and further improving the efficiency of its water consumption;

vii. To continue to proactively identify and evaluate emerging trends/paradigms in the commercial office space market and the IT / Financial Services / Banking / GCC

sectors, in order to make a positive impact on the Companys business, and implement mitigation strategies whenever required.

viii. To identify any potential new risks for the Company such as the impact ofAI on employment generation in the GCC Sector in India and the impact of extreme heat and climate change on the commercial office market and NKP in particular.

ix. To ensure that NKP continues to maintain its present occupancy levels of 99% and above, and license at the best possible rates in a competitive market.

x. To ensure an efficient capital allocation strategy in order to maximize shareholder value.

2. Business Climate Summary: Opportunities, Risks and Concerns:

Macro-Economic Environment i. Global economy:

Geopolitics and the global economic environment continue to have a bearing on real estate demand in India, including in Mumbai. The quantum of investments into India, and specifically in Indian real estate are, inter alia, driven by economic conditions and, on a more micro level, changing business trends for commercial real estate in the developed world. Since the last election in the United States, new paradigms (tariffs, protectionism and increasingly bilateral trade and diplomacy etc.) are evolving. Accordingly, the economic implications of this developing ‘new order are currently uncertain and appear likely to remain so for some time. The apprehension of a tariff driven reemergence of inflation, coupled with weakening job markets and lower demand/ consumption leading to global recessionary pressures continues to remain real. This uncertainty continues to weigh on economic policy and investment decision making.

The potential effects of tariffs in the short term and medium term will continue to be evaluated and monitored carefully.

The global economy is expected to grow at approx. 3.4% in 2027 on account of strong demand in developed economies especially the US as well as sustained and increasing investments in Artificial Intelligence in the major economies of the world as per the latest estimates. Major economies earlier casted higher inflation due to global conflicts especially in the Middle East between Iran and the US. This war is having a cascading effect globally due to disruptions in supply chain and trade flows, causing inflation and energy prices to soar worldwide. Due to heightened global tension on account of such wars, the consequences need to be carefully monitored. Emerging economies are expected to lead the charge worldwide and grow at approx. 3.50 to 4.00 %, though vulnerable to oil shocks and currency weakness. Such global and geopolitical conflicts continue to create significant fluctuations and downward pressure on foreign exchange, which cause anxiety amongst investors, and affect business environments.

Indian economy:

The Indian economy sustained strong economic growth backed by the services sector. India is presently one of the fastest growing major economies in the world. The resilience stems from multiple factors such as structural and income tax reforms, GST reforms, labour reforms, capital expenditure and domestic consumption. Inflation though is up from F.Y. 2026 due to soaring energy prices and the effect of tariffs.

In all probability, the Indian economy should grow consistently for f.y. 2027 and f.y. 2028. Projections are lowered due to turbulence in the supply chain and trade caused by tariffs and geopolitical war. Potential effects of climate change including a weak monsoon should be monitored carefully.

Industry overview in India:

Commercial real estate:

The year under review continued to see increasingly strong demand for commercial real estate in India from institutional investors as well as end users. For institutional investors, this has been driven by the desire and imperative to be part of a market that has shown strength and resilience amid global uncertainty, and offers the possibility for sustained growth over the medium to long term. The effect of AI in the short as well as medium term on the Real Estate market in India should be carefully monitored as well, as this could lead to potential reduction in incremental hiring and future job creation in India.

Additionally, for investors from developed economies, the combination of Indias enormous domestic potential for growth, continuing efficiencies of cost as compared to their home markets and availability of the required talent pool are significant attractions.

As mentioned during earlier years in this analysis, demand for commercial real estate in Mumbai is dependent on the city continuing to be an investment destination of choice for Indian as well as multinational corporates. Over the past approx. two decades, other metros in India have also established themselves as vibrant and attractive destinations for commercial real estate by offering a business / investment friendly climate, with lower living costs for employees, and competitive salary costs and real estate prices for employers.

In this context, successive and continuing State Government initiatives to simplify the regulatory and ease of doing business frame work in Maharashtra are welcome and much needed. The successful implementation of these initiatives and

the improving transport and allied infrastructure, should help Mumbai retain its pre-eminent position as a preferred business / investment destination in India.

The traditional strengths of Mumbai, including its Financial Services Industry, business ethos and a large, cosmopolitan and educated work force remain very relevant, and should also continue to enhance the citys desirability as a dynamic and competitive international investment destination.

At the Central Government level too, investors and entrepreneurs look forward to continuing of stable, pro investment and business supportive policies, which incrementally build on existing legislation and / or introduce fresh initiatives targeted to accelerate investment, infrastructure, job creation and economic growth.

From a real estate perspective, the increasing emergence of, and investor response to Indian Real Estate Investment Trusts (REITs) are welcome and should continue to lead to the broadening and deepening of the real estate capital markets in India.

With the help of a supportive regulatory framework for SM-REITs, fractional ownership of commercial real estate is on the rise, thereby increasing the attractiveness of the real estate sector as an alternate investment vehicle.

i. Demand for Commercial Real Estate in Suburban Mumbai

Demand for commercial real estate in suburban Mumbai is driven by the Information Technology (IT), the Multinational Banking and Financial Services Industries (BFSI) and, to some extent, corporate offices sectors. The demand from multinationals, especially in the GCC sector, has increased over the past years. Presently, India is host to approx. 2117 GCCs collectively employing approx. 3-4 million professionals and generating significant revenue.

Though demand is strong, the business model for these sectors is based on relatively inexpensive commercial real estate, in suburbs beyond Borivali in the West, Mulund in the East, in satellite cities like Navi Mumbai, as well as in other cities in India like Chennai, Pune, Hyderabad and Bangalore. These markets could keep commercial rates under pressure in the Companys micro market.

However, the demand for high quality, well planned ESG conscious and professionally managed commercial developments like NKP in the Companys micro market is estimated to remain steady. The micro market, and specifically NKP itself, is advantageously located on the Western Express Highway and is in close proximity to the commuter rail network, the Mumbai Metro and the airport. The creation of the Metro Line in Mumbai with a Metro station approx. 300 metres South East of NKP is a tremendous additional connectivity advantage to NKP. In addition, emergence of the recently opened Coastal Road which connects the suburbs of Bandra directly to South Mumbai via the Bandra-Worli Sea Link has greatly enhanced intra-city connectivity. The entire coastal road, when complete, will significantly improve connectivity from/to the northern part of Mumbai, where NKP is located. These infrastructure developments further enhance Mumbais position as a preferred destination of Grade A Licensees such as International Banks and Financial Services Companies.

Source: Zinnov-nasscom India GCC Landscape Report 2026