Nucleus Software Exports Ltd Management Discussions

of Financial Condition and Results of Operations of Nucleus Software Exports Limited

Managements discussion and analysis of the financial condition and results of operations include forwardlooking statements based on certain assumptions and expectations of future events. The Company cannot assure that these assumptions and expectations are accurate. Although the Management has considered future risks as part of the discussions, future uncertainties are not limited to Management perceptions.

A. INDUSTRY STRUCTURE AND DEVELOPMENT

Global Industry Overview

The software industry, particularly in the domain of financial technology (FinTech), is undergoing unprecedented transformation and global expansion. Technological innovation, demographic shifts, and evolving regulatory landscapes are reshaping the industry at an accelerated pace. Our Company made this possible by staying ahead of the curve, leveraging technology to drive change and empower financial institutions worldwide.

Key Market Trends

Across global markets, several transformative trends are redefining the future of the software industry. These include the widespread adoption of Artificial intelligence (AI) and Machine Learning (ML), the surge in digital banking and mobile-first financial services, and heightened focus on cybersecurity and data protection. Additionally, regulatory reforms are propelling open banking and interoperability, creating demand for seamless, customer-centric financial solutions. Our Company made this possible by embedding these advancements into our product strategy and enabling our clients to stay future-ready.

Competitive Dynamics

Nucleus Software competes with a broad spectrum of global players—from large technology conglomerates to agile FinTech innovators. Our competitive edge is built on deep domain expertise, cutting-edge product innovation, and a steadfast customer-first philosophy. Our Company made this possible by continuously evolving our offerings, strengthening strategic alliances, and delivering solutions tailored to meet the complex demands of the modern financial ecosystem. Regulatory Environment

Navigating a diverse and complex regulatory landscape is both a challenge and an opportunity. Regulatory frameworks vary widely across geographies, necessitating vigilance, agility, and local market understanding. Our Company made this possible by proactively aligning with local compliance standards, fostering trust, and enabling our clients to operate with confidence in every market we serve.

Market Expansion Strategies

To harness global growth potential, Nucleus Software adopts a focused, region-specific approach to expansion—prioritizing markets with favourable regulations and strong digital demand. Through strategic investments in R&D, localized innovation, and top-tier talent acquisition, we continue to build lasting relationships with clients and partners across the globe. Our Company made this possible by staying true to our mission of delivering transformative solutions that drive measurable business value.

B. COMPANY OVERVIEW

The Company was incorporated on January 9, 1989 as Nucleus Software Exports Private Limited with its registered office at 33-35 ThyagrajNagar Market, New Delhi, India. Subsequently in October 1994, it was converted into a Public Limited Company. In August 1995, Nucleus made an Initial Public Offer and is currently listed at National Stock Exchange of India Ltd. and BSE Ltd.

Nucleus operates through integrated and well networked subsidiaries in India, Japan, Netherlands, Singapore, USA, Australia and South Africa. Since 1995, product development has been our forte and the Company has chosen to exclusively develop products and further add value through dedicated Research and Development initiatives.

Over the years we have gained deep experience working closely with Global leaders in the Banking and Financial Services industry. The Company has seven subsidiaries, as described below:

Date of Incorporation	Name of Subsidiary Company	Location	Percentage of Shareholding
February 25, 1994	Nucleus Software Solutions Pte. Ltd.	Singapore	100%
August 5, 1997	Nucleus Software Inc.	USA	100%
November 2, 2001	Nucleus Software Japan Kabushiki Kaisha	Japan	100%
February 3, 2006	Nucleus Software Netherlands B.V.	Netherlands	100%
April 21, 2008	Nucleus Software Ltd.	India	100%
February 3, 2014	Nucleus Software Australia Pty. Ltd.	Australia	100%
February 10, 2015	Nucleus Software South Africa (Pty) Ltd.	South Africa	100%

The Company has Corporate office in Noida and branch offices in Chennai, Pune and Mumbai in India and in London and Dubai.

The Singapore subsidiary has a representative office in Jakarta in Indonesia and in Manila in the Philippines. These subsidiaries/branch offices help the Company in providing front-end support to customers and explore new opportunities.

Nucleus Software delivers disruptive Fintech Solutions to 200+ Banks and Financial Institutions across 50 countries supporting Retail Lending, Corporate & SME Finance, Islamic Finance, Automotive Finance, Captive Automotive Finance, Cash Management, Mobile & Internet Banking, Transaction Banking and more. Our solutions manage $15 Trillion+ value of yearly transactions, with over 26 Million transactions each day through our globally integrated transaction banking platform. Our lending platform manages $1.2+ Trillion value of loans globally, while enabling 500,000+ users to log in daily.

1. FinnOne Neo?: The next-generation digital lending platform, designed to revolutionize the lending process. FinnOne Neo? is built on an advanced technology platform, empowering financial institutions to streamline their lending operations, enhance customer experiences, and drive business growth.

2. FinnAxia?: An integrated global transaction banking suite, trusted by banks worldwide to optimize their transaction banking processes. With FinnAxia?, financial institutions can efficiently manage their cash management, trade finance, liquidity management, and other transaction banking activities on a single platform, thereby improving operational efficiency, visibility, and enhancing client relationships.

3. PaySe?: The worlds first online and offline digital payment solution, created with the vision to democratize money. This innovative payment solution offers users a seamless and convenient way to conduct digital transactions, both online and offline, facilitating financial inclusion and empowering individuals and businesses.

4. Nucleus Software Digital Services: Our comprehensive suite of services is tailored to assist banks and financial institutions in their digital transformation journey and maintain an optimal technology infrastructure. Through Nucleus Software Digital Services, we offer a holistic approach to digital transformation, enabling organizations to deliver seamless customer experiences, achieve operational and cost efficiencies, and gain actionable insights to drive strategic decision-making.

A brief on the functionality of our flagship products is furnished below:

1. FinnOne Neo? - AI-enabled Digital Lending

Platform

FinnOne Neo? revolutionizes end-to-end digital lending for financial institutions, delivering superior product selection, enhanced efficiency, reduced costs, minimized errors, and increased margins - all adding up to maximized portfolio performance, driving growth and success.

With 40 years of global lending experience, FinnOne Neo? offers unparalleled value by being the only solution that truly understands the intricacies of lending. With over 540+ ready APIs, it seamlessly integrates all your lending processes.

The recent GA 8.0 marks the achievement of our 18th released version till date. In todays fastpaced, technology-driven financial ecosystem, Artificial Intelligence (AI) and Machine Learning (ML) are revolutionizing the way financial services operate. With their ability to drive efficiency and foster innovation, these technologies are becoming essential to the industry. As part of GA 8.0, FinnOne Neo? has integrated powerful AI/ ML capabilities aimed at improving operational efficiency and customer experience.

FinnOne Neo? Product Modules:

Customer Acquisition System:

The Loan Origination system is a robust solution designed to oversee the entire loan lifecycle, from customer onboarding to loan disbursals, allowing for easy scalability and accelerated growth. The solution makes Lending Agile, Scalable, and Transparent, unlocking new opportunities for expansion and profitability.

Loan Management System:

FinnOne Neo? Loan Management System simplifies and enhances loan management, transforming financial institutions lending business into an efficient, customer-centric operation. Discover a gateway to advanced loan servicing capabilities designed to elevate customer experience and streamline operations.

Collections:

A next-gen solution that empowers financial institutions with extensive collection strategies, an automation-ready framework. FinnOne Neo? Collections supports end-to-end customer follow-up activities and communication. It is highly configurable and customer-centric, requires zero manual intervention, and provides the collection team with a 360-degree customer exposure view.

Collateral Management System:

FinnOne Neo? Collateral Management System is a robust and scalable solution designed to manage the complete collateral lifecycle across all financial institution platforms. Acting as a centralized repository, it provides users with a comprehensive view of all collaterals, serving as the single source of truth for collateral data. With a 360-degree view of collaterals, the system integrates seamlessly with various external systems including loan origination, servicing, and collections through built-in APIs.

Enterprise Content Management:

The solution is designed to streamline document management and processing for enterprise operations. FinnOne Neo? Enterprise Content Management can seamlessly integrate with existing applications or function independently as a powerful document management tool. It enhances operational efficiency by managing, storing, archiving, and indexing documents effortlessly. Capable of handling documents from various sources, it maintains a consistent workflow, simplifying the entire document processing cycle.

Portal: eApply and eServe:

The FinnOne Neo? Internet Channel suite provides web-based applications for customer self-application (eApply) and customer selfservice (eServe).

Sales Assist:

A digital loan / card sourcing front end web channel module used by sales staff for complete application entry, triggering credit checks through fintech integrations, getting eligibility/serviceability, offers and status of loan application, query module, loan calculators, packaged and split loans, multiple LOB support with business flow orchestration and intelligent dashboard for sales staff.

Mobility Apps: mCAS, mApply, mCollect & mServe:

The FinnOne Neo? Mobility suite is a portfolio of mobile solutions aimed at digitizing various lending business processes - loan origination by field staff (mCAS), loan origination by prospect customers (mApply), loan self-servicing (mServe), & field collection management (mCollect). The suite offers functional areas for use by end customers and by staff of banks and finance companies.

FinnOne Neo? Retail Lending - End-to-end digital transformation

Nucleus Software is shaping the future of retail lending with its globally acclaimed, awardwinning platform, FinnOne Neo?:

• Accelerate Go-To-Market - Float innovative, customer-centric products quickly. Easy configurability of business & credit policies.

• Unparalleled Omni Channel Experience - delivers consistent and improved customer experience across multi-channel solutions; helps end customers self-service loans via web, mobile app, WhatsApp, Google home, wearable devices and voice instantly.

• Supports both Cloud and on-premises deployments.

FinnOne Neo? Corporate Lending - Enhanced Agility via Digitizing SME and Corporate Lending

FinnOne Neo? Corporate is designed to ensure financial institutions and banks stay customer centred. Our Corporate Lending solution supports multi-branch, multi-product and multi-lingual implementations.

FinnOne Neo? Corporate Lending Solution allows Financial Institutions to:

• Unlock Growth - enabling quick and easy creation of new products within multiple lines of businesses.

• Handle Complex Products - integrated and global approach within corporate and SME lending

• Achieve Business Agility - a one-stop solution for all SME & Corporate lending driven by best-in-class roadmap practices.

• Stay Ahead with an advanced technology platform - Cloud ready, Scalable, Secure & Available with a Strong API layer

FinnOne Neo? Automotive Finance- An End-to- end Automotive Finance Platform

Leading the charge, FinnOne Neo? for auto finance propels lending businesses into an agile, scalable, and transparent realm. This robust digital lending solution serves as a cornerstone for overseeing the entire loan lifecycle, from seamless customer onboarding to expeditious loan disbursals, offering an adaptable framework for accelerated growth, expanded horizons, and heightened profitability. Manage Dealership Network & Relationships Efficiently. Enhanced product designed to cater equipment, automobile, EVs, and charging station financing needs.

FinnOne Neo? for Captive Automotive Finance -

Financing and Leasing Excellence

FinnOne Neo? for Captive Automotive Finance provides all the capabilities that market leaders need to prosper - from new and lease products financing, to channel support and sophisticated workflows for streamlined operations.

The solution ensures that standard business processes can be easily implemented across multiple countries, creating a centrally driven yet localized setup with enhanced efficiency, reduced cost, and simplified management. Changes can be introduced quickly and across multiple geographies to ensure that the agility required for business needs is matched by system flexibility. It offers easy adaptability to regulatory changes and Automated dealer commission & subsidies to effectively manage dealer relationships. The system supports risk-based pricing strategy and provides Integrated support for Residual Value calculations.

FinnOne Neo?for Islamic Finance - Interest Free Banking Governed by Shariah Principles

Islamic Finance holds a significant share in the global banking space. Nucleus Software has been at the centre of innovation in Islamic Finance for the last two decades. Islamic Finance solution offers end to end digitization across customer onboarding, servicing to delinquency management and is backed with digital channels and data driven decision making.

The solution provide seamless Shariah compliant banking experience to end customers and help offer tailored products rapidly, across every channel at an optimised cost.

2. FinnAxia?- Nucleus Softwares Transaction Banking Platform

FinnAxia? is an advanced, modular transaction banking platform that redefines how financial institutions serve their corporate clients. Designed to support the entire transaction banking spectrum - including receivables, payments, liquidity, supply chain finance, and trade finance. FinnAxia? delivers unmatched agility and scalability. It empowers banks to begin with what they need today and expand at their pace, module by module.

FinnAxia? provides a clear value proposition: to enable banks to operate with precision, create compelling client experiences, increase revenue potential, and control risk proactively. Standardized workflows improve turnaround time and reduce dependency on manual processes. A unified omnichannel interface ensures a consistent and intuitive experience for end users. With dynamic pricing and advanced billing engines, banks can monetize services intelligently while maintaining compliance and visibility across all client transactions.

FinnAxia? Product Suites Modules and Capabilities:

Global Receivables: Accelerating collections and simplifying reconciliation. Through virtual account structures and real-time dashboards, banks can offer corporate clients a clearer picture of incoming funds across payment sources. Automation reduces manual workload and speeds up cash application.

Global Payments: Ensuring seamless management of both domestic and international transactions. It supports high-volume processing with realtime payment tracking, multi-currency handling, and ISO20022 and AML compliance. Features like dynamic currency conversion and instant settlement help banks offer differentiated value.

Global Liquidity Management: Provides corporate treasuries with real-time insights into group-wide cash positions. Through automated sweeps, balance forecasting, and notional pooling, corporates can maintain optimal liquidity without operational disruptions across time zones.

Virtual Account Management (VAM): Enables corporates to rationalize account structures and streamline reconciliation. With VAM, banks can offer account-level granularity without physically opening new accounts, improving control and visibility over fund flows.

E-FSCM (Financial Supply Chain Management): Strengthens financing processes across the supply chain by supporting supplier onboarding, invoice discounting, PO financing, and distributor funding. It transforms working capital management from a static function to a dynamic, data-led process that balances cost, risk, and liquidity.

Trade Finance: Digitizes the full trade lifecycle, including Letters of Credit, Bank Guarantees, Open Account Trade, and Documentary Collections. A centralized dashboard ensures faster processing, reduces paperwork, and improves customer responsiveness.

EBPP (Electronic Bill Presentment and Payment): Brings efficiency and flexibility to billing. It enables banks to support corporates with e-invoice delivery, diverse payment modes, auto-reconciliation, and a self-service portal that reduces dependency on bank staff.

New Features in FinnAxia? GA 8.6

The latest General Availability (GA) release of FinnAxia? introduces several enhancements that address evolving market needs and regulatory requirements. These new features strengthen the platforms capabilities across multiple dimensions:

• Multifactor Authentication- Strengthens login and transaction security with layered authentication, protecting against unauthorized access.

• Beneficiary Limits Tracking- Allows corporates to set daily and maximum limits for beneficiaries, enabling tighter control over payment activity.

• Beneficiary Validation - NRE Flag- Ensures compliance for NRE transactions through automated validations and restrictions.

• Improved Client Experience:

o Free Format Payments- Supports flexible

payment formats to accommodate diverse corporate needs and reduce manual handling.

o Email Notification- Sends automated alerts on payment status, improving transparency and reducing follow-ups.

o Corporate Advice Generation- Enables clients to download payment advice directly from the portal for easy sharing and faster communication.

o Account Statement Delivery- Automates statement delivery across multiple formats and channels for timely access.

o Profile Switch- Simplifies navigation between multiple corporate profiles, enhancing user convenience and productivity.

o Enhanced Operational Capabilities-

Configurable Reverse MIS

Delivers real-time, automated visibility into uploaded payment files for better tracking and decision-making.

o Statutory Payments- Supports seamless in-platform processing of CBDT payments, improving efficiency and compliance.

o Grievance Redressal- Provides a structured, responsive system for resolving client issues promptly.

o DPSC - Grievance & Dispute- Facilitates compliant resolution of Digital Payment Service Charge disputes with comprehensive tools.

o FinnAxia? simplifies operations, reduces risks, unlocks liquidity, and enhances both the banks service capability and the corporates financial agility.

3. PaySe?- Nucleus Financial Inclusion Platform

PaySe? - enables small ticket transactions at remote locations over a secure and reliable platform. Financial Institutions can achieve easy digital onboarding of rural borrowers as well as achieve cost optimisation through automated business processes. PaySe? is an offline and online digital cash solution designed to democratize finance and offers efficient and comprehensive digital onboarding. Financial Institutions can capture customer data, verify documents, conduct KYC/AML checks and create customer accounts while in offline mode to onboard customers in remote areas with no internet connectivity. PaySe? has an inbuilt innovative digital payment solution in the form of a digital wallet to make payments using smart phones instead of cash or cards when completely offline.

PaySe? platform overview - 100% secure, eliminates frauds & data breaches across

• Digital on-boarding

• Digital payments

• Digital loan disbursement & collection

• Digital charts of account

• Digital credit scoring engine

• MIS & analytics

In FY 2022-23 we were awarded three patents for our first as well as Indias first offline and online Financial Inclusion platform, "PaySe?". Our first patent aims to revolutionize electronic transactions; creating and innovating technology to power secure, efficient, and low-power short- range communication systems. Our second patent unlocks the future of digital payments with innovative wireless digital wallet technology, thus making transactions simpler, faster, and more secure, both offline and online. Our third patent underscores the uniqueness and ingenuity embedded in PaySe?, highlighting its groundbreaking approach to targeted electronic transactions within the financial system. The invention discloses a digital wallet having electronic cash stored therein, wherein the electronic cash is allocated with a pre-defined specific purpose. This digital wallet can carry targeted electronic transactions with various users and transaction terminals in a financial system.

PaySe? is Indias first Digitally Compliant Cash Solution, Compliant with RBI PPI guidelines (Approved by RBI for PPI license)

4. Nucleus Software Digital Services

Offers banks and financial institutions a holistic approach to digital transformation, a crucial role in digital transformation of organizations by delivering seamless customer experiences, operational and cost efficiencies, and actionable insights. This division leverages a broad spectrum of disruptive digital services like Cloud Services, Application Modernization, Data Engineering / Virtualization & Analytics, Robotic Process Automation (RPA), Infra Services and more. This division has been very active in delivering solutions covering Modern banking, Self Service Onboarding Capabilities, Straight Through Processing, Data Virtualization, Data Modelling, RPAs, Chatbots, Machine Learning to name a few, including be-spoke services for enterprise level solution implementations.

The Digital Services wing has operations in India, Southeast Asia, Japan, Middle East, and Europe focussing on:

1. Data Engineering & Analytics

2. Application Modernization

3. Cloud Services

4. Infra Services

C. AWARDS & RECOGNITIONS

• The Fintech Partner Award at Asia Fintech Awards 2024 for Nucleus Software flagship solution FinnOne Neo?, revolutionizing digital lending

with AI-powered automation and seamless integrations.

• Best Fintech & NBFC Collaboration at 17th NBFC & Fintech Conclave Awards 2024, in partnership with TATA Capital Ltd., showcasing our role in strengthening the fintech ecosystem through strategic alliances.

• Best Fintech of the Year at 17th NBFC & Fintech Conclave Awards 2024, recognizing our unparalleled contributions to the financial services industry and our impact on digital transformation.

• Best Digital Lending Implementation: Best Tool & Practices Adopted by IBSi Global Fintech Innovation Awards 2024, for our cutting- edge work with Ambit Finvest Private Limited, delivering efficiency, compliance, and next-gen digital lending experiences.

• Annual Report for the Year Ended March 31, 2024 won the Silver Award for Excellence within the Technology Software industry by the League of American Communications Professional (LACP).

• Dr. Ritika Dusad, Our Executive Director was honored with the prestigious "DE&I in Tech Leadership Award" at "The Rising 2024". Emerging victorious from a pool of over 100 nominees. Dr. Dusads outstanding contributions have transformed the tech industry, instigating impactful change at every juncture.

• Nucleus Software was honored with prestigious award from IBS Intelligence (IBSi) for the "Best Digital Lending Implementation - Most Impactful Project" category. This recognition is a testament to our dedication to innovation and excellence in the realm of digital lending. Our collaborative efforts with Poonawalla Fincorp Limited not only transformed digital lending but also left a lasting impact on the industry. The award acknowledges the effectiveness and significance of our project in reshaping the digital lending landscape.

• Annual Report for the Year ended March 31, 2023, won the Silver Award for Excellence within the Technology Software industry and Technical Achievement Award from League of American Communication Professionals (LACP). The Annual Report was also ranked 99th amongst the top 100 Annual Reports worldwide by League of American Communications Professionals LLC (LACP).

• FinnOne Neo? has won the Banking Frontiers Technoviti Award 2023. FinnOne Neo? is the next-generation digital lending solution built on an advanced technology platform designed to shape the future of lending across Retail and Corporate finance. The multi-channel solution helps digitize the complete loan lifecycle end-

to-end and supports both cloud and on-premise deployments.

• Nucleus Software received IBSi Global Fintech Innovation Awards 2023 for Most Effective Digitization/Paperless Initiative - Best Project Implementation for Mirae Asset Financial Services (India) Private Limited.

• Nucleus Software earned the IBSi Global Fintech Innovation Awards 2023 under category Best Transaction Banking implementation for BRAC Bank PLC.

• Nucleus Software along with Mirae Asset Financial Services (India) Pvt Ltd showcased ground-breaking achievement by winning the IBS Intelligence Global Fintech Innovation Awards 2022, in the innovative category "Implementation of the Most Effective Paperless Digitization Project.

• Annual Report for the Year ended March 31, 2022 won the Platinum Award for Excellence within the Technology Software industry and Technical Achievement Award from League of American Communication Professionals (LACP).

• Nucleus Software received first position at the "Corporate Governance and Sustainability Vision Awards 2021", held by Indian Chamber of Commerce.

• Annual Report for the Year ended March 31, 2021 won the Platinum Award for excellence within the Technology Software industry and the Technical Achievement Award from League of American Communication Professionals (LACP).

• Nucleus Software was awarded the "Best Technological Innovation in Payments (B2B)" award at the Seamless Middle East 2020 conference in Dubai.

D. FUTURE OUTLOOK

The Global BFSI Industry Outlook: 2025 and Beyond

The global Banking, Financial Services, and Insurance (BFSI) sector is poised for significant transformation in the upcoming financial year, driven by technological advancements and evolving consumer expectations. This transformation is particularly pronounced in key financial hubs across North America, Europe, and Asia-Pacific, where fintech innovation and regulatory shifts are reshaping the industry.

Global BFSI Industry Outlook

The global financial services sector has demonstrated strong growth in recent years, supported by digital transformation, regulatory changes, and evolving consumer expectations. This momentum is expected to continue, with financial institutions focusing on diversified revenue models, operational resilience, and technological advancements to navigate the evolving landscape.

• Diversified Revenue Streams & Adaptability

According to Deloittes 2025 Banking and Capital Markets Outlook, banks are expanding their revenue models to remain resilient in a low- growth, lower-interest-rate environment. This includes:

o Expanding fee-based income from wealth management, insurance, and advisory services.

o Strengthening digital banking capabilities to cater to tech-savvy consumers.

o Exploring embedded finance and Banking- as-a-Service (BaaS) models to monetize financial infrastructure.

o Enhancing cost-efficiency through AI-driven automation and cloud-native solutions.

• Agility and Innovation as Competitive Differentiators

IBMs 2025 Global Outlook for Banking and Financial Markets emphasizes the increasing importance of agility and innovation in financial services. Key trends shaping the industry include:

o AI-driven customer experience: Hyper personalization in banking through AI- powered chatbots and analytics.

o Real-time transaction processing: Payments and lending are becoming faster and more seamless.

o Regulatory-driven transformation:

Compliance requirements are evolving, prompting the adoption of RegTech solutions to streamline reporting and risk management.

o Cloud adoption: Financial institutions are leveraging cloud infrastructure to enhance scalability, security, and innovation.

These shifts indicate that the BFSI industry is moving towards a more interconnected, technology-driven future, where digital transformation and financial inclusion play central roles in growth strategies.

The Future of Transaction Banking and Lending

Transaction banking is undergoing a significant transformation, driven by digitalization and regulatory advancements. Key trends include:

• Real-Time Payments & Cross-Border Transactions: Digital payment infrastructure and instant cross-border settlements are being enhanced through AI and blockchain integration.

• Cash & Liquidity Management: AI-powered liquidity forecasting and treasury automation are improving corporate financial operations.

• Trade Finance Digitization: Blockchain-based trade finance solutions are reducing processing time, increasing transparency, and mitigating risks.

• Supply Chain Finance: AI-powered risk analytics and digital trade platforms are optimizing working capital for businesses.

• The global transaction banking market is expected to grow significantly, fueled by digital transformation, API-driven connectivity, and embedded finance models (Markets and Markets, 2024).

Lending: The Rise of Al-Powered Digital Lending

The lending sector is being redefined by AI-driven underwriting, alternative credit scoring, and embedded lending models.

• Digital Lending Expansion: Mobile-first lending platforms and alternative credit assessment models are expanding financial access.

• AI-Driven Credit Scoring: Machine learning and alternative data sources enhance credit decisioning.

• Buy Now, Pay Later (BNPL): BNPL solutions continue to gain traction, reshaping consumer lending.

The global digital lending market is projected to grow at a CAGR of 11.9% from 2024 to 2030, reaching $330 billion by 2030 (Statista, 2024).

Fintech Evolution and Opportunities

Fintech is set to play a pivotal role in reshaping the financial landscape. Key trends include:

1. Artificial Intelligence (AI) Integration

AI is revolutionizing financial services by enhancing transaction processing, investment strategies, and money management.

• The global AI in Fintech market is projected to grow at a CAGR of 16.5% from 2022 to 2030, reaching approximately $41.16 billion by 2030 (Grand View Research, 2024).

• The generative AI segment within financial services is expected to expand from $1.09 billion in 2023 to over $12 billion by 2032, reflecting a CAGR of 28.1% (Statista, 2024).

2. Blockchain and Digital Assets

Blockchain technology is moving towards mainstream adoption, offering secure and transparent transaction methods.

• The global blockchain market size is projected to grow from $20.1 billion in 2024 to $248.9 billion by 2029, at a CAGR of 65.5% (MarketsandMarkets, 2024).

• The digital assets market is expected to generate revenue of $46.3 billion by 2025, reflecting rapid growth (Statista, 2024).

• Supportive regulatory stances, such as the pro-crypto policies in the U.S. and parts of Asia, are further encouraging growth in digital asset investments.

3. Regulatory Technology (RegTech)

With increasing regulatory pressures, fintech companies are developing sophisticated tools to ensure compliance, streamline reporting, and reduce operational risks.

• The global RegTech market is anticipated to reach $55.28 billion by 2025, growing at a CAGR of 20.3% from 2019 (MarketsandMarkets, 2024).

4. Embedded Finance

The integration of financial services into nonfinancial platforms is expanding, allowing companies to offer banking services directly within their ecosystems.

• The embedded finance market is projected to reach $138 billion by 2026, growing at a CAGR of 16.4% from 2021 (Statista, 2024).

Regional Fintech Growth and Opportunities

1. Digital Identity Solutions

• The global digital identity solutions market is projected to grow from $42.12 billion in 2024 to $133.19 billion by 2030, at a CAGR of 21.2% (MarketsandMarkets, 2024).

• North America, Europe, and Asia-Pacific are leading adoption due to supportive government regulations and initiatives (GlobeNewswire, 2024).

2. AI-Driven Financial Services

• The global AI in finance market is expected to grow from $38.36 billion in 2024 to $190.33 billion by 2030, at a CAGR of 30.6% (MarketsandMarkets, 2024).

• North America and Asia-Pacific are experiencing faster market growth compared to regions with regulatory uncertainties (Statista, 2024).

3. Expansion into Emerging Markets

Fintech companies are focusing on underbanked regions, particularly in Asia, Africa, and Latin America, where increasing internet penetration, mobile device usage, and supportive regulatory frameworks are driving financial inclusion.

4. Global & Regional Fintech Trends

• Artificial Intelligence (AI) Integration: AI is revolutionizing financial services by enabling

hyper-personalized financial products and enhancing risk management.

• Embedded Finance: The integration of financial services into non-financial platforms is expanding, allowing companies to offer banking services directly within their ecosystems.

Decentralized Finance (DeFi): DeFi platforms are gaining traction, offering decentralized financial services that operate without traditional intermediaries. dirox.com

Digital Identity Solutions: The adoption of digital identity solutions is increasing, driven by the need for secure and efficient customer verification processes.

5. Evolving Regulatory Landscape

• Licensing and Compliance: Governments are implementing licensing rules to ensure fair and efficient operations of fintech companies, aligning them with traditional financial services firms.

• Cross-Border Regulatory Challenges: Fintech startups operating in multiple countries face the complexity of navigating varying regulatory frameworks, making cross-border transactions more challenging.

• Regulatory Uncertainty: A significant number of fintech companies view regulatory uncertainty as a top challenge, emphasizing the need for adaptive strategies to thrive in a more regulated environment.

Indias Financial Services and Fintech Sector

India is emerging as a significant player in the global financial services and fintech sectors.

• The asset management market in India is expected to reach approximately $139.43 billion by 2030, with a CAGR of 33.7% from 2024 to 2030 (Grand View Research, 2024).

• The fintech industry in India is projected to generate aggregate revenues of up to $190 billion by 2030, driven by digital adoption and financial inclusion initiatives (Consultancy, 2024).

• India is on track to become the worlds third- largest economy by 2027, surpassing Japan and Germany, with its stock market expected to be the third-largest by 2030 (Mordor Intelligence, 2024).

Future of Lending and Banking Technology Firms in

India

The Indian fintech sector is undergoing rapid transformation:

• Digital Lending Expansion: Mobile-first platforms are leading the charge, supported by 750 million smartphone users in India (Vision Solutions, 2024).

• Open Banking Adoption: Secure data-sharing frameworks are enhancing customer experiences and fostering innovation.

• Technological Integration: AI and ML are reshaping transaction processing, investment strategies, and customer service.

Global Importance of Indian Fintech Companies

Indian fintech firms have established a strong international presence:

• Investment Magnet: Fintech investment in India has surpassed $35 billion, doubling the countrys share of global fintech funding since 2016 (Bain & Company, 2024).

• Global Expansion: Indian fintech firms are entering international markets, offering innovative solutions in payments, lending, and digital banking.

• Public Listings: Major fintech firms are preparing for IPOs, such as PayUs planned listing in 2025, highlighting Indias growing global influence (Reuters, 2024).

Conclusion

The global BFSI industry is on the cusp of a transformative period, with transaction banking, digital lending, and fintech innovations driving efficiency, inclusion, and technological advancements. While North America and Europe continue to evolve, emerging markets such as India, Africa, and Latin America are becoming central to the industrys future. The rapid adoption of AI, blockchain, RegTech, and embedded finance will further accelerate digital transformation, ensuring a dynamic and resilient financial ecosystem for years to come.

Nucleus Software -Strategic Priorities for 2025 and Beyond

Nucleus Software is poised to be at the forefront of this transformation. With a proven track record in delivering mission-critical platforms for lending and transaction banking, we are empowering financial institutions to reimagine their operations and deliver superior customer value in real time.

In 2025 and beyond, Nucleus Software roadmap is clear and purposeful:

• Product Innovation: Accelerated R&D initiatives to incorporate the latest technologies including GenAI, autonomous finance, and tokenized assets.

• Global Expansion: Strengthening sales and market development across high-growth regions — including Australia, Canada, MEA, Southeast Asia, and the USA — through strategic partnerships with system integrators.

• Talent and Culture: Continued investment in a high-performing, innovation-driven workforce that brings agility and creativity to the forefront of our operations.

• Sustainable Growth: Focused on organic growth, our capex priorities remain aligned to product development and cloud-native transformations, rather than M&A in the medium term.

• Next-Gen Tech Readiness: Experimenting with digital currencies, decentralized finance, and quantum computing to ensure our solutions remain future-proof and resilient.

E. THE WAY FORWARD

The outlook for the global fintech industry in 2025 remains highly promising, despite economic uncertainties and geopolitical shifts. The pace of digital disruption has accelerated, driven by widespread Artificial Intelligence (AI) adoption, evolving regulatory landscapes, and a growing demand for hyper-personalized, secure, and realtime financial experiences. This year has marked a pivotal shift where next-generation technologies are no longer optional but central to financial institutions survival and success.

Artificial intelligence, machine learning, blockchain, open banking, digital identity verification, and embedded finance are becoming foundational pillars of modern financial services. Innovations in fraud prevention, cybersecurity, and customer experience (CX) are transforming how banks and financial institutions operate. In this fast-evolving ecosystem, Nucleus Software made this possible by staying ahead of emerging trends and continuously innovating to meet the moment.

Looking ahead, Nucleus Software is strategically positioned to lead the digital transformation of financial services. With financial institutions under increasing pressure to modernize legacy systems, reduce operational costs, and meet new compliance demands, the need for intelligent, agile, and scalable platforms has never been greater. Nucleus Softwares solutions are designed to deliver precisely this — combining powerful functionality with real-time capabilities and AI-driven insights.

The rising momentum around open banking and API ecosystems is creating new pathways for collaboration and customer-centric innovation. Nucleus Software made this possible through deep investments in API-driven architecture, enabling clients to embrace ecosystem partnerships, co-create new offerings, and deliver richer customer experiences. With expertise built on decades of domain leadership, we help financial institutions confidently navigate this dynamic regulatory and technical environment.

Nucleus Softwares ongoing focus on AI, machine learning, and blockchain allows us to deliver data-driven, intelligent platforms that are secure, compliant, and customizable to diverse market needs. Our products are engineered to empower banks with advanced analytics, seamless integration, and frictionless user journeys, further cementing our competitive edge.

With a strong track record, unwavering commitment to excellence, and a future-ready technology stack, Nucleus Software stands as a trusted digital transformation partner for financial institutions globally. We are building not just for todays digital demands but for the dynamic financial ecosystems of tomorrow.

F. OPPORTUNITIES AND Threats

In 2025, the fintech and banking software landscape continues to evolve at an unprecedented pace, presenting a dynamic mix of opportunities and challenges. Financial institutions across the globe are under intense pressure to innovate, digitize operations, and deliver real-time, hyper-personalized experiences. This urgency creates vast opportunities for software companies like Nucleus Software,

especially in the areas of digital lending, transaction banking, and customer experience transformation.

Key Opportunities:

• AI and GenAI Integration: The adoption

of Generative AI, predictive analytics, and explainable AI (XAI) offers significant potential in areas like credit risk modeling, loan origination, fraud detection, and customer servicing. Nucleus Software is leveraging these technologies to help clients enhance decision-making and efficiency.

• Digital-First Financial Ecosystems: With

neobanks, fintechs, and traditional banks alike adopting mobile-first strategies, there is growing demand for scalable, modular, and cloud- native platforms that support seamless digital onboarding, payments, and lending.

• Open Banking and Embedded Finance: The

global push toward interoperability and customercentric ecosystems, powered by API-based infrastructure, presents major innovation and collaboration opportunities. Nucleus Software is actively enabling this transition through its open architecture and plug-and-play capabilities.

• Sustainable and Ethical Finance: With the global emphasis on ESG (Environmental, Social, and Governance), there is growing interest in tech platforms that can support green financing, ethical credit practices, and sustainability-linked lending products.

• Rising Fintech Adoption in Emerging Markets:

Regions like Southeast Asia, the Middle East, Africa, and Latin America are witnessing explosive growth in digital financial services, offering fertile ground for customer acquisition and localized product innovation.

Key Threats:

• Heightened Cybersecurity Risks: As digital transactions surge, so do risks related to data breaches, identity theft, and ransomware attacks. Financial institutions and their tech partners must invest heavily in proactive threat detection, encryption, and resilience.

• Regulatory Complexity and Compliance Burden:

As governments and regulators worldwide tighten controls on digital lending, data sharing, and AI usage, software providers must stay ahead of evolving norms across jurisdictions. Compliance agility is critical.

• Economic headwinds and Geopolitical Tensions:

Global economic uncertainty, high interest rates, and regional instabilities may lead to tighter credit markets, slowing tech investments by some financial institutions.

• Intensifying Competition: With big tech companies entering finance and traditional banks ramping up their in-house tech capabilities, fintech players face increased competition. Agility, innovation speed, and customer trust will be key differentiators.

Despite these challenges, Nucleus Software remains resilient and future-ready, leveraging decades of expertise, robust risk frameworks, and a relentless focus on innovation to navigate and lead in this evolving environment.

G. RISKS AND CONCERNS

These are discussed in detail in the Risk Management chapter provided later in this Annual Report.

h. internal control systems and their

ADEQUACY

Internal control systems are a set of policies, processes and procedures put in place to help achieve the strategic objectives of an organization. At the same time internal controls also enhance the reliability and accuracy of accounting data. The Company has an Internal Control System commensurate with the size, scale and complexity of its operations. This has been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies. The Company employs an advanced Enterprise Resource

Planning (ERP) system that connects all parts of the organization, to record data for accounting, consolidation and management information purposes. It has continued its efforts to align all its processes and controls with global best practices. The management assessed the effectiveness of the Companys internal control over financial reporting (as defined in Regulation 17 of SEBI Regulations 2015) as of March 31, 2025.

ASA & Associates LLP, the statutory auditors of the Company, have audited the financial statements included in this annual report and have issued an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.

The Board of Directors has also appointed Internal Auditors i.e. Varma & Varma Chartered Accountants as recommended by the Audit Committee with a well- defined internal audit scope. The audit is based on an internal audit plan, which is reviewed each year in consultation with the statutory auditors and approved by the Audit Committee. The Internal Auditor reports to the Chairperson of the Audit Committee and presents significant audit observations to the Audit Committee. Based on the report of the Internal Auditor, process owners undertake corrective action in their respective areas and thereby strengthen the controls.

The Audit Committee also meets statutory auditors to ascertain, inter alia, their views on the adequacy of internal control systems and keeps the Board of Directors informed of its major observations periodically. Based on its evaluation [as defined in Section 177 of the Companies Act, 2013 and Regulation 18 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015], the Audit Committee noted that, as of March 31, 2025, the Companys internal financial controls were adequate and operating effective.

The CEO/CFO certification provided elsewhere in this report also places responsibility on the CEO and CFO to continuously ensure adequacy of our internal control systems and procedures.

I. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

Nucleus HR function is committed to fostering a strong organizational culture that balances performance with purpose and empowers every Nucleite to contribute meaningfully. Our Vision is "To be a culturally strong organizaiton" remains central to our strategy, enabling us to build a resilient and future-ready workforce.

FY 2024-25 was a year of deliberate transformation anchored in cultural integration, leadership development, and Lean maturity. Your Company adapted the Hoshin Kanri approach to drive enterprisewide alignment and focus on key priorities, ensuring that every teams efforts are connected to strategic objectives. This was further supported by structured reviews and capability-building interventions aimed at creating a high-trust, high-performance environment.

Your Company continued to evolve policies, learning platforms, and engagement frameworks to meet the changing expectations of the workforce while promoting transparency, inclusion, and continuous improvement. Through this integrated approach, your Company reinforced its commitment to attracting, developing, and retaining top talent.

As the IT landscape continues to shift, your Company remains agile and future-focused, investing in the culture, capabilities, and systems needed to scale sustainably and deliver long-term value.

J. FINANCIAL PERFORMANCE

Consolidated financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of the Companies Act, 2013 (the Act) and other relevant provisions of the Act.

The Company has seven subsidiary companies, all of which are wholly owned. The Company discloses stand-alone audited financial results on a quarterly and annual basis, consolidated un-audited financial results on a quarterly basis and consolidated audited financial results on an annual basis.

An overview of the consolidated financial results for FY25 and FY24 is given below: The consolidated financial results are as below:

(Rs. in crore)

For the Year Ended March 31,	2025	% of Revenue	2024	% of Revenue	Growth (%)
Revenue From Operations	832.25	100.00	826.45	100.00	0.70
Expenses
a) Employee benefit expense	534.64	64.24	491.06	59.42	8.87
b) Operating and other expenses	129.26	15.53	114.99	13.91	12.41
c) Finance costs (Bank charges)	0.75	0.09	0.95	0.11	(21.05)
Total Expenses	664.65	79.86	607.00	73.45	9.50
Operating Profit (EBITDA)	167.60	20.14	219.45	26.55	(23.63)
Depreciation & Amortization	14.81	1.78	14.55	1.76	1.79
Operating Profit after Interest and	152.79	18.36	204.90	24.79	(25.43)
Depreciation
Other Income	66.26	7.96	50.90	6.16	30.18
Profit Before Tax	219.05	26.32	255.80	30.95	(14.37)
Taxation	56.05	6.73	64.20	7.77	(12.69)
Profit After Tax	163.00	19.59	191.60	23.18	(14.93)
Other Comprehensive Income	(3.52)	(0.42)	1.96	0.24	(279.59)
Total Comprehensive Income for the year	159.48	19.16	193.56	23.42	(17.61)

Revenue from Operations

Our revenues from software development comprise of income from fixed price and time and material contracts. Revenue from fixed price contracts comprising of license, related customization and implementation is recognized in accordance with the output method based on percentage completion. Revenue from time and material contracts is recognised as the services are rendered. Revenue from annual technical service contracts is recognized on a pro rata basis over the period in which such services are rendered.

During the year, revenue from operations is Rs. 832.25 crore, as compared to Rs. 826.45 crore for the previous year.

Revenue from Various Geographies

Your Groups parent Company is incorporated in India and caters to customers situated all across the globe. We operate in seven main geographical segments: India, Far East, Southeast Asia, Europe, Middle East, Africa and Australia, which represent the reportable segments. These segments are based on location of customers of the Company.

For the year, around 42% of revenue was derived from overseas customers. The graph below presents a geography- wise distribution for the year as well as the previous year.

Revenue from Products and Services

Our Revenues are further disaggregated into Products and Services. "Products", comprises of license fee, revenue from customization and implementation of products and postproduction maintenance support. Product revenue for the year is Rs. 713.79 crore, 85.77% of the total revenue, against Rs. 711.40 crore, 86.08% of total revenue, in the previous year.

Software services rendered by the Company typically consist of development of software to meet specific customer requirements. These services consist of application development & maintenance, testing, consulting and infrastructure management services with a strong banking domain focus. Revenue from Software projects and services including other revenue for the year is Rs. 118.46 crore, 14.23% of the total revenue, against Rs. 115.05 crore, 13.92% of the total revenue in the previous year.

EXPENSES

Employee Benefit Expense

Employee benefit expenses include salaries paid to employees globally which have fixed, variable and incentives components; provision for retirement benefits, contribution to provident fund and expense on staff welfare activities. The employee benefit expenses have increased by 8.87% to Rs. 534.64 crore, 64.24% of revenue against Rs. 491.06 crore, 59.42% of revenue in the previous year.

(Rs. in crore)

For the Year Ended March 31,	2025	% of Revenue	2024	% of Revenue	Growth (%)
Salaries	448.10	58.65	449.72	54.42	8.53
Contribution to provident and other funds	31.52	3.79	27.63	3.34	14.09
Gratuity expense	6.70	0.80	6.24	0.76	7.43
Staff welfare	8.32	1.00	7.47	0.90	11.28
Total Employee Benefit Expenses	534.64	64.24	491.06	59.42	8.87
Revenue	832.25	100.00	826.45	100.00	0.70

Operating and Other Expenses

Operating and other expense primarily consist of expenses such as travel expenses, sales and marketing expenses, outsourse technincal service expenses, information technology expenses, infrastructure charges, contribution to CSR activities etc.

Operating and other expenses at Rs. 129.26 crore, 15.53% of revenue for the year, increased by 12.41% in comparison to Rs. 114.99 crore, 13.91% of revenue in the previous financial year.

(Rs. in crore)

For the Year Ended March 31	2025	% of Revenue	2024	% of Revenue	Growth (%)
Advertisement and business promotion	5.61	0.67	2.77	0.34	102.33
Commission to channel partners	0.82	0.10	0.90	0.11	(8.70)
Communication	1.68	0.20	1.50	0.18	12.10
Conference, exhibition and seminar	7.27	0.87	6.19	0.75	17.39
Conveyance	0.89	0.11	0.69	0.08	28.74
Contribution to CSR Activities	2.77	0.33	2.13	0.26	29.78
Cost of software purchased for delivery to clients	0.14	0.02	0.38	0.05	(61.97)
Directors remuneration	3.01	0.36	3.21	0.39	(6.35)
Insurance	1.12	0.13	1.36	0.16	(17.32)
Information technology expenses	41.24	4.96	33.74	4.08	22.25
Legal and professional	16.43	1.97	17.02	2.06	(3.47)
Miscellaneous expenses	2.07	0.25	2.01	0.24	3.30
Outsourced technical service expense	6.16	0.74	5.96	0.72	3.29
Power and fuel	3.83	0.46	3.44	0.42	11.26
Provision for doubtful debts/advances/other current assets	(1.60)	(0.19)	1.25	0.15	(227.94)
Rates & Taxes	0.81	0.10	0.42	0.05	95.05
Rent	2.60	0.31	2.18	0.26	19.10
Repair and maintenance	5.21	0.63	4.66	0.56	11.72
Travel expense	18.04	2.17	15.25	1.84	18.30
Training and recruitment	6.49	0.78	4.31	0.52	50.57
Withholding tax charged off	4.67	0.56	5.62	0.68	(16.92)
Total Operating and Other Expenses	129.26	15.53	114.99	13.91	12.41
Revenue	832.25	100.00	826.45	100.00	0.70

The Increase in Operating and other expense for FY 2025 from FY 2024 is primarily due to higher Advertisement and business promotion expenses, Traveling Expenses, Information Technology Expenses, Training and Recruitment, Conference, exhibition & seminar expenses.

The Company has set up Nucleus Software Foundation, a trust for the purpose of undertaking CSR activities of the company. During the year, the Company contributed Rs. 2.77 crore towards CSR activities to the trust. The details of CSR initiatives undertaken by the trust has been provided in a separate section in the Annual Report.

Finance Cost

Finance cost during the year is at Rs. 0.75 crore, 0.09% of revenue against Rs. 0.95 crore, 0.12% of revenue in the previous year

(Rs. in crore)

For the Year Ended March 31,	2025	2024
Bank Charges	0.43	0.41
Interest Expense on lease liability	0.32	0.54
Total	0.75	0.95

Operating Profit (EBITDA)

Operating Profit during the year at Rs. 167.60 crore, 20.14% of revenue against Rs. 219.45 crore, 26.55% of revenue in the previous year.

Depreciation & Amortization

Depreciation & Amortization on fixed assets is Rs. 14.81 crore, 1.78% of revenue for the year, against Rs. 14.55 crore, 1.76% of revenue in the previous year.

Other Income

Other Income includes MTM gain on mutual fund investment, interest income, dividend on investment, profit on sale of investments, gain/(loss) on exchange fluctuation etc.

(Rs. in crore)

For the Year Ended March 31,	2025	2024
Dividend on investment	0.44	0.44
Interest income	25.86	15.53
Net Gain / (Loss) on exchange fluctuation	0.57	0.28
Net Gain/ (Loss) on sale of investments	1.22	0.75
MTM Gain/ (Loss) on mutual funds	38.00	31.66
Others	0.17	2.24
Total	66.26	50.90

The other income for the year is Rs. 66.26 crore, against Rs. 50.90 crore in the previous year.

Foreign Exchange Gain / (Loss)

Foreign Exchange Gain (Loss) includes gain (loss) from translation of current assets and liabilities at quarter end rates, those arising from realization/payments of receivables/payables. During the year the Company had a foreign exchange gain of Rs. 0.57 crore against gain of Rs. 0.28 crore in the previous year.

Foreign Exchange continues to be volatile, as depicted in the below mentioned chart.

The Company follows a well-defined policy of hedging close to receivables through Forward Contracts which are designated as Highly Probable Forecast Transactions. The Company has a conservative approach and does not speculate in foreign currency markets. Forwards are held to maturity and regular reporting and monitoring systems are in place including quarterly updates to the Audit Committee.

Currency-wise revenues for the year along with a comparison for the previous years are as follows:

(in %)

Currency	FY25	FY24
INR	57.68%	52.98%
USD	27.51%	30.49%
SGD	4.81%	5.58%
AUD	2.93%	3.38%
JPY	1.81%	1.20%
EUR	1.60%	1.04%
MYR	1.62%	1.05%
GBP	1.08%	2.55%
AED	0.96%	1.40%
ZAR	-	0.21%
QAR	-	0.12%
Total	100.00%	100.00%

Taxation

It represents a provision for corporate & income taxes determined in accordance with tax laws applicable in countries where the Company and subsidiaries operate.

(Rs. in crore)

For the Year Ended March 31,	2025	2024
- Current Tax Expense	47.63	57.50
- Deferred Tax Credit (net)	8.42	6.70
Total	56.05	64.20

Total effective tax for the year is 25.59% of Profit before tax, in comparison to 25.10% of Profit before tax for the previous year.

Profit After Tax

Profit after tax for the year is Rs. 163.00 crore, 19.59% of revenue, against Rs. 191.60 crore, 23.18% of revenue in previous year.

This age of competition necessitates overall revenue growth, earned in an optimal cost environment. We remain committed to achieving higher productivity and generate better margins. Our sales and marketing efforts are focused on increasing our customer base and hence the market share, which would ultimately yield better realizations. Emerging markets across the world will continue to provide stability and growth would be led by larger engagements and value offerings.

Other Comprehensive Income (OCI)

Other comprehensive income represents

a) Items that will not be reclassified to profit or loss: Equity instruments through OCI - this is on account of fair valuation of investment for which the Company has made an irrevocable option to present the same in the OCI. For the year it is Rs. (1.93) crore, against Rs. 5.51 crore in the previous year. Remeasurements of the defined benefit plans- For the year it is Rs. (4.38) crore, against Rs. (4.06) crore in the previous year.

Tax on above is Rs. 1.48 crore for the year, against Rs. 0.63 crore in the previous year

b) Items that will be reclassified to profit or loss: Effective portion of gains and loss on hedging instruments in a cash flow hedge, net - when a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of derivative is recognized in OCI. For the year it is Rs. 0.02 crore, against Rs. (0.11) crore in the previous year. Exchange difference on translation of foreign operations. For the year it is Rs. 1.27 crore, against Rs. (0.04) crore in the previous year.

Tax on above is Rs. (0.02) crore for the year, against Rs. 0.03 crore in the previous year

Total Other comprehensive income/(loss) net of tax for the year is Rs. (3.56) crore, against Rs. 1.96 crore in the previous year. Share Capital

The Paid-Up Share Capital of the Company, as on March 31, 2025, is 2,63,25,306 equity shares of 10 each, as compared to 2,67,73,324 equity shares of 10 each as on March 31, 2024. During Financial Year 24-25 the Company bought back 4,48,018 Equity Shares representing 1.67% of the total Paid up Equity Share capital through tender offer route.

Subsidiaries

The Company has seven subsidiary companies, all over the world, all of which are wholly owned. Its gross investment in Paid-up Share Capital of the Subsidiaries as on March 31, 2025 is as per the below table.

Name of Subsidiary Company	Currency	As at March 31, 2025		As at March 31, 2024
		In foreign Currency	Eqv. Rs. (in crore)	In foreign Currency	Eqv. Rs. (in crore)
Nucleus Software Solutions Pte. Ltd., Singapore. 6,25,000 equity shares of SGD 1 each	SGD	6,25,000	1.63	6,25,000	1.63
Nucleus Software Inc., USA. 10,00,000 equity shares of US$ 0.35 cents each	USD	3,50,000	1.63	3,50,000	1.63
Nucleus Software Japan Kabushiki Kaisha, Japan. 200 equity shares of JPY 50,000 each	JPY	1,00,00,000	0.41	1,00,00,000	0.41
Nucleus Software Netherlands B.V., Netherlands. 7,500 equity shares of Euro 100 each	Euro	7,50,000	4.89	7,50,000	4.89
Nucleus Software Limited, India. 1,50,00,000 equity shares of 10/- each	INR	-	16.94	-	16.94
Nucleus Software Australia Pty. Ltd, Australia 1,00,000 Equity share of 1 AUD each	AUD	1,00,000	0.55	1,00,000	0.55
Nucleus Software South Africa (Pty.) Limited, South Africa 10 Equity shares of ZAR 61,200 each	ZAR	6,12,000	0.32	6,12,000	0.32
1 Total	26.37		26.37

The profits/losses of the Subsidiary Companies are fully reflected in the consolidated accounts of the Company and Subsidiaries.

Other Equity

The movement in the components of Other Equity is as below:

(Rs. in crore)

Particulars	Opening Balance as on April 1, 2025	Additions/ (Deletions) during the year	Closing Balance as on March 31, 2024
General Reserve	-	-	-
Capital Reserve	0.89	-	0.89
Capital Redemption reserve	6.06	0.45	5.61
Retained Earnings	766.89	37.42	729.47
Hedging Reserve	0.05	0.01	0.04
Foreign Currency Translation Reserve	4.27	1.27	3.00
Equity instrument through other comprehensive income	9.73	(1.93)	11.66
Total	787.89	37.22	750.67

Non-Current Fixed Assets

As at March 31, 2025, Net carrying amount of Property, Plant and Equipment, Intangible assets, Furniture and fixtures, capital work in progress, right of use of assets etc. is Rs. 61.29 crore, against Rs. 59.19 crore as on March 31, 2024.

(Rs. in crore)

As at March 31,	2025	2024	Inc/Dec (%)
Gross Carrying Amount
Freehold land	0.34	0.34	-
Leasehold improvements	0.14	0.14	-
Buildings	25.13	24.23	3.71
Plant and equipment	10.24	9.69	5.68
Computer equipment	57.14	43.69	30.79
Vehicles	1.95	2.68	(27.24)
Furniture and fixtures	3.76	2.61	44.06
Software	22.62	21.64	4.53
Total Gross Carrying Amount	121.32	105.03	15.51
Less; accumulated depreciation	79.69	68.88	15.69
Net Carrying Amount	41.63	36.15	15.16
Capital work in progress	0.22	0.09	144.44
Intangible Assets under Development	0.03	0.59	(94.92)
Right of use Assets (net of Amortisation)	6.70	9.37	(28.50)
Investment Property (net of Deprecation)	12.71	13.00	(2.23)
Total Non-Current Fixed Assets	61.29	59.19	3.55

As permitted by Ind AS 101, the Company has elected to continue with the carrying values under previous GAAP as deemed cost for all the items of property, plant and equipment and Intangible assets etc.

Investments

The Company continues to remain debt-free and we believe that cash generated from operations and reserves and surplus are sufficient to meet our obligations and requirements towards capital expenditure and working capital requirements.

a. Non-current investments is Rs. 403.62 crore as on March 31, 2025 against Rs. 321.17 crore as on March 31, 2024.

(Rs. in crore)

Particulars	2025	2024
Investment in equity shares of a listed company at FVOCI	9.98	11.91
Investment in tax free bonds at amortised cost	32.81	34.00
Investment in Target maturity fund (quoted) at amortised cost	142.40	132.88
Investment in unquoted mutual funds at Fair value through profit or loss (FVTPL)	218.43	142.38
Total	403.62	321.17

b. Current investments is Rs. 237.06 crore as on March 31, 2025 against Rs. 327.62 crore as on March 31, 2024

(Rs. in crore)

Particulars	2025	2024
Investment in unquoted mutual funds at Fair value through profit or loss (FVTPL)	236.53	327.62
Investment in tax free bonds at amortised cost	0.53	-
Total	237.06	327.62

Cash and Bank Balances

As on March 31, 2025 the cash and bank balances (including fixed deposits) is at Rs. 122.67 crore against Rs. 73.94 crore on March 31, 2024.

(Rs. in crore)

As at March 31,	2025	2024
Cash in hand	-	-
Balances with Bank
In Current Accounts	38.74	38.60
Remittance in Transit	0.04	-
In Deposit Account with original maturity of less than 3 months	11.68	7.20
In Deposit Account with original maturity of less than 12 months*	71.93	27.87
Balance in earmarked accounts	0.28	0.27
Total	122.67	73.94

*Balance with scheduled banks in deposit accounts include Rs. 0.55 crore (31 March 20240.29 crore) which are under lien.

Operating Cash Flow

As a part of the financial policies, the Company believes in maintaining high level of liquidity as it provides immense support against contingencies and uncertainties.

Our net cash flow from operating activities before working capital changes is Rs. 172.50 crore for the financial year 24-25 against Rs. 228.44 crore in the previous year. After considering working capital changes, operating cash flow for the year is Rs. 150.94 crore against Rs. 222.03 crore in the previous year.

To summaries the Companys liquidity position, given below are few ratios:

As at March 31	2025	2024
Operating Cash Flow as % of Revenue	18.14	26.86
Cash and Equivalents including current investment as % of Total assets	31.20	36.05
Cash and Equivalents including current investment as % of Revenue	43.22	48.59

Trade Receivables

Our trade receivables (net of provision) as on March 31, 2025 is Rs. 137.41 crore, against Rs. 166.16 crore as on March 31, 2024.

The age profile of the debtors (net of provision) is given below:

As at March 31,	2025	2024
Less than six months	98.69%	95.65%
Between 6 months and 1 Year	1.31%	4.18%
More than 1 Year	-	0.17%

Loans and Other Financial Assets

Loans and Other Financial assets have been classified into Non-Current and Current based on their period of realization.

(Rs. in crore)

For the year	2025	2024
Non - Current
Loans Receivables considered good	0.08	0.39
Security deposits	1.38	2.44
Long-term deposits	124.17	97.44
Total	125.63	100.27

(Rs. in crore)

For the year	2025	2024
Current
Loans Receivables considered good	0.34	0.46
Security deposits	1.74	1.00
Mark-to-market gain on forward contracts	0.06	0.06
Expenses recoverable from customers	0.16	0.17
Total	2.30	1.69
Total Loans and other Financial Assets	127.93	101.95

Security Deposits, utilized primarily for hiring of office premises and staff accommodation, amounts to Rs. 3.12 crore as on March 31, 2025 against Rs. 3.44 crore as on March 31, 2024. Long term deposits amounting to Rs. 124.17 crore as on March 31, 2025 include deposits held with bank/financial institution for maturity more than 12 months from balance sheet date.

Other Assets

Other Assets include Income tax asset, Service income accrued but not due, Supplier and capital advances, Prepaid expenses etc. Other assets have been classified into Non-Current and Current based on their period of realization.

(Rs. in crore)

As at March 31,	2025	2024
Non - Current
Advance Tax	8.75	12.74
Capital Advances	8.04	7.98
Prepaid Expenses	1.26	0.90
Total	18.05	21.62
Current
Service income accrued but not due	21.11	22.77
Employee Advances	0.34	0.45
Prepaid Expenses	15.64	11.15
Contract cost	0.01	0.34
Balances with Government authorities	0.62	0.07
Supplier advances	7.14	7.46
Deferred Expenses	0.06	0.11
Total	44.92	42.35
Total Other Assets	62.97	63.97

Current Liabilities

Current liabilities include Trade payables, Short-term provisions, Employee payable, Deferred revenue, Advance from customers, Statutory liabilities etc. As on March 31, 2025 the Current liabilities are Rs. 282.55 crore against Rs. 295.34 crore as on March 31, 2024

(Rs. in crore)

As at March 31,	2025	2024
Financial liabilities
Lease Liabilities	1.12	2.78
Trade Payables	12.90	16.46
Unpaid dividends	0.28	0.27
Payable for purchase of fixed assets	1.78	0.25
Employee payable	50.06	45.56

(Rs. in crore)

As at March 31,	2025	2024
Other current liabilities
Advances from customers/Advance Billing	61.58	87.50
Deferred Revenue	122.80	118.15
Statutory Liabilities	17.22	18.92
Short term provisions
Compensated absences for employees	5.34	4.90
Provision for asset retirement obligations	0.22	0.22
Provision for Income tax	9.25	0.33
Total	282.55	295.34

Trade payables represent the amount payable for providing goods & services and is Rs. 12.90 crore as on March 31, 2025 against Rs. 16.46 crore as on March 31, 2024. Advances from customers as on March 31, 2025 is Rs. 61.58 crore against Rs. 87.50 crore as on March 31, 2024. These consist of advance payments received from customers, for which related costs have not been yet incurred or product license delivery is a later date. Deferred revenue represents the advance invoicing for annual maintenance charges for which services are to be rendered in the future. As on March 31, 2025 it is Rs. 122.80 crore against Rs. 118.15 crore as on March 31, 2024.

Employee Payables includes the provision for accrued salaries, incentives, bonus and retention bonus payable to employees. It is Rs. 50.06 crore as on March 31, 2025 as against Rs. 45.56 crore as on March 31, 2024

Statutory dues are the amounts accrued for taxes deducted at source by the Company, staff provident fund, employee state insurance liabilities, GST, etc. As on March 31, 2025 it is Rs. 17.22 crore against Rs. 18.92 crore as on March 31, 2024.

Short-term provisions for Compensated absences and provision for Income taxes are those for which liability is expected to arise in the near future. Sum of all these short-term provisions as on March 31, 2025 is Rs. 14.81 crore against Rs. 5.45 crore as on March 31, 2024.

The Company has made contributions to Nucleus Software Employees Group Gratuity Assurance Trust, which has made further contributions to Employees Group Gratuity Scheme of Life Insurance Corporation of India.

Non-Current Liabilities

Non-Current Liabilities as on March 31, 2025 is Rs. 56.18 crore against Rs. 41.24 crore as on March 31, 2024:

(Rs. in crore)

As at March 31,	2025	2024
Financial liabilities
Lease Liabilities	0.88	1.81
Deferred Tax liabilities	14.99	8.03
Long-term Provisions
Compensated absences for employees	23.50	20.02
Gratuity	16.78	11.35
Asset retirement obligations	0.03	0.03
Total	56.18	41.24

A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The Company based on actuarial valuation determines provision for Compensated absences.