Palash Securities Ltd Management Discussions

Annexure A

Economic Overview

The global economy faced heightened uncertainty during financial year 2025-26, primarily due to geopolitical tensions arising from the Middle East conflict, which affected commodity prices, inflation expectations and global financial conditions. Global headline inflation is projected to increase to 4.4% in 2026 before moderating to 3.7% in 2027. Global growth is projected to slow down to 3.1% in the light of outbreak of war in the Middle East in 2026 and 3.2% in 2027. Slowdown in growth and increase in inflation are expected to be particularly pronounced in emerging markets and developing economies.

Global growth remained resilient at 3.4% in 2025 (3.3% in 2024), amidst several headwinds such as prolonged geopolitical tensions, trade-related uncertainty and higher debt levels which were counterbalanced by tailwinds like fiscal and monetary support, accommodative financial conditions and surging investment in technology. Global inflation eased to 4.1% in 2025 from 5.8% in the previous year, reflecting the impact of softening energy prices, normalisation of supply chain constraints, even as core and services inflation remained sticky. The disinflationary process, however, remained uneven across countries with relative stickiness in services inflation in major advanced economies.

World goods and services trade volume grew by 5.1% in 2025, exceeding world GDP growth. Merchandise trade volume expanded by 4.6% (2.7% in 2024), driven mainly by frontloading of imports in anticipation of higher tariffs and growth in trade of technology related products exempt from the tariff measures. Global services trade volume, on the other hand, grew at a moderate pace of 5.3% (7.8% in 2024) as the post pandemic surge in travel services had already played out in the preceding years, alongside a muted growth in transportation services due to lower shipping rates.

Global equity markets remained resilient, supported by AI-related technology stocks. However, concerns about tariff uncertainty, stretched valuations, potential spillovers on other software services, and escalating geopolitical tensions generated episodes of turbulence. The US dollar depreciated during April 2025 - February 2026, but strengthened on safehaven demand after the outbreak of the West Asia conflict. Sovereign bond yields remained elevated amid fiscal concerns, with the conflict adding further upward pressure.

Indias economic growth remained resilient during financial year 2025-26 despite global uncertainties and geopolitical tensions. India reaffirmed its position as one of the worlds fastest-growing major economies, delivering real GDP growth of around 7.4%. The year was marked by strengthening domestic demand, robust public investment, and resilient macroeconomic fundamentals, which supported economic growth even as the global economy continued to face persistent uncertainties and geopolitical challenges.

Industry Structure and Developments

The Company acts as a Core Investment Company (CIC) as per RBI guidelines. The main objective of the Company is to invest / deal in securities mainly of group companies and in immovable properties. Your company holds majority investments in its group companies. The businesses of the Company are carried out by its three Wholly-owned Subsidiaries viz. OSM Investment & Trading Company Limited; Champaran Marketing Company Limited; and Hargaon Investment & Trading Company Limited. These are registered NBFCs and primarily engaged in investment activities. The Company has a step down subsidiary Hargaon Properties Ltd and is engaged in investment of properties. The Company had another Subsidiary viz. Morton Foods Limited engaged in the Food Processing Business. Morton Foods Limited became an Associate Company of the Company on 18th November 2025 due to reduction of shareholding of the Company along with its subsidiaries from 51.37% to 44.95%.

Morton Foods Limited manufactures and markets canned fruits, vegetables and food products like jams, squashes, crushes, vegetable sauces, juices and breakfast cereals under the brand Morton since 1959. It has a manufacturing unit at Prayagraj which makes Canned fruits and vegetables, Jams, Crush & Squashes, Tomato Ketchup and Vegetable sauces etc. Breakfast cereals and Pasta, Vermicelli are manufactured by third party manufacturer and Morton Foods Ltd markets it under the brand Name Morton. Morton Foods Ltd services and operates in the various customer segments i.e. 1) General Trade / Kirana; 2) Modern Trade; 3) Hotel Restaurant and Catering (Horeca); 4) E-commerce; 5) Central Police Canteen Stores; 6) Institutions - Taj, Hayat , Specialty Restaurants etc. 7) Defense APO - Canned fruits, Vegetables and curries for in-house consumption. 8) Canteen Stores Department

The countrys financial services sector consists of capital markets, insurance sector, banking and non-banking financial companies (NBFCs). Non-banking financial companies (NBFCs), banks, and financial institutions form the broad constituents of the credit ecosystem of the Indian financial sector, with NBFCs being a key pillar therein. The Non-Banking Financial Companies (NBFC) sector in India has experienced significant growth and transformation over the past decade, becoming an integral part of the Indian financial system.

As per RBI reports, Non-Banking Financial Companies (NBFC) sector remained resilient during financial year 2025-26, supported by strong capital buffers, healthy profitability and improving asset quality. The sector remains well-capitalised, with Capital to Risk-Weighted Assets Ratio (CRAR) comfortably above regulatory requirements, reflecting strong financial resilience. Asset quality continued to improve, with Gross Non-Performing Assets (GNPA) levels remaining on a declining trend, while certain segments, particularly microfinance and unsecured lending, continued to warrant close monitoring. Profitability remained healthy, supported by robust net interest margins, while return indicators stayed at comfortable levels. Credit growth steadied during financial year 2025-26, supported by improved funding conditions and increased lending activity

Opportunities and Threats

Your Company being an Investment Company seeks opportunities in the capital market. The unpredictability in the stock market represents both opportunity as well as challenges for the Company.

Indias capital markets are witnessing deeper participation from retail investors, mutual funds, insurance companies and pension funds. The growing domestic investor base is reducing dependence on foreign portfolio flows and improving market resilience.

Capital markets face notable challenges. Geopolitical tensions, volatility in commodity prices, inflationary pressures and changes in global monetary policies may adversely affect investor sentiment and capital flows into emerging markets, including India. Recent surveys indicate that margin pressures and geopolitical developments continue to weigh on business confidence. The rupees depreciation and persistent inflationary pressures, driven by elevated oil prices, could impact corporate profitability and sentiment. Equity markets are also navigating valuation pressures, especially in mid- and small-cap segments, which may see corrections. Regulatory tightening around derivatives, co-lending, and high-frequency trading is introducing short-term compliance adjustments, particularly for NBFCs and institutional investors.

The Indian capital market in financial year 2025-26 faces a highly polarized environment. Opportunities center on sustained domestic SIP inflows, rate cuts easing corporate margins, and global liquidity. Threats revolve around currency depreciation; US trade tariff volatility, and shifting geopolitical conditions.

The food processing industry is a high growth industry and the same applies for it in Indian market. The government of India has acknowledged the food processing sector as a high priority industry and is currently promoting it with various fiscal reliefs and incentives. India has one of the largest working populations in the world. With increasing disposable incomes, this segment can be regarded as the biggest consumer of processed foods in the country. There are various threats to the Company like market Competition that forces the Company to sell its product at low cost. This also led to loss to the Company. On the other hand, raw material is based on agricultural produce which is affected by natural calamities, which deteriorate the quality of the product, which is the major threat to the Company. Also external situation like Cross-border emergencies and wars also affect the business.

Risks and Concerns

The Companys business performance is inherently influenced by the operational and financial health of its portfolio companies. Growth in these underlying businesses or sectors enhances the Companys prospects, while any challenges whether due to macroeconomic headwinds, market volatility, or internal disruptions within the investee entities may adversely affect returns and overall performance.

The Company is exposed to specific risks that are particular to their respective businesses in which they operate, including market risk, credit risk, liquidity risk, interest rate risk, equity risk, operational risk, currency risk, regulatory and macro-economic risks. The Company has a robust risk management framework that strives to identify, monitor and minimize risks as also identify business opportunities.

Outlook

Global growth is projected at 3.3% in 2026, fully recovering from the April 2025 tariff-related downgrade and returning to its January 2025 level. Advanced economies (AEs) are expected to grow at 1.8%, driven largely by continued US resilience, while emerging market and developing economies (EMDEs) are projected to expand by 4.2%, slightly below initial expectations, reflecting lingering effects of tight financial conditions and trade uncertainty. Overall, growth stabilises but remains uneven and regionally divergent. Global inflation is projected to rise modestly to 3.8% in 2026, indicating that disinflation remains incomplete. Advanced-economy inflation is expected to stay elevated at 2.2%, reflecting persistent services and wage pressures, while EMDE inflation is projected at 4.8%, driven by domestic demand and food-price risks. Inflation dynamics suggest restrictive global monetary conditions are likely to persist.

The Indian economy in financial year 2026-27 is expected to remain resilient, despite challenging external environment characterised by elevated energy and commodity prices, rising logistics costs, volatility in global financial markets and uncertainties surrounding global trade policies. Growth prospects are supported by Indias strong macroeconomic fundamentals, including robust domestic demand, relatively lower dependence on exports as a growth driver, and a stable policy environment.

NBFCs are poised to play an increasingly critical role in driving Indias economic growth by extending formal credit access to traditionally underserved segments, in alignment with national development goals. As customer expectations evolve and digital-first business models become more prevalent, incumbent NBFCs must rethink their operating strategies, while new entrants must carefully assess market dynamics before entry. With lending activity expected to scale, there is a growing need for stronger risk management practices and more robust governance frameworks across the sector. According to CRISIL Ratings, the assets under management (AUM) of nonbanking financial companies (NBFCs) will grow a steady 18-19% this fiscal and the next, driven by whetted consumption demand, and cross the Rs.50 lakh crore mark by March 2027. Growth will be driven by strong consumer demand, GST rationalization, and low inflation.

The future of NBFCs in India is promising, with opportunities for growth driven by digitization, niche specialization, and focus on underserved markets. However, navigating the evolving regulatory landscape, embracing technology responsibly, and prioritizing customer experience will be crucial for success.

The India capital market outlook remains positive, supported by strong economic fundamentals, favorable demographic trends, and continued regulatory reforms. Growing financial awareness, increasing disposable incomes, and expanding digital infrastructure will continue to drive retail participation. Foreign portfolio investment flows are expected to remain supportive as India maintains its position as a preferred emerging market investment destination.

Performance

During the financial year 2025-26, on a standalone basis, the Company recorded Revenue from operations of Rs.372.34 lakhs as against Rs.604.38 lakhs in the previous financial year. The Profit after Tax for the year stood at Rs.236.08 lakhs compared with Rs.471.79 lakhs in the previous year. On a consolidated basis, the Company reported Revenue from operations of Rs.4,923.85 lakhs during financial year 2025-26 as compared to Rs.4,883.01 lakhs in the previous financial year, reflecting growth over the last previous year. The consolidated Profit after Tax for the year stood at Rs.1,171.68 lakhs as against a loss of Rs.1,765.19 lakhs in financial year 2024-25, demonstrating a significant improvement in the financial performance of the Group.

The Company aims to create sustainable vision to grow the business and make long-term strategic investments in various new ventures promoted by the Company and its subsidiaries.

During the financial year 2025-26, the production in Morton Foods Limited increased from 4,232 MT to 5,815 MT, representing an increase of approximately 37%. The increase in production was primarily attributable to higher execution of Defence tenders and the introduction of new products such as sugar, pickles, and other food items. Sales also increased significantly from Rs.4,523 lakhs to Rs.7,247 lakhs, registering a growth of approximately 60% over the previous year.

Despite the substantial increase in production and sales, the MFLs loss increased from Rs. 1,491 lakhs to Rs.1,669 lakhs, representing an increase of approximately 11%. The higher loss was mainly due to increase in the cost of goods sold as a percentage of sales from 46% to 56%, driven by higher raw material and procurement costs; and increase in salary cost and related costs during the year.

Disclosure

The Disclosure with respect to details of significant changes in key financial ratios as stipulated under Regulation 34(3) read with Schedule V Clause B of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are as follows:

Sr No.	Particulars	31.03.2026	31.03.2025	Change (%)	Explanation
(i)	Debtors Turnover Ratio	0	0	0	--
(ii)	Inventory Turnover Ratio	0	0	0	--
(iii)	Interest Coverage Ratio	0	0	0	--
(iv)	Current Ratio	47.18%	34.21%	37.93%	Due to Increase in Fixed Deposits
(v)	Debt Equity Ratio	0	0	0	--
(vi)	Operating Profit Margin (%)	94.03%	99.85%	(5.83%)	Decrease in Dividend Income & Gain on sale of Investment
(vii)	Net Profit Margin (%)	57.86%	73.76%	(21.56%)	Decrease in Dividend Income & Gain on sale of Investment
(viii)	Return on Net Worth	6.13%	13.04%	(53.01%)	Decrease in Dividend Income & Gain on sale of Investment

Internal Control Systems and Their Adequacy

The Company has an adequate system of internal control implemented by the management towards achieving efficiency in operations, optimum utilization of resources and effective monitoring thereof and compliance with applicable laws. The Internal Auditors were suggested with audit plan based on the risk profile of business activities of the organization, which were approved by the Audit Committee. The adequacy of the internal control system is reviewed by the Audit Committee of the Board of Directors. The efficacy of the internal checks and control systems are verified by the Internal Auditors as well as the Statutory Auditors. The Audit Committee reviews the internal audit plan, adequacy and effectiveness of the internal control system, significant audit observations and monitors the sustainability of remedial measures. The performance of the Company is regularly reviewed by the Board of Directors to ensure that it is in keeping with the overall corporate policy and in line with pre-set objectives. The Company updates its internal control systems from time to time, enabling it to monitor adherence to internal procedures and external regulatory guidelines.

Human Resources

Steps have been taken to inculcate a performance-oriented culture by focusing and laying more emphasis on the performance management system. It has been Companys endeavour to attract talent from the most reputed institutions to meet the requirements of various functions. The Company will intensify efforts to create an environment where everyone feels valued, respected, and empowered to contribute their unique perceptions.

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys outlook, objectives, projections, estimates and expectations may be forward looking statement within the meaning of applicable laws or regulations. Actual results may differ from those expressed or implied. Important factors that could make a difference to the Companys operations include government regulations and tax-regime, economic developments within India and abroad, financial markets and other related and incidental factors. The Company assumes no responsibility in respect of forward-looking statements that may be revised or modified in future on the basis of subsequent developments, information or events. The financial statements are prepared under historical cost convention, on accrual basis of accounting, and in accordance with the provisions of the Companies Act, 2013 ("the Act") and comply with the Accounting Standards notified under Section 133 of the Act read with the Indian Accounting Standards Rules, 2015. The management has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner, the state of affairs and profit/loss for the year. The narrative on our financial condition and result of operations should be read together with our audited consolidated financial statements and the notes to these statements included in the annual report.

	For and on behalf of the Board
	Shalini Nopany
Place: Kolkata	Chairperson
Dated: 15th May, 2026	DIN: 00077299