Saraswati Commercial (India) Ltd Management Discussions

Saraswati Commercial (India) Limited ("the Company") is an Investment and Credit Company (ICC) primarily engaged in the business of investment and trading in shares and securities. The Company is registered as a non-deposit taking NBFC Company pursuant to the receipt of Certificate of Registration dated 27th April, 2007, issued by the Reserve Bank of India (‘RBI) under section 45-IA of the Reserve Bank of India Act, 1934. Pursuant to the Scale Based Regulatory Framework for NBFCs notified by RBI, the asset size of the Company on standalone basis is more than Rs. 1,000 Crores; hence, the Company falls under the category of Middle Layer NBFC (‘NBFC-ML).

ECONOMY AND MARKETS (a) ECONOMIC REVIEW: Global Economy

The global economy was grappling with multiple challenges, primarily due to unresolved and ongoing geopolitical tensions most notably between Russia and Ukraine, and between Israel and Iran. Several countries introduced tariffs on global trade in March 2025, followed by retaliatory actions that disrupted international trade, increased inflation, and slowed economic growth. Higher import costs are expected to raise consumer prices in many regions.

The Global Economy navigated a complex landscape influenced by geopolitical shifts, trade fluctuations and pressures in 2024. Despite persistent challenges, proactive policies and continued investments in key sectors strengthened stability and resilience. The global economy grew by 3.5% in 2023, with a slight slowdown to 3.3% in 2024. Advanced Economies grew at a steady 1.7% in 2023 and at 1.8% in 2024, constrained by high interest rates. Meanwhile, Emerging Markets and Developing Economies (EMDEs) expanded by 4.7% in 2023 and 4.3% in 2024. Heightened supply chain vulnerabilities prompted businesses and governments to re-evaluate trade dependencies and implement strategic measures to enhance economic stability.

Source: International Monetary fund April 2025 report.

The global economy is to grow steadily at 2.8% in 2025 and 3.0% in 2026, supported by stable performance in both advanced and emerging markets. Growth in advanced economies is likely to stay modest at 1.4% in 2025 and 1.5% in 2026, influenced by domestic demand and different policy approaches. Meanwhile, emerging markets such as China and India are expected to show stronger growth of 3.7% in 2025 and 3.9% in 2026, despite global uncertainties and recent trade tensions. Even so, economies are expected to stay resilient by adopting new technologies and implementing strategic policy measures.

Indias GDP growth highest amongst major peers (In Percentage)

GDP GROWTH RATE	2023	2024	2025	2026
WORLD OUTPUT	3.5	3.3	2.8	3.0
USA	2.9	2.8	1.8	1.7
CHINA	5.4	5.0	4.0	4.0
JAPAN	1.5	0.1	0.6	0.6
GERMANY	-0.3	-0.2	0.0	0.9
INDIA	7.5	6.5	6.2	6.3
UK	0.4	1.1	1.1	1.4
FRANCE	1.1	1.1	0.6	1.0
ITALY	0.7	0.7	0.4	0.8
CANADA	1.5	1.5	1.4	1.6
RUSSIA	4.1	4.1	1.5	0.9

Source: IMF World Economic Outlook, April, 2025.

Indian Economy

India continued to be one of the fastest-growing major economies, driven by strong domestic demand, structural reforms and supportive policies. In recent years, the countrys rapid economic expansion enabled it to surpass the UK, making it the worlds fifth-largest economy. However, in FY2025, global uncertainties, rising geopolitical tensions and persistent inflationary pressures contributed to a slowdown in overall economic growth. Inflationary pressures remained a key concern in FY2025, driven by global supply chain disruptions and commodity price volatility. In response, the RBIs Monetary Policy Committee (MPC) reduced the repo rate by 25 basis points in two successive cuts, bringing it down to 6% as of April 2025, while continuing with an accommodative stance. Consumer Price Index (CPI) inflation is expected to average 4.9% in FY2025, down from 5.4% in the previous year, and is projected to ease further to 4.0% in FY2026.

India continued on a steady path of economic growth, driven by a strong manufacturing sector, an expanding services industry and increased investments in infrastructure. Various government-led initiatives, including digital transformation efforts and financial inclusion programs, played a crucial role in strengthening domestic manufacturing capabilities attracting foreign direct investment (FDI) across key sectors. The availability of capital, evolving investment trends and access to credit remained essential factors in driving economic expansion, supporting business growth, facilitating infrastructure development and creating employment opportunities. Additionally, interest rates and government policy measures significantly contributed to maintaining economic stability, positively influencing various industries and boosting consumer demand. The steady rise in urbanisation, along with a rapidly growing middle class, further contributed to increased consumer spending across multiple sectors. With these strong economic drivers in place, Indias economy is projected to grow at a robust rate of 6.5% in FY 2026. However, risks stemming from geopolitical tensions, global commodity price fluctuations and financial market uncertainties persist. Looking ahead, Indias economic outlook remains positive, with growth projections exceeding the global average. India is well-positioned to sustain its growth momentum and establish itself as a leading economic powerhouse.

Real Gross Domestic Product (GDP) and Gross Value Added (GVA)

	FY 2022	FY 2023	FY 2024	FY 2025
	FE	FE	(1st RE)	(2nd AE)
Real GDP (in trillion)	150.2	161.7	176.5	188.0
Real GVA (in trillion)	138.8	148.8	161.5	171.8
Real GDP growth	9.7%	7.6%	9.2%	6.5%
Real GVA growth	9.4%	7.2%	8.6%	6.4%

Source: Government of India, National Statistical Office (CSO). AE denotes advance estimate, FE denotes final RE denotes revised estimate.

(b) OUTLOOK:

NBFCs are set to become key enablers of Indias economic progress by extending access to formal credit in traditionally underserved segments, aligning with the countrys goals.

In a landscape where customer demands are evolving and digital-first models are gaining ground, incumbent NBFCs must reimagine their operational frameworks, while new players need to carefully evaluate their entry strategies. As lending activities scale, it becomes imperative for these institutions to strengthen their risk management practices and structures.

According to ICRA Ratings, credit growth in the NBFC sector was about 17% in the financial year 2022-23 and the financial year 2023-24, but it is expected to moderate to 13 15% in the financial year 2024-25 and the financial year 2025-26. This deceleration is not a sign of weakening fundamentals; rather, it reflects a maturing sector where institutions balancing risk and growth cautiously. Additionally, the sector is likely to benefit from easing liquidity conditions and potential interest rate cuts, which could support net interest margins and return on assets of NBFCs. However, challenges such as asset quality concerns in microfinance and unsecured lending segments remain monitorable. Overall, NBFCs are anticipated to experience stable asset quality and sustained earnings growth, positioning them favourably in Indias evolving financial landscape.

Chart depicts the projections for Indias GDP Growth by various institutions in FY 2026.

(c) INDUSTRY STRUCTURE AND DEVELOPMENTS:

India has a diversified financial sector undergoing rapid expansion with many new entities entering the market along with the existing financial services firms. The sector comprises commercial banks, insurance companies, NBFCs, housing finance companies, co-operatives, pension funds, mutual funds and other smaller financial entities. After the COVID-19 gradually tapers off, the financial services sector is poised to grow eventually on the back of strong fundamentals, adequate liquidity in the economy, significant government and regulatory support, and the increasing pace of digital adoption. In fact, digital transactions will play a larger role in the financial eco-system than hitherto witnessed. l Non-Banking Financial Companies:

The NBFC sector plays a crucial role in Indias financial system by providing credit to various economic sectors, including those that traditional banks may not adequately serve. At the same time, NBFCs maintain strong partnerships with commercial banks, mutual funds and insurance companies to ensure financial stability and a diversified funding base. The growth of assets under management (AUM) for NBFCs is expected to remain robust at 15-17% over FY2025 and FY2026.

While this reflects a slight moderation from the strong 23% growth recorded in FY2024, it continues to exceed the decade-long term average growth of 14% per annum (FY2014-2024).

The NBFC sector has faced consecutive challenges since FY2019, beginning with the failure of a large NBFC and subsequent liquidity stress, followed by the COVID-19 pandemic and most recently, monetary policy tightening due to high inflation. However, these pressures have eased over the past two years. According to the RBIs Financial Stability Report (December 2024), the sector remains healthy, supported by strong capital buffers (Capital to Risk Weighted Assets Ratio at 26.1% in September 2024), robust interest margins and earnings (Net Interest Margin at 5.1% and Return on Asset at 2.9%) and improving asset quality (Gross Non-Performing Asset at 3.4% of gross loans). Despite these challenges, NBFCs have maintained adequate provisions for non-performing assets, demonstrating effective loan resolution and asset quality improvement. Additionally, ongoing regulatory recalibration, stronger focus from RBI on customer protection, operational compliance and pricing disclosures, are expected to shape the sectors future lending practices.

NBFC Industry Outlook

NBFCs are strengthening their position by exploring diverse funding sources, including domestic capital markets and offshore options, while leveraging strategic partnerships with banks for greater financial reach. Policy interventions aimed at easing regulatory constraints and improving funding access could further enhance stability. Despite the banking sectors dominance, NBFCs remain a key investment focus due to their resilience and growth potential. With a robust capital position and evolving strategies, the sector is expected to navigate challenges effectively, ensuring a stable outlook for FY2026 and driving financial inclusion.

Looking ahead, the NBFC sector is poised for stronger growth in FY 2025 26, aided by the Reserve Bank of Indias recent repo rate cuts and changes in income tax slabs designed to boost consumer spending. According to a CRISIL report, AUM growth is projected to recover to 16 18% in FY 2026 27, following a moderation in FY 2025 26. The report also expects asset quality to remain stable during the current fiscal, further reinforcing the sectors outlook. l Equity Markets:

The Indian stock market closed FY 2024-25 with modest gains, demonstrating resilience despite significant foreign portfolio investor (FPI) outflows in the latter half of the year.

The Nifty index delivered positive returns, outperforming several Asian peers such as Japans Nikkei 225 and South Koreas KOSPI. However, Hong Kongs Hang Seng Index led the regional markets with a remarkable 39.8% return. India is the fourth-largest market by market capitalization. Indias domestic equity markets continue to rank fourth globally with a market cap of over USD 4.0 trillion.

SR. NO.	COUNTRY	US$ TN MARKET CAP
1.	USA	59.3
2.	CHINA	7.8
3.	JAPAN	5.6
4.	INDIA	4.4
5.	UNITED KINGDOM	3.9

Source: https://companiesmarketcap.com/all-countries/

In FY25, a total of 318 Companies comprising 79 mainboard and 239 SME listings raised Rs. 1.72 trillion through IPOs, surpassing the combined total raised in the previous two fiscal years (FY24 and FY23). Of this, Rs. 1.6 trillion was raised via mainboard IPOs, with the remainder coming from the SME segment. Notably, the average issue size more than doubled to Rs. 2,082 crore in FY25, up from Rs. 815 crore year-on-year. As previously highlighted, Foreign Institutional Investors (FIIs) remained active participants in the primary markets, subscribing to a substantial Rs. 1.21 trillion worth of issues.

Financial Year	Total No. of IPOs	No. of mainline IPOs	Amount raised by mainlines (Rs. in Crores)	No. of SME IPOs	Amount raised by SMEs	Total amount raised ( Crs)
2025	318	79	162,517	239	9967	172,484
2024	273	78	67,558	195	6070	73,628
2023	164	39	52,549	125	2307	54,857

Source: Business Standard Newspaper dated 27th March, 2025.

Indias economic transformation over the past few decades has been marked by rapid growth and a dynamic evolution of its financial landscape. At the heart of this transformation lies the rise of capital markets, which have played a pivotal role in driving capital formation, deepening the financialisation of domestic savings, facilitating wealth creation. A key contributor to this growth has been the surge in investor participation number of investors expanded from Rs. 2.3 crore in FY15 to Rs. 19.2 crore in FY25, reflecting a robust CAGR of 23% over the decade.

(d) OPPORTUNITIES AND THREATS:

Indian Economy provides excellent growth opportunities as the increased thrust to power, road, ports, telecom and other infrastructure projects will create a positive environment for the Investment and Financial Services Industry in India. Further, growth of service sector also presents new opportunities for Investment and Financial Services Industry in India. With increasing globalization, integration of world markets, it not only provides new avenues for earning opportunities our investment business but is also impacted / threatened by domestic and global events. The Company believes that it has to adopt robust risk management practices and continuously monitor and adapt to changing dynamics to not only take advantage of the earnings opportunities but also mitigate the risks and threats posed by the local and global events.

India being an emerging global economy, faces notable risks due to global relations. A shift in developed and emerging countries interest rates, policies and protectionism along with trade and capital market conditions may hamper businesses locally. Geopolitical and trade tensions in the global market post further risk to the Indian NBFC industry. There also exists Risk of investment or Market risk which arising from the adverse movements in market price of various securities and it similarly depends on the global markets, which may impact value of portfolio of investment in securities.

External Risks associated with liquidity stress, political uncertainties, fiscal slippage concerns, etc. Regulatory and compliance-related changes in the sector affecting NBFCs. Any stringent regulatory change or unfavourable policy change can pose a threat to the industry players in the short run.

(e) RISKS AND CONCERNS:

The Financial services industry is subject to continuously evolving regulatory requirements due to increasing globalization, integration of world markets. Risk is an integral part of the business and almost every business decision requires the management to balance risk and reward. The Company is exposed to the market risk, liquidity risk, operational risk, compliance risk, cyber security risk, IT risk and credit risk. It is further exposed to risk of economic cycle. The Company manages these risks by remaining very conservative and following requisite risk management practices.

(f) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Management has laid down a set of standards, processes and structure which enables it to implement internal financial controls across the organization with reference to financial statements and such controls are adequate and are operating effectively. Internal Finance control framework has been established in line with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (the ‘Guidance Note). As a part of the effort to evaluate the effectiveness of the internal control systems, your Companys internal audit system reviews all the control measures on a periodic basis and recommends improvements, wherever appropriate. The Company has in place adequate internal control systems and procedures commensurate with the size, scale, complexity and nature of its business. These systems and procedures provide reasonable assurance of adherence to the accounting procedures and policies, maintenance of proper accounting records, reliability of financial information, compliance with regulatory directives, efficacy of its operating systems, protection resources and safeguarding of assets against unauthorized use. The management regularly reviews the internal control systems and procedures, undertake corrective actions, in their respective areas and thereby strengthen the controls.

The internal financial control is supplemented by extensive internal audits, regular reviews by the Management and standard policies and guidelines to ensure reliability of financial and all other records to prepare financial statements, its reporting and other data. The Audit Committee of the Board reviews internal audit reports given along with management responses. The Audit Committee also monitors the implemented suggestions. The Company has, in all material respects, adequate internal financial control over financial reporting and such controls are operating effectively. The Statutory Auditors of the Company have also certified the existence and operating effectiveness of the financial controls relating to financial reporting as of 31st March, 2025. During the year under review, no material or serious observation has been observed for inefficiency or inadequacy of such controls.

(g) SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

The Company is engaged in the business of Investment, Trading in Shares and Securities and Lending Activities. As per Ind AS 108 "Operating Segments", specified under Section 133 of the Companies Act, 2013, there are no reportable operating or geographical segments applicable to the Company.

The gross revenue from such Financing and Investment activities considered in profit & loss account (including unrealised gain) for the year is Rs. 7541.58 Lakhs and considered in other comprehensive income (including unrealised gain) is Rs. 17,293.88 Lakhs. For detailed information, please refer to Note no. 36 of the Standalone and note no. 38 of the Consolidated Financial Statements of the Company for the financial year ended 31st March, 2025.

(h) DISCUSSIONS ON STANDALONE & CONSOLIDATED FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

(Rs. in Lakhs)

Particulars	Standalone			Consolidation
	31.03.2025	31.03.2024	% changes	31.03.2025	31.03.2024	% changes
Total Income (I)	7,541.58	12,833.57	(41.24)	7,544.58	12,834.29	(41.22)
Total Expenses (II)	661.47	486.51	35.96	662.49	487.49	35.90
Profit before tax (I-II=III)	6,880.11	12,347.06	(44.28)	6,882.09	12,346.80	(44.26)
Less: Tax Expenses (IV)	1,538.99	1,956.45	(21.34)	1,539.37	1,956.49	(21.32)
Profit after Tax (III-IV=V)	5,341.12	10,390.61	(48.60)	5,342.72	10,390.30	(48.58)
Other Comprehensive Income before tax (VI)	17,293.88	17,244.10	0.29	17,560.27	17,652.62	(0.52)
Less: Tax expenses (VII)	3,570.67	1,950.01	83.11	3,646.21	1,995.22	82.75
Other Comprehensive Income for	13,723.21	15,294.10	(10.27)	13,914.06	15,657.40	(11.13)
the year (VI-VII=VIII)
Total Comprehensive Income (V+VIII=IX)	19,064.33	25,684.71	(25.78)	19,256.78	26,047.70	(26.07)
Earning per share
Basic	517.41	1,008.87	(48.71)	517.51	1008.85	(48.70)
Diluted	517.41	1,008.87	(48.71)	517.51	1008.85	(48.70)

(i) KEY FINANCIAL RATIOS:

Ratios	Standalone			Consolidation
	2024-2025	2023-2024	Change (%)	2024-2025	2023-2024	Change (%)
Interest Coverage Ratio	46.29	74.61	(37.95)	46.25	74.54	(37.94)
Current Ratio	0.53	0.49	6.49	0.53	0.49	6.49
Debt Equity Ratio	0.09	-	-	0.09	-	-
Net Profit Margin	71.53%	80.99%	(11.69)	71.52%	80.98%	(11.69)
Return on Net Worth	11.79%	30.42%	(61.25)	11.50%	30.05%	(61.73%)
CRAR	81.78%	73.09%	11.90	-	-	-
(capital-to-risk weighted assets ratio) (%)
CRAR- Tier I Capital (%)	81.78%	73.09%	11.89	-	-	-
CRAR- Tier II Capital (%)	0.00%	0.00%	(100.00)	-	-	-

The Company is mainly engaged in the business of investment and trading in shares and securities hence its profitability is directly link to and impacted by equity market volatility. Ratios where there has been significant change (i.e. change of 25% or more as compared to the immediately previous financial year). All the figures mentioned hereunder are Rs. in Lakhs.

Interest Coverage Ratio:

On a standalone basis, Interest coverage ratio as on 31st March, 2025 stood at 46.29 against 74.61 as on 31st March, 2024.

The decrease in ratios is due to decrease in profit as compared to previous year. The Earning before interest and taxes stood at Rs. 7,370.73 as on 31st March, 2025 visa-vis Rs. 12,559.38 as on 31st March, 2024.

On a consolidated basis, Interest coverage ratio as on 31st March, 2025 stood at 46.25 against 74.54 as on 31st March, 2024.

The decrease in ratios is due to decrease in profit as compared to previous year. The Earning before interest and taxes stood at Rs. 7,372.89 as on 31st March, 2025 visa-vis Rs. 12,559.28 as on 31st March, 2024.

Return on Net Worth Ratio:

On Standalone basis, the Return on Networth stood at 11.79% as on 31st March, 2025 visa-vis 30.42% as on 31st March, 2024. The decrease in ratios is due to decrease in profit after tax i.e. Rs. 5,631.22 as on 31st March, 2025 visa-vis net profit after tax Rs. 10,429.51 as on 31st March, 2024.

On Consolidated basis, the Return on Networth stood at 11.50% as on 31st March, 2025 visa-vis 30.05% as on 31st March, 2024. The decrease in ratios is due to decrease in profit after tax i.e. Rs. 5,632.82 as on 31st March, 2025 visa-vis net profit after tax of Rs. 10,429.20 as on 31st March, 2024.

The Parent Company & its group is mainly engaged in the business of investment and trading in shares and securities hence the Net Profit Margin likely to be impacted on account of the market volatility.

CRAR- Tier II Capital (%):

CRAR Tier II represents the provision on standard assets, calculated at 0.4% of the outstanding standard loans on the balance sheet. As of 31st March, 2024, the provision amounted to Rs 0.62. However, as of 31st March, 2025, the provision is Nil, as the outstanding loan balance on the balance sheet date is Nil. Consequently, this has resulted in a 100% decrease in the CRAR Tier II ratio.

(j) HUMAN RESOURCE DEVELOPMENT:

The Companys success is fundamentally driven by its human capital. Understanding that the motivated and skilled workforce is essential for long-term growth, the Company places a strong emphasis on creating a supportive environment that fosters both safety and productivity. The HR team plays a key role in nurturing a workplace founded on the principles of integrity, transparency, and continuous learning. Through its focus on equality and strict enforcement of zero tolerance towards harassment.

Being in the financial services sector, we recognize that our Companys growth is closely tied to the development of our employees. We are dedicated to fostering talent, recognizing each individuals unique strengths. The Human Resource

Management Department (HRMD) undertook several initiatives during the financial year 2024-25 to strengthen human resources along with building a conducive working environment through new recruitments, skill enhancement through in-house and external training programmes and conducting regular meetings for employees, besides undertaking leadership development programme for senior management. Regular employee engagement initiatives and tailored development programmes ensure our team members reach their full potential. During the year 2024-25, there were 9 employees in the Company.

(k) CAUTIONARY STATEMENTS:

Statements in this report on Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied due to risk and uncertainties. These risks and uncertainties include significant changes in political and economic conditions in India and internationally, volatility in interest rates and in the securities market, new regulations and Government policies that may impact the companys business as well as the ability to implement strategies. The Company assumes no responsibility nor is under any obligation to publicly amend, modify or revise any forward looking statements on the basis of any subsequent developments, information or events.