STEL Holdings Ltd Management Discussions

Overview

The Management Discussion and Analysis Report (MDA) is an integrated part of Companys annual financialstatements. The purpose of the MDA is to provide a narrative explanation, through the eyes of management, of how the Company has performed in the past, its present condition, and its future prospects. This report contains a description of the year gone by and some of the key factors that influenced the business of the Company during the year, as well as a fair and unbiased overview of the Companys past, present, and future.

STEL remains essentially a Core Investment Company. Of the total income received by the Company (‘STEL), dividend income constitutes the main earnings. The performance of the Company is directly related to the performance of the Investee Companies.

Industry Structure & Developments, Business Overview and Future Outlook Global Economy Overview 2024-25

The global economy exhibited steady yet uneven growth across regions in 2024. A notable trend was the slowdown in global manufacturing, especially in Europe and parts of Asia, due to supply chain disruptions and weak external demand. In contrast, the services sector performed better, supporting growth in many economies. Inflationary pressures eased in most economies. However, services inflation has remained persistent. Although commodity prices have stabilised, the risk of synchronised price increases persists. With growth varying across economies and last-mile disinflation proving sticky, central banks may chart varying paths of monetary easing. This will lead to uncertainty over future policy rates and inflation trajectories. This apart, geopolitical tensions, ongoing conflicts, trade policy risks continue to pose significant challenges to global economic stability. In this global context, India displayed steady economic growth. As per the first advance estimates of national accounts, Indias real GDP is estimated to grow by 6.4 per cent in FY25. Growth in the first half of FY25 was supported by agriculture and services, with rural demand improving on the back of record Kharif production and favorable agricultural conditions. The manufacturing sector faced pressures due to weak global demand and domestic seasonal conditions. Private consumption remained stable, reflecting steady domestic demand. Fiscal discipline and strong external balance supported by a services trade surplus and healthy remittance growth contributed to macroeconomic stability. Together, these factors provided a solid foundation for sustained growth amid external uncertainties.

Looking ahead, Indias economic prospects for FY26 are balanced. Headwinds to growth include elevated geopolitical and trade uncertainties and possible commodity price shocks. Domestically, the translation of order books of private capital goods sector into sustained investment pick-up, improvements in consumer confidence, and corporate wage pick-up will be key to promoting Rural demand backed by a rebound in agricultural production, an anticipated easing of food inflation and a stable macro-economic environment provide an upside to near-term growth. Overall, India will need to improve its global competitiveness through grassroots-level structural reforms and deregulation to reinforce its medium-term growth potential.

Indian Financial & Capital market

Indias monetary and financial sectors have performed well in the first nine months of FY25. Bank credit has grown at a steady rate in the current financial year, with credit growth converging deposit growth. There has been a consistent improvement in the banks (SCBs) as reflected in a fall in gross non-performing assets (GNPAs) accompanied by a rise in the capital-to-risk weighted asset ratio (CRAR). The government has also achieved significant progress in financial inclusion, with the Financial Inclusion Index of the Reserve Bank of India (RBI) increasing from 53.9 in March 2021 to 64.2 at the end of March 2024. Rural Financial Institutions

(RFIs) have been an important player in facilitating Indias financial inclusion journey. Development Financial Institutions (DFIs) have contributed significantly to the countrys economic progress by financing infrastructure development projects.

The capital markets have demonstrated strong performance, driving capital formation in the real economy, increasing the financialization of domestic savings, and supporting wealth creation. As of December 2024, the Indian stock market has recorded new highs, consistently outperforming its emerging market peers despite geopolitical uncertainties and election-driven market volatility challenges. Meanwhile, the insurance and pension sectors continue to perform with the vision of achieving universal coverage and strengthening the financial ecosystem further.

The financial sector is currently undergoing a transformative period marked by several emerging trends. Notably, there is an increase in the share of consumer credit in overall credit extended by banks and a rise in non-bank financing options. Additionally, equity-based financing has gained popularity, with the number of initial public offerings (IPOs) increasing sixfold between FY13 and FY24. While these developments herald a new era for the financial sector, they also introduce potential risks from a regulatory standpoint. The rise in consumer debt, the expansion of unsecured lending, and the growing number of young investors underscore the need for balancing growth and stability.

Such regulation should encourage financial sector growth while ensuring stability and resilience.

Source: Economic Survey 2024-25

Your Company will continue to look for opportunities to invest in companies which have consistent growth prospects with high quality earnings. In new age companies where valuations are a concern and whose earnings will fructify at a later stage in their development, the Company has made a small allocation of capital.

The Company will continue to allocate its capital between listed equity, fixed income and unlisted equity. Management will evaluate and select investments based on high quality governance, long term sustainability and strength of the investee companys balance sheets.

Financial Performance with respect to Operational Performance

Analysis of Profit and Loss statement and Balance Sheet including the key ratios based on consolidated results is mentioned as follows:

Profit and Loss Statement Analysis

Revenue for FY25 stands at 2190.73 lakhs compared to 1846.41 lakhs in FY24 with a growth of 18.65 % Y-o-Y. We have achieved an EBITDA of 2126.85 lakhs during the year compared to 1781 lakhs during FY24. During the year company achieved a Dividend Income of 2042.67 lakhs compared to 1698.82 lakhs in Previous Year. The net profit for the year stands at 1586.83 lakhs compared to

1327.33 lakhs in PY. Earnings per Share (EPS) stood at 8.60 in FY25 against 7.19 in FY24.

Balance Sheet Analysis

Net Worth increased to 1753.14 crore in FY25 from 1503.73 crore in FY24. The Company has not raised any Equity Capital during the year, keeping the Equity Share Capital unchanged at 18.45 crore. Reserves and Surplus increased to 1734.69 crore in FY25 from 1485.28 crore in FY24. Book Value per share increased to 949.93 in FY 25 from 814.79 in FY 24.

The Shareholders of the company will be pleased to note that, the share price of the Company as on March, 2025 is 448/- per share high, vis-a-vis to the share price of 367/- per share as of March, 2024. The strategy of the Company has always been to remain invested in leaders and in businesses which require lower capital reinvestment to grow. As shown in our Investment Schedule of Annual Financials, the portfolio is skewed in its focus in Power Generation & Transmission Sector, Carbon Black Manufacturers, Tyre Manufacturers, Construction & Infrastructure, Pharmaceuticals, Consumer Goods, Financial Services etc.

We are pleased to share that the market value of our investments in quoted and unquoted securities will come to around 1884.20 crores as on March 31, 2025 compared to 1566.56 crores in PY.

Your Company will continue to allocate its capital between listed equity, fixed income and unlisted equity. Management will evaluate and select investments based on high quality governance, sustainability and strength of the investee companys balance sheets.

Opportunities, Threats & Future Outlook

With a stable government at the Centre, growth is expect to revive, and with stalled projects coming on line, easing of capital availability, in the process improving general business confidence.

The Company is a Core Investment Company and derives major revenue from investments. Also, the value of the stocks, shares and other securities depends on the prevailing capital markets scenario.

The Companys investments are predominantly held in group companies engaged in Power Generation and Transmission, Auto Tyres & Rubber Products, Electric Utilities, Carbon Black, Pharmaceuticals, FMCG Retail etc.

Any adverse impact on these industries could possibly have direct bearing on the performance of the

Company. Any slowdown in the growth of Indian economy or any volatility in global financial markets, could also affect the business. The Company is also prone to risks pertaining to change in government regulations, tax regimes, other statutes and capital market fluctuations in respect of investments held.

The future success of the Company continues to depend on its ability to anticipate the volatility of the financial markets, minimising risks and increasing returns through prudent investment decisions.

The investments of the Company are typically long term in nature and predominantly in the listed equities.

The Company invests in Companies, where it is part of the promoter group entity from long-term perspective. The Company continues to invest for the long term while availing opportunities to realize a better gaining position considering the macro economic conditions both globally & domestically.

Risk and Concerns

Risk Management is an important aspect of the corporate governance which aims to improvise the governance practices across the Companys activities. The provisions of Risk Management Committee are not applicable on the Company. The Company is mainly exposed to market risks in the form of reduction in value of its investments and fall in returns due to dip in the Investee Companys performance. Company has also adopted the risk management processes which will enable the Company to proactively manage uncertainty and changes in the internal and external environment to limit negative impacts and capitalize on opportunities. It will help in business growth with financial stability.

The identified risks pertaining to the nature of business carried out by the Company comprise of Strategic Risk, Operational Risk, Sectoral Risk, ESG related risks, Capital Market Fluctuations Risk, Regulatory & Compliance Risk, Human Resource Risk, Information and Technology Risk, Liquidity Risk etc. Risk mitigation measures are also reviewed alongside the identified risks.

Internal Control System and their adequacy

Effective internal controls are necessary for building up an efficientorganization. The Company has an adequate system of accounting and administrative control with adequate system of internal checks that ensures safe recording of all Companys assets and their proper and authorized utilization. Board has appointed the internal auditor to conduct a risk based audit with to review not only test adherence to laid down in policies and procedures but also to suggest improvements in process and systems. Any internal control weaknesses, non-compliance with statutes and suggestions on improvements in existing practices form part of internal audit report. Their audit program is agreed upon by the Audit Committee. Internal Audit observations and recommendations reported to the Audit Committee, which monitors the implementation of such recommendations. The Company has an Audit Committee which on a regular basis reviews the adequacy and effectiveness of internal control.

Key Financial Ratios*

Key Financial Ratios *	2024-25	2023-24	Variance (%)
Debtors Turnover Ratio	NA. The Company does not have any receivables during the year and previous year.	NA. The Company does not have any receivables during the year and previous year.	NA
Inventory Turnover Ratio	NA. The Company is into Investment operations and hence does not have inventory.	NA. The Company is into Investment operations and hence does not have inventory.
Interest Service Coverage Ratio	NA. The Company does not have any borrowings till date.	NA. The Company does not have any borrowings till date.
Current Ratio	1.092	651.978	-99.83 %
Debt Equity Ratio	NA	NA	-
Operating Profit Margin	0.969	0.961	0.77%
Net Profit Margin	0.725	0.719	0.75%
Return on Equity	0.009	0.009
Return on Capital Employed	9.459	0.571	1557.40 %
Return on Investment	0.012	0.014	-18.18%

Significant Changes in Key Financial Ratios i.e., change of 25% or more as compared to immediately previous financial year), along with a detailed explanation thereof:

Current Ratio FY 2024-25 : 1.092 Current Ratio FY 2023-24 : 651.978 Variance : -99.83 %

An advance payment was made in the previous year towards the purchase of PCBL share warrants. The transaction was executed during the current year, and the balance payment remains outstanding. Return on Capital Employed FY 2024-25 : 9.459 Return on Capital Employed FY 2023-24 : 0.571 Variance : 1557.40 %

The change is attributed to the same reasons stated above in the case of current ratio.

Human Resources

Every Company is depended on the quality of workforce. An Organizations vision is lived by and fructified by its people. The Board places on record its appreciation for the dedicated services by the employees for the smooth functioning of the company. During the year under review, the company had only 3 (Three) employees and the company continued with its focus on training and development of its employees.

The Company believes in retaining the best talent, clearly defining their roles and responsibilities.

Segment wise or product wise performance

The Companys income for the year consisted of dividend income and interest income from bank deposits and accordingly there are no reportable segments.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys outlook, projections, estimates, expectations or predictions are "Forward Looking Statements" within the meaning of applicable securities laws or regulations. Actual results could differ materially from those expressed or implied. As "forward looking statements" are based on certain assumptions and expectations of future events over which the Company exercise no control, the Company cannot guarantee their accuracy nor can it warrant that the same will be realized by the Company. Important developments that could affect the Companys operations include a downtrend in the Investee Company performance, significant changes in political and economic environment in India and tax laws.

	For and on behalf of the Board of Directors
	Mr. Abraham Ittyipe	Mr. Mahesh Narayanaswamy
	(DIN: 02717344)	(DIN : 01449684)
	Whole time Director	Director
Place : Kochi
Date : July 24, 2025