Sumedha Fiscal Services Ltd Management Discussions

GLOBAL ECONOMY

The global economy enters FY 2025-26 with a cautiously stable outlook, balancing modest recovery signals against persistent geopolitical and structural challenges. Global GDP is expected to grow at around 2.6% in 2025, with early signs pointing to a potential pickup toward 3.3% in 2026. Growth remains uneven: the United States and India continue to post robust domestic demand, underpinned by consumption, services, and digital investment, while Europe and China are weighed down by structural weaknesses, policy uncertainty, and a slower-than-expected recovery in manufacturing and real estate sectors.

Geopolitical factors continue to exert a strong influence on economic sentiment. The ongoing U.S.-China trade friction, though recently softened by a temporary rollback of tariffs, remains a key risk. The Russia-Ukraine conflict has compounded supply-side disruptions, prompting long-term shifts in energy sourcing, particularly in Europe, where the transition away from Russian gas has added cost and complexity to industrial production. These factors are contributing to reduced global trade volumes, and export-oriented economies, particularly in Europe and East Asia, are underperforming relative to historical trends.

On the macroeconomic front, global inflation has moderated from its post-pandemic highs, leading central banks in advanced economies to pause rate hikes. However, policy rates remain high in real terms, with central banks wary of declaring victory too early. As a result, credit conditions remain tight, dampening investment appetite, especially in capital-intensive sectors.

Despite the headwinds, there are bright spots. Technology-driven investments, especially in artificial intelligence, automation, and digital infrastructure, are accelerating across North America and parts of Asia. The transition to green energy continues to gather momentum, bolstered by regulatory incentives and growing corporate commitment to sustainability. However, supply chain realignments in sectors like semiconductors, clean energy, and critical minerals are creating transitional friction, and nearshoring efforts have yet to fully offset the efficiency losses from global fragmentation.

Financial markets have largely stabilized on the back of cooling inflation and greater monetary clarity. Equities have shown resilience, and corporate earnings in sectors like technology, consumer goods, and healthcare remain steady. Businesses globally are responding with a focus on resilience, risk management, and innovation, embedding geopolitical scenario planning and digital adoption into core strategy. Looking ahead, FY 2025-26 is likely to remain a period of gradual, uneven recovery, with adaptability, sectoral strength, and regional positioning defining performance outcomes.

Source: The insights above are drawn from recent publications by global institutions and leading financial media, including the IMF, S&P Global, OECD, McKinsey, Reuters, Financial Times, and others.

INDIAN ECONOMY

India is projected to close FY 2024-25 with a GDP growth of 6.4%, a slight moderation from the previous year but still one of the strongest among major economies. The outlook for FY 2025-26 remains positive, with growth expected between 6.8% and 7.2%, underpinned by strong domestic demand, a vibrant services sector, and ongoing infrastructure investments.

Private consumption continues to drive growth, bolstered by rising urban incomes, a recovering rural economy, and increased access to credit. Agricultural exports, which saw an uptick in FY 2024-25, are expected to continue supporting rural demand. The governments infrastructure push, particularly in green energy and digital sectors, is also expected to keep Gross Fixed Capital Formation robust. While private sector capital expenditure is gradually picking up, it remains concentrated in select high-growth sectors like technology, manufacturing, and renewable energy.

Inflation has moderated significantly, with CPI easing to 3.16% in April 2025, the lowest in nearly six years. This has allowed the Reserve Bank of India (RBI) to maintain a neutral stance on monetary policy, with a stable interest rate environment. The fiscal deficit for FY 2024-25 is projected to be 4.8% of GDP, a slight improvement from earlier projections. Tax collection remains strong, supported by digitalization and better compliance.

The current account deficit (CAD) remains manageable, estimated at 1.4%—1.8% of GDP, supported by resilient services exports and remittances. Foreign exchange reserves continue to provide a strong buffer, with the Indian rupee showing relative stability despite global financial pressures.

Looking ahead, Indias growth trajectory will be shaped by continued investment in infrastructure, digital public goods, and the PLI (Production-Linked Incentive) schemes, which are boosting manufacturing in sectors like electronics and clean energy. Challenges

remain in areas such as labour market informality and regulatory bottlenecks, but policy reforms and government initiatives are expected to drive long-term growth.

Source: The insights above are drawn from recent publications by Indian and global institutions, including the RBI, Ministry of Finance, IMF, World Bank, Economic Survey, and media reports.

INDIA M&A TRENDS 2025

Indias M&A landscape in 2025 remains robust, with activity fueled by strategic consolidations, private equity investments, and a focus on sectors such as technology, infrastructure, and healthcare. The outlook is positive, underpinned by favourable economic conditions, regulatory support, and a growing appetite for consolidation in high-growth industries.

Key Drivers of M&A Activity

• Strategic Mergers and Consolidations: Indian companies are increasingly turning to mergers to enhance competitiveness and market share, particularly in sectors like telecom, energy, and consumer goods. Key examples include the Reliance-Disney merger and Adanis acquisitions of ACC and Ambuja Cement, aimed at expanding their market presence and optimizing synergies.

• Private Equity and Venture Capital: The surge in private equity (PE) activity continues, especially in technology, financial services, and infrastructure. With Indias growing digital economy, PE firms are targeting companies in fintech, e-commerce, and renewable energy sectors. In FY 2024-25, PE investments exceeded $15 billion, signaling strong investor confidence in Indias growth story.

• Government Reforms and Policy Support: Pro-business reforms such as the new Insolvency and Bankruptcy Code (IBC), tax incentives, and FDI liberalization have provided an enabling environment for cross-border M&A deals. These reforms are expected to continue driving the M&A market by improving ease of doing business and simplifying regulatory hurdles.

• Cross-Border Transactions: Indias attractiveness as a key emerging market continues to attract cross-border M&A activity. Indian companies, particularly in IT and pharma, are acquiring firms abroad to gain access to new markets, technologies, and expertise. Similarly, foreign investors are increasingly eyeing Indian firms in high-growth sectors like tech, e-commerce, and renewable energy.

Outlook for 2025

In 2025, M&A activity in India is expected to remain strong, particularly as companies focus on digital transformation, infrastructure expansion, and cost optimization. While sectors like healthcare, telecom, and energy are expected to see consolidation, technology and green energy will be key areas for cross-border investments.

With regulatory support, strong domestic demand, and a favourable business environment, Indias M&A market is poised for continued growth, attracting both domestic and international investors.

Source: Insights are derived from recent reports by industry analysts, financial institutions, and global advisory firms. ALTERNATIVE INVESTMENT FUNDS (AIFs) IN INDIA

Indias Alternative Investment Funds (AIFs) sector has experienced significant growth, positioning itself as a pivotal component of the countrys financial ecosystem. As of March 2025, the total Assets Under Management (AUM) in AIFs reached Rs.13.49 lakh crore, marking a 18.85% increase from Rs.11.35 lakh crore in March 2024.

Growth Drivers

• Regulatory Enhancements: The Securities and Exchange Board of India (SEBI) has introduced several amendments to the AIF Regulations, including the Fifth Amendment in April 2024, which provides greater flexibility in dealing with unliquidated investments.

• Product Innovation: The introduction of Specialised Investment Funds (SIFs) in early 2025 allows asset managers to offer niche investment strategies, catering to wealthier investors with a minimum investment of Rs.1 million.

• Sectoral Focus: AIFs have increasingly targeted high-growth sectors such as technology, healthcare, and infrastructure, attracting both domestic and international investors.

Market Outlook

The AIF industry is projected to continue its upward trajectory, with expectations of a five-fold increase in AUM by 2034, reaching approximately $2 trillion. This growth is anticipated to be driven by sustained investor interest, regulatory support, and the evolving investment landscape.

Source: The insights above are based on the latest industry reports, SEBI regulations, and financial publications.

BUSINESS OVERVIEW

Highlights of Financial Performance during FY 2024-25 Total Income from Operation of Rs. 10157.97 Lacs (Rs. 9550.10 Lacs for FY23-24)

• Profit Before Tax of Rs. 848.77 Lacs (Rs. 918.49 Lacs in FY23-24)

• Net Profit of Rs. 658.64 Lacs (Rs. 771.74 Lacs in FY23-24)

• Basic EPS after extra ordinary items stood at Rs. 8.25, compared to Rs. 9.67 in FY23-24

Sumedha Fiscal Services Limited is a distinguished player in the Indian financial services landscape, specializing in debt syndication, financial restructuring, and corporate advisory. The Company excels in managing both private placements and public issues of equities and debt, offering a broad range of fee-based services, including fund mobilization through debt, quasi-equity, and structured hybrid instruments. Serving a diverse set of premier public and private corporates, Sumedha Fiscal Services Limited is recognized for its comprehensive and integrated approach. With an unwavering commitment to its vision of ‘adding values to value, the Company consistently delivers exceptional value to its clients in every engagement.

Investment and Merchant Banking Outlook and Prospects

The investment and merchant banking sectors in India have shown significant growth in FY 2024-25, supported by robust capital market activity. The sector, valued at approximately Rs.17,000 crore in FY 2024-25, has benefited from strong performance in equity capital markets (ECM), mergers and acquisitions (M&A), and initial public offerings (IPOs). India continues to be one of the leading markets for ECM activity globally, with several high-profile IPOs expected in the near future, underlining the active role of domestic and international players in driving corporate transactions.

Growth in the sector is driven by increased demand for capital raising, debt syndication, and cross-border transactions, with a notable rise in corporate financing needs across various industries. The demand for specialized financial advisory and tailored financing solutions has continued to strengthen, and the sector is also witnessing increased technological integration. The use of AI and machine learning for enhanced risk management and operational efficiency is reshaping the way financial services are delivered.

Looking forward to FY 2025-26, the outlook for the investment and merchant banking sectors remains positive, with projections indicating a market size of Rs.25,000 crore by 2028. The sector is expected to continue growing, fueled by sustained demand for corporate financing, increasing deal activity, and favourable market conditions. The ongoing evolution of regulatory frameworks and market innovations will further support this growth trajectory.

One of the businesses of the Company, Investment Banking remains a prime focus of the Company. The business segment has contributed Rs. 1053.91 lacs, for the year under review in comparison with Rs. 532.06 lacs in the Financial Year 2023-24.

RISK MANAGEMENT

The Company has instituted a robust and evolving risk management framework designed to identify, assess, monitor, and mitigate both internal and external risks that could impact its strategic objectives and operational performance. This framework is embedded into the decision-making and governance structure, enabling the Company to safeguard stakeholder interests and deliver long-term value.

The risk management strategy covers a wide spectrum of risks—strategic, financial, operational, compliance-related, and reputational—and is tailored to the size, scale, and nature of the Companys activities. All significant risks are periodically reviewed through a structured reporting mechanism, with quarterly updates presented to the Audit Committee and the Board of Directors.

While the Company is not currently mandated to constitute a Risk Management Committee under Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the internal systems in place are comprehensive and commensurate with regulatory expectations and business complexity. The governance framework ensures proactive identification and timely mitigation of risks across functions.

In todays dynamic and highly regulated financial landscape—characterized by increasing global integration, rapid digital evolution, and emerging macroeconomic uncertainties—risk management remains a critical pillar of business resilience. The Companys approach has consistently demonstrated resilience across economic and credit cycles, incorporating learnings from evolving market and regulatory scenarios.

Backed by a strong governance ethos, sound capital and liquidity management practices, and a pan-India operational presence, the Company is well-positioned to pursue sustainable growth across all verticals while maintaining a prudent risk posture.

RISKS AND CONCERNS

The Company is subject to following broad risks -

• Operational Risk

The Companys operations are inherently reliant on the effectiveness of its people, processes, and internal systems. Any inadequacy or failure in these areas could potentially have a material adverse impact on its business performance and financial position.

To mitigate such risks, the Company has implemented a robust internal control framework and conducts regular audits and process reviews to ensure operational efficiency and compliance. Its key management personnel and operational teams comprise experienced professionals with a high degree of expertise and commitment, ensuring sound execution and oversight of business activities. This proactive approach significantly reduces the likelihood of disruptions arising from operational lapses or process inefficiencies.

• Market Risk

Market risk arises from fluctuations in the value of financial instruments driven by volatility in variables such as equity prices, interest rates, currency exchange rates, credit spreads, and other asset prices. As a financial services intermediary, the Company is inherently exposed to these risks, particularly in relation to its proprietary trading and investment activities.

To manage and mitigate such exposures, the Company continuously monitors its investment portfolio, market positions, and risk thresholds. It employs prudent risk management practices, including the strategic use of derivatives and other hedging instruments, to safeguard against adverse market movements and ensure portfolio stability.

• Liquidity Risk

Liquidity risk refers to the potential impact of adverse market conditions on the Companys ability to meet its short-term financial obligations, liquidate assets without significant loss, or access funding at reasonable costs. A severe market-wide liquidity crunch or disruption could also affect counterparties and clients, thereby indirectly impairing the Companys own cash flows and financial commitments.

To mitigate such risks, the Company maintains a prudent liquidity management strategy, including holding a portion of its capital in high-quality liquid assets to cushion against unforeseen short-term pressures. The business is well-capitalized and adopts a forward-looking approach to liquidity planning, focusing on building financial buffers and maintaining flexibility to navigate economic cycles. This disciplined approach enables the Company to sustain long-term stability despite temporary market volatilities.

• Regulatory and Compliance Risk

The Company operates in a highly regulated environment, and any changes in laws, rules, or regulatory interpretations affecting its business segments may have a material impact. Regulatory risk may also arise from non-compliance, delayed implementation of regulatory requirements, or differing interpretations between the Company and regulatory authorities.

To mitigate such risks, the Company has established a robust compliance framework supported by dedicated teams of professionals who ensure adherence to all applicable legal and regulatory obligations. Regular internal audits are conducted to assess compliance with statutory requirements and internal policies. Where necessary, the Company seeks expert external legal and professional advice to ensure full alignment with the evolving regulatory landscape and to proactively address any potential areas of concern.

• Reputation Risk

Reputation is a critical asset for the Company, directly influencing stakeholder trust, client retention, and long-term business sustainability. While a strong reputation is built through consistent delivery of high-quality services, integrity, and client-centricity, it remains vulnerable to a wide range of external and internal factors that can cause significant and sometimes irreversible damage.

The Company places the highest importance on preserving its reputation, which has been earned through decades of trusted advisory and financial services. It fosters a culture of accountability and excellence across all levels of its operations. A dedicated and professionally committed workforce upholds the Companys core values, ensuring that all interactions reflect ethical standards, client trust, and stakeholder confidence.

INTERNAL CONTROL SYSTEMS

The Company has instituted an internal control framework that is commensurate with the scale and complexity of its operations. This system is structured to ensure strict compliance with applicable laws and regulations governing its business activities. The internal financial controls relating to the preparation of financial statements are assessed to be adequate and effective. These controls are designed to safeguard the Companys assets, ensure the accuracy and integrity of its accounting records, prevent and detect frauds

and errors, and facilitate the timely preparation of reliable financial information.

There has been no material developments in the area of Human Resources.

The Company had 49 permanent employees during the year under review

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR:

Ratios	31-03-2025	31-03-2024	Variance	Remarks
Debtor Turnover	0.03	0.02	50%	Majorly due to high increase in turnover in comaprison to low increase in overall debtors
Inventory Turnover	0.14	0.15	(6.66%)	Majorly due to increase in Turnover
Operating Profit Ratio%	0.09	0.10	(10.00%)	Majorly due to slight reduction in operational profit
Net Profit Ratio%	0.06	0.08	(25.00%)	Majorly due to slight reduction in operational profit
Debts Equity Ratio %	0	0	0	No Interest during the year
Interest Coverage Ratio %	0	0	0	No Interest liability
Current Ratio %	50.75	79.00	(35.75%)	Due to increase in current liabilities
Return on Networth %	11.14	14.48	(23.06%)	Majorly due to slight downfall in profit

Cautionary Statement

This Management Discussion and Analysis provides the details of the Company objectives. Statements detailed here are not exhaustive but are for information purposes only. The actual performance of the Company in future may vary substantially from those outlined herein. Some of the statements written herein are forward looking and should not be construed as a guarantee of performance. The readers must exercise their due diligence before forming any opinion based on this statement.