Twenty First Century Management Services Ltd Management Discussions

ECONOMIC OUTLOOK SURVEY 2025 -HIGHLIGHTS

• GDP growth for 2024-25 projected at 6.4 percent

• CPI based inflation rate for 2024-25 projected at 4.8 percent

• FICCIs latest Economic Outlook Survey puts forth an annual median GDP growth forecast for 2024-25 at 6.4 percent.

• The median growth forecast for agriculture and allied activities has been put at 3.6 percent for 2024-25; while industry and services sector are anticipated to grow by 6.3 percent and 7.3 percent, respectively.

• The first half of 2024-25 recorded a modest growth of about 6.0 percent, and for the second half, survey estimates indicate a median GDP growth of 6.8 percent for Q3 and Q4. Economic activity is expected to witness an uptick in the second half supported by a revival in public capital expenditure, festive demand and normalization in industrial activity post monsoon.

• CPI based inflation has a median forecast of 4.8 percent for 2024-25, with a minimum and maximum range of 4.5 percent and 4.8 percent, respectively.

• The participating economists anticipate the repo rate at 6.25 percent by the end of the fiscal year 2024-25.

• Based on the responses of the participating economists, the median forecast for exports has been put at USD 450.5 billion and for imports at USD 729.6 billion in 2024-25.

Views of Economists Outlook 2025

Global Economy

The participating economists observed global economic prospects for 2025 to present a reasonable growth trajectory, with an underlying note of caution. Softening price levels and ensuing monetary policy easing in some of the major economies, positive momentum in interest sensitive sectors, and continued recovery in service sector are expected to bode well for the growth prospects this year. According to OECDs latest assessment on economic outlook, global growth is forecasted at 3.3 percent in 2025, marking a marginal increase vis-a-vis the 3.2 percent growth estimate of 2024. The growth is expected to remain below the pre-pandemic average (2013-2019) of about 3.4 percent. Also, variation in growth trajectories across countries remains. Furthermore, according to the survey participants the advancements in technology, particularly in semiconductors, electronics, and artificial intelligence, alongside increased attention towards green energy transitions, are expected to catalyze investments. Nonetheless, downside risks continue to cloud the global economic landscape. Rising geopolitical tensions and trade policy uncertainty pose as challenges, with the potential to fragment global trade and restrain growth. The impact of change in political leadership in the United States is yet to be seen. Going ahead, a prolonged tariff war could exacerbate economic and trade related issues. Also, though inflation has softened across advanced and emerging market economies, however, the progress continues to vary across countries. The conflict in the Middle East remains escalated and could impact energy markets. Additionally, elevated public debt levels are a challenge and could pose a threat to fiscal sustainability.

Indian Economy Indias economic outlook for 2025 reflects cautious optimism, amidst the backdrop of persisting external headwinds. On the positive side, participating economists expect consumer spending to gain momentum, driven by an improved outlook for the agriculture sector, which is likely to bolster rural consumption and sentiment in the first half of the next fiscal year. Food inflation - which has remained elevated for over a year and strained household budgets, particularly for low- and middle-income urban families - is expected to ease. As inflationary pressures recede, participating economists expect urban consumption, especially for low ticket and discretionary items, to witness a recovery.

On investment front, the governments focus on capital expenditure is expected to remain a key growth driver in the year 2025-26. Investments in infrastructure and allied sectors—such as roads, housing, logistics, and railways—are anticipated to further economic momentum. Additionally, the services sector, particularly hospitality, real estate, health, and education, is expected to contribute to creation of fresh capacity. Nonetheless, downside risks remain on the horizon. Participating economists expect the private capital expenditure cycle to stay subdued, with a cautious outlook limiting large-scale capacity additions. Factors such as geopolitical uncertainties, uneven domestic demand, over supply from China have kept investors on the edge. However, with deleveraged corporate balance sheets, capacity utilization rates holding up, and uptick in demand - the momentum in private investments could build. Merchandise exports are projected to face persistent challenges, constrained by weak global demand, potential tariff wars, and ongoing geopolitical tensions. While services exports are expected to perform better than merchandise exports, uncertainties stemming from US trade policies and financial market volatility could pose additional risks. Trump 2.0: Challenges and Opportunities for India The participating economists indicated possibility of shortterm disruptions through channels like exports, foreign capital flows, and input costs for the US trading partners including India. The likelihood of tax cuts (personal and business) could increase the US fiscal deficit, while higher tariffs and stricter immigration norms could push up labour costs and inflation. The Federal Reserve, in response, could cut the policy rates by less than what was anticipated. This may reduce capital inflows into emerging markets, including India, causing Rupee fluctuations. Trade tensions, including a potential US-China trade conflict, could disrupt supply chains and raise input costs in the short term. However, economists expect US to take a calibrated approach towards India. Nonetheless, India is poised to benefit from global supply chain diversification away from China. Its strategic position as a manufacturing hub could attract foreign direct investment in sectors like semiconductors, electronics, and automotive components. Targeted industrial policies and sector-specific strategies will remain critical to seizing these opportunities. The energy sector holds promise, with the revitalized US-India Strategic Clean Energy Partnership (SCEP) emphasizing renewable energy, energy efficiency, and sustainable fuels. India could also benefit from lower global oil prices as US production increases. Strengthened collaboration in civil nuclear energy will further enhance ties. To address risks and unlock opportunities, economists recommended that India should evaluate reducing tariffs on select and specific US imports while ensuring revenue stability and minimal domestic impact. Diversifying export markets and leveraging ongoing trade negotiations will be critical to enhancing trade resilience. Also, development of high-quality industrial clusters with robust backward and forward linkages is essential for India to integrate into diversifying global supply chains. Complementing this effort, infrastructure upgrades and sector-specific policies can attract greater foreign direct investment (FDI). Expanding trade and investment partnerships across agriculture, defence, energy, healthcare, and emerging technologies will foster mutual growth. Deepening collaborations in areas like artificial intelligence, clean energy, and cybersecurity will further strengthen economic and strategic ties between India and the U.S. Expectations from the Forthcoming Union Budget 2025-26 The Union Budget for

2025-26, set to be presented on 1st February 2025, arrives amidst global economic uncertainties and moderating domestic growth. Against this backdrop, participating economists shared their expectations. Boosting Private Consumption: Reviving private consumption emerged as a key priority. A review of the current tax structure including rates (both direct and indirect taxes) in the Union Budget 2025-26 is called for with a view to enhance disposable income and stimulate consumer spending. Additionally, continued investments in welfare programs such as MGNREGA, PMGSY, and PMAY were recommended.

Enhancing Capital Expenditure:

The governments capital expenditure (capex) has steadily increased as a percentage of GDP, rising from 1.6 percent in FY19 to 3.4 percent in FY25 (Budget Estimates). Economists expect continued capex expansion, given its strong multiplier effects. An increase between 10-15 percent in capex over 2024-25 is being looked at in the upcoming budget. Strengthening Agriculture and Rural Economy: Economists recommended initiatives to increase productivity, improve rural infrastructure, and strengthen agricultural value chains. Investments in cold storage facilities and supply chain efficiency were underscored as critical to managing inflationary pressures and minimizing food wastage. The government should consider launching an agri yields mission in the bottom 100 districts of the country - on lines of the aspirational district program. Also, climate proofing agriculture remains pertinent. Setting up of a Centre of Excellence for developing and evaluation of climate smart agriculture technologies could be considered in the forthcoming Budget.

Revitalizing Manufacturing and MSMEs:

The participating economists emphasized on continuing the focus on manufacturing sector. With regard to improving ease and cost of doing business, the reforms pertaining to land, labour and financial sector are imperative. While many of these reforms fall in the state and concurrent domains, a resolute and actionable plan needs to be worked out. Moreover, policy certainty and timely impact assessment of regulations remains crucial. Focus on Sustainable Finance and Green Initiatives: Sustainable finance and green initiatives were expected to remain prominent in the budget. Launch of a vision document for circular economy, a review of the priority sector lending framework to bring within its purview climate adaptation and climate risk mitigation activities, development of carbon capture, utilization, and storage technologies in mission mode - should be looked at in the Budget 2025-26.

Supporting Exports:

Amidst external headwinds, Indias exports prospects have come under the lens. Extending support to exporters by continuing the interest equalisation scheme could be timely. Also, expansion in marketing support allocations was called for.

Indian Equity Market:

Capital Market outlook for 2025

Economists predict that India equity strategies in 2025 will be influenced by a range of domestic and international factors. On the one hand, there is growing evidence that the Indian economy has bottomed out; but on the other hand, the global economic environment is set to be less supportive than in 2024.

Our experts expect that strong domestic flows will likely continue to support the market, making up for any outflows from international investors. They also think that there is a low likelihood that valuation multiples will rerate in 2025.

“In a world of increasing tariffs, Indias relatively inward-focused economy is better positioned compared to more trade-dependent nations,” said Kunal Vora, Head of India Equity Research, BNP Paribas.

How does the local economy support India equities?

In the three years following the Covid-19 pandemic, the Indian economic enjoyed a prolonged recovery, driven by a combination of government capital expenditure, tax growth and healthy exports, according to experts.

In 2024, however, low money supply, declining credit growth and elevated household debt resulted in weak consumption, slow collection of general sales tax (GST), and subdued global demand which led to weak exports. Taken together, these factors weighed on corporate earnings.

But there were also signs of the Indian economy bottoming out in the third quarter of 2024. Credit growth, industrial production, steel production, auto sales and GST collections have picked up in recent months. Furthermore, the government expects capex spending to recover in 2025.

All of this points to an improvement in headline growth, with the National Statistics Office estimating that GDP will grow by 6.4% in the financial year 2025. This implies 6.7% growth in the second half of financial year, compared to 6% in the first half.

International and domestic trade flows

The Indian stock market remains resilient, due to strong domestic demand, while external events keep foreign flows into India subdued, with a recent preference for assets denominated in USD.

Economists believe that President Trump will implement most of the foreign, economic, and trade policies that he promised during his campaign. Tariffs are a key focus, and they are likely to boost prices in the US and dampen the economic environment, while the Fed is expected to maintain a hawkish stance, which is broadly negative for emerging markets, according to our experts.

The appetite for buying high valuation emerging markets, like India, should remain low unless there are signs of a strong recovery in economic growth.

However, the Indian stock market is less reliant on external capital than in the past, as domestic demand for stocks has grown rapidly in recent years, countering both foreign selling and increased supply in primary markets.

The banks experts see domestic institutions growing in importance, with systematic investment plans accounting for 60% of the flows from local institutions. Retail participation is also rising, driven by strong performance of small- and mid-cap stocks, increasing awareness of mutual funds, the ease of opening of digital trading accounts and attractive after-tax returns of equities over other asset classes.

Opportunities amid high valuations for India equities

From a valuation perspective, India trades at a higher level than other markets. Although Indian stocks have corrected slightly from the peak valuation, they still have a premium to most global markets, with the US being a notable exception.

Companies that are focused on the domestic economy are trading at a significant premium to their counterparts in other countries, and this is also true for sectors where the earnings growth outlook has deteriorated: the Indian MSCI Consumer Index in January traded at a price to earnings ratio of 44 times (on a next 12-month basis), compared to 15 times in China and 20 times in the US.

Earnings have provided strong support to the Indian market in recent years, as profits rose sharply from a low base in the period following the Covid-19 pandemic. With the post-pandemic uptick now over, our experts expect earnings growth to likely be moderate over the coming years.

High valuations for Indian stocks, with clouds ahead

In short, experts expect 2025 to be a year where the Indian stock market will continue to be supported by domestic flows, as well as a stable local macro-economic and policy environment. And from a valuation perspective, although the market is expensive, there is a low likelihood that multiples will rerate over the year.

Opportunities and Threats

Opportunities

• Long-term economic outlook positive, will lead to opportunity for Investment activities

• Regulatory reforms would aid greater participation by all class of investors

• Corporates looking at consolidation / acquisitions / restructuring opens out opportunities for good investment

Threats

• Execution risk

• Short term economic slowdown impacting investor sentiments and business activities

• Slowdown in global liquidity flows

• Increased intensity of competition from local and global players

• Market trends making other assets relatively attractive as investment avenues Strengths

• Experienced top management

With over three decades of experience of the Chairman of the company in Capital Market Operations and good business acumen of picking up the right stocks for investment and trading the business of the company could improve during the current financial year 2025-26.

The top management team comprises qualified and experienced professionals, with a successful track record. The company believes that its managements entrepreneurial spirit, strong technical expertise, leadership skills, insight into the market and customer needs provide it with a competitive strength, which will help to implement its business strategies.

BUSINESS RISK MANAGEMENT

The company is functioning under the dynamic leadership and guidance of the experienced CEO and hence the risks connected with the investments in equity market will be balanced. Further the Investment Committee will also assist to manage the risk in a prudent manner.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets.

All the transactions are properly authorized, recorded and reported to the Management. The

Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements.

All the investments related activities are done under the direct supervision of the Chairman of our company. Based on the nature of the business the Audit Committee has suggested formation of Investment Committee and the investments of the company are done as per the decisions taken by the Investment Committee. This will augur well for this financial year also.

Considering the size and nature of business the company has appointed an Internal Auditor for the company from the financial year 2016-17 to ensure proper and adequate systems and procedures commensurate with its size and nature of its business. Internal Auditors continue to monitor the operations and administration of the company.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

In order to ensure that the activities of the Company and its employees are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behaviour, the company continues to pursue a vigil mechanism policy framed during the financial year 2016-17.

REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

DIRECTORS AND COMMITTEE MEETINGS

During the year Seven (7) Board Meetings, Five (5) Audit Committee Meetings, Four (4) Stakeholders Relationship and Investor Grievances Committee Meetings, One Meeting of Corporate Social Relationship Committee, Two (2) Meetings of Nomination and Remuneration Committee, One Meeting of Directors other than Independent Directors for evaluation of performance of Independent Directors and One Meeting of Independent Directors for evaluation of performance of other Directors were held. The Details of which are given in Corporate Governance Report. The provisions of Companies Act, 2013 and listing agreement were adhered to while considering the time gap between two meetings.

AUDIT COMMITTEE

The company is having an audit committee comprising of the following directors:

Shri B.K.Rai - Chairman of the Committee - Non Executive & Independent Director Ms. Dipti Dinesh Sakpal - Member - Non Executive & Independent Director Mrs. Raghavan Suguna - Member - Non Executive & Independent Director Stakeholders/Investors Grievance and Share Transfer Committee

The company is having a Stakeholders/Investors Grievance and Share Transfer Committee comprising of the following directors:

Ms. Dipti Dinesh Sakpal -Chairperson of the Committee - Non Executive & Independent Director

Shri B.K.Rai - Member - Non Executive & Independent Director

Mrs. Raghavan Suguna - Member - Non Executive & Independent Director

NOMINATION AND REMUNERATION COMMITTEE

The company is having a Nomination and Remuneration Committee comprising of the following directors:

Ms. Dipti Dinesh Sakpal - Chairperson of the Committee - Non Executive & Independent Director Shri B.K.Rai - Member - Non Executive & Independent Director Mrs. Raghavan Suguna - Member - Non Executive & Independent Director CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE

The company is having a Corporate Social Responsibility Committee comprising of the following directors:

Shri Sundar Iyer- Chairman of the Committee - Executive Director

Shri B.K.Rai - Member - Non Executive & Independent Director

Ms. Dipti Dinesh Sakpal - Member - Non Executive & Independent Director

RELATED PARTY TRANSACTIONS

As per the requirements of the Companies Act, 2013 and SEBI (LODR) Regulation 2015, your Company has formulated a Policy on Related Party Transactions which is also available on Companys website at

The Policy intends to ensure that proper reporting; approval and disclosure processes are in place for all transactions between the Company and Related Parties. This Policy specifically deals with the review and approval of Material Related Party Transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions.

All Related Party Transactions are placed before the Audit Committee as well as Board for review and approval. Prior omnibus approval is obtained for Related Party Transactions on a quarterly basis for transactions which are of repetitive nature and/ or entered in the Ordinary Course of Business and are at Arms Length.

There were no contract / arrangement / transactions entered in to during the year ended March 31, 2025 which were not at arms length basis.

All the material related party transitions exceeding ten percent of the annual consolidated turnover as per the last audited financial statement were entered during the year by the company are disclosed in accordance with section 134 (3) (h) of the Companies Act, 2013, in form AOC 2 as per Annexure “2” of this report.

CORPORATE GOVERNANCE

As per the provisions of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from the Companys Secretarial Auditor (which is given below) confirming compliance forms an integral part of this Report.

PRACTICING COMPANY SECRETARYS CERTIFICATE ON CORPORATE GOVERNANCE

A certificate obtained from the Practicing Company Secretary of the company on the Compliance of Corporate Governance is enclosed as Annexure IV.