IL&FS Investment Managers Ltd Management Discussions

1 INDUSTRY STRUCTURE AND BUSINESS ENVIRONMENT (1) Global Economy Global economic momentum moderated in early 2026 after a period of steady growth in the previous year. Growth has been supported by continued technology investment, relatively accommodative financial conditions, and policy support across major economies. However, geopolitical tensions in the Middle East, persistent inflationary pressures, and volatility in energy and commodity markets have introduced uncertainty into the global outlook. Supply chain disruptions are expected to gradually ease during 2026; however, global growth is projected to moderate to around 3.1% in 2026 before improving marginally to 3.2% in 2027. Inflation is expected to remain elevated in the near term at approximately 4.4% in 2026 before moderating thereafter. Overall, the global outlook remains cautiously balanced but tilted to the downside, with risks arising from prolonged geopolitical tensions, tightening financial conditions, and commodity price volatility. (2) Indian Economy India continues to remain one of the fastest-growing major economies globally, supported by strong domestic demand, macroeconomic stability, and sustained government capital expenditure. The Reserve Bank of India has projected GDP growth of around 6.9% for FY2026- 27, reflecting continued resilience despite global headwinds. Inflation has remained broadly within the RBIs tolerance band, although food and energy price volatility has exerted intermittent upward pressure. The monetary policy stance has remained neutral and data- driven, with repo rates maintained at 5.25% , reflecting a balance between supporting growth and controlling inflationary risks. Structural reforms, infrastructure investments, and strong services sector performance continue to support Indias medium- term growth trajectory. (3) Private Equity/ Fund Management Industry The Indian private equity and venture capital industry witnessed moderation in deal values in 2025, with total investments declining approximately 17% to about USD 36 billion. The decline was primarily driven by reduced large- cap transactions, while venture capital and growth- stage investments remained relatively resilient. Investors have increasingly shifted toward selective, smaller, and value- driven investments, focusing on operational efficiency, governance improvements, and long- term value creation rather than leverage- led returns. Despite global uncertainty and liquidity constraints, India continues to attract sustained investor interest due to its structural growth story, particularly in sectors such as consumer, manufacturing, technology, and infrastructure. The outlook for the industry remains cautiously positive, though investment activity is expected to remain disciplined in the near term. (II) REVIEW OF OPERATIONS Global economic growth moderated in early 2026 following a period of relatively stable expansion in the preceding year. Economic activity has been supported by continued investment in technology, accommodative financial conditions, and policy support across major economies. However, geopolitical tensions in the Middle East have led to renewed uncertainty, resulting in volatility in commodity markets, inflationary pressures, and relatively tighter financial conditions. While recent developments indicate signs of gradual stabilisation, the global outlook continues to remain sensitive to geopolitical and macroeconomic developments. Against this backdrop, the Indian economy has demonstrated resilience, supported by strong domestic demand, sustained public capital expenditure, and ongoing structural reforms. While external risks arising from global volatility, commodity price movements, and capital flow fluctuations persist, Indias stable macroeconomic fundamentals and policy support continue to support growth, reinforcing its position as a structurally attractive long- term investment destination. The investment environment is expected to remain cautiously optimistic. Stable domestic economic conditions, along with increasing interest in technology- led and AI- enabled opportunities, are expected to support investment activity. However, global uncertainty and tighter liquidity conditions may continue to result in a selective and disciplined approach toward capital deployment. At the same time, prevailing market conditions may create opportunities for divestments and value realisation, thereby supporting fund managers in achieving exits at appropriate valuations and maximising investor returns from the remaining portfolio assets under management. The Company operates in a single business segment, namely fund management and related advisory services, and is currently operating in a stabilisation and maintenance phase in view of the ongoing resolution process of its parent group. As in the past, the Fund management team continued to focus on undertaking portfolio divestments, thereby enabling return of capital to Fund investors. The teams also actively pursued resolution of underlying litigations, thereby paving the way for further monetisation and exit opportunities across portfolio investments.

The developments at Infrastructure Leasing & Financial Services Limited (IL&FS") and its group entities have had an adverse impact on the Company, including its business outlook and brand perception. These developments have significantly affected long- term revenue growth prospects and strategic continuity. The newly constituted IL&FS Board has re- initiated the process for divestment of its holding in IIML, and the process is currently underway.

On the debt platform, IML, through its subsidiary, continues to manage the Infrastructure Debt Fund (IDF), comprising five closed- ended schemes, which are in various stages of maturity and resolution, with a continued focus on orderly wind- down, value preservation, and maximisation of investor recoveries.

IMLs joint venture with the Government of Andhra Pradesh continues to secure mandates and is actively engaged in the execution of multiple infrastructure projects across the State.

(III) ACTIVE FUNDS UNDER MANAGEMENT

The Company manages the following active funds, with brief status updates provided below:

(1) IFIN Realty Trust (IRT):

(a) IIML is the Fund Manager and also an investor in this Fund.
(b) Fund life has been extended up to March 31, 2027.
(c) The Fund currently has 11 outstanding investments with an aggregate NAV of approximately 3.7 crore.
(d) During FY2026, IRT along with its offshore fund generated exits aggregating to approximately 170 crore (IFIN share: 3%).
(e) The Fund distributed approximately 3.75 crore to investors, comprising IFIN (92%) and IIML (8%) from the above exits.
(f) The Fund Manager continues to actively pursue exit of remaining investments through litigation and/or negotiated settlement mechanisms.

(2) IL&FS Realty Fund:

(a) IIML is the Fund Manager and also an investor in this Fund.
(b) Extension of Fund life up to March 31, 2027 has been sought; currently 3 investors representing 43.5% voting rights have provided consent, against the required threshold of 66.67%.
(c) The Fund has 2 outstanding investments with an aggregate NAV of approximately 12.5 crore.
(d) During FY2026, the Fund distributed approximately 15.8 crore to investors; IIML share in the distribution was approximately 3.23%.
(e) The remaining investments are under advanced stages of litigation, and the Fund is currently awaiting judicial outcomes to progress toward final exit.

(3) Tara Ill Funds:

(a) IIML is the Fund Manager for this Fund structure.
(b) The Tara Ill umbrella comprises three funds, and the fund life expired on March 31, 2026, with no further extension proposed.
(c) The two India-based funds, namely Tara India Fund Ill Trust and Tara India Fund Ill Domestic Trust, have been fully divested.
(d) The offshore Fund, namely Tara India Fund Ill LLC, is awaiting receipt of the final tranche of approximately 1.8 crore, expected in June 2026, for completion of full divestment

(IV) FINANCIAL PERFORMANCE REVIEW

On a standalone basis, the Total Income of the Company for FY 2025- 26 is Rs. 552876 lakhs. The Total Expenses on a standalone basis is Rs. 73746 lakhs. The resultant Profit Before Tax and Exceptional Items on a standalone basis for FY 2025- 26 is Rs. 4791.30 lakhs.

On a consolidated basis, the Total Income of the Company for FY 2025- 26 is Rs. 6553.18 lakhs. The Total Expenses on a consolidated basis is Rs. 5662.86 lakhs. The resultant Profit Before Tax and Exceptional Items on a consolidated basis for FY 2025- 26 is Rs. 900.10 lakhs.

(V) OUTLOOK

The outlook for the Company is closely linked to the ongoing resolution process of its parent group and the monetisation of existing assets.

The IL&FS resolution process continues to progress under the newly constituted Board, which is undertaking asset monetisation and value realisation initiatives. The proposed divestment of the holding in IIML is also underway.

In the near term, the Company is expected to continue operating in a maintenance and value preservation mode, focusing on:

(a) Realisation of investments(b) Protection and maximisation of stakeholder valueThe timing and outcome of divestment and resolution processes remain dependent on external factors and regulatory developments.

(VI) OPPORTUNITIES AND THREATS

(1) Opportunities:

(a) Continued investor interest in Indias long-term growth story(b) Value unlocking through structured asset monetisation(c) Opportunities arising from resolution-driven investment exits(d) Stable domestic macroeconomic environment supporting investor confidence

(2) Threats:

(a) Prolonged global geopolitical instability affecting capital flows(b) Volatility in financial markets impacting valuation and exits(c) Legal and regulatory uncertainties in ongoing resolution processes(d) Dependency on key personnel in a lean operating structure(e) Execution risk in asset monetisation and divestment processes

(VII) BUSINESS SEGMENT AND HUMAN RESOURCES

The Company presently operates in one business segment - fund management and related services

The adverse developments at IL&FS have had an adverse impact on employee morale and the Company has witnessed significant number of employee departures along with the Key Managerial Personnel of IIML. Thus, there is now change in the top executive team of IIML. IIML is in the fiduciary business of managing third party money and therefore human capital is key to monitoring and continuing the business model and further its sustainability

The Company presently has 13 employees

(VIII) INTERNAL CONTROL SYSTEMS

The Company has an adequate system of internal controls to ensure accuracy of accounting records, compliance with all laws and regulations and compliance with all rules, processes and guidelines prescribed by the Management

An extensive internal audit is carried out by an independent firm of Chartered Accountants. Post audit reviews are also carried out to ensure follow up on the observations made. The scope of the internal audit is determined by the Audit Committee and the internal audit reports are reviewed by the Audit Committee on a regular basis. The suggestions and recommendations by the Internal Auditors are implemented in a time bound manner to ensure that the internal controls and systems are adequate

The Internal Auditors also review all Related Party Transactions of the Company and provide the necessary reports to the Audit Committee on a periodic basis

(IX) RISKS AND CONCERNS

Given the Company is currently operating in maintenance mode pursuant to the resolution process of its parent group, it is not undertaking any new business activities. Accordingly, the risk profile remains largely unchanged from prior periods and primarily includes compliance, legal, and employee continuity risks. The Company continues to monitor applicable regulatory developments and maintains a framework to mitigate operational and fiduciary risks in line with its limited ongoing operations.

(X) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established adequate internal control systems commensurate with its size and nature of operations.

Key features include:

(a) Independent internal audit conducted by external Chartered Accountants(b) Regular review of internal audit reports by the Audit Committee(c) Follow-up mechanism for implementation of audit recommendations

(d) Review of related party transactions as part of internal audit scope(e) Controls ensuring accuracy of financial reporting and statutory complianceThe internal financial control framework is considered adequate and operating effectively.

(XI) SIGNIFICANT CHANGES

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, is as follows:

	March 31, 2026 (Rs. in lakhs)	March 31, 2025 (Rs. in lakhs)	Explanation
(i) Debtors Turnover
Trade Receivables	0	0	Trade receivables are NIL
Turnover	5,528.76	904.78
Ratio	N.A.	N.A.
(ii) Inventory Turnover	N.A.	N.A.
(iii) Interest Coverage Ratio	N.A.	N.A.
(iv) Current Ratio
Current Asset	7,170.82	4,628.88
Current Liability	248.02	271.99
Ratio	28.91	17.02	The current ratio has increased due to increase in Mutual Funds investments during the year
(v) Debt Equity Ratio	N.A.	N.A.
(vi) Operating Profit Margin (%)
PBT	4,791.30	(156.37)
Turnover	5,528.76	904.78
Ratio	86.66%	(17.28%)	Operating Margin has increased as there is a dividend income during the year from Subsidiary Companies
(vii) Net Profit Margin (%)
PAT	4,791.30	(217.71)
Turnover	5,528.76	904.78
Ratio	86.66%	(24.06%)	Net Profit Margin in the previous year has increased as there is a dividend income from Subsidiary Companies during the year
(viii) Return on Net Worth (%)
Net worth	11,417.50	9,055.15	There is increase in ratio as Net profit in current year is increased
PAT	4,791.30	(217.71)
Ratio	41.96%	(2.40%)

(XII) CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, or predictions may be forward- looking statements within the meaning of applicable securities laws and regulations.

Actual results could differ materially from those expressed or implied due to various factors including:

(a) Changes in economic conditions(b) Regulatory or legal developments(c) Market and financial volatility(d) Outcomes of ongoing resolution processesThe Company undertakes no obligation to publicly update any forward-looking statements.