IL&FS Investment Managers Ltd Management Discussions

(I) Business Overview

1. Global Economy

The global economy experienced moderate growth during FY 2024?€“25, with world GDP expanding by approximately 3% in calendar year 2024, slightly below historical averages. This growth occurred amid persistent inflationary pressures and tight financial conditions. Inflation, which had surged to multi-decade highs in 2022, began to ease appreciably through 2024 as supply-chain disruptions abated and commodity prices softened.

Central banks in major economies maintained restrictive monetary policy to combat inflation, though the pace of interest rate hikes slowed as disinflation trends emerged. The international economic landscape was further complicated by escalating trade tensions. In early 2025, the United States implemented a series of substantial tariffs under Trumps administration, Global inflation is projected to gradually decline toward target levels over the coming year, allowing policymakers to cautiously contemplate a shift from monetary tightening. However, geopolitical tensions particularly the ongoing Russia?€“Ukraine war and escalating trade protectionism, including new U.S. tariffs and Chinas retaliatory measures, disrupted supply chains and dampened investor confidence.

Looking ahead, growth is expected to stay modest, with risks from policy uncertainty and trade fragmentation persisting

2. Indian Economy

Indias economy showcased notable resilience throughout FY 2024?€“25, maintaining a strong growth trajectory amidst global uncertainties. Real GDP growth for the year is estimated at around 6?€“6.5%, positioning India among the fastest-growing major economies. This robust performance was driven by steady domestic demand, rising public and private investments, and prudent macroeconomic management. Key sectors such as construction and financial services experienced significant growth, contributing to the overall economic momentum. Even as global conditions remained volatile, Indias economic fundamentals ?€“ from healthy corporate balance sheets to improving capacity utilization continued to inspire confidence. Official forecasts for the upcoming fiscal year peg GDP growth at ~6.5%, reflecting a slight downward revision due to global uncertainties but still a leading pace globally

Inflationary pressures eased considerably over the year. The Consumer Price Index (CPI)inflationdeclined to

3.3% in March 2025, marking the lowest level since August 2019. This moderation was largely attributed to a significant drop in food prices and stable global oil costs. Core inflation broad-based disinflation. In response, the Reserve Bank of India (RBI) adopted a more accommodative monetary policy stance, reducing the benchmark repo rate by 25 basis points in both February and April 2025, bringing it down to 6.00%. The RBI projects CPI inflation to align supportive stance for growth as long as price stability persists

Indias external sector remained robust during the fiscal year. While due to softening global demand, resilient services exports, particularly in IT and business services, along with strong remittance inflows, helped maintain a sustainable current account deficit under 2% of GDP. Foreign continued steadily, reflecting global investor confidence in Indias medium- direct investment (FDI) inflows term prospects. While gross FDI was strong, net FDI moderated slightly due to higher profit repatriation and outbound investments by Indian companies. As of early April 2025, Indias foreign exchange reserves rose to approximately USD 676.3 billion, providing an import cover of about 11 months and reinforcing the countrys capacity to withstand external shocks In April 2025, the United States implemented a 26% tariff on certain Indian goods under Executive Order 14257, aiming to address trade imbalances. This move prompted immediate diplomatic engagement from India, seeking full exemption from these tariffs. A temporary 90-day suspension of the tariffs was announced on April 9, 2025, providing a window for negotiations. Indian Commerce and Industry Minister

Piyush Goyal is currently leading discussions in theU.S.,withthefirstphase of a bilateral trade deal expected to be finalized before July 2025. The agreement aims to strengthen trade relations and secure favorable terms for

Indian exporters

3. Private Equity

In 2024, Indias private equity and venture capital (PE-VC)landscapeexperienced significantresurgence, with total investments reaching approximately USD 43 billion across nearly 1,600 deals, marking a 9% year-over-year increase. This growth was primarily driven by a 40% surge in venture capital and growth equity investments, totaling around USD 14 billion, while traditional private equity investments remained steady at USD 29 billion Buyout transactions gained prominence, accounting for 51% of the total deal value, as funds increasingly pursued control stakes in high-quality assets. Real estate and infrastructure sectors attracted approximately 16% of PE-VC capital, alongside sustained interest in technology investments. The domestic fundraising environment reached new heights, with Kedaara Capital closing its fourth fund at approximately USD 1.7 billion in 2024, and ChrysCapital raising a record USD 2.1 billion in early 2025 - the largest India-focused fund to date. Exit activity also strengthened, with realized exits totaling USD 33 billion, a 16% increase year-over-year. Public-market routes, including initial public offerings and block trades, comprised 59% of the exit value, reflecting buoyant equity market conditions The outlook for Indias PE-VC market remains cautiously optimistic, supported by macroeconomic tailwinds such as steady GDP growth, moderating inflation, and an emerging rate-cut cycle. Sectors like financial services, healthcare, real estate, and consumer goods are expected to present robust deal pipelines. While investors remain mindful of global volatility and trade risks, significant dry powder is available for Indian opportunities

(II) Analysis of Performance for the year ended March 2025

1. Business Review

As in the past, the Fund team continued to focus on undertaking portfolio divestments, thereby enabling return of capital to Fund investors. The Fund teams also successfully furthered the various litigations, paving the path to further divestments

2. Financial Performance

On a consolidated basis, Income from Operations for FY2025 was RS 2,907.57 lakhs, and Other Income was

RS 1,756.40 lakhs, resulting in Total Income of RS 4,663.97 lakhs. Total Expenses Before Tax were RS 3,211.91 lakhs. Profit (PBT) and Exceptional Items was RS 1,452.06 lakhs

(III) Outlook for the Financial Year 2025-2026

The adverse developments at the IL&FS Group have impacted all IIMLs business plans for revenue growth. The newly constituted IL&FS Board has been working on a resolution plan, including the sale of IL&FSs stake in IIML. This process is underway

(IV) 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 significantly impacted employee morale, resulting in notable departures, including key managerial personnel The Company presently has 15 employees

(V) 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

(VI) 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

(VII) 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, 2025	March 31, 2024	Explanation
	( RS in lakhs)	( RS in lakhs)
(i) Debtors Turnover
Trade Receivables		0.00	Trade receivables are NIL
Turnover	979.35	3,202.03
Ratio	N.A.	N.A.

		March 31, 2025	March 31, 2024	Explanation
		( RS in lakhs)	( RS in lakhs)
(ii)	Inventory Turnover	N.A.	N.A.
(iii)	Interest Coverage Ratio	N.A.	N.A.
(iv)	Current Ratio
	Current Asset	4,629.69	6,875.24
	Non Current Asset	4,718.49	4,862.97
	Ratio	0.98	1.41	The current ratio has decreased due to
				decrease in Deferred tax assets during the
				year
(v)	Debt Equity Ratio	N.A.	N.A.
(vi)	Operating Profit	Margin
	(%)
	PBT	(154.37)	2,255.23
	Turnover	979.35	3,202.03
	Ratio	(15.76%)	70.43%	Operating Margin has decreased as there
				is no dividend income during the year from
				Subsidiary Company
(vii)	Net Profit Margin (%)
	PAT	(235.09)	2,250.91
	Turnover	979.35	3,202.03
	Ratio	(24.00%)	70.30%	Net Profit Margin in previous year has
				reduced to Net Loss as there is no dividend
				income from Subsidiary Companies during
				the year
(viii)	Return on Net Worth (%)
	Net worth	9,057.12	11,464.99	There is reduction in ratio as Net profit in
	PAT	(235.09)	2,250.91	previous year is reduced to Net loss during
				the year
	Ratio	(2.60%)	19.63