Speaking requires practice and if you are told to speak on a given topic without preparation and with sudden time frame, that will require a bit of planning for carrying on with speech.
It looks that Extempore Speech is a new test at various B schools but historically we all learnt to speak on an assigned topic in our school days.
You are tested on your communication, synchronization of your thoughts, domain knowledge, and modulation of your voice, eye to eye contact, confidence level and overall body language. These attributes are the signals of your potential for becoming would be manager and selection panel is trying to test you during Extempore Speech session.
Prior practice with given topics, listening to great speeches, watching business videos or films will help you muster confidence to be successful at Extempore Speech.