Hello @jagan_Rajaram 

We can use following procedure for use SysPrep with Cloning:

1. Log in to the web console by using the Nutanix credentials, and then browse to the VM dashboard (see VM Dashboard).

2. Select the VM that you want to clone, click Launch Console, and then log in to the VM with administrator credentials.

3. Configure Sysprep with the system cleanup action of your choice, specify whether or not you want to generalize the installation, and then choose to shut down the VM.

* Open the command prompt as an administrator and navigate to the sysprep folder.
* cd C:\windows\system32\sysprep
* Generalize the installation and then shut down the VM.
* C:\Windows\system32\sysprep>sysprep /generalize /shutdown /oobe
* The VM shuts down automatically.
* Note: Make sure to shut down the VM. Restarting the VM will result in the VM losing its generalized state and in Sysprep attempting to find an answer file that has not been provided yet. For the same reasons, until you have completed this procedure, do not start the VM.

4. Create a reference image from the VM by using Image Service. See Configuring Images for more information.

Note:  We need to generalize vm first to apply unattend:
C:\Windows\system32\sysprep>sysprep /generalize /shutdown /oobe

Reference Links and Commands:

https://portal.nutanix.com/page/documents/details?targetId=Web-Console-Guide-Prism-v6_0:wc-windows-vm-customize-with-sysprep-clone-vm-wc-t.html

Note: For more assistance, please open a case with Nutanix Support