Agarwal Industrial Corporation Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

The disclosures presented in this Annexure - Management Discussion and Analysis (MD&A) are intended to promote transparency in the Companys financial performance during the year under review. The MD&A goes beyond the financial statements by examining the balance sheet, income statement, and cash flow statement to provide deeper insights into the factors influencing the Companys financial health and its prospects.

These disclosures help investors evaluate the Company more comprehensively and make informed investment decisions. Financial statements alone are not sufficient to assess current performance or predict future outcomes; narrative explanations are necessary to understand both performance and the operating environment. The MD&A fulfills this need by presenting both short-term and long-term analyses of the Companys business from managements perspective.

Certain statements in this discussion relating to projections, estimates, expectations, or outlook are "forward-looking statements." Actual results may differ materially from those expressed or implied due to factors such as changes in government policies and regulations, tax regimes, economic developments in India and in the countries where the Company operates, fluctuations in exchange and interest rates, competitive pressures, demand-supply constraints, and other macroeconomic conditions.

BITUMEN INDUSTRY SCENARIO*

Bitumen is an oil-based substance and semi-solid hydrocarbon product produced by removing the lighter fractions (such as liquid petroleum gas, petrol, and diesel) from heavy crude oil during the refining process. Composition of bitumen includes carbon (87-92%), hydrogen (6-8%), sulphur (~5%), nitrogen (1%), and oxygen (1%). It possesses physical properties such as adhesion, water resistance, hardness, and viscosity.

India Bitumen Market Segmentation are:

By Type (Paving Grade Bitumen, Oxidized Bitumen, Polymer Modified Bitumen, Bitumen Emulsion, and Others) and End-Use Industry (Road Construction, Water Proofing, and Others) Bitumen consumption scaled a decade high last fiscal due to a surge in road construction ahead of the general election. Sales of bitumen, used mainly for building roads, rose 10% to 8.8 million metric tonnes (MMT) in FY25, according to oil ministry data.

"The Ministry of Road Transport and Highways (MoRTH) is targeting 13,000-14,000 km of national highway construction in 2024-25 (FY25), compared to 12,349 km in 2023-24 (FY24) and 10,331 km in 2022-23."

More than 42% of bitumen consumed in the country is imported. India paid $1.4-1.6 billion for bitumen imports in FY25. In volume terms, bitumen accounts for about 4% of total domestic consumption of refined products.

Bitumen consumption has gained pace in recent years in line with increasing road construction activity. Average annual consumption in the last five financial years between 2019-20 and 2023-24 was 7.44 MMT.

Last fiscal, western India was the largest consumer of bitumen and the East the smallest. Bitumen is the preferred material for road building although cement is also being increasingly used for making concrete roads.

Increase in road construction activities fuels the demand for bitumen. Bitumen is processed into asphalt for road construction. Asphalt is a mixture of rock aggregates and bitumen. Bitumen serves as a binding agent and improves the stability of asphalt. Depending on the type of bitumen or composition of the mixture used, asphalt roads can be made suitable for regions with different climatic conditions or various levels of operational demands. Asphalt is also used for airport runways, parking decks, and working areas in ports. In addition, Indias recent passed budget includes expenditure on development of National Highways, including projects relating to expressways, two-laning of highways, under the National Highways Development Project, six-laning of crowded stretches of the Golden Quadrilateral, a special program for the development of road connectivity in Naxal affected areas, development of Vijayawada Ranchi road, and for providing last mile connectivity, which is anticipated to drive the growth of India bitumen market. Furthermore, bitumen adhesive is widely used in the construction industry for roofs. It is a cold applied adhesive for bonding bituminous roofing felts to asphalt, felt, metal, and concrete. Bitumen adhesive has physical properties that includes toughness, flexibility, and forms adhesive and cohesive film and provides good UV resistance. Owing to growth in construction industry due to rapid urbanization and launch of government initiatives such as Housing for All that includes construction of houses for urban poor is expected to drive the growth of the bitumen market across the country. growth in the construction industry due to growth in population across the cities and demand for new houses led to increase in demand for bitumen across the country. In addition, government initiatives such as Pradhan Mantri Awas Yojana (PMAY) that includes construction of houses for poor people living in both rural andurban areas is likely to increase the demand for bitumen; thereby, driving the growth of the Indian bitumen market. However, human health & environmental issues associated with bitumen, fluctuating international crude oil prices, and increase in use of alternative of bitumen such as concrete in roadway construction applications are expected to restrain the growth of the market. Moreover, development of biobased bitumen and EME (Enrobes a Module Eleve) binder is anticipated to provide lucrative opportunities for further development of the market.

However, human health & environmental issues associated with bitumen, fluctuating international crude oil prices, and increase in use of an alternative for bitumen such as concrete in roadway construction application restrain the growth of the market across the India. Moreover, development of bio-based bitumen and EME (Enrobs Module Elev) binder is anticipated to provide lucrative opportunities for further development of the market.

The India bitumen market covered in the study includes paving grade bitumen, oxidized bitumen, polymer modified bitumen, and bitumen emulsions. By end-use industry, the market is classified into road construction (airports & runways and highways & express ways), waterproofing, and others. Region-wise, it is analyzed across North India (Uttar Pradesh, Rajasthan, Punjab, Haryana, rest of North India (Himachal Pradesh, Uttarakhand, Chandigarh, and Delhi)), East India (Bihar, Jharkhand, West Bengal, Odisha, and Andaman & Nicobar), Northeast India (Arunachal Pradesh, Assam, Tripura, Meghalaya, and rest of Northeast (Sikkim, Nagaland, and Mizoram)), and South India (Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Kerala, and rest of South India (Lakshadweep and Puducherry)), and West India (Maharashtra, Gujarat, Madhya Pradesh, Chhattisgarh, rest of West India (Goa, Dadra & Nagar Haveli, and Daman & Diu).

The major key players operating in the India bitumen market include Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Ltd., Oil & Natural Gas Corporation Ltd., Total India, Tiki Tar Industries India Ltd., Agarwal Industries Corporation Ltd., Juno Bitumix Pvt. Ltd., Universal Bituminous Industries Pvt. Ltd., and Swastik Tar Industries.

* based on reliable published resources

OUR OPERATIONS - BUSINESS SEGMENTS

Agarwal Industrial Corporation Ltd (AICL) is an integral part of Ancillary Infra Industry and is engaged in the business of (i) manufacturing and trading of Bitumen and Allied products used heavily in infrastructure projects (ii) providing Logistics for Bulk Bitumen and LPG through its own Specialized Tankers and (iii) also generates power through Wind Mills. These businesses are of seasonal nature due to which revenue gets varied

MANUFACTURING OF BITUMEN & BITUMINOUS PRODUCTS

AICL has its manufacturing and storage units at Taloja, Belgaum, Baroda, Hyderabad, Cochin (through its wholly owned subsidiary - Bituminex Cochin Private Limited) and at Pachpadra City, Dist. Barmer, (Rajasthan). Further, the Company has already started full fledged operations at its recently established manufacturing and storage facilities of Bitumen and other value added Bituminous products at Guwahati, Assam and which would endeavor to expand and develop Bitumen trade in Eastern states as Bitumen is extensively used in infrastructure projects more specifically in road construction projects initiated by the State Government.

BULK BITUMEN STORAGE FACILITIES

AICL has Bulk Bitumen Storage facilities to effectively handle and market bitumen imports at Mumbai, Maharashtra, Vadodara, Gujarat, Karwar, Haldia, West Bengal, Dighi (Company Owned), Maharashtra , Hazira ( Loading ) Mangalore and Guwahati.

BULK BITUMEN TRANSPORTATION

AICL has its own a large fleet of specialized Bitumen Tankers for transportation of Bitumen to its valued customers at their locations on their request. It can be procured either in bulk or in packed form. In either case the product has to be dispatched to the construction site or to the storage facilities of our industrial consumers. The bulk bitumen is transported via specially designed tankers that are insulated and have pumping facility for loading and unloading the bitumen. Most of our Bitumen tankers are under contract with major oil companies in India like HPCL, BPCL and IOCL and by other major consumers of the product.

BULK LPG TRANSPOTATION

AICL is also one of the leading transporters of LPG in India, which is the most widely used fuel for domestic as well as industrial purposes. Though it has its own a large fleet of tankers, it also hires tankers on long term contracts to cater to the demand from customers LPG is mainly sourced from domestic refineries and via bulk imports. Bulk LPG is mainly transported from the source to the industrial user or to their bottling plants through specially designed tankers LPG, being highly inflammable, require tankers that take care of all safety aspects while loading, transporting and unloading. Most of the LPG tankers are under contract with major oil companies like HPCL, BPCL and IOCL.

POWER GENERATION THROUGH WIND MILLS

AICL has diversified into Non-Conventional energy generation by installing wind mills at Rajasthan and Maharashtra, keeping in view of the likely shortage of energy resources in future. It has one Windmill at Dhulia, Maharashtra and one in Jaisalmer, Rajasthan.

AUTHORIZED SERVICE CENTRE OF ASHOK LEYLAND

AICL owns a large fleet of tankers which necessarily calls for regular periodic checks and maintenance. As also, our entire fleet of tankers comes from the Ashok Leyland .

Both these factors influenced our decision to set up an authorized service center, for Ashok Leyland vehicles, within the company. Not only does this ensure a timely turnaround of the fleet serviced but is an economically beneficial proposition for the company. It has also its own workshop and maintenance facilities at strategic locations like Mumbai, Baroda and Jodhpur.

FINANCIAL PERFORMANCE AND OPERATIONS

Major indicators of your Companys financial performance for the F.Y ended March 31, 2025 are presented in the accompanying Audited Financial Statements. These financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendments) Rules, 2016. The Company has adopted Ind AS from April 01, 2017 for the first time and accordingly these financial results are Ind AS 101 (First Time Adoption of Indian Accounting Standards) compliant.

RESULTS OF OPERATIONS (Standalone)

The Company reported a total revenue of Rs. 200,335 lakhs for the financial year ending March 31, 2025, representing a 12% increase compared to the previous years revenue of Rs. 179,431.84 lakhs. Moreover, the Profit Before Tax (PBT) for the current year stood at Rs. 7,235.07 lakhs, up from Rs. 6,693.46 lakhs in the previous year, marking an increase of approximately 8%. The Profit After Tax (PAT) also showed a positive trend, reaching Rs. 5,362.99 lakhs compared to Rs. 4,960.91 lakhs last year, indicating a 8% increase. This growth reflects the Companys consistent performance and strategic initiatives.

During the Financial Year ended on 31^st March 2025, the Company under its Ancillary Infra - Bitumen and allied products segment, sold 5,35,938.62 MTS of Bitumen and allied products as compared to 4,90,813.49 MTS sold during the corresponding previous financial year ended on 31^st March 2024, thus registering a growth of 9.19%.

DIVIDEND

Your Directors have recommended a dividend of Rs. 3.30 per equity share of the face value of Rs.10/- each fully paid up for the financial year ended March 31, 2025. The dividend distribution is subject to approval of the members of the Company at the ensuing Annual General Meeting.

Pursuant to the amendments introduced by the Finance Act, 2020 the Company will be required to withhold taxes at the prescribed rates on the dividend paid to its shareholders w.e.f. 1^st April 2020. No tax will be deducted on payment of dividend to the resident individual shareholders if the total dividend paid does not exceed Rs. 5,000/-. The withholding tax rate would vary depending on the residential status of the shareholder and documents registered with the Company.

SHARE CAPITAL

Issued and Paid up Capital of the Company is comprised of 1,49,57,789 Equity Shares of Face Value of Rs. 10/ each amounting to Rs.14,95,77,890 /- as on date.

AMOUNT TO BE CARRIED TO OTHER EQUITY

The Company has transferred Rs. 4920.40 Lakhs to the Other Equity for the F.Y. March 31, 2025 after appropriating Rs. 448.73 Lakhs towards dividend paid for the F.Y. ended March 31, 2024.

CAPITAL EXPENDITURE

As at March 31, 2025, the Capital Expenditure during the year under review amounted to Rs. 1659.13 Lakhs including Capital Work in Progress Rs. 1,555,23 Lakhs

SEGMENTWISE/PRUDUCTWISE PERFORMANCE

For Segment wise/ Product wise performance of the Company, please refer to Financial Statements of the Company.

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Results for the F.Y ended on March 31, 2025 include the financial results of its Wholly Owned Subsidiary (WOS) Companies- (i) Bituminex Cochin Private Limited, and (ii) AICL Overseas FZ-LLC and (iii) Agarwal Translink private Limited and (iv) AICL Finance Private Ltd.

These Audited Financial Results have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards)(Amendments) Rules, 2016.

OUR STRENGTHS

• Indias first largest Bitumen Company in Private Sector.

• Promoters with profound Industry Experience of 38 plus years.

• Well diversified Company: Manufacturing & Trading of Bitumen and other value added products; Transportation of Bulk Bitumen & LPG: Power Generation through Wind Mills.

• Bulk Bitumen Storage facilities near ports for effective and optimum handling of bitumen imports.

• Consistently Dividend Paying Company

• Bitumen manufacturing is our finest forward integration and is an extension of our parent Business i.e. Bitumen Bulk Transportation.

• Strong Suppliers & Client relationship continuing for past many years.

• Being amongst the largest fleet operators of specialized Bitumen and LPG Tankers in the country adds to customer comfort and ensures supply reliability.

• Market share gain over the years, spurred by superior product quality and increased customer satisfaction though no identified identical business peer.

• Majority of our manufacturing facilities are ISO Certified.

• All major capex till date from capital infusion and internal accruals so far thus improving bottom line through saving financial costs.

• Benefits of Listed Company - Capital appreciation, liquidity and transparency of operations.

• Geographically well located Company in different parts of the country.

For details, please refer to relevant sections of Directors Report.

OUR CHALLENGES

• Imports - Shipments at Right time, Right Pricing, Quality Material.

• Pricing - Competition with other players in the Industry.

• Continuous development of Infrastructure Sector.

• Timely payment to our clients from the related government authorities.

• Cost reduction/cost minimization through consistent guidance and motivational efforts. at all

• levels of operations

OUR OPPORTUNITIES

• Directly related to Infrastructure projects which are under Govts priority agenda.

• Endless opportunities for expansion of Bitumen Products as road construction within the ambit of infrastructural growth.

• Tremendous scope for developing Value Added Products with potential of higher margins.

• Huge deficit in bitumen indigenous supply and demand leaving tremendous scope for imports

• Huge deficit in power demand and power supply leaving tremendous scope for expansion of Wind Power Mills

• Having own manufacturing plants and bulk imports minimize dependency on oil Companies.

OUR THREATS

There are no major business / industry threats before us as ours is a well-diversified and fundamentally strong Company with clear vision for future growth and prosperity and is under priority infrastructure sector. However, there are some factors which are beyond the control of the

Company viz. impact due to fluctuations in the economy caused by changes in global and domestic economies, competition in the industry, changes in government policies and regulations, fluctuations in interest rates etc. which are common to all sectors, so we are no exception. Nevertheless, your Company ensures all safeguards to combat any such eventuality .to the best of its ability and vast industry experience.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has in place an adequate system of internal controls, with documented procedures covering all corporate functions. Systems of internal controls are designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls, and compliance with applicable laws and regulations. The Audit Committee of the Board oversees the adequacy of the internal control environment through regular reviews of the audit findings and monitoring implementations of internal audit recommendations through the compliance reports submitted to them.

MANPOWER

Your Company is committed to attract, develop and retain high quality talent. We promote culture of higher commitment and entrepreneurial approach across all over management positions to foster organizations growth. During the year under report, your Company maintained harmonious and cordial industrial relations with its staff and employees.

PROTECTION OF WOMEN AT WORK PLACE

The Company has formulated a policy on ‘Protection of Womens Rights at Workplace as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013.

There were no cases of sexual harassment received by the Company in 2024-25 & between the end of the financial year and the date of this Report.

MATERNITY BENEFIT ACT, 1961

The Company shall complied with the provisions of the Maternity Benefit Act, 1961, if any such situation arise.

SAFETY, HEALTH AND DEVELOPMENT

Safety, health and development of human resources is our paramount objective and your Company actively pursues measures to sustain and improve the same on regular basis.

MANAGEMENT INFORMATION SYSTEMS (MIS)

Effective Management Information Systems are core to any successful business and your Company is supported and empowered by installing updated and advanced MISs to be in forefront of this competitive industry.