Alicon Castalloy Ltd Management Discussions

ECONOMIC REVIEW

The economic landscape of FY 2023-24 was defined by resilience amidst a series of global challenges. The world economy navigated a dynamic environment, showing remarkable fortitude despite various upheavals. Global growth maintained a modest pace, with a 3.2% increase in CY 2023, reflecting a steady but slow recovery. This moderation was influenced by factors such as escalating geopolitical conflicts, inflation, higher interest rates, a sluggish recovery in China, and volatility in energy and food markets. Additionally, geopolitical tensions in the Red Sea region led to higher logistical costs and shipment delays. Global inflation eased to 6.8% in CY 2023 and is projected to further decline to 5.9% in CY 2024 and 4.5% in CY 2025. The global economy is expected to continue growing at 3.2% in both CY 2024 and CY 2025. Advanced Economies are anticipated to see a modest growth increase from 1.6% in CY 2023 to 1.7% in CY 2024 and 1.8% in CY 2025, while Emerging Markets and Developing Economies are expected to experience a slight decrease from 4.3% in CY 2023 to 4.2% in both CY 2024 and CY 2025.

In contrast, the Indian economy maintained a strong growth trajectory, reinforcing its position as the worlds fifth-largest economy. According to provisional GDP growth estimates released by the National Statistical Office (NSO), Indias GDP growth rate exceeded earlier predictions, reaching 8.2% in FY 2023-24, up from 7.0% in FY 2022-23.This robust economic performance was supported by strong domestic demand, increased investment, moderate inflation, and a stable interest rate environment. Indicators such as the Index of Industrial Production (IIP), Goods & Services Tax (GST) collections, manufacturing Purchasing Managers Index (PMI), per capita income, and rising private capital expenditure collectively pointed to strong economic momentum. Specifically, Indias IIP recorded a growth rate of 5.8% in FY 2023-24, an improvement from 5.2% in the previous year. The Mining sector led with 7.5% growth, followed by electricity at 7.1%, and Manufacturing at 5.5%. Additionally, headline inflation softened to 5.4% during FY 2023-24, down from 6.7% the previous year, though volatile food prices remain a concern for disinflation. The Reserve Bank of India (RBI) maintained the policy repo rate at 6.50%, staying vigilant to ensure the inflation target of 4% is achieved.

Looking ahead, Indias economic outlook remains promising, with the International Monetary Fund (IMF) projecting GDP growth rates of 6.8% in FY 2024-25 and 6.5% in FY 2025-26.The economy is poised to benefit from a demographic dividend, increased capital expenditure, proactive government policies, robust consumer demand, and improving rural consumption. Key government initiatives such as Make in India 2.0, Atmanirbhar Bharat, Ease of Doing Business, and the Production-

Linked Incentive (PLI) scheme are expected to further strengthen Indias infrastructure and manufacturing base, enhance economies of scale, boost exports, and position the country as a global manufacturing hub. Moreover, the Interim Budget 2024-25 outlines a comprehensive economic management strategy, including infrastructure development, digital public infrastructure, taxation reforms, and proactive inflation management. These measures are set to lay the groundwork for realising the vision of a developed and self-reliant India by 2047

Source:

• GOVERNMENT OF INDIA - PRESS NOTE ON PROVISIONAL ESTIMATES OF ANNUAL GDP FOR 2023-24 AND QUARTERLY ESTIMATES OF GDP FOR Q4 OF 2023-24

• Government of India - Qulck Est?mate of Index of Industrial Production and Use-Based Index for the Month of March 2024

• RBI - Annual Report - FY23-24

• IMF- World Economic Outlook April 2024, National Statistical Office, Ministry of Statistics & Programme Implementation, Reserve Bank of India, Ministry of Commerce & Industry

INDUSTRY OVERVIEW

The global metal casting market was valued at US$ 165 billion in CY 2023, as reported by IMARC, and is poised for significant growth, with a projected compound annual growth rate (CAGR) of 7.3% between CY 2024 and CY 2032. By CY 2032, the market is expected to reach US$ 314.9 billion. This robust expansion is fuelled by rising demand from the automotive and aerospace industries, rapid

The global metal casting market was valued at US$ 165 billion in CY 2023, as reported by IMARC, and is poised for significant growth, with a projected compound annual growth rate (CAGR) of 7.3% between CY 2024 and CY 2032. By CY 2032, the market is expected to reach US$ 314.9 billion.

technological advancements, a shift towards recycled metals, the growth of construction and infrastructure projects, and increased investments in the defence and military sectors.

Supporting this growth, global casting production reached over 113.14 million metric tonnes in CY 2022, up from 112.5 million metric tonnes in CY 2021, according to the World Casting Census published by Modern Castings USA. China, India, and the United States continue to lead the industry, holding the top three positions as the worlds largest casting producers.

Source: Foundry Informatics Centre

India has retained its position as the worlds second-largest producer of castings, with annual production reaching approximately 14.16 million metric tonnes in FY 2022-23, up from 13.78 million metric tonnes in the previous year. The Indian foundry industry boasts a turnover of around US$ 20 billion, with exports amounting to US$ 3.94 billion in FY 2022-23. Grey iron castings dominate the market, accounting for approximately 68% of total production.

India is home to approximately 4,500 foundry units, with 90% classified as MSMEs. Around 1,500 of these units have achieved International Quality Accreditation, boosting their competitiveness on the global stage. Many large foundries in the country are modernised and globally competitive. Although a significant number of foundries still rely on cupolas fuelled by LAM Coke, there is a growing shift towards induction melting, driven by increasing environmental awareness. Some foundries are transitioning to induction furnaces, and in Agra, some units are even adopting cokeless cupolas.

To stay competitive, foundries are actively upgrading and automating their operations by adopting advanced technologies like 3D printing, robotics, IT applications, foundry simulation software, and waste reclamation/ recycling. They are also exploring common facility centres and focussing on value addition and up-scaling to enhance efficiency and productivity. The sector employs about 20 Lakhs people, providing direct employment to approximately 5 Lakhs individuals and indirect employment to another 15 Lakhs.

The Indian foundry industry produces metal cast components for various end-user sectors, including automotive, industrial machinery, pipes and fittings, agricultural machinery, railways, pumps and compressors, valves, wind turbine generators, electrical equipment, power, and sanitary applications. The industrys growth is driven by demand from the automotive and auto components sectors, tractors, construction equipment, machine tools, and capital goods, along with emerging opportunities in defence and railways.

Sector-wise Major Consumers of Castings

Source: Foundry Informatics Centre

The Indian foundry industry stands to benefit from multiple growth opportunities, driven by the Government of Indias focus on infrastructure development, advancements in the defence and space sectors, modernisation of railways, and expansion in the renewable energy, capital goods, power, cement, and textile markets. The expansion of the export market also presents lucrative opportunities for

the industry. Additionally, there is a rising demand for lightweight and advanced cast components in sectors like electric vehicles, high-speed trains, defence, and nuclear power plants, where these components play a critical role in withstanding high pressures and heat while ensuring safety.

Since FY 2021-22, casting exports have shown a positive and encouraging trend. In FY 2022-23, exports reached approximately US$ 3.95 billion, reflecting an 11.5% increase compared to FY 2021-22.

Export Data of Major Casting (Fig in Million US$)

Source: Foundry Informatics Centre

The rapid shift from Industry 4.0 to Industry 5.0 marks a significant advancement in the manufacturing sector, building on the steady implementation of Industry 4.0 through government initiatives such as the National Manufacturing Policy. This policy aims to increase the manufacturing sectors contribution to GDP to 25% by CY 2025. The Production-Linked Incentive (PLI) scheme for manufacturing, launched in CY 2022, is another critical measure designed to elevate the core manufacturing sector to global standards. Additionally, government initiatives such as Make in India, Ease of Doing Business, Vocal

for Local, the easing of FDI norms, and skill development efforts are driving manufacturing demand, fostering investment in the sector, and positioning India as a leading global manufacturing hub.

Given the integral role metal castings play in engineering and other sectors, the foundry industry is crucial for supporting manufacturing growth.The sustainable growth of the foundry industry is essential for achieving the goal of increasing manufacturings share in GDP To meet the growing demand for metal castings in India, foundries are investing in new technology and equipment, with new capacities being added rapidly.The Indian casting industry is projected to reach US$ 25 billion by CY 2025.

The Indian automobile industry dominates the consumption of casting products. Alicon Castalloy Limited primarily serves the automobile sector while actively expanding its supply of aluminium castings to non-automobile segments, including defense, healthcare, telecom, railways, and power.

The domestic auto industry saw satisfactory growth in sales volumes, recording a 12.5% increase in FY 2023-24. However, overall exports faced challenges during the financial year, with significant drops in Commercial Vehicles, 2-wheelers, and 3-wheelers, though Passenger vehicles showed marginal growth. Notably, the industry experienced a recovery in exports during the final quarter of FY 2023-24, particularly in the 2-wheeler segment, indicating promising potential for FY 2024-25.

The growth in the auto industry has provided strong support for Alicon, driven by increased demand from its customer base. As Indias economic growth fuels demand in the domestic auto market, the industry is poised for further expansion. Alicon is strategically positioned to capitalise on its market strength and secure a substantial market share. Additionally, the Company is leveraging the trend towards lightweighting in the auto industry, which is expected to drive further growth for its products.

Source:

• https://foundryinfo-india.org/profile_of_indian.aspx

• IMARC Group, Foundry Informatics Centre (foundryinfo-india.org), IFEX, IBEF, SIAM

The growth in the auto industry has provided strong support for Alicon, driven by increased demand from its customer base. As Indias economic growth fuels demand in the domestic auto market, the industry is poised for further expansion. Alicon is strategically positioned to capitalise on its market strength and secure a substantial market share.

SWOT Analysis

Strengths

• Among Indias top aluminium foundries

• Globally acknowledged accreditation

• Provider of comprehensive engineering solutions for aluminium alloy castings

• Extensive network of esteemed clients

• Inhouse design, technolgy centre and tool manufacturing

• Second-largest producer globally

• Advanced facilities producing high-quality castings

• Strong and reliable supply chain for key raw materials, including alloys

Weakness

• Significant reliance on the automotive industrys performance

• Operations that require substantial capital investment

• Prolonged product development timelines

Opportunities

• Among Indias top aluminium foundries

• Globally acknowledged accreditation

• Provider of comprehensive engineering solutions for aluminium alloy castings

• Extensive network of esteemed clients

• Inhouse design, technolgy centre and tool manufacturing

• Second-largest producer globally

• Advanced facilities producing high-quality castings

• Strong and reliable supply chain for key raw materials, including alloys

Threats

• Geopolitical challenges affecting exports

• Supply chain disturbances in the global automotive sector

• Inflation and elevated interest rates impacting market conditions

COMPANY OVERVIEW

Alicon Castalloy Limited (hereafter referred to as Alicon or the Company), is one of Indias leading integrated manufacturers of aluminium castings, with nearly five decades of industry expertise. The company has distinguished itself in the Pro-Cast and Magma sectors within India, and it unifies the strengths of three entities: Alicon Castalloy, Atlas Castalloy, and Illichmann Castalloy. This partnership brings together European engineering excellence, Japanese quality standards, and the innovative spirit and efficiency of Indian manufacturing.

Alicon is a comprehensive provider of engineering solutions for aluminium alloy castings, serving a broad spectrum of industries. Its clientele spans key sectors such as automotive, infrastructure, aerospace, energy, agriculture, defense, and healthcare, both within India and globally.

The company operates four advanced manufacturing facilities strategically located in Shikrapur and Chinchwad (Maharashtra), Binola (Haryana), and Slovakia. These state-of-the-art plants are equipped with cutting-edge technology, enabling faster time-to-market and enhanced cost efficiency. Alicon is recognised for having one of the largest aluminum foundries in India and has built a robust and innovative product pipeline, with a presence in 18 countries. To strengthen its global footprint, Alicon has established marketing franchises in the USA and France, along with an international marketing office in Austria.

Alicon offers a comprehensive suite of high-quality casting services, including design, engineering, casting, machining, assembly, painting, and surface treatment for aluminum components. It is a pioneer in India for Low Pressure Die Casting (LPDC) and Gravity Die Casting (GDC) technologies. The company has earned a reputation as a preferred supplier to numerous domestic and international Original Equipment Manufacturers (OEMs) in the two- wheeler and four-wheeler segments, as well as tier-I non- automotive companies.Through its proprietary Eight-Step process, developed and refined in-house, Alicon delivers technologically advanced and cost-effective solutions throughout the product lifecycle.

OPERATION AND FINANCIAL OVERVIEW

Alicon has maintained a clear focus on its strategic priorities, which are central to its growth and long-term sustainability. The company continues to enhance its product mix, notably increasing the share of Passenger Vehicles (PV) and Commercial Vehicles (CV) in its portfolio, which now accounts for 52% of sales in FY 2023-24, up from 49% in FY 2022-23. This shift towards higher-margin products has been a key driver in improving sales volumes and profitability.

Additionally, Alicons customer profile is evolving as it attracts prestigious global names, including leading OEMs and Tier 1 companies. This growing stature in the industry underscores the companys successful transition from being merely a supplier of low-cost components to a trusted solution provider, distinguished by its innovation, technology, and design expertise.

The company also remains committed to ongoing cost reduction initiatives, employing Kaizen principles to achieve micro-level efficiencies across operations. By collaborating closely with customers, Alicon has successfully implemented price adjustments, further bolstering its financial performance.

Guided by its 3R ethos of Reflection, Reimagine, and Resilience, Alicon continues to prioritise sustainable cost optimisation and the acquisition of new business opportunities. The company is future-ready, with a strengthened focus on design, research & development, and value engineering, ensuring it remains at the forefront of the industry while fortifying its manufacturing processes for the challenges ahead.

In FY 2023-24, Indias Passenger Vehicle (PV) segment saw robust growth, driven by positive consumer sentiment, new model launches, better vehicle availability, effective marketing, and a recovering rural market. The SUV segment, improved supply dynamics, and expanding road infrastructure further boosted PV sales.

The Commercial Vehicle (CV) segment recorded a modest 0.6% growth, with a decline in Light and Small Commercial Vehicles (LCVs and SCVs) due to a dip in the CNG market. The shift towards higher tonnage trucks with greater payload capacity also influenced the segment, though this wasnt fully reflected in unit sales.

The 2-wheeler segment continued its recovery, growing over 13% in domestic sales, supported by new models, a positive market outlook, and the expanding electric vehicle (EV) market. The end of the FAME-II subsidy on March 31 spurred a significant increase in 2-wheeler EV sales.

Overall, the automobile industry posted a 12.5% growth in domestic sales, driven by Indias strong economic performance and supportive government schemes. Globally, the auto industry remained resilient despite challenges like higher inflation and slower consumer spending.

Alicons impressive performance in FY 2023-24 is underpinned by the addition of new parts, logos, and customers, a diversified revenue profile, and strong momentum in its global operations. The companys ongoing evolution and transformation have translated into tangible improvements, driving significant growth.

In FY 2023-24, Alicon delivered robust revenue of 1,563 Crores, marking an 11% year-on-year growth compared to 1,405 Crores in the previous financial year. This growth was driven by a strategic focus on higher-value opportunities in the Passenger and Commercial Vehicle segments, along with the addition of prestigious global clients. Alicons commitment to developing capabilities for new technology platforms in the auto industry, expanding into new geographical markets, and enhancing value engineering and capability augmentation further strengthened its performance.

The revenue growth was accompanied by improved profitability. Alicons EBITDA rose to 199 Crores in FY 2023-24, a 27% increase from 157 Crores in FY 202223. The EBITDA margin improved to 12.7%, up from 11.2% in the previous year, reflecting a 157 basis points increase, despite absorbing 14.4 Crores in ESOP costs. Excluding

this, EBITDA would have grown by 36% YoY, with a margin of 13.7%. This improvement in EBITDA margin, despite rising labour costs and overheads, highlights the success of Alicons strategic initiatives, including value engineering, optimising product mix, and cost-saving measures.

Profit before tax (PBT) saw a sharp increase of 30% YoY, rising from 62 Crores in FY 2022-23 to 81 Crores in FY 2023-24. Profit after tax (PAT) grew by 19%, reaching 61 Crores compared to 51 Crores the previous year, even in the face of higher interest and depreciation costs. Reflecting this strong performance, the Board of Directors has recommended a dividend of 3 per share. Additionally, the Companys return on capital employed (ROCE) increased from 12.7% in FY 2022-23 to 14.5% in FY 2023-24. The long-term rating by credit rating agency, CRISIL, has been reaffirmed at A positive.

Source:

• FADA Releases March24 & FY24 Vehicle Retail Data

• ET-Firm economic growth helped Indian automobile industry post 12.5% sales growth

• SIAM - Auto Industry Sales Performance of March 2024, Q4 (Jan-March 2024) and April March 2024

BUSINESS OVERVIEW Key Industry Highlights Domestic Auto Market

• Domestic business contributed 75% to overall business revenue

• The Indian automotive sector experienced 12.5% growth in sales volume

• The domestic passenger vehicles (PV) segment witnessed growth of 8.4%, while the Companys growth in supplying passenger vehicles was higher at 18%

• In the PV segment, electric vehicles (EVs) are dominating, with increasing customer interest and steadily rising market share

• The Company is witnessing significant traction in EV volumes and is engaged in crucial projects to boost its production capabilities

• The 2-wheeler segment continued to show resilience, driven by a surge in EV sales following the expiration of the FAME 2 subsidy on March 31, leading to a significant increase in the market share of 2-wheeler EVs

• The Companys concentration on critical components, particularly in the EV sector, has enabled it to secure significant contracts, setting it apart from competitors in this segment

• The domestic commercial vehicles segment grew marginally by 0.6%, whereas the Companys growth in supplies to commercial vehicles was higher at 18%

• The market is also shifting towards hybrid technology and the Company is leading this transition

• The Company increased production volume for cylinder heads and is actively promoting the sale of its cylinder head businesses

• The Company added 50 new parts from 17 customers in FY 2023-24

• 95% of new business added in FY 2023-24 pertains to 4-wheelers

Domestic Non-Auto Market

• The Non-Auto segment is experiencing a revival in momentum, buoyed by increased government expenditure on Infrastructure and Defence, as well as a renewed focus on the Make in India initiative

• The Company has observed robust demand for its products like aluminium wheels for battle tanks, serving the defence sector, while Alicon has added two types of wheels to its portfolio for supply over the next three years

International Auto Market

• The global business contribution increased to 25% of the total revenue in FY 2023-24 compared to 22% in the prior financial year

• 85% of the new business added during the fiscal year is for global markets

• Exports across OEMs remained subdued, primarily due to tepid demand in key markets stemming from geopolitical tensions and foreign exchange challenges

• After delays due to congestion and the Russia- Ukraine conflict, transit times for exports overseas are beginning to normalise. Consequently, international customers are now observing an increase in inventory buildup and are adjusting their short-term production schedules

• The Company has observed an increase in the number of enquiries from global customers, with buyers from the US and Europe showing interest in sourcing larger quantities of products from Alicon

• The share of international business is set to improve further as the Company continues to add new parts to its portfolio

Strategic Growth Pillars

Alicon is dedicated to strengthening its global presence in

the auto industry by increasing R&D efforts, realigning its

capabilities, and optimising its resources and workforce.

The companys strategy is built around five key growth

pillars, which aim to drive business transformation and ensure resilient performance in a challenging environment:

• Expanding strategic product offerings within the internal combustion engine (ICE) business

• Capitalising on opportunities in carbon-neutral technologies, including battery electric vehicles (BEVs), hybrid electric vehicles (HEVs), fuel cells, and hydrogen cells

• Leveraging demand for structural components or technology-agnostic parts that remain essential regardless of the vehicles fuel technology

• Diversifying into non-auto sectors like defence, energy, and telecom, leveraging Alicons existing competencies

• Enhancing customer engagement and increasing wallet share by offering value-added product combinations and comprehensive solutions

Alicons consistent growth is a testament to the effective execution of this strategy. The company has committed significant resources to restructuring its business model, transforming into a more agile and diversified organisation that can tap into a broader range of opportunities. This transformation is marked by a shift towards expertise in design, research & development, and value engineering. Alicon is now distinguishing itself by winning business through innovation, technology, and design, positioning itself as a solution provider rather than merely a low-cost component supplier. The steady growth in the order book and the addition of prestigious clients, including leading global OEMs and Tier-1 companies, further underscore its progress. Alicons proven track record highlights its operational efficiency, credibility as a supplier, and growing industry prominence.

The company is making significant strides across all key pillars, with notable improvements in its value addition mix. The carbon-neutral business, structural products, and non-auto segments are contributing increasingly to overall growth. Despite a volatile market environment, Alicon achieved balanced growth across all segments and remains committed to increasing value addition in products for the 4-wheeler and commercial vehicle sectors.

In FY 2023-24, 2-wheelers accounted for 40% of total sales, with passenger vehicles at 33%, commercial vehicles at 19%, and non-auto segments at 6%. Alicon continues to expand the share of passenger vehicles (PV) and commercial vehicles (CV) in its product mix, with 85% of new global orders being for 4-wheelers. The ramp-up of EV volumes has led the EV segment to contribute 12% to overall revenue. In the carbon-neutral technology space, Alicon is focussed on passenger vehicles, commercial vehicles, and export opportunities, which offer significant potential for value addition.

The Companys focus on future-ready technology and innovation has propelled it to a leading position in the Carbon Neutral (CN) sector, and it is now extending this approach to hybrid vehicles.

In the electric vehicle (EV) sector, Alicon has established itself as a reputable supplier, excelling in client engagement, R&D, design, and value engineering. The company is committed to enhancing its technological capabilities, automating key operational processes, and pursuing advanced technologies, particularly in thermal cooling solutions for EVs. Alicon aims to deliver innovative solutions, especially in complex parts like cooling systems for motors and e-axles, surpassing traditional methods. The company has made significant progress in developing a 3D printing solution for sand moulds, enabling faster design-to-prototype conversion and reducing product development lead times.

Looking ahead, Alicon plans to implement friction stir welding technology, a highly recommended method for creating strong, high-quality joints in the EV sector. By prioritising technology-driven solutions, the company aims to carve out a distinctive position in the global market. Alicon is also advancing its sustainability initiatives, including establishing a captive solar plant in India and installing solar panels at its facility in Europe, which are expected to significantly impact the energy landscape.

Despite macroeconomic challenges, Alicons export business is performing well, driven by efforts to increase wallet share through the development of parts for multiple customers. Growth rates have improved in international markets, including the USA, Japan, and Southeast Asia, and the improved availability of chips is expected to bolster OEM production outlooks.

WAY FORWARD

Alicons continued evolution is reflected in its strong performance, marked by revenue growth and enhanced profitability. The Companys adaptable business model positions it to supply a diverse range of components essential for both established and emerging technologies. This adaptability allows Alicon to expand its business scope and increase market share by pursuing opportunities across various markets, customer segments, fuel technologies, and vehicle categories.

Significant growth opportunities lie ahead, particularly as passenger vehicle penetration in India remains

significantly lower compared to countries such as China, Germany, Japan, and the US. India is expected to continue as a strong growth market, while other international markets offer opportunities driven by growth prospects and replacement cycles. The outlook for the 2-wheeler segment in FY 2024-25 also appears positive, with Alicon anticipating increased demand from key customers. While the Company focusses on the 4-wheeler business and higher value-added products, it remains committed to expanding volumes in the 2-wheeler segment to optimise asset utilisation and operate its capacities at peak efficiency.

Alicon is optimistic about prospects in the Commercial Vehicles sector, bolstered by increased infrastructure investments and rapid urbanisation in India. The broader vehicle market in India is expected to grow, with projections indicating that the Passenger Vehicles market will comprise 60% ICE, 25% Hybrid, and 15% Battery Electric vehicles by FY 2030-31. This outlook underscores the sustained relevance and growth potential of ICE technology, while hybrid vehicles, EVs, and carbon- neutral technologies present compelling growth opportunities. Alicons strategic positioning with high content per vehicle across all three technology verticals strengthens its competitive edge in the market.

The Companys focus on future-ready technology and innovation has propelled it to a leading position in the Carbon Neutral (CN) sector, and it is now extending this approach to hybrid vehicles. Alicons emphasis on essential components, particularly in the CN and Hybrid sector, has enabled it to secure substantial contracts, setting it apart from competitors. Additionally, a prominent client is planning to establish an engine manufacturing hub in Hosur, India, with Alicon as the exclusive supplier of cylinder heads for these engines, positioning the Company as a key beneficiary of this development.

In summary, Alicons strategic focus on innovation, market diversification, and technological advancement is driving its transformation and positioning the Company for sustained growth and industry leadership in the years ahead.

RISKS, CONCERNS AND MITIGATION

Although there are numerous opportunities for business growth across various segments and regions, the organisation faces several risks in an ever-changing environment. To ensure continuous operations and sustainable growth, it is essential to minimise or mitigate the potential adverse effects of these risks. The company has implemented a strong risk management framework to identify, assess, and address key business risks in a timely manner. Below are the key risks and their corresponding mitigation strategies:

The Company is committed to creating a safe, productive, and satisfying work environment. Its HR strategies aim to align personal goals with the organisations vision for growth, focussing on comprehensive and inclusive employee development. The 3R framework-Reflection, Resilience, and Reimagination-is central to the Companys culture.

HUMAN RESOURCE MANAGEMENT

As of March 31,2024, the Company employed a total of 952 full-time staff members. Recognising that its employees are the cornerstone of its success and sustainability, the Company has reinforced its well-developed HR policies to create a supportive work environment. These policies are designed to attract top talent and maintain high retention rates.The impressive growth of the organisation highlights the dedication, skill, and enthusiasm of its workforce. The HR team emphasises employee development through targeted training and skill enhancement while promoting a balanced work-life approach.

The Company is committed to creating a safe, productive, and satisfying work environment. Its HR strategies aim to align personal goals with the organisations vision for growth, focussing on comprehensive and inclusive employee development. The 3R framework-Reflection, Resilience, and Reimagination-is central to the Companys culture. Additionally, the Cultural Pillars of Agility, Innovation, and Passion play a key role in sustaining motivation and boosting both efficiency and productivity.

The adoption of these HR policies helps maintain a strong level of employee motivation:

• A Seasonal Attendance Incentive, coupled with service increments for Senior Operators, is provided by the Company

• The Production Incentive policy is designed to boost productivity

• The Leave Policy ensures employees receive sufficient vacation time

• The HOPE policy focusses on improving the integration of contract associates, with an annual transition of 3-4 operators from contractual to permanent roles

INTERNAL CONTROL SYSTEMS

The Company has put in place strong internal control systems that match the size, nature, and complexity of its business. This framework outlines the various processes,

guidelines, and procedures that direct operations. The internal controls are designed to protect assets and infrastructure, enhance operational efficiency, optimise resource use, manage financial operations, address evolving business risks, and ensure compliance with relevant laws and regulations.They also safeguard against unauthorised use and conduct thorough risk assessments.

These controls are regularly reported to management to support informed decision-making. Effective governance, a vigilant finance team, and independent internal reviews strengthen the companys ability to adapt to new challenges. Continuous reviews and testing maintain the effectiveness of the internal control system across all business areas.

The Audit Committee closely monitors business operations to ensure compliance. The internal audit function evaluates critical audit areas independently, and the Audit Committee reviews these findings periodically. The Board receives observations and recommendations from the Audit Committee and takes necessary actions to address any issues ?dentified.

CAUTIONARY STATEMENT

The Management Discussion and Analysis includes statements that outline the Companys goals, forecasts, estimates, and expectations, which may be considered "forward-looking statements" under applicable laws and regulations. These statements are based on informed judgements and estimates. The Companys past performance is not necessarily a predictor of future outcomes, and actual results may vary significantly from those stated or implied. These forward-looking statements are subject to various risks and uncertainties, such as economic conditions impacting supply and demand, market price fluctuations both domestically and internationally, changes in government regulations and policies, tax laws, availability and costs of raw materials, and other legal factors. The Company does not undertake any obligation to publicly update, amend, or revise any forward-looking statements in light of new developments, information, or events.