Ameenji Rubber Ltd Management Discussions

The following discussion and analysis of the financial condition and results of operations of the Company should be read in conjunction with the audited financial statements and the related notes thereto for FY 2025-26. Unless otherwise stated, the financial information and financial performance discussed herein are based on the audited consolidated financial statements of the Company for FY 2025-26 and the corresponding comparative figures for FY 2024-25. The Companys consolidated financial statements include the financial results of its subsidiary, Ameenji Rubber Inc., USA, which forms part of the Companys consolidated operations.

Certain statements contained in this Management Discussion and Analysis may constitute “forwardlooking statements” within the meaning of applicable securities laws and regulations. These statements are based on the Companys current expectations, estimates, assumptions and projections regarding its business, financial performance, industry and future prospects. Such statements are subject to various risks, uncertainties and other factors, including changes in economic conditions, market conditions, government policies, regulatory developments and other factors beyond the Companys control, which may cause actual results, performance or achievements to differ materially from those expressed or implied in such statements. The Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect subsequent events, changes in circumstances or developments, except as may be required under applicable laws and regulations. Accordingly, readers are cautioned not to place undue reliance on such forward-looking statements.

Industry structure and developments

The Indian rubber industry remains an important component of the countrys manufacturing ecosystem, with natural rubber being widely used across tyre and general rubber goods industries. During FY 202425, Indias natural rubber production increased by 2.1% to 8.75 lakh tonnes, while domestic consumption stood at 14.10 lakh tonnes, indicating a continuing gap between domestic production and consumption. The auto-tyre sector accounted for 67.1% of total natural rubber consumption, while imports increased by 11.8% to 5.51 lakh tonnes during the year.

The latest provisional data published by the Rubber Board for FY 2025-26 indicates continued activity in the sector, with monthly natural rubber production and consumption remaining significant and domestic prices continuing to fluctuate. For example, average RSS-4 prices at Kottayam were ^19,975 per 100 kg in April 2025 and ^21,770 per 100 kg in March 2026, illustrating the movement in domestic rubber prices during the year.

Source: Rubber Board, Ministry of Commerce & Industry, Government of India

Annual Trends in Area, Production, Consumption, Import, Export and Average Prices of Natural Rubber in India

Source: https://rubberboard.gov.in/rbfilereaderRs.fileid=1327 Opportunities

Product Quality & Customer Retention: Established quality management systems, continuous process improvement and on-site technical support provide an opportunity to strengthen customer relationships, increase repeat business and expand the Companys customer base.

Product Customisation & Process Improvement: The Companys focus on customised systems and processes, manufacturing efficiency and adoption of new technology provides scope to improve operational capabilities and cater to evolving customer requirements.

Geographic Expansion: The Companys existing presence across international markets and its plans to enter new international and untapped domestic markets provide opportunities to broaden its customer base and diversify its geographical presence.

Customer & Market Expansion: Continued focus on customer engagement, timely delivery, product reliability and technical expertise provides opportunities to develop long-term customer relationships and increase the Companys presence across existing and new markets.

Threats

Raw Material Price Volatility: Fluctuations in natural and synthetic rubber prices, driven by global supply and demand, crude oil prices and market conditions, may increase procurement costs and put pressure on margins.

Supply Disruptions: Natural rubber is susceptible to adverse weather conditions, pests and diseases, while concentration of production in certain countries may expose supplies to geopolitical and trade disruptions.

Regulatory Developments: Changes in environmental regulations and sourcing requirements may affect the availability and cost of rubber and related inputs.

Segment-wise or product-wise performance

The Company operates in a single primary business segment, comprising the manufacturing and supply of rubber and rubber-based engineering products. During FY 2025-26, the Companys single operating segment recorded consolidated revenue from operations of Rs.12,324.99 lakh, compared with Rs.9,405.18 lakh in FY 2024-25, registering a growth of approximately 31.04%. The growth was primarily driven by an increase in domestic sales, which rose from Rs.8,378.42 lakh to Rs.12,106.28 lakh during the year. However, export sales declined from Rs.1,026.77 lakh to Rs.218.71 lakh. Despite the growth in revenue, profitability declined during the year, with Profit Before Tax decreasing from Rs.1,069.40 lakh to Rs.891.23 lakh and Profit After Tax decreasing from Rs.768.39 lakh to Rs.633.93 lakh. While revenue increased during the year under review, profitability declined primarily due to lower export sales.

Outlook

The outlook for the Company remains supported by continued Government investment in Indias road and railway infrastructure. The Union Budget 2026-27 provides a total budgetary allocation of ^2,93,030 crore for the Ministry of Railways, including ^2,77,830 crore towards capital expenditure for Indian Railways. The Government has also continued significant investment in the road transport and highways sector, with the 2026-27 Budget providing for expenditure towards development and maintenance of National Highways.

These investments are expected to support continuing requirements for specialised products used in transportation infrastructure, including bridge bearings, expansion joints, railway vestibules and rubberised level-crossing products. The Company intends to leverage its diversified product portfolio and manufacturing capabilities to participate in opportunities arising from infrastructure development, rehabilitation and maintenance, while continuing to focus on product quality, customer requirements and operational efficiency.

Risks and concerns

The Company is exposed to certain business and operational risks, including customer concentration and dependence on a limited number of customers, fluctuations in raw material prices and dependence on key suppliers located within limited geographical areas. The Company is also subject to stringent quality requirements, and any failure to meet applicable quality standards could adversely affect its reputation, orders and operations. Further, concentration of operations in certain geographical regions, dependence on its manufacturing facility, machinery and power supply, and the availability of adequate labour may affect business continuity in the event of disruptions. The Company also faces risks associated with industrial accidents and fire at its manufacturing facility, as well as foreign exchange fluctuations and adverse developments in overseas markets in respect of its export operations.

Internal control systems and their adequacy

The Company has established internal control systems commensurate with the size, scale and nature of its operations. The internal control framework is designed to support orderly and efficient conduct of business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. The Company also maintains appropriate systems and procedures for compliance with applicable laws and regulations. The adequacy and effectiveness of internal financial controls are subject to review through the Companys internal control and audit processes.

The Audit Committee reviews the adequacy of internal financial controls and risk management systems and considers relevant observations arising from the audit process. The Statutory Auditor also reports on the adequacy of the Companys internal financial controls with reference to financial statements and the operating effectiveness of such controls, as required under the Companies Act, 2013. Based on the processes and reviews undertaken during the year, the Company considers its internal control systems to be adequate and commensurate with its operations. The Board remains committed to continuously strengthening the Companys control environment in line with the evolving scale and requirements of the business.

Discussion on financial performance with respect to operational performance

During FY 2025-26, the Company recorded Revenue from Operations of Rs.12,324.99 lakh, as compared to Rs.9,405.18 lakh in FY 2024-25, registering a growth of approximately 31.04%. The increase in revenue was primarily driven by growth in domestic sales, which increased to Rs.12,106.28 lakh from ^8,378.42 lakh in the previous year. During the same period, export sales declined to Rs.218.71 lakh from ^1,026.77 lakh. The Company is engaged in the manufacture and supply of rubber and rubber- based engineering products, including expansion joints, bridge bearings, elastomeric pads, rubber sheets, rubber moulded components and other infrastructure-related rubber solutions, and operates as a single primary business segment.

Despite the growth in Revenue from Operations, the Companys Profit Before Tax decreased to Rs.891.23 lakh from Rs.1,069.40 lakh, while Profit After Tax decreased to Rs.633.93 lakh from Rs.768.39 lakh in FY 2024-25. The decrease in profitability was primarily attributable to lower export sales during the year, as export sales generally contribute relatively higher margins compared to domestic sales. In addition, the cost of materials consumed increased to Rs.7,933.66 lakh from ^6,087.90 lakh in the previous year, while employee benefit expenses stood at ^1,196.65 lakh compared with ^1,284.32 lakh in FY 2024-25. Accordingly, while the Company achieved a significant increase in revenue, particularly through its domestic operations, the change in sales mix and lower contribution from export sales, together with higher material consumption costs, resulted in a decline in overall profitability during the year.

Initial Public Offer and Utilisation of Issue Proceeds

During FY 2025-26, the Company completed its Initial Public Offer and was listed on the SME Platform of BSE Limited in October 2025. The Company raised Rs.3,000 lakh through the Issue. As at March 31, 2026, the proceeds of the Issue were utilised in accordance with the objects stated in the Offer Document, including funding of capital expenditure towards modernisation of existing machinery and procurement of new machinery for the new product line, repayment and/or pre-payment of certain borrowings, general corporate purposes and issue-related expenses. As at March 31, 2026, Rs.500 lakh remained unutilised and was temporarily invested in fixed deposits with scheduled banks. There was no deviation or variation in the utilisation of the Issue proceeds during the year.

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.

During FY 2025-26, the Company witnessed an improvement in the Inventory Turnover Ratio, which increased from 1.29 times to 1.62 times. The Debt Equity Ratio decreased from 2.10 times to 1.00 times, primarily due to the increase in Equity Share Capital and Other Equity pursuant to the Initial Public Offer. The Net Profit Margin declined from 8.17% to 5.14%, primarily due to lower export sales and an increase in the cost of materials consumed.

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

The Return on Net Worth of the Company decreased from 35.16% in FY 2024-25 to 11.59% in FY 2025-26, representing a decrease of approximately 67.02%. The decrease was primarily due to a significant increase in total equity during the year under review pursuant to the Companys Initial Public Offer, while Profit for the year declined from ^768.39 lakh in FY 2024-25 to ^633.93 lakh in FY 2025-26. The increase in total equity, together with the decline in Profit for the year, resulted in a lower return generated on the Companys net worth during FY 2025-26.

Material developments in Human Resources / Industrial Relations front, including number of people employed

The Company is evaluating and aligning its employment practices, compensation structures and related policies with the new Labour Codes and the applicable Rules and continues to monitor further notifications, amendments and implementation guidelines. As at March 31, 2026, the Company had 56 employees on its payroll across various functions.

DISCLOSURE PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013

Read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

1. Ratio of Remuneration of each Director to the Median Remuneration of Employees:

The ratio of the remuneration of each Director to the median remuneration of all employees of the Company for the Financial Year ended 31 March 2026 is set out in the table below: