Anjani Portland Cement Ltd Management Discussions

ECONOMIC SCENARIO AND OUTLOOK

Global Economy:

The global economy had shown resilience in the year 2025, achieving a growth rate of 3.2% despite challenges from war in the West Asia, geopolitical conflicts, trade tensions and shift in monetary policy. The year ended with a renewed geopolitical shock which has quickly altered the macro-financial landscape within weeks into a significant energy and market disturbance. Disruptions around the Strait of Hormuz-through which roughly one-fourth of global oil and around one-fifth of LNG flows transit- have heightened concerns of a sustained supply shock. For India, where more than 85% of crude oil requirements are imported, the macro implications are immediate. Global markets reflected this transition from a supportive to a more fragile environment.

The fiscal year 2026-27 continued under the political shadow of a geopolitical shock which has a direct influence on trade internationally and creates uncertainty in the global economic environment. The global economy faces renewed tests as the war in the Middle East threatens to disrupt growth and disinflation. According to expert predictions, global economic growth for the year 2026 is projected to be slow around 3.0% and inflation is projected to rise modestly in for the year 2026. A prolonged conflict, deeper geopolitical fragmentation, disappointment over AI-driven productivity, or renewed trade tensions could weaken growth and unsettle markets. High public debt and eroded policy buffers add vulnerability.

As energy costs continue to rise and sustainability demands increase, securing reliable and affordable energy sources is likely to become a major operational challenge for the global industry. The consistent pace amid numerous obstacles highlights the remarkable persistence of global economies. According to expert predictions, global economic growth for the year 2026 is projected to be around 3.0% and that global inflation is expected to fall but US inflation will return to target more gradually. The growth will be resilient as technology and adaptability offset trade policy headwinds

Indian Economy:

Indias economic momentum remains strong, underpinned by resilient domestic demand and sustained macroeconomic stability. In FY 2025-26, GDP marked a robust growth at 7.6%. With Indias economy showing resilient growth, supported by strong domestic demand, policy reforms, and a healthy investment pipeline, several new projects and developments are underway across key sectors. Over recent decades, Indias rapid economic growth has led to a substantial increase in its demand for exports. A stable external position, supported by a manageable current account balance and consistent capital flows, reinforces confidence in Indias long-term growth trajectory. The GDP growth is forecast at 6.5 per cent in FY27, reflecting moderation from FY26. Strong economic fundamentals, together with reform initiatives, helped India limit the impact of global disruptions.

INDUSTRY OVERVIEW

India is the second-largest producer of cement in the world. It accounts for more than 8% of the global installed capacity. Abundant limestone deposits across the country provides strong growth potential for cement industry. India has a lot of potential for development in the infrastructure and construction sector and the cement sector is expected to largely benefit from it. Furthermore, on the back of rising rural housing demand, the consumption of cement in India has been growing consistently as it is one of the cheapest products to buy in terms of /kg. Strong expansion of the industrial sector is one of the main demand drivers for the cement industry. As a result, there is a strong potential for an increase in the long-term demand for the cement industry. However, the per capita consumption of Cement in India is significantly lower than the global average, at between 290 kg and 340 kg per person, compared to 520 kg and 540 kg per person globally.

The demand for cement in India is expected to grow at a sturdy pace supported by government-led spending on infrastructure and housing. The Indian government is firmly focused on infrastructure development to spur economic growth and is striving for full infrastructure coverage to establish smart cities. The government plans to increase the capacity of railways and the facilities for handling and storage to enable the transfer of cement and cut out on transportation costs. These measures are expected to result in increased construction activity in the country, thereby boosting demand for cement.

Looking ahead, Indias cement industry is projected to grow at a CAGR of 6.5% from 2026 to 2031 reaching an installed capacity of 650 million metric tonnes per annum by 2031. Indias cement industry is on robust growth trajectory, underpinned by expanding infrastructure, housing demand, and strong private sector investments. Cement makers project 7-8% growth in FY27 despite West Asia headwinds, driven by infra spending, housing demand, and urbanization.

PERFORMANCE REVIEW

Operational Performance:

Cement

At present, our installed annual cement manufacturing capacity is 11,60,000 MT. In the financial year 2025-26 our annual production was 4,65,292MT of cement, constituting an annual capacity utilisation of 40%. The industry average capacity utilisation stood at 70% during the said period. Further, the cement industry average capacity utilisation is projected to increase to 75% over the next five years with the activities on development of infrastructure coupled with government-led spending on infrastructure and housing.

The Company is consistently enhancing its operational efficiency through various measures. During the financial year 2025-26, the following measures were taken to improve the operational efficiency:

? Increased kilns production by optimizing kiln operations & Raw mix.

? Debottlenecking of equipments to increase production capacity.

? Decreased equipment break downs and increased equipment availability.

Further the Company is constantly looking for improving its utilization of alternative fuel resources. This will not only improve the cost efficiency of our production but also contribute to the green environment by reducing the utilization of coal.

The below table sets forth the current installed cement capacity, utilization level and production of our Cement plants production unit and Cement sales volume for the periods indicated.

Particulars (in MT per annum except figures in %)	FY 2025- 26	FY 2024- 25
Installed Cement Capacity	11,60,000	11,60,000
Utilization Level	40%	61%
Cement Production	4,65,292	7,05,239
Cement Sales Volume	8,21,145*	9,99,823 **

*Including 3,60,870 MT of traded cement

**Including 2,83,291 MT of traded cement

In past few years, the cement industry is going through a consolidation phase, which has resulted in the larger brands vying for higher market share. This coupled with elections in Telangana and Andhra Pradesh exerted pressures on the volumes as well as on the realizations. The company increased its focus to sell in core markets thereby cutting down non core market sales. This resulted in lower capacity utilization.

In order to improve capacity utilization, the company initiated various measures like selling its certain cement products in Chettinad Brand, to its parent company. Going Forward this is likely to result in gradual increase in the capacity utilization and improve its sales performance and improve profitabilitys.

Captive Power Plant

Power Generation / Consumption/ Export details Financial Year 2025- 26
Power Plant	UOM	CPP			EB	Total Power Generation	Total consumption in cement plant (CPP+EB)	Total Export
		Gross Generation	Auxiliary Consumption	Net Generation		Net	Net
Anjani Works	Lac KWh	366.67	29.82	336.85	51.87	367	389	-

Financial Performance:

Particulars ( in Lakhs)	Standalone		Consolidated
	FY 2025- 26	FY 2024- 25	FY 2025- 26	FY 2024- 25
Total Income	31,043	37,453	45,691	43,171
Total Expenditure	33,405	42,110	48,670	52,868
EBIDTA	813	(307)	3,520	(1,794)
Profit Before Tax	(2,362)	(4,657)	(2,979)	(9,697)
Profit After Tax	(10,396)	(3,482)	(2,631)	(8,122)
Basic & Diluted Earnings Per Share of 10 each (Per Share)	(35.39)	(11.85)	(9.8)	(27.51)

Please refer the section Financial Performance of the Directors Report for detailed information.

Key Financial Ratios:

Particulars	FY 2025- 26	FY 2024- 25	Change %	Reason for increase/decrease (more than 25%)
Trade payable turnover ratio (in times)	4.02	5.62	(0.29)	Lower Purchases due to drop in production and no corresponding decrease in Avg Trade Payable
Net capital turnover ratio (in times)	(11.11)	(3.69)	2.01	Due to increase in working capital
Debt Equity Ratio (in times)	0.72	1.03	(0.30)	Debt reduced due to repayment of Long term borrowings
Current Ratio (in times)	0.67	0.43	0.57	Reduction in Current Liability due to repayment of bank borrowings and other liabilities.
Return on equity ratio (in %)	(0.07)	(0.09)	(16.44)	Due to lower PBT Loss (Excl Exceptional Item)
Net Profit Margin (in %)	(0.08)	(0.09)	(17.02)	Due to lower PBT Loss (Excl Exceptional Item)
Debt service coverage ratio (in times)	0.31	0.30	0.04	Reduction in Borrowings
Return on capital employed (in%)	0.00	(0.02)	(107.69)	Due to repayment of Long term borrowings and positive EBIDTA returns during the year
Inventory Turnover Ratio	12.45	14.00	(0.11)	Due to decrease in Sales
Interest Coverage Ratio	0.04	(0.68)	(1.05)	Due to higher earnings
Operating Profit Margin (%)	0.03	(0.01)	(418.97)	Due to higher operational profit
Debtors Turnover	22.77	15.52	0.47	Reduction in Trade Receivables

Details of any change in return on net worth as compared to the immediately previous financial year:

The return on net worth for the financial year 2025-26 has decreased from (9.25)% to (38.04)% due to increase in losses on account of lower sales realization and also on account of exception item viz., sale in investment in subsidiary.

Segment wise or product wise performance:

The Company has following business segments, which are its reportable segments during the year. These segments offer different products and services, and/or managed separately because they require different technology and production processes.

Reportable Segment	Product/ Services
Cement	Manufacturing and trading of cement
Power Plant	Generation of power

The performance is detailed as under;

Particulars ( in Lakhs)	Year ended March 31, 2026			Year ended March 31, 2025
	Cement	Power	Total	Cement	Power	Total
Segment Revenue	31,020	2,468	33,488	37,344	3,937	41,281
Less : Inter Segment Revenue	-	(2,468)	(2,468)	-	(3,937)	(3,937)
Total Revenue from Operations	31,020	-	31,020	37,344	-	37,344
Segment Result (Profit Before Tax and Interest) from each Segment	89	-	89	(1,891)	-	(1,891)
Less : Exceptional Item	-	-	(7,996)	-	-	-
Less : Interest	-	-	2,451	-	-	(2,766)
Total Profit Before Tax	-	-	(10358)	-	-	(4,657)
Capital Employed (Segment Assets - Segment Liabilities)	As on March 31, 2026			As on March 31, 2025
Segment Assets	49,611	6,472	56,083	85,152	6,675	91,827
Segment Liabilities	28,555	199	28,754	53,999	190	54,189

BUSINESS REVIEW

Sustainable Development:

Sustainability is a core element of our business strategy, with a focus on conservation of environment, natural resources and energy efficiency. Its initiatives include reducing the clinker factor, lowering energy intensity, and incorporating waste from other industries into its cement manufacturing process. The Companys plant is ISO 14001 certified, validating its commitment to sustainability. Furthermore, through focused interventions across areas such as healthcare, education, employment, and sustainable livelihoods in areas around its operations, the Company positively impacts the lives of thousands of people.

? Energy Conservation

Energy conservation is at the extreme focus of the Company and has seen numerous innovations and initiatives over the years ranging from shop-floor experiments to capex. This has yielded multiple benefits including reduction in carbon intensity and rationalization of production costs. More details on initiatives taken in the area of energy conservation are given in Annexure 3 to this Annual Report.

? Alternative Fuels and Raw Materials

Company is constantly working on to increase usage of alternative raw materials and fuels in its operations. Company uses wastes of various industries such as Pharma, Chemical, Sponge Iron, fertilizer, thermal power plant and others as alternative raw materials and alternative fuels. The pharmaceutical waste is used to substitute coal for thermal energy requirement in our Cement Plant. This solvent waste is available to us at zero landing cost to our manufacturing facility. Currently, we procure these solvents from pharmaceutical companies located in and around Hyderabad and Visakhapatnam. Pharmaceutical waste like spent carbon, spent organic liquid and spent organic solid can be substituted in place of coal, to reduce carbon-di-oxide emissions and also reduce cost of production. These measures have helped the Company to maintain its thermal substitution rate at

7.95 % in financial year 2025-26 which is at par with Industry Standards. The Company also uses alternative raw materials in place of laterite and Iron ore. Companys share of alternate raw material consumption in total raw material consumption stood at 17.02% in financial year 2025-26.

? Green Products

The Company has been producing blended cement in the category of Portland Pozzolana Cement (PPC) conforming strictly to the specified BIS norms. Blended cement contributes to sustainable design by making concrete stronger and durable, reducing consumption of natural resources such as limestone, lowering greenhouse gas emissions, and contributes to a circular economy by utilizing wastes from power, iron and steel plants. Use of blended cement also has cost benefits for Companys customers. The share of blended cement in total cement production is 43.71% in financial year 2025-26.

? Environment, Occupational Health & Safety

The company views occupational health and safety (OHS) as an integral part of its operations. Employee safety is taken as the most important operating metric. By establishing strong internal controls and governance mechanisms, the Company has been able to continuously enhance the safety and well-being of its workforce. A strong governance mechanism is in place to ensure action plans are being implemented and that the risk mitigation efforts are on track.

Similar importance is given to protection of the environment. Some of the notable initiatives in this area are as follows:

? Line-1 & 2 coal storage shed side walls closed with sheeting to decrease fugitive emissions.

? AFR Storage shed side walls closed with sheeting to decrease air emissions.

? New shed constructed for Line-2 packing plant to decrease fugitive emissions.

? All conveyor discharge areas covered with sheeting to decrease fugitive emissions.

? Water Conservation

The Company is mindful of the water scarcity in the country and is tirelessly working towards achieving water security. Some of the notable initiatives in this area are as follows:

? Water harvesting in mined-out pits.

? Water harvesting initiatives in the nearby communities.

? Quality control

The Company have an analytical laboratory for quality control at its manufacturing facility which is controlled by experienced team of professionals. Our laboratory is equipped with X-ray analyzer for monitoring of mineral composition of raw materials and the final product. Samples of the final products are also sent to independent quality analysts for inspection to enhance and standardize quality norms.

? Awards and Recognition

The company has already achieved ISO Certification ISO 9001:2015 for Quality Management System Standard, ISO 14001:2015 for Environmental Management System Standard, ISO 45001:2018 for Occupational Health and Safety Management System Standard.

RISK MANAGEMENT

The Company has well defined structure which enable and empower management to identify, assess and leverage business opportunities and manage risk exposure in the organization effectively. As per Risk Management framework and procedures, management treat various category of risks and take appropriate actions for its mitigation. Company has a process for communication, consultation, monitoring and periodical review of the risks to ensure effective prevention and mitigation plan. A Risk Management Committee has also been constituted to oversee the risk management process.

The key risks identified by the Company as are follows:

Raw material risk:

The cement industry depends primarily on limestone and other raw materials. Our competitiveness, costs and profitability depend, in part, on our ability to source and maintain a stable and sufficient supply of raw materials (such as limestone, gypsum, fly ash, granulated slang, iron ore and laterite) at acceptable prices. The price of raw materials can be uncertain due to various factors beyond our control, such as climatic and environmental conditions, commodity price fluctuations, market demand, spread of infectious diseases, such as the COVID-19 pandemic, production and transportation cost, natural catastrophes, and changes in government policies including duties and taxes and trade restrictions. In addition, competition in the industry may result in increase in prices of raw materials, which we may not be able to match, thereby affecting our procurement.

Competition risk:

The Indian cement industry is highly competitive and is dominated by a few large pan-India cement manufacturers. In southern region of India, our major competitors include well-known locally established cement manufacturers. Competition occurs principally based on price, quality and brand name. As a result, to remain competitive in our markets, we continuously strive to reduce our costs of production, ensure consistent quality of cement comparable to the best in industry and maintain a brand of our own in the market.

Risk of change in Government policies:

The cement manufacturing companies are heavily reliant on demand from the cement - consuming industries such as infrastructure, housing and commercial real estate. Infrastructure sector drives overall development of the economy and is a major focus of the Government of India. Any pullback by the government on its initiatives will result in recession in the cement industry.

Power and fuel cost risk:

The cement industry is highly energy intensive and therefore require continuous supply of power and fuel. The production cost has seen an adverse impact due to the increased cost of power & fuel and freight. Any rise in international coal prices will adversely impact the operating costs of the Company. The Company focused on reducing the cost of power and fuel by maximizing the usages of the domestic coal and various alternative fuels, reducing our dependence on international coal.

Logistics Risk:

The Company currently use road transportation for dispatches. With the rise in diesel prices, the cost of road transportation has increased. The cost increase and huge dependence on road transportation is having an adverse impact on our operational costs. Initiatives to improve efficiency by increasing dispatches through bulk cement were some of the measures undertaken to achieve this.

Marketing Risk:

Due to increased demand for cement, intense competition is expected, which may adversely impact on the Companys market share, sales volume, and profitability. Our company continues to evaluate various marketing opportunities and take appropriate effective strategies to improve its sales and maximize its revenue.

Information Technology Risk:

Our day to day operations depend on the information technology systems. All our operations function under an ERP system and we rely heavily on our information technology systems including for our manufacturing process which is significantly automated. We also use information technology systems for routine corporate activities such as processing of financial information, managing information pertaining to creditors/ debtors and engaging in normal business activities. We have a backup system in place which collects and maintain backup of the data every 24 hours to avoid any security breaches. Effective cyber security requires protecting both our hardware and software from misuse, interference, loss, unauthorized access, modification and disclosure and we as a concerned and proactive organization have taken all effective measures to design our control mechanism and ensure that we are cyber-secured.

Talent Management:

Human resources are most critical behind Raw Materials in deciding the Companys ability to deliver value to its various stakeholders. Attrition and the non-availability of the required talent resources can affect the overall performance of the Company. Our critical challenges include recruiting, training and retaining talent and ensuring the right people are in the right roles. We mitigate talent management risks by providing specialized training courses to enhance and reskill employees, thus creating a talent pipeline for future roles.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has got an adequate system of internal control in place commensurate with the size of its operation and is properly designed to protect and safeguard the assets of the Company. There is a proper system for recording all transactions which ensures that every transaction is properly authorized and executed according to norms.

The Company has also appointed M/s. M. Bhaskara Rao & Co., Chartered Accountants as Internal Auditors to conduct the Systems and Compliance Audit of the Company. The Internal Auditors, conducts systematic assessments of processes, tools, and practices used for risk identification, evaluation, control, monitoring, and reporting. Audit findings are reported quarterly to the Boards Audit Committee, which reviews them and recommends improvements to the Risk function.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Company holds its skilled and trained workforce in high esteem, recognizing them as indispensable for achieving organizational goal. During the year, the Company undertook a variety of training initiatives covering a wide spectrum of topics. These encompassed technical competencies crucial for operational excellence, programs aimed at fostering positive behavioral traits, workshops focusing on enhancing business acumen, as well as both general and advanced management principles. The main focus of all the training programmes were to upskill talent at all levels to provide them a ground for personal growth within the company. This would not only result in retention of talent but also optimizing of available resources.

Customer-centric training was prioritized to uphold service standards, while safety protocols were reinforced to ensure a secure work environment. The Company emphasized the importance of values and ethical conduct, instilling a sense of integrity and responsibility across all levels of the workforce. The Industrial relations during the year under review has been cordial and contributed to mutual development of the organization and employees. The Company employed 175 people as of 31st March, 2026.

CAUTIONARY STATEMENT

The Management Discussion and Analysis Report made above are on the basis of available data as well as certain assumptions.

Important factors that could influence Companys operations include global and domestic supply and demand conditions affecting the selling price of finished goods, availability of inputs and their prices, changes in government regulations, tax laws, economic developments within the country and outside and other factors such as litigations and Industrial relations.

The Company assumes no responsibilities in respect of the forward looking statements which may undergo changes in the future on the basis of subsequent developments, information or events.