Asian Granito India Ltd Management Discussions

Pursuant to Schedule V to the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis Report covering business performance and outlook (within limits set by the Company?s competitive position) is given below:

Economic Review Global Economy

The global economy is navigating a dynamic landscape, amidst a spectrum of challenges and opportunities. Demonstrating remarkable resilience in CY 2023, it experienced a steady but slow recovery, albeit with regional disparities. According to the International Monetary Fund (IMF), the global economy achieved a modest growth rate of 3.2% in CY 2023. Despite escalating geopolitical conflicts, higher inflation, higher interest rates, a sluggish recovery in China and volatility in energy prices and food markets, global economic growth has decelerated but not halted. Furthermore, the crisis in the Red Sea route has caused the biggest diversion of global trade in decades, resulting in higher logistical costs, shipment delays, and elevated fuel and commodity prices.

Global inflation continues to recede at a faster pace and decreased from 8.7% in CY 2022 to_6.8% in CY 2023. It is expected to decline further to 5.9% in CY 2024 and 4.5% in CY 2025. Core inflation has remained persistent and is expected to decline gradually. Advanced economies are returning to their inflation targets sooner than emerging market and developing economies, fostering optimism for continued easing of financial conditions and improvement of monetary policy frameworks.

Economic growth in several emerging markets and developing economies has surpassed projections in CY 2023. Additionally, a positive development is the strongest recovery of the_ US economy_ among major economies, marked by a stronger performance in private consumption, swift containment of a looming banking crisis, tight labor market, and rising wages. The GDP of the US increased to 2.5% in CY 2023 and is projected to grow to 2.7% in CY 2024. The Euro Area has shown resilience in managing unprecedented shocks triggered by the prolonged Russia-Ukraine war, the lingering impacts of tight monetary policy, and previous energy price fluctuations. After experiencing a 0.4% decline in GDP growth in CY 2023, the Euro Area is projected to grow at 0.8% in CY 2024.

Despite economic uncertainties and heightened geopolitical tensions posing risks to the outlook, positive factors, such as rapid disinflation, economic stimulus in China, easing fiscal policy, the fading of prior energy price shocks, rebound in the euro area and a notable resurgence in labor supply in many advanced economies are expected to bolster the global economic outlook. The global economy is expected to grow at 3.2% in both CY 2024 and CY 2025. Advanced Economies (AEs) are projected to witness a modest uptick in growth from 1.6% in CY 2023 to 1.7% in CY 2024 and 1.8% in CY 2025. Emerging Markets and Developing Economies (EMDEs) are expected to experience a slight decline from 4.3% in CY 2023 to 4.2% in CY 2024 and CY 2025. With the improvement in the economic landscape, the World Trade Organisation predicts a moderate recovery in global merchandise trade volume, with growth rates expected to reach 2.6% in 2024 and further increase to 3.3% in 2025.

(Source: IMF-World Economic Outlook April 2024, World Trade Organization)

Indian Economy

Amid a volatile global economic landscape, India shines as a beacon of stability. The Indian economy maintained a steady growth trajectory, solidifying its position as the fifth-largest economy in the world. According to the provisional estimates of gross domestic product (GDP) growth released by the National Statistical Office (NSO), India?s GDP growth rate has exceeded the second advance estimate and is estimated to reach 8.2% in FY 2023-24_compared to 7.0% in FY 2022-23. The fourth quarter of FY 2023-24 witnessed a robust growth rate of 7.8% Y-o-Y due to strong performance in the manufacturing sector. The overall economic growth was supported by strong domestic demand, increased investment, moderate inflation and a stable interest rate environment.

India?s Index of Industrial Production (IIP) recorded a growth rate of 5.8% in FY 2023-24, marking an increase from 5.2% in the previous year. The Mining sector recorded the highest growth at 7.5%, followed by Electricity at 7.1% and Manufacturing at 5.5% in FY 2023-24. The growth observed in the IIP, Goods & Services Tax (GST) collections, manufacturing Purchasing Managers? Index (PMI), per capita income and increasing private capital expenditure collectively signifies strong economic momentum. India?s per capita GDP in current prices is estimated at Rs 2.11 Lakhs in FY 2023-24, achieving healthy growth of 8.6%. Rising levels of disposable income have led to an upswing in household consumption, stimulating demand across sectors. Furthermore, headline inflation softened to 5.4% during FY 2023-24 from 6.7% in the previous year. However, volatile food prices hinder the trajectory of disinflation. The RBI opted to maintain the policy repo rate at 6.50% and remain vigilant to take effective measures to achieve the target of 4% inflation.

Despite a subdued external environment, India?s overall trade deficit significantly improved by 35.77% from USD 121.62 billion in FY 2022-23 to USD 78.12 billion in FY 2023-24. Merchandise trade deficit improved by 9.33% at USD 240.17 billion compared to USD 264.90 billion in the previous fiscal year. Total merchandise exports stood at USD 437.06 billion in FY 2023-24. Electronic Goods, Drugs & Pharmaceuticals, Engineering Goods, Iron Ore, Cotton Yarn/Fabric/made-ups, Handloom products, etc. and Ceramic products and glassware were major contributors to export growth.

India?s economic outlook remains promising with the IMF projecting a GDP growth rate of 6.8% in FY 2024-25 and 6.5% in FY 2025-26. The economy is poised to benefit from the demographic dividend, increased capital expenditure, proactive government policies, robust consumer demand and improving rural consumption prospects. As headline inflation eases towards the target, it is expected to stimulate consumption demand, especially in rural areas.

The government?s continued emphasis on capital expenditure and fiscal consolidation efforts, coupled with growing consumer and business optimism augur well for investment and consumption demand. Key government initiatives such as ‘Make in India 2.0?, Ease of Doing Business and PLI scheme are poised to bolster the infrastructural and manufacturing base, enhance economies of scale, boost exports and position India as a global manufacturing hub. Furthermore, 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 lay the foundation for achieving the vision of a developed and self-reliant India by 2047.

(Source: National Statistical Office, Ministry of Statistics & Programme Implementation, Economic Times, Reserve Bank of India, Ministry of Commerce & Industry, IMF - World Economic Outlook April 2024)

Industry Overview Global Tiles Industry

The global ceramic tiles market size reached USD 84.8 billion in CY 2023 and is projected to reach USD 135.8 billion by CY 2032, reflecting a growth rate of 5.2% during CY 2024 - CY 2032. Key factors driving market growth include a surge in global construction activities, increasing demand for aesthetic ceramic tiles, technological advancements in manufacturing, rising popularity of custom designs, ease of maintenance, expansion in the renovation sector, and supportive government initiatives. The rapid evolution of technology, such as digital printing technology, has revolutionized tile designs. Innovations in tile manufacturing have resulted in the development of larger format tiles and thinner tiles, which are gaining popularity for their modern aesthetics and ease of installation.

According to the Mecs/Acimac Research Department report "World production and consumption of ceramic tiles", 11^th edition 2023, the performance of the global ceramic industry and market in 2022 was influenced by inflation, energy crisis, and a reduction in demand following the post-pandemic surge. Global ceramic tile production decreased to 16,762 million sq. mtr. in CY 2022, marking a 9.7% decline from the 18,572 million sq. mtr. in CY 2021. This represented a decrease of 1.8 billion sq. mtr., primarily attributed to declines in China. Production in Asia decreased by 11.6%, from 13.8 billion sq. mtr. to 12.2 billion sq. mtr., representing 73% of global production, with China accounting for a loss of 1.55 billion sq. mtr. contributing to this decline.

Most other regions also experienced a contraction. Production across the European continent decreased to 1,908 million sq. mtr., accounting for 11.4% of global production, with a reduction of 8.4% in the European Union, down to 1,267 million sq. mtr. and 13.5% in non-EU Europe, totaling 641 million sq. mtr., primarily due to declines in Turkey and Ukraine. Similarly, production in the American continent also decreased, reaching 1,624 million sq. mtr. North America maintained its CY 2021 production levels at 378 million sq. mtr., with a marginal increase of 0.3%, while production in Central and South America declined to 1,246 million sq. mtr., representing an 8.4% decrease. In contrast to other continents, Africa experienced an increase in production to 1,037 million sq. mtr. in CY 2022, marking a significant rise of 139%, driven by growth in Egypt, Algeria, Ghana, Kenya, and Zambia.

Global tile consumption decreased from 18,378 million sq. mtr. to 16,377 million sq. mtr. in CY 2022, marking a 10.9% decline. Similar to production trends, this decline was observed across all regions except Africa, which saw a 5.4% growth to 1,241 million sq. mtr. In Asia, consumption declined to 11.6 billion sq. mtr., comprising 71% of the world total, reflecting a 12.6% decrease. In Europe, consumption dropped in both European Union countries to 1,002 million sq. mtr. (a 6.3% decline) and non-EU Europe to 635 million sq. mtr. (an 11.9% decrease). Similarly, consumption in the Americas decreased in both Central and South America to 1,241 million sq. mtr. (a 14.3% decline) and in North America to 580 million sq. mtr. (a 3.8% decrease).

In CY 2022, global exports declined by 8.1%, reversing the previous year?s gains and returning to CY 2020 levels of 2,770 million sq. mtr. This contraction affected all geographical areas except North America, which saw a 5.8% increase to 48 million sq. mtr. Asia experienced a 4.3% decrease, falling from 1,414 to 1,353 million sq. mtr., representing 48.8% of global exports. European Union exports decreased from 1,051 million sq. mtr. to 965 million sq. mtr., reflecting an 8.2% decline and accounting for 35% of the global total. Exports from non-EU European countries also declined significantly. Exports from Central and South America decreased by 10.2% to 164 million sq. mtr. and from Africa by 22.7% to 66 million sq. mtr.

TOP MANUFACTURING COUNTRIES

COUNTRY	2018 (Sq.m Mill.)	2019 (Sq.m Mill.)	2020 (Sq.m Mill.)	2021 (Sq.m Mill.)	2022 (Sq.m Mill.)	% on 2022 world production	% var. 22/21
1. CHINA	9,011	8,225	8,474	8,863	7,312	43.6%	-17.5%
2. INDIA	2,011	2,223	2,318	2,550	2,300	13.7%	-9.8%
3. BRAZJL	872	909	840	1,049	927	5.5%	-11.6%
4. VIETNAM	602	560	559	554	579	3.5%	4.5%
5. SPAIN	530	510	488	587	500	3.0%	-14.8%
6. IRAN	383	398	449	458	480	2.9%	4.8%
7. ITALY	416	401	344	435	431	2.6%	-0.9%
8. INDONESIA	383	347	304	410	430	2.6%	4.9%
9. TURKEY	335	296	370	438	385	2.3%	-12.1%
10. EGYPT	300	300	285	340	380	2.3%	11.8%
TOTAL	14,843	14,169	14,431	15,684	13,724	81.9%	-12.5%
TOTAL WORLD	17,430	16,806	17,134	18,572	16,762	100.0%	-9.7%

TOP CONSUMPTION COUNTRIES

COUNTRY	2018 (Sq.m Mill.)	2019 (Sq.m Mill.)	2020 (Sq.m Mill.)	2021 (Sq.m Mill.)	2022 (Sq.m Mill.)	% on 2022 world production	% var. 22/21
1. CHINA	8,163	7,453	7,859	8,268	6,737	41.1%	-18.5%
2. INDIA	1,742	1,867	1,884	2,069	1,750	10.7%	-15.4%
3. BRAZIL	775	802	829	902	736	4.5%	-18.4%
4. VIETNAM	542	467	440	420	505	3.1%	20.2%
5. INDONESIA	450	413	357	478	489	3.0%	2.3%
6. EGYPT	236	239	237	308	368	2.2%	19.5%
7. USA	289	273	264	289	285	1.7%	-1.4%
8. SAUDI ARABIA	206	223	284	252	271	1.7%	7.5%
9. TURKEY	236	185	241	291	260	1.6%	-10.7%
10. MEXICO	236	238	242	276	257	1.6%	-6.9
TOTAL	12,875	12,160	12,637	13,553	11,658	71.2%	-14.0%
TOTAL WORLD	17,313	16,642	17,098	18,378	16,377	100.0%	-10.9%

Source: Ceramic Tiles Market Report by Type_and Region 2024-2032 (Imarcgroup.com), Mecs/Acimac Research dept. report- ‘World production and consumption of ceramic tiles?, 11^th edition 2023

Indian Tiles Industry

India maintains its position as the world?s second-largest producer and consumer of tiles. The Indian Ceramic Tiles Market is estimated to be valued at USD 9.20 billion in CY 2024 and is projected to grow to USD 17.36 billion by CY 2029, with a CAGR of 13.54% during the forecast period. The Indian tiles market has been growing steadily, propelled by the growth in the construction and real estate sector. The increasing demand for ceramic tiles in India can be attributed to several factors, including robust growth in the residential and commercial infrastructure. Additionally, the urbanization trend has sparked increased demand in residential and commercial markets, resulting in the increased consumption of building materials, including ceramic tiles. Furthermore, government investments in infrastructure, along with initiatives such as the Smart Cities Mission and the Pradhan Mantri Awas Yojana (PMAY) focused on affordable housing, are further accelerating market growth.

Increasing disposable incomes have also spurred demand as people seek to enhance the aesthetics of their homes and workplaces, leading to higher spending on wall and floor upgrades. The growth of the market is further propelled by the _ourishing tourism and hospitality industry along with the corporate sector. The proliferation of hotels and business offices in the country contributes significantly to the increasing need for tiles.

The Morbi district in Gujarat is renowned as the world?s second-largest ceramic cluster, housing more than 1,800 manufacturing units. This cluster dominates India?s ceramic products market with a substantial 90% share. Moreover, it is the hub for 95% of India?s ceramic tile producers. However, the share of organized players in this cluster has been steadily increasing. Leading tile manufacturers are forging joint ventures with smaller, unorganized players or outsourcing to them, with the goal of integrating them into the organized sector for the benefit of the entire industry. Tiles produced in Morbi are majorly exported to East Asia, the US, Europe, Africa, and the Middle East.

India?s ceramic tile industry has attracted global attention in recent years due to the remarkable growth in export volumes, which have increased steadily across all continents. This surge in exports is primarily led by the dense network of companies within the Morbi ceramic cluster. In CY 2023, India?s ceramic tile exports recovered strongly from the decline recorded in

CY 2022, the only year of contraction in the history of the Indian ceramic industry, due to the energy crisis and the sharp increase in transport costs. Export volumes surged to 589.5 million sq. mtr. marking a 39.6% rise over CY 2022, with revenues climbing to EUR 2.25 billion, showing a 28.2% increase. While Indian exports grew at a CAGR of_ 21.5% between CY 2014 and CY 2023, exports to Asia increased by 14.1%, while shipments to North America surged by 93.5%, to non-EU Europe by 66%, to the European Union by 35.8%, to Africa by 25.7%, and to South America by 22.4%.

India?s Ceramic Tile Export by Region

REGION/AREA	VOLUME IN MLN SO.M.			VALUE IN MLN EUR
	2022	2023	Var.% 23/22	2022	2023	Var.% 23/22
Asia	233.2	249.5	7.0%	922.1	901.9	(2.2%)
Africa	71.9	121.3	68.8%	239.8	348.7	45.4%
NAFTA	43.9	65.4	48.8%	212.8	290.8	36.6%
European Union	33.4	58.4	75.2%	168.1	270.4	60.8%
Other Europe	22.5	54.4	142.3%	139.0	287.4	106.8%
Latin America	15.5	37.9	144.6%	67.2	143.9	114.2%
Oceania	18.0	2.5	41.4%	9.9	11.1	122.0
Total Exports	442.1	589.5	39.6%	1,758.9	2,254.3	28.2%

Source: Ceramic World Web

Source: Ceramic Industry in India Size & Share Analysis - Growth Trends & Forecasts (mordorintelligence.com), Indian Ceramic Tile Exports 2023 (Ceramic World Web), Vibrant Gujarat - Development of Ceramic Park at Morbi

Outlook

The Indian ceramic tiles industry is poised for accelerated growth, supported by strong domestic and global demand. Furthermore, manufacturers are prioritizing quality and the adoption of cutting-edge technologies to meet the demands of export markets. However, challenges arise from persistent inflation in several countries, and elevated freight costs and delays in transit time due to the Red Sea crisis. Additionally, escalating geopolitical tensions have the potential to disrupt the supply chain in the future and may adversely impact exports.

In the longer term, the Indian ceramic tiles industry is poised to emerge as a global hub, leveraging its manufacturing prowess, skilled and adaptable workforce and cost advantages. Furthermore, the Indian industry is well-positioned to benefit from the ‘?China plus one?? strategy as countries seek to reduce reliance on China by exploring alternative sources. With a strong focus on technology, product assortment, innovation and quality, we stand in a good position to emerge as a leader in the lucrative exports market.

Global Marble & Quartz Industry

The global marble market size is estimated at USD 20.81 billion in CY 2024 and is expected to reach USD 26.07 billion by CY 2029, growing at a CAGR of 4.61%. The rapid growth in the construction industry is expected to drive marble consumption in building and decoration applications worldwide in the coming years. Asia-Pacific dominates the market, with the most significant consumption from countries such as China and India. The region is expected to be the dominating and fastest-growing market over the forecast period, owing to increasing government investment in the building and construction industry in the region.

In India, the growing real estate sector, which is mainly focused on residential and commercial spaces, is key to the sector?s growth. Demand for residential housing in India has surged due to rapid urbanization and rising household income. Furthermore, the Indian government has allowed foreign direct investment (FDI) of up to 100% for settlement development and township projects. Consequently, this is expected to stimulate residential housing construction in the country, thereby increasing demand for marble and quartz.

Source: Marble Market Size & Share Analysis - Growth Trends (mordorintelligence.com)

Global Sanitaryware Industry

The global sanitaryware market is projected to expand from USD 53.59 billion in CY 2024 to USD 74.80 billion by CY 2029, with a CAGR of 6.89% over the next five years. This growth is primarily driven by robust activity in residential, commercial, and infrastructure development projects, boosting demand for sanitaryware in both residential and commercial sectors.

According to statistics from UNICEF and the World Health Organization (WHO), more than half of the global population still lacks access to safe sanitation. Numerous NGOs, supported by WHO and the World Bank, are actively running campaigns and constructing toilets in rural and underdeveloped areas to improve sanitation conditions. This has contributed to the growth of the sanitaryware industry, which still holds significant potential for further expansion.

The global sanitaryware and bath fittings market is experiencing growth due to several factors like the growing adoption of smart home technologies and evolving trends in residential interior design. Additionally, the market is expected to expand with the introduction of innovative smart bathroom fittings, offering features such as water flow control, adjustable lighting and integrated music systems. In addition, the pandemic heightened awareness about hygiene, prompting a rise in global demand for showers and faucets. The developments in the hospitality sector and associated infrastructure upgrades are also contributing to the market?s upward trajectory.

The Asia-Pacific region is the world?s leading exporter of sanitaryware products and is poised to experience significant growth in sanitaryware and bathware segments. This expansion is driven by urbanization, favorable demographics and increased investments by millennials in home ownership and renovation and contemporary interior designs across both developed and developing economies. Additionally, strong economic growth in the region, supported by government initiatives and manufacturing activities, is expected to further boost market expansion.

Source: Sanitaryware Market Size & Share Analysis - Growth Trends & Forecasts (mordorintelligence.com)

Growth Drivers

• Government?s focus on infrastructure and housing development: The government?s emphasis on infrastructure development with augmented investment, development of industrial corridors, an outlay of Rs 80,671_Crores for the Pradhan Mantri Awas Yojana (PMAY) along with the proposed construction of 2 Crore more houses under the PMAY-Gramin in the Interim Budget 2024-25 is expected to drive the growth of the construction sector and boost demand for tiles. The Indian real estate market is projected to reach a value of USD 1.5 trillion by CY 2034, representing 10.5% of economic output. Flagship programs, such as the Smart Cities Mission, PMAY (Urban and Gramin) and NTR and DDA Housing Scheme, Housing for All and Credit-Linked Subsidy Scheme (CLSS) are shaping the real estate sector and creating significant opportunities for the tiles and sanitaryware industry. Furthermore, factors such as population surge, urbanization, a growing trend towards homeownership, the prevalence of nuclear families, and the burgeoning middle class with increasing disposable income have led to increased demand for residential spaces with aesthetic flooring solutions, thereby significantly boosting demand for tiles, marbles, sanitaryware and bath fitting products.

• Expansion of commercial and hospitality infrastructure:

As economic growth continues, the demand for commercial real estate is increasing not only in major cities but also in Tier II and Tier III cities. These cities have seen a rise in both demand and supply for office real estate. The growing economic activity and formal employment are projected to necessitate ~2.7 billion sq. ft. of office space by CY 2034. Additionally, growing income levels and consumer sentiments are boosting retail consumption, anticipated to stimulate growth in the retail real estate sector, including shopping malls. Furthermore, factors such as favorable demographics, rising income levels and an increase in the frequency of business and leisure travel have bolstered the demand for hospitality infrastructure. The expansion in commercial and hospitality infrastructure supports the growth of the ceramic tile, sanitaryware and bath fitting market.

• Low per capita consumption: India?s per capita consumption of tiles is estimated at ~0.6 sq. mtrs. This is significantly lower compared to 4.0 sq. mtrs. in China, 3.4 sq. mtrs. in Brazil and the global average of 1.4 sq. mtrs. This highlights substantial growth potential for the Indian tile industry.

• Shift towards innovative, value-added products:

The advent of trends such as printed ceramic tiles, germ-free tiles, 3D tiles and aesthetically captivating mosaic tiles is expected to drive growth in the Indian tile industry. Consumers are increasingly opting for digitally-printed tiles to enhance the visual appeal of residential and commercial spaces. Furthermore, there is a growing preference for germ-resistant tiles as hygiene awareness among consumers continues to rise.

• Diversification from China: The government has imposed anti-dumping duties on imports of luxury vinyl tiles and gypsum tiles imports from China for five years. The anti-dumping duty is set at USD 2.05 per sq. mtr. for luxury vinyl tiles from China and USD 1.44 per sq. mtr. for imports from Taiwan. These measures are aimed at promoting fair trade practices and ensuring a level playing field for the domestic industry.

• Government initiatives: The implementation of programs like the Micro and Small Enterprises - Cluster Development Programme (MSE-CDP) and Industrial Infrastructure Upgradation Scheme (IIUS) for cluster development and Credit Linked Capital Subsidy Scheme (CLCSS) and the National Manufacturing Competitiveness Programme (NMCP) for technology upgradation, has contributed to the growth of the ceramic tile industry. Other initiatives such as ‘Make in India? and ‘Vocal for Local? also foster industry growth. Moreover, the construction of toilets under the ‘Swachh Bharat? mission has boosted the demand for sanitaryware and ceramic tiles.

Company Overview

Asian Granito India Ltd. (hereinafter referred to as ‘?AGL?? or ‘?the Company??) has rapidly ascended to prominence as India?s leading brand in luxury surfaces and bathware solutions in a short span. Specializing in a wide range of products including tiles, engineered marble and quartz surfaces, countertops, sanitaryware, bathware, faucets and construction chemicals, AGL products are renowned for their reliability, adaptability, and cutting-edge innovation. Leveraging our profound expertise and understanding of building materials, we have transformed into a brand that provides integrated solutions under one umbrella. AGL has successfully crafted a strong global brand identity recognized for its unwavering commitment to quality, boasting a loyal customer base across diverse market segments. The Company has also fortified its position as the 4^th largest publicly listed ceramic tile company in India.

AGL has 14 state-of-the-art manufacturing units, comprising 5 own plants, 4 subsidiaries and 3 outsourcing facilities. These facilities, equipped with a combined capacity of 54.5 million sq. mtrs., are strategically located across Gujarat. Additionally, the Company boasts a widespread marketing and distribution network across India, encompassing over 14,000 touchpoints, 235+ exclusive franchise showrooms and 12 company-owned display centers across India. AGL also exports its products to over 100 countries. It strives to reinforce its position as a leader in the Indian ceramic industry by consistently introducing innovative and value-added products to meet the evolving needs of its esteemed customers.

Operational Performance Performance of the Tiles Business

Snapshot

• Manufacturing facilities: Dalpur-Himmatnagar, Mehsana, Morbi, Dholka and Idar

• Installed capacity: 1,58,920 sq. mtrs. daily (including 37,300 sq. mtrs. of contract manufacturing)

• Production volume in FY 2023-24: 30 million sq. mtrs.

• Total Consolidated Sales in FY 2023-24: Rs 1,145 Crores

• Capacity utilization: 56%

• Contribution of Tiles in total revenue: 75%

Business Overview

We manufacture tiles under four verticals, namely, ceramic, polished vitri_ed, glazed vitri_ed and double charged. The tile revenue (including own manufacturing, subsidiary and outsourcing) stood at Rs 1,145.1 Crores in FY 2023-24 compared to Rs 1,280.8 Crores in FY 2022-23. Exports revenue stood at

Rs 246 Crores, contributing 16% to total sales.

Operational Strength

We offer a wide range of products available in various sizes, polishes, and finishes. With a robust distribution network, substantial production capacity and technologically-advanced manufacturing units, we have established a strong presence in the Indian ceramic tiles sector. We are committed to develop innovative and value-added products to meet the evolving requirements of our customers worldwide. Furthermore, in a strategic move, we have entered into a joint venture agreement with Nepalese stakeholders and incorporated a new company, Nepovit Ceramic Private Limited as a Joint Venture Company (JVC). This venture aims to establish a manufacturing unit for wall tiles in Nepal. Additionally, in the second quarter of FY 2023-24, we expanded our operations by founding wholly-owned subsidiaries in the USA and UAE. These expansions are expected to strengthen our operational footprint and market presence in these regions.

Retail Strength

We have a robust franchise network that includes 235 exclusive franchisee-owned and franchise-operated outlets, along with

12 Company-Owned display centers. Additionally, our ‘AGL Export House,? spanning 15,000 sq. ft. in Morbi, is dedicated to enhancing our export capabilities. We aim to expand our network to over 10,000 touchpoints and 500 exclusive brand showrooms.

Performance of the Marble and Quartz Business

Snapshot

• Manufacturing facilities: Dalpur

• Installed capacity: 6,100 sq. mtrs. Daily

• Capacity utilization: 69%

• Production volume in FY 2023-24: 0.86 million sq. mtr.

• Consolidated revenue in FY 2023-24: Rs 199.9 Crores

• Contribution to the total revenue FY 2023-24: 13%

Operational Strength

Leveraging over two decades of industry experience, we excel in delivering unique and innovative products driven by strong R&D capabilities and a deep understanding of consumer needs. Our product portfolio includes multi-color quartz with 99.9% silica content, surpassing the industry standard of 97% silica concentration. Additionally, our Quartz product range includes various products available in 20 mm and 30 mm thicknesses, which exceed the common 15 mm thickness available in the market. These unique and superior products enable us to garner high dividends from our satisfied clientele.

Performance of the Sanitaryware Business

Snapshot

• Bathware manufacturing capacity: 2,000 pieces per day

• Production volume in FY 2023-24: 0.18 million pieces

• Consolidated revenue in FY 2023-24: Rs 39 Crores

We ventured into bathware, which facilitated a strategic diversification of our product portfolio. Previously dependent on third-party vendors and contract manufacturing, the establishment of a new sanitaryware plant has propelled another phase of growth for our company. AGL Bathware offers 1,100+ SKUs of faucets, showers and bathware accessories, complementing our previously launched sanitaryware and CP fittings range. Within this business segment, we offer comprehensive bathroom solutions. Our goal is to establish a robust presence in the domestic bathware market by leveraging our extensive distribution network and strong brand reputation. Additionally, we aim to establish a dedicated network of over 500 touchpoints through more than 100 distributors for faucets and sanitaryware in the coming months. We aspire to become a leading player in the sanitaryware sector and anticipate a turnover of ~ Rs 400 Crores from our Sanitaryware and Bathware division over the next five years.

Financial Review

( Rs Crores)

Particulars	FY 2023-24	FY 2022-23	Change YoY (%)
Revenue from Operations	1,530.59	1,562.72	(2%)
EBITDA	50.98	(68.11)	175%
EBITDA Margin	3.33%	(4.36%)	176%
PBT	(14.93)	(112.44)	87%
PAT	(20.07)	(87.01)	77%
PAT Margin	(1.33%)	(5.61%)	76%
EPS	(1.00)	(6.10)	84%

Profit and Loss Account Analysis

• Total Income: Revenue from operations stood at Rs 1,530.59 Crores in FY 2023-24 compared to

Rs 1,562.72 Crores in FY 2022-23, marking a 2% y-o-y decline.

• EBITDA & EBITDA Margin: The EBITDA increased by 175% to Rs 50.98 Crores in FY 2023-24 as against Rs (68.11) Crores in FY 2022-23 due to marginal softening in gas prices and raw material prices. The EBITDA Margin for FY 2023-24 is 3.33% compared to (4.36%) in FY 2022-23.

• PBT: PBT increased by 87% to Rs (14.93) Crores in comparison to Rs (112.44) Crores in FY 2022-23.

• PAT & PAT Margin: PAT increased by 77% to Rs (20.07) Crores compared to Rs (87.01) Crores in FY 2022-23. The PAT Margin for FY 2023-24 is (1.33%) compared to (5.61%) in FY 2022-23.

• EPS: We recorded earnings per share of Rs (1.00) per share in FY 2023-24 compared to Rs (6.10) per share in FY 2022-23.

Balance Sheet Analysis

• Consolidated Net Worth: Our consolidated net worth stood at Rs 1,280 Crores as on 31 March, 2024 compared to Rs 1,256 Crores as on 31 March, 2023.

• Consolidated Loan Profile: Our total long-term debt for FY 2023-24 stood at Rs 235 Crores compared to Rs 214 Crores in FY 2022-23.

Key financial ratios with details of significant changes

During FY 2023-24, the significant changes in the financial ratios of the Company and change in Return on Net worth compared to that of the previous year (i.e. change of 25% or more as compared to the immediately previous financial year) are outlined below:

Particulars	FY 2023-24	FY 2022-23	Change (%)	Reason for Change
Inventory Turnover	7.53	6.25	20.46%	Due to Faster Liquidation of Stock during the year
Interest Coverage Ratio	4.77	(2.97)	(260.77%)	Due to increase in profit during the year
Debt-Equity Ratio	0.04	0.06	(23.26%)	Due to decrease in working capital requirement
Operating Profit Margin	5.52%	(0.56%)	(1,086.20%)	Due to increase in profit during the year
Net Profit Margin	2.27%	(1.95%)	216.00%	Due to increase in profit during the year
Return on Net Worth (%)	2.37%	(2.16%)	(101.10%)	Due to increase in profit during the year

SWOT Strengths

• A seasoned team of promoters and senior management and strong leadership

• Robust demand in both domestic and overseas markets

• Strong brand recall, especially in the western part of India

• Diversified product portfolio

• Focus on value-added products

• Robust supply chain facilitating on-time delivery

• Strategic location of plants, allowing for high availability of raw materials at competitive prices

• Assured gas connection in all plants

Weakness

• 60% market share held by unorganized players

• Strong competition from imports from China

• Volatility in exchange rates may affect the overall financial performance

Opportunities

• Surge in demand from the real estate sector, especially from the commercial and hospitality sectors

• Government initiatives like PMAY, Smart Cities Mission, AMRUT, Make in India, Vocal for Local, etc., providing growth opportunities for the industry

• Rapid urbanization and rising demand for residential and commercial real estate in cities

• Leveraging partnerships and future investments to facilitate the development of international business

• Rise in middle-class and dual-income households leading to increasing disposable incomes and improving standards of living

Threats

• Regulatory changes

• Rise in import duty on key input materials and energy

• Changes in market trends

• Growing competition from unorganized player

• Macroeconomic challenges including inflation and global economic slowdown

Competitive Strengths

State-of-the-art manufacturing facilities: Our state-of-the-art manufacturing facilities are pivotal to our success, featuring advanced technology, high-end machinery, and cutting-edge testing equipment. All machines, whether sourced domestically or internationally, adhere strictly to global quality standards. These facilities are fully integrated and multipurpose, capable of managing the entire production cycle from raw materials to finished goods and warehousing. This integration provides us with the flexibility to produce different product sizes and customize our portfolio to meet evolving customer demands, all while achieving cost efficiencies without significant capital investments. Moreover, our in-house R&D team plays a crucial role in developing innovative products and conducting rigorous testing and analysis. With a strong focus on design and quality, we consistently enhance our technological systems and processes to improve productivity, operational efficiency, and our competitive edge in the market.

Robust product portfolio of 1,400+ unique designs: From being a pure-play wall tiles player, we have emerged as India?s leading brand in Luxury Surfaces and Bathware Solutions. Our diverse product range includes ceramic floor tiles, glazed vitri_ed tiles, polished vitri_ed tiles, engineered marble and quartz stone, and bathware solutions. Our portfolio boasts over 1,400 unique designs, developed by our R&D team through extensive collaboration with network partners such as dealers, distributors, and customers. This approach ensures our offerings are highly relevant and consistently deliver maximum customer satisfaction by aligning with diverse sizes and material preferences. Maintaining strict quality and design standards through our in-house laboratory, we strategically prioritize creating a distinctive portfolio featuring captivating designs that cater to evolving customer preferences.

Robust pan-India distribution network: Our extensive dealer-distributor network spans across India, enabling us to cater effectively to the diverse requirements of our customers including retail, government entities and private organizations. Our customer outreach spans over 14,000+ touchpoints across

35 states and union territories in India, encompassing 2,700+ registered dealers and sub-dealers, 235 exclusive franchises and 12 company-owned display centers. Our strong relationship with our dealers contributes significantly to our exceptional customer retention rates. To maintain market competitiveness, our dedicated sales and marketing team consistently engages with dealers to gather customer insights, assess market demands, enhance designs, develop new products and refine product positioning.

Experienced leadership and dedicated team: Our esteemed promoters and directors have been instrumental in our Company?s success story since its inception, offering decades of experience in the tiles industry. Our capable management team has extensive expertise spanning technical, operational and business development domains. Furthermore, our committed and talented employees are guided by the vision and leadership of our senior management and promoters. With an abundant wealth of talent and experience, we are strongly positioned to navigate market trends, expand operations, and effectively cultivate and leverage customer relationships. Our technical and support staff play a vital role in managing crucial operational activities.

Strategic location and connectivity to raw material sources and customers: Our manufacturing facilities are strategically situated near Rajasthan, a key hub for raw materials essential to tile production. This proximity enables efficient road transport of raw materials, optimizing operations and minimizing inventory requirements. Additionally, Gujarat?s robust transportation network ensures reliable product distribution, facilitating prompt delivery to customer locations.

Optimized production processes: Our cutting-edge manufacturing plants adhere strictly to global standards, continuously upgrading all major processes. Process refinement is an ongoing endeavor, driven by our trained and experienced staff aiming for maximum efficiency through optimal resource utilization. We prioritize effective labor management and productivity, supported by Management Information Systems (MIS) tools for operational efficiency. Our employee-centric HR policies foster strong relationships across our workforce, ensuring smooth business operations.

Business Strategy

Domestic demand for tiles is expected to remain a mixed bag on account of inflation pressure on retail as well as institutional customers. However, growth in real estate, government spending on affordable housing and infrastructure and growth in commercial real estate and retail segments will drive demand for ceramic products. However, input cost pressure may increase production costs and may dent margins due to the lower ability to further increase prices. Margin is expected to improve marginally on account of an increase in capacity utilization and innovative technology.

However, new opportunities are consistently unfolding, indicating promising future growth. Exports are showing signs of improvement due to strong demand across various regions. Equipped with advanced technologies, a strong focus on product innovation and a wide-ranging portfolio, AGL and other Indian manufacturers are well-positioned to emerge as leaders in this lucrative market. Our Enhanced Strategic Integration Program (ESIP) is designed to achieve our ambitious revenue goal of

Rs 6,000 Crores. To realize our goal of becoming a global leader in delivering innovative lifestyle solutions and generating long-term stakeholder value, we intend to execute the following strategies:

• Expansion of multi-material portfolio: We are committed to expanding our multi-material portfolio, which involves establishing India?s largest single roof wall tile plant in Morbi, one of the largest display centers at Ahmedabad, a quartz surfaces plant, a mega slab plant, a manufacturing facility for large format GVT tiles in Morbi and increasing our quartz surfaces capacity.

• Enhance brand visibility: We aim to elevate our brand presence by engaging a renowned celebrity as a brand ambassador, and by expanding and optimizing our social media reach through campaigns and influencer collaborations.

• Increase domestic touchpoints: Our strategy involves expanding our domestic footprint by establishing additional exclusive showrooms under our current franchise model. We are actively expanding our network of dealers and sub-dealers in regions where our presence is limited. Furthermore, we aim to augment our Company-Owned display centers to foster deeper engagement with retail customers.

• Expand international presence through strategic planning: We are focused on expanding our international presence by adding new dealerships and distribution points in our existing developed markets. We are also focused on building a large presence in developed markets with growing demand through the opening up of Subsidiaries and Warehouses to supply products in real-time and explore OEM partnerships with importers, distributors and manufacturers abroad.

• Strengthen in-house manufacturing capabilities: We are focused on establishing in-house manufacturing capabilities for bathware with a focus on high margins to bolster our company?s growth trajectory.

• Focus on innovation and development of value-added products: We aim to boost efforts in innovation and the development of value-added products to meet evolving customer needs, expand our market footprint and drive growth.

Risks, Concerns and Mitigation

Our comprehensive risk management framework is meticulously crafted to monitor internal and external risks that could potentially disrupt our business operations. This framework encompasses various strategies aimed at mitigating existing risks while proactively identifying and managing new and emerging risks to the business. The key business risks and their corresponding mitigation measures are listed below:

Risk	Description	Mitigation Strategy
Competitive Risk	The tile market continues to be dominated by the unorganized segment, leading to fierce competition. Given the lucrative growth opportunities in both domestic and global markets, competitive intensity is high in the industry, especially in terms of pricing.	We have an unwavering commitment to develop innovative, technologically-advanced products with superior quality. Intense market research and focus on R&D enable us to deliver first- time right products giving us a competitive edge. Our moat is further strengthened by our cost-efficient processes, unmatched distribution strength and state-of-the-art manufacturing facilities.
Product Risk	Our business growth faces the risk of our products becoming obsolete and undesirable, or unable to meet market expectations.	Our focus on extensive market research coupled with strong R&D capabilities, enable us to launch innovative specialized products with unique features. We have been the torchbearers for innovating several forms of tiles in our industry. We constantly strive to innovate and renovate our product offerings to be able to match the pulse of the market. This helps us to strengthen brand equity and connect with our customers.
Brand Reputation Risk	Brand strength is imperative to command premium and ensure strong profit growth.	We spare no efforts to ensure strong brand equity amongst all stakeholders. Our innovative products are aimed at meeting customer needs. In addition, we cultivate strong dealer engagement through various campaigns. This ensures we remain a preferred partner for both customers and dealers.
Substitution Risk	Every product runs the risk of being substituted by a new product category, making the current offering obsolete or redundant. This may severely impact financial performance and business continuity.	Our ongoing market research and constant engagement with various market participants enable us to understand the ever- evolving needs of the consumer. Accordingly, we constantly strive to innovate and renovate our offerings to remain relevant in the market. Our innovations are technologically-driven, ensuring the robustness of our portfolio.
Operational Risk	Unpredictable, external, or internal events may result in unfavorable developments for the business operations. This may impact financial performance and business continuity.	All our operational and financial operations are controlled by our carefully designed comprehensive internal control system. We ensure strict adherence to these controls through regular and periodic reviews and audits. Deviations, if any, are immediately reported and met with appropriate action.
Distribution Risk	Being a product-driven business, our distribution strength is a key pillar of organizational success. Any negative impact on any of our touchpoints may result in diminished business performance, hamper brand equity and reduce profit margins.	We have created an unmatched distribution network spread across the length and breadth of the country and globe with 14,000+ touchpoints points and 2,700+ distributors, dealers and sub-dealers spread across 35 states and Union Territories. We also have a dedicated sales and support team to support our distribution network, to ensure the robustness of our distribution capabilities.
Geographical Risk	In the event that our revenue is over- dependent on a particular geography, any unfavorable events in that geography may impact margins.	Our strong distribution network ensures that our product portfolio reaches the length and breadth of the country. We earn 11%, 51%, 19% and 19% of domestic revenues from East, West, North and South markets respectively. Exports contribute 16% of our revenue. Hence, our revenue flow is not concentrated.

Internal Control System and their Adequacy

Our internal control systems are devised considering the size, nature and complexity of our business operations. Our internal control systems properly document all processes related to all our operational and financial functions. The systems ensure adequate safeguards of assets against unauthorized use, efficient productivity at all levels and strict compliance with applicable rules and regulations. The systems help us to secure sensitive data, conduct the audit process smoothly, ensure adequate accounting of records and reliable financial reporting, monitor operations, conservation of assets, prevent frauds and errors, execute authorized transactions and ensure compliance with corporate policies. The aptness of the internal control framework and strict compliance is reviewed by our internal audit team on a periodic basis. The team reports any deviations or observations to the Management and the Audit Committee. Any recommended measures and suggestions for improvement are duly considered. As majority of the branches are electronically integrated with the Head Office, we have strong control on our internal control systems and compliance.

Information Technology

We have implemented extensive automation across production, market research, product development and distribution. This has boosted our operational efficiency and productivity. Advanced technology has significantly reduced costs by eliminating redundancies and enhancing employee efficiency.

Quality Culture

We ensure customer satisfaction by developing innovative, high-quality products using the latest technology. Serving both institutional and retail customers, we strictly adhere to international quality standards. Our focus on innovation and R&D has established our reputation for launching superior products, enhancing our brand equity in India and internationally. This strong quality culture attracts new customers, allows us to command a market premium and drives organizational growth and long-term shareholder value.

Human Resources

We consider human capital to be an imperative pillar of organizational growth. We owe our success to our talented and dedicated employees. We have a comprehensive HR policy to ensure a positive, motivating, and equitable work environment. Regular upskilling and personal development training keep our employees aligned with business needs. Our employee-friendly policies enhance productivity, satisfaction, and retention. We maintain an open-door policy and transparent culture, fostering strong management-employee bonds and boosting morale. Performance-based rewards ensure merit-based growth. This people-centric approach builds strong loyalty and unity among employees and attracts new talent. As of 31 March, 2024, we have over 6,000+ employees.

Cautionary Statement

This document contains statements about expected future events, financial and operating results of Asian Granito India Limited, which may be forward-looking. By their nature, forward-looking statements require your Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the actual results may differ from what is expressed or implied in the forward-looking statements in the Annual Report. Readers are cautioned not to place undue reliance on forward-looking statements.

Note

Except stated otherwise, all figures, percentages, analysis, views and opinions are on consolidated financial statements of Asian Granito India Limited and its wholly-owned subsidiaries (jointly referred as AGL or Company, hereinafter). Financial information presented in various sections of the Management Discussion and Analysis is classified under suitable heads, which may be different from the classification reported under the Consolidated Financial Statements. Some additional financial information is also included in this section, which may not be readily available from the Consolidated Financial Statements. Previous year?s figures have been regrouped, wherever necessary, to make it comparable with the current year.

For and on behalf of the Board of Directors

	Kamleshkumar B. Patel
Place: Ahmedabad	Chairman and Managing Director
Date: 23 May, 2024	DIN: 00229700