astral ltd Management discussions

Global economy

The global economy has been steadily navigating through recent challenges, and projected growth rates reflect a resilient outlook. Despite a slight dip from an estimated 3.4% in 2022 to 2.9% in 2023, we anticipate a gradual recovery to 3.1% in 2024. While the current economic climate has been influenced by various factors, including central bank rate hikes to address inflation and the ongoing conflict in Ukraine, there are positive developments to highlight as well.

Notably, the rapid reopening of the Chinese economy following the containment of COVID-19 has paved the way for a faster-than-expected recovery. This encouraging trend has contributed to renewed optimism for global economic growth.

Although inflationary pressures remain a concern, we expect inflation rates to gradually decrease from 8.8% in 2022 to 6.6% in 2023 and further to 4.3% in 2024.

While these levels remain above pre-pandemic levels, it is important to recognize the progress made in managing inflation.

As we look ahead, the balance of risks is becoming more favorable, with the potential for stronger boosts from pent-up demand in several economies and a more rapid decline in inflation. It is crucial to acknowledge these positive factors alongside the potential challenges we may face, such as the possibility of a severe COVID-19 outbreak in China or geopolitical tensions. Overall, the global economy is demonstrating resilience and adaptability in the face of uncertainties, paving the way for a brighter future.

In conclusion, the global economy is projected to witness a modest growth rate in FY23, with several factors influencing the outlook. Despite the challenges posed by inflationary pressures and geopolitical tensions, there is hope that pent-up demand in many economies and a gradual fall in inflation will stimulate growth. However, downside risks remain a concern, and policymakers are skilfully navigating the challenges posed by inflation and other geopolitical uncertainties. With proactive and effective strategies in place, the global economy is on its way to a brighter economic future.

Indian economy

Following an 8.7% growth in FY22, the Indian economy is expected to continue its impressive growth trajectory in FY23, with a projected real GDP growth rate of 7%. With agencies worldwide predicting India to remain the fastest-growing major economy at 6.5-7.0% in FY23, the countrys economic success story shows no signs of slowing down. Fueling this growth is a combination of private consumption, capital formation, and a government-led capital expenditure cycle. These factors have generated employment opportunities, as seen in the declining urban unemployment rate and faster net registration in the Employee Provident Fund. Additionally, Indias massive vaccination drive, which has administered over 2 billion doses, has lifted consumer sentiment and aided in the rebound of consumption. With private capex expected to take a leadership role in job creation, the Indian economy is poised for further expansion in the coming years. Despite the challenges faced by the Indian economy, the countrys policymakers have demonstrated remarkable resilience in steering it towards sustained growth. The government and RBI have taken proactive measures to rein in inflation and ease global commodity prices, bringing retail inflation below the RBIs upper tolerance target in November 2022. As a result, growth is expected to remain brisk in FY24, with a focus on credit disbursal, capital investment, and strengthening the balance sheets of corporate and banking sectors. The expansion of public digital platforms and innovative measures such as PM GatiShakti, the National Logistics Policy, and Production-Linked Incentive schemes are expected to further support the countrys economic growth in the years to come.

The recent government announcement of 10 trillion for infrastructure spending is expected to significantly bolster the economy. This substantial investment will have a considerable impact on various sectors, particularly in lifting the housing sector. With a notable decrease in housing inventory, there is a high probability of a significant boost to new construction activities in residential areas.

Industry overview

Indian plastic pipe industry

The future of the Indian plastic pipe market is illuminated with opportunities in key sectors such as potable water supply, wastewater supply, electrical and telecommunication cable protection, agriculture, chemicals, and oil and gas. As the country steadily marches towards development, the market is expected to grow at an impressive CAGR of 10.3% from 2022 to 2027, reaching a valuation of $10.9 billion. This growth can be attributed to a myriad of factors, including government investment in infrastructure, an uptick in residential and commercial construction, industrial expansion, the irrigation sector, and the replacement of deteriorating pipes. The production of PVC pipes has registered a record-breaking growth of 35% in FY22, as reported by CRISIL, lending credence to the optimistic outlook of the market.

Undeterred by the challenges posed by the pandemic, the polymer pipes sector has emerged as a shining star in Indias new normal. The demand for metal to polymer pipes has experienced a noticeable shift across various industries, particularly in plumbing and piping applications within the construction industry. CPVC pipes have also witnessed a surge in demand in the hot- and cold-water plumbing industry in recent years. As the Indian economy continues to march forward, the plastic pipe market is poised for an impressive growth trajectory, spearheading a new era of infrastructure development in the country.

uPVC pipes

Within the realm of agriculture and plumbing, UPVC pipes have gained prominence as a key material used for the supply of potable water and sewerage. The notable advantage of UPVC pipes is their long lifespan and affordability, rendering them a popular replacementfor ordable galvanised iron pipes. As per a CRISIL report, the market for

UPVC pipes is poised to undergo a 11-12% CAGR growth trajectory till 2024, propelled by an increase in demand for durable and reliable pipes that can withstand wear and tear.

GROWTH DRIVERS

The Indian plastic pipe industry is on the cusp of an exciting growth trajectory, fueled by a combination of direct and indirect government policies. The following points highlight the key drivers of growth for the industry: The Indian governments unwavering support for the sector has been a key growth catalyst. Direct policies, such as the Jal Jeevan Mission and Har Ghar Jal Yojna, have created new demand avenues for the industry, while indirect policies have amplified its development.

The Jal Jeevan Mission (JJM) initiative is a game-changer for the industry. With a target of providing tap water connections to all rural households by 2024, it has created a massive opportunity for plastic pipe manufacturers to cater to the increasing demand for potable water supply. The governments imposition of Anti-Dumping Duty on CPVC resin/compound imports from China and Korea from 2020 to 2025 has benefited local players directly, helping them gain market share and further strengthening the domestic industry.

The governments focus on infrastructure development has led to a massive surge in demand for polymer pipes. The National Infrastructure Pipeline (NIP) goals have resulted in the allocation of a capital expenditure of 5.5 trillion for FY22, creating opportunities for the industry.

The expansion of railways, airports, roadways and highways, the agricultural sector, and the sector, among others, is driving the demand for polymer pipes in India. These sectors are creating new markets for polymer pipes, presenting significant growth opportunities.

Moreover, the robust demand growth of UPVC pipes can be attributed to the benefits they offer, such as being resistant to corrosion, abrasion, and chemicals. The versatile nature of UPVC pipes also enables their use across diverse industries, including water treatment, oil and gas, chemical, and wastewater management. As the market continues to burgeon, industry experts predict that UPVC pipes will play an even more critical role in Indias infrastructure development, particularly as the nation strives to provide reliable and efficient access to water resources.

CPVC pipes

Amid the burgeoning Indian plastic pipe industry, CPVC pipes, renowned for their exceptional durability, fire and corrosion resistance, and ability to withstand extreme temperatures, are carving out a prominent niche in the hot and cold potable water distribution systems plumbing segment. Indeed, their meteoric ascent in the market has been nothing short of remarkable, with demand outpacing that of all other plastic pipes in recent years.

Although the CPVC pipe market in India is still in its early stages, its growth potential is nothing short of staggering. Propelled by a favourable landscape characterised by longevity, lead-free composition, and exceptional performance, CPVC pipes are poised to capture a significant share of the overall plastic pipes market, with a predicted growth rate that is set to exceed a remarkable 20% by 2024, according to CRISIL. As such, this burgeoning segment is expected to leave an indelible mark on the Indian plumbing landscape, making it an area to watch for all stakeholders involved in the rapidly evolving plastic pipe industry.

HDPE pipes

As for HDPE pipes, they have become a highly sought-after solution in various fields, such as irrigation, drainage, city gas distribution, and chemical and processing industries. They hold a substantial 6-8% share of the plastic pipes industry, and are increasingly preferred over traditional metal and cement pipes due to their superior build and quality. The use of HDPE pipes ensures optimal performance and long-lasting durability, which translates into cost savings and lower maintenance requirements over time.

According to a CRISIL report, the HDPE pipes market is poised for impressive growth in the coming years, with a projected CAGR of 12-13% until 2024. This is mainly driven by the growing demand for reliable and efficient piping systems across multiple applications, particularly in emerging economies such as India. Additionally,

HDPE pipes offer a range of benefits, including excellent resistance to corrosion, chemicals, and weather, as well as flexibility and ease of installation.

These features make HDPE pipes a versatile and highly desirable solution for modern infrastructure and construction projects, further fueling the expansion of this market segment.

PPR pipes

Polypropylene Random Copolymer (PPR) pipes, renowned for their durability and versatility, have established a niche market in various industrial sectors, constituting 3-5% of the total demand for plastic pipes. The relatively higher cost of PPR pipes as compared to other plastic pipes, however, has limited their widespread adoption and use.

According to a report by CRISIL, the demand for PPR pipes is projected to grow at a steady pace of 6-7% CAGR until 2024, owing to their superior chemical resistance, impact strength, and thermal stability, making them ideal for use in harsh industrial environments. As industrialization continues to advance and evolve, PPR pipes are poised to play a critical role in a range of industrial applications.

Indian water tank industry

The Indian water tank market is set for a steady growth trajectory between 2021 and 2025, owing to a range of factors including rising construction activities, increasing government regulations on wastewater, ageing water infrastructure, and the growing demand for treated and soft water in various sectors. These tanks, typically made of polyethylene or polypropylene materials, offer a convenient storage solution for various applications such as drinking water, irrigation, chemical manufacturing, fire suppression, and food preparation.

The Asia Pacific region, particularly India, has emerged as the largest revenue-generating market for water tanks, thanks to the growing construction of households, public places, and new buildings. While the market is currently dominated by unorganised regional firms that service up to 70% of the industry, the major Indian pipes businesses are expanding their manufacturing base, which has resulted in an effective pan-India presence with overlapping distribution networks. This development bodes well for the ordable and prominent pipe players in the market, as the distribution network of water tanks overlaps with that of pipes, making it a logical extension for any pipe player.

The Indian water tank market is estimated to be worth around 45-50 billion, with a projected growth rate of 5-6%

CAGR. Plastic storage tanks are expected to continue their healthy demand trend, given the increasing building activity, concerns about water conservation, growing population, and ageing water infrastructure. Overall, the India water tank market represents a significant opportunity for players in the industry who can navigate the challenges posed by transportation costs and logistics, while leveraging emerging opportunities in government regulations and new market segments.

Indias need for effective water storage

Access to water in some parts of India is a rising concern due to long and unpredictable dry growing seasons caused by global warming. As a result, water storage tanks have become an indispensable solution to address the growing concern of water scarcity. These tanks are used to provide storage of water for a wide range of applications, including drinking water, irrigation agriculture, livestock water for animals, chemical manufacturing, food preparation, and many other uses.

Irrigation tanks have been a traditional method in India for many years. These water storage tanks are typically filled with natural water resources like rainfall and then stored for use in agricultural purposes, domestic uses, and other uses. With groundwater depletion and erratic monsoons becoming increasingly prevalent, water tank harvesting has become crucial for industries like agriculture, food processing, or construction.

In addition to the aforementioned end uses, water storage tanks have a significant impact on the environment and economy. These tanks play a vital role in mitigating the effects of drought and water scarcity by providing a reliable source of water for both agricultural and domestic purposes. Furthermore, Indias burgeoning population has driven rapid industrialisation and urbanisation, leading to a promising outlook for the water tank industry. As construction activities continue to soar, water tanks have become an essential component of modern societys infrastructure. This growth is further fuelled by the exponential increase in construction activities worldwide, particularly in India, where demand for water tanks is steadily rising. The increasing demand for water storage tanks has led to the emergence of new and innovative technologies, such as rainwater harvesting and solar-powered tanks, which have further expanded the usage and application of these tanks. With technological advancements, water storage tanks are access becomingmore to clean water for more people in India. With no signs of slowing down, the industry is poised for impressive growth, presenting an attractive opportunity for investors looking to capitalize on the countrys expanding infrastructure needs.

Indian adhesive and sealants industry

The burgeoning Indian adhesives and sealants market is poised for impressive growth, with an estimated valuation of over USD 2,400 million by the end of FY23. The industry is anticipated to register a robust CAGR of over 7% between 2023 and 2028, driven by the increasing demand from the packaging industry and the growing aerospace sector in the country, including a myriad of other growth drivers propelling it forward.

The Indian adhesives and sealants market is thriving, marked by a diverse and fragmented landscape where the top five players account for 32.96% of the industry. The COVID-19 pandemic has caused severe disruptions to the Indian economy, leaving no industry unscathed, including the adhesives and sealants market. Nevertheless, the market has shown remarkable resilience, bouncing back to pre-pandemic levels and forging ahead with steady momentum towards new horizons. The industry can be bifurcated into two key segments, namely:

1. Industrial adhesives: former caters to a variety of B2B industries such as Packaging, Footwear, Paints, Automotive, and many more

2. Consumer adhesives: serves industries such as Furniture/Woodwork, Building Construction, Arts and Crafts, Electrical fittings, among others.

With a dynamic and ever-evolving market landscape, the Indian adhesives and sealants industry is poised to continue its upward trajectory for the foreseeable future, providing ample opportunities for growth and innovation.

GROWTH DRIVERS

The Indian adhesives and sealants market has been bolstered by several key drivers in recent years, each of which underscores the industrys enduring growth prospects. Lets delve deeper into these growth drivers: The soaring aerospace industry in India has been a major driver of demand for adhesives and sealants. With the civil aviation and defence sectors experiencing an unprecedented surge in activity, demand for adhesives and sealants is poised to rise steadily in tandem. Furthermore, as Indias capital expenditure spending on defence continues to soar, the aerospace industry will likely continue to grow, providing ample opportunities for both new and existing players in the adhesives and sealants market. The packaging industry is a rapidly growing sector, driven by cutting-edge design and technology that enhances product safety and longevity. As the fifth-largest sector in Indias economy, the packaging industry owes its impressive growth trajectory to the rising middle-class population, improved supply-chain systems, and the growing popularity of e-commerce. The packaging industry is the largest end-user of adhesives and sealants, with applications ranging from labels, tapes, and carton sealing to labelling and more.

The work-from-home and online classes brought on by the pandemic have created an upsurge in demand for household furniture, particularly wooden furniture. This trend is likely to persist, further driving demand for adhesives and sealants used in the manufacturing and finishing of furniture.

The electronics industry is another key growth driver for the adhesives and sealants market, given the extensive use of these materials in various applications, including conformal coatings, bonding of surface mount devices, and protecting terminal electrodes. With demand for electronics growing at a compound annual growth rate of 19-24%, the adhesives and sealants market is poised to benefit significantly from this trend.

The construction industry is a significant user of adhesives and sealants, with applications ranging from flooring and carpets to wall covering, lamination, and fixed window frames. As India continues to invest in infrastructure and increase spending on building construction, the construction industry is poised to remain a vital source of demand for adhesives and sealants in India.

Indian paints & coatings industry

The Indian paints and coatings market is brimming with promise, poised to achieve a staggering $7,645 million by the year-end. Furthermore, this dynamic industry is anticipated to register a CAGR of over 7% during the forecast period of 2023-2028, buoyed by the impressive strides made in the construction sector.

The architectural segment of the Indian paints and coatings industry has been the bedrock of its growth and development. Despite the COVID-19 pandemics debilitating effects on businesses worldwide, the architecture segment has persevered, experiencing substantial growth in 2022. Its impressive performance can be attributed to a robust construction pipeline, ambitious government schemes such as "Housing for All," and burgeoning urbanisation, which have collectively fuelled a spike in demand for architectural coatings across the nation. These factors will undoubtedly play a critical role in propelling the markets growth in the medium to long term, with economic growth, urbanisation, and purchasing power serving as the essential drivers of architectural paint consumption in any given country.

The Indian paints and coatings markets growth trajectory is not without its share of challenges, as raw material prices remain volatile and could potentially hinder progress. Nevertheless, the industrys innovative adoption of nanotechnology in paints and coatings represents a silver lining, offering myriad opportunities for market growth in the years ahead. As the market continues to rebound from the pandemics effects, its growth will be propelled by the construction industrys unwavering demand and the automotive industrys steady recovery, auguring well for a bright future.

GROWTH DRIVERS

The Indian paints and coatings industry is on the rise, driven by several growth drivers that are transforming the market. Here are some of the key drivers that are expected to shape the industrys future: cant government and private

Rising residential sector: The governments support and initiatives have led to an increase in demand for the residential sector. The Ministry of Housing and Urban Development has allocated funds in the

2021 budget for the construction of houses, while initiatives such as Pradhan Mantri Awas Yojana

(PMAY) program are expected to provide homes to many people by 2022. This trend is expected to continue, providing a significant boost to the architectural emulsion coatings market.

Commercial sector expansion: The expansion of the commercial sector in India is having a positive impact on the paints and coatings industry. The opening of 92 new school buildings, with 48 labs and three libraries in the southern part of the country in

September 2021, is a testament to this trend. With more commercial buildings, there will be a greater demand for architectural emulsion coatings, thereby contributing to the growth of the market.

Government initiatives: The Indian governments initiatives have had a positive impact on the paints and coatings industry. For instance, the government provides subsidies on interest rates for housing loans for citizens who wish to build or buy their first house. Such initiatives, along with the governments focus on infrastructure development, are expected to drive the demand for paints and coatings in the coming years.

Indian sanitaryware industry

The Indian Sanitary Ware market is currently experiencing a seismic shift, with an abundance of raw materials and low labour costs attracting both domestic and international players to set up manufacturing facilities across the country.

This,coupledwith initiatives and a marked improvement in living standards, has led to a substantial increase in the level of sanitation across India. Notably, consumers in India are becoming increasingly hygiene conscious, with a rise in disposable income and influence from western culture. Additionally, an increasing preference for functional and feature-rich bathrooms has led affordable to an uptick in demand for sanitary ware.

As we look towards the future, the Indian Sanitary Ware market is poised for tremendous growth, with a projected CAGR of 7.38% between 2023 and 2029, and an expected market value of US$1245 million by 2029. The market has experienced steady development in recent years, and the related industry verticals, such as bathroom primed for strong growth in the years to come. Notably, bathrooms in modern Indian homes are increasingly adorned with fittings

Despite intense competition in the market, with both organised and unorganised players vying for market share, the unorganised players still hold a significant one-fourth of the total market share in 2022. Furthermore, over 46 million units of sanitary ware were sold in the base year 2022, with that number expected to surpass 80 million units by 2030.

While the middle or mass sanitary ware market currently holds the majority of the market share, the premium segment is expanding at a higher growth rate. Overall, the Indian Sanitary Ware market presents a wealth of opportunities for those looking to capitalise on this burgeoning industry.

GROWTH DRIVERS

The Indian housing sector has been on a steady rise, propelled by an rising purchasing power, and government initiatives such as easy loans. This growth has fueled demand for bathroom fittings, which are an integral part of modern-day infrastructure.

Urbanisation and rising customer awareness have been the key drivers of the sanitaryware markets growth in India. As customers become more inclined towards premium, high-end household fittings, demand for bathroom accessories continues to soar. Furthermore, the development of smart and luxury housing projects has boosted the market further, leading to a growing preference for automated bathroom accessories such as sensor taps and automatic soap dispensers.

The increasing disposable income, combined with evolving customer preferences have also been key factors driving growth in the sanitaryware industry. In addition, industries such as hospitality and tourism have increased the demand for ceramic sanitaryware products. Rapid growth in the real estate sector has led to a surge in demand for sanitaryware products, driven by the increasing construction of a range of property segments such as hospitality facilities. This trend is expected to continue in the coming years, powered by a growing population and an increase in the number of nuclear families. The increasing focus on health and hygiene, especially in the wake of the COVID-19 pandemic, has led to a heightened demand for bathroom consumers become more hygiene-conscious. This trend is expected to continue, further driving growth in the sanitaryware market.

Finally, changing customer preferences have also been a major driver of growth in the sanitaryware industry, as consumers increasingly seek products that are not only functional but also aesthetically pleasing.

As a result, manufacturers are now offering a range of innovative and attractive products, further fueling demand in the market.

The governments Swachh Bharat campaign has encouraged cleanliness and hygiene, particularly in rural and underdeveloped areas. This has led to an increased demand for sanitaryware products, as people are more aware of the importance of having clean and hygienic living spaces.

Sources:

1.https://www.imf.org/en/Publications/WEO/Issues/2023/01/31/world-economic-outlook-update-january-2023#:~:text=Global%20growth%20 is%20projected%20to,19)%20average%20of%203.8%20percent. (Global economy)

2.https://pib.gov.in/PressReleasePage.aspx?PRID=1894932#:~:text=Despite%20the%20downward%20revision%2C%20the,growing%20 significant%20economies%20in%202022. (Indian economy)

3.https://timesofindia.indiatimes.com/blogs/voices/trends-and-future-of-the-indian-plastic-pipe-market/ (Indian plastic pipe industry) 4. https://www.mordorintelligence.com/industry-reports/india-adhesives-and-sealants-market (Indian adhesives and sealants industry) 5. https://www.mordorintelligence.com/industry-reports/india-paints-and-coatings-market (Indian paints and coatings industry) 6. https://www.maximizemarketresearch.com/market-report/indian-sanitary-ware-market/85262/ (Indian sanitaryware industry)

Company Overview

Astral is a prestigious manufacturer of Chlorinated Poly Vinyl Chloride (CPVC) and Poly Vinyl Chloride (PVC) plumbing systems catering to both residential and industrial use. With a commanding market share in the domestic CPVC and PVC pipe industry, the Company has achieved widespread recognition as a leader in the piping segment. However, Astrals growth hasnt been restricted to the piping segment alone. Over the years, it has diversified its product portfolio and expanded into other areas such as adhesives and sealants, infrastructure products, and water tanks. Recently, it has forayed into the paints, faucets, and sanitaryware segments, thereby transforming itself into a comprehensive home building material player.

Astral operates several manufacturing facilities across India, including Santej, Dholka (Gujarat), Hosur (Tamil Nadu), Ghiloth (Rajasthan), Sangli (Maharashtra), Sitarganj (Uttarakhand), Aurangabad (Maharashtra), and Bhubaneswar (Odisha), which are capable of producing a range of products such as plumbing systems, drainage systems, agricultural pipes, industrial pipes, fire protection pipes, electrical conduit pipes, and infrastructure products. The Company also has water tank manufacturing facilities in Santej, Ghiloth, Hosur, Aurangabad, and Bhubaneswar. Astrals adhesive and sealant manufacturing facilities are located at Santej (Gujarat), Rania and Unnao (U.P.), Elland (U.K.), and Stanford (USA), and have been instrumental in expanding the Companys product portfolio. With a focus on innovation, technology, and customer satisfaction, Astral has established itself as a leading player in the home building materials industry and is committed to maintaining its position as a market leader by delivering high-quality products and services.

Astrals newly acquired Gem Paint Business operates from a state-of-the-art plant located in Bangalore, catering specifically to the South Indian market. This facility is a newly constructed establishment equipped with advanced technology systems and boasts a capacity to accommodate the Companys growth plans for the next 3-4 years.

Business performance

The pipes industry confronted significant due to the volatility in polymer prices, presenting considerable hurdles for small and unorganized players. Similarly, the adhesives and sealants sector encountered difficulties stemming from elevated chemical prices.

However, amidst these circumstances, both pipes and adhesives segment experienced growth driven by the thriving construction industry, albeit grappling with fluctuating raw material costs.

Amidst these prevailing market trends, Astral exhibited notable resilience, achieving a commendable revenue of 51,585 million, signifying a substantial 17.4% increase over FY22. The Company attained a profit before tax (PBT) of 6,170 million and an earnings before interest, taxes, depreciation, and amortization (EBITDA) of 8,351 million. Additionally, Astral recorded a net cash profit of 6,376 million, denoting a 3.29% rise over FY22.

Individually, both the plumbing and the paints & adhesives divisions demonstrated commendable performance. The plumbing business witnessed an 11.93% revenue growth, reaching 37,675 million in FY23. Accompanied by an EBITDA of 6,419 million. The profit before tax (PBT) for this segment amounted to 4,850 million, Notably, the year yielded a robust production growth of 22.15%, culminating in a production volume of 1,73,940 MT. shoppingmalls,and Conversely, the paints & adhesives division thrived throughout FY23, recording a remarkable revenue growth of 35.28% compared to FY22, amounting to 13,910 million. The EBITDA for this segment experienced a notable surge of 24.40%, reaching 1,932 million. Consequently, this segment accounted for 27% of Astrals total revenue, marking a significant increase from the 23% contribution recorded in FY22.

Key Financial Ratios

PARTICULARS	FY22	FY23	CHANGE
Operating ProfitMargin	17.94%	16.19%	(1.75)%
Net Profit Margin	11.16%	8.91%	(2.25)%
Debtor Turnover	22	25	3 days
Inventory Turnover	61	62	1 day
Interest Coverage*	107.31	36.98	(65.54)%
Debt Equity	0.02	0.02	0.00%
Current Ratio	1.85	1.72	(7.36)%
Return on Net Worth#	22.92%	17.27%	(5.65)%

Note:

* Reason for change in Interest Coverage challenges

The decrease in the Interest Coverage Ratio can be primarily attributed to the higher interest rates on Operational Buyers credit facilities during the year. Furthermore, there has been an overall increase in borrowing rates, which has also contributed to the decline in the ratio.

#Reason for change in return on networth

The decrease in return on net worth is mainly because of the impact of, business combination including amortisation of intangible assets of the recently acquired subsidiary, Gem Paints Private Limited and also there has been a inventory losses due to fluctuation of prices of raw materials and chemicals.

Internal control systems and their adequacies

Astrals commitment to accountability and transparency is exemplified by its institutionalized system of controls, which cover all corporate functions. These controls are designed to ensure that operations are efficient and effective, financial controls are reliable, compliance with applicable laws and regulations is upheld. To ensure the ongoing appropriateness of these policies and procedures, they are regularly updated, overseen by the Internal Auditor, and aligned with industry standards. The Board and the Audit Committee provide additional supervision of internal control adequacy through monitoring the implementation of internal audit recommendations via compliance reports. Astrals independent auditors have also confirmed the adequacy of its internal controls over

This comprehensive and dynamic internal control system is a testament to Astrals commitment to best practices and serves to inspire confidence among the integrity and soundness of its operations.

Human resources

The Company recognizes that its employees are the backbone of the business, and it values their commitment, competence, and hard work. Astral emphasises the importance of providing its workforce with opportunities to grow and develop, and has implemented robust HR policies to support this mission. Astrals focus on employee highly motivated and skilled workforce that consistently delivers exceptional results.

As of March 31, 2023, Astral boasts a team of over 8,200+ employees (including contract labour) located across various regions. These individuals have shown remarkable dedication to their roles, which has enabled the Company to achieve unparalleled levels of performance. Moving forward, the Company remains committed to nurturing its employees and fostering a culture of growth and development, as it believes that this is the key to driving sustainable success in the long run.

Cautionary statement

Investors are cautioned that this discussion contains forward-looking statements that involve risks and uncertainties. When used in this discussion, words like ‘will, ‘shall, ‘anticipate, ‘believe, ‘estimate, ‘intend and ‘expect and other similar expressions, as they relate to the Company or its business, are intended to identifytheirreport. such forward-looking statements. The Company undertakes no obligations to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, actual results, performances, or achievements could differ materially from those expressed or implied in such statements. Readers are cautioned not to place undue reliance on the forward-looking statements as they speak only as of their dates.