Auro Impex & Chemicals Ltd Management Discussions

For the Financial Year 2025-26

(Pursuant to Regulation 34(3) read with Schedule V, Part B of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015)

1. Company Overview

Auro Impex & Chemicals Limited is a public company listed on NSE EMERGE (SME Platform of NSE), incorporated on 20th January 1994 as a private company. The registered office of the company is situated at 32, K. L. Saigal Sarani, 740A, Block P, New Alipore, Kolkata 700053, West Bengal, India.

Our Company is specifically engaged into manufacturing of (i) Collecting Electrodes of all profiles, (ii) Discharge Electrodes, (iii) Electro- magnetic rapper, (iv) Tank Fabrication and Duct Fabrication, and (v) other ESP Internal spare parts, for some Original Equipment manufacturers (OEMs) and service providers ranging from sourcing of components, designing, manufacturing, quality testing as per the specifications provided by OEMs and service providers. The Company also undertakes trading activities and has diversified its product portfolio into the manufacture of stainless-steel pipes.

We are an ISO 9001:2015 certified Company that specializes in the manufacturing of Collecting Electrode, Discharge Electrode Plate steel structures and other internal components of an Electrostatic Precipitator (ESPs).

Recently, as part of its growth and capacity expansion strategy, the Company has proposed the construction of a new shed/building within the premises of its existing factory located at Mouza-Hanral, P.S. Dadpur, Hooghly, West Bengal 712149, along with the installation of new plant and machinery. These initiatives are intended to strengthen the Companys manufacturing infrastructure, enhance production and storage capacity, improve operational efficiency and support its future business requirements. During the preceding year, the Company also installed four S.S. TIG Mills for manufacturing stainless-steel pipelines of various sizes, creating an additional avenue for revenue generation and further diversifying its business and product portfolio.

2. Industry Overview

The global air quality control systems market was estimated at approximately USD 125.4 billion in 2025 and is projected to reach around USD 131.48 billion in 2026, growing at a CAGR of approximately 4.9%. The market continues to be driven by increasing industrialisation, urbanisation, rising awareness of the health and environmental impacts of air pollution and stringent emission-control regulations.

[Source: https://www.thebusinessresearchcompany.com/report/air-quality-control-system-global-market-report]

India represents a significant and growing market, with the air pollution control systems market estimated at approximately USD 5.1 billion in 2025 and projected to grow at a CAGR of around 8.4% during 2026 2033.

[Source: https://www.grandviewresearch.com/horizon/outlook/air-pollution-control-systems-market/india]

Increasingly stringent environmental norms, industrial expansion and growing adoption of pollution-control technologies are supporting demand across sectors such as power, cement, steel, metals, chemicals and manufacturing. Key technologies include electrostatic precipitators (ESPs), scrubbers, bag filters, air filtration systems and other emission-control solutions.

The outlook remains positive, supported by regulatory compliance requirements, replacement and retrofitting of existing systems, technological advancements and increasing emphasis on environmental sustainability.

The global stainless steel pipe industry represents a significant segment of the global steel and industrial products market, with the global stainless steel pipes market estimated at approximately US $37.2 billion in 2025, broadly corresponding to FY 2025 26, and projected to reach nearly US $59.0 billion by 2032, implying a CAGR of approximately 6.7% over the forecast period. Demand for stainless steel pipes continues to be supported by their superior corrosion resistance, durability, strength, hygiene and suitability for high-temperature and demanding operating environments. Key end-use industries include oil & gas, chemicals and petrochemicals, power generation, water and wastewater treatment, food & beverage, pharmaceuticals, construction and infrastructure. The industry is expected to benefit from continued industrialisation, infrastructure development, expansion of energy and process industries, and increasing investment in replacement and modernisation of existing pipeline systems. Asia-Pacific remains a major production and consumption centre, supported by its large manufacturing base and expanding industrial infrastructure. Within the broader market, stainless steel seamless pipes are also expected to record healthy growth, with Markets and Markets estimating a 5.8% CAGR during 2025 2030, driven by demand from oil & gas, energy, chemical processing, automotive and other applications requiring high-performance corrosion-resistant piping.

Overall, the global outlook for the stainless steel pipe business remains positive, with approximately 6 7% annual market growth expected over the medium term, although raw-material price volatility, international trade policies and competitive pricing may influence industry profitability. The industry outlook remains positive over the medium to long term, although raw-material price volatility, energy costs and global trade conditions remain key challenges.

[Source: https://www.360iresearch.com/library/intelligence/stainless-steel-pipes https://www.marketsandmarkets.com/Market-Reports/stainless-steel-seamless-pipes-market-221921867.html]

3. Opportunities and Threats

Opportunities

The Company operates in an industry where long-term demand is supported by increasing environmental regulations and industrial requirements for effective particulate emission control. Opportunities exist in the installation of new pollution-control systems as well as in refurbishment, replacement and supply of spare parts for existing ESP installations.

The Companys established experience in ESP internal parts, electrodes and related products provides an opportunity to deepen relationships with existing customers and expand its domestic and international customer base. The Companys ability to manufacture products to customer specifications is also expected to support its competitive positioning.

The Companys diversification into stainless-steel pipes represents an additional growth opportunity. The installation of S.S. TIG Mills enables the Company to participate in the growing demand from sectors such as chemicals, petrochemicals, oil and gas, power, infrastructure, water treatment and general engineering.

Threats

The Companys operations remain exposed to fluctuations in the prices of steel, stainless steel and other raw materials, which may impact margins if increases in input costs cannot be fully passed on to customers. The Company also operates in competitive markets where pricing, product quality, delivery schedules and technical capabilities influence customer decisions.

Changes in environmental regulations, delays in industrial capital expenditure, postponement of customer projects, economic slowdowns and volatility in commodity prices may affect demand and order execution. Working-capital requirements associated with inventory and receivables also remain important considerations for the Companys operations.

The Company seeks to mitigate these risks through customer diversification, quality-focused manufacturing, prudent working-capital management and continuous monitoring of market conditions.

4 . Segment-wise / Product-wise Performance

The Companys principal business continues to be air pollution control equipment and ESP-related products, including collecting electrodes, discharge electrodes, ESP internal components, electrical control solutions and other related equipment and spares.

During FY 2025-26, the Company reported standalone revenue from operations of 14,589.77 lakh, against 16,371.97 lakh in FY 2024-25 a decline of approximately 10.89%, reflecting lower operating activity during the year and prevailing market conditions.

The Company continues to pursue diversification through its stainless-steel pipe manufacturing business. The four S.S. TIG Mills installed by the Company are intended to manufacture stainless-steel pipes of various sizes and provide an additional source of revenue, with contribution expected to increase progressively as capacity utilisation and market penetration improve.

The Company continues to focus on quality, customer-specific manufacturing, timely execution and strengthening its presence in domestic and international markets.

5. Outlook

The management remains cautiously optimistic regarding the medium- and long-term prospects of the Company. Increasing environmental compliance requirements, industrial expansion and the need for efficient emission-control systems are expected to support demand for ESP equipment, internal components, electrodes and related products.

The Company expects opportunities to arise not only from new ESP installations but also from replacement, refurbishment, retrofitting and supply of spare components for existing installations.

The stainless-steel pipe business provides an additional growth avenue, and the Company expects to leverage its manufacturing capabilities and customer relationships to gradually build a presence in this market. The Companys continued investment in plant and equipment during FY 2025-26 reflects its focus on strengthening manufacturing capabilities.

The Company will continue to focus on capacity utilisation, cost optimisation, product quality, customer relationships, working-capital efficiency and expansion into new markets.

6. Risks and Concerns

The Companys principal business risks include fluctuations in raw-material prices, changes in demand from industrial customers, competition, project delays, customer concentration, foreign-exchange fluctuations in export transactions and working-capital requirements.

The Company is also exposed to risks associated with the expansion of its stainless-steel pipe business, including capacity utilisation, market development, raw-material price volatility and competition from established manufacturers.

The Company seeks to address these risks through regular monitoring of business and financial performance, prudent financial management, internal controls, customer and supplier relationships and appropriate operational planning.

The Company has not reported any default on loans during FY 2025-26, and no debt securities were issued by the Company during the year.

7. Internal Control Systems and their Adequacy

The Company has established internal financial controls commensurate with the size, nature and complexity of its business, designed to safeguard assets, prevent and detect fraud and errors, ensure accuracy and completeness of accounting records, and support compliance with applicable laws and regulations.

The Company has appointed an independent Internal Auditor, and internal audit reports and observations are reviewed by the Audit Committee. For FY 2025-26, M/s R Das & Associates, Chartered Accountants, were re-appointed as Internal Auditors. The internal audit mechanism assists management and the Audit Committee in identifying areas requiring attention and monitoring corrective actions.

Based on the disclosures available, the Board is of the view that the Companys internal financial controls were adequate and operating effectively during the financial year.

8. Discussion on Financial Performance with respect to Operational Performance

The financial performance of the Company for FY 2025-26 is summarised below:

( In Lakh)

Particulars		Standalone		Consolidated
	For the Financial Year ended 31st March 2026	For the Financial Year ended 31st March 2025	For the Financial Year ended 31st March 2026	For the Financial Year ended 31st March 2025
Revenue from Operations	14,589.77	16,371.97	25,020.22	26,295.21
Other Income	106.75	125.21	161.82	176.23
Total Income	14,696.53	16,497.17	25,182.03	26,471.43
Total Expenses	14,144.10	15,925.34	24,608.52	25,852.64
Profit before Tax	552.43	571.83	573.51	618.79
Tax Expenses	152.27	143.93	157.58	155.82
Profit after tax for the year	400.16	427.90	415.94	462.97
Earnings Per Share (Basic)	3.28	3.51	3.41	3.79
Earnings Per Share (Diluted)	3.28	3.51	3.41	3.79

Key Financial Ratios

Pursuant to Regulation 34(3) read with Schedule V, Part B of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the following key financial ratios are furnished for FY 2025-26 in comparison with FY 2024-25, together with explanations where the variation is 25% or more:

Particulars	FY 2025-26	FY 2024-25	Change	Var. 25%?	Note
Debtors Turnover	6.33	7.46	15.15%	No	Average Receivable is increased during the year relating to previous year
Inventory Turnover	4.29	5.72	-25.00%	Yes	Declined due to reduced revenue from operation and cost of goods sold.
Interest Coverage					Declined, reflecting the impact of finance costs relative to earnings.
Ratio	3.55	3.9	-8.97%	No	Finance costs were 314.81 lakh in FY 2025-26 against 291.32 lakh in FY 2024-25.
Current Ratio	1.78	1.74	+2.30%	No	Both the current assets & current liabilities decreases during the year but current assets decreases less than current liability.
Debt-Equity Ratio	0.71	0.91	-21.98%	No	Total borrowings declined during the year while Reserve & Surplus increased from 4,136.92 lakh to 4,537.08 lakh, together resulting in an improved leverage position.
Operating Profit Margin (%)	5.21%	4.51%	15.52%	No	Mainly due to decrease in cost of Raw material consumed.
Net Profit Margin (%)	2.74	2.61	4.98%	No	Primarily driven by improved operating efficiency.
Debt Service Coverage Ratio	1.89	2.28	-17.11%	No	Decline due to increase in debt repayment obligations.
Return on Equity Ratio	8.82	10.34	-14.70%	No	ROE decline due to lower net profit, higher finance costs.
Trade Payable Turnover Ratio	14.91	34.01	-56.16%	Yes	Declined due to drop in purchase & an increase in average payables.
Net Capital Turnover Ratio	4.88	5.12	-4.68%	No	The ratio declined due to sales/revenue growth is slower than the increase in net working capital.
Return on Capital Employed	9.76	10	-2.4%	No	Declined due to increase in finance costs.
Return on Investment	0.50	-	0.5%	No	Due to sale of Mutual funds during the year.

9. Human Resources / Industrial Relations

Human resources continue to be an important component of the Companys operations. The Company is committed to providing a safe, healthy and supportive working environment and to maintaining cordial relations with its employees.

The Companys employees are engaged across manufacturing, engineering, quality control, administration, sales, finance and other functions.

For FY 2025-26, the Company has continued to maintain cordial employee relations and remains focused on employee safety, productivity, skill development and operational efficiency. Where project requirements fluctuate, contract manpower is deployed based on the nature and scale of work. As on 31^st March 2026, the Company has 60 permanent employees.

10. Overall Management Perspective

FY 2025-26 was a year of consolidation and continued business development for the Company. While revenue from operations declined during the year, the Company remained profitable, modestly improved its net margin, and continued to strengthen its balance sheet and manufacturing capabilities.

The reduction in trade receivables and borrowings reflects improvement in certain aspects of working-capital and financial management. At the same time, the increase in inventory and the decline in revenue indicate the need for continued focus on inventory optimisation, capacity utilisation and order execution.

The Company remains focused on strengthening its core ESP and air pollution control business while developing its stainless-steel pipe manufacturing capabilities. Management believes that increasing environmental compliance requirements, industrial development and the Companys diversified product portfolio provide a platform for sustainable long-term growth.

The Company will continue to focus on operational efficiency, quality, customer satisfaction, prudent financial management, working-capital optimisation and responsible utilisation of its manufacturing capacities.

11. FORWARD LOOKING STATEMENT

The statements made in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be ‘forward-looking statements within the meaning of applicable securities laws & regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand, supply, and price conditions in the domestic & overseas markets in which the Company operates, changes in Government regulations, tax laws & other statutes, and other incidental factors.