Beezaasan Explotech Ltd Management Discussions

1. Industry Structure and Developments

The industrial explosives sector plays a vital role in a nations economic growth, industrial development, and strategic capabilities. Industrial explosives are extensively utilized across mining operations, including coal, iron ore, and limestone extraction, as well as in quarrying and large-scale infrastructure projects such as tunnels, roads, and dams. Their application enables efficient rock blasting, significantly reducing project timelines and operational costs.

The sector also contributes substantially to the broader economy by supporting an extensive supply chain comprising raw material suppliers, transportation providers, and component manufacturers. In addition, it generates skilled employment opportunities in manufacturing, engineering, and logistics. By facilitating mining and infrastructure development, the industry indirectly supports key sectors such as power generation, steel production, and construction.

Beezaasan Explotech Limited operates in the defence and industrial explosives segment, which is integral to both national security and infrastructure development. The industry continues to witness steady demand driven by sustained investments in infrastructure projects, ongoing mining activities, and increased government expenditure on defence modernization.

2. Opportunities and Threats

Opportunities

- Government Policy Support: Continued emphasis on indigenous manufacturing through initiatives such as Make in India and Aatmanirbhar Bharat is expected to create significant growth opportunities for domestic defence and explosives manufacturers.

- Expansion in Mining Activities: Growing demand for coal, minerals, and other natural resources is driving increased mining operations, thereby supporting demand for industrial explosives.

- Export Growth Prospects: Strengthening international relations and increasing acceptance of Indian-made products present opportunities to expand exports to friendly and emerging markets.

- Technological Advancement: Adoption of advanced manufacturing technologies, automation, and enhanced safety systems can improve operational efficiency, product quality, and competitiveness.

Threats

- Regulatory and Compliance Challenges: The industry operates within a highly regulated framework requiring strict adherence to safety, environmental, and defence-related regulations, which may increase compliance costs.

- Volatility in Raw Material Prices: Fluctuations in the availability and cost of key raw materials may impact production schedules and profitability.

- Operational and Security Risks: Given the nature of explosives manufacturing, the business is exposed to heightened safety, security, and operational risks that require continuous monitoring and mitigation.

- Geopolitical and Supply Chain Uncertainties: Global economic conditions, geopolitical tensions, and disruptions in supply chains may adversely affect the availability of inputs and export opportunities.

3. Outlook

The outlook for FY 2026-27 remains positive, supported by the Governments continued focus on infrastructure development, mining expansion, and defence modernization. The Company is well-positioned to capitalize on emerging opportunities and strengthen its market presence through strategic growth initiatives, including:

- Expansion of manufacturing capacity to meet growing market demand.

- Continued investment in research and development aimed at enhancing product safety, efficiency, and innovation.

- Establishment of strategic partnerships and technology collaborations to improve operational capabilities and product offerings.

- Commencement of operations at new manufacturing facilities, which is expected to significantly contribute to the Companys production capacity, revenue growth, and overall business performance.

4. Risk Management

The Company has established a comprehensive risk management framework to identify, assess, monitor, and mitigate risks that may impact its business operations and strategic objectives. The framework enables proactive risk management and supports sustainable business growth.

The key risks identified by the Company and the corresponding mitigation measures are as follows:

- Operational Risks: Mitigated through robust standard operating procedures (SOPs), stringent safety protocols, regular audits, employee training programmes, and continuous monitoring of manufacturing processes.

- Regulatory and Compliance Risks: Managed through periodic legal and regulatory reviews, internal compliance assessments, and adherence to applicable statutory, environmental, and industry-specific regulations.

- Market and Business Risks: Addressed through customer diversification, expansion into new markets and geographies, strengthening customer relationships, and continuous evaluation of emerging business opportunities.

- Technology and Innovation Risks: Mitigated through ongoing investments in research and development, technology upgrades, process improvements, and strategic collaborations aimed at enhancing operational efficiency and maintaining competitiveness.

The Company regularly reviews its risk management practices to ensure that potential risks are effectively identified and managed in a dynamic business environment.

5. Internal Control Systems and Their Adequacy

The Company has established and maintained an adequate system of internal financial controls and internal control mechanisms commensurate with the nature, scale, and complexity of its operations. These controls are designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, reliability of financial reporting, safeguarding of assets, and compliance with applicable laws and regulations.

The internal control framework, inter alia, ensures:

- Accuracy and reliability of financial and operational records.

- Safeguarding and optimal utilization of the Companys assets.

- Efficiency and effectiveness of business processes and operations.

- Compliance with applicable statutory, regulatory, and internal policy requirements.

- Timely identification and mitigation of operational and financial risks.

The effectiveness of the internal control systems is regularly reviewed through internal audits, management reviews, and independent evaluations by statutory auditors. Audit observations and recommendations are periodically placed before the Audit Committee and the Board of Directors, and necessary corrective actions are implemented promptly to strengthen the control environment.

The Board is of the opinion that the Companys internal control systems are adequate and operating effectively.

6. Discussion on Financial Performance with Respect to Operational Performance

During FY 2025-26, the Company achieved**:

- Revenue from Operations: Rs. 21,158.12 Lakhs

- EBITDA Margin: Rs. 1971.54 Lakhs

- Net Profit: Rs. 1,180.61 Lakhs

** Standalone Figures

Growth was primarily driven by higher production volume, cost optimization, and prudent working capital management. Rising input costs were partly mitigated through improved procurement strategies and automation in manufacturing.

7. Disclosure of Accounting Treatment:

The financial statements of the Company have been prepared in accordance with the applicable Accounting Standards prescribed under Section 133 of the Companies Act, 2013, read with the relevant rules issued thereunder, and other generally accepted accounting principles in India. The Company has consistently applied the prescribed accounting policies in the preparation of its financial statements.

The Statutory Auditors have not made any qualification, reservation, adverse remark, or disclaimer in their Audit Report for the financial year under review.

A. Statutory Compliance

The Company has complied with all applicable statutory and regulatory requirements during the year under review.

A compliance certificate/report on adherence to the provisions of various applicable laws is periodically placed before the Board of Directors. The Company has established appropriate systems and processes to ensure timely compliance with the provisions of the Companies Act, 2013, rules made thereunder, applicable SEBI regulations, and other relevant laws and regulations governing its operations.

B. Forward-Looking Statements

This Management Discussion and Analysis Report contains certain forward-looking statements concerning the Companys future business prospects, performance, growth strategies, and industry outlook. These statements are based on current expectations, assumptions, estimates, and projections regarding future events and are subject to various risks and uncertainties, including economic conditions, government policies, regulatory changes, geopolitical developments, market dynamics, and other factors beyond the Companys control.

8. Human Resources and Industrial Relations

The Company recognizes its human resources as a key driver of sustainablegrowthandoperationalexcellence.Employeeengagement, skill enhancement, workplace safety, and professional development continuetoremainintegraltotheCompanyshumanresourcestrategy. The Company is committed to fostering a positive work environment that encourages learning, collaboration, and high performance. During the year under review, industrial relations remained cordial and harmonious at all levels of the organization. Key human resource initiatives undertaken by the Company include:

- Regular safety, technical, and compliance training programmes to enhance employee competence and promote a strong safety culture.

- Employee welfare and well-being initiatives aimed at improving workplace satisfaction and overall quality of work life.

- Performance-based evaluation and incentive programmes designed to recognize and reward employee contributions.

- Continuous learning and development initiatives to strengthen leadership capabilities and support career growth opportunities. The Company remains committed to maintaining a safe, inclusive, and motivating workplace while fostering a culture of accountability, innovation, and continuous improvement.

9. Environmental, Social, and Governance (ESG) Initiatives

The Company remains committed to conducting its business in a responsible and sustainable manner, with a strong focus on environmental stewardship, social responsibility, and sound corporate governance. Sustainability principles are embedded in the Companys operational practices and long-term business strategy. Key sustainability and ESG initiatives undertaken by the Company . include:

- Adoption of environmentally responsible practices for the safe handling, treatment, and disposal of hazardous waste in . compliance with applicable regulations.

- Continuous efforts to minimize the environmental impact of operations through efficient resource utilization, pollution control measures, and process improvements.

- Implementation of community development and welfare initiatives in and around the areas where the Company operates, contributing to the socio-economic well-being of local communities.

- Integration of Environmental, Social, and Governance (ESG) considerations into strategic planning, risk management, and business decision-making processes.

The Company remains committed to enhancing its sustainability performance and creating long-term value for all stakeholders while maintaining high standards of safety, environmental protection, and corporate governance.

ratios, along with detailed explanations thereof, including:

Ratio	FY 2025-26 Ratio	FY 2024-25 Ratio	% Variance	Reason for Variance
(a) Current Ratio	2.63	4.05	-35.03	Current Ratio has been decreased due to increase in Short Term Bor- rowing and Current Liabilities.
(b) Debt-Equity Ratio	0.23	0.23	-2.87	D/E Ratio has been maintained due to simultaneous increase in both Shareholders Fund and Borrowings.
(c) Debt Service Coverage Ratio	4.71	3.49	34.86	DSCR has increased due to decrease in finance cost during the year.
(d) Return on Equity Ratio	0.09	0.21	-53.79	ROE has been decreased due to increase in Shareholders Funds during the year.
(e) Inventory Turnover Ratio	6.81	9.59	-29.00	Inventory Turnover Ratio reduced due to increase in average inventory during the year.
(f) Trade Receivables Turnover Ratio	22.43	33.04	-32.11	Trade Receivable Turnover Ratio has been decreased due to increase in average trade receivable during the year.
(g) Trade Payables Turnover Ratio	49.14	763.14	-93.56	Trade Payables Turnover Ratio has been decreased due to increase in average trade payables.
(h) Net Capital Turnover Ratio	4.31	4.91	-12.07	Net Capital Turnover Ratio has been decreased due to increase in work- ing capital during the year.
(i) Net Profit Ratio	5.58	5.72	-2.48	Net Profit Ratio has been decreased slightly due to decrease in profit during the year.
(j) Return on Capital Employed	10.05	18.00	-44.15	ROCE has been decreased due to increase in shareholders fund during the year.
(k) Return on Investment	7.72	12.81	-39.71	ROI has been decreased due to increase in shareholders fund during the year.

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

During the year 2025-26, the Net Worth of the Company has been increased from Rs. 9603.97 Lacs to Rs. 15287.38 Lacs. This increase is mainly due to Increase in Share Capital & Securities Premium. The Profit after tax (PAT) also decreased from Rs. 1230.11 lacs to Rs. 1180.61 Lacs.

As the Net Worth of the Company has been increased and there is decreased in the PAT, the resulting Return on Net Worth has been decreased from 12.81 times to 7.72 times.

Cautionary Statement

Statements in this report relating to the Companys objectives, projections, outlook, estimates, and expectations may be considered "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied, depending on various economic, regulatory, and operational factors.