Bheema Cements Ltd Management Discussions

"ANNEXURE-B"

ECONOMIC OUTLOOK

The global cement and concrete market continues to witness steady growth driven by increasing infrastructure development, urbanization, and construction activities across emerging economies. The global market, estimated at approximately USD 477 billion in 2023, is projected to reach around USD 774 billion by 2028, growing at a CAGR of about 8.4% during the forecast period. The Asia-Pacific (APAC) region remains the largest market for cement, supported by strong demand from infrastructure, housing and industrial development. Additionally, the replacement of technologically obsolete and smaller manufacturing units with modern and efficient plants is expected to further support market growth in the region.

In India, the cement industry continues to benefit from strong demand from infrastructure development, government spending on construction projects, and rural housing initiatives. Cement demand is expected to grow by around 7 8%, reaching approximately 382 million metric tonnes during the fiscal year, supported by increased construction activities and infrastructure expansion.

Despite the positive demand outlook, the industry continues to face certain challenges, including high input costs such as fuel, coal and petcoke, along with inflationary pressures, which may impact operating margins. However, continued demand from non-residential sectors including infrastructure and commercial construction projects is expected to support overall industry growth.

Regionally, demand growth is expected to remain stronger in the eastern, central and southern regions of India due to ongoing infrastructure and construction projects, while growth in the northern and western regions may remain relatively moderate. Overall, the outlook for the cement industry remains positive, supported by sustained investments in infrastructure development and construction activities across the country.

INDIAN INFRASTRUCTURE MARKET

Real gross domestic product

The fiscal deficit for 2024-25 is expected to moderate to 4.9% of GDP from the previous years 5.6% of GDP, which reflects a steady transition from pandemic-era recovery to aggressive fiscal consolidation. The government has targeted a further improvement to 4.4% of GDP for the next fiscal (April 2025 March 2026), moving closer to its long-term goal of reaching below 4.5% by FY26.

Fiscal deficit to moderate to 4.9% of GDP in FISCAL 2025; steady improvement over 5.6% in Fiscal 2024.

OUTLOOK

While initial forecasts of real GDP growth for Fiscal 2025 (April 2024 March 2025) were estimated at 6.4%, the economy has shown resilience despite global trade uncertainties and geopolitical cooling. Inflation has tracked a downward trajectory, softening to 4.9% in the April December period, with a gradual alignment toward the 4% target expected. Key factors impacting growth include the stabilization of global energy prices and the robust rebound in domestic private consumption. The demand for rural housing in FY25 was supported by a healthy rabi harvest (up 2.4% in acreage) and improved reservoir levels, ensuring upbeat farm sentiments. The continued policy support and elevated MSPs reaching their highest levels in seven years have bolstered rural incomes, thereby driving steady cement consumption in the hinterlands.

On the infrastructure segment, the Union Budget 2024-25 provided a massive impetus with a 11.1% increase in capital expenditure to a record 11.11 trillion (3.4% of GDP). This includes significant allocations of 2.8 trillion for roads and 2.6 trillion for railways, which are expected to drive robust cement demand. The identification of three dedicated Economic Railway Corridors specifically the Energy, Mineral, and Cement Corridors is a transformative step for the sectors logistics and volume growth. In the urban housing sector, demand remains strong despite the transition to a higher interest rate environment earlier in the year. The structural shift toward hybrid working models and significant growth in employee headcounts within the IT/ITES and BFSI sectors continue to fuel the need for larger, premium homes. Furthermore, the approval of 2 crore additional houses under PM Awas Yojana (PMAY) ensures a long-term demand floor for the industry. In FY25, operating income for the cement sector is expected to increase by 7 9%, supported by volume growth as production rose to approximately 453 million tonnes.

Infrastructure Boom:

• Gati Shakti & National Infrastructure Pipeline: The flagship PM Gati Shakti mission, supported by the 102 trillion NIP, has entered a high-execution phase, providing a direct multiplier effect for core manufacturing.

• Global Sentiment: Continued infrastructure focus in major economies, including the US Infrastructure Bill, has kept global sentiments spirited, positioning India as a key hub for industrial capacity.

• Corporate Performance: Leading cement and steel players continue to report strong operational results, with market leaders like UltraTech and Adani (Ambuja/ACC) aggressively expanding to capture the burgeoning domestic market.

Cement Industry Outlook:

India remains the worlds second-largest cement producer with an installed capacity reaching ~700 MTPA as of April 2024. Following the pandemic-induced slowdown, the industry has entered a "Capex Overdrive," with an estimated 33 35 MTPA of capacity added in FY25 alone the highest in a decade.

Demand is projected to reach 460 465 MT by the end of FY25, driven by a CAGR of 7 8% in the housing and infrastructure sectors. Regional distribution remains a key factor, with South India continuing to hold the largest share (~33%), while the Eastern region leads the current wave of capacity expansion. With high-quality limestone deposits and a government-led push toward Viksit Bharat 2047, the Indian cement industry is poised for sustained long-term growth.

INVESTMENTS

• FDI Inflows: Cumulative FDI inflows in the cement and gypsum products sector reached approximately US$ 6.3 billion by mid-2024, reflecting sustained global interest in Indias urban development.

• Exports: Indias exports of Portland and hydraulic cements were valued at approximately US$ 63.6 million in 2024, with key destinations including Sri Lanka and the Maldives.

Housing Demand: The shift toward hybrid work and the governments renewed push for the PM Awas Yojana (Urban & Rural) 2.0 targeting 30 million additional houses is expected to drive a surge in cement demand across Tier 2 and Tier 3 cities.

Some of the major investments and development in Indian cement industry are as follows:

• UltraTech Expansion: In 2024, UltraTech Cement continued its aggressive expansion with a fresh capex of over 13,000 crore (US$ 1.56 billion), aiming to cross a total capacity of 180 MTPA by 2025.

• Real Estate PE/VC: Private Equity investments in real estate surged to US$ 3.0 billion in the first half of 2024, a 15% year-on-year increase.

• Infrastructure PE/VC: PE/VC investments in infrastructure and real estate combined hit a record high, with the infrastructure sector alone recording nearly US$ 7.1 billion in the first half of 2024.

• Production Growth: Cement production in India grew by 1.9% in June 2024 compared to the previous year, maintaining steady output despite seasonal monsoons.

• Adani Group Consolidation: Following the acquisition of Ambuja and ACC, the Adani Group surpassed the 100 MTPA capacity milestone in 2024 and further expanded by acquiring Penna and Orient Cement.

• Dalmia Bharat Milestone: Dalmia Cement reached its capacity target of 49.5 MTPA in March 2025, supported by new grinding units in Bihar and the Eastern region.

• Decarbonization: JK Cement and UltraTech accelerated their net-zero journeys; JK Cement joined the LeadIT initiative in 2024 to pilot low-carbon technologies like electric calcination and green hydrogen.

• Sustainability Financing: UltraTech successfully raised US$ 500 million through sustainability-linked financing in mid-2024 to fund green energy transitions.

GOVERNMENT INITIATIVES

In order to help private sector companies, thrive in the industry, the Government has been approving their investment schemes. Some of the initiatives taken by the Government off late are as below:

• Union Budget 2024-25:

i. Infrastructure Capex: Allocated a record 11.11 trillion (US$ 132 billion) for infrastructure, including US$ 33 billion for roads and US$ 30 billion for railways.

ii. ii. PM Awas Yojana 2.0: Announced an investment of 10 lakh crore (US$ 120 billion) to address the housing needs of 1 crore urban families.

iii. iii. Rural Connectivity: Launched Phase IV of PMGSY to provide all-weather connectivity to 25,000 rural habitations.

• Railway Corridors: Under PM Gati Shakti, the government announced three new major railway corridors, including a dedicated Cement Economic Corridor to improve logistics efficiency.

• Urban Rejuvenation: Continued high allocation for AMRUT 2.0 and Smart Cities Mission to enhance urban infrastructure and cement consumption.

Company Outlook, Risk and Financial Highlights

a) Outlook

The new management, with rich and diverse backgrounds in core Engineering and Manufacturing sector are fully resolved to restore the plant to its former glory. Presently the control of the company has been handed over to us and work is underway in line to commence commercial production. The overhauling of the plant is completed and trial runs are being conducted.

Execution Strategy:

• An immaculate execution strategy to revive the plant in record time and operate at the best industry standards

• Bringing new investments for technology upgradation and expanding the capacity following best pollution control norms by investing in pollution control equipment.

• Three phase revival strategy to restoration of the grinding plant, development of mine and clinker facility and moving on to capacity addition in line with our growth strategy

• Addition of latest engineering innovations to the existing line of machinery to operate at one of the lowest cost of productions in the Industry and increased capacity

• Industry veterans with a combined experience of over 150 years are part of the revival and restoration team.

• Financial Engineering by experts to keep the cost of capital at the lowest and ensure sufficient working capital to sustain our operationalization plan for the factory.

The management is thankful for the support offered by the Government of Telangana in the revival stage and is certain that the Company shall face a turnaround by the end of next fiscal.

b) Risks and Concerns

Companies in the global cement industry are facing major challenges: If they are to improve productivity while simultaneously decreasing costs, they need high-performance products that are also energy-efficient and offer maximum availability and flexibility. These products also need to comply with environmental regulations while providing maximum safety for employees, machines and material.

Bheema Cements Limited shall strive for better output and alternative products to increase the topline. Further the Company shall keep a good liquidity flow to meet the capex and the working capital.

c) Internal Financial Control Systems and their Adequacy

The Company has adequate internal financial control systems and procedures in all operational areas and at all levels equipments procurement, finance, administration, marketing and personnel departments. The Company also has Internal Audit systems commensurate with its size and nature of business. The internal audit function will be done by a firm of Chartered Accountants. The Audit committee reviews the internal audit reports and the adequacy of internal controls from time to time. d) Financial review

The Highlights of Financial Operational Performance are given below:

(Rs. In Lakhs)

Particulars	2024-25	2023-24
Total Income	6.52	3.81
Total Expenditure	2,988.03	3058.32
Profit before Tax	(2,981.51)	(3,054.51)
Provision for Tax	0.00	0.00
Profit after Tax	(2,981.51)	(3,054.51)

e) Human Resources Development and Industrial Relations

The Company believes that the quality of its employees is the key to its success in the long run and is committed to provide necessary human resource development. The Company is in process of hiring resources with vast experience and expertise in the industry.

Industrial relations during the year are cordial and the Company is committed to maintain the same in future.

RISKS AND AREAS OF CONCERN

Our comprehensive Risk Management System (RMS) framework helps us identify risks and opportunities and monitor their movement. It ranks each risk based on two parameters: (a) likelihood of the event and (b) the impact it is expected to have on the Companys operations and performance to form a risk heat map.

The risks that fall under the purview of high likelihood and high impact are identified as primary risks. RMS also identifies the potential emerging risks.

This structured process of identifying risks supports the management in making strategic decisions and in developing detailed mitigation plans. The identified risks are then integrated into the Companys planning cycle, which is a rolling process, and is reviewed periodically to make the business and operations sustainable and secure. Some of the risks may be ongoing, while a few could be emerging risks due to the changing environment around our business operations.

KEY RISKS IDENTIFIED RISKS

(a) Ongoing case with the Electricity Department in the Supreme Court

(b) Creating sufficient liquidity for working capital requirements post the commencement of the plant.

(c) Raw material prices for fly ash and slag has increased multifold.

A well-considered plan has been laid down to address the risks. We are going to adopt more sustainable and efficient energy modes and options. We are investing continuously to make our plants compatible for fuel flexibility and enhanced capacity. Health and Safety Maintaining safety of all stakeholders, be it internal or external, is a humongous task, especially in todays challenging times where we wish to promote our vision of ‘Zero Harm in our day-to-day operations (road safety, safe project execution, safe supply chain movements, etc.).

Bheema Cements Limited	By Order of the Board of Directors
CIN: L26942TG1978PLC002315	For, BHEEMA CEMENTS LIMITED
	SD/-	SD/-
Registered Office:	Prasanna Sai Raghuveer	Kuchampudi Srinivasa
6-3-652/C/A, Flat 5A,	Kandula	Upendrasaket Varma
Kautilya Amrutha Estates	Chairman & Managing Director	Whole-time Director
Somajiguda, Hyderabad,	DIN:07063368	DIN:07087346
Telangana State -500082, India
Place: Hyderabad
Date: 23rd March, 2026