Chandra Prabhu International Ltd Management Discussions

Management Discussion :fl

and Analysis (md&a) wm

This report contains forward-looking statements, which reflect CPILs expectations and assumptions about future performance, strategy, and market conditions. These statements, identified by terms like expects, plans, intends, and similar expressions, are inherently uncertain and subject to risks. Actual results may differ materially due to various factors. CPIL does not undertake any obligation to update these statements unless required by law, and advises stakeholders not to place undue reliance on them.

CPIL, a trusted name in coal, and agro product trading, has recently added metal scrap to its portfolio. On 11th June 2024, the company also revived its Agro Business using advanced technology and hi-tech machinery. Committed to ethical, sustainable, and stakeholder-driven growth, CPIL continues to pursue profitable expansion across all its operations.

Global Economic Overview

In FY 2024?25, the global economy showed signs of cautious recovery amid persistent inflation, trade disruptions, and geopolitical tensions. According to the IMF, global GDP growth was estimated at 3.0%, with a projected increase to 3.1% in FY 2025-26, driven by improved financial conditions, lower effective tariffs, and fiscal expansion in major economies. Inflation is expected to ease gradually, although U.S. inflation

remains above target. Key risks include elevated uncertainty, potential tariff hikes, and geopolitical instability, prompting calls for restoring confidence and sustainability in global policy frameworks.¹

^Source: MF World Economic Outlook Update, July 2025)

In the coal trading sector, global coal demand reached a record 8.8 billion tonnes in 2024, marking a 1.5% increase from the previous year. This growth was primarily driven by rising consumption in China, India, and Indonesia, offsetting declines in Europe and North America. However, demand in China and India began to soften in early 2025 due to increased renewable energy generation. The International Energy Agency(IEA) forecasts coal demand to remain broadly flat in 2025 and decline slightly in 2026. Notably, coal use in the U.S. rose by 10% in first half of 2025 due to high natural gas prices. Despite regional fluctuations, global coal trade volumes are expected to contract in 2025 and 2026, marking the first consecutive two-year decline this century.²

The metal scrap trading sector also saw significant growth. The global metal recycling market was valued at USD 551.9 billion in 2024 and is projected to reach USD 767.9 billion by 2029, growing at a CAGR of 6.8%. This surge is driven by environmental regulations, industrial demand for sustainable raw materials, and technological advancements. The Asia-Pacific region, particularly China, leads this growth due to rapid urbanization and industrialization. Key end-use industries include automotive, construction, and electronics. Ferrous metals dominate the market, while non-ferrous metals like aluminium and copper offer higher value. Challenges such as disorganized waste collection in developing countries and the complexity of modern products pose hurdles to efficient recycling.³

India Economy Overview

Indias economy remained resilient in FY 2024?25, with real GDP growth estimated at 6.5%, supported by strong domestic demand, robust investment activity, and government-led capital expenditure. The Ministry of Statistics and Programme Implementation (MoSPI) reported healthy growth across agriculture, industry, and services, with Gross Value Added (GVA) expanding steadily. Private consumption and gross fixed capital formation were key contributors to growth, while exports faced headwinds due to global trade moderation.

Inflation remained within manageable levels. The Reserve Bank of India (RBI) projected headline CPI inflation at 4.5% for FY 2024?25, aided by easing food and fuel prices. Monetary policy remained accommodative, with the repo rate held steady to support growth while keeping inflation expectations anchored.

Looking ahead to FY 2025?26, the RBI has retained its GDP growth forecast at 6.5%, citing buoyant rural demand, a revival in urban consumption, and improved capacity utilization in manufacturing. The central bank expects inflation to moderate further to 3.8%, driven by stable commodity prices and proactive supply-side interventions 3. However, risks from global trade disruptions, geopolitical tensions, and climate-related shocks remain.

India is expected to remain the fastest-growing major economy in the world, with continued emphasis on infrastructure development, digital transformation, and green energy investments. The governments focus on fiscal consolidation, ease of doing business, and targeted welfare schemes is likely to support inclusive and sustainable growth.⁴

(²Source: IEA Coal Mid-Year Update, July 2025 )

(³Source: Metal Recycling Market Report, July 2025)

(^Sources MoSPI ? National Accounts Statistics 2025, RBI Bulletin ? Inflation & Growth Outlook, RBI Annual Report ? GDP Forecast, Mint ? RBI Monetary Policy Update)

Outlook

India is poised to maintain strong economic momentum in FY 2025?26, with GDP growth projected at 6.5%, supported by robust domestic demand, infrastructure investment, and a revival in rural and urban consumption. Inflation is expected to moderate to 3.7%, enabling a stable monetary policy environment. Despite global uncertainties, Indias macroeconomic fundamentals remain resilient, positioning it as the fastest-growing major economy globally.⁵

Company Overview

Chandra Prabhu International Ltd. (CPIL) is a multi-product trading company with over 40 years of experience in coal, and agro commodities. Expanding its portfolio, CPIL has recently entered the metal scrap trading segment and revived its Agro Business using advanced technology and hi-tech machinery. Committed to ethical practices and sustainable growth, CPIL continues to deliver value across industries and stakeholders.

COALSECTOR

Global Overview: .

The global coal industry in FY 2024?25 witnessed a I complex interplay of energy demand, climate policies, 1 and geopolitical factors. According to the L International Energy Agency (IEA), global coal I demand reached a new high in 2024, driven by I increased consumption in Asia and slower-than- : expected transitions to renewable energy in some . regions. Flowever, the IEA projects that coal demand I will plateau through 2027 due to aggressive renewable : energy deployment and climate commitments. The

World Bank also notes a medium-term decline in coal prices and demand, reflecting a reshaping of global energy trade.⁶

Indian Perspective:

India remains one of the worlds largest coal producers and consumers. In FY 2024?25, domestic coal production reached 1,047.67 million tonnes (MT), a 4.99% increase over the previous year. Coal India Limited (CIL) contributed 781.07 MT, while commercial and captive mines produced 197.50 MT, marking a 28.11% rise. Dispatches rose to 1,024.99 MT, and coal imports declined significantly, saving ?42,000 crore in foreign exchange.

To support clean energy goals, the government approved a 8,500 crore incentive scheme for coal gasification projects, with joint ventures like CIL-BHEL and CIL-GAIL already underway.

Looking ahead to FY 2025?26, the sector targets 1,150 MT in production and aims to reach 1.5 billion tonnes by 2030, alongside plans to add 30,000 MW of new coal-fired capacity to meet rising energy demand. These efforts are complemented by policy reforms, digital platforms, and a Just Transition framework to support coal-dependent communities and ensure sustainable growth.⁷

{⁵Source: Reserve Bank of India (RBI), Ministry of Statistics and Programme Implementation (MoSPI)} (⁶Source:iea.org,blogs.worldbank.org)

(⁷Source:Ministry of Coal, PIB, CEA)

Company Status:

The company has focused on trading in Imported Coal and its efforts yielded tremendous results and despite of pandemic hit economy, out of total revenue of Rs. 99,426.36 Lakhs, company has generated revenue of Rs. 67,688.73 Lakhs for the financial year 2024-2025 i.e. 68.07% of revenue from coal segment has been attributed towards the total revenue of the company. The Company has gained momentum and is very optimistic to maintain the growth trajectory in the Coal segment and continues to perform well and exploit the available opportunities by effectively utilizing its resources.

AGRICULTURE SECTOR Global Overview:

Globally, agriculture in FY 2024?25 faced challenges from climate change, labor shortages, and supply chain disruptions. The FAO reported moderate growth in global agricultural output, with increased mechanization and digital technologies improving productivity. However, extreme weather events and geopolitical tensions affected food security and trade flows. The global push for sustainable farming practices and climate-resilient crops gained momentum, supported by international funding and policy frameworks.⁸

Indian Perspective:

Indias agriculture sector grew by 3.8% in FY 2024?25, up from 1.4% the previous year. The government allocated ?1,41,352 crore (RE) to the Ministry of Agriculture and Farmers Welfare, with 92% directed toward farmer welfare schemes such as PM-KISAN, Crop Insurance, and RKVY. For FY 2025?26, the budget is ?1,37,757 crore (BE), introducing new initiatives like PM Dhan Dhaanya Krishi Yojana, Mission for Aatmanirbharta in Pulses, and the Seed Mission.

The ministry comprises two departments: one focused on welfare schemes and the other on agricultural research and education. Labor shortages remain a major challenge due to rural-to-urban migration, an aging workforce, seasonal employment, low wages, and a skill gap. Mechanization and technology adoption are central to improving productivity, though affordability and access remain barriers. A new company division aims to address these issues by offering services that leverage both imported and locally manufactured machinery to reduce manual dependency and enhance farm efficiency.⁹

Company Status:

Company has generated revenue of Rs. 15.96 Lakh from its Agro division (Hiring of AgroEquipments) during the year under review. During the year, the Company has not done any work regarding Agro Products. Hope, with the use of the new and innovative technology & Hi-tech agro machinery/equipments will enlarge our business scale in agro sector during the upcoming years.

Global Overview:

In FY 2024?25, the global metal scrap industry saw strong demand due to rising steel production and sustainability goals. India stood out with a 6.2% growth in crude steel output, reaching 149.4 MT, while global production declined by 1%. The push toward circular economies and recycling boosted scrap utilization, especially in electric arc and induction furnaces. Sponge iron, a key input for these furnaces, continued to grow in demand, supported by Indias abundant iron ore reserves and policy backing.

(⁸Source:FAO.org,WorldBank Agriculture Outlook)

(⁹Source: PRS Legislative Research ? Union Budget 2025?26,Union Budget Documents ? Ministry of Agriculture.)

Looking ahead to FY 2025?26, Indias steel consumption is projected to rise by 9?10%, driven by infrastructure and construction. The governments Production-Linked Incentive (PLI) scheme and investments in specialty steel are expected to further increase scrap-based production. However, global metal demand may face headwinds due to recession risks and tariff uncertainties, potentially impacting pricing and trade flows. Despite this, Indias domestic resilience and policy support position it as a key growth market for both scrap recycling and sponge iron production.¹⁰

Indian Perspective:

India produced 143.6 MT of crude steel and 138.5 MT of finished steel in FY 2024?25. The government launched PLI Scheme 1.1 for Specialty Steel with a Rs. 6,322 crore budget and imposed a 12% safeguard duty on flat steel imports. Investments in infrastructure and transport connectivity support the sectors growth. Steel prices averaged Rs. 53,500 per tonne, and the outlook remains positive with projected 8?10% volume CAGR from FY25 toFY27.¹¹

Company Status:

In order to diversify its business operations, the Company has, in recent years, entered into trading activities in newly identified segments, namely metal scrap and sponge iron. Out of total revenue of Rs. 99,426.36 Lakhs company has generated revenue of Rs. 31709.26 Lakhs for the financial year 2024-2025 i.e. 31.90% of revenue from Metal segment has been attributed towards the total revenue of the company. The Company has gained momentum and is very optimistic to maintain the growth trajectory in the Metal segment and continues to perform well and exploit the available opportunities by effectively utilizing its resources.

CORPORATE SOCIAL RESPONSIBILITY

Acting responsibly and giving back to society are integral to the way we conduct our business. We recognise that we must be an active contributor to enhancing the lives of our communities. It is also our ongoing commitment to share value where it has been created. We have been including our communities in our growth journey through a wide range of social interventions. As a responsible corporate citizen, we are actively initiating and / or participating in work that together make us the local lighthouse for the region which significantly improves the lives of the people where we operate and are present. It is our constant endeavour to address critical social, environmental and economic needs of the communities.

(¹⁰Source:J.P Morgan ? Metals Outlook 2025, IBEF ? Steel Sector Infographic, Ministry of Steel ? Monthly Economic Report March 2025)

("Source: IBEF.org, Ministry of Steel, Jefferies)

While there is currently no legal obligation for the Company to contribute towards Corporate Social Responsibility (CSR) under applicable laws, Chandra Prabhu International Ltd. voluntarily contributed Rs. 10 lakh during the financial year as part of its commitment to social welfare. This reflects the Companys values of responsible business conduct and its dedication to making a positive impact beyond statutory requirements.

FINANCIAL PERFORMANCE

During the year under review, the Financial Performance of the Company is as below:

Particulars	Numerator	Denominator	31.03.2025	31.03.2024	Variance	Reasons for Variance [where variance is more than 25%]
Current Ratio	Current Assets1	Current Liabilities1	1.16	1.41	-17.60%	-
Debt Equity Ratio	Total Debt2	Shareholders Equity3	1.65	1.22	35.32%	Variance is due to increase in bank borrowings.
Debt Service Coverage Ratio	Earnings available for debt service4	Debt Service5	0.38	0.59	-36.47%	Variance is due to increase in debts .
Return on Equity Ratio	Net Profits after taxes	Avg Shareholders Equity6	4.91%	1.66%	195.88%	Variance due to increase in Profit
Inventory Turnover Ratio	Cost of Goods Sold7	Average Inventory	37.45 Times	29.47 Times	27.11%	Variance due to reclassification of Rs 1720.98 lakhs of Inventory as Capital Assets.
Trade Receivable Turnover Ratio	Sales	Average Trade Receivable	18.38 Times	20.72 Times	-11.25%	-
Trade Payable Turnover Ratio	Purchase	Average Trade Payables	55.14 Times	48.53 Times	13.62%	-
Net Capital Turnover Ratio	Total Sales	Working Capital8	66.16	22.60	192.80%	Variance due to increase in Sales
Net Profit Ratio	Net Profit	Total Sales	0.24%	0.09%	158.62%	Variance due to increase in Profits
Return on Capital employed	Earning before interest and taxes	Capital Employed9	7.92%	6.21%	27.58%	Variance due to increase in earnings before tax
Return on investment	Income generated from Investment	Time weighted average investment	NA	NA	NA

1. Current Assets & Current Liabilities as per Balance Sheet

2. Total Debt : Long Term Borrowings including ( Current Maturities of Long Term Borrowings), Short term borrowings and interest accrued on debts

3. Shareholder equity includes sum of equity share capital and Reserve & Surplus.

4. Earning available for debt service = Net Profit after taxes + Depreciation + Interest Cost

Net profit after tax means reported amount of "Profit /(Loss) for the period" and it does not include items of other comprehensive income.

5. Debt service = Interest cost + Principal repayments

6. Average shareholders equity is (opening + closing)/2

7. Cost of goods sold includes purchase of stock in trade and change in inventories of stock in trade

8. Working Capital = Current Assets - Current Liabilities

9. Capital Employed = Tangible Net worth + Total Debt where Tangible Net worth = Total Assets - Total Liabilities

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the Company have been prepared to comply in all material respects with the accounting standards notified under Section 133 of the Companies Act, 2013, and other accounting principles generally accepted in India. The management accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, so that the financial statements reflect in a true and fair manner the form and substance of transactions, and reasonably present the state of affairs, profits and cash flows for the year.

Our team oversees key risk categories including credit, market, legal and regulatory, operational, liquidity, interest rate, cyber security, information technology, strategic, and economic risks. Through a structured risk management system, the Company conducts regular risk assessments and implements preventive measures to address emerging and complex risks.

A risk-aware culture is embedded across the organization, reinforced by well-defined standards, policies, procedures, and controls. All risk-related policies are reviewed and approved by the Board and its Committees, ensuring independent and comprehensive risk oversight across all business verticals. The Company remains committed to maintaining a resilient and proactive approach to risk, enabling sustainable and secure growth.

• Stable staff team (no turn-over) and good level of synergy within the team ;

- More transversality, within WMFRs departments and working groups, through the creation of 2 "special advisors "positions;

-Attractiveness of WMFR with high level-partners Ability to carry out major projects;

- Early design and management of an innovative a quality approach

- Fragility of governance volunteering:

- Lack of diversity (gender, ethnicity . etc.) among WMFRs stakeholders

Difficult communication on our mailing-lists

- Additional human resources through a French programme called "Volontariat en service civique";

- Audit reports allowing us to call for diversified and external funding;

- A "Reconnaissance dUtilite Publique (RUP)" status made accessible (acknowledgement of public utility)

• Lack of stability in the evaluation process of our activities

- Financial insecurity (sources of funding);

- Unreliability regarding volunteer involvment management (anticipation is difficult, involvment is inconstant):

Strengths

• Highly skilled workforce through successful training and learning programs. Chandra Prabhu International Limited is investing its resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.

• Strong distribution network ? Over the years Chandra Prabhu International Limited has built a reliable distribution network that can reach majority of its potential market.

• Highly successful at Go to Market strategies for its products.

• Strong Free Cash Flow ? Chandra Prabhu International Limited has strong free cash flows that provide resources in the hand of the company to expand into new projects.

Weakness

• Limited success outside core business ? Even though Chandra Prabhu International Limited is one of the organizations in its industry, it has faced challenges in moving to other product segments with its present culture.

• Business and growth directly linked with the GDP growth of the country.

Opportunities

• Opening up of new markets because of government agreement ? the adoption of new technology standard and government free trade agreement has provided Chandra Prabhu International Limited an opportunity to enter a new emerging market.

• Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Chandra Prabhu International Limiteds products thus providing an opportunity to the company - either to boost its profitability or pass on the benefits to the customers to gain market share.

• The market development will lead to dilution of competitors advantage and enable Chandra Prabhu International Limiteds to increase its competitiveness compare to the other competitors.

Threats

• Shortage of skilled workforce in certain market represents a threat to steady growth of profits for Chandra Prabhu International Limited in those markets.

• Intense competition ? Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.