Deccan Cements Ltd Management Discussions

After completion of the ongoing brownfield expansion project at the existing plant location, at present Deccan Cements Limited is having installed capacity of 4 Million Tons per annum. Deccan Cement with an existence of more than four decades has a good reputation in south Indian cement and is now ready to cater to growing infrastructure development projects.

Global Economy:

The IMFs July update has put the 2026 global growth at around 3.0%, while the World Banks latest outlook is more cautious at 2.5%. The major risk is the further escalation of the Middle East conflict. The World Bank has warned that a much more severe escalation could reduce global growth dramatically, potentially toward 1.3% in an extreme scenario. Oil has recently moved sharply higher amid uncertainty around the U.S.-Iran situation. For oil-importing economies such as India, China, Japan and much of Europe, this is more impactful. From an Indian business perspective, the OECDs June outlook projected Indian growth to moderate from 7.6% in FY2025-26 to about 6.3% in FY2026-27, partly because of higher energy prices. Nevertheless, India remains one of the stronger large economies globally.

Indian Economy:

The Indian economy remains fundamentally strong, although growth is likely to moderate from the very high levels seen recently. On 5 August 2026 in its assessment the RBI kept the repo rate at 5.25%, retained a neutral policy stance and raised its FY2026- 27 real GDP growth projection to 6.7%. The World Bank estimates that India grew 7.6% in FY2025-26, but expects growth to moderate to 6.6% in FY2026- 27, partly because of geopolitical and energy-related pressures. The IMFs current country data puts 2026 real GDP growth at 6.4%. The important point is that India is less dependent on exports than many Asian economies, so weak global demand does not necessarily translate into a domestic recession. Indias external position has improved considerably compared with previous periods of vulnerability. The World Bank notes Indias strong foreign-exchange reserves, predominantly rupee-denominated public debt and relatively healthy financial sector as important buffers against external shocks. Indias exports could be affected by tariffs, protectionism and weaker global growth. However, Indias large domestic market provides it some insulation.

Industry Structure and Developments:

CRISIL expects Indian cement demand to grow around 6.5-7.5% in FY27, primarily from infrastructure and industrial/commercial construction. However, additional capacity and competition are restricting the pricing substantially.

The South Indian cement industry has a positive demand outlook, but margins remains under pressure in the near term because of capacity additions and intense competition. South India, particularly Andhra Pradesh, Telangana, Tamil Nadu and Karnataka, is likely to remain one of Indias most important cement markets. Infrastructure projects, such as, Highways and expressways, Irrigation projects, Ports, Metro/ urban infrastructure, Industrial corridors, Airports, Power projects, Data centers and industrial facilities, Warehousing and logistics, Railways, which requires more cement, will be major drivers of growth in south India.

Opportunities:

Major infrastructure projects, which will boost the demand of cement, such as Vizhinjam International Seaport (with estimated project cost of ?8,900 crore), the Bengaluru-Chennai Expressway (with approximately cost of ?18,000 crore), the Chennai Metro Rail Phase-2 (with estimated project cost of ?63,246 crore), and the Mappedu Multi-Modal Logistics Park in Tamil Nadu (with estimated project cost of ?1,424 crore), South Coast Railway Upgrades, with ongoing network expansion and station modernizations with over ?54,000 crore, Polavaram Irrigation Project with an estimated revised cost of ?55,548.87 crore, Plans for 8 new industrial manufacturing clusters backed by ?10,522 crore in baseline infrastructure near major ports like Visakhapatnam, Kakinada, and Krishnapatnam, Vizag-Chennai Industrial Corridor in the Kadapa district with a project infrastructure cost of ?2,137 crore, Central and state road expansions·including sections of NH-365BG and NH-67·launching connectivity packages valued over ?1,880 crore, alongside larger regional expressway pipelines, Visakhapatnam Hyperscale Data Centre valued at ?15,000 crore, Renewable Energy & Storage Parks: SAEL Industries solar and pumped-storage logistics buildouts across Kadapa and Kurnool totaling ?22,000 crore, Phase-II of the Hyderabad Metro (?24,237 crore), the Musi River development (?1,500 crore), regional road expansions like the NH- 930P widening (?675 crore), and upcoming grade separators at Khajaguda Junction (?220 crore).

Threats:

• Excess production facilities in a region may lead to tougher competition.

• The cement industry greatly relies on construction activities. Therefore, any problem in construction activities will affect the cement industry to a large extent.

• Scarcity in supply of raw material.

• Increase of power and fuel cost.

• Increase in steel and other building material cost will have impact on cement consumption.

However, the ongoing and proposed infrastructure projects will encourage the demand of cement in near future.

Segment-wise or product-wise performance:

The Company operates in a single product segment and the product is a generic one with small variations in the form of OPC, PPC, SRC etc., and it does not require much elaboration on segment wise / product wise performance.

Outlook:

Considering the overall situation and the developments taking place in Industry, the current and quarter is not encouraging. However, the outlook for the future is expected to be stable.

During December 2025, the company successfully completed its brown field expansion project. Accordingly, the present the cement production capacity is 4 Million Tons per annum.

During FY 2021-22, your Company had participated in the auction process for the purpose of grant of

Limestone Mining Lease in Rata Mandha-1A (RM- 1A) Block, Shri Mohangarh Tehsil, Jaisalmer District, Rajasthan. However, the auction process shall remain subject to the decision of the Hon?ble High Court of Rajasthan in SB Civil WP No.16345/2018. Though, the Company was declared as the preferred bidder in December 2021, the Letter of Intent (LOI) was issued in March 2023. Your company is in the process of obtaining the statutory approvals required for the mining operations.

During FY 2024-25, your company had participated in the auction process for the Limestone Mining Lease in Block II - Saidulnama Block for Limestone Mineral in Mahankali Gudem village, Palakeedu Mandal, Suryapet District on 170.74 Hectare Area. The Company was declared as the preferred bidder in November 2024, and the Letter of Intent (LOI) was issued to the company in January 2025. Your company is in the process of obtaining the statutory approvals required for the mining operations.

Risks and Concerns:

The company can be said to have the following risks and concerns which are commonly applicable to any cement unit.

• Lower demand growth leading to Lower Capacity utilization;

• Drop in realizations which may impact the margins;

• Regular increases in cost of inputs leading to impact on margins;

• Probable Uncertainties in Coal supplies and increase in the prices;

• Upward revisions in international crude prices leading to Increase in transportation cost, for both input materials and finished goods;

• Adverse Changes in Government Policies impact the costs, demand and supply;

Internal Control Systems and their Adequacy:

The internal control system in the Company has a process designed to take care of various controls and audit requirements. It aims at effectiveness in the operations and protection of the companys assets from any possible loss and unauthorised use. It also helps proper and correct data being recorded, ensuring transparency. The design of the processes is such that there is an adequate, appropriate and need based control on the activities / business operations of the Company.

The Internal Control system is backed by an established and adequate Internal Audit System which is carried out by an independent firm of Chartered Accountants of repute and experience. The internal auditors review periodically to ensure robust control systems for effective control. The internal auditors submit their reports to the Audit Committee of the Board of Directors for their review. The Internal Control system ensures that the Internal Audit Scope is adequate and their reviews are well directed to achieve the desired objectives. The Audit Committee also reviews the adequacy and effectiveness of internal control systems and suggests improvements from time to time.

The compliance of the legal and statutory requirements is given utmost importance to ensure efficiency in operations / reporting and controls. All parameters in all operations / activities are monitored regularly to ensure desired results.

Financial and Operational Performance:

During the year under review, the Companys operational performance was encouraging to some extent. During FY 2025-26 the Company sold 16.22 Lakh MTs of cement, as against 13.90 Lakh MTs during FY 2024-25, which is about 16.68% higher in FY 2025-26.

The revenue from Cement sales in FY 2025-26 stands at Rs. 62,893.56 Lakhs, as against Rs.51,964.02 Lakhs in FY 2024-25, which is about 21.03% higher in FY 2025-26. During FY 2025-26 the Company had a turnover of Rs. 63,561.42 Lakhs from operations which is about 20.62% higher than previous year (FY 2024-25: Rs. 52,697.72 Lakhs).

The demand for the product and the price fluctuations can be gauged from the fact that the volume of cement sale was higher by 16.68%, whereas, the revenue was higher by 21.03% during the year. Details of the Companys Performance on the basis of sale of products are given in the Note No.18 to the Financial Statements forming part of this Annual Report.

With increase in the Volume of sales by 16.68%, the revenue from operations increased by 20.62% (Rs.10,863.70 Lakhs), due to more realisations. Further, due to increase in revenue, the EBIDTA margin increased by 48.81%, and Profit before exceptional item and tax was increased by 99.07% (Rs.1,065.49 Lakhs) [FY 2025-26: Rs. 2,141.02 Lakhs V/s. FY 2024-25: Rs.1,075.54 Lakhs].

The Profit after Tax for the year stood at Rs. 2,859.12 Lakhs compared to Rs.753.30 Lakhs for the previous year (an increase of about 279.54%).

As per the requirement, the company is required to comment upon the changes in the specified ratios beyond a threshold limit (i.e. change of 25% or more as compared to the immediately previous financial year) along-with a detailed explanation thereof.

The details of ratios and the variance are as given below:

Particulars (Ratio)	2025-26	2024-25	Variance
Debtors Turnover Ratio	11.99	9.43	27.15%
Inventory Turnover Ratio	6.23	5.23	19.12%
Interest Coverage Ratio	1.78	1.84	(3.26%)
Current Ratio	0.83	1.17	(29.06%)
Debt Equity ratio	1.00	0.99	1.01%
Operating profit Margin ratio (%)	8.00%	4.00%	100.00%
Net profit margin ratio (%)	4.00%	1.00%	300.00%
Return on Equity / Net worth	0.04	0.01	300.00%

Increase in Debtors Turnover Ratio: Due to increase in sales.

Decrease in Current Ratio: Due to write off of banked units and increase of current portion of long term debt, driven by the upcoming term loan repayments.

Increase in operating profit margin ratio: This is due to increase in sales and profits.

Net Profit Margin Ratio, and Return on Equity:

This is due to increase in sales, profit on sale of immovable properties.

Human Resources & Industrial Relations:

The Company believes that the people are its assets and continues its focused attention on nurturing and developing its human resources through continuous training, motivation and engagement initiatives. The relationship with employees continues to be cordial and harmonious and always provides a positive and conducive environment to improve efficiency. Emphasis on competency improvement through skill and capability development, training programs and rationalization of work methods, has improved employees productivity and morale. The Companys Health and Safety Policy aims at providing a healthy and safe working environment for the employees. As on 31^st March 2026, the Company has 345 employees who are engaged in its various units and corporate office.

Cautionary Statement:

Statements in the “Management Discussion & Analysis Report” which seek to describe the Companys objective, projections, estimates, expectations or predictions may be considered to be “forward looking statements” within the meaning of applicable securities laws or regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include demand- supply conditions, increase in installed capacities prices of input materials, cyclical demand, pricing in the Companys markets, changes in Government regulations, tax regimes etc., besides other factors such as litigation and labour related issues.

For and on behalf of the Board of Directors,
	Deccan Cements Limited
	Sd/-
	P. Parvathi
Place: Hyderabad	Chairperson and Managing Director
Date: 12th August 2026	DIN :00016597