Deccan Cements Ltd Management Discussions

Deccan Cements Limited, with an existing installed capacity of 2.2 Million Tons per annum is in its final stage of completion of the ongoing expansion project at the existing plant location. After completion of the expansion project, the total install capacity of the Company will be 4.00 Million Tons per annum. Deccan Cement with an existence of more than four decades has a good reputation in south Indian cement and will now be ready to cater to growing infrastructure development projects.

Global Economy:

The International Bank for Reconstruction and

Development (a World Bank Group) in its Global

Economic Prospects states that the global economy is facing substantial headwinds, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the weak outlook limits their ability to boost job creation and reduce extreme poverty. According to EY, the Global economic activity is expected to maintain modest but uneven momentum. The real global GDP growth will decelerate to around 3.0% in 2025 and 2.9% in 2026, following a 3.2% advance in 2024, as rising trade frictions, persistent geopolitical and policy uncertainty, elevated market volatility, and inflation divergence reshape the global outlook. Regional growth patterns have become more fragmented, with developed markets losing steam and emerging markets showing varied resilience. However, India remains a global bright spot, underpinned by infrastructure investment and strong domestic demand, with GDP growth projected at 6.6% in 2025 and 6.5% in 2026, following a 6.7% advance in 2024.

Indian Economy:

Indias economic outlook for 2025 remains positive, with projections indicating it will be the fastest-growing major economy, though growth is expected to be moderate compared to recent years. The IMF forecasts a 6.4% GDP growth for both 2025 and 2026. Other organizations like the UN and the CII also project growth within the 6.3-6.7% range. This growth is fuelled by strong domestic demand, government investments, and a resilient services sector.

Risks persist on the external front due to US trade measures, while manufacturing remains subdued. As per OECD, private consumption is supported by rising real incomes and lower personal income taxes. Investment will remain strong, bolstered by easing financial conditions. However, export growth is expected to slow due to weaker global demand, the impact of higher tariffs and heightened trade policy uncertainty.

Indias economic activity is gaining momentum amid continuing global uncertainties. India continues to maintain its position as the fastest-growing economy among emerging markets and developing economies. The Indian economy exhibits robust fundamental policies by Reserve Bank of India (RBI), which plays a key role in maintaining stability through its adept monetary policy framework. By carefully managing interest rates and liquidity, the RBI aims to control inflation while fostering sustainable economic growth. It ensures a resilient financial sector, contributing to overall economic stability. Higher economic growth typically correlates with increased job creation and improved social security measures. When a countrys GDP grows faster, businesses tend to expand and invest more.

Industry Structure and Developments:

The general elections, extended monsoon, weak spending by state government, slow pace of project execution and real estate market, impacted the demand and price of Cement in FY 2024-25.

Infrastructure, which accounts for 30% of the domestic cement demand, is expected to remain a key demand driver in the FY 2025-26. Roads, followed by railways, irrigation and urban infrastructure are the main infra projects, which need cement. Further, a healthy monsoon season this year will boost the agricultural income, which will create demand of house in rural areas, due to which the demand of cement will increase. In addition, due to higher budgetary allocation for several schemes by central government, such as PMGSY and MNREGA, will also support cement consumption. Allocation for the

Pradhan Mantri Awas Yojana-Urban scheme in the Union Budget 2025-26 is more by 45%, due to which the urban housing segment is expected to regain momentum in the FY 2025-26, which will support cement consumption.

Opportunities:

The Andhra Pradesh Capital Region Development

Authority (CRDA) has called for tenders to build a state-of-the-art secretariat in Amaravati at an estimated cost of 4,668 crore. The Union government granted in-principle approval for two significant of a common central secretariat and a general pool residential accommodation for central government employees, within the capital city of Amaravati with a combined cost of 2,787 crore. Andhra Pradesh

Chief Minister announced that the state government is targeting to complete the Polavaram project by

October 2026. The HUDCO, a navaratna central public sector enterprise, has pledged to provide a loan of 11,000 crore for the construction of the Amaravati greenfield capital city in Andhra Pradesh. This loan will contribute to the 26,000 crore required for the first phase of Amaravatis development. The World Bank and the Asian Development Bank (ADB) have already committed 15,000 crore.

Hyderabad Regional Ring Road at an estimated cost of 17,000 crore, Nagpur - Vijayawada Expressway at an estimated cost of 14,666 crore, proposed bus rapid transit (BRT) system ‘Warangal Metro Neo at an estimated cost of 1,100 crore, 713 kilometer-long

4 lane semi-access-controlled Hyderabad - Indore Expressway, 31 kilometer Hyderabad Airport Express

Metro, 4,000 MW coal-firedTelangana Super Thermal

Power Project in Ramagundam, Telangana, Sitamma Sagar Project on the Krishna River in Telangana, at an estimated cost of 10,000 crore, the proposed 1,100 km long, six-lane, Greenfieldaccess-controlled

Nagpur - Hyderabad - Bangalore Expressway at an estimated budget of 35,000 crore, Hyderabad

Pharma City, a large-scale pharmaceutical and life sciences industrial park, are the few infrastructure projects in Telangana which will boost the cement demand.

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 outlook for the future is expected to be stable.

The management of your company is working for increasing the cement production capacity by 2.2 Million Tons in the existing cement plant location. We are expecting to commence production from the new Line-III unit by end of 2025.

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 Honble 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 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 not encouraging. During FY 2024-25 the Company sold 13.90 Lakh MTs of cement, as against 19.17 Lakh MTs during

FY 2023-24, which is about 27.49% lower in FY

2024-25.

The revenue from Cement sales in FY 2024-25 stands at Rs.51,964.02 Lakhs, as against Rs.79,651.59

Lakhs in FY 2023-24, which is about 34.76% lower in FY 2024-25. During FY 2024-25 the Company had a turnover of Rs. 52,697.72 Lakhs from operations which is about 34.08% lower than previous year (FY 2023-24: Rs. 79,942.50 Lakhs).

The demand for the product and the price fluctuations can be gauged from the fact that the volume of cement sale was lowered by 27.49%, whereas, the revenue was lowered by 34.76% 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 decrease in the Volume of sales by 27.49%, the revenue from operations decreased by 34% (Rs.27,244.78 Lakhs), due to low price. Further, due to decrease in revenue the EBIDTA margin decreased by 53.02%, and Profit before exceptional item and tax was decrease of 84.59% (Rs.5,904.66 Lakhs)

[FY 2024-25: Rs.1,075.54 Lakhs V/s. FY 2023-24: Rs.6,980.20 Lakhs].

The Profit after Tax for the year stood at Rs.753.30

Lakhs compared to Rs.3,726.27 Lakhs for the previous year (a decrease of about 80%).

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)	2024-25	2023-24	Variance
Debtors Turnover Ratio	9.34	19.43	(51.47%)
Inventory Turnover Ratio	5.23	7.46	(29.89%)
Interest Coverage Ratio	1.84	6.64	(72.29%)
Current Ratio	1.17	1.46	(19.86%)
Debt Equity ratio	0.99	0.72	37.50%
Operating profit Margin ratio (%)	4.00%	10.00%	(80.00%)
Net profit margin ratio (%)	1.00%	5.00%	(80.00%)
Return on Equity / Net worth	0.01	0.05	(80.00%)

Decrease in Debtors Turnover Ratio: Due to decrease in sales.

Decrease in Inventory Turnover Ratio: Due to reduction in sales quantity and price resulted in profits

Decrease in Interest Coverage Ratio: Due to decrease in sales and profits.

Increase in Debt Equity Ratio: Due to increase in the borrowings for the expansion projects.

Decrease in Operating profit Margin ratio, Net Profit Margin Ratio, and Return on Equity:This is due to decrease in sales and profits.

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 2025, the Company has 357 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
	Chairperson and
Place: Hyderabad	Managing Director
Date: 12th August 2025	DIN : 00016597