EICL Ltd Management Discussions

The Company has been able to operate only one of its manufacturing units, situated at Thonnakkal, Thiruvananthapuram, and that too on a partial scale, owing to the constrained supply of raw material (clay) from its captive mines over the past five years. The other plant, located in the Veli area, has remained non-operational since August 2020 due to the continued non-availability of raw material. The Company is currently extracting clay only from two smaller mining blocks at Thonnakkal, which have the necessary statutory clearances from the relevant government authorities. However, operations at the larger mining areas located at Veiloor and Mullassery could not be commenced, as requisite mining approvals from the Government of Kerala are still awaited.

The Company has been actively and consistently engaging with the concerned regulatory authorities to obtain the necessary clearances for the additional mining areas held by it. The Company remains optimistic that such approvals will be granted in the near future. Receipt of these approvals will significantly enhance the Companys ability to mine and supply raw material to both of its plants, thereby improving their capacity utilization levels—an essential prerequisite for restoring and sustaining the commercial viability of operations in Kerala. Historically, EICL has been a prominent manufacturer of value-added clay products and has catered to several large industrial customers in India and abroad, primarily in the paint and paper sectors, and additionally in industries such as tyres, rubber, and others. Owing to limited domestic supply, several key customers have been compelled to meet their requirements through imports. An increase in the Companys domestic production would not only aid in conserving valuable foreign exchange but also contribute meaningfully to local employment generation.

In light of the above, during the Financial Year under review, the Board of Directors approved the recommencement of partial operations at the Veli Unit. Given that the said unit had remained shut for over four years, the Board also sanctioned an additional capital investment of Rs.10 crore towards refurbishment of buildings, plant and machinery, and the requisite incremental working capital to restore operations at the site. Pursuant to completion of the refurbishment exercise, the Veli Unit commenced partial operations with effect from September 2024. As on date, both the manufacturing units located in Thiruvananthapuram are operational, although operating at suboptimal capacity levels due to the limited availability of raw material. The Company intends to increase capacity utilization at both units once the requisite mining approvals are secured.

In order to mitigate the ongoing risk associated with raw material constraints, the Company, through its wholly owned subsidiary in Bhuj, Gujarat, has previously established a manufacturing facility with an approximate installed capacity of 40,000 TPA for refined kaolin products. During the year, further capital expenditure was incurred at this unit with the objective of enhancing the product mix, thereby supporting improved profitability.

With respect to assets held for sale, the Company was able to complete the sale of a portion of its landholding in Shimoga, Karnataka during the year under review. The sale of the remaining land parcels is expected to be concluded within the current Financial Year, which would further augment the Companys cash flow position.

As regards the "Emphasis of Matter" noted by the Statutory Auditors in their Audit Report, the Board confirms that a clearly articulated plan is in place to secure the requisite mining approvals, as detailed in the preceding paragraphs.

Further, the Statutory Auditors have not made any qualification, reservation, adverse remark, or disclaimer in their Report that requires any specific comment or explanation from the Board of Directors.

The Companys manufacturing facilities are governed by a comprehensive "Environment, Health and Safety Policy" and are certified under ISO 14001:2015 and ISO 45001:2018 Management System Standards. A robust set of safety guidelines is in place to identify and mitigate unsafe practices or hazardous conditions within the Companys premises. These protocols form the foundation of a safe and incident-free workplace.

The Company has undertaken the following key Environment, Health, and Safety (EHS) initiatives at its manufacturing units:

1. Rainwater Harvesting: Implementation of a rainwater harvesting project at the Kerala plant to support sustainable water management.

2. Safety Training and Awareness Drives: Regular safety campaigns and training programs are conducted to enhance employee awareness and promote adherence to workplace safety norms.

3. Promotion of a Safety-Positive Culture: Equal emphasis is placed on both procedural and behavioral aspects of safety to foster a culture aimed at achieving zero workplace accidents.

4. Enhanced Monitoring and Audits: Increased focus on safety- related training, observations, and periodic audits, including internal safety audits.

5. Hazard Identification and Risk Assessment: Continuous identification and assessment of safety hazards, near-miss incidents, and high-risk zones through dedicated safety management audits.

6. Employee Engagement Initiatives: Employees are encouraged to actively participate in safety week celebrations through creative activities such as poster-making, slogan writing, poetry, and essay competitions. Participation is preceded by a formal safety oath.

7. Annual Health Check-ups: Comprehensive annual medical examinations are conducted for all officers to ensure employee well-being.

All of the above EHS measures have been effectively implemented across the Companys operational units.

The Company holds multiple mining leases over land parcels located at Thonnakkal, Veiloor, Mullassery, and other regions in Thiruvananthapuram, Kerala, granted over various periods from 1994 to 2008. Mining operations in the Veiloor region had been suspended pursuant to a judgment passed by the Honble High Court of Kerala. Following full compliance with the directives set forth in the said judgment, the Company has been actively pursuing the issuance of environmental clearances and mining approvals from the Government of Kerala for the additional mining areas under lease. These applications are currently at various stages of regulatory processing.

Presently, the Company is operational at two smaller mining blocks in Thonnakkal, which have all requisite statutory approvals. However, due to the restricted supply of raw material, only partial operations are being conducted at the Thonnakkal unit. During the Financial Year under review, the Company also recommenced partial operations at its Veli unit, which had remained closed since August 2020.

The sustained viability and long-term growth of the Companys manufacturing operations in Kerala are intrinsically linked to the timely grant of environmental and mining clearances for the larger leasehold areas. At this critical juncture, it is imperative that the Government of Kerala extend its support by facilitating the necessary approvals. Such regulatory clearances will enable the Company to enhance capacity utilization across both production units, thereby improving operating efficiencies and positively impacting financial performance.

The overall financial position of the Company remains stable and satisfactory.

With respect to the non-core land assets classified as "held for sale," the Company successfully concluded the sale of a substantial portion of its landholding in Shimoga, Karnataka during the year. The remaining land parcels are expected to be monetized in the near term, further strengthening the Companys liquidity position.

The manufacturing facility of the Companys wholly owned subsidiary in Bhuj, Gujarat continues to report favourable operational performance. During the year, the Company undertook additional capital expenditure to expand production volumes of higher-margin, value-added products. This investment is expected to further enhance the subsidiarys contribution to the overall profitability of the Group.

The details of various pending legal matters involving the Company are disclosed in the notes to the financial statements forming part of the Annual Report for the Financial Year 2024-25.

Pursuant to Section 124(5) of the Companies Act, 2013, the final dividend unpaid/unclaimed for the Financial Year 2016-2017, 1^st interim dividend unpaid/unclaimed for the Financial Year 2017-2018 and the 2^nd interim dividend unpaid/unclaimed for the Financial Year 2017-18 has been transferred to the Investor Education and Protection Fund (IEPF) of the Central Government of India in August, 2024, January, 2025 and March, 2025 respectively. The details of shareholders unpaid dividend were already uploaded in the Companys website www.eicl.in.

In terms of Section 124(6) of the Companies Act, 2013, read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended, shares of the Company in respect of which dividend entitlements have remained unclaimed or unpaid for seven consecutive years or more, are required to be transferred by the Company to the Investor Education and Protection Fund (IEPF) of the Government of India, for which the Company has published notice through advertisement in widely circulated English Newspaper and in regional language and uploaded in the Companys website: www.eicl.in . Accordingly, during the Financial Year 2024-2025, the Company has transferred 32601 equity shares to the IEPF Authority. After this transfer as of 31-03-2025, the IEPF Authority is holding total of 146851 Equity Shares of the shareholders of the Company. After Financial Year 2024-25, on April, 2025 the Company has transferred 4388 Equity Shares to IEPF Authority.

The Final unpaid dividend of the year 2017-2018 and interim dividend declared as Final dividend of the Financial Year 2018-2019 will be transferred to IEPF in the month of August, 2025 and January, 2026 respectively.

The Members are requested to take note that unclaimed dividends to be claimed immediately to avoid the transfer of the shares to the IEPF Account. The shares transferred to the IEPF Account can be claimed back by the concerned members from IEPF Authority as per prescribed rules.

The Board of Directors of the Company comprises individuals who are highly qualified and possess extensive experience and expertise in their respective fields.

In accordance with the statutory requirements and best governance practices, the Board convenes at least four meetings during each Financial Year. A calendar for the scheduled Board meetings is finalized at the beginning of every Financial Year. Additional meetings are held as and when necessary to address critical business matters.

During the Financial Year 2024-25, the Board met four (4) times on 06 May, 2024, 09 August, 2024, 05 November, 2024, and 07 February, 2025.

It is confirmed that no Independent Director on the Board is related to any other Director.

EICL Limited has established a robust internal control system that is commensurate with the size, scale, and complexity of its operations. The system is designed to ensure the orderly and efficient conduct of business, including adherence to policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information.

The Audit Committee, which comprises professionally qualified and experienced Directors, defines the scope and authority of the internal audit function. The Committee interacts regularly with the Statutory Auditors, Internal Auditors, and the management team to review the adequacy and effectiveness of the internal control framework and to ensure that internal audit findings are appropriately addressed.

Pursuant to Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014, the Company has appointed M/s T.R. Chaddha & Company, Chartered Accountants, as its Internal Auditors for a term of three years to conduct the internal audit for the Financial Years 2023-2026.

The Company has effectively aligned its human capital strategy with its overarching business and organizational objectives. Emphasis continues to be placed on teamwork, skill enhancement, and the development of both leadership and functional capabilities across all levels of the workforce.

In accordance with Section 136 of the Companies Act, 2013, the report and financial statements are being circulated to the Members excluding the relevant annexure containing particulars of employees. This annexure is available for inspection at the Registered Office of the Company during business hours. Members interested in obtaining a copy may make a written request to the Company Secretary.

During the Financial Year under review, there were no employees who were employed throughout the year or for any part thereof, who individually or jointly with their spouse and dependent children, held more than two percent of the equity shares of the Company.

During the Financial Year 2024-25, the industrial relations climate across all units of the Company remained harmonious and conducive to business operations. The Company continued to maintain positive and collaborative engagement with its employees and recognized trade unions.

The workmen at the Thonnakkal unit extended their full cooperation in ensuring the smooth and uninterrupted functioning of operations throughout the year. In addition, the workforce has expressed its commitment to supporting the sustained and stable operations at the Veli unit, which recommenced during the year under review. The Company acknowledges and deeply appreciates the steadfast support and constructive participation of its employees, particularly in actively representing the Companys interests before various governmental authorities in Kerala through formal communications and representations on critical operational issues.

During the year, there is no application which was made or any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 by and against the Company.