Finolex Industries Ltd Management Discussions

Indian Economy

Overview and Outlook

India is expected to remain the worlds fastest- growing major economy in 2025, maintaining strong momentum despite a challenging global environment. According to the International Monetary Funds April 2025 World Economic Outlook, Indias GDP is projected to grow by 6.2% in 2025 and 6.3% in 2026¹, outpacing global peers and reinforcing its position as a key driver of global economic growth.

This outlook is driven by strong domestic fundamentals, buoyant private consumption, especially in rural areas, rising urban incomes, and continued government focus on infrastructure and manufacturing. Policy measures, such as personal income tax reductions and increased capital expenditure, are expected to support demand and investment. Meanwhile, moderating inflation and healthy water reservoir levels are set to benefit agriculture and rural consumption.

Domestic Demand: Revised GDP figures for previous years highlight the strength of Indias domestic demand, which remains the principal engine of growth. While real GDP growth moderated to 6.5% in 2024-25, India sustained its position as the fastest-growing major economy, underscoring the resilience and dynamism of its domestic market.

Policy Support: The 2025 Union Budget introduced significant personal income tax reductions, boosting disposable incomes, particularly among the growing middle class. This is expected to inject substantial liquidity into the economy, supporting consumption and potentially adding 0.6-0.7% to GDP growth in FY26².

Manufacturing and Infrastructure: The

governments focus on manufacturing through initiatives such as the National Manufacturing Mission and the Production Linked Incentive (PLI)

schemes, combined with record levels of foreign

direct investment, is positioning India as a global manufacturing hub. Significant infrastructure investments, spanning highways, airports, and renewable energy, are further accelerating growth and job creation.

Agriculture: Agriculture remains the backbone of the Indian economy, employing over 46% of the population and contributing 16-18% to GDP³. The sector exhibited stability, with an average annual growth rate of around 5% from FY17 to FY23 and recorded a 3.5% growth in the second quarter of FY24. Government initiatives, such as the Prime Ministers Dhan-Dhaanya Krishi Yojana and increased budget allocations, drive productivity, support rural incomes, and ensure food security. Allied activities such as livestock, horticulture, and fisheries are also emerging as important growth drivers within the sector.

India is poised to remain the fastest- growing large economy, reaffirming its leadership in the global economic landscape-supported by strong domestic demand, resilient rural consumption, and strategic policy initiatives⁴.

Agriculture Sector Overview

Indias economy is deeply rooted in rural livelihoods, with over half the population depending on land- based occupations that significantly contribute to national income and employment. The sector has demonstrated robustness and consistent growth, with a projected expansion of 3.5-4% in FY25⁵, buoyed by favourable monsoons, rising rural demand, and sustained government support. Agriculture and allied activities now account for nearly 20% of the countrys Gross Value Added, and foodgrain output is expected to reach a new record in 2025.

A key trend shaping the sector is the growing emphasis on modern irrigation and water management infrastructure. With increased investments in irrigation, warehousing, cold storage, and a push for sustainable and efficient farming practices, the demand for reliable piping solutions is rising sharply. PVC pipes and fittings have become essential in this transformation, serving as the preferred material for irrigation channels, drip and sprinkler systems, and rural water supply. Their durability, resistance to corrosion, and ease of installation make them ideal for the diverse and demanding conditions of Indian agriculture. As farmers adopt advanced irrigation techniques and the government

accelerates rural infrastructure projects, the use of PVC pipes continues to rise, directly linking the sectors growth to increased demand for these products.

Outlook

The outlook for Indias agriculture sector is positive, with growth projected to remain steady amid continued policy support, technological adoption, and rising food demand. As the industry modernises, the need for efficient and durable irrigation and water management solutions will intensify. PVC pipes are set to play an increasingly critical role, with demand expected to grow in tandem with agricultural expansion and infrastructure upgrades. The market for PVC pipes, valued at $ 5.25 Billion in 2024, is forecast to reach $ 7.43 Billion by 2030, reflecting their centrality to Indias agricultural transformation⁶.

In FY25, agriculture continued to be a core demand driver for our pipes and fittings business, accounting for 67% of total volumes. Our focus remains on supporting Indias agricultural transformation through the provision of reliable, high-quality pipes and fittings that meet the evolving needs of farmers and rural communities.

Key Government Initiatives to Boost the Agriculture Sector

The Union Budget 2025-26 strongly emphasises revitalising Indias agricultural sector with targeted initiatives to improve productivity, support farmer incomes, and enhance rural prosperity.

Initiative Name	Scheme Overview		Budget Allocation (FY26)		Target Areas		Key Objectives
PM Dhan Dhanya Krishi Yojana	Scheme to transform Indian agriculture, enhance farmer livelihoods, and promote sustainable practices		Part of ^ 1.37 Lakh Crore (agri budget)		100 low- productivity districts; 1.7 crore farmers		Modernise agriculture, enhance rural livelihoods, encourage climate-resilient and diversified agriculture
Mission for Aatmanirbharta in Pulses	Six-year mission for selfreliance in pulses, focusin< on tur, urad, and masoor; MSP procurement and warehousing.		^ 1,000 Crore7 g		Pulse growing regions		Boost yield, stabilise farmer incomes, reduce imports
Mission for Cotton Productivity	Five-year mission to improve cotton productivity, especially extra-long staple varieties with Science & Technolog; support to farmers.		^ 500 Crore8 y		Cotton- producing states		Enhance productivity, promote quality varieties, sustainability in cotton farming
Comprehensive Programme for Vegetables & Fruits		Boost production, supply chains, processing, and prices for farmers in horticulture.		^ 500 Crore9		Horticulture clusters		Increase output, improve supply chains, strengthen processing infrastructure
National Mission on High-Yielding Seeds		Development, propagation, and commercial availability of 100+ high-yielding, pest- resistant, climate-resilient seeds.		^ 100 Crore10		Nationwide		Improve seed quality, enhance yields, climate and pest resilience
Rural Prosperity and Resilience Programme		Rural employment, technology, skilling, and infrastructure for economic resilience and empowerment.		Part of ^ 1,88,755 Crore11		Rural areas, youth, women		Job creation, technology integration, infrastructure development, rural economic upliftment
Expansion of Kisan Credit Card (KCC) Scheme		Enhanced short-term loan limit from ^3 lakh to ^5 lakh for 7.7 crore farmers, incl. fishermen/ dairy.		Not a direct outlay; ^ 10.05 Lakh Crore in outstanding KCC loans as of Dec 2024		7.7 crore beneficiaries		Provide affordable credit, enable investment in machinery and quality inputs
Ongoing Flagship Initiatives (e.g., PMKSY, PMFBY, RKVY		Major centrally sponsored schemes including direct income support, crop insurance, irrigation, natural farming, and agricultural extension.		PM-KISAN: ^ 63,500 Crore PMFBY: ^ 12,242 Crore RKVY: ^ 8,500 Crore NMNF: ^ 2,481 Crore ATMA: Included in DA&FW budget		Pan-India		Expand irrigation, provide crop insurance, develop rural infrastructure, strengthen market linkages

The governments latest initiatives, as outlined in the Budget 2025-26, signal a decisive and strategic push to transform Indias agriculture sector, aiming for higher productivity, greater adaptability, and improved farmer welfare. The introduction of the Prime Minister Dhan-Dhaanya Krishi Yojana is expected to be a game-changer for 1.7 Crore farmers across 100 low-productivity districts. The Yojana focuses on crop diversification, direct financial support, and adoption of sustainable, climate-resilient practices. This targeted approach bridges regional disparities, modernises farming, and ensures equitable growth across rural India.

Industry Overview

PVC pipes and fittings

Indias PVC (Polyvinyl Chloride) pipes and fittings segment represents the cornerstone of the countrys water infrastructure and irrigation systems. As of FY24, this segment was valued at approximately ^ 352 Billion¹², accounting for the largest share of the domestic piping market by both value and volume. PVC pipes and fittings command nearly 70% of piping industry demand, driven by their proven performance in irrigation, plumbing, and sanitation applications.

The PVC pipes and fittings segment continues to demonstrate steady growth, supported by ongoing infrastructure development, government initiatives in water supply, and sustained replacement demand across agricultural and urban applications.

The organised segment accounted for approximately 70% of PVC pipe demand in FY24, up from around 50% a decade ago, driven by GST enforcement, anti-dumping duties, and greater compliance requirements. The top five manufacturers collectively control about 40% of the industrys installed capacity. As of FY24, the total installed capacity for PVC pipes across the industry exceeds 4 Million Tonnes per annum, reflecting significant scale and consolidation.

Key Risks

• Volatility in PVC resin prices, closely linked to crude oil and global polymer markets.

• Intense competition from both organised and unorganised players, especially in Tier II and

III geographies.

• Cyclicality in demand from agriculture and real estate, which are sensitive to monsoons and interest rates.

• Technology substitution risks, as applications in water infrastructure and gas distribution increasingly adopt HDPE, CPVC, and

OPVC alternatives.

Finolex Industries: Perspective

At Finolex Industries Limited, we remain focused on strengthening our leadership in the PVC pipes and fittings industry, which continues to anchor the broader plastic piping industry in India. Despite a challenging demand environment and volatility in PVC resin prices during FY25, we achieved modest volume growth in pipes and fittings, supported by our strong presence across both agricultural and non-agricultural markets. Our ongoing efforts are directed towards expanding capacity, improving product mix, and enhancing margins through disciplined pricing and operational efficiency.

Outlook

The outlook for Indias PVC pipes and fittings industry remains positive, with the industry positioned for sustained growth over the medium term, driven by continued infrastructure investment and evolving customer requirements. At Finolex Industries Limited, we are well- positioned to capture the next phase of industry growth. Our focus remains on margin recovery, operational efficiency, and disciplined capacity expansion. With 25,000 Metric Tonnes (MT) of new capacity already commissioned in Q4 FY25 and a further 25,000 Metric Tonnes (MT) underway, we are strengthening our ability to serve both agricultural and non-agricultural markets. Our investments in product mix enhancement, brand initiatives, and market outreach are designed to reinforce our leadership and ensure that our pipes and fittings continue to meet the evolving needs of customers across India.

Growth Drivers: Indian pipes and fittings Industry

Indias pipes and fittings industry is poised for robust expansion, supported by a combination of structural, policy, and market-specific

1. Government Infrastructure Programmes

• Major public initiatives, such as the Jal Jeevan Mission, AMRUT, Pradhan Mantri Awas Yojana (PMAY), and the Smart Cities Mission,

are driving large-scale investments in water supply, sanitation, and urban infrastructure.

• Irrigation-focused schemes, such as the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) and the Per Drop More Crop

initiative, are accelerating micro-irrigation coverage, directly boosting demand for pipes and fittings in rural and agricultural markets.

• These programmes are expanding the addressable market and creating sustained, long-term demand for high-quality piping solutions.

2. Urbanisation and Real Estate Growth

• Rapid urbanisation and the ongoing expansion of residential and commercial real estate are increasing the need for modern plumbing and sanitation systems.

• The rising urban population and the launch of premium housing are driving the adoption of advanced, value-added piping products, especially in metropolitan and Tier I/II cities.

3. Replacement Demand and Shift

• The ongoing replacement of ageing galvanised iron (GI) pipes with PVC, CPVC, and other plastic variants is a significant and steady growth engine.

• Replacement demand remains solid even during periods of subdued new construction, ensuring a stable base for industry volumes.

4. Agriculture and Irrigation Modernisation

• Agriculture remains a core demand driver, with irrigation accounting for approximately 45% of total pipe and fitting usage.

• Increased investment in micro-irrigation, drip, and sprinkler systems is supporting sustained demand growth, particularly in states with expanding irrigated acreage.

5. Organised Sector Expansion and Regulatory

Support

• The share of organised players has risen to around 70% in FY24, driven by GST enforcement, anti-dumping duties, and stricter compliance requirements.

• Sector consolidation is enabling better capacity utilisation, improved supply chain efficiency, and enhanced customer trust.

6. Rising Awareness and Quality Standards

• Increased awareness among consumers and institutional buyers about the benefits of certified, high-quality pipes and fittings is supporting the shift towards branded and standardised products.

• Implementation of BIS norms and quality certifications is further strengthening market discipline and product reliability.

7. Policy and Economic Tailwinds

• Continued government focus on infrastructure, rural development, and housing is expected to provide a stable policy environment and funding support.

• Economic growth, rising disposable incomes, and a growing middle class are underpinning long-term demand for water management and sanitation solutions.

Company Overview

Legacy of Excellence in Pipes and Fittings

Established in 1981, Finolex Industries Limited (hereafter referred to as ‘Finolex or ‘Our Company) is a leading producer of PVC pipes and fittings and PVC resin in India. For over four decades, we have been synonymous with quality, reliability, and innovation, earning the trust of millions of customers nationwide. What began as a single manufacturing unit has evolved into a multilocation enterprise, firmly establishing our Company as a market leader.

In FY25, we delivered pipes and fittings volumes of 3,47,982 Metric Tonnes (MT), achieving growth in both agri and non-agri segments despite subdued demand conditions. Our ongoing focus is on expanding our presence in the non-agri segment, strengthening our project business, and driving operational efficiency. We continue to invest in capacity, product innovation, and digital initiatives to enhance customer engagement and market reach.

Integrated Value Chain & Backward Integration

Our unique business model encompasses in-house production of PVC resin, the key raw material for pipes and fittings, giving us a decisive edge in cost efficiency, quality control, and supply reliability. Our flagship Ratnagiri facility in Maharashtra uses advanced technology and features a captive cryogenic jetty and dedicated power plant, ensuring a consistent, high-quality PVC resin supply to our manufacturing units. This integrated approach shields us from market volatility and reinforces the quality of our products.

Our manufacturing facilities are strategically positioned across key regions, with three ISO 9001:2015 certified plants in Maharashtra (Ratnagiri, Urse, and Badhalwadi) and one in Gujarat (Masar). This arrangement enables us to efficiently serve major markets across India, reduce transportation time and costs, and maintain consistent supply and quality standards. By locating our plants near high-demand regions, we can respond swiftly to customer needs and manage logistics more effectively.

By managing every stage from raw material sourcing to finished goods, we deliver consistent value and reliability, strengthening our reputation and supporting sustainable growth.

Diverse & Innovative Product Portfolio

We offer one of the most comprehensive product portfolios in the Indian pipes and fittings industry. Our range covers PVC, CPVC, speciality pipes, and a wide variety of fittings, serving critical applications across agriculture, plumbing, sanitation, and infrastructure projects nationwide.

Our commitment to innovation and quality enables us to address the diverse requirements of customers throughout India. By continuously expanding and refining our product offerings, we ensure that our pipes and fittings deliver reliable performance in both traditional and emerging applications.

We remain focused on supporting the evolving needs of the market with solutions that combine durability, efficiency, and ease of installation, reinforcing our position as a trusted partner for projects of every scale.

Nationwide Distribution &

Customer Reach

We have established a robust distribution network that spans the entire country, ensuring efficient service to both rural and urban markets. Our network is designed to ensure product availability and prompt service delivery across all regions, supporting the diverse needs of our customer groups.

Our diverse customer base includes farmers, plumbers, contractors, builders, and government agencies. We are a preferred partner for large- scale infrastructure and irrigation projects, as well as for individual households and small businesses. This broad market presence, supported by strong channel relationships, allows us to deliver value and reliability to customers in every segment we serve.

Recognition for Excellence in FY25

Our marketing initiatives for pipes and fittings have earned recognition across multiple industry platforms, reflecting the effectiveness of our campaigns and brand-building efforts. These awards validate our strategic approach to connecting with customers and strengthening market presence throughout India.

E4M Indian Marketing Awards Type/Category: Silver - Festive Marketing

Asset/Campaign: Diwali Film

We were honoured with the Silver award for Festive Marketing at the E4M Indian Marketing Awards for our Diwali film, which established our brands connection with Indian festive traditions and resonated strongly with audiences.

Eggfirst Chalo Bharat Conclave

Type/Category: Gold - Best Use of Animation

Asset/Campaign: Navratri Campaign

Our Navratri campaign received the Gold award for Best Use of Animation, recognising our creative approach in engaging audiences through vibrant and culturally relevant storytelling.

Eggfirst Chalo Bharat Conclave

Type/Category: Bronze -Occasion Based Marketing

Asset/Campaign: Diwali Film

The Diwali film also earned the Bronze award in the Occasion Based Marketing category, further affirming its impact and execution.

Marksmen Daily - India TV

Type/Category: Most Preferred Brand 2024-25

We were recognised as the ‘Most Preferred Brand 2024-25 by Marksmen Daily and India TV, reflecting the trust and preference we have earned among consumers for our pipes and fittings.

Times Now ESG Impact Summit 2024

Type/Category: Champions of CSR

At the Times Now ESG Impact Summit 2024, we were acknowledged as ‘Champions of CSR for our sustained efforts in creating positive social impact through our corporate social responsibility initiatives.

ET Now

Type/Category: Iconic Brands of India 2024

ET Now recognised us among the ‘Iconic Brands of India 2024, highlighting our enduring presence and reputation in the pipes and fittings industry.

Financial Analysis FY25 Financial Overview

Our Company delivered stable operational performance in FY25 despite a subdued demand environment and continued volatility in PVC resin prices. Revenue stood at ^ 4,142 Crore, marginally lower than the previous year, reflecting muted realisations. EBITDA was ^ 476 Crore, with a margin of 11.49%, impacted by fluctuations in input costs and pricing pressures. Profit after tax rose to

Key Performance Indicators

^ 778 Crore, benefiting from an exceptional gain, and PAT margin improved to 18.78%. The company maintained a strong balance sheet, with a net cash surplus of ^ 2,535 Crore and a return on capital employed of 25.59%. Pipes and fittings volumes increased by 3.39% to 3,47,982 Metric Tonnes (MT), driven by steady demand in both the agricultural and non-agricultural segments. Management remains focused on margin recovery, operational efficiency, and strengthening the non-agri portfolio to drive future growth.

Statutory Reports

Financial Review and Analysis (FY25)

Particulars	Unit	FY25	FY24	Variance 25 vs 24	Reasons for Variation of >25%
Revenue	Cr	4,142	4,317	-4%	-
EBITDA	Cr	476	585	-19%	-
EBITDA Margin	%	11.49	13.55	-15%	-
PAT	Cr	778	455	71%	PAT has improved owing to increase in profit for the year primarily due to exceptional gain.
PAT Margin	%	18.78	10.55	78%	PAT margin has improved owing to increase in profit for the year primarily due to exceptional gain.
RoCE	%	25.59	34.27	-25%	The profitability has decreased from last year due to decrease in gross margin on account of decrease in selling price.
Interest Coverage Ratio	Times	16.05	16.05	0%	-
Debt-equity Ratio	Times	0.04	0.07	-46%	Debt equity ratio improved due to repayment of debt and improvement in shareholders equity.
Inventory Turnover Ratio	Times	3.54	3.91	-9%	-
Debtors Turnover Ratio	Times	9.90	11.43	-13%	-
EV/EBITDA	Times	23.46	26.15	-10%	-
Market Capitalisation	Cr	11,164	15,292	-27%	Attributable to a change in the market price of shares.
Current Ratio	Times	1.28	1.15	12%	-
EPS	^ per share	12.58	7.36	71%	EPS has improved owing to increase in profit for the year primarily due to exceptional gain.
Return on Net Worth	%	13.01	8.22	58%	Return on net worth has improved owing to increase in profit for the year primarily due to exceptional gain.

Risk Management & Mitigation

Risk	Mitigation
Raw Material Price Volatility Fluctuations in PVC resin and other input costs can impact the Companys margins and profitability.	We leverage our backward integration into captive resin production, maintain a diversified supplier base (comprising both imports and domestic sources), ensure dual sourcing for key raw materials, actively monitor market trends, and adjust pricing and inventory strategies to minimise impact.
Economic Risks Macroeconomic factors such as inflation, interest rate fluctuations, currency volatility, and economic slowdowns can affect demand, input costs, and overall profitability.	We maintain a flexible business model and regularly review our cost structures to ensure agility in the face of economic uncertainty. Through prudent financial management— including conservative leverage, we safeguard our operations against adverse macroeconomic movements. Our diversified product portfolio and broad customer base reduce dependence on any single sector or geography, providing a natural buffer during periods of economic downturn. This disciplined approach enables us to sustain stable performance and deliver value to all stakeholders, regardless of external market conditions.
Regulatory Changes Frequent changes in environmental, product quality, or industry-specific regulations may affect our operations, costs, or market access.	We maintain a vigilant approach to regulatory compliance by continuously monitoring changes in the legal and policy landscape relevant to our industry. Our teams proactively adapt internal processes and operational protocols to ensure that we meet all statutory and regulatory requirements in a timely manner. Regular engagement with key industry bodies allows us to stay informed about upcoming regulations and best practices. In addition, we invest in ongoing staff training and awareness programmes, enabling our workforce to respond swiftly and effectively to new requirements. This disciplined approach minimises operational disruptions and reinforces our commitment to full compliance across all aspects of our business.
Risk	Mitigation
Supply Chain Disruptions Interruptions in the supply chain, due to logistics challenges, geopolitical events, or supplier issues may affect timely production and delivery.	We recognise that supply chain disruptions can arise from a range of factors, including logistics challenges, geopolitical events or supplier-specific issues, all of which have the potential to impact production schedules and timely delivery of pipes and fittings. To mitigate these risks, we have established a robust, multi-location manufacturing footprint, which enhances operational flexibility and reduces dependence on any single facility or region. This geographical diversification is complemented by a broad supplier base, ensuring that critical raw materials and components are sourced from multiple vendors. In addition, contingency logistics arrangements are in place, allowing us to respond swiftly to unforeseen disruptions by leveraging alternative transportation routes and partners. These measures collectively strengthen our supply chain resilience, support uninterrupted operations and enable us to maintain consistent service levels for customers across India.
Input Price Risk A rise in raw material prices can result in higher production costs, leading to pressure on margins and reduced profitability. This risk has the potential to disrupt cost stability and impact our overall financial performance.	In the pipes and fittings segment, input price risk is typically addressed by passing on increased raw material costs to customers. This approach helps protect margins and ensures that profitability is maintained, even during periods of price volatility. For the PVC resin segment, we are exposed to fluctuations in the prices of key commodity chemicals such as ethylene and PVC, as well as intermediates like Ethylene Dichloride (EDC) and Vinyl Chloride Monomer (VCM). Ensuring a consistent supply of these materials is essential for uninterrupted production. The prices of PVC resin we produce are closely monitored and adjusted in line with the prevailing import parity price of PVC in the market. Since market prices for both inputs and outputs are generally adjusted over time, our exposure to price variations is limited to short periods. We maintain a strategic pricing and procurement approach to minimise the operational impact of raw material cost fluctuations and to support a stable financial outlook.
Risk	Mitigation
Cybersecurity & Data Privacy Cyber threats or data breaches could disrupt our operations or compromise sensitive information.	We have established a robust, multi-layered cybersecurity framework, wherein endpoint protection is managed through 24x7 threat monitoring and response via CrowdStrike MDR. FortiGate Next-Gen Firewalls provide strong perimeter defence with intrusion prevention and traffic filtering. Centralised tracking is enabled through a Next-Gen SIEM, with QRadar implementation in progress to ensure end-to-end visibility. These measures collectively enhance reliability, protect sensitive data, and reduce operational risk. We have implemented robust IT security protocols, conducts regular system audits, and provides ongoing employee training to safeguard digital assets and ensure data privacy.
Brand and Trademark Protection Counterfeit products in the market may impact our brand reputation as well as cause loss of sales.	To safeguard our intellectual property, we have established partnerships with leading IPR consultants and legal professionals who assist in identifying counterfeit products in the market and play a crucial role in providing actionable intelligence. We routinely conduct enforcement actions, including market raids, against entities involved in the manufacturing or distribution of counterfeit goods. In addition, we actively monitor trademark applications and consistently oppose filings that are identical or deceptively similar to our registered trademarks, thereby preventing potential brand dilution and consumer confusion.
Environmental & Sustainability Risks Increasing environmental regulations and stakeholder expectations around sustainability may affect the Companys operations and reputation.	We adhere to all applicable environmental standards and invest in sustainable practices across our operations. Regular ESG reviews and transparent reporting reinforce our commitment to responsible and sustainable growth.
Risk	Mitigation
Competition Risk An increase in competition, with new entrants and established players seeking to expand their market share, continues to pose a risk to our projected margins and market position.	We address competition risk by consistently investing in product quality, expanding our distribution reach, and strengthening our brand presence. Our efforts include deepening relationships with dealers, introducing new products, and entering emerging markets to maintain our competitive advantage. We also focus on operational efficiency, cost optimisation, and regular engagement with channel partners to reinforce loyalty and ensure prompt service. These measures help us respond effectively to market changes and sustain our leadership in the pipes and fittings industry.
Geographic Concentration Risk Relying heavily on a limited number of geographical regions could restrict our customer reach and engagement. This concentration may affect our marketability and consumer recognition, potentially leading to a decline in profitability.	We mitigate geographical concentration risk through a robust pan-India operational footprint, supported by multiple manufacturing plants strategically located across key regions. This multilocation approach ensures operational flexibility and significantly reduces dependency on any single facility or area, thereby minimising the impact of localised disruptions such as adverse weather, regulatory changes, or socio-political events. Regular regional risk assessments are conducted to identify and proactively address potential vulnerabilities, enabling us to adapt swiftly to changing local conditions. We enhance business continuity and ensure reliable service to customers nationwide, by continously expanding and optimising our manufacturing and distribution network.

Human Resources (HR)

Our people remain at the core of our success. Our HR strategy is built on three foundational pillars: Culture, Career, and Learning and Development. These pillars embody our commitment to fostering a workplace that promotes collaboration, inclusivity, and high performance.

Employee Value Proposition - Desired Cultural Characteristics

We aim to be the best at what we do, not only in the eyes of our customers, but also in the eyes of our colleagues. We are committed to ensuring a healthy work-life balance and strongly believe in the power of teamwork, where each employees unique strengths contribute meaningfully to our collective goals. We are also driven to make a positive social impact through active community engagement.

The following characteristics define our Employee Value Proposition:

We have implemented a range of structured initiatives to enhance employee capabilities and nurture engagement, contributing to a vibrant organisational culture. These efforts have earned us the ‘Great Place To Work certification for the third consecutive year.

Our approach includes personalised leadership engagement, open-door policies, cross-functional career mobility, and skill-based development programmes. We ensure that every employee is empowered to grow and reach their full potential.

As of March 31, 2025, we employed 1,499 individuals across our Corporate Office in Pune, pan-India sales network, and manufacturing locations at Ratnagiri, Masar, Urse, and Badhalwadi. During FY25, we invested 4,474 learning mandays in employee development, reinforcing our belief that continuous learning drives both individual and organisational excellence.

Information Technology

Our Company significantly strengthened its IT infrastructure across multiple fronts during the year. A hub-and-spoke architecture was implemented on Microsoft Azure Cloud, enabling scalable and secure operations. Seamless integration between the on-premises Active Directory and Azure AD enhanced identity and access management.

A major network upgrade was undertaken by replacing end-of-life switches, while server modernisation was driven through the deployment of HPE GreenLake solutions. Enhancements to data centres in Baner and Ratnagiri included biometric access controls, water leakage detection systems, rodent repellent installations, and gas-based clean agent fire suppression systems.

Security infrastructure was further fortified through the ongoing implementation of Security Information and Event Management (SIEM) and Veeam Backup & Disaster Recovery tools. For endpoint and data protection, Finolex deployed Microsoft Intune, Data Loss Prevention (DLP), endpoint security, Azure Internet Protection, and robust email security measures.

These initiatives culminated in the achievement of ISO 27001:2022 certification, reinforcing the Companys commitment to information security and operational excellence.

Digital Transformation

At Finolex, we have advanced our digital transformation by launching a robust Dealer Performance Dashboard, providing our channel partners with real-time visibility into sales and operations. This strategic initiative enhances data- driven decision-making and deepens partner alignment with our growth objectives. Additionally, the development of an internal workflow application has streamlined commercial approvals within our project business segment, accelerating decision-making processes and fostering greater transparency across teams.

Cybersecurity

At Finolex Industries, we have adopted a proactive and holistic approach to strengthening our cybersecurity posture through comprehensive awareness, training, and infrastructure initiatives. We conduct regular phishing simulation campaigns to assess employee susceptibility to social engineering attacks and improve awareness of email-based threats. Our structured security awareness programme includes visual campaigns that circulate informational posters and training modules integrated with our learning management system, delivering role-based education on compliance, secure practices, and emerging risks.

To further elevate our cybersecurity framework, we successfully achieved ISO/IEC 27001:2022 certification, reflecting our commitment to global standards in Information Security Management. We conduct internal security audits periodically to identify and address gaps, following the Plan-Do- Check-Act cycle for continual improvement. The deployment of Microsoft 365 Data Loss Prevention (DLP) policies in simulation mode allows us to refine controls in advance of full implementation. Our endpoint protection has been bolstered through Microsoft Defender and CrowdStrike Falcon, with the latter serving as our primary solution for advanced threat detection.

Round-the-clock monitoring of endpoint and perimeter devices is enabled through SIEM integration powered by CrowdStrike Falcon Insight, ensuring real-time threat detection and incident correlation. We also maintain active Cyber Threat Intelligence (CTI) subscriptions from credible sources such as CISA, CERT-In, Fortinet, and Wipro to stay informed of vulnerabilities and adapt our defences proactively. Additionally, we have developed a secure image-sharing process, reinforcing our dedication to safeguarding digital assets across all levels.

Data Management & Analytics

At Finolex Industries, we made significant strides in enhancing our data management and analytics capabilities to support smarter business operations. The implementation of Power BI dashboards across

all departments has provided our teams with real-time access to critical data, enabling more informed and agile decision-making. In parallel, our adoption of Azure Data Lake and Azure Databricks to host Microsoft Fabric has established a unified data platform, simplifying access to consolidated and readable data sources while streamlining the creation of dashboards.

We also migrated from Gmail to Microsoft 365, ushering in a modern collaboration environment that has improved communication and enabled seamless virtual meetings through Microsoft Teams. Additionally, our use of Microsoft Power Apps has allowed us to develop customised applications tailored to departmental needs, driving greater operational efficiency and boosting user satisfaction across the organisation.

Internal Control Systems

At Finolex Industries, we have implemented comprehensive internal control procedures tailored to the nature of our business and the scale of our operations, ensuring smooth business proceedings. We conduct regular internal audits at all our plants, with a focus on key operational areas. These audits are designed to be independent and objective, evaluating and enhancing the effectiveness of our risk management, control, and governance processes. Our Audit Committee oversees the internal audit function, monitoring the performance of internal audits through periodic reviews of audit plans, audit findings, and the timeliness of issue resolution through follow-ups. This robust framework ensures that our internal controls remain effective and aligned with our business needs, with a commitment to ongoing review and continuous improvement.

Internal Financial Control

We have established robust, well-documented internal financial controls tailored to the scale and complexity of our operations. These controls are integral to our governance framework, supporting effective and efficient business conduct.

Our internal controls safeguard company assets, ensure policy compliance, prevent and detect errors, and maintain accurate financial records.

Comprehensive checks and balances are embedded throughout our processes to promote smooth organisational functioning.

We conduct regular reviews and assessments of our internal financial controls to ensure they remain effective and reliable. This ongoing evaluation reinforces strong governance and operational efficiency across the organisation.

Cautionary Statement

This Annual Report and Management Discussion and Analysis contain forward-looking statements regarding the Companys objectives, projections, estimates, and expectations, subject to applicable laws and regulations. Actual results may differ

materially from those expressed or implied due to various factors, including changes in the global economy, political conditions, market performance, government regulations, tax regimes, and other unforeseen circumstances. Except as law requires, the Company undertakes no obligation to update any forward-looking statements to reflect future events or developments. Investors are advised to exercise caution and not rely on these statements when making investment decisions.