Goa Carbon Ltd Management Discussions

Global Economy

Overview

The global economy demonstrated resilience during FY2026 despite navigating a complex landscape shaped by geopolitical conflicts, trade fragmentation, and persistent policy uncertainty. While economic activity remained supported by resilient labour markets, easing financial conditions, and continued investment in technology, heightened geopolitical tensions-particularly in the Middle East-disrupted energy markets and tempered growth prospects. At the same time, the rapid adoption of artificial intelligence continued to enhance productivity and investment across several economies, partially offsetting the impact of external shocks.

According to the International Monetary Fund (IMF), global growth is projected at 3.0% in 2026, marginally lower than earlier estimates, while global headline inflation is expected to average 4.7%, reflecting renewed energy price pressures and a temporary pause in the disinflationary trend. Although inflation has moderated significantly from its post-pandemic highs, underlying price pressures remain uneven across regions, requiring central banks to maintain a cautious policy stance.

Outlook

The IMF expects global growth to recover to 3.4% in 2027, supported by easing geopolitical disruptions, stronger technology-led investment, and resilient domestic demand across several major economies. Nevertheless, the outlook remains subject to downside risks, including prolonged geopolitical conflicts, trade fragmentation, energy price volatility, and financial market corrections. Sustained policy coordination, continued structural reforms, and investments in productivity-enhancing technologies will be critical to strengthening global resilience and ensuring stable, sustainable and inclusive economic growth over the medium term.

Indian Economy

Overview

India remained one of the worlds fastest-growing major economies during FY2026, supported by resilient domestic demand, robust investment activity, and sustained expansion across the manufacturing and services sectors. According to the National Statistics Office (NSO), Indias real Gross Domestic Product (GDP) grew by 7.7% in FY2026, reflecting the economys resilience despite a challenging global environment.

Growth was driven by sustained public capital expenditure, resilient private consumption, and continued infrastructure development, alongside improving manufacturing activity and a strong services sector. These structural strengths, supported by ongoing policy initiatives and digital transformation, reinforced Indias macroeconomic stability and strengthened its long-term growth potential.

Outlook

Indias economic outlook remains favourable, underpinned by strong domestic fundamentals, continued infrastructure investments, and structural reforms aimed at enhancing productivity and competitiveness. The International Monetary Fund (IMF) projects Indias economy to grow by 6.4% in FY2027, maintaining its position among the fastest-growing major economies globally.

While geopolitical tensions, trade fragmentation, and commodity price volatility may continue to pose external challenges, Indias diversified economic base, expanding manufacturing ecosystem, and sustained focus on investment- led growth are expected to support stable and sustainable economic expansion over the medium term.

Sources: National Statistics Office (NSO), Ministry of Statistics and Programme Implementation, IMF World Economic Outlook.

Calcined Petroleum Coke Industry Global Industry Overview and Outlook

Calcined Petroleum Coke (CPC) is a critical intermediary material in the global aluminium value chain, serving as the primary raw material for manufacturing carbon anodes used in aluminium smelting. As a significant share of global CPC demand originates from the aluminium industry, the sectors outlook remains closely aligned with trends in aluminium production, infrastructure investment, and the accelerating energy transition.

According to the Ministry of Mines, global primary aluminium production is projected to reach 74.39 million tonnes in FY2026, while global consumption is expected to increase to 74.49 million tonnes, indicating a marginal supply deficit and reflecting resilient demand despite prevailing geopolitical and macroeconomic uncertainties. The projected increase in aluminium production is expected to sustain demand for carbon anodes and, consequently, for high-quality CPC across global smelting operations.

Demand for aluminium continues to be underpinned by structural growth across renewable energy, electric vehicles, power transmission, construction, and lightweight transportation. The International Energy Agency (IEA) reported that global electricity demand recorded strong growth during 2025, driven by accelerating electrification, expanding industrial activity, digitalisation, and rising cooling requirements. Continued investments in renewable energy, transmission infrastructure, battery storage, and grid expansion are expected to support long-term aluminium demand across clean energy applications, thereby reinforcing structural demand for CPC throughout the aluminium value chain.

The global aluminium industry is also advancing its decarbonisation agenda through greater adoption of renewable energy, recycling, and energy-efficient smelting technologies. These developments are increasing the focus on supply chain sustainability, lower-carbon production processes, and operational efficiency, encouraging CPC manufacturers to optimise manufacturing processes while aligning with evolving environmental expectations. At the same time, the industry continues to remain exposed to fluctuations in green petroleum coke availability, energy costs, freight rates, and evolving environmental regulations, requiring manufacturers to maintain operational flexibility and cost competitiveness.

Indian Industry Overview and Outlook

Indias aluminium industry continued to strengthen its position as one of the worlds fastest-growing markets, supported by sustained infrastructure development, rapid urbanisation, expanding manufacturing activity, and increasing investments in renewable energy and transportation. According to the Ministry of Mines, India produced 4.24 million tonnes of primary aluminium during FY2025, while total aluminium consumption reached 4.62 million tonnes during April-December FY2026, registering a 13.43% year-on-year increase. Despite this progress, Indias per capita aluminium consumption remains around 3.5 kg, substantially below the global average of 12 kg, underscoring substantial headroom for future demand growth.

The continued expansion of infrastructure, power transmission networks, railways, electric mobility, and renewable energy installations is expected to drive sustained aluminium demand in the coming years. As CPC remains an indispensable input for manufacturing carbon anodes used in aluminium smelting, these structural demand drivers are expected to translate into sustained demand for carbon anodes and provide long- term support to domestic CPC manufacturers. In parallel, ongoing investments in aluminium capacity expansion, resource security, and downstream value addition are further strengthening the industrys long-term fundamentals.

Looking ahead, the Indian aluminium market is expected to grow at a compound annual growth rate (CAGR) of around 7.6% through 2030, supported by favourable policy initiatives, increasing industrial demand and the countrys long-term infrastructure development agenda. Greater emphasis on sustainability, energy efficiency, and cleaner production technologies is also expected to accelerate investments across the aluminium value chain, creating opportunities for CPC manufacturers with efficient operations, consistent product quality, and strong environmental practices to strengthen their long-term competitiveness.

Sources: Ministry of Mines, Government of India - Annual Report FY26, IEA - Global Energy Review 2026, IEA - Aluminium, IAI - Aluminium Sector Greenhouse Gas Pathways to 2050

Company Overview

Goa Carbon Limited (GCL or the Company), the manufacturing flagship of the Dempo Group, is one of Indias leading manufacturers of Calcined Petroleum Coke (CPC). Since its establishment in 1967, the Company has been engaged in converting Raw Petroleum Coke (RPC), a by-product of the petroleum refining process, into value-added CPC or blending thereof, an essential raw material for the aluminium, steel, graphite, titanium dioxide, and refractory industries.

With strategically located manufacturing facilities in Goa, Paradeep (Odisha), and Bilaspur (Chhattisgarh), GCL has established a robust manufacturing and distribution network that enables it to efficiently serve customers across key industrial markets. All three manufacturing facilities are certified to ISO 9001 and ISO 14001 standards by Bureau Veritas, reflecting the Companys commitment to quality management, operational excellence and environmental stewardship.

Over the years, the Company has built long-standing relationships with some of Indias leading industrial organisations, including Hindalco Industries Limited, National Aluminium Company Limited (NALCO), Bharat Aluminium Company Limited (BALCO), Vedanta Aluminium, Kerala Minerals and Metals Limited (KMML), and Steel Authority of India Limited (SAIL), in addition to several steel manufacturers across western and eastern India. The Companys focus on consistent product quality, dependable service, and timely deliveries has enabled it to establish a strong reputation in the domestic CPC market.

Backed by nearly six decades of industry experience, GCL continues to focus on operational excellence, customer satisfaction, and sustainable value creation while strengthening its position as a trusted partner to Indias core manufacturing industries.

Financial and Operational Review

The following operational and financial review provides Managements perspective on the Companys performance during FY2026 and should be read in conjunction with the audited financial statements, the notes thereto and other information forming part of this Annual Report. The financial statements have been prepared in accordance with the applicable provisions of the Companies Act, 2013, the Indian Accounting Standards (Ind AS), the regulations prescribed by the Securities and Exchange Board of India (SEBI), and other generally accepted accounting principles in India.

Key Financial Ratios

Some of the Key Financial Ratios are given below, except for Earnings Per Share:

S.No.	Particulars	As at 31st March 2026	As at 31st March 2025
1.	Debtors Turnover Ratio	7.13	8.00
2.	Inventory Turnover Ratio	3.94	1.92
3.	Current Ratio	1.62	1.51
4.	Debt-Equity Ratio	0.99	1.29
5.	Earnings per Share (Rs. )	(52.71)	(24.07)
6.	Return on Capital Employed	(0.06)	(0.02)
7.	Net Profit Ratio	(0.06)	(0.06)

The Net Cash Flow of the Company is as follows:

(Rs. in lakhs)

S.No.	Particulars	As at 31st March 2026	As at 31st March 2025
a.	Net cash generated from/(used in) operations	7,764.87	(5,392.89)
b.	Net cash (used in)/generated from investing activities	(819.24)	8,027.35
c.	Net cash (used in) financing activities	(13,734.81)	(7,953.25)
d.	Net increase/(decrease) in cash and cash equivalents (a+b+c)	(6,789.18)	(5,318.79)
e.	Cash and cash equivalents at the beginning of the year	10,741.01	16,059.80
f.	Cash and cash equivalents at the end of the year (d+e)	3,951.83	10,741.01

The Companys operational and financial performance during FY2026 was shaped by evolving market conditions in the Calcined Petroleum Coke (CPC) industry. Demand from the aluminium sector remained stable, while domestic market conditions continued to be influenced by an imbalance between available supply and demand, resulting in pressure on product realisations. In response, the Company adopted a disciplined operating approach, aligning production with prevailing market conditions and prioritising operational efficiency and prudent resource utilisation. Planned maintenance shutdowns at the Goa and Bilaspur plants also influenced production during the year, while operations were optimised across its manufacturing network.

The Company continued to focus on disciplined procurement, efficient inventory management, and working capital optimisation throughout the year. Production planning and raw material sourcing were calibrated to market conditions, with emphasis on maintaining cost efficiency and ensuring uninterrupted customer supplies. The Companys operational approach remained centred on balancing production, procurement, and customer commitments while responding to changing industry dynamics.

Towards the close of the financial year, operating performance showed encouraging improvement, supported by better alignment between domestic product realisations and prevailing market conditions, timely raw material sourcing and continued supply chain optimisation. These measures, together with the Companys focus on operational discipline and efficient resource allocation, strengthened its ability to respond to evolving market opportunities.

Outlook

The outlook for the Company remains closely linked to demand from the aluminium industry, which continues to be supported by infrastructure development, urbanisation, electrification, and the growing adoption of lightweight materials across key end-use sectors. India is expected to remain one of the key contributors to global aluminium demand growth, supported by sustained investments in infrastructure and manufacturing.

Against this backdrop, the Company will continue to focus on operational excellence through disciplined production planning, prudent procurement practices, and efficient working capital management. By leveraging its strategically located manufacturing facilities, established customer relationships, and strong technical capabilities, GCL remains committed to enhancing operational efficiency, maintaining financial discipline, and creating sustainable long-term value for its stakeholders.

Risk Management

Pet Coke Use in Aluminium and Calcination: Regulatory Impact

The aluminium industry remains the largest consumer of Calcined Petroleum Coke (CPC), making the sectors growth and the regulatory framework governing petroleum coke critical to the domestic calcination industry. In India, the import of Raw Petroleum Coke (RPC) for CPC manufacturers and CPC for the aluminium industry continues to be regulated under the framework prescribed by the Directorate General of Foreign Trade (DGFT), in accordance with the directions of the Commission for Air Quality Management (CAQM). The existing import limits of 1.9 million MT of RPC for CPC manufacturers and 0.8 million MT of CPC for the aluminium industry continue to provide the regulatory framework within which the industry operates. Regulatory changes affecting import policies, environmental compliance requirements, or the use of petroleum coke may influence raw material availability, cost structures, and the overall operating environment for domestic CPC manufacturers.

Mitigation Strategy

The Company continues to proactively engage with regulatory authorities and industry associations on matters relating to the CPC industry while ensuring full compliance with applicable environmental and operational regulations. GCL remains focused on prudent procurement planning, operational flexibility, and continuous monitoring of regulatory developments to effectively manage potential policy-related risks and maintain business continuity.

Raw Material Sourcing and Supply Chain Stability

RPC, the principal raw material used in the manufacture of CPC, is sourced from both domestic and international markets. The availability and procurement of RPC continue to be influenced by global refinery output, evolving trade flows and international logistics conditions. The International Energy Agency (IEA) notes that refinery operations and crude throughput continue to be affected by changing feedstock availability, export restrictions, and shifting trade patterns, influencing petroleum product supply chains.

In addition, geopolitical developments have continued to affect global shipping routes and freight markets. According to the United Nations Conference on Trade and Development (UNCTAD), disruptions in major maritime corridors have resulted in longer voyage distances, elevated freight costs, and increased uncertainty across global supply chains.

Mitigation Strategy

During FY2026, the Company continued to strengthen its procurement strategy by optimising the sourcing mix across domestic and imported raw materials based on commercial viability and operational requirements. Procurement planning remained closely aligned with production schedules and working capital priorities, while increased emphasis on domestic sourcing and operational flexibility supported supply reliability and cost efficiency. The Company also continued to diversify its sourcing approach and closely monitor market developments to ensure the timely availability of critical raw materials.

Sources: IEA - Oil Market Report, UNCTAD - Review of Maritime Transport 2025

Foreign Exchange and Interest Rate

The Company is exposed to foreign exchange and interest rate risks due to its dependence on imported RPC and the financing requirements of its operations. Fluctuations in exchange rates can influence the landed cost of imported raw materials, while changes in interest rates may affect borrowing costs and overall finance expenses. While easing interest rates may support financing costs, volatility in global financial markets and currency movements continues to present potential risks for businesses with import dependencies.

Mitigation Strategy

The Company has implemented currency hedging strategies to protect against adverse exchange rate movements and it continues to monitor foreign exchange movements and interest rate trends to minimise their impact on business operations. Procurement planning, prudent working capital management, and appropriate treasury practices remain integral to the Companys risk management framework. By aligning procurement decisions with prevailing market conditions and maintaining financial discipline, GCL aims to mitigate the impact of fluctuations in exchange rates and financing costs on its overall operations.

Sources: RBI, RBI Financial Stability Report

Environment and Regulations

Aluminium, the second most widely used metal in the world after steel, remains the largest consumer of Calcined Petroleum Coke (CPC), requiring approximately 0.4 tonnes of CPC for every tonne of aluminium produced. Consequently, any regulatory changes affecting the import, production, or use of CPC have a direct bearing on the aluminium value chain and the domestic calcination industry. As CPC continues to be a critical raw material for aluminium manufacturing, maintaining a balanced regulatory framework is essential to support the growth of Indias core industrial sectors.

Mitigation Strategy

While the CPC industry continues to operate under stringent environmental regulations, including regulated import quotas and prescribed emission standards, the Company remains committed to maintaining full compliance with all applicable statutory requirements. During FY2026, the National Green Tribunal (NGT) dismissed the application seeking the closure or relocation of the Goa plant, recognising the Companys continuous endeavours to maintain the regulatory standards and ensuring compliance with the recommendations of the Pollution Control Board from time to time.

The Company also continued to strengthen its environmental performance through the implementation of a Flue Gas Desulphurisation (FGD) system to comply with notified SO2 emission standards, while proactively engaging with regulatory authorities and adopting responsible operational practices to support sustainable manufacturing.

Working Capital Requirements

The Company primarily relies on non-fund-based credit facilities, including Letters of Credit (both sight and usance), for the procurement of raw materials from overseas suppliers. Under the Sight Letter of Credit mechanism, shipments are subsequently converted into a Buyers Credit Facility through overseas banks at competitive interest rates, backed by Trade Credit Bank Guarantees (TCBG) or Standby Letters of Credit (SBLC) issued by Indian banks. During the year, the Company further strengthened its liquidity position by securing additional working capital limits and availing short-term borrowings to effectively support its operational and working capital requirements.

The Company continued to explore alternative financing avenues to optimise its working capital management and enhance financial flexibility. Efforts were made to negotiate favourable commercial terms with suppliers to reduce financing costs, while raw material imports were also supported through clean credit facilities extended by suppliers. By leveraging diverse financing options and optimising contractual arrangements, the Company remains focused on improving working capital efficiency, reducing finance costs, and maintaining a prudent financial management framework, in the given situations.

Human Resources

People and Culture: Empowering a Sustainable Future

GCLs committed workforce continues to drive its vision of a sustainable and high-performing future. The Company fosters a safe, inclusive, and growth-oriented work environment through people-centric policies and a strategic HR framework focused on productivity, talent development, and career progression. Open communication and employee engagement are actively encouraged, enabling individuals to raise concerns without fear of retaliation. Continuous upskilling initiatives ensure technical readiness, supporting operational excellence, and cost efficiency.

As of 31 March 2026, GCL had 195 permanent employees, comprising a balanced mix of professionals and skilled workmen, all of whom play a vital role in the Companys continued growth and success.

Health and Safety

GCLs safety culture is driven by a top-down approach to decision-making while actively encouraging employee participation and feedback. A strong commitment to employee health and safety is embedded across all aspects of the Companys operations, reflecting its belief that protecting its people is fundamental to achieving long-term operational excellence and sustainable growth.

The Company promotes greater management involvement through regular proactive inspections, transparent communication before and after incidents, and robust monitoring of Safety, Health and Environment (SHE) metrics. Preventive maintenance remains a key priority, helping minimise operational risks and maintain a safe workplace. GCL also enforces strict protocols to ensure that employees do not undertake non-routine or unfamiliar tasks without adequate training and supervision.

Training and Development

At GCL, training initiatives are designed to build a well- rounded workforce by strengthening workplace safety and enhancing essential competencies such as communication, team building, presentation, and negotiation skills. Recognising the rapidly evolving digital landscape, the Company also places significant emphasis on cybersecurity awareness. Comprehensive training programmes equip employees to effectively address emerging cybersecurity challenges, enabling them to succeed across all aspects of their professional journey.

Leadership and Technical Skill Enhancement

GCL invests in strengthening employees leadership and technical capabilities through structured development programmes, mentorship, and specialised training initiatives. This continuous learning approach empowers employees to drive innovation, improve operational effectiveness, and contribute meaningfully to the Companys long-term success.

Employee Engagement and Satisfaction

GCL is committed to fostering a work environment where employees feel valued, respected, and supported. The Company undertakes various initiatives to enhance employee engagement, motivation, and overall well-being, creating a positive, collaborative, and productive workplace.

Diversity and Inclusion

GCL remains committed to fostering a diverse and inclusive workplace where every individual, irrespective of their background, is valued, respected, and provided with equal opportunities to grow. The Company believes that a culture of diversity and inclusion strengthens collaboration, encourages innovation, and contributes to sustainable business growth.

Internal Control System

The Company maintains a robust internal control system designed to align with the scale of its business operations and the specific requirements of its industry. Internal auditors play a vital role in ensuring compliance, operational efficiency, and accuracy through regular assessments and adherence to applicable laws, regulations, and internal policies.

The Company conducts periodic internal audits to comprehensively evaluate its operations, with detailed audit reports submitted to the Audit Committee during its quarterly meetings. This rigorous internal control and audit framework reflects the Companys commitment to transparency, operational excellence, and the highest standards of governance and compliance across the organisation.

Statutory Compliance

During the quarterly Board meetings, the Executive Director presents a comprehensive declaration to the Board confirming the Companys compliance with all applicable statutes, regulations and guidelines. The declaration is prepared based on confirmations received from all operating plants and department heads, ensuring that the Companys operations remain aligned with prevailing legal and regulatory requirements. In addition, the Company Secretary, who also serves as the Compliance Officer, oversees compliance with the provisions of the Companies Act, 2013, and the regulations prescribed by the Securities and Exchange Board of India (SEBI), and regularly reports on compliance matters to the Board.

Cybersecurity and Data Protection

The Company has implemented robust technologies, processes, and protocols to safeguard its networks, systems, applications, and data against external threats, damage, and unauthorised access. Comprehensive cybersecurity measures are in place to ensure the integrity, confidentiality, and availability of the Companys digital assets.

Regular awareness and training programmes are conducted to educate employees on the safe and responsible use of the Companys digital infrastructure, thereby minimising the risk of data breaches and cybersecurity incidents. The Information Technology Department actively gathers user feedback to continuously strengthen cybersecurity protocols in line with evolving threats and industry best practices. In addition, cybersecurity risks and mitigation measures are periodically reviewed by the Audit Committee and the Board of Directors, ensuring effective governance and sustained resilience across the Companys digital ecosystem.

Cautionary Statement

Certain statements contained in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or pred ictions may constitute forward- looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied in such statements due to various risks and uncertainties.

Important factors that could influence the Companys operations include, among others, domestic and global economic conditions affecting demand, supply, and pricing in the industry, changes in government policies, taxation and other statutory regulations, environmental laws and labour relations. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.