Goa Carbon Ltd Management Discussions

Global Economy

Overview

In FY2025, the global economy entered a phase of cautious stabilisation after years of disruption. The IMFs January 2025 fintech, World Economic Outlook projects global GDP growth at ~2.7%, a slight improvement over recent years but still below the 3.1% pre-pandemic decade average. Growth remains subdued due to elevated interest rates, geopolitical tensions, ongoing supply chain challenges, and rising protectionism. Global inflation is expected to average 4.2% in 2025. While advanced economies move closer to their inflation targets, many emerging markets face continued price pressures driven by external shocks, necessitating balanced monetary responses.

Trade tensions, especially among major economies, have dampened global momentum. Escalating tariffs and restrictions have slowed cross-border trade, with the WTO warning of a potential 0.2% contraction in global goods trade, posing risks to developing economies reliant on exports for growth. Meanwhile, technological transformation and digitalisation in sectors like health tech, and green energy present long-term promise. Yet, disparities in access and skills across nations raise concerns of widening inequality in the absence of coordinated global action.

Outlook

While the global economy in FY2025 is showing signs of recovery and resilience, it remains under pressure from multiple fronts. A coordinated policy response both domestic and international will be crucial to reviving productivity, restoring investment momentum, and ensuring that growth is inclusive and sustainable in the years ahead.

Sources:

International Monetary Fund, World Economic Outlook Update, January 2025 World Trade Organisation, Global Trade Outlook, April 2025

Indian Economy

Overview

Indias economic growth in FY2025 remains steady, led by the services sector, which continues to drive GDP expansion.

With a dominant share in global IT services and a growing presence in education, healthcare, and financial services, India is consolidating its position as a digital economy hub. The technology sector, in particular, is attracting significant domestic and international investments, further enhancing the countrys global competitiveness.

Retail inflation eased to 3.34% in March 2025, signalling improved price stability driven by effective supply-side management and food inflation controls. Meanwhile, trade remains a key focus area. Although the trade deficit with China has widened, India is reducing import dependency especially in electronics and machinery through policies promoting domestic manufacturing. Efforts to diversify trade partnerships, notably with the United States, are also underway to lower barriers and boost export opportunities.

Outlook

While global economic challenges, such as high inflation in advanced economies and supply chain disruptions, pose risks, Indias economic resilience is supported by the

Indian governments promotion of domestic manufacturing through its Atmanirbhar Bharat (Self-Reliant India) initiative, a economy and young, skilled workforce, a steady increase in domestic consumption, strategic investments in infrastructure, and ongoing economic reforms.

As the country continues to focus on improving the ease of doing business and embracing digital innovation, it is expected to remain one of the fastest-growing major economies globally. Despite some hurdles, the outlook for India in FY2025 is optimistic, with sustained growth across various sectors.

Source:

International Monetary Fund, World Economic Outlook Update, January 2025

Calcined Petroleum Coke Industry

Global Industry

Overview and Outlook

With a global market valued at approximately US$3.23 Billion in 2025, Calcined Petroleum Coke (CPC) continues to be an indispensable raw material in the production of aluminium and steel. Approximately 85% of the global CPC supply is utilised by the aluminium industry, with the remainder serving steelmaking and other industrial applications. The aluminium industrys demand for CPC is expected to grow steadily, with consumption estimated at 30.09 million metric tonnes in 2024 an increase of 7,70,000 metric tonnes over the previous year. This demand is driven primarily by the essential role CPC plays in producing anodes for aluminium smelting.

China and North America remain the leading producers of CPC, contributing over 75% of the global supply. Chinas share, in particular, is expected to remain in the range of 55 60%. However, the global CPC market is experiencing a moderate surplus, with China alone seeing an estimated oversupply of 2,80,000 metric tonnes in 2024. This trend may continue in 2025, as additional capacities become operational in Southeast Asia and other overseas markets.

The global CPC market is expected to grow to US$5.23 Billion by 2037, reflecting a Compound Annual Growth Rate (CAGR) of 4.1%. The aluminium industry is also moving toward sustainability, with increased adoption of low-carbon aluminium and newer, greener technologies. The push toward aluminium production powered by renewable energy is gaining momentum.

Indian Industry

Overview

Rising environmental concerns over air pollution and carbon emissions are prompting regulatory changes in Indias CPC Industry. The Supreme Court has empowered the Commission for Air Quality Management (CAQM) to revisit and revise import quotas in light of ‘emerging and unforeseen circumstances, with a focus on prioritising domestically available CPC. Additionally, the MoEF&CC has mandated compliance with new environmental standards for the calcination industry, effective from June 2025.

India, now the worlds second-largest aluminium producer, relies heavily on CPC as a critical raw material in the aluminium production process. Approximately 40 metric tonnes of CPC are consumed for every 100 metric tonnes of aluminium produced. As such, the health and competitiveness of the domestic CPC industry are directly linked to the countrys industrial and economic stability.

Outlook

Pursuant to the Supreme Courts directions dated 10^th October 2023, the Commission for Air Quality Management (CAQM) issued an order on 15th February 2024 revising the import quotas for pet coke. Accordingly, in March 2024, the Directorate General of Foreign Trade revised import limits from 1.4 million tonnes to 1.9 million tonnes per annum of raw petroleum coke (RPC) for CPC production and 0.5 million metric tonnes of CPC for the aluminium industry, effective FY2025. The import quota for CPC by aluminium smelters has been enhanced to 0.8 million tonnes per annum, effective FY2026.

The countrys aluminium consumption is also expected to rise steadily driven by infrastructure growth and increased industrial demand with the market projected to grow from US$17.5 Billion in 2024 to US$35 Billion by 2035.

Sources:

Research Nester, Calcined Petroleum Coke Market Outlook 2037 Shanghai Metals Market (SMM), Analysis of Calcined Coke Market Trends–2024 Market Research Future, India Aluminum Market Forecast to 2035 IMARC, India Petroleum Coke Market Size, Share, Trends and Forecast by Type, Application, and Region, 2025-2033

Company Overview

Goa Carbon Limited (‘GCL, ‘the Company) is the manufacturing flagship company of the Dempo Group. Since its establishment in 1967, GCL has been a leading player in the processing and manufacturing of Calcined Petroleum Coke (CPC) in India. The core of its manufacturing process involves converting Green Petroleum Coke (GPC), a by-product of oil refining, into high-value carbon-based CPC by removing moisture and volatile matter at extremely high temperatures. This critical product serves as a vital raw material for various industries, including aluminium, graphite, titanium dioxide, and refractories.

With three well-set, strategically located plants in Goa, Paradeep in Odisha, and Bilaspur in Chhattisgarh, GCL ensures a robust manufacturing and delivery network. All the plants hold ISO 9001 and ISO 14001 certifications by Bureau Veritas, reflecting the Companys commitment to quality and environmental standards.

GCL has earned an excellent reputation in the domestic market, supplying to prominent companies such as Hindalco financial Industries, National Aluminium Co. Ltd., Bharat Aluminium Co. Ltd., Vedanta Aluminium, Kerala Minerals and Metals Ltd., Steel financial Authority of India Ltd., and several steel plants in the South-Western region and Odisha. The Companys commitment to quality, reliability, and timely deliveries has also garnered the trust of all its customers.

Financial and Operational Review

The following operating and financial review intends to convey the managements perspective on the operating and financial performance of the Company for FY2025. This should be read in conjunction with the statements, the schedules and notes thereto, and the other information included elsewhere in the Annual Report. The statements have been prepared in compliance with the requirements of the Companies Act, 2013, the guidelines issued by the Securities and Exchange Board of India (SEBI), in accordance with Indian Accounting Standards (Ind AS) and other accounting principles generally accepted in India.

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

Details of Key Financial Ratios

Particulars	As at 31st March 2025	As at 31st March 2024
1 Debtors Turnover Ratio	8.00	9.80
2 Inventory Turnover Ratio	1.92	3.07
3 Current Ratio	1.51	1.58
4 Debt Equity Ratio	1.29	1.35
5 Earnings per share (Amount in )	(24.07)	93.43
6 Return on Capital Employed	(0.02)	0.24
7 Net Profit Ratio	(0.06)	0.11

The Net Cash Flow of the Company ( in Lakh) during the year ended 31^st March 2025 is as follows:

Particulars	As at 31st March 2025	As at 31st March 2024
(a) Net cash generated from/(used in) operations	(5,392.89)	19,608.31
(b) Net cash generated from/(used in) investing activities	8,027.35	9,947.12
(c) Net cash generated/(used in) from financing activities	(7,953.25)	(13,750.80)
(d) Net increase/(decrease) in cash and cash equivalents (a + b + c)	(5,318.79)	15,804.63
(e) Cash and cash equivalents at the beginning of the year	16,059.80	255.17
(f) Cash and cash equivalents at the end of the year (d + e)	10,741.01	16,059.80

The Companys operational performance and financial results are subject to periodic fluctuations driven by several factors (as detailed in the section, ‘Risk Management, below). A key factor is the variability in customer delivery schedules, which directly affects revenue streams. In addition, the Company continues to face constraints in aligning selling prices with the dynamic costs of imported raw materials. Significant fluctuations in FOB/CFR prices further complicate pricing decisions and margin management.

Despite these headwinds, the Company remains resilient and well-positioned in the market. Backed by over five decades of industry experience, it continues to focus on maintaining sustainable operations through prudent planning and adaptive business strategies.

Outlook

Amidst a challenging global economic landscape, GCL has remained focused on maintaining operational efficiency and stability. During the year, GCL engaged in optimising internal processes to ensure efficient conversion of raw materials into finished goods. Attention has been placed on managing input flows, refining production systems, and managing output requirements. These efforts reflect a practical, process-oriented approach shaped by the realities of the external environment.

The Companys approach continues to be shaped by its ability to anticipate and respond to market changes, with a sustained emphasis on producing high-quality products at the lowest possible cost. This principle has remained central to operations, guiding both day-to-day functions and broader decision-making.

Risk Management

GCL works towards mitigating potential risks, thereby minimising the losses. In addition to the points discussed above, the Company has identified some critical business challenges and planned mitigation strategies, which include:

Pet Coke Use in Aluminium and Calcination: Regulatory Impact

CPC demand is increasingly aligned with the aluminium sectors growth, backed by Indias position as the worlds second-largest producer and prevailing import quotas. In 2024, the CAQM raised the RPC import cap to 1.9 million tonnes and CPC to 0.8 million tonnes, recognising their role as key feedstock. With 85 percent of global CPC consumed by aluminium now shifting to greener production, Indias compliant calciners are critical to enabling this transition.

Additionally, the Ministry of Environment, Forest and

Climate Change has finalised new PM2 and SO norms

effective June 2025, highlighting the push for sustainable calcination. Supporting domestic producers through fair quotas is vital to the Make in India mission and industrial resilience, though risks remain from market distortions and disproportionate allocations.

Mitigation strategy: With rising production costs in the West, aluminium manufacturing is shifting to the East, boosting long-term CPC demand. In response to regulatory changes, the Company has proactively ensured compliance with new emission norms, reinforcing its commitment to sustainable

CPC production. Backed by the aluminium sectors growth and green transition, the Company is well-positioned to tap emerging opportunities and sustain long-term growth.

Raw Material Sourcing and Supply Chain Stability

Ensuring a steady supply of high-quality RPC is increasingly difficult due to tighter customer specifications, declining domestic availability, price volatility, and global supply chain disruptions driven by geopolitical and trade uncertainties.

Mitigation strategy: The Company has strengthened procurement, planning, and inventory management through a dedicated team, while deepening supplier engagement and exploring long-term sourcing solutions with aluminium smelters. By leveraging global partnerships, diversifying sources, and enhancing logistics resilience, the Company aims to ensure cost-effective, stable, and uninterrupted raw material supply.

Foreign Exchange and Interest Rate

Foreign exchange and interest rates pose a potential risk. A sharp tightening of global financing conditions or a rapid appreciation of the U.S. Dollar against the Indian Rupee could exert significant downward pressure on the Company.

Mitigation strategy: The Company has implemented currency hedging strategies to protect against adverse exchange rate movements. Additionally, regular scenario planning and building reserves have enhanced the Companys financial resilience in addressing these challenges.

Environment and Regulations

Aluminium, the second most used metal in the world after steel, depends heavily on CPC, with approximately 0.4 tonnes required per tonne of aluminium produced. Any regulation impacting either the import or production of CPC will directly impact Indias aluminium industry. Thus, CPC is a critical and strategic part of the countrys economic growth.

Mitigation strategy: While Calcined Petroleum Coke (CPC) is closely regulated with tighter import quotas and stricter environmental emission standards, it is still a key input in aluminium manufacturing. In response, the Company has adopted compliant operational strategies aligned with this regulatory landscape. As a future-ready organisation, it has launched the brand ‘gcarb+, a cutting-edge product made from premium, low-sulphur raw materials, designed to reduce emissions and meet the carbon industrys rising sustainability standards.

Working Capital Requirements

The Company primarily relies on non-fund-based credit facilities such as Letters of Credit (sight and usance) for the procurement of its raw material from overseas markets. In case of Sight Letter of Credit, once the shipment is completed, it is converted into a Buyers Credit Facility through overseas banks at a competitive interest rate against the Trade Credit Bank Guarantee (TCBG) or Standby Letter of Credit (SBLC) issued by Indian banks. During the year, for meeting working capital requirements, the Company has tied up additional working capital limits and also availed short-term loans.

The Company actively explored alternative financing channels to meet its working capital requirements. Efforts have been made to negotiate commercial contracts to minimise costs. Additionally, the Company imported raw materials based on clean credits provided by its suppliers. By seeking newer financing avenues and optimising contractual terms, the Company aims to reduce financing costs and improve overall working capital management, reflecting its commitment to financial prudence.

Human Resources

People and Culture: Empowering a Sustainable Future

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

As of 31st March 2025, GCL employed 195 permanent staff, comprising a blend of professionals and skilled workmen, each integral to the Companys ongoing growth and success.

Health and Safety

GCLs safety culture is rooted in a top-down approach to decision-making, while actively encouraging employee participation and feedback. A strong commitment to employee health and safety is embedded in every aspect of operations, reflecting GCLs belief that safeguarding its people is essential to achieving long-term operational excellence and sustainability. The Company promotes greater management engagement through regular proactive inspections, transparent communication before and after incidents, and robust tracking of Safety, Health, and Environmental (SHE) metrics. Preventive maintenance remains a key focus, helping to minimise operational risks and ensure workplace safety. The Company also enforces strict protocols to prevent employees from undertaking non-routine or unfamiliar tasks without proper training and supervision.

Training and Development

At GCL, training initiatives are designed to cultivate a well-rounded workforce, emphasising safety and essential skills such as communication, team building, presentation, and negotiation. In line with the evolving digital landscape, the Company recognises the growing importance of cybersecurity. Comprehensive training programmes ensure employees are well-equipped to navigate ever-evolving cybersecurity challenges. This holistic approach supports their success across every aspect of their professional journey.

Leadership and Technical Skill Enhancement

GCL invests in developing its employees leadership and technical skills through tailored programmes, mentorship, and specialised training. This approach empowers the team to drive innovation and contribute significantly to the Companys ongoing success.

Employee Engagement and Satisfaction

GCL is committed to creating a work environment that values and supports the team, ensuring that employees feel appreciated, motivated, and fulfilled Initiatives are designed to enhance employee engagement and satisfaction, fostering a positive and productive workplace.

Diversity and Inclusion

GCL is dedicated to cultivating a diverse and inclusive workplace where every individual, regardless of background, is valued, respected, and given equal opportunities. The Company believes that embracing diversity and inclusion drives innovation, collaboration, and sustainable growth.

Internal Control System

The Company upholds a robust internal control system designed to match the scale of its business operations and the specific demands of its industry. Internal auditors are integral to ensuring compliance, efficiency, and accuracy through regular assessments and adherence to applicable laws and policies.

The Company conducts regular internal audits to comprehensively evaluate its operations, with detailed reports submitted promptly to the Audit Committee during quarterly meetings. This commitment to rigorous internal controls and audits underscores the Companys dedication to transparency, operational efficiency, and maintaining high compliance standards throughout the organisation.

Statutory Compliance

During the quarterly Board meetings, the Executive Director presents a comprehensive declaration to the Board regarding the Companys compliance with all relevant statutes, enactments, and guidelines. This declaration is prepared after receiving confirmation from all operating plants and department heads, ensuring that the Companys operations align with legal and regulatory requirements. Additionally, the Company Secretary, who also serves as the Compliance Officer, oversees compliance with the Companies Act, 2013, and SEBI (Securities and Exchange Board of India) Regulations and reports to the Board.

These declarations and the work done behind it affirm the Companys commitment to compliance, integrity, and ethical business practices. By emphasising these efforts in each quarterly meeting, the Company reaffirms its dedication to responsible corporate conduct and adherence to applicable laws and regulations.

Cybersecurity and Data Protection

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

Regular training programmes are conducted to educate employees on the safe and responsible use of the Companys digital infrastructure, significantly reducing the risk of data breaches and security incidents. The Information Technology Department actively gathers feedback from users to continuously refine and strengthen cybersecurity protocols in line with emerging threats and best practices. In addition, cybersecurity risks and mitigation strategies are periodically reviewed by the Audit Committee and the Board of Directors, ensuring strong governance and sustained vigilance across the organisations digital ecosystem.

Cautionary Statement

Some of the statements given in the above management discussion and analysis about the Companys projections, objectives, estimates, expectations, and predictions may be ‘forward-looking statements within the meaning of applicable securities laws and regulations. The actual results may differ materially from those expressed or implied in these statements. Important factors that could make a difference to the Companys operations include, inter alia, domestic and global economic conditions affecting demand, supply and price conditions in the industry, changes in government laws, tax regime and other statutory changes, environmental laws and labour relations. The Company undertakes no obligation to periodically revise any such forward-looking statement to reflect future events or circumstances.