Grindwell Norton Ltd Management Discussions

General Review:

Grindwell Norton Limited ("Company" or "GNO") is one of the subsidiaries of Compagnie de Saint-Gobain ("Saint-Gobain"), a transnational group with its headquarters in Paris and with sales of Euro 46.5 billion in 2025. Saint-Gobain has organized its businesses into two broad areas: Construction or Building related businesses focused on serving regional markets and Industrial Solutions catering to the global market. Within GNO, the businesses are divided into two major segments.

1. Abrasives

2. Ceramics & Plastics

Business Environment:

Indias growth story continued to gather momentum during the year under review, driven by a powerful confluence of strong domestic consumption, accelerating infrastructure investment, moderating inflation, and a broad-based revival across manufacturing and services. Even as global headwinds - from shifting trade dynamics to external demand volatility - tested emerging economies worldwide, Indias macroeconomic fundamentals held firm, reinforcing its position as one of the worlds most resilient and attractive growth markets.

Indias growth trajectory remains compelling - the economy grew by approximately 76% in FY 2025-26, with the industrial and manufacturing sector expected to grow at around 7%, buoyed by targeted policy support, infrastructure momentum, and a sharper focus on ease of doing business. The Union Budget 2025-26 added further impetus, with measures designed to stimulate consumption, investments, and deepen the countrys industrial base. Indias major industries-including steel, foundry, automotive, general engineering, renewable energy, aerospace, defence, and electronics are witnessing dynamic expansion, reshaping the countrys industrial landscape. The steel and foundry sectors are strengthening their global standing as India emerges as one of the largest producers, driven by infrastructure projects and rising demand from construction and automotive manufacturing. The automotive industry, buoyed by a growing middle class and government incentives for electric vehicles, is evolving into a hub for both conventional and next-generation mobility solutions. General engineering is diversifying into advanced machinery and robotics, supporting industrial modernization. Meanwhile, renewable energy industries such as wind and solar are scaling rapidly, with India setting ambitious targets to become a global clean energy leader. In aerospace and defence, indigenous production and space exploration initiatives are enhancing self-reliance and global competitiveness, while electronics manufacturing - boosted by production-linked incentives and semiconductor investments - is positioning India as a critical player in global supply chains. Together, these sectors reflect Indias transformation into a multifaceted industrial powerhouse, blending traditional strengths with future-oriented innovation.

Against this promising backdrop, Management remains confident that the Companys strategic focus on technology, operational excellence, and customer centricity will enable it to capture emerging opportunities, strengthen its competitive positioning, and deliver sustained, long-term value to its stakeholders.

ABRASIVES

GNO is the market leader in India, offering the widest range of cutting-edge abrasive products to the Indian market and catering to multiple market segments through diverse and varied channels. While most of these products are made by GNO in India, some are sourced from affiliate plants of Saint-Gobain or from third parties.

Abrasives business comprises of following sub-groups, also called as Sector of Activities (SOAs) i) Bonded Abrasives ii) Thin Wheels iii) Coated Abrasives (including Non-woven abrasives) iv) Superabrasives v) Construction products and vi) Sealants & Adhesives. Saint-Gobain has good backward integration for certain Abrasives as the Ceramic Materials Division of Saint-Gobain manufactures high-end Abrasive grains. Besides, Saint-Gobain has strong Research and Development capabilities and is uniquely positioned in the Abrasives industry.

Abrasives business in India has four manufacturing sites: Mora (near Mumbai), Bengaluru, Nagpur and Baddi (Himachal Pradesh). All the sites are certified under ISO 9001: 2015, ISO 14001:2015 and ISO 45001:2018. Besides, to augment its manufacturing capacity, GNO also has contract manufacturing and extensive sourcing arrangements both at domestic and international level.

Products & Plants:

Bonded abrasives, generally available in the form of wheels and other shapes such as Segments, Sticks & Cones, etc. are used for various precision applications such as Outside Diameter grinding, Inside Diameter grinding, Surface grinding, Face grinding, Lapping, Honing, Super-finishing, Thread grinding, Fluting, etc. They are also used in rough applications such as Snagging, Burr removal and Off-hand grinding. Bonded Abrasives are used by a variety of Industries like Steel, Bearings, Auto Ancillaries, Auto Original Equipment Manufacturers ("OEMs"), Foundries, Cutting Tools, Needle, Razor, Food Processing, Aerospace and General Engineering. The variety of products is large and consists of both Made-to- Order and Made-to-stock products. GNO makes over 15,000 different products in a year.

Thin Wheels are predominantly Cutting and Grinding Wheels used for Cutting, Deburring and Weld-removal. These are generally used in Fabrication, Construction, Foundry and General Engineering. With the increasing affordability of Power Tools, usage of Thin Wheels is growing significantly.

Coated Abrasives products are engineered composites comprising of a backing, a bond system and abrasive grains and are designed for material removal and surface preparation and finishing. Coated Abrasive products are available in various shapes like Discs, Belts, Wheels, Sheets & Rolls to suit a wide gamut of surface preparation and polishing applications. Non-Woven Abrasives, which are a part of Coated, are used for getting the desired high-quality surface finish for metals, wood and other composites. Non-woven products are also used for consumer applications like utensil cleaning, floor cleaning etc.

Superabrasives are made of Diamond (synthetic or natural) or Cubic Boron Nitride and are used in precision applications in Auto, Bearing, Steel, Solar, Electronics and many similar industries.

To support the growth agenda, significant investments in capability building and capacity expansion have been made across the Companys product platforms. In the Thin Wheel and Bonded segments, the Companys investments are already yielding dividends through an expanded product range and enhanced innovation capabilities, enabling the Company to deliver superior solutions that meet the evolving needs of its customers. In the Coated segment, the commissioning of a new paper maker and the new non-woven line has not only increased production capacity but also significantly enhanced the Companys ability to customise products to precise customer specifications. These investments collectively strengthen the Companys operational agility and position it to respond swiftly and effectively to the dynamic demands of both domestic and international markets.

The Companys digital transformation journey has moved well beyond aspiration and is now a tangible operational reality. The end-to-end CRM platform, built entirely by the in-house IT team, powers both direct customer sales and retail channel management with real-time visibility and intelligence. To further strengthen its channel ecosystem, the Company has launched a dedicated portal and mobile application for its channel partners, enabling seamless order management, communication, and engagement. On the manufacturing and operations front, the Companys investment in Industry 4.0 technologies is driving measurable improvements in process efficiency, quality control, and data-driven decision-making across its facilities. Together, these digital investments are not only enhancing productivity and customer experience today but are also laying the foundation for a more agile, scalable, and future- ready organisation.

Industry:

The Abrasives industry in India currently has two major players offering a full range of Abrasives products, one of which is GNO. GNO is the market leader in Abrasives and has a strong presence across geographies and channels. Over the years, and due to the growth of the Indian market, many global players have established their presence in India. The Company has also witnessed power tool companies and local traders importing products under their own brands from China.

Imports from China are predominantly in the power tools accessory range and cater to the low and mid-tier market segments. In the last few years, the Company has also witnessed Paint, Adhesives and players from other allied industries also starting to participate in select Abrasives range.

While the overall abrasive Industry is becoming competitive due to the Chinese influx, this is also helping to grow the overall market as many manual applications are moving to power tools. At the same time, the Company also sees lot of opportunities for Abrasives in emerging industries like Electronics, Aerospace and Defence. Major players like GNO can differentiate due to deep customer connect, ability to customize solutions and also due to strong brand equity, built over decades.

The key success factors for the Abrasives industry in India include a comprehensive product range, a loyal distribution network, extensive market reach, a high level of technical competence to develop specific solutions for diverse customers, a strong cost position, agility in introducing new products and solutions, reliable service, consistent quality and a focus on innovation.

Development & Outlook:

Saint-Gobain is a major player worldwide in Abrasives. It has a strong product portfolio with Centers of Excellence, footprint in several countries for manufacturing and R&D centers located in different parts of the world to cater to both the local and global needs in terms of products, manufacturing process etc. Besides, the Ceramic Materials Division of Saint-Gobain develops high end Abrasive Grains. GNO benefits from being a part of such an organization, in terms of access to all developments in products and process technology.

During FY 2025-26, the Indian abrasives industry continued to expand in line with Indias resilient macro environment, supported by steady domestic consumption, sustained public capex on infrastructure, and improving private investment sentiment. Key user segments such as steel, automotive and auto components, general engineering, metal fabrication and construction benefited from higher project execution and manufacturing activity, while increasing penetration of power tools and organised retail in tier-2/3 markets continued to shift demand from manual applications to power tool accessories.

Looking ahead, the outlook remains favourable, supported by continued infrastructure momentum, manufacturing localisation and policy focus on strengthening the industrial base; however, competitive intensity is expected to remain elevated due to imports and new entrants, and volatility in raw material, energy and logistics costs (due to the current geopolitical situation) could influence near-term pricing and margins.

Risks & Concerns:

Overall, there are no major risks and concerns. There can be some short-term volume impact due to overall geopolitical tensions and risks related to supply chain concerns. Apart from this, with multiple global Abrasives players focusing on India, some pressure on the Companys key, high-margin products can be expected. The Company plans to mitigate this by constantly upgrading its products and expanding into new markets and segments.

(i) Industry & Market:

The Abrasives business caters to several industries such as Steel, Automobiles, Auto Components, General Metal Fabrication, Construction and Woodworking. The dependence on any single industry segment is less than 15% even as Automotive coupled with ancillaries and Automotive after, has a significant impact. This broad-based nature of Abrasives business in a way protects it from the volatility of any segment.

GNO, over the last few years, has focused on growing the non-engineering channels and diversifying into adjacency products. The Company has also increased efforts to grow exports. This, in a way, should partially insulate the Company from the ups and downs of specific market segments in India.

(ii) Technology:

Abrasives have been used over a very long period and technological changes in terms of applications are gradual. GNO Abrasives is well positioned to anticipate and take advantage of these technological changes as Saint-Gobain is one of the worlds leading manufacturers of Abrasives with a very strong R&D Centre in the USA with regional R&D centers located elsewhere (including a Centre in India). Both basic and applied research takes place at these R&D centers. GNO has full access to all the research and technology developments.

(iii) Competition:

The Abrasives market in India has two major players and many other small and mid-size players. In the last few years, we have seen Paint, Adhesives and similar companies are entering the Abrasives market. With their deep distribution and aggressive pricing, they have been able to penetrate the market in a short period of time. On the other hand, imports from China have grown over the period. Organized players in the power tools segment and local traders are importing from China under their own brands. High-end European and Japanese players continue to operate in specific niches through their subsidiaries, distributors or agents. To meet the growing challenges in the market, the Company will have to continue to invest in technology, capacities and capabilities and provide superior solutions.

PERFORMANCE POLYMER SOLUTIONS ("PPS")

Performance Polymer Solutions business caters to a wide range of industries spanning from Auto, Industrial, Construction and Bio Pharma and also new upcoming industries in India i.e. Wind, Electronics, Semiconductors, Space & Aerospace through its five sub-businesses (EQYO, Omniseal Solutions, Life Sciences, Tape Solutions & Performance Film Solutions) with manufacturing plants in Bengaluru & Ambernath. Each of these sub-businesses is a market leader in its space globally and in India with innovative products & services developed at global and regional R&D Centers. The Saint-Gobain regional R&D centre in Chennai has experts focused dedicatedly on developing breakthrough solutions.

Products & Plants:

The major product lines for these businesses are as below -

• EQYO (Formerly known as Bearings) - Automotive PTFE Bearings, Yoke Assemblies & high precision Injection molding components

• Omniseal Solutions - Spring Energized Polymer Seals & Metal Seals

• Life Sciences - Tubings (Silicone & TPE) and Single Use Bags & Assemblies

• Tape Solutions - Electric Vehicle (EV) Tapes & Foams, Pressure Sensitive Adhesive & Acrylic Foam Tapes & Wire Harness tapes

For each of these businesses other than PFS, we have manufacturing in India offering global solutions to our customers in India & abroad. The plant in Bengaluru manufactures the EQYO, Omniseal Solutions, Life Sciences & EV Tapes portfolio and is accredited with ISO 14001, ISO 45001, TS16949, ISO 9001 and ISO 13485 certifications. The plant in Ambernath is dedicated to Pressure Sensitive Adhesive & Wiring harness tapes apart from manufacturing a range of Printed products for Automotive industry. Ambernath plant is accredited with ISO 14001, ISO 45001, ISO 9001, AS 9100 and IATF 16949 certifications.

Industry Outlook:

Across all major industries which are catered by PPS, there has been a robust growth and favorable technology upgrade which has helped the business to maintain a good growth historically and in the current year. PPS is impacted favorably by the China + 1 strategy of many industries, GST 2.0 specially for Auto segment and multiple PLI supports for new industries like Electronics, Semiconductors, White goods & EV. The adoption of Single Use products has also increased in the Bio Pharma industry due to Indias growth in Biologics, Vaccines & Biosimilars with a need for faster changeovers. The penetration of EV in 3 wheeler & 2 wheeler industry also has had positive impact on PPS Tapes business. With the new trade deals, PPS can further benefit in future with a lot of global customers looking at India as manufacturing hub specially for Auto & Auto Components.

Development & Outlook:

PPS has aligned itself completely to the Lead & Grow Strategy of Saint-Gobain Group. The 5 key areas of focus for PPS will be -

• Growing the business leveraging its capacities & capabilities

• Competency Building for each business to deliver breakthrough solutions for customers

• Further building Application & Product Management expertise

• Strong focus on Cost, Efficiency & Working Capital leveraging the new digital tools

• Building stronger processes & enablers for better service & growth

The overall outlook for the financial year 2026-27 looks positive across all business units, with new products and competition conversion to fuel growth. New products for 2026-27 include a wide range of industrial tapes developed at the Companys Ambernath plant, a new tubing developed in India for Indian customers and a vertical ramp-up of the new Single Use Bag and Assembly plant to cater to the growing single-use requirement in India. Geographical expansion in the Companys industrial business, especially for Tapes using the distribution model, should also provide growth impetus to the business in future years.

Risks & Concerns:

Demand disruption due to geopolitical uncertainty in key markets like Automotive, Life Sciences, Industrial and Oil & Gas is a major risk in the short term. Inflationary environment and concerns over availability of key raw materials along with logistical uncertainties will be critical challenges to overcome for the business in the current year. Depreciation of the Rupee is also a risk as the business is import-intensive.

Products & Plants:

Performance Ceramics and Refractories ("PCR") is one of GNOs business units that stands for comprehensive and high-end technology solutions that enable the Companys customers across industries - Primary and Secondary Metals, Petrochemicals, Ceramics, Ballistic Armour and other emerging areas - to operate with significantly higher efficiencies, with enhanced levels of safety and sustainability, in the most demanding environments.

PCR business has two manufacturing sites: one is located at Bengaluru, and the other at Halol. The plants in Bengaluru and Halol are certified under ISO 9001:2015, ISO 14001:2015, ISO 45001:2018 and the ECOVADIS Silver Label for Sustainability.

Industry:

PCR Refractory products find use in applications across industry segments like Primary Iron & Steel, Primary Non-Ferrous Metals (Aluminium, Copper, Zinc, etc.), Secondary Steel, Secondary Iron, Secondary Non-Ferrous (Aluminium, Copper), Petrochemicals, Carbon Black, Waste to Energy Systems, etc. PCR Ceramic products are used in applications in industry segments like Sanitaryware, Tableware, Ballistic Armor Protection, Wear Resistance Systems, etc.

Development & Outlook:

In the Primary Iron & Steel Segment, PCR business unit expanded its technology collaboration with Shinagawa Refractories to cover Trough & Runner Castables in addition to Tap Hole Clay product range. As is the case with Tap Hole Clay products, the new Trough & Runner products will also be sold under the joint branding of Shinagawa - Saint-Gobain. PCR has also been able to consolidate its position as a key refractory supplier in Blast Furnace Projects (New Expansion or Revamping) and in Molten Iron Transportation applications.

In Secondary Steel Making, PCR continued to maintain a leadership position by introducing a slew of innovations in the form of new products, application engineering techniques and business models. The innovations are focused on increasing throughput and reducing the cost of melting while maintaining high standards of safety. A unique engagement and customer loyalty program called Steel Club was introduced for this market, which has been significantly strengthened over the past year. Under this program, regular training sessions are organised both at customer sites and at the Companys plants to share practical furnace-related experience with customer teams. In addition, several in-depth technical projects, focused on improving the quality of steel produced and on advancing sustainability initiatives, have been introduced under this program.

The Petrochemical market has been a very strong area of growth for PCR, driven by increasing investments in carbon black production, gasification, and reforming processes. The growth strategy in this segment is centered on consolidating core offers, selectively expanding into ultra-high-temperature applications, and leveraging India-based manufacturing and engineering capabilities. Carbon black remains a key focus area, with solutions strengthened through improved design, installation support, and localised supply to enhance competitiveness and responsiveness. The Company also offers unique gasification solutions for the petrochemical market, using both liquid and solid feedstock, enabling customers to operate more efficiently while reducing emissions. In addition, the Companys secondary reforming solutions, used in the fertilizer industry, are based on proven and stable technology that delivers long-term sustainability benefits.

PCR has also significantly enhanced its engineered ceramics manufacturing set-up with the addition of new industrial capabilities to produce a full range of Silicon Impregnated Silicon Carbide ("SiSiC") and Reaction-Bonded Silicon Carbide ("RB-SiC") products. These advanced materials enable high-performance solutions across highly specialised application environments. The Company also upgraded its unique Total Burner Solutions, which are used in annealing and galvanizing furnaces, helping to reduce fuel consumption, lower emissions such as NOx and SOx, and contribute to a reduced carbon footprint. The expanded capabilities have been set up at the Halol plant, Gujarat, which integrates precision casting and world-class furnace technologies under one roof.

Risks & Concerns:

Ongoing war and geopolitical tensions across key regions continue to create uncertainty in global markets. These developments have led to supply chain disruptions, volatility in energy markets, and price surcharges on raw materials and other consumables, which could adversely impact input costs in the short term.

Products & Plants:

Silicon Carbide grains are used primarily as raw material in the manufacture of Abrasives, Refractories, Iron Foundries and for stone polishing. SiC is manufactured at the plant located at Tirupati in Andhra Pradesh. SiC is also manufactured by the Companys subsidiary, Saint-Gobain Ceramic Materials Bhutan Private Limited, at its plant near Phuentsholing in Bhutan. Both the plants are certified under ISO 9001: 2015, ISO 14001:2015 and ISO 45001:2018. GNO is pioneered in providing consistent quality, reliable service with shorter lead time, which becomes the strength of the Company to compete with imports.

Industry:

In the domestic market, there are three main players (including GNO) in the SiC business. This market is also catered to by imports, mainly from China, Vietnam and Russia. The key requirements for success in the industry are quality and cost competitiveness. Entry barriers are high by way of capital investment and technology. SiC is experiencing steady growth in the domestic market, driven by the increasing steel production in India. The demand from the steel industry will continue to fuel the growth of SiC in the country

Development & Outlook:

During the year, market prices remained subdued, which exerted pressure on margins. Accordingly, the focus was on higher-margin business, resulting in lower volumes. Looking ahead to 2026-27, dependence on local manufacturers is expected to increase on account of supply chain disruptions due to the current geopolitical situation. This can drive stronger demand for locally manufactured Silicon Carbide, enabling better pricing and improved operating profit. The Companys focus will be on maximising output from both manufacturing locations, along with continued emphasis on price improvement and cost control.

Risks & Concerns:

While higher reliance on local manufacturing may support demand and pricing, certain risks remain. Input costs continue to be under pressure due to the current geopolitical environment. Close monitoring of market developments will be critical to respond quickly and guide business decisions.

Development & Outlook and Risk & Concerns:

GNO has captive IT services unit which provides various IT services (e.g., Application development, infrastructure management, and cybersecurity) to the Saint-Gobain Group globally. The IT services unit has around 650 employees. The captive centre follows the cost-plus model. The growth in this segment is limited and future growth can happen only on account of cost inflation. The financial performance of this segment may be impacted due to the foreign exchange fluctuation and hedging strategy

1. Financial:

GNOs financial management has always been governed by prudent policies, based on conservative principles. Currently, GNO has minimal borrowing. All the commercial transactions entered into by GNO in foreign currencies are managed by hedging them appropriately to minimize the exchange risk. GNO has a well-defined and structured treasury operation, with the emphasis being on security

• Contingent Liabilities: Details of Contingent Liabilities are in the Notes forming part of the financial statements.

• Statutory Compliance: GNO ensures statutory compliance of all applicable laws and is committed to the timely payment of statutory dues. The Company monitors compliance under various statutes periodically.

Human Resources:

The Companys greatest strength has always been its people. Built on a culture of meritocracy, inclusion, and equal opportunity, the Company fosters a workplace where talent is nurtured, performance is recognised, and every individual is empowered to grow. Employee relations remained cordial and productive across all work sites during the financial year ended March 31, 2026, and as at that date, there were 2,385 permanent employees on the Companys rolls.

The Company continues to invest meaningfully in building employee capability through structured training programmes, e-learning courses, and targeted initiatives in Environment, Health and Safety, Sustainability and World Class Manufacturing. Career development pathways are benchmarked against industry best practices, and a transparent performance management process ensures that strong contributions are consistently acknowledged and rewarded - keeping the workforce motivated, skilled, and future-ready.

The Company complies with all employee benefit legislations. The relevant details are given in the Business Responsibility and Sustainability Report forming part of the Annual Report.

Above all, the Company believes that a thriving workforce and a thriving business go hand in hand. By championing diversity, encouraging innovation, and creating an environment where people can do their best work, the Company is laying the foundation for sustained growth and long-term value creation for all its stakeholders.

Overall Performance:

GNO delivered a strong financial performance during year. The Companys standalone revenue from operations increased by 10.5% and standalone operating profit increased by 14.4%. On a consolidated basis, revenue from operations rose by 9.3% and operating profit by 12.4%. Consolidated operating profit margin improved to 18.3% vs 17.8%, while net profit margin increased to 13.6% vs 13.2%. Return on Net Worth (standalone) for the financial year ended March 31, 2026 stood at 16.4% compared to that of the previous financial year ended 16.1% and Return on Net Worth (consolidated) for the financial year ended March 31, 2026 was at 16.4% compared to that of the previous financial year ended 16.3%.

Significant changes in key financial ratios along with detailed explanation:

The debt-equity ratio decreased by 31.57% during the financial year ended March 31, 2026, primarily due to repayment of debt during the year.

Internal Control Systems:

The Company has established an effective system of internal controls, with documented policies and procedures that encompass all financial and operational aspects. These controls are designed to reasonably ensure the reliability of financial reporting, monitor operations, and protect assets from unauthorized use or losses while ensuring compliance with regulations. The efficacy of the internal control systems is validated by Internal as well as the Statutory Auditors.

A well-established, independent and multi-disciplinary Internal Audit team operates in accordance with governance best practices. It reviews the compliances, internal controls, the efficiency and effectiveness of operations, and key process risks. Every quarter the significant audit finding, the corrective steps recommended, and their implementation status are presented to the Audit Committee.

The Risk Management Committee reviews business risk areas, encompassing operational, financial, strategic, regulatory, and other risks.

Segment Financials:

For the current year, in line with the Accounting Standards on Segment reporting, GNO has identified three segments. These segments are Abrasives, Ceramics & Plastics and Digital Services.

Cautionary Statement:

The Management Discussion and Analysis Report contains a few forward looking statements based on the information and data available with the Company and assumptions with regard to the economic environment, the government policies etc. The Company cannot guarantee the validity of assumptions and performance of the Company in the future. Hence, it is cautioned that the actual results may differ from those indicated, expressed, or implied in this report.