Gujarat Apollo Industries Ltd Management Discussions

The year that was

The year 2025-26 was a transformative year for the company.

The highlights of FY 2025-26, in brief, are as follows:

The Companys financial results can be summed up as under:

1. Total Revenue from operations of the Company is Rs. 3,167.03 Lakhs.

2. Profit Before exceptional items and Tax of the Company is Rs. 86.57 Lakhs.

3. Profit/Loss after Tax is Rs. 214.16 Lakhs.

4. Basic and Diluted Earnings per Share is Rs. 1.73.

While maintaining a steadfast emphasis on Crushing and Screening equipment, your Company has actively broadened its portfolio to embrace construction and material handling machinery. By capitalizing on our core strengths in engineering, R&D, and manufacturing, we are driving innovative product offerings that have unlocked new markets and attracted an expanded client base.

With the expiration of the non-compete clause from our previous joint venture, strategic avenues opened to grow our presence within road construction machinery. Consequently, the development of new product offerings for this segment is currently underway.

Furthermore, the company secured advanced technology to manufacture safe pick-and-carry cranes tailored for material handling operations. Over the past year, prototype production commenced alongside filings for required regulatory clearances. This product line represents a highly promising domain for our strategic long-term expansion.

- Expanding into road construction equipment represents a pivotal milestone in extending our footprint across the mining and construction sectors.

- This broadened product range reinforces sustainable business growth, establishing our company as a comprehensive provider for mining, road construction, and material handling solutions.

- Through continuous investment in research and development, we guarantee that every new offering maintains high standards of innovation and excellence.

Protecting the interests of all stakeholders serves as the foundation of our business philosophy. We are dedicated to upholding transparency, fairness, and trust across all engagements to ensure our practices remain in harmony with the expectations of our shareholders, employees, customers, and partners. Guided by a commitment to profit sharing, we continually seek to generate lasting value for everyone who places their trust in our organization.

Your Company has demonstrated a remarkable ability to navigate challenging market conditions through a combination of research and development, dedicated efforts, and manufacturing excellence. By staying ahead of industry trends and continuously innovating, we have maximized our market opportunities and solidified our position as a leading player in the construction equipment and material handling space.

The detailed Management discussion and analysis report, industry wise, economy wise, product wise and in general is as follows:

Indias growing economy, fueled by a young and growing population, a rising middle class, and government-backed economic reforms, has positioned it as a prime target for international investors. The countrys GDP growth of 7.7% in 2025-26 solidified its status as one of the worlds fastest-growing major economies. This economic vitality has attracted significant foreign direct investment (FDI). These funds are being channeled into large-scale projects, including infrastructure development, manufacturing plants, and data centers.

Within this dynamic economic landscape, the crushing and screening market as well as construction equipment market in India is experiencing a positive trajectory, driven by several key factors. The governments emphasis on infrastructure development and mining initiatives has created a robust demand for crushing, screening, and construction equipment. This market is poised for significant growth in the coming years, fueled by the following factors:

- Increased infrastructure spending: Government investments in roads, railways, and airports are driving demand for aggregates, which require crushing and screening equipment and other construction and material handling equipment.

- Growing mining sector: The rising demand for minerals like iron ore, coal, and copper is stimulating growth in the mining sector, leading to increased demand for equipment to process these materials.

- Technological advancements: Innovations in the crushing and screening industry have resulted in more efficient and productive equipment, driving demand for these advanced solutions.

The crushing and screening market in India is projected to grow in the coming years. This growth will be driven by the aforementioned factors, as well as the increasing demand for crushed and screened materials from other industries, such as construction, manufacturing, and power. The governments emphasis on infrastructure building is likely to increase the demand for road construction equipment.

Your company is well-positioned to capitalize on this market growth. Our in-house R&D capabilities and superior manufacturing practices provide a competitive edge. By prioritizing customer service, expanding our distribution network, and investing in marketing and advertising, we are confident in our ability to increase our market share in this segment.

The Companys primary focus is on the mining, construction and material handling equipment making our growth directly linked to the expansion of these industries. Our Crushing & Screening equipment, in particular, has a broad range of applications across various sectors, including road construction, building construction, mining, and general infrastructure development.

- Value-driven market positioning: Our reputation for producing high-quality equipment at competitive prices allows us to target customers seeking value for their investment.

- Labor cost advantage: Indias lower labor costs provide a significant competitive advantage in manufacturing, enabling us to offer cost-effective solutions.

- Product diversification: Expanding our product range to include road construction equipment and material handling equipment will attract a broader customer base.

- Global economic volatility: Fluctuations in the global financial market could impact the Indian economy, potentially leading to a slowdown in demand for crushing and screening equipment.

- Intense competition: The competitive nature of the market, with numerous local players offering low-priced products, could create price pressures and limit our ability to command higher prices.

- Raw material price volatility: Fluctuations in steel and other raw material prices can impact the cost of our products. Rising prices could increase our manufacturing costs, potentially affecting profit margins.

The Company operates in a single segment, in the business of manufacturing and sale of Construction and Mining Machineries, and Spare Parts thereof.

The companys wholly owned subsidiary, AEML Investments Ltd., is dedicated to manufacturing components for agricultural equipment and farm machinery. In addition to its manufacturing operations, AEML is also engaged in real estate projects, and trading activities for goods and commodities. In the FY 2025, AEML has taken over Fieldtrack Earthmovers Pvt. Ltd. (FEPL) making it a 100% subsidiary. FEPL manufactures mini tractors of range 14 hp to 25 hp. FEPL has a dealer network in the states of Maharashtra, Karnataka, UP and Gujarat.

The company has a joint venture with PFH BV, a prominent Belgium-based manufacturer of agricultural and construction equipment. This collaboration aims to leverage our combined expertise and resources to develop and market innovative solutions in the agricultural machinery sector. The JV has faced challenges in developing new products.

The Company anticipates a positive outlook for the Crushing and Screening business in the coming years. The introduction of new products with proven technology is expected to contribute to growth in both revenue and profitability. Our existing cash reserves provide a solid foundation for expanding into diversified business activities beyond mining equipment.

The company anticipates favourable growth because of the addition of a road-construction equipment product line as well as pick and carry cranes.

Favorable government policies, particularly the emphasis on infrastructure development and construction, create a promising market environment for our products. We anticipate a steady increase in demand for our solutions in the coming years.

However, potential risks such as rising capital costs and uncertainties in the global geopolitical landscape could impact our outlook. We will closely monitor these factors and adapt our strategies accordingly to mitigate any adverse effects.

The Company maintains robust internal control systems designed to prevent unnecessary losses, ensure accurate record-keeping, generate reliable financial reporting, safeguard assets, and uphold management policies. Our internal control framework is regularly evaluated to identify areas for improvement and eliminate inefficiencies.

To maintain a high standard of internal control, we engage an independent firm of Chartered Accountants to conduct periodic internal audits. The officers responsible for each function are required to review the audit reports and provide timely updates on corrective actions taken.

Your Company remains committed to excellence in quality management and is certified to ISO 9001:2015 by TUV India Private Limited (TUV NORD). This certification recognizes our commitment to production, quality control, and adherence to international standards.

Our Company prioritizes a human-centric approach to our HR practices. Our policies emphasize qualitative and transparent recruitment, training and development, performance appraisal, and employee welfare. We believe that investing in our employees is fundamental to our long-term success.

Recognizing our employees as key contributors to our industry leadership, we offer competitive compensation packages and a positive work culture to attract and retain top talent. Our focus is on creating an environment that supports our business objectives and fosters employee performance evaluation aligned with our long-term goals.

We empower our employees by providing clear key results areas (KRAs) and opportunities for performance discussions, development planning, and self-appraisals. This approach encourages personal and professional growth and strengthens employee engagement.

During the Financial year under review, the Net Turnover of the Company has Increased to Rs. 3,167.03 lakhs as compared to Rs. 2,006.72 lakhs in the previous financial year.

There is an increase in the total sales because the projects that went on hold in the previous year have been awarded due to favorable market conditions and finalizing the pending issues. Though we could achieve the expected revenue but due to stiff competition and management has decided to accept the order where Company can get the break-even sales value for the domestic market as the export market remains sluggish due to the uncertainty in the international market prevailing throughout the year. Consequently, in the export market except Nepal, we could not have the expected orders due to geopolitical situation and countries where we were exporting facing the USD crisis.

Even though total revenue has increased, as stated above, the profits of the Company have decreased compared to the previous financial year because of the increase of the material cost and in the overall day today business expenses as stated above.

The Profit before Tax is Rs.86.57 lakhs in the current year as compared to Rs.345.44 lakhs in the previous year which has decreased by around 75%.

The Profit after Tax is Rs. 214.16 lakhs in the current year as compared to Rs. 162.41 lakhs in the previous year which has Increased by around 32%.

Details of significant changes (i.e., change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof, including:

In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018) (Amendment) Regulations, 2018, the Company is required to give details of significant changes of 25% or more as compared to the immediately previous financial year) in key sector specific financial ratios.

(i) Debtors Turnover Ratio: Current Year 1.86:1 Previous Year 2.85:1

Reason for changes: As compared to previous year we have better realization on the sales in terms of credit sales. Last year, many of our sales had longer payment terms, like LCs (Letters of Credit) that took over three months to be paid, which led to a higher amount of outstanding debt. The situation was better this year.

(ii) Inventory Turnover Ratio: Current Year 1.64:1 Previous Year 1.01:1

Reason for changes: It is mainly due to commencement of the road construction business where inventories has increased looking to the future orders /sales as compared to previous year where no such anticipated business was there.

(iii) Interest Coverage Ratio: Current Year 1.01:1 Previous Year 3.09:1

Reason for changes: The net profit has come down due to increased cost as stated earlier , interest coverage decreased as compared to previous year.

(iv) Operating Profit Margin: Current Year (25.79%) Previous Year (29.01%) NO NEED

Reason for changes: There is no significant change as compared to the immediate previous financial year.

(v) Net Profit Margin: Current Year 6.76% Previous Year 8.09%

Reason for changes: There is no significant change as compared to the immediate previous financial year.

(vi) Current Ratio: Current Year 9.61:1 Previous Year 9.53:1

Reason for changes: There is no significant change as compared to the immediate previous financial year.

(vii) Debt Equity Ratio: Current Year 0.04:1 Previous Year 0.05:1

Reason for changes: There is no significant change as compared to the immediate previous financial year.

Details of any change in Return on Net Worth as compared to immediately previous financial year along with detailed explanations thereof.

During the year under consideration there is an increase in the overall return on net worth after tax which is Rs. 214.16 Lakhs as compared to Rs. 162.41 Lakhs in 2024-25.

The main reason for the increase in net worth is due to the security premium received on conversion of warrants to equity shares , consequently reserve increases which affected the return on net worth.

Statements in this Management Discussion & Analysis that describe the Companys objectives, projections, estimates, expectations, or predictions may constitute “forward-looking statements” within the meaning of applicable laws and regulations. Actual results, performance, or achievements may differ materially from those expressed or implied, depending on various factors, including economic conditions, government policies, and unforeseen events.

Key factors that could influence our operations include the availability and pricing of inputs, demand and pricing for finished goods in our primary markets, changes in government regulations and tax laws, economic developments within India, and other incidental factors.