Hexa Tradex Ltd Management Discussions

COMPANY OVERVIEW

Hexa Tradex Limited is primarily engaged in the domestic and international trading of goods and services. The company operates as a dealer, trader, import-export agent, representative, contractor, buyer, seller, and broker across products. Its core business focuses on wholesale cash-and-carry trading across a diverse range of products.

Leveraging group synergies, including access to competitive commercial arrangements, critical equipment and supplies, as well as technical expertise and operational knowledge, Hexa Tradex has established its presence in the investment and trading services sector. The company is engaged in the trading of chemicals, iron and steel products, machinery parts and accessories, minerals, motor vehicle components, non-ferrous metals and related products, obsolete and discarded materials, paints, varnishes and adhesives, among other items. It also operates as an import-export agent, representative, contractor, selling agent and broker on a wholesale cash-and-carry basis.

The company intends to adopt a focused approach initially while gradually expanding its portfolio of products, markets and customers over time.

Hexa Tradex aims to cater to the evolving requirements of domestic and international clients while strengthening its position in the investment and trading services industry. The company continues to pursue growth opportunities by expanding its presence across promising markets in India and overseas, with the objective of emerging as a leading player in investment and general trading operations.

OUTLOOK

THE GLOBAL ECONOMY

The global economy, which had been recovering from higher trade barriers and elevated uncertainty, now faces renewed risks due to the outbreak of war in the Middle East. The International Monetary Fund has projected global growth to moderate to 3.1% in 2026 and

3.2% in 2027, down from 3.4% in 2025. The forecast assumes that the conflict will remain limited in duration, intensity, and scope, with disruptions easing by mid-2026. Even so, the projections remain well below the historical average growth rate of 3.7% during 2000 2019.

The IMF expects growth in advanced economies to slow to 1.8% in 2026 and 1.7% in 2027 from 1.9% in 2025. In the US, the economy is projected to expand by 2.3% in 2026, supported by fiscal measures and the lagged impact of interest rate cuts in 2025. Growth in the euro area is projected to ease from 1.4% in 2025 to 1.1% in 2026 before inching up to 1.2% in 2027. Chinas growth forecast for 2026 has been revised down 0.1 percentage point from the January estimate to 4.4%, as lower US effective tariff rates on Chinese goods and domestic stimulus measures only partly offset the shock from the Middle East conflict. Growth is expected to slow further to 4.0% in 2027 amid persistent structural headwinds.

Indias growth forecast for 2026-27 has been revised upward by 0.1 percentage point to 6.5%, supported by carryover effects of strong growth in 2025-26 and the reduction in additional US tariffs on Indian goods from 50% to 10%, which outweigh the adverse impact of the Middle East conflict. Growth is expected to remain at 6.5% in 2027-28.

THE INDIAN ECONOMY

The war in the Middle East and the rise in crude oil prices are likely to dampen Indias economic prospects. The Reserve Bank of India has projected economic growth to slow to 6.9% in 2026-27 from an estimated 7.6% in the previous year. Elevated energy prices arising from the conflict, along with the possible development of El Nino conditions, could pose downside risks to the growth outlook.

The India Meteorological Department has forecast southwest monsoon rainfall in 2026 to be below normal at 92% of the long-period average due to the likely development El Nino conditions during the season, which are typically associated with weaker monsoons in India.

There are also concerns that a below-normal monsoon inflationand prompt the RBIs sharprise crudeoilpricescouldpushup Monetary Policy Committee to raise interest rates sooner than expected.

At the same time, the Union Budgets focus on long-term growth drivers and structural reforms, anchored in the vision of ‘Viksit Bharat, reinforces confidence in the resilience of the domestic economy.

India is expected to remain the worlds fastest-growing major economy, although the ongoing conflict has heightened uncertainties surrounding the economic outlook.

OPPORTUNITIES

The governments vision of transforming India into a developed nation by 2047 presents significant the past seven years, government capital expenditure has nearly tripled, which is expected to create strong multiplier effect across the economy and stimulate private sector growth.

Indias expanding network of trade agreements also offers significant opportunities country has signed free trade agreements with the European Union, the United Kingdom, New Zealand, and Oman, while negotiations are underway with several countries and regional blocs, including the United States and the Gulf Cooperation Council. These agreements are expected to enhance market access and support the expansion of trade activities.

CHALLENGES

Trading businesses face a wide range of risks and challenges arising from domestic and global economic conditions, geopolitical developments, competition, and trade protection measures by various countries. The long-term success of any business depends on its ability to effectively navigate these challenges and adapt to changing market conditions.

The war in the Middle East and the closure of the Strait of Hormuz have significantly disrupted global trade. More than 20% of global oil and liquefied natural gas exports pass through the strait, which serves as a critical route for petroleum exported from Iran, Iraq, Kuwait,

Qatar, and the United Arab Emirates.

The war in the Middle East, global trade tensions and heightened policy uncertainty could materially affect Hexa Tradexs business. In response, the company strengthened its risk management framework through enhanced analytics and scenario planning capabilities to better anticipate and manage disruptions arising from evolving global trade environment.

RISK MANAGEMENT

Trading and financing businesses involve significant risks, particularly in volatile prevailing macroeconomic and geopolitical trends. The companys ability to meet its commitments depends on how these factors affect its operations and future prospects. Adverse regulatory developments fluctuations in global economic conditions may directly impact revenue streams and profitability.

At Hexa Tradex, risk management is viewed as a continuous and evolving process rather than a one-time exercise. Ongoing monitoring and periodic form an integral part of the companys risk management strategy. This approach enables timely identification and assessment of risks, supports the implement effective control measures, and facilitates corrective action based on past experiences.

Hexa Tradex has identified the following key risks associated with its business operations:

a) Strategic Risk: The trading industry is highly competitive in nature, requiring continuous adaptation to changing market dynamics.

b) Commercial Risk: The company is exposed to risks arising from vendor or customer defaults and operational disruptions.

c) Financial Risk: Delayed payments or defaults by customers, along with rising financingcosts, may adversely affect profitability and margins. While Hexa Tradex evaluates profitability on a case-by-case basis, it places strong emphasis on credit risk management, particularly in dealings with regular customers.

d) Geopolitical Risk: Cross-border trading activities expose the company to political and global economic uncertainties. To mitigate these risks, Hexa Tradex has established a robust risk management framework under which management regularly assesses risk factors, analyses market developments, and implements appropriate mitigation measures. The framework is reviewed periodically to ensure alignment with prevailing market conditions.

FINANCIAL PERFORMANCE

The companys total income for the year under review is 7.86 lakhs as compared to 677.25 lakhs in the previous year. The company has made a loss (after tax) of 295.31 lakhs for the year under review, as compared to a profit (after tax) of 187.87 lakhs in the previous year. The companys other equity has reduced to 3,72,145.83 lakhs as of March 31, 2026, as compared to 3,74,016.17 lakhs as of March 31, 2025. The fall is mainly due to loss of 1575.03 lakhs (net of taxes) in Other Comprehensive Income (OCI), which is mainly on account of loss on fair valuation of investments as of March 31, 2026, the net worth of the company moderated to 3,73,250.74 lakhs in comparison to 3,75,121.08 lakhs as of March 31, 2025.

ADEQUACY OF INTERNAL CONTROL SYSTEM

Hexa Tradex has established a comprehensive internal control framework to safeguard its assets against unauthorised use or disposition and to ensure that transactions are appropriately authorised, accurately recorded and reported in a timely manner. The companys internal audit and control department periodically reviews and strengthens these controls. A well-defined organisational structure, clear delegation of authority and internal operating guidelines support effective business governance and oversight.

The internal audit and control department conducts audits across key business functions in line with an audit plan approved by the audit committee. The committee regularly monitors compliance with the approved plan and reviews audit findings, corrective actions and recommendations concerning significant risk areas. Through periodic effectiveness of the companys internal control systems.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Hexa Tradex follows a process-driven recruitment policy focused on attracting, developing and retaining skilled professionals. However, like many growing organisations, the company continues to face challenges in talent retention. At present, Hexa Tradex operates with a lean workforce, though it expects to strengthen its talent base with additional qualified professionals to support its future growth and business expansion plans.

Cautionary Statement

The statement in this Management Discussion and Analysis report, describing Hexa Tradexs outlook, projections, estimates, expectations or predictions may be a ‘forward-looking statement within the meaning of applicable securities, laws or regulations. Actual results could differ materially from those expressed or implied.