Hilltone Software & Gases Ltd Management Discussions

(Pursuant to Regulation 34(2)(e) and Schedule V of SEBI (LODR) Regulations 2015)

Your directors have pleasure in presenting the "Management Discussion and Analysis Report" for the Financial Year ended on 31^st March, 2025.

A. OVERALL REVIEW OF THE COMPANY "HILLTONE SOFTWARE AND GASES LIMITED":

Established in 1993, Hilltone Software and Gases Limited has attained the leadership position in the Manufacturing and Supply of Industrial and Medical Gases due to its excellent credentials, zeal to excel and an unswerving commitment to quality.

The Company has its plant at Santej using the latest technology and process to obtain the best quality Medical Oxygen and complete in-house analytical set to control our process at all stages. We also providing the entire range of industrial gases and medical gases like Nitrous Oxide - Bulk A Type, Oxygen/ Nitrogen/ Co2/ D.A, Helium etc. We supplying Medical Gases to many reputed Hospitals and medical institutions like S.A.L hospital and medical institute, Krishna Heart Institute and many more (List of major customers enclosed herewith) in Trolleys of 40 cylinders on regular basis. Hilltone Software and Gases Limited has a strong focus on Research and Development for process improvement, cost reduction and new product development. This is evident in the fact that Hilltone continuously modifies its production process to enhance flexibility on the use of various types and quality of the raw materials.

The Company has started Software Business during the year under review.

Further, the following information on the economy and industry is based on the various reports on industry and websites and the Company is not responsible for any discrepancy/error in the information.

B. OVERVIEW OF THE GLOBAL ECONOMY:

Global growth is projected at 3.0 percent for 2025 and 3.1 percent in 2026, an upward revision from the April 2025 World

Economic Outlook. This reflects frontloading ahead of tariffs, lower effective tariff rates, better financial conditions, and fiscal expansion in some major jurisdictions. Global inflation is expected to fall, but India inflation is predicted to stay around 4.2%. Downside risks from potentially higher tariffs, elevateduncertainty, and geopolitical tensionspersist. Restoring confidence,predictability, and sustainability remains a key policy priority.

C. OVERVIEW OF THE INDIAN ECONOMY:

Indias GDP growth numbers for the last quarter of fiscal 2024 to 2025 came as a welcome surprise, with the economy growing at a brisk 7.4% year on year. Growth for the full fiscal year came in at 6.5%, driven by strong private consumption expenditure and investments, indicating domestic demand might be more resilient than expected, supported by easing inflation and favorable conditions in rural economies.

Private final consumption expenditure grew 6% in the last quarter of fiscal year 2024 to 2025. Although consumption spending growth slowed this quarter, annual growth was 7.2%, which was well ahead of overall GDP growth.

What came as a relief is that, after years of being led primarily by the government, green shoots were visible in private investment, suggesting broader participation in capex formation. Gross fixed capital formation rose by a strong 9.4% in the fourth quarter, up from an average of 6.2% in the last three quarters. However, full-year gross fixed capital formation growth was more modest at 6.7%; the fourth-quarter acceleration may suggest that private capex may have turned the corner, as consumption spending showed signs of improvement.

The impact of global risks and trade headwinds led to a moderation in exports to 3.9% in the fourth quarter compared with an average 7.4% seen in the past three quarters. Nonetheless, exports for the full fiscal year grew at 6.3%, an improvement compared with the 2.2% seen in fiscal year 2023 to 2024. Goods exports were affected more than services exports, and the latter helped India to reduce its annual currentaccount balance to -0.6% of GDP—the lowest since fiscal 2016 to 2017 (except during the pandemic when the balance moved to a surplus).

Government capex was relatively restrained in the fourth quarter, with revised estimates being 12.2% lower than the budgeted effective capex for the entire fiscal year. Government spending contracted for the quarter by 1.8%—the sharpest fall since the second quarter of fiscal 2022 to 2023, bringing down annual spending growth to just 2.3%.

Lower government spending brought down the fiscal deficit to 4.8% of GDP in fiscal year 2024 to 2025, despite it being an election year. The latest data points to further improvement in the fiscal position in the first two months of the current fiscal year. The governments cumulative fiscal deficit, which stands at 0.8% of the annual target, is at its lowest since April 1997 (when the government began publishing monthly economic data).

The other big factor has been falling inflation, which had been easing since the beginning of the fiscal year, but fell to 2.1% in June 2025, marking the lowest levels since January 2019. This came as a big relief for Indian consumers and policymakers, who saw it as an opportunity to aggressively pursue easing monetary policy and cut policy rates by 100 basis points between February and June.

D. INDUSTRY INSIGHT

Indian Industrial and Medical Gas

Industry

The India medical gas market size reached USD 715.50 Million in 2024. Looking forward, IMARC Group expects the market to reach USD 1,656.70 Million by 2033, exhibiting a growth rate (CAGR) of 9.03% during 2025-2033. The India medical gas market is driven by rapid healthcare infrastructure expansion, increasing adoption of advanced medical devices, rising demand for home healthcare services, government initiatives like the Ayushman Bharat scheme, and growing investments in domestic medical gas production, ensuring a steady supply to support hospitals, clinics, and emergency medical care. The rising utilization of industrial gases across variousindustries, such as steel manufacturing, pharmaceuticals, healthcare, etc., as they aid in optimizing processes, improving efficiency, streamlining operations, reducing costs, and increasing overall productivity, is primarily driving the India industrial gases market.

The Company has increased its total number of customer touch points through the growing network. Currently your company is catering to the need of Domestic Markets only but the Companys products have good demand in the international markets. The product wise performance of the Company is briefly described herein below.

(A) Oxygen: Oxygen is required in steel melting, fabrication, copper smelting, medical applications, etc. The use of oxygen improves the thermal efficiency of fuel. As a result, oxygen is used as a method of better energy production from available fuel. Oxygenation in different furnaces including those for steel, copper, cement production, etc will improve efficiency in energy generation. Similarly, oxygen can be used for hazardous waste clean -up, pollution treatment of water and in coal gasification systems. It can also be used as a replacement of chlorine in paper and pulp industry to reduce pollution. Your Company manufactures Oxygen for both medical and Industrial use. The Production in this year has Increased of Oxygen to cater the high supply in the market.

(B) Nitrogen: Nitrogen is an inert material and is used in heat -treatment to create a neutral atmosphere. It is also used for the removal of air from contaminated mines having methane to avoid occurrence of fire. Huge quantities of nitrogen are used in blast furnaces and other furnace applications to make use of its neutral properties. It is also used as a source of nitrogenous fertiliser from ammonia which is obtained from the synthesis of nitrogen with hydrogen. Ammonia is also the starting point of chemicals like nitric acid, hydrazine and amines. Liquid nitrogen is used for cryogenic applications to take advantage of its low temperature properties in manyapplications like solvent extraction, recycling tires, food and pharmaceutical industry, hospitals, artificial insemination, enhanced oil recovery etc. Your Company manufactures Nitrogen for both medical and Industrial use. The Production in this year has Increased of Nitrogen to cater the high supply in the market.

(C) Argon: Your Company is involved in trading Argon Gas. Argon is known as Noble gas. It does not mix with oxygen and is used in stainless and alloy steel production, MIG and TIG method of welding. Argon is also used in light bulbs for creating an inert atmosphere to increase the life of tungsten filaments.

(D) Hydrogen: Your Company is involved in trading Hydrogen. Hydrogen is presently made by the electrolysis of water and its production consumes a lot of energy. In spite of this handicap, it is used for the manufacture of edible oil fats like margarine from vegetable oils. Hydrogen is used to create a reducing atmosphere in heat -treatment furnaces. It is also needed for the manufacture of silicon chips. Liquid hydrogen is used as fuel in space shuttles. With the availability of hydrogen as a by-product from some chemical processes, its use has been growing. Many consider hydrogen as a future source of energy. Hydrogen is also used to remove sulphur from sour crude oil which is gaining ground because of emphasis on environmental protection.

(E) Carbon Dioxide: Gas Carbon Dioxide gas is traded by your Company. CO2is mainly used in food industry for carbonating beer, soft drinks, etc. Liquid carbon dioxide is used as a refrigerant in food industry. Carbon dioxide gas is used as a de -oxidant/insecticide for food preservation, foundry applications and fire-fighting. Solid and liquid carbon- dioxide is used in many cryogenic applications, as in blood storage.

(F) Helium: This is a very light gas and is nobler than Argon. It is used in deep sea diving, balloons and many other applications including high quality electric welding and leak detection.

Liquid Helium is used in MRIs at hospitals for its supra-conductivecharacteristics. Your Company isinvolved in trading of this gas.

E. RISK AND CONCERN

The company has an effective framework for assessment and mitigation of the risk. The management of the Company identifies, reviews and develops a plan for reducing risks. Current global and domestic headwinds need to be closely monitored for their impact on the business operations. The Company has put in place appropriate measure for its mitigation including business portfolio risk, financial risk and legal risk and internal process risk.

F. FUTURE SCENARIO

We believe that the application of industrial gases will grow in all areas of manufacturing industry. Products like CNG, LNG and LCNG should join the portfolio since the nature of these products are similar. Shale gas is yet another area for growth of the industry. We think the country has challenges from 3Es, namely Energy, Environment and Eatables. These areas need a helping hand from the industrial gas industry to solve their problems.

With rapid urbanization in the close vicinity of the plant, the Company will be investing more on environmental protection systems, policies and practices, leading to a possible increase inthe cost of production. Your Company aims at enhancing and maximizing shareholders value by achieving appropriate trade-off between risk & returns.

G. HUMAN RESOURCES

Human Resources play a critical role in driving Hilltones strategies and growth. The Company endeavours to become the best place to work for its employees and to provide them with a nurturing environment that is essential for their growth. Hilltone has implemented comprehen-sive and well-structured HR policies to ensure employee growth both at personal and professional levels. The Companys talent pool comprises a diverse set of experienced and skilled people who play key roles in enhancing business efficiency, devising strategies, setting up systems andevolving business as per industry requirements. The Company provides a safe, conducive and productive work environment to its people. Hilltones strong organisational culture also enables it to attract talented resources. The Company conducts regular training programmes for employees to ensure skill upgradation and personnel development. High employee retention levels is a key outcome of these initiate.

H. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company has an adequate system of internal controls to ensure that all the assets are safeguarded and are productive. Necessary checks and controls are in place to ensure that transactions are properly verified, adequately authorized, correctly recorded and properly reported. The Internal Auditors of the Company conduct Audit of various departments to ensure that internal controls are in place and are submitting quarterly reports to the Audit Committee. The management maintains adequate internal financial control systems encompassing its entire business operations, statutory compliances and Financial Reports. CONCLUSION

Your Companys primary focus will be to grow volumes across markets. The Company will address each market depending on local conditions and consumer trends. While we recognize that the global environment is extremely challenging, there are new opportunities emerging to meet consumer needs. Your Company will focus on profitable growth through a mix of brand led growth, innovation and cost efficiencies.

On behalf of the Board of Director