Hilltone Software & Gases Ltd Management Discussions

(Pursuant to Regulation 34(2)(e) and Schedule V of SEBI (LODR) Regulations2015)

Your directors have pleasure in presenting the "Management Discussion and Analysis Report" for the Financial Year ended on 31^st March, 2026.

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 inhouse 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.

The Company has also full-fledged started the its Engineering division at its Haryana Plant. 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:

In FY26, global economic growth is expected to remain subdued, shaped by lingering inflationary pressures, elevated interest rates in key developed markets, and continued geopolitical uncertainties. While easing inflation and potential monetary policy normalization may offer some support, cautious consumer spending and fragile global trade dynamics are likely to persist. As a result, global growth is projected to remain modest, with only a gradual recovery from the slowdown observed in 2025.

US economy is expected to remain resilient, supported by strong services activity and a stable labour market, though growth may moderate due to higher interest rates. Europe, including the UK, is likely to see subdued growth amid geopolitical tensions and high energy costs. Chinas growth is expected to stay moderate due to real estate and industrial challenges. The Asia-Pacific region is projected to be the fastest-growing, driven by robust domestic demand.

C. OVERVIEW OF THE INDIAN ECONOMY:

Real GDP or GDP at Constant Prices is estimated to attain a level of Rs. 192 lakh crore in FY26, against the First Revised Estimate GDP for the year FY25 of Rs. 178 lakh crore The total expenditure that the government is expected to spend in FY27 Rs. 54 lakh crore, compared to the last financial year growth trajectory of around 10.1%. Real GDP has been grew by 7.6% in FY26 against the growth rate of 6.5% during FY25. Nominal GDP is expected to grow at 8.0% in FY26.

Indias economic outlook remains compelling. The country continues to benefit from a strong combination of structural drivers— manufacturing expansion, rising urbanization, digital adoption, and policy-led growth initiatives. The increasing share of manufacturing in the economy, along with initiatives such as Production Linked Incentive (PLI) schemes and supply chain localization, is expected to drive demand across sectors including steel, electronics, chemicals, and energy. At the same time, emerging sectors such as semiconductors, electric mobility, renewable energy, and advanced materials are creating new avenues for demand for high- value gas applications. Infrastructure development remains a key catalyst, with continued investment in transportation, logistics, and urban development expected to support industrial activity and long-term demand for gases across applications. While the external environment may continue to present uncertainties—ranging from geopolitical developments to commodity price volatility—the structural growth story of the Indian economy remains intact.

D. INDUSTRY INSIGHT Indian Industrial and Medical Gas Industry The India medical gas market size reached USD 780 Million in 2025-2026. 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 20252033. 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 various industries, 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 many applications 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 firefighting. 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-conductive characteristics. Your Company is involved in trading of this gas.

(G) 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.

(H) FUTURE SCENARIO

(I) 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 in the cost of production. Your Company aims at enhancing and maximizing shareholders value by achieving appropriate trade-off between risk & returns.

(J) 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 comprehensive 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 and evolving 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.

(K) 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.

(L) 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.