Madhav Marbles and Granites Ltd Management Discussions

Economic Overview

The global macroeconomic and geopolitical environment remains increasingly complex, presenting multifaceted challenges to both global stability and economic growth. Ongoing conflicts in Ukraine and the Middle East, along with rising tensions in the South China Sea, continue to fuel geopolitical instability. Concurrently, tariff wars have disrupted global trade flows and dampened business sentiment, resulting in downgraded growth forecasts. Additional challenges such as climate-related natural disasters, deepening societal polarization, and persistent supply chain disruptions further contribute to the prevailing uncertainty and ambiguity.

In its April 2025 update, the International Monetary Fund (IMF) projected global growth at 2.8% for 2025 and 3.0% for 2026, factoring in the impact of newly announced tariffs and associated uncertainty.

Amid this subdued and uncertain global backdrop, Indias economic resilience stands out, underscoring its emerging role as a key engine of global growth. India remains the fastest-growing major economy in the world, with an estimated growth rate of 6.2%. Bolstered by robust macroeconomic fundamentals and proactive government initiatives, the country is well-positioned to navigate ongoing global challenges. Strategic reforms in infrastructure development, innovation, and financial inclusion continue to strengthen Indias trajectory, reinforcing its status as a critical driver of global economic momentum.

Industry Overview

Renowned for its unmatched style, elegance, and durability, Indian granite is among the most sought-after stone materials in the global construction industry. It is extensively used in building structures, interior design, countertops, tile flooring, and large-scale architectural projects worldwide.

India ranks among the worlds largest producers and exporters of granite, a position supported by its abundant geological reserves and a vast array of high-quality stones. The country offers an impressive variety of granite in diverse colours and patterns, including globally recognized types such as Black Galaxy, Absolute Black, and Kashmir Cream. This rich and varied portfolio enables Indian granite to meet a wide range of aesthetic and functional requirements across international markets. The Indian granite industry has experienced remarkable growth in recent years, propelled by rising demand from construction and renovation activities both domestically and globally.

Despite its inherent strengths and rising global demand, the granite industry continues to face several significant challenges. Stringent government mining regulations, coupled with the scarcity of premium-quality raw granite, have disrupted supply chains and contributed to escalating production costs. Additionally, the industry must navigate a complex regulatory environment characterized by strict environmental standards and intricate approval processes, which often result in operational delays. Labour-related issues further add to the challenges, collectively contributing to a slowdown in overall industry momentum.

Looking ahead, the industry is expected to adapt through increased investment in sustainable mining practices, technology-driven efficiency improvements, and enhanced supply chain management. With continued innovation and strategic planning, the industry remains well-positioned to overcome current headwinds and capitalize on long-term growth opportunities in both domestic and international markets

Company Overview

Established in 1989, Madhav Marbles and Granites Limited is a leading processor and exporter of premium-quality natural stones. Operating as a 100% Export Oriented Unit (EOU), the Companys manufacturing facility is located in Thoppur, Tamil Nadu. Over the past 36 years, the Company has built a strong reputation for excellence, consistently upholding high standards of product quality and customer service.

With its unwavering commitment to quality and customer satisfaction, Madhav Marbles and Granites Limited has established a strong brand presence in international markets, particularly in the United States and European countries. The Company also exports its products to Canada, Australia, South Africa, Russia, and countries in the Far East.

Power Generation Segment

The Companys power generation division owns three Wind Turbine Generators (WTGs) with a combined capacity of 4.00 MW, located in the state of Tamil Nadu. The electricity generated from these turbines is primarily used for captive consumption, with surplus units banked with the Tamil Nadu Electricity Board (TNEB).

Trading Operations

The Company also undertakes trading activities in marble, granite, and sandstone, which are conducted from its office located in Udaipur, Rajasthan.

Operational Performance

Granite and Stone:

• Manufacturing Facility at: Thoppur, Tamil Nadu >? Revenue from operations: I NR 309.49 million

• Contribution ofTile Segment in Total revenue: 40.41 %

• Contribution of Slab Segment in Total revenue: 47.04%

• Contribution ofTrading Segment in Total revenue: 12.55%

Windmill:

The production during the year was 5749790 units as against 5942038 units in the previous year. The current years production was utilized for meeting power requirements of Granite and Stone Division and balance units were banked with TNEB.

Realty

The management does not intend to take up any new real estate project in near future.

Risks and Concerns

1. Regulatory and Environmental Compliance

The industry operates under strict regulatory frameworks, including mining laws, environmental standards, and land acquisition policies. Delays in obtaining necessary approvals, changes in regulations, or noncompliance can disrupt operations and lead to penalties or shutdowns.

2. Scarcity of Quality Raw Material

Access to high-grade raw granite is becoming increasingly difficult due to the depletion of easily extractable reserves and restrictions on quarrying activities. This scarcity may lead to increased procurement costs and affect the quality of final products.

3. Supply Chain Disruptions

The industry is vulnerable to disruptions in logistics and transportation, both domestically and internationally. Geopolitical tensions, port congestions, or shortages of shipping containers can impact timely delivery and customer satisfaction.

4. Labour Availability and Workforce Issues

The industry is labour-intensive and often affected by shortages of skilled and unskilled labour. Labour unrest, migration, and lack of training can result in reduced productivity and operational inefficiencies.

5. Export Dependence and Global Market Volatility

A significant portion of the industrys revenue is derived from exports. Economic slowdowns, changes in trade policies, currency fluctuations, or geopolitical instability in key export markets can adversely affect demand and profitability.

6. Competition and Price Pressure

The global market for natural stones is highly competitive, with significant competition from other low-cost producing countries such as China, Brazil, and Vietnam. Price undercutting and commoditization may erode margins.

7. Environmental and Sustainability Concerns

Increasing awareness and regulations around environmental sustainability are pushing the industry towards more eco-friendly practices. Failure to adopt sustainable mining and processing methods may pose reputational and compliance risks.

8. Technological Obsolescence

The industry must continuously invest in modern equipment and technology to improve efficiency and maintain product quality. Lag in adoption can result in reduced competitiveness and higher operational costs.

Power Generation Segment

The Companys power generation division owns three Wind Turbine Generators (WTGs) with a combined capacity of 4.00 MW, located in the state of Tamil Nadu. The electricity generated from these turbines is primarily used for captive consumption, with surplus units banked with the Tamil Nadu Electricity Board (TNEB).

Trading Operations

The Company also undertakes trading activities in marble, granite, and sandstone, which are conducted from its office located in Udaipur, Rajasthan.

Operational Performance

Granite and Stone:

• Manufacturing Facility at: Thoppur, Tamil Nadu • Revenue from operations: INR 309.49 million • Contribution ofTile Segment in Total revenue: 40.41 %

• Contribution of Slab Segment in Total revenue: 47.04%

• Contribution ofTrading Segment in Total revenue: 12.55%

Windmill:

The production during the year was 5749790 units as against 5942038 units in the previous year. The current years production was utilized for meeting power requirements of Granite and Stone Division and balance units were banked with TNEB.

Realty

The management does not intend to take up any new real estate project in near future.

Risks and Concerns

1. Regulatory and Environmental Compliance

The industry operates under strict regulatory frameworks, including mining laws, environmental standards, and land acquisition policies. Delays in obtaining necessary approvals, changes in regulations, or noncompliance can disrupt operations and lead to penalties or shutdowns.

2. Scarcity of Quality Raw Material

Access to high-grade raw granite is becoming increasingly difficult due to the depletion of easily extractable reserves and restrictions on quarrying activities. This scarcity may lead to increased procurement costs and affect the quality of final products.

3. Supply Chain Disruptions

The industry is vulnerable to disruptions in logistics and transportation, both domestically and internationally. Geopolitical tensions, port congestions, or shortages of shipping containers can impact timely delivery and customer satisfaction.

4. Labour Availability and Workforce Issues

The industry is labour-intensive and often affected by shortages of skilled and unskilled labour. Labour unrest, migration, and lack of training can result in reduced productivity and operational inefficiencies.

5. Export Dependence and Global Market Volatility

A significant portion of the industrys revenue is derived from exports. Economic slowdowns, changes in trade policies, currency fluctuations, or geopolitical instability in key export markets can adversely affect demand and profitability.

6. Competition and Price Pressure

The global market for natural stones is highly competitive, with significant competition from other low-cost producing countries such as China, Brazil, and Vietnam. Price undercutting and commoditization may erode margins.

7. Environmental and Sustainability Concerns

Increasing awareness and regulations around environmental sustainability are pushing the industry towards more eco-friendly practices. Failure to adopt sustainable mining and processing methods may pose reputational and compliance risks.

8. Technological Obsolescence

The industry must continuously invest in modern equipment and technology to improve efficiency and maintain product quality. Lag in adoption can result in reduced competitiveness and higher operational costs.

Opportunities and Outlook

Navigating accurate business performance forecasting has become increasingly complex due to a confluence of macroeconomic and industry-specific challenges. These include ongoing economic downturns, evolving consumer preferences, intensified market competition, and procurement-related disruptions. These headwinds are expected to persist in the near term, creating an environment of caution and uncertainty.

Despite these challenges, the industry is poised to benefit from several encouraging developments. Large-scale investments from institutional investors, global corrective monetary measures, and increased spending on remodeling and renovation projects?particularly in key international markets?are expected to serve as significant revenue drivers.

In response to the dynamic business environment, the Company has adopted a strategic and proactive approach. Key initiatives include:

• Sourcing raw materials from quarries in Rajasthan at competitive prices to ensure cost efficiency and supply continuity.

• Optimizing production volumes to balance demand fluctuations and operational efficiency.

• Implementing robust cost management practices to protect margins and enhance financial resilience.

• Focusing on innovation and value addition through continuous development of customized, high-quality granite products tailored to global and domestic market trends.

• Strengthening brand presence through enhanced marketing efforts and deeper customer engagement across multiple geographies.

The Company remains committed to broadening its footprint in both international and domestic markets. By staying aligned with evolving consumer aspirations and market demands, we aim to unlock new growth avenues and reinforce our competitive position.

The management firmly believes that in a rapidly changing landscape, continuous assessment, strategic adaptation, and a culture of innovation are essential to sustaining growth and long-term success. We remain focused on these pillars to ensure the Company is well-positioned to navigate future opportunities and challenges with agility and resilience.

Internal Controls and their adequacy

Your Companys Internal Control Systems are commensurate with the nature, size and complexity of its business. The internal financial controls are in place and policies and procedures have been adopted for ensuring the orderly and efficient conduct of business, adherence to Companys policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information.

Internal audits are conducted periodically to ensure that the assigned responsibilities are carried out effectively. The Audit Committee provides necessary oversight and directions to the internal audit function and periodically reviews the findings and ensures corrective measures are taken.

Human Resource

The Company considers its Human Resource as its most important asset and makes sustained efforts for the development of its manpower and also encourages them to continuously upgrade and improve their skills and qualifications.

Statutory Compliance

The Executive Directors makes declaration at each Board Meeting on quarterly basis, regarding compliance with applicable provisions of various statues and regulations.

Cautionary Statement

Statement on the Management Discussions and Analysis and current years outlook are Managements perception & understanding drawn from the regional and global macro-economic cues at the time of drawing this report. Actual results may be materially different from those expressed in the statements. Important factors which could influence the Companys operations include demand & supply conditions, availability of input and relative prices in the domestic & global markets, Change in Government policies, tax laws, economic development within the country & foreign countries in which the Company has business presence.