Mangalam Cement Ltd Management Discussions

CEMENT INDUSTRY DEVELOPMENT AND OUTLOOK

India remained one ofthe worlds fastest-growing major economies during FY 2025-26, with GDP growth estimated at approximately 7.7%, supported by strong domestic demand, sustained infrastructure development, robust manufacturing activity, rapid digital adoption, and continued policy support from the Government.

Despite persistent geopolitical uncertainties, inflationary pressures, evolving global trade dynamics, and climate-related risks, Indias economic outlook remains resilient. Strong macroeconomic fundamentals, healthy domestic consumption, and sustained public and private sector investments are expected to support continued growth. The Reserve Bankof India (RBI) has projected real GDP growth of around 6.6% for FY 2026-27, although the outlook remains subject to global economic developments, commodity price volatility, and inflationarytrends.

The Indian cement industry recorded steady growth during FY 2025-26, driven by sustained demand from the rural housing, industrial and commercial (I&C), and infrastructure segments. Looking ahead, cement demand is expected to grow by approximately 7%-8% during FY 2026-27, supported by continued momentum in the housing sector, increased infrastructure investments, and accelerated execution of Government-led projects.

The industry also witnessed significant capacity expansion during the year, adding approximately 65 million tonnes per annum (MnTPA), taking Indias total installed cement manufacturing capacity to around 730 MnTPA. Capacity addition is expected to continue, with nearly 75 MnTPA likely to be commissioned during FY 2026-27. Over the medium term, the industry is projected to add around 250 MnTPA between FY 2026-27 and FY 2030-31,increasing the countrys total installed capacity to approximately 975 MnTPA by the end of FY 203031. This expansion reflects the industrys confidence in Indias long-term growth prospects and rising demand across infrastructure, housing, and industrial construction.

The infrastructure sector continued to remain a key growth driver, supported by increased capital expenditure across core ministries, including Railways, Road Transport & Highways, and Rural Development. Government infrastructure spending for FY 2026-27 is expected to increase further, with a strong focus on enhancing logistics efficiency and promoting green energy initiatives.

The long-term outlookforthe cement industry remains positive, underpinned by sustained Government investment in infrastructure and housing, flagship programmes such as Pradhan Mantri AwasYojana (PMAY), Smart Cities Mission, and Atal Mission for Rejuvenation and Urban Transformation (AMRUT), rapid urbanisation, and rising construction activity. Continued investments in rural roads, healthcare, sanitation, and educational infrastructure are also expected to support healthy cement demand across rural and semi-urban markets.

COMPANY PERFORMANCE REVIEW

• FINANCIAL HIGHLIGHTS (? in Lakhs)

Your Company has produced 3.59 Million MT of cement as compared to 3.49 Million MT in the previous year and registered an increase of 2.87 % in volume.

Revenue from Operations increased by 4.61% from ? 1,68,098.78 lakhs in the previous year to ? 1,75,840.61 lakhs in the current year.

Profit before depreciation and tax increased by ? 4,817.20 lakhs from ? 14,862.60 lakhs in the previous year to ? 19,679.80 lakhs in the current year.

Net Profit of the Company increased by ? 8,388.72 lakhs from ? 4,506.31 lakhs in previous year to ? 12,895.03 lakhs in the current financial year.

Clinker production increased by 7.26% in comparison to previous year and production of cement increased by 2.87% in comparison to previous year.

• Cement Sales and Dispatch Volume in MMT

• Power and Coal Consumption

• Power Generation

The Company continued to focus on reducing its carbon footprint, enhancing energy efficiency and optimising logistics costs during FY 2025-26, in line with its commitment to sustainable, environmentally responsible and cost-efficient operations.

As part of its sustainable fuel strategy, the Company further increased the use of alternate fuels, including biomass and biomass briquettes manufactured from agricultural residues such as soybean husk and mustard husk, as well as processed municipal waste sourced from nearby regions. These initiatives not only strengthened the Companys environmental stewardship but also reduced its dependence on conventional fossil fuels, resulting in lower carbon emissions and improved fuel cost efficiency.

The Company achieved replacement of more than 50% of conventional diesel with biodiesel across vehicles operating at its cement plants and mining locations. This initiative significantly reduced greenhouse gas emissions and marked another important milestone in the Companys transition towards cleaner and more sustainable fuel alternatives.

Further advancing its green mobility initiatives, the Company expanded the deployment of battery-operated electric vehicles (EVs) for in-plant material handling operations. EV-based transportation was also utilised for the movement of fly ash and limestone, reinforcing the Companys commitment to cleaner, energy-efficient and environmentally responsible logistics practices.

As part of its renewable energy strategy, the Company executed a Power Purchase Agreement (PPA) and acquired the requisite captive equity stake in Suryadeep RJ-1 Projects Private Limited for procurement of solar power under the Captive Open Access framework.

Pursuant to the arrangement, Suryadeep RJ-1 Projects Private Limited has developed a15.17 MW (AC) / 22 MW (DC) Solar Power Plant at Barmer District, Rajasthan, under the Group Captive Generation mechanism through an Open Access Solar Photovoltaic (PV) project on a Build-Own-Operate (BOO) basis.

The solar power project is under commissioning and is expected to commence power supply under the Short Term Open Access (STOA) mechanism by June 2026, subject to successful stabilisation and necessary approvals, supporting increased renewable energy usage, lower energy costs, and enhanced sustainability.

The Company also implemented several logistics optimisation initiatives aimed at improving operational efficiency and reducing transportation costs. These included optimisation of the transportation mix, scientific route planning, increased sourcing from primary and nearby locations, renegotiation of commercial arrangements, and wider adoption of GPS-enabled tracking systems and digital technologies for real-time monitoring and effective logistics management.

Collectively, these initiatives enhanced operational efficiency, strengthened the Companys sustainability performance, optimised operating costs and further reduced its overall environmental footprint.

The Companys MDF Division delivered an improved performance during FY 2025-26 compared with the previous financial year, driven by enhanced operating efficiencies. The outlook for FY 2026-27 remains positive. The Raw materials cost have increased sharply, particularly due to middle east crisis which is expected to come down in near future. The Company expects the Division to further strengthen its operational and financial performance.

Looking ahead, the Company will continue to strengthen its portfolio of premium products, improve operational efficiencies, optimise costs and create long-term stakeholder value through sustainable growth initiatives, technological advancements and a continued focus on customer-centric solutions.

Environment, Health and Safety (EHS) continue to remain a core priority for the Company. The Companys EHS Policy is founded on full compliance with all applicable statutory and regulatory requirements and is driven by a commitment to continually enhance environmental, health and safety standards by adopting industry best practices wherever feasible.

As part of its commitment to environmental sustainability, the Company has planted more than 50,000 saplings, creating a dense and sustainable green belt across its manufacturing facilities, mining areas and surrounding communities. Employees, contract workforce and members of the local community actively participate in plantation drives, reinforcing environmental awareness and fostering a shared sense of responsibilitytowards ecological conservation.

Furthering its commitment to community welfare, the Company has extended support to various healthcare institutions and has adopted the District Hospital at Ramganj Mandi, contributing towards its infrastructure, maintenance and overall development, thereby enhancing the quality of healthcare services available to the local community.

Safety remains an uncompromising priority across all areas of operation. The Company is committed to fostering a strong safety culture that extends beyond its employees to include contract workers, raw material suppliers, transporters and other business partners. This commitment is reinforced through structured training programmes, regular safety awareness initiatives, effective communication, periodic audits and proactive risk management practices, with the objective of achieving a safe and incident-free workplace.

The Company recognizesthat effective risk management is integral to achieving its strategic objectives and creating long-term value for stakeholders. Risks are periodically identified, assessed, monitored and reviewed by the Senior Management and the Risk Management Committee through a structured Enterprise Risk Management (ERM) framework. The Company has established robust policies and processes to proactively identify, evaluate and mitigate potential risks,thereby strengthening business resilience and ensuring sustainable growth.

Economic Volatility Risk : Macroeconomic conditions, including fluctuations in economic growth, inflation, interest rates, currency movements and geopolitical developments, may influence industrial activity and impact demand for cement. The Company closely monitors the evolving economic environment and remains confident aboutthe long-term growth prospects ofthe Indian cement industry, supported by sustained infrastructure development, increasing urbanization, rising housing demand, favourable Government policies and improving consumer spending. These structural growth drivers are expected to support steady demand for cement in the coming years.

Key Input Risk: Availability and procurement of key raw materials, fuel and other critical inputs at competitive prices are essential for maintaining operational efficiency and cost competitiveness. Volatility in the prices of fuel, power and raw materials may adversely affect the Companys profitability.

To mitigate this risk, the Company maintains adequate captive limestone reserves to meet its long-term production requirements and has established long-standing relationships with reliable suppliers to ensure uninterrupted availability of critical inputs. The Company also continues to invest in process improvements, technological upgradation and operational efficienciesto optimize raw material consumption, enhance fuel efficiency and improve overall productivity.

Competition Risk: The Indian cement industry continues to witness capacity expansion and heightened competition, which may exert pressure on pricing and market realizations.

The Company addresses this risk by consistently delivering superior product quality, strengthening its brand equity and maintaining a balanced mix of retail and institutional sales. It continues to expand its dealer and retailer network, enhance customer engagement and reinforce its marketing and sales capabilities to deepen market penetration, retain existing customers and acquire new business opportunities.

Regulatory and Compliance Risk : The regulatory landscape governing the Companys operations continues to evolve, with increasing emphasis on environmental, safety, corporate governance and other statutory compliances. Any non-compliance could result in financial penalties, legal liabilities and reputational damage.

The Company has implemented a robust compliance management framework supported by well-defined internal controls and monitoring mechanisms to ensure adherence to all applicable laws, rules and regulations. Periodic compliance reviews, internal audits and regular awareness and training programmes are conducted to strengthen the compliance culture across the organization.

Human Capital Risk: Human capital remains one of the Companys most valuable assets. Challenges in attracting, developing and retaining skilled talent may affect operational efficiency and business growth.

The Company focuses on maintaining an optimal blend of experienced professionals and young talent through structured recruitment, succession planning and leadership development initiatives. Continuous learning, capability building and specialized technical and behavioural training programmes are conducted to enhance employee competencies. The Company also provides a conducive work environment and career development opportunities, enabling it to maintain employee attrition at levels significantly below industry benchmarks.

Information Technology and Cyber Security Risk : Increasing digitalization has heightened the risk of cyber threats, including unauthorized access, data breaches, ransomware attacks, phishing, malware, system disruptions and information loss, which could adversely affect business continuity.

The Company relies on SAP ERP for its core business processes, including finance, procurement, sales and supply chain management. To safeguard its digital assets, the Company continuously upgrades and strengthens its IT infrastructure and cyber security framework.

It has implemented robust controls relating to data security, user authentication, access management, backup and disaster recovery. Periodic vulnerability assessments, security reviews and system upgrades are undertaken to enhance resilience against evolving cyber threats and ensure business continuity.

Your Companys internal control procedures are adequate to ensure compliance with various policies, practices, and statutes in keeping with the organizations pace ofgrowth and increasing complexity of operations.

Your Company maintains a system of internal controls designed to provide reasonable assurance regarding the following:

• Effectiveness and efficiency of operations

• Adequacyofsafeguardsforassets

• Prevention and detection of frauds and errors

• Accuracy and completeness of the accounting records

• Timely preparation of reliable financial information

The internal controls and governance process are duly reviewed for their adequacy and effectiveness through periodic audits by independent internal and external auditor. The Audit Committee is periodically briefed on the corrective and preventive action taken to mitigate the risks.

Employees continue to be the cornerstone of your Companys success and remain its most valuable asset. Mangalam Cement Limited is committed to building a high-performance, inclusive, and future-readyworkforce byfostering a culture ofcontinuous learning, innovation, collaboration, and professional excellence.

The Company maintains a well-balanced talent pool comprising experienced professionals alongside young and dynamic talent, supported by highly qualified technical and non-technical personnel. Its Human Resources strategy is closely aligned with business objectives and focuses on attracting, developing, engaging, and retaining talent to strengthen organizational capability, enhance productivity, and support sustainable long-term growth.

Employee well-being, health, safety, learning, and development continue to receive the highest priority across all levels of the organization. The Company regularly conducts structured training, leadership development, technical skill enhancement, behavioural learning, and competency-building programmesto equip employees with the knowledge and capabilities required to meet evolving business challenges. These initiatives have significantly contributed to improving operational excellence, quality standards, employee engagement, and overall organizational effectiveness.

The Company also remains committed to providing a safe, inclusive, and empowering work environment that encourages innovation, teamwork, integrity, and performance. Its employee welfare initiatives and transparent people practices have helped foster a highly motivated workforce and a positive organizational culture.

Industrial relations remained cordial and harmonious throughout the year. The Company continued to maintain constructive engagement with employees, trade unions, Government authorities, and other stakeholders, ensuring uninterrupted operations and a stable industrial environment.

As on 31 March 2026, the Company had 993 permanent employees

on its rolls.

The key financial ratios as specified under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are as follows:

Due to increase in Profit for the Year.

The return on net worth as on 31st March, 2026 has increased to 13.19% in the current year due to increase in profit for the year.

The statement in this report on Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, or predictions may be forward looking, within the meaning of applicable security law or regulations. These statements are based on certain assumptions and expectations of future events. Actual results could however differ materially from those expressed or implied. Important factor that could make a difference to the Companys operations include global and domestic demand-supply conditions, finished goods prices, raw materials cost and availability, changes in Government regulations and tax structure, economic developments and other factor such as litigation and industrial relations.

The Company assumes no responsibility in respect of forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information, or events.