MCON Rasayan India Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

1. This section shall include discussion on the following matters within the limits set by the listed entitys competitive position:

MCON Rasayan India Limited is operating in the field of construction chemical and specialty building materials, wherein we are manufacturing all the products related to concrete, like concrete admixtures and curing compounds, then concrete repairs, waterproofing systems, tile adhesives — used for fixing the tiles — and multiple other products which either help in new construction or are used for restoration and repair of a structure. MCON Rasayan has been focusing mainly on the Western zone of India and slowly spreading its wings across various parts of India.

So, if we talk of the geographical development, currently we are there in eight different states of India, and we are increasing our distribution network. Some key points that we would like to mention here are about the approvals that we have got with the government infra projects — this year we got approved with one of the biggest organizations in Maharashtra, which is working on the roads, that is MSIDC, and also with the Central Public Works Department, that is CPWD. We are now there in various states of India—you talk of Delhi NCR, Gujarat, Maharashtra, Goa.

So, we are there with CPWD and working on multiple projects of CPWD, including some key projects like the Ambedkar Statue and GST Bhavan. As far as our manufacturing capability is concerned, our plant in Ambethi is working full-fledged, and we are able to utilize 55% of the capacity, thereby to say that we have got enough capacity to grow further. Also, the various units that we have put up with the help of our franchises in places like Kishangarh in Rajasthan, Kurukshetra in the north, and in the south in Karnataka, in Bangalore and in Pune, all are working in a proper way and delivering the products as per the need of the customer. We also have got a major focus on concrete admixtures, and we have done fantastic business with concrete admixtures with multiple RMC plants getting connected to MCON, and we are able to supply the admixtures to them. In the white powder section, we are doing really well in the white tile adhesive as well as the wall putty segment and that is how we are growing in that segment.

We have set up a good laboratory in our manufacturing plant, and currently we are in the process of getting it accredited as an NABL lab, which will help us in doing third-party testing for our own products, and the test reports that we give will be more authenticated as per the government norms.

So, as far as opportunities are concerned, MCON has got some strong and very reliable opportunities in the government segment, wherein, we got approval from MSIDC, and we are doing multiple road projects in and around Nashik, Aurangabad, Amravati, Buldana, etc.

Also, because of the Kumbh Mela coming up in Nashik, there is a lot of work going on in Nashik under CPWD and PWD where again we are doing multiple projects under the government segment in and around Nashik. As far as Mumbai is concerned, which is one of our key markets, there again a few very strong, large, government-aided projects are going on one is the PAP project, which we are doing with the help of Shapoorji Pallonji, and we are doing big business over there in multiple products. Second is the BDD Chawl — one of the biggest projects, and a very talk-of-the-town project, you can say, the BDD Chawl so there also, to multiple contractors, we are supplying our products. If we come to the private segment, MCON, as usual, has created some very good distributor base, and almost 35 to 40 new distributors were appointed in the current financial year. These distributors are mainly focusing on builders and contractors and selling our products because of the help of the distributors and the various opportunities that we have got, we were able to increase the sale of the tile adhesives, which is one of the key products to increase the bottom line of MCON.

At the same time, we also did some fantastic business in the admixture division by supplying admixture to various RMC plants and various road projects and big contractors. These admixtures help us in increasing the top line and also creating our benchmark in various projects to begin with. In the current year, MCON also focused a bit on the waterproofing segment, which is one of the most profitable segments, wherein we worked on the various verticals of waterproofing and met multiple consultants whom we approached with the waterproofing solutions.

In fact, to enhance or strengthen the waterproofing segment further, we have also appointed a product manager for the waterproofing division, who is an experienced gentleman from the industry, and with his help we are focusing on all the segments, be it government, private, or the repair segment, wherein waterproofing can be promoted.

Thus, the coming financial year will have a fantastic top line, as well as it will also help us to strengthen our bottom line.

The current financial year, the major concern has been the geopolitical situation across the world, wherein the war had a major impact on the supplies of raw material as well as on the pricing of raw material. The core part was that, due to the inventory that we are carrying, so for some part of the year we could adjust the pricing and ensure that we could pass on, at the same level, the products to our clients on the orders that we have taken, and in the latter part we were able to increase and pass on the price increase to the client. But this particular war situation has got the risk of, the supplies being slowed down, and we will have to ensure that we carry higher inventory levels compared to what we have, because we need to be prepared in case the war further aggravates.

The other major concern, of course, is the monsoon this time. Also, the monsoon started quite early — like it started in the month of May itself and continued across September. So, due to that, the major markets that we have, like Mumbai and Pune, were greatly impacted as far as the sales in quarter one and quarter two are concerned, but the same was compensated in quarter three and quarter four, so we could come out of the risk of monsoon, that always bothers the business that we are in.

The third part, or the third major risk and concern, was the various new entrants that are coming into the market with bigger and deeper pockets, because they are all big companies — like Paint companies, Aditya Birla has come into construction chemicals, Asian Paints has come into construction chemicals — so there has been quite a competition going on as far as the pricing is concerned at the customer level, or giving schemes is concerned so we are trying to negotiate that by having a one-to-one relationship with the customer, right from the bottom to the topmost level, and thus ensuring that the customer buys the product not based on the pricing or the schemes, but based on the quality and the real value for money.

MCON has ensured that it has a diverse market. Like we are there in the builder market — there is a private builder and residential market we are there in the commercial construction market we are there in the industrial segment with floor hardeners. We are also there in government infrastructure, be it buildings, be it dams, roads, bridges, etc. Also, we are there in the repair and rehab segment in a big way with multiple consultants and architects, and we are, of course, there in the retail segment with more than 1,000 retailers selling MCON products. Thus, of course, the external risk of market dependency is there but that is well balanced because we are there in multiple markets.

At the same time, the product segment that we are carrying will ensure that if any kind of ups and downs happen in the construction market, still we are able to service one of the few markets that are available and ensure that we can sustain ourselves. So, whenever the question is of sustainability, MCON will be able to do that. The second part is the risk, at the manufacturing level, where, the lack of labour and labour strikes can also be one of the risks. So there, again, we have got a plant wherein the labour is being brought in from other states in Gujarat, and we are providing them proper labour quarters to stay within the factory premises and giving them all the best facilities, so that they dont leave us and we dont have labour challenges. Plus, there are no major challenges of labour unions in Gujarat, so that is another big advantage of the geographical location that we have got for our manufacturing plant.

MCON RASAYAN has developed its systems as the business grows — it keeps on maturing its systems, plus it also takes help of external consultants who help mentor us or bring in new MIS, for long-term reliability of the data that we have. So, this year was no different — like we brought in an external consultant, plus we also brought in a data analyst to work with the data, crunch the data, and provide a good, strong MIS to the management to make decisions. Plus, as far as internal controls are concerned, all the orders are being punched into the CRM, based on the standard pricing model that is there in the CRM, plus all the orders flow from the CRM to Tally, so there is no human intervention in making the orders, which was there in the past. So, this particular practice has ensured that, further, we are reducing the risk of mistakes. Yes, and having enough internal control, plus at various stages there is an approval process in place, and a person who is approving it in the CRM itself So we can see the flow of the order, the approvals happening, and the controls being put in place.

Also, we have got a good set of board of directors, especially our independent directors, who are very strong in terms of internal control systems and they keep on auditing the internal control systems again and again and looking out for MIS. Plus, during the board meetings also, we present the MIS to the board to ensure that they are also on the same page as the working management.

Like we have told in the past, also, our product segment can be divided into two parts, that is, powder-based products and liquid based products. Powder-based products are all the products that are manufactured with the help of cement and sand; liquid-based products are all the products that are manufactured with the help of polymers, different types of polymers.

So, in the past, we were at a ratio of almost 85:15 — 85% powder-based products and 15% liquid-based product. This year, we are almost at 65:35 — 65% powder based and 35% liquid based Again, from that, also, the low-cost powder products like the ready-mix mortars have reduced from 40% to 26%, and the high-cost powder products like the tile adhesive have increased from 15-18% to 28%, so that is a big jump as far as the high-value products are concerned. Again, the liquid products — the admixtures — have performed really well, with almost 12% contribution to the total turnover, and also, we have got a very strong flow of orders from the concrete repair products, which are again a mix of powder and liquid but a good-margin product.

So, this way, we have ensured that we are increasing our bottom line and also increasing the top line, of course, and the volumes are not the only thing that we are looking at — we are also keen, and looking at the profitability, whenever we focus on various segments.

MCON Rasayan enters the coming financial year with a clear line of sight to stronger growth on both the top line and the bottom line. With capacity utilisation at our Ambethi plant at only around 55%, and the plants fungible manufacturing capability allowing the same machinery to produce both low-value and high-value products, we have adequate headroom to scale turnover meaningfully without fresh capital expenditure, supported further by spare capacity available through our franchise units in Rajasthan, Haryana, Karnataka, and Maharashtra.

The shift in product mix towards higher-margin categories — tile adhesives, concrete admixtures, and concrete repair products — is expected to continue, improving overall profitability even where volume growth is moderate. The waterproofing vertical, strengthened this year with a dedicated product manager, is expected to be a key growth driver going forward given its favourable margin profile.

While input cost volatility linked to geopolitical developments and monsoon-related seasonality in our core Western markets remain factors we actively monitor and mitigate through inventory planning and pricing pass-through, the Companys diversified end-market exposure — spanning residential, commercial, industrial, government infrastructure, and repair/rehabilitation segments — along with an expanding distributor base of over 1,000 retailers, positions MCON Rasayan to sustain its growth momentum and deliver improved financial performance in FY 2026-27.

MCON, as a company, always remains committed to giving some innovative products or end systems to the construction industry.

This year was no different, wherein we did a tie-up with one of the key innovators in the industry, known as Semco, wherein we did a strategic tie-up with them for manufacturing curing-free ready-mix plaster in our plant, based on the Semco formulation, which was co-branded by MCON and Semco. This product has got good traction in the new construction and repair market, because water is one of the scarce resources as on date, and so this particular product eliminates the need for water curing, and thus it will be a very great boon for all the builders and contractors alike. Apart from that, overall, if you see, then there is a very positive outlook in the market again — the major market, as always, of MCON has been the Mumbai market, wherein even in the current financial year we did almost 55% of our business from the Mumbai market, which of course had its own challenges of heavy rains, etc. But still, we could manage to cross the boundaries of what we had planned for. As for the geographical areas that we were trying to focus on — the south market and the north market, which are far away from our Western zone — there, we are not able to have that kind of success that we had planned for otherwise. The top line would have increased drastically, but we are trying our level best to ensure that our revenue is well-balanced across various markets, so that if any challenges come in one particular market, the same can be negotiated by the supplies and the sales that happen in the other revenue markets.

Overall, if you see, at 55% capacity utilization, we have done Rs66 crore of turnover, and also the manufacturing capacity that we are talking of is a fungible capacity. So, in a powder-based plant, we have got a product which is Rs5 a kg, and we also have got a product which is Rs15 a kg, manufactured with the same capacity, the same machine.

So just by changing the product mix, we can have a bigger turnover. So currently, even if we have to do a turnover of 250 to 300 crores, still we have got enough manufacturing capability and capacity to execute that kind of orders, and at the same time we also have got enough spare capacity available with our franchise units, due to which we are not having any challenges as far as manufacturing capacity is concerned. Yes, of course, the cutthroat competition is there, so we need better or more marketing tools in terms of marketing budgets and certain schemes, and all that, which we are planning in terms of the loyalty bonus programme and loyalty points programme, etc.

The revenue from operations for FY 2025-26 is Rs. 6,524.16 Lakhs over the previous years revenue from operations of Rs. 5074.52 Lakhs, reflecting an increase of 28.57% over the previous year.

Net Profit after tax for FY 2025-26 is Rs. 304.44 Lakhs against the previous years Net Profit after tax of Rs. 227.39 Lakhs. Earnings per Share for FY 2025-26 was Rs. 4.15 against the previous years Earnings per Share of Rs. 3.40.

The Company remains committed to enhancing shareholder value through operational efficiencies, product innovations, and strategic growth initiatives, and expects to deliver improved results in the coming years.

The Company firmly believes that motivated and empowered employees are the cornerstone of competitive advantage.

The companys employee value proposition is based on strong focus on employee development, providing a satisfying work environment, performance appraisal and counselling and appropriate empowerment. The company continues to maintain and enjoy a cordial relationship with its employees, providing a positive environment to improve efficiency with regular investments in upgrading the knowledge skills of the employees.

The number permanent employees on the roles of the Company as on 31st March 2026 is 151 employees and an average year on year growth of 7.86 %.

Due to change in increase in share capital, reserves and surplus and profits for the current financial year there is a change in net worth amounting to 9.23%.

The Company has followed all the treatments in the Financial Statements as per the prescribed Accounting Standard: our company has followed all required accounting standards also disclosed significant accounting policy. Financial statements include balance sheet, profit and loss, cash flow statement with schedules/Notes.

The statements in the "Management Discussion and Analysis Report" section describes the company objectives, projections, estimates, expectations, and predictions, which may be "forward looking statements" within the meaning of the applicable laws and regulations. The annual results can differ materially from those expressed or implied, depending upon the economic and climatic conditions, Government policies and other incidental factors.