Murudeshwar Ceramics Ltd Management Discussions

Forming part of the Boards Report

Economic Overview

The Global economy is again disrupted, this time with the outbreak of war in the Middle East. Rising commodity prices, firmer inflation expectations, and tighter financial conditions are testing the recent resilience. Under the assumption of a limited conflict, the Global GDP growth is projected to slow from 3.4% in 2025 to 2.8% in 2026 before picking up to 3.1% in 2027. Policy interest rates are expected to remain broadly stable this year in most major economies with underlying price pressures generally projected to remain contained, before easing slightly in 2027 (Sources OECD Economic Outlook, Interim Report March 2026).

Whereas, India recorded a robust real GDP growth of 7.7% for the financial year 2025-26, with the growth rate accelerating to 7.8% in the final quarter (January to March). This performance cemented its status as one of the worlds fastest-growing major economies, outperforming earlier projections and weathering global trade headwinds. India continued to demonstrate strong economic fundamentals and remained among the fastest-growing major economies in the world. Growth was supported by sustained public infrastructure spending, rising urbanization, increasing private sector investments, stable financial markets, and continued policy reforms aimed at enhancing competitiveness and ease of doing business.

About Industry Structure and Development

The Indian ceramic tile industry is one of the largest and fastest-growing segments of the building materials sector, driven by increasing urbanization, housing demand, infrastructure development, commercial construction, industrial corridors and renovation activities. The industry comprises organized and unorganized players engaged in the manufacture and marketing of ceramic wall tiles, floor tiles, vitrified tiles, glazed vitrified tiles, sanitaryware, and allied products catering to both domestic and international markets.

During FY 2025-26, the industry witnessed steady growth supported by continued investments in residential housing, commercial real estate, urban infrastructure, hospitality projects, and government-led development initiatives. Demand was further supported by increasing consumer preference for premium products, large-format tiles, innovative surface finishes, and aesthetically differentiated designs. The organized segment continued to gain market share, driven by enhanced product quality, brand recognition, wider distribution networks, and increasing compliance requirements.

Outlook:

The Global Ceramic Tiles market size in 2026 is estimated at USD 228.8 billion, growing from 2025 value of USD 212.17 billion with 2031 projections showing USD 333.67 billion, growing at 7.84% CAGR over 2026-2031. The India ceramic tiles market size is expected to increase from USD 10.45 billion in 2025 to USD 11.30 billion by 2031, growing at a CAGR of 8.12% over 2026-2031.

The outlook for the Indian ceramic tiles industry remains positive, supported by strong macroeconomic fundamentals, rising urbanization, increasing housing demand, and continued investments in infrastructure and real estate development. Government initiatives focused on affordable housing, smart cities, urban infrastructure, and industrial development are expected to continue generating demand for ceramic and vitrified tiles across residential, commercial, and institutional segments. India has emerged as the worlds second-largest producer, consumer, and exporter of ceramic tiles, reflecting the sectors growing importance in the global building materials industry.

Opportunities and Threats:

The Company is well-positioned to capitalize on the long-term growth potential of the building materials sector. Increasing investments in housing, infrastructure, and urban development are expected to support demand for ceramic and vitrified tiles. Evolving consumer preferences toward premium products, innovative designs, and sustainable solutions present opportunities to enhance product offerings and improve profitability. The Companys focus on operational efficiency, brand development, and market expansion can further strengthen its competitive position in domestic and international markets. Further, The Indian Government is investing huge for developing and upgrading the infrastructure, including residential, commercial, and public properties like Airports, Railway Stations, Metro Rails etc.

At the same time, the industry remains exposed to several external risks. Rising energy and raw material costs due to geopolitical tension in middle east, Russia Ukraine war situations, and trade tariff as initiated by USA continue to pose challenges to cost management. Competitive intensity, coupled with pricing pressures, may impact margins. Macroeconomic slowdowns, changes in government policies, environmental regulations, and uncertainties in global trade could affect demand and business performance. The Company continues to monitor these developments closely and remains focused on risk mitigation, operational excellence, and sustainable growth.

Segment–Wise or Product-Wise Performance:

The financial performance and operational performance have been more fully described in the Boards Report. Shareholders may refer to the same in the Boards report and financial statements for further reference.

(Rs. In lakhs)

- The sale of products has increased by 7.33% at Rs. 14,822.67 lakhs in compared to Rs. 13,810.46 lakhs of the previous year

- Sale of services has marginally decreased by 11.72% at Rs. 5,677.07 lakhs in compare to Rs. 6,430.71 Lakhs of the previous year.

Significant change in production plan:

During the year under review, the management undertook a comprehensive review of the approved production plan in light of evolving geopolitical tension and ongoing conflicts between Iran-America and Ukraine and Russia. The review identified changes in domestic demand patterns, revisions to customer order forecasts, temporary raw material supply constraints, availability of energy, and emerging export opportunities.

To produce high value GVT, PGVT Vitrified tiles in bigger sizes at Sira plant and Wall tiles at Karaikal. The Company also planning to produce 60 cm x 60 cm Vitrified tile at Karaikal plant from 1st June, 2026. The figures of different sizes of Vitrified Tiles & Wall tile production for the year and corresponding period of previous year are given below:

Risks and concerns:

The Company operates in a competitive and dynamic business environment and is exposed to various risks, including fluctuations in raw material and energy costs, changes in market demand, intense competition, supply chain disruptions, and credit risks. The business is also subject to regulatory, environmental, and statutory compliance requirements. Further, economic conditions, developments in the real estate and construction sectors, and changes in consumer preferences may impact the Companys performance.

The Company has established adequate internal control systems and risk management processes to identify, assess, monitor, and mitigate these risks. The management continuously reviews the risk environment and implements appropriate measures to safeguard the Companys interests and ensure sustainable growth.

Discussion on financial performance with respect to operational performance:

During the year ended March 31, 2026, the Company recorded revenue from operations of Rs. 20,547.50 lakhs as against Rs. 20,286.37 lakhs in the previous year, reflecting a marginal growth of 1.29%. The increase in revenue was supported by stable operational performance, consistent production levels, and sustained customer demand. Earnings before exceptional items and tax improved to Rs. 1,369.49 lakhs from Rs. 1,194.95 lakhs in the previous year, driven by improved operational efficiency and effective cost control measures. The total comprehensive income also increased to Rs. 1,147.72 lakhs compared to Rs. 968.73 lakhs in the previous year. Consequently, earnings per share rose to Rs. 1.90 from Rs. 1.60, reflecting enhanced operational performance and improved profitability during the year.

Overall, the financial performance of the Company is closely linked to its operational efficiency and reflects the benefits of continued focus on cost optimization, productivity enhancement, and process improvements. The Company remains committed to further strengthening its operational capabilities to support sustainable financial growth in the coming years.

Internal control systems and adequacy:

The Company has in place adequate internal financial controls over financial reporting in accordance with Section 134(5)(e) of the Companies Act, 2013, which are commensurate with its size, scale, and complexity of operations. These controls are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. Based on periodic evaluation by management, internal auditors, and review by the Audit Committee, the Board is satisfied that such internal financial controls were operating effectively throughout the year. The Company continues to strengthen its control systems through automation, process improvements, and regular policy updates.

Material development in human resources/ industrial relations:

The Company continued to strengthen its human resource capabilities through focused initiatives in training, skill enhancement, and leadership development. Structured learning programs were conducted to improve functional competencies, behavioural skills, and managerial effectiveness across various levels of the workforce. Emphasis was placed on aligning employee development initiatives with organizational goals and evolving industry requirements. The Company remains committed to continuous human capital development and fostering a positive industrial relations climate to support long-term organizational growth and productivity. The Company employed 276 employees across all locations as of March 31, 2026.

Details of significant changes in key financial ratios:

During the year under review, the followings are significant changes (i.e., changes of 25% or more as compared to the immediate previous financial year) in key financial ratios have been occurred.

Details of any change in return on net worth as compared to the immediately previous financial year along with a detailed explanation thereof:

There has been no significant change in the Return on Net Worth compared to the immediately preceding financial year, except for the impact of carried-forward profits or losses. However, the Return on Net Worth improved due to higher profitability during the year.

Disclosure of accounting treatment:

Your Company has been adopted "IndAS" since April 01, 2017. There are no changes in accounting treatments for the financial year ended March 31, 2026. The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS), the provisions of the Companies Act, 2013 (to the extent notified) and guidelines issued by the SEBI.

Cautionary statement:

This Management Discussion and Analysis Report contains certain forward-looking statements relating to the Companys business outlook, opportunities, threats, forecasts, and expectations. These statements are based on current assumptions and expectations of future events and are subject to various risks and uncertainties. Actual results may differ materially from those expressed or implied in such statements. Factors that may affect the Companys performance include changes in economic conditions, demand and supply dynamics, product pricing, government policies, regulatory requirements, taxation laws, and other external factors beyond the Companys control.