NCL Industries Ltd Management Discussions

For the financial year ended 31 March 2026

The Companys performance during the year ended 31^st March 2026 and the Managements view on the future outlook are discussed below. During the year, the Board of Directors approved the discontinuance of the Doors Division, and accordingly its results are presented as discontinued operations under Ind AS 105. The company continues its operations which comprise of the Cement, Boards, Ready Mix Concrete and operation of Energy divisions.

A. INDUSTRY STRUCTURE AND DEVELOPMENTS

Your Company operates as a diversified building materials house with Cement being the major revenue contributor, supported by Cement Bonded Particle Boards, Ready Mix Concrete and Hydel Energy. The industry structure and developments in respect of each division are briefly discussed below.

Cement

The Indian cement industry is the second largest in the world, yet per capita consumption remains among the lowest globally, which itself signals substantial long term headroom. FY 2025-26 was a year of strong volume recovery. Industry cement production grew by about 8.7 per cent, with physical output estimated at around 491 million tonnes against about 453 million tonnes in the previous year, as Government capital expenditure and project execution normalised after the election related slowdown of FY 2024-25 and housing demand stayed resilient. Average cement prices, however, rose only about 2 per cent to around Rs. 345 per 50 kg bag, so the years growth was led more by throughput than by pricing. Capacity utilisation was about 72 per cent, as roughly 47 to 49 million tonnes of new capacity was commissioned during the year, part of a larger addition of 160 to 170 million tonnes expected across FY 2025-26 to FY 2027-28. Housing and infrastructure together account for close to 90 per cent of domestic demand, keeping the sector closely linked to public investment and residential construction.

Your Company caters to the southern markets with an installed cement capacity of 3.58 MTPA and achieved a capacity utilisation of about 2.77 MTPA ie., 77%. The new green field Vizag grinding Unit with a capacity of 0.66 MnTPA at Thallapalem near Anakapalle in Vishakhapatnam district of Andhra Pradesh, commissioned in the month of November 2025 strengthens the Companys reach in eastern Andhra Pradesh and Odisha. The favourable demand environment and the Companys pan India dealer network support a positive medium term outlook for the division.

Ready Mix Concrete (RMC)

RMC is a natural adjunct to the cement business and offers an outlet for the Companys cement while reinforcing its brand. It is also more eco friendly than site mixed concrete. The short shelf life of RMC limits the distance between plant and end user, but the segment is expected to record steady growth over the coming years on the back of continued urban construction.

Boards

Your Company is the only manufacturer of Cement Bonded Particle Boards in the country, marketed under the brand name Bison Panel, with a total installed capacity of 90,000 MT per annum across three locations. Bison Panels are used in prefabricated structures and more so, in applications such as false ceilings, kitchen platforms and fixed furniture. Growing awareness and new applications continue to expand the demand potential, and the Company is evaluating opportunities to add capacity.

Energy (Hydel and Renewable)

With the two-fold aim of decreasing the cost of production by reducing energy costs and to ensure green energy for a sustainable future your company has commenced implementation of a 130 MW Solar and Wind Hybrid project at Kuppanpuram, Thoothukudi district, Tamil Nadu, at an estimated project cost of about Rs. 919 crores to be implemented in phases. Under the phase I, 50 MW is scheduled to be commissioned by FY28 at an estimated cost of Rs. 392 crores, to be funded through a mix of debt and internal accruals.

Currently in the small hydro segment, your Company operates with an installed capacity of 15.75 MW with generation dependent on the release of water in the reservoirs. In line with its vision of promoting green energy, the Company continues to operate its 8 MW waste heat recovery system and solar arrangements to reduce power costs in the cement division.

Doors (Discontinued Operations)

During the year, the Board of Directors reviewed the operations of the Doors Division and, in view of continued losses and sub optimal capacity utilisation, approved its discontinuance as part of a strategic realignment towards the Companys core operations. The results of the division are presented as discontinued operations in accordance with Ind AS 105.

B. OPPORTUNITIES AND THREATS

The continued focus of the Central and State Governments on infrastructure and housing offers a considerable growth opportunity for cement and building materials. The Companys robust pan India network of distributors, dealers and retailers, and its diversified portfolio spanning cement, boards, RMC and energy, position it to encash the demand across housing, airports and construction.

The principal threats are the volatility in prices of key inputs such as coal, petcoke and freight, limited pricing power in a period of large industry capacity additions, and consolidation by large players, all of which can pressure realisations and margins for medium sized producers. Availability of new limestone mines at reasonable cost remains a constraint factorr on capacity growth. In the Boards business, competition and the emergence of substitute products are the ongoing challenges the company would encounter.

C. SEGMENT WISE / PRODUCT WISE PERFORMANCE

The performance of the operating segments during the year under review (is set out below. Segment revenue is stated inclusive of inter segment revenue and segment results are stated before interest and unallocable items.

Segment Rs.In crores	% of segment revenue	Revenue FY 2025-26	Revenue FY 2024-25	PBIT FY 2025-26	PBIT FY 2024-25
Cement	83.3	1,500.08	1,450.23	129.88	46.54
Boards	9.0	163.40	206.12	10.82	16.84
Ready Mix Concrete	7.3	130.89	148.01	3.50	5.21
Energy	0.4	7.36	6.58	3.41	2.67
Unallocated	-	-	-	9.40	5.81
Total (continuing)	100.0	1,801.72	1,810.94	157.01	77.08

The improvement was led by the Cement division, whose segment result increased sharply to Rs. 129.88 crores from Rs. 46.54 crores on higher dispatch volumes, better price realisation and improved fixed cost absorption. The Boards result moderated to Rs. 10.82 crores, RMC remained profitable, and the Energy division improved.

Production Volumes

Segment	Unit	FY 2025-26	FY 2024-25
Cement	MT	2,768,119	27,11,868
Boards	MT	50,175	82,299
Energy	Million Units	35.58	34.44
Ready Mix Concrete	Cu. Mtrs	276,503	3,15,238

D. FINANCIAL PERFORMANCE REVIEW (STANDALONE AND CONSOLIDATED)

The financial highlights for the year, on both a standalone and a consolidated basis, are summarised below. Figures relate to continuing operations except where the line item specifically refers to discontinued operations or the profit for the year.

Particulars (Rs Crores)	Standalone FY 2025-26	Standalone FY 2024-25	Consolidated FY 2025-26	Consolidated FY 2024-25
Revenue from operations (net)	1422.08	1362.10	1422.08	1362.10
Other income	31.57	20.27	31.57	21.15
Total income	1453.65	1382.38	1453.66	1383.25
EBIDTA	ALIGN=RIGHT>221.93	140.86	221.57	140.41
EBIDTA margin (%)	15.6	10.3	15.6	10.3
Finance costs	19.74	20.53	19.04	19.86
Depreciation and amortisation	55.15	53.72	55.49	54.07
Exceptional items	9.77	10.06	9.77	10.06
Profit before tax (continuing)	137.27	56.54	137.26	56.42
Profit after tax (continuing)	123.65	34.24	123.75	34.06
Loss after tax (discontinued)	(28.36)	(8.86)	(28.36)	(8.86)
Particulars (Rs Crores)	Standalone FY 2025-26	Standalone FY 2024-25	Consolidated FY 2025-26	Consolidated FY 2024-25
Profit for the year	95.29	25.38	95.39	25.20
Earnings per share - total (Rs)	21.07	5.61	21.09	5.57
Net worth	946.25	864.38	940.20	858.24

On a standalone basis, while the revenue from operations grew by 4.4 per cent to Rs. 1422.08 crores, the EBIDTA recorded a significant growth by 58 percent ie., Rs. 221.93 crores resulting in an EBIDTA margin of 15.6 percent vis-a-vis 10.3 per cent in the previous year. Profit before tax from continuing operations more than doubled to Rs. 137.27 crores. The discontinued Doors Division recorded a loss after tax of Rs. 28.36 crores, which was recognised in connection with the Companys decision to exit the business.

The profit for the year rose to Rs 95.29 crores vis-a-vis Rs 25.38 crores in FY 2024-25, and earnings per share improved to Rs. 21.07/- from Rs. 5.61/- despite the write-down in the Doors division. The consolidated results are closely aligned with the standalone position, with profit for the year of Rs. 95.39 crores.

During the year, capital work in progress reduced from about Rs. 148.34 crores to Rs 2.29 crores and property, plant and equipment increased correspondingly, reflecting the capitalisation of the major project Vizag Grinding unit. The profit and loss statement includes an exceptional item of Rs 9.77 crores towards Provision for diminution in value of investment in Joint Venture NCL Industries & NCL Buildtek JV and Provision towards Mineral Bearing Cess. The Board has recommended a dividend (Interim & Final) of Rs 3.50 per equity share for FY26.

E. MARKET OUTLOOK Market Outlook

The medium term outlook for the cement and building materials industry remains highly encouraging, Industry demand is projected to grow in the mid to high single digits for the financial year 2026-27 driven by sustained public capital expenditure and resilient housing sector demand. However operating margins will remain sensitive to the pace of price increases, the price trajectory of coal, petcoke and freight and the absorption rate of newly commissioned industry capacity.

Corporate Strategy and Performance Vectors.

Your company is well positioned to leverage this market recovery. Following our strategic exit from the doors business, we have sharpened our focus on core operations. Performance will be further accelerated by ongoing cost efficiency measures and the expanded deployment of low cost renewable power. Additionally, the boards, ready mix concreted (RMC) and energy divisions are expected to deliver steady revenue contributions.

F. risks and concerns

Your Company does not perceive any serious risks and concerns apart from the normal business risks connected with the industries in which it operates. The principal risks relate to volatility in the prices of key inputs such as coal, petcoke, steel and freight, limited pricing power at a time of large industry capacity additions and consolidation, the availability of new limestone at reasonable cost, and regional demand and monsoon variability. Steep movements in input costs can introduce an element of uncertainty in the outlook for the industry as a whole, and global events can affect market stability. Management continuously monitors these factors and has initiated measures to protect margins and cash flows.

G. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate internal financial controls commensurate with its size and nature of operations. The internal controls are periodically reviewed by the management and Audit committee to ensure their effectiveness. The auditors independently assess the adequacy of these controls as part of their audit.

H. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The recovery in cement demand and realisations during the year translated directly into stronger operational and financial performance. Higher volumes improved fixed cost absorption, lifting the cement segment result and, in turn, the Companys EBIDTA margin, return on capital employed and return on net worth, as discussed in the segment and financial performance sections above and reflected in the key financial ratios below.

I. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Company continues to maintain cordial relations with its employees and staff, and the senior management team has been strengthened to provide leadership depth. Systematic training in site operational control and management is imparted regularly. As on 31 March 2026, the Company had 825 employees working in its factories and offices.

J. SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Key financial ratios improved materially during the year, driven by the recovery in cement volumes and improved price realisation. The ratios on both a standalone and a consolidated basis are set out below.

Ratio	Standalone FY26	Standalone FY25	Consolidated FY26	Consolidated FY25
Current Ratio	1.54	1.50	1.60	1.53
Debt Equity Ratio	0.25	0.29	0.25	0.29
Debt Service Coverage Ratio	2.67	1.85	2.68	1.86
Return on Equity (%)	10.53	2.95	10.61	2.95
Inventory Turnover Ratio	8.40	7.42	8.40	7.42
Trade Receivables Turnover Ratio	13.09	11.33	13.09	11.33
Trade Payables Turnover Ratio	3.82	3.85	3.82	3.85
Net Capital Turnover Ratio	55.84	32.04	43.76	27.66
Net Profit Ratio (%)	5.73	1.61	5.73	1.60
Return on Capital Employed (%)	12.26	6.23	12.26	6.20

K. DETAILS OF CHANGE IN RETURN ON NET WORTH

Return on net worth improved to about 10.5 per cent on a standalone basis (about 10.6 per cent consolidated) from 2.95 per cent in the previous year. The increase was driven mainly by the higher profitability of the Cement division, with net worth rising to Rs 946.25 crores on a standalone basis as on 31^st March 2026 from Rs. 864.38 crores a year earlier.

L. CAUTIONARY STATEMENT

Some of the statements made in this Report are forward looking and are based on the perceptions and views of the management. The projections and expectations are subject to market uncertainties and changes in circumstances. Shareholders and investors are advised to form their own opinion, and the management assumes no responsibility for any variances in the actual outcome that may emerge.