Orient Ceratech Ltd Management Discussions

Overview:

This Management Discussion and Analysis (MDA) Report forms an integral part of the Boards Report and provides insights into the Companys performance and strategic direction during the FY 2024-25. It covers the managements views on the economic environment, industry landscape, operational performance, risks, opportunities, internal controls, and other key developments. This report should be read in conjunction with the Companys audited financial statements, notes thereto, and other relevant information provided in the Annual Report.

Economic Overview:

In FY 2024-25, the Indian economy remained a global standout, demonstrating resilience amid persistent global headwinds. Indias Real GDP grew by 6.5%, supported by robust domestic demand, sustained government infrastructure investments, strong performance in services, and continued recovery in manufacturing and construction.

Globally, the economic environment remained uncertain due to persistent geopolitical tensions, including the prolonged Russia-Ukraine war, continued instability in the Middle East, heightened trade policy uncertainty, and continued disruptions in the Red Sea region, which impacted global shipping routes and raised freight and insurance costs. These factors contributed to slowing global growth, with advanced economies such as the US, Euro area, and China exhibiting moderated expansion. The United States saw its GDP growth slow from 2.8% in 2024 to a projected 1.6% in 2025, while China faced sluggish growth owing to continued weakness in its property sector, deflationary trends, and muted domestic demand, with growth expected to moderate to 4.7% in 2025. Europe continued to struggle with low growth, weak consumer confidence, and inflationary pressure. European economies continued to recover from the energy crisis, but the pace remained subdued, although the Euro area expected a mild pick-up in growth to 1% in 2025.

On the other hand, emerging markets, including India, were comparatively resilient, benefiting from robust infrastructure investments and improved macroeconomic policies. However, global trade barriers and tighter financial conditions limited upside potential for many economies.

In India, Retail inflation softened to 4.6% for FY 2024-25, the lowest since FY19, owing to effective monetary policy and government interventions, which included bolstering buffer stocks and timely release of essential food items. Core inflation and fuel prices saw moderation, but food inflation remained firm due to persistent supply concerns around certain staples. The fiscal situation further improved with the fiscal deficit narrowing to 4.8% of GDP in FY 2024-25, surpassing previous targets through higher non-tax revenues and controlled expenditure, and the current account deficit stood at approximately 0.7% of GDP, supported by robust service exports remittance inflows. The rupee remained broadly stable, backed by resilient capital flows and improved forex reserves.

Gross Value Added (GVA) grew by ~6.3% year-on-year, led by the construction, infrastructure, and financial services sectors. However, global demand softness, rising trade protectionism, and continued volatility in commodity prices weighed on Indias exports, especially in manufacturing and chemical intermediates.

Despite the global slowdown, India retained its position as one of the fastest-growing major economies, continuing to be a preferred destination for global investors and industrial expansion.

Industry Scenario:

Below table details our key product segments with industries and customers they cater to:

Product Segment	Industries / End Customers
Ceramic Raw Materials	Metals & other related industries, Refractories, Foundries, Abrasives
Refractories	Steel, Metals & other related industries, Cement, Power, Non-Ferrous Metal Industries
Speciality Ceramics	Oil & Gas

Steel and Refractories:

Indias steel industry remained pivotal to industrial growth in FY 2024-25, with crude steel and finished steel production reached at 155 MnT and 149 MnT respectively, marking a year-on-year growth of over 7%. Growth was driven by robust demand from infrastructure, construction, automotive, and engineering sectors, combined with supportive government policies, including the ongoing Production Linked Incentive (PLI) schemes and large-scale public capital expenditure. India retained its position as the worlds second-largest steel producer and a net exporter of finished steel.

The positive momentum in the steel industry directly benefits the refractory sector. Refractories remain critical for high- temperature industrial processes, and their demand is closely aligned with the steel and cement sectors. The Indian refractory market was valued at over $2.0 billion in FY 2024-25, with growth accelerating to over 6% CAGR, supported by increased offtake from both mini-mills and integrated steel plants. Capacity utilization improved, with manufacturers focusing on raw material localization to reduce import dependency and enhance supply security.

However, despite continued competition from overseas players, the industry still faces challenges such as volatile raw material prices (especially for fused and calcined materials), Alumina prices increased significantly during the year, mainly because of supply issues and export restrictions in China. This added to the overall rise in input costs. The industry still depends heavily on chinese imports for key materials like magnesite and microsilica. At the same time, stricter environmental rules and higher transport costs continue to be challenges. Indian refractory producers actively invested in process improvements, digitalization, and sustainability initiatives to enhance global competitiveness and reduce environmental impact.

Ceramic Raw Materials:

The ceramic raw materials segment experienced steady growth in FY 2024-25, supported by rising demand from the refractory, foundry, and abrasive sectors. Demand was particularly strong in the eastern and western regions of India, where steel and casting clusters expanded operations. However, the segment continued to experience pressure from volatile input prices, logistics constraints, and energy costs. The rising cost of alumina, critical for bauxite-based products was particularly notable this year, largely due to restricted supply and price escalation from Chinese suppliers. The segments focus remained on beneficiation and technology upgrades to improve quality consistency and minimize dependence on imported inputs to meet growing industry standards.

Specialty Ceramics - Oil & Gas:

The global oil & gas sector witnessed mixed trend in FY 2024-25, with operators focused on optimizing and extending the life of existing wells and preferring sand-based proppants over ceramics in several regions. This shift impacted demand for ceramic proppants during the year, especially where shorter-cycle, low-cost fracturing gained traction.

Despite this temporary shift, the medium-to-long-term outlook remains positive. With crude oil prices stabilizing and upstream investments gaining traction, FY 2025-26 is expected to witness a renewed uptick in demand for ceramic proppants, particularly for high-pressure, high-temperature wells in the Middle East, Africa, and parts of Asia.

As global energy companies refocus on well productivity, long-term recovery, and reservoir performance, ceramic solutions are regaining strategic importance. Your Company is strategically positioned to benefit from this rebound, leveraging its domestic manufacturing, export capabilities, and technical customisation.

Opportunity and Threats:

Your Company continues to operate in a competitive and evolving industrial landscape, offering both challenges and growth opportunities. As a challenger to larger domestic and Chinese players, the Company is navigating an environment where Indias steel output is projected to surpass 300 million tonnes by decade-end, which will drive strong demand for refractories, specialty ceramics, and ceramic raw materials. Government-led infrastructure projects, industrial expansion, and PLI schemes continue to support this growth. Continued investment in R&D is vital to develop advanced, energy- efficient products that enhance cost competitiveness and reduce steel consumption.

In the ceramic raw materials segment, opportunities lie in product value addition, beneficiation of low-grade ores like magnesite and bauxite, and increasing domestic substitution for imports. Rising input costs and fuel prices remain a challenge, making cost efficiency and supply chain optimization critical.

In the Specialty Ceramics division, your Company stands out as the sole major producer of ceramic proppants in the country. While FY 2024-25 was challenging due to a global preference for sand-based alternatives, the outlook for FY 2025-26 is optimistic, especially with demand expected to pick up in the Middle East, North Africa, and select Western markets. The Companys strategic location and growing export capabilities give it a competitive edge. To seize these opportunities, continued focus on R&D, technological innovation, product customization, and raw material security will be vital.

Risks and Concerns:

Indian refractory industry continues to face high dependency on China as more than 25-30% of the raw materials are still being imported. Non-availability of high purity raw materials, notable increases in alumina prices from China, low ferric bauxite, materials such as microsilica, etc., is a major risk. Price competitiveness from Chinese players continues to erode domestic margins, especially for standard-grade products. Heavy dependence on the steel sector (70%+ consumption) presents a significant concentration risk. Any disruption or slowdown in steel production directly impacts demand for refractories. Domestic capacity utilization remains sub-optimal (~55-60%), highlighting the need for improved operational efficiency and market diversification.

In the oil and gas segment, the anticipated global peak in oil demand by 2030 poses a long-term structural risk for your Company. The continued shift toward cleaner energy, particularly the declining use of oil in transportation fuels post- 2026, driven by electric vehicle adoption, biofuel development, and enhanced fuel efficiency, could dampen traditional demand channels. Price volatility remains a major concern in this segment. Crude oil price volatility, geopolitical risks, and increasing ESG-focused capital reallocation by global oil majors also contribute to market uncertainty for specialty ceramics used in hydraulic fracturing. Mitigating these risks will require the Company to continue diversifying its product base, improving cost structures, strengthening relationships in key export markets, and developing high-value, application- specific products to reduce dependency on any single industry or material stream.

Outlook:

The global economic environment is expected to remain complex, characterized by moderate growth, persistent geopolitical tensions, and continuing structural shifts in energy and trade patterns. Global GDP growth is projected to stabilize around 2.5%-3% over the medium term, supported by gradual recovery in advanced economies and stronger expansion in selected emerging markets. However, risks remain from tightening monetary policies, supply chain realignments, and increasing geopolitical fragmentation, with significant implications for global trade and commodity markets.

Indias economy is poised to sustain solid growth momentum, with GDP growth likely to range between 6% and 6.7% in FY25-26, supported by ongoing domestic consumption, infrastructure investments, and an accelerating transition to technology-driven services and manufacturing. Inflation is forecasted to remain moderate, aided by stable commodity prices and prudent monetary policy. Continued fiscal consolidation and targeted reforms will enhance macroeconomic resilience.

The steel industry and allied sectors such as refractories and ceramic raw materials are expected to grow in line with Indias infrastructure ambitions and expanding manufacturing base. Additionally, growing environmental regulation and quality consciousness are shifting market preference toward value-added and efficient refractory solutions, an area where the Company has been building capabilities.

In the Specialty Ceramics segment, particularly oil and gas, demand is expected to rebound post FY24-25 as upstream investments increase and exploration activities resume. However, the medium- to long-term trajectory will be influenced by the global energy transition, with gradual shifts toward cleaner fuels, influencing product mix and innovation priorities. Expanding export markets, especially in the Middle East, Africa, and Asia, provide substantial growth avenues.

As a challenger brand with integrated operations, technical capabilities, and strategic location advantages, your Company is well-positioned to outpace industry growth, gain market share, and explore new geographies and product applications.

Internal Controls systems and their adequacy:

Your Company continues to maintain a robust and adequate internal control procedures and vigilance system in place that aligns with its scale of operations and business complexity. These controls are designed to provide reasonable assurance that the Companys assets are safeguarded, transactions are duly authorized, recorded accurately, and reported timely. The internal control systems also ensure the reliability of financial reporting, effective operational monitoring, protection against unauthorized use or loss of assets, and adherence to applicable laws and regulations. During the year, the Company continued to strengthen its internal control environment through process improvements, digitization of key workflows, and risk-based reviews.

In line with best governance practices, and based on recommendations from the Audit Committee, the Company appointed M/s Atul HMV & Associates LLP as the Internal Auditors for the financial year 2024-2025. The internal auditors conduct periodic audits across key departments and processes, assessing the effectiveness of business systems, compliance, and risk management practices.

Their observations and audit findings, along with the status of implementation of remedial actions recommended by them, are reviewed and discussed quarterly with the Audit Committee to ensure timely corrective measures and continuous improvement. Additionally, the Statutory Auditors provide an independent assessment of the adequacy and effectiveness of the Companys internal control systems, reinforcing confidence in financial controls and governance standards.

The Company remains committed to continuous improvement of its internal control systems to ensure strong governance and sustained business performance.

Segment-wise performance

Please refer Note No. 39 of the Financial Statements.

Segment:

Segment performance is evaluated and monitored based on profit or loss and is measured consistently with the statement of profit & loss. Operating segment have been identified on the basis of nature of products and other quantitative criteria specified in the Ind AS 108. The chief operational decision maker monitors the operating results of its business segment separately for the purpose of making decision about resource allocation and performance assessment.

The Board of Directors of the Company has authorised its KMPs to assess the financial performance and position of the Company, and make decisions in normal course of business operations. For key strategic decisions, the Board of Directors take decisions after evaluating the possible options and recommendations given by the management.

Segment revenue and results:

Unallocable expenditure which are not directly attributable to any business segment are shown net of allocable income. Segment assets and Liabilities:

Segment assets include all operating assets used by the operating segment and mainly consist of property, plant and equipment, trade receivables, inventories and other operating assets. Segment liabilities primarily includes trade payable and other liabilities. Common assets and liabilities which cannot be allocated to any of the business segment are shown as unallocable assets / liabilities.

Inter segment transfer:

There is no change in the nature of business of the Company during the year under review. The Company has two major business segments in terms of the nature of output (i) Alumina Refactories & Monolithics products & bauxite ores: and (ii) Power generation. Inter segment revenues are recognised at sales price. The same is based on market price and business risks. Profit & loss on inter segment transfer are eliminated at the group level.

Financial Highlights & Accounting Treatment:

The Financial Statements for the year ended 31st March, 2025, have been prepared in accordance with the Companies (Indian Accounting Standards) Rule, 2015 (Ind AS) prescribed under section 133 of the Companies Act, 2013 and other recognised accounting practices and policies to the extent applicable.

For the Financial Year ended 31st March, 2025, at Standalone level, revenue from operations of the Company stood at Rs 33,263.11 Lakhs and profit before exceptional item and tax stood at Rs. 1,290.50 Lakhs. Gross revenue from sale of power stood at Rs 576.82 Lakhs. At Consolidated level, revenue from Operations stood at Rs. 32,710.21 Lakhs and profit before exceptional item and tax stood at Rs. 1,320.91 Lakhs. As compared to FY 2023-24, the Companys consolidated revenue from operations in FY 2024-25 increased by 4.38%, while profit before exceptional item and tax decreased by 34.84%. Decrease in profit before exceptional item and tax is mostly attributable to change in product mix and increase in finance cost.

Dividend:

The Board has recommended dividend of Rs.0.25/- per equity share for the Financial Year ended 31 st March, 2025, payable subject to approval of the Members at the ensuing Annual General Meeting. This will result in a total outflow of Rs. 299.10 Lakhs.

The Company believes in maintaining a fair balance between dividend distribution and cash retention. The cash retention is required for future growth and to meet any unforeseen contingencies.

Key Financial Ratios:

The key financial ratios for FY 2024-2025 and FY 2023-2024, are as follows:

Sr. No. Particulars	2024- 25	2023-24	% Change	Reasons for change in the ratio by more than 25%
1 Debtors Turnover (Days) (Avg. Debtors/Sales)	85.59	85.13	0.54
2 Inventory Turnover (Days) (Sales/Avg. Inventory)	93.42	77.71	20.22
3 Interest coverage Ratio (Profit before Exceptional Item and tax + interest Exp) / Interest Expenses	3.27	6.38	(28.48)	Increase in working capital loan utilisation & decrease in margin.
4 Current Ratio (Current assets /Current Liability)	2.66	2.35	13.21
5 Debt Equity Ratio (Total debts /Shareholders fund)	0.16	0.21	(22.99)
6 Operating Profit Margin (in %) (EBIT- other Income) /Revenue from Operation	3.56%	4.97%	(28.37)	Decrease in profit
7 Net Profit Margin* (in %) (Net Profit/ Revenue from Operation)	2.89%	4.05%	(28.60)	Decrease in profit
8 Return on Net Worth (in %) (Net Profit/Average shareholders equity)	3.49%	4.83%	(27.86)	Decrease in profit

*before exceptional item

Human Resource/Industrial Relation Development:

As on March 31, 2025, the Company had a total head count of 256 as against 242 in the previous year.

The Company continues to maintain healthy and harmonious employee relations across all its plants and offices. The Human Resources function plays a pivotal role in enabling business transformation by aligning organizational goals with individual aspirations. Senior management remains approachable and responsive, ensuring effective counselling and prompt redressal of employee grievances.

Recognizing that its workforce is a key driver of success, the Company remains committed to continuous training, skilling, and upskilling initiatives. These efforts ensure that employees are well-equipped to adapt to evolving technologies, processes, and industry practices.

Statutory Compliance:

The Managing Director makes a declaration at each Board Meeting on quarterly basis, regarding the compliance with provisions of various statutes after obtaining confirmation from all the unit heads of the Company. The Company Secretary also ensures compliance, inter-alia, with the provisions of Companies Act, 2013 and SEBI Regulations.

Cautionary Statement:

Statements made in this report describing the Companys objective, projections, estimates and expectations may be "forwardlooking statements" within the meaning of applicable securities laws and regulations. Important factors that could make a difference to the Company operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in government regulations, tax laws and other statutes and incidental factors. Although the expectations are based on reasonable assumptions, the actual results might differ.