Pacific Industries Ltd Management Discussions

The Management of Pacific Industries Limited is pleased to present the Management Discussion and Analysis Report for the financial year ended March 31, 2025. This report provides an overview of the Companys business environment, industry structure, economic developments, opportunities, challenges, and future outlook. It forms an integral part of our corporate governance disclosures.

? GLOBAL ECONOMY 2024

The global economy in CY 2024 exhibited steady growth and showcased resilience in the face of a turbulent economic landscape and evolving trade and monetary policies. The economy expanded at an estimated growth rate of 3.3%1 . The growth drivers across the demographics remained divergent. The US economy witnessed steady growth due to increase in the consumer spending and profits of the corporations. Conversely, the economy of Europe faced stagnation as major economies such as Germany grappled low consumption. Chinas economy failed to match the growth rate of previous years due to slowdown in the property sector but received support from external demand. The global headline inflation eased from its peak level of 6.6% in CY 2023 to 5.7% in CY 2024. However, this decline was divergent across regions. The advanced economies steadily progressed towards their inflation targets, whereas due to geopolitical tensions and disruptions in supply chains, the emerging markets continued to struggle to match their inflation levels. The central banks of major economies across the globe eased the interest rates to augment development and growth.

? INDIAN ECONOMY AND OUTLOOK

The Indian Economy sustained its steady expansion by achieving a growth rate of 6.5% in FY 2024-25. Services and agriculture sector were the primary drivers towards the growth of the nation. Despite challenges, the manufacturing sector showed resilience. Strong consumption, prudent fiscal policies and a sustained push on infrastructure were the key facilitators of this growth. During the year under review, inflation declined to 5.2%. This decline helped augment household spending and provided a much-needed relief to policymakers. Furthermore, the income tax slab revision by the government aimed to increase disposable income of the citizens of the country. Capital expenditure witnessed a hike during the year with the Union Government allocating H11.11 Lakh crore, which is 3.4% of the countrys GDP3. The increase in spending in this sector helped to create additional jobs in the sector. Combined with stable macroeconomic indicators, the country remained strong and resilient and progressed towards a stronger growth rate as compared to its global counterparts.

? OUTLOOK

The economy of India is foreseen to sustain its momentum of growth and expand at an estimated rate of 6.5% as projected by Reserve Bank of India (RBI) in its April 2025 Policy Update. The RBI projected a downward forecast for CPI inflation to 4.0% in FY 2025-26 due to favourable Rabi and Kharif crops and lowering of crude oil prices. Industrial activity and strong domestic demand along with the agricultural sector exhibiting strong potential due to healthy recovery and crop production are expected to bolster growth. The reduction in repo rate by the RBI in April 2025 to 6.0%6 is expected to augment liquidity in the economy and enhance credit flow.

The recent tariffs imposed on Indian imports by the US government, however, pose risk to this growth and can negatively impact the export volume of the country resulting in widening of Current Account Deficit (CAD). The Government is monitoring the evolving tariff scenario and implementing steps to mitigate the effects on its economy. The governments recent conclusion of a historic Free-Trade Agreement (FTA) with the UK will boost economic and strategic ties between the countries. With the domestic pillars of the economy appearing stable, the economic outlook of the country remains closely aligned with the rapidly evolving global trade scenario and its impact.

? GLOBAL GRANITE STONE INDUSTRY

Granite is a felsic igneous rock which is granular in nature and is composed of quartz, feldspar and mica. Granite finds extensive use across countertops, flooring and monument construction. Granite is available in a broad spectrum of colours and patterns, which plays a key role in elevating the overall aesthetics of interior and exterior designs. The strength and timeless appeal has made it a preferred choice in residential and commercial projects as it offers both enhanced aesthetics and strong performance. The global granite market was valued at $19.2 Billion in 2024. The market is expected to expand to $23.6 Billion by 2033, at a Compound Annual Growth Rate (CAGR) of 2.19% during 2025-2038. Heightened urbanisation coupled with accelerated infrastructure development in both residential and commercial segments are expected to be the primary drivers of this growth. Globally, North America leads the global granite market with extensive utilisation across residential and commercial spaces. Owing to its durability, aesthetic appeal and heightened inclination of consumers towards natural and sustainable materials, the popularity of granite countertops, flooring and other applications has witnessed a steady rise. Europe commands the second largest market share. Demand in this region is being driven by the utilisation of granite in historical landmarks, modern buildings and urban development projects.

? INDIAN GRANITE STONE INDUSTRY

Globally, India stands as one of the largest producers and exporters of granite, underpinned by its rich geological reserves and wide variety of high-quality stones. The country boasts extensive granite deposits in a multitude of colours and patterns, including renowned varieties such as Black Galaxy, Paradiso, Rosa Pink, Tea Brown and White Galaxy. This diverse portfolio enables Indian granite to cater to a broad spectrum of consumer preferences and applications across global markets.

In recent years, the granite industry in India has experienced significant growth, making a notable contribution to the nations GDP and foreign trade. Annual production has reached approximately 130 million tonnes, positioning India as the second-largest producer of granite globally. Indian granite is exported to over 150 countries, with major markets including the United States, China, Italy, the United Arab Emirates and Europe.

According to official export statistics for 2022-23, the total value of exports (including re-exports) of ores and minerals from India stood at ^2,42,326 crore. Among these, granite accounted for 5.18% of the total mineral export value, following diamonds (75.82%) and iron ore (5.95%).10 This shows granites vital role in Indias mineral export portfolio, contributing significantly to the estimated $5 billion in annual foreign trade earnings from this sector.

Indias granite industry continues to thrive on a combination of abundant natural resources, skilled craftsmanship and increasing global demand for sustainable and aesthetically appealing building materials.

? QUARTZ

Quartz is widely utilised across varied industries. Its strength, durability and resistance to heat are major facilitators of its demand. Further, the heightened integration of quartz in consumer electronics and semiconductors is augmenting the growth of the market. In addition, the growth of the market is supported by the increasing demand of durable material for construction, manufacture of tiles and interior designing and other decorative purposes. In 2024, the global market size of quartz industry stood at $8 Billion. The industry is expected to reach $12.5 Billion by 2033, achieving a CAGR of 4.97% during the period 2025-2033. The Asia-Pacific dominated the market in 2024 by capturing a market share, which exceeded 45%. Global Quartz Market Growth Source: IMARC Report 13 The US, due to a huge, diversified usage across varied areas stands out as a key market disruptor. The push for renewable energy in the US is augmenting the demand for quartz in the production of photovoltaic cells. The electronics industry represents a major segment within the quartz market. Quartz plays an indispensable role in the production of semiconductors, oscillators and other electronic components. Increased demand of consumer electronics is further driving the demand of quartz. The automotive industrys increased dependency on advanced technologies, such as sensors for electric and autonomous vehicles appear as the major drivers of demand in the regional market of the US.

? COUNTERTOP MARKET OVERVIEW

The global countertop market generated around USD 148.3 billion in 2024 and is expected to grow to about USD 217.8 billion by 2030, at an annual growth rate of approximately 6.7%. This growth is mainly driven by increasing demand for kitchen and bathroom remodelling, along with rising construction in the hospitality and food-service sectors across the world. Granite continues to be the most widely used material and accounted for the largest share of the market in 2023. However, engineered quartz is growing the fastest due to its modern appearance, strength and ease of maintenance. Consumers are increasingly choosing quartz for both residential and commercial spaces. Regionally, Asia-Pacific is the largest market, making up more than 37% of global countertop sales in 2023. This is largely due to rapid urban growth and more housing developments in countries like China and India. North America also plays a big role, with strong demand for home renovations and high-end materials like quartz and granite. Europe is seeing steady growth as well, with more people opting for stylish and sustainable interior surfaces. In summary, the global countertop industry is growing steadily as more people invest in home improvement, commercial construction increases and preferences shift toward durable, attractive and low maintenance materials like granite and engineered quartz.

? INDIAN COUNTERTOP INDUSTRY

Indias countertop market was valued at around USD 11.86 billion in 2024 and is expected to reach USD 19.39 billion by 2030, growing at an average annual rate of about 8.5%. Granite is currently the most commonly used material for countertops in India, but engineered quartz is quickly gaining popularity and is projected to be the fastest growing segment in the coming years. India accounts for approximately 7.8% of global countertop market revenues, making it the fastest- growing market in the Asia-Pacific region. This growth is being driven by a rise in residential and commercial construction, increasing home renovation activities and a shift in consumer preference toward modern, durable and low maintenance surface materials. Overall, the Indian countertop market is expanding steadily, with demand rising for both traditional options like granite and newer materials like quartz, especially among consumers who want stylish and long-lasting interior finishes.

? INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has a sound internal control system, which ensures that (a) its financial reports are reliable, (b) its operations are effective and efficient, and (c) its activities comply with applicable laws and regulations. The internal control systems are further supplemented by internal audit carried out by an independent Chartered Accountant and periodical review by the Management. The Internal Audit process is designed to review the adequacy of internal control checks in the system and covers all the significant areas of the Companys operations.

The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of the internal control systems and tracks the implementation of corrective actions. Significant audit observations and corrective actions taken by the Management are presented to the Audit Committee. To maintain its objectivity and independence, the Internal Audit reports are submitted to the Chairman of the Audit Committee. Audit Committee plays a key role in providing assurance to the Board of Directors.

? CSR ACTIVITIES

Your Company believes that as a responsible corporate citizen, it must address the needs of underprivileged and committed to serving them. The Company is keen to fulfill its social responsibility by being actively involved in a variety of public services projects. We encourage collaboration with various NGOs to support in CSR activities at group level.

? HUMAN RESOURCES

The Company believes in making the optimum utilization of all the available resources, to achieve this, human power is highly important and thus the Company time over has been taking newer and effective initiatives for improving the human resource strength and creating a conducive and healthy work atmosphere.

The Company consider its Human Resource as the most valuable resource which has to be nurtured well and equipped to meet the challenges posed by the dynamics of business developments. The Company continuously provide training to its employees both in-house as well as through reputed Institutes. The staffs are highly motivated due to good work culture, training, remuneration packages and the values, which the Company maintains. The Board of Directors would like to record their appreciation of the efficient and loyal service rendered by the Companys employees.

? DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE.

The Company achieved Revenues from Operations and Other Income (gross) of 25,099.70 Lakhs during the financial year ended 31^st March, 2025. The profit after tax 557.43 Lakhs during the year. The Management is confident of rebound in the economy and expect growth coming back in the ensuing years.

? CAUTIONARY STATEMENT

Statement in this Managements Discussion and Analysis detailing the Companys objectives, projections, estimates, estimates, expectations or predictions are "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand-supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations.