Petro Carbon & Chemicals Ltd Management Discussions

GLOBAL ECONOMIC

The global economy demonstrated resilience during 2025-26 despite geopolitical tensions, elevated interest rates in major economies, supply chain disruptions and trade policy uncertainties. According to the International Monetary Fund (IMF), global growth is projected at around 3.1% 3.3% during 2026, supported by technological investments, easing inflationary pressures and improved financial conditions. However, geopolitical conflicts, energy price volatility, protectionist trade measures and slowing industrial activity in certain advanced economies continue to pose downside risks.

Emerging economies, particularly India and Southeast Asia, are expected to remain key drivers of global growth, supported by infrastructure investments, manufacturing expansion and rising domestic consumption. India continues to be among the fastest-growing major economies, benefiting from strong government spending, industrial development and increasing investments in manufacturing and infrastructure sectors.

Global inflation has moderated compared to previous years, although energy prices remain vulnerable to geopolitical developments and supply disruptions. Central banks across major economies continue to balance growth support with inflation management, while businesses remain focused on operational efficiency and supply chain resilience.

INDIAN ECONOMY

India continues to remain one of the fastest-growing major economies globally, supported by strong domestic demand, government-led capital expenditure, infrastructure development, manufacturing growth and an expanding services sector. Despite global geopolitical uncertainties, trade disruptions and inflationary pressures, the Indian economy has demonstrated resilience through sustained investment activity and robust consumption trends.

Various multilateral agencies including the Asian Development Bank (ADB) and the International Monetary Fund (IMF) have projected Indias GDP growth in the range of approximately 6.4% to 6.9% over the medium term, positioning India among the fastest-growing large economies in the world. Growth is expected to be driven primarily by domestic consumption, public infrastructure spending, manufacturing expansion and increasing private sector investments.

The Government of India continues to focus on infrastructure creation, industrial development and manufacturing competitiveness through initiatives such as:

· Make in India;

· Production Linked Incentive (PLI) Schemes;

· National Infrastructure Pipeline (NIP);

· Gati Shakti Programme;

· Logistics and supply chain modernization;

· Renewable energy and energy transition initiatives.

These measures are expected to improve industrial productivity, strengthen domestic manufacturing capabilities and enhance Indias competitiveness in global supply chains.

Indias manufacturing sector has shown encouraging momentum supported by rising domestic demand, infrastructure spending and capacity expansion across key industries. Continued growth in sectors such as steel, aluminium, construction, automobiles, engineering and chemicals is expected to support industrial production and investment activity.

The services sector continues to be a significant contributor to economic growth, driven by information technology services, financial services, digital infrastructure, Global Capability Centres (GCCs), e-commerce and telecommunications. Strong GST collections, improving credit growth and increasing formalization of the economy continue to provide support to economic activity.

Rural demand is also expected to improve gradually, supported by government welfare initiatives, agricultural reforms and higher rural spending. However, weather-related risks, including monsoon variability, may influence agricultural output and rural consumption patterns.

While the overall outlook remains positive, certain challenges continue to persist, including:

· Global geopolitical tensions and trade uncertainties;

· Volatility in crude oil and commodity prices;

· Inflationary pressures arising from energy and food prices;

· Currency fluctuations;

· Supply chain disruptions;

· Slower growth in certain global economies.

Nevertheless, supported by strong macroeconomic fundamentals, policy reforms, infrastructure investments and growing industrialization, India is expected to maintain its position as one of the leading growth engines of the global economy. The medium to long-term outlook remains favourable, particularly for sectors linked to manufacturing, infrastructure, energy, metals, chemicals and industrial development.

For industries such as Calcined Petroleum Coke (CPC), carbon products, steel and aluminium, the continued expansion of infrastructure, manufacturing and industrial production in India is expected to create significant growth opportunities in the coming years.

INDUSTRY OVERVIEW

The global Calcined Petroleum Coke (CPC) industry continues to be supported by sustained demand from the aluminium, steel, graphite electrode, titanium dioxide and specialty carbon product industries. CPC remains a critical raw material in the manufacture of carbon anodes used in primary aluminium production and various metallurgical applications.

Demand for CPC is expected to remain robust, driven by increasing aluminium consumption in infrastructure, renewable energy, electric vehicles, transportation and packaging industries. Expansion of aluminium smelting capacities in India, the Middle East and Southeast Asia is expected to provide long-term growth opportunities for CPC manufacturers.

The global transition towards electric mobility and clean energy technologies is also expected to support demand for carbon materials and high-quality petroleum coke products. Growing investments in battery manufacturing and energy storage infrastructure are creating additional opportunities across the carbon value chain.

In India, continued emphasis on infrastructure development, power transmission projects, railway modernization, urbanization and industrial growth is expected to support demand for aluminium and steel, thereby strengthening the outlook for CPC and related carbon products. Government initiatives such as Make in India, Production Linked Incentive (PLI) schemes and increased capital expenditure on infrastructure are expected to provide further growth momentum to downstream industries consuming CPC. The industry, however, continues to face challenges arising from:

Volatility in crude oil and green petroleum coke prices;

Fluctuations in freight and logistics costs;

Environmental and emission-related regulatory requirements;

Supply-demand imbalances in global petroleum coke markets;

Geopolitical developments affecting energy markets and international trade.

Availability of low-sulphur green petroleum coke, a key raw material for CPC production, remains a critical factor influencing industry dynamics. Any disruption in refinery production patterns or feedstock availability may impact pricing and supply conditions globally. At the same time, increasing refining capacities in Asia and the Middle East may improve long-term supply availability.

Key Industry Drivers

Global aluminium production growth, driven by demand from electric vehicles (EVs), packaging, and infrastructure sectors.

Rising infrastructure investments and renewable energy deployment, which increase demand for aluminium and specialty carbons.

Indias industrial expansion and the Make in India initiative supporting domestic manufacturing of CPC and related products.

Tightening environmental regulations in key raw material-producing countries such as China, which affect global supply dynamics.

Raw Material Landscape

The primary raw materials for CPC production are Raw Petroleum Coke (RPC) and Calcined Petroleum Coke for blending. The Company sources approximately 58% of its raw materials through imports and 42% from indigenous sources. Foreign currency risk management through forward contracts is an integral part of the procurement strategy.

The Company is engaged in the manufacture and sale of carbon-based and chemical products. PCCL continues to focus on:

Expansion of manufacturing capabilities;

Product quality enhancement;

Operational excellence and cost optimization;

Strengthening customer relationships;

Development of value-added products.

COMPANY OVERVIEW

Petro Carbon and Chemicals Limited (PCCL) is an ATHA Group (the Group) Company engaged in the business of manufacturing and marketing of Calcined Petroleum Coke (CPC) in the carbon industry. Our Companys business model is fundamentally a B2B model wherein we majorly supply our end product CPC, to the renowned, aluminum manufacturing government companies, graphite electrodes and titanium dioxide manufacturers as well as other users in the metallurgical, chemical industries and other steel manufacturing companies. In 2018, our company was honored with the prestigious NALCO VIKRETA UTKARSH PURASKAR, recognizing us as the top supplier among all the suppliers of POL (Petroleum, Oil, and Lubricants) by the National Aluminum Company Limited.

We currently operate one (1) manufacturing plant located at PO: Oil Refinery, Haldia, Dist. Purba Medinipur, West-Bengal 721 606 (Haldia Industrial Growth Centre of WBIIDC) which is presently involved in calcination of Petroleum Coke. The Plant has a capacity of approximately 93,744 tons per annum of CPC and the plant comprises an area of around 30 acres with good infrastructure facilities like own railway sliding inside the plant premises itself facilitating unloading / loading of wagons, along with yard / shed to store both Raw Petroleum Coke (RPC) / Calcined Petroleum Coke (CPC).

The following operating and financial reviews are intended to covey the managements perspective on the operating and financial performance of Petro Carbon Chemical Limited for the financial year ended March 31, 2026. This should be read in conjunction with the Companys Standalone Financial Statements, the schedules and notes thereto and other information included elsewhere in our Companys Annual Report.

Our Companys Financial Statements have been prepared in compliance with the requirements of the Companies Act, 2013, the guidelines issued by the Securities and Exchange Board of India (SEBI), in accordance with the Generally Accepted Accounting Principles (GAAP).

Manufacturing Unit

PCCL is strategically located within the port perimeter and has access to all the strategic transportation means at its door step. The plant site area is well developed. All necessary infrastructure facilities such as motorable road, nearness to rail head with its own railway siding and having all the necessary utility facilities like continuous service water connection from Haldia Development Authority (HDA) , industrial electric-power connection from West Bengal State Electricity Distribution Company (WBSEDCL).

PCCL enters FY 2026-27 with significant momentum. The near-doubling of revenue in FY 2025-26, coupled with improved margins and return ratios, positions the Company well for the next phase of growth. Key strategic priorities for the coming year include:

Capacity Expansion and Commissioning

The Company has invested Rs. 5,638.11 Lakhs in projects currently under construction (CWIP). The completion of these projects expected within FY 2026-27 is anticipated to substantially increase production capacity, enabling further revenue growth and operating leverage.

Business Diversification

The Company is channelling capital through its subsidiary, ACL Alchemy Private Limited, which is utilising the funds for further capital contribution in Vishal Industries, its associate. This integrated approach signals a strategy of controlled vertical or horizontal diversification within the broader industrial materials space.

Financial Discipline

The Company will seek to optimise its debt profile as new capacities get commissioned and cash generation improves. With a Debt-Equity Ratio of 0.52x and a DSCR of 3.86x, the balance sheet has adequate headroom. Working capital optimisation will be a priority.

Regulatory Compliance

The Company remains committed to full compliance with all statutory, environmental, and corporate governance requirements. The Company has maintained its clean compliance record, including CSR spending in excess of the mandated amount.

FINANCIAL PERFORMANCE REVIEW

FY 2025-26 was a landmark year for PCCL. The Company delivered strong revenue growth and improved profitability, reflecting both volume expansion and improved realisations. All figures are in Rs. Lakhs unless stated otherwise.

Profit & Loss Summary

Particulars	FY 2025-26	FY 2024-25
Revenue from Operations	57,665.15	29,597.12
Other Income	126.20	380.18
Total Income	57,791.35	29,977.30
Cost of Materials Consumed	46,565.02	22,580.81
Changes in Inventories of Finished Goods	(112.03)	1,667.89
Employee Benefit Expenses	731.74	624.95
Finance Cost	1,682.75	708.25
Depreciation & Amortisation	599.06	278.92
Other Expenses	4,971.43	3,375.95
Total Expenses	54,437.97	29,236.77
Profit Before Tax (PBT)	3,353.38	740.53
Tax Expense (Net)	813.75	(206.54)
Profit After Tax (PAT)	2,539.63	947.07

Revenue Analysis

Revenue from Operations surged by approximately 94.83% from Rs. 29,597.12 Lakhs in FY 2024-25 to Rs. 57,665.15 Lakhs in FY 2025-26. This growth was driven by:

• Significant volume growth in the sale of Calcined Petroleum Coke — net sales stood at Rs. 56,780.14 Lakhs (FY 2024-25: Rs. 29,529.07 Lakhs), a near doubling of turnover.

• Expansion in sales of Electrical Energy, which grew from Rs. 68.06 Lakhs to Rs. 885.01 Lakhs — reflecting the commissioning and scaling of the captive power plant.

• Favourable realisations and improved market penetration.

Other Income declined from Rs. 380.18 Lakhs to Rs. 126.20 Lakhs, primarily due to lower interest income on loans (Rs. Nil vs Rs. 105.34 Lakhs in the previous year) and a reduction in miscellaneous income.

Cost Structure and Margins

The cost of materials consumed rose to Rs. 46,565.02 Lakhs (FY 2024-25: Rs. 22,580.81 Lakhs), tracking the near-doubling of revenue. Raw Petroleum Coke (RPC) represented the dominant input cost at Rs. 30,633.06 Lakhs.

Despite the surge in revenue, material cost as a percentage of revenue remained broadly similar, demonstrating stable procurement efficiency.

Finance Costs increased substantially to Rs. 1,682.75 Lakhs (from Rs. 708.25 Lakhs), reflecting higher utilisation of term loans and working capital facilities for capacity expansion and increased business share.

Depreciation & Amortisation nearly doubled to Rs. 599.06 Lakhs (from Rs. 278.92 Lakhs), tracking the addition of new plant and equipment.

Other Expenses grew to Rs. 4,971.43 Lakhs (from Rs. 3,375.95 Lakhs), with freight and forwarding costs of Rs. 2,055.46 Lakhs being the largest component, reflecting higher volumes.

Profitability

The Companys profitability showed a dramatic improvement across all metrics:

Metric	FY 2025-26	FY 2024-25
Profit Before Tax (Rs. Lakhs)	3,353.38	740.53
Profit After Tax (Rs. Lakhs)	2,539.63	947.07
PBT Margin (%)	5.81%	2.50%
PAT Margin (%)	4.40%	3.20%
Basic & Diluted EPS (Rs.)	10.28	3.83
Return on Equity (%)	13.89%	5.70%
Return on Capital Employed (%)	15.66%	5.15%

PBT increased by 353% year-on-year to Rs. 3,353.38 Lakhs. PAT grew by 168% to Rs. 2,539.63 Lakhs. The significant improvement in profitability ratios reflects the benefit of operating leverage as volumes scaled, combined with disciplined cost management.

BALANCE SHEET AND FINANCIAL POSITION REVIEW

Shareholders Funds

The Companys net worth strengthened significantly during the year:

Particulars (Rs. Lakhs)	31st March 2026	31st March 2025
Share Capital	2,470.00	2,470.00
Reserves and Surplus	17,037.21	14,582.35
Total Shareholders\u2019 Funds	19,507.21	17,052.35

Reserves and Surplus grew from Rs. 14,582.35 Lakhs to Rs. 17,037.21 Lakhs, driven entirely by PAT accretion. The Surplus in the Statement of Profit and Loss increased from Rs. 10,213.65 Lakhs to Rs. 12,753.28 Lakhs. Share capital remained unchanged at Rs. 2,470.00 Lakhs (2,47,00,000 equity shares of Rs. 10/- each). The Company has 2,60,00,000 authorised shares.

Non-Current Liabilities

Long-term borrowings increased from Rs. 6,020.69 Lakhs to Rs. 9,565.84 Lakhs, reflecting net drawdown of term loans to fund the ongoing capital expenditure programme.

Current Liabilities

Total current liabilities declined from Rs. 18,180.08 Lakhs to Rs. 16,149.34 Lakhs, driven by a reduction in trade payables.

Short-term borrowings increased from Rs. 8,383.04 Lakhs to Rs. 10,358.40 Lakhs, reflecting expanded working capital facility utilisation — bill discounting at Rs. 4,943.02 Lakhs and buyers credit at Rs. 3,233.46 Lakhs — to support higher business volumes.

Trade payables reduced from Rs. 9,031.55 Lakhs to Rs. 4,648.51 Lakhs, due to lower year-end purchasing.

Dues to Micro and Small Enterprises (MSME) increased to Rs. 982.73 Lakhs from Rs. 267.17 Lakhs, reflecting higher procurement from MSME suppliers.

Non-Current Assets

Particulars (Rs. Lakhs)	31st March 2026	31st March 2025
Property, Plant & Equipment (Net)	16,208.54	15,933.03
Capital Work-in-Progress (CWIP)	5,638.11	435.46
Non-Current Investments	935.00	310.00
Long-Term Loans & Advances	58.23	67.43
Other Non-Current Assets	28.36	13.96
Total Non-Current Assets	22,868.24	16,759.88

CWIP surged from Rs. 435.46 Lakhs to Rs. 5,638.11 Lakhs, reflecting investment in new manufacturing capacity. Total additions to Property, Plant & Equipment and CWIP during the year amounted to approximately Rs. 6,162 Lakhs. All CWIP projects are expected to be completed within one year. Non-current investments rose to Rs. 935.00 Lakhs following the investment of Rs. 625.00 Lakhs in OCDs of the subsidiary ACL Alchemy Private Limited.

Current Assets

Particulars (Rs. Lakhs)	31st March 2026	31st March 2025
Current Investments	Nil	349.98
Inventories	10,623.53	15,077.22
Trade Receivables	8,401.72	2,621.36
Cash and Cash Equivalents	753.83	2,806.05
Short-Term Loans & Advances	2,983.72	3,924.40
Other Current Assets	137.70	140.31
Total Current Assets	22,900.50	24,919.32

Inventories declined from Rs. 15,077.22 Lakhs to Rs. 10,623.53 Lakhs, reflecting better inventory management. Raw materials declined from Rs. 13,362.77 Lakhs to Rs. 8,658.33 Lakhs, while finished goods increased marginally to Rs. 1,585.03 Lakhs. Trade receivables increased to Rs. 8,401.72 Lakhs, corresponding to the significant revenue growth, particularly in the second half of the year. All receivables are current (less than six months) and classified as undisputed and good. Cash and cash equivalents declined to Rs. 753.83 Lakhs primarily due to heavy investing activities in capex.

CASH FLOW ANALYSIS

Cash Flow Summary (Rs. Lakhs)	FY 2025-26	FY 2024-25
Net Cash from Operating Activities (A)	441.73	1,244.78
Net Cash used in Investing Activities (B)	(6,331.71)	(5,039.07)
Net Cash from Financing Activities (C)	3,837.76	6,230.71
Net Increase / (Decrease) in Cash (A+B+C)	(2,052.22)	2,436.42
Opening Cash & Equivalents	2,806.05	369.63
Closing Cash & Equivalents	753.83	2,806.05

KEY FINANCIAL RATIOS

The following table summarises the key analytical ratios as disclosed in the standalone financial statements:

Ratio	FY 2025-26	FY 2024-25	Variance
Current Ratio (times)	1.42	1.37	+3%
Debt-Equity Ratio (times)	0.52	0.39	+34%
Debt Service Coverage Ratio (times)	3.86	3.03	+27%
Trade Receivables Turnover (times)	10.46	6.72	+56%
Trade Payables Turnover (times)	6.74	5.14	+31%
Inventory Turnover Ratio (times)	3.26	2.74	+19%
Net Working Capital Turnover (times)	8.57	4.66	+84%
Net Profit Ratio (%)	4.39%	3.16%	+39%
Return on Capital Employed (%)	15.66%	5.15%	+204%
Return on Equity (%)	13.89%	5.70%	+144%

CAPITAL EXPENDITURE AND EXPANSION PLANS

FY 2025-26 was characterised by a major capital expenditure cycle. The Company invested aggressively in expanding its manufacturing capacity and supporting infrastructure:

Asset Category (Rs. Lakhs)	FY 2025-26	FY 2024-25
Gross Block Additions (PPE)	959.33	7,434.91
Capital Work-in-Progress (Net)	5,638.11	435.46
Investment in Subsidiary Debentures (OCDs)	625.00	\u2014
Total Investment in Expansion	7,222.44	7,869.46

RISK MANAGEMENT

The Companys business is exposed to various risks including:

Raw Material and Commodity Risk

The Company is exposed to volatility in global petroleum coke prices. Raw petroleum coke (Green Petroleum Coke) is a byproduct of crude oil refining; fluctuations in crude oil prices and refinery capacities directly impact raw material costs. The Company imports approximately 58% of its raw materials, creating exposure to both price and logistics risks. Management mitigates this through diversified sourcing and matching sales contracts.

Foreign Currency Risk

Imports of raw materials in foreign currency create exchange rate exposure. As at the balance sheet date, the Company had three outstanding short-term forward exchange contracts for payables amounting to approximately US$ 44.16 Lakhs (equivalent Rs. 4,087.11 Lakhs). Net unhedged foreign currency exposure stood at approximately US$ 10.70 Lakhs (equivalent Rs. 1,106.08 Lakhs). The Company does not use forward contracts for speculative purposes.

Concentration Risk

The Company operates in a single business segment — Calcined Petroleum Coke — and derives the entirety of its revenues from this product. This creates dependence on the health of end-user industries, particularly aluminium, which can be cyclically sensitive. However, Company is developing new businesses – ECA and CPP.

Interest Rate and Liquidity Risk

The Company carries significant borrowings — both long-term (Rs. 9,565.84 Lakhs) and short-term (Rs. 10,358.40 Lakhs). Interest rate fluctuations directly impact finance costs. The Company monitors its liquidity position through working capital management and monitoring of interest rate movements.

Capital Expenditure Execution Risk

With a large CWIP of Rs. 5,638.11 Lakhs, the Company is exposed to construction and commissioning delays, cost overruns, and the risk that commissioned assets may not achieve projected utilisation levels within anticipated timelines. There is also senior level professional dealing with project implementation and doing continuous monitoring with senior management team to mitigate this risk.

Regulatory and Environmental Risk

The Company is subject to environmental regulations governing petroleum coke processing and calcination activities. Compliance with emission norms, waste disposal standards, and occupational health and safety requirements is monitored by management. No regulatory litigation was reported outstanding during the year.

Internal Control System & Their Adequacy

The Company has strong internal control procedures in place that commensurate with its size and operations. The Board of Directors, responsible for the internal control system, sets the guidelines and verifies its adequacy, effectiveness and application. The Companys internal control system is designed to ensure management efficiency, measurability and verifiability, reliability of accounting and management information, compliance with all applicable laws and regulations, and the protection of the Companys assets.

Human Resources and Industrial Relations

The Company had 85 employees as on 31st March, 2026. It continues to invest in employee training, safety, and leadership development. The industrial relations environment remained cordial during the year, with zero man-days lost due to disputes or unrest.

Key initiatives during the year:

Skill enhancement workshops.

Occupational health and safety campaigns.

Digital workforce systems implementation.

Environment, Health and Safety (EHS)

Environmental compliance and safety remain top priorities. The Company has:

Installed pollution control equipment like bag filters, scrubbers, and continuous emission monitoring systems.

Adopted water and energy conservation measures across plants.

Reported zero major reportable incidents in FY 2025-26.

Cautionary Statement

Certain statements in this Report concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of subsequent developments.

To strengthen the Internal Control Processes, the Company has appointed Independent Professional firm as Internal Auditors who are authorized by the Audit Committee to assess the adequacy of Control Processes and report key audit observations and recommendations to the Audit Committee on a periodic interval. Further, during the year the Internal Financial Controls were adequate and operating effectively. The Statutory Auditors have also certified on adequacy of Internal Controls & their operating effectiveness.