Rapicut Carbides Ltd Management Discussions

TUNGSTEN CARBIDE INDUSTRY STRUCTURE, PERFORMANCE, DEVELOPMENT, OVERVIEW AND OUTLOOK

The tungsten carbide industry continues to remain strategically important for critical industrial sectors globally. With its exceptional hardness, strength, wear resistance and ability to perform under demanding operating conditions, tungsten carbide is widely used in cutting tools, dies, inserts, wear parts and other precision applications. The industry value chain broadly comprises tungsten mining and recycling, production of tungsten intermediates and powders, blending with binders such as cobalt or nickel, and subsequent processing into cemented carbide and other engineered products.

During FY 2025 26, the global tungsten industry experienced unprecedented volatility and uncertainty, with raw material supply availability, export restrictions in tungsten raw material supply, geopolitical developments and changing trade policies having a significant impact on prices and procurement. Chinas implementation of export controls on tungsten products from February 2025 further tightened international availability and disrupted established global trade flows.

The international market witnessed a sharp increase in tungsten prices, particularly for concentrates and intermediates, while availability outside China remained constrained. The market also experienced a growing divergence between domestic Chinese prices and international prices due to restricted access to export material.

Globally and domestically, tungsten carbide continues to find applications across diverse sectors, including:

- Metal, Mining & Construction drill bits, cutting tools, wear parts and components for demanding applications and hard-rock environments.

- Oil & Gas, Energy & Power drilling equipment, valves and wear-resistant components for energy infrastructure.

- Automotive & Railway precision tooling, components and wear parts.

- Defence & Aerospace specialised components requiring high hardness, strength and heat resistance.

- Agriculture, Food & Feed wear-resistant components used in harvesting and processing equipment.

- Chemical & Pharmaceutical specialised tools, dies and components requiring wear and corrosion resistance.

- Electric, Electronics & Medical precision components and specialised tooling.

- Paper, Printing, Plastic & Glass carbide knives, dies and wear-resistant components.

The medium- to long-term demand outlook for tungsten carbide remains positive, supported by industrialisation, infrastructure development, advanced manufacturing, defence requirements, energy transition and increasing demand for high-performance and durable tooling. At the same time, the industry is expected to remain exposed to raw material availability, geopolitical developments, trade restrictions and significant price uncertainty.

INDUSTRY DEVELOPMENTS AND RAPICUT INITIATIVES

FY 2025 26 was characterised by substantial volatility in tungsten raw material prices and increasing uncertainty in global supply chains. The Company faced significant increases in the cost of key raw materials and consumables, together with a highly competitive market environment. Despite these challenges, Rapicut Carbides Limited demonstrated resilience and achieved its highest sales volumes in intermediate and other value-added products, along with improved export performance.

The Company continued to focus on strengthening its product portfolio, manufacturing capabilities and customer

relationships through the following initiatives:

- Product Development: Continued development, upgradation and supply of tungsten Intermediates, carbide dies, wire drawing nibs, intermediate products, specialised wear parts and other value-added products for wire, fastener,

engineering and industrial applications.

- Capacity Building: The Company has invested in few machinery and equipment, including semi-automatic machines, material handling equipment, packing machines, and other essential machinery, with the objective of enhancing operational efficiency and improving the quality of its finished products.

- Market Expansion: The Company strengthened its domestic and international customer base and achieved higher export volumes, reflecting continued acceptance of its products in overseas markets.

- Market Presence: Continued participation in relevant industry exhibitions and international market interactions, including Fastener Exhibition 2025 and India Energy Week Expo 2026, along with the Companys international exposure through SIMTOS & KINTEX 2026, Seoul.

- Customer Relationships: The Company continued to strengthen long-standing customer and supplier relationships while actively responding to changing market conditions and customer requirements.

These initiatives enabled the Company to navigate a highly uncertain raw material environment while improving its product

mix and increasing its presence in intermediate and value-added product segments.

OUTLOOK AND OPPORTUNITIES

The outlook for the tungsten carbide industry remains positive over the medium to long term, although near-term conditions are expected to remain highly uncertain and heavily volatile. Global supply-chain restructuring, export restrictions and increasing strategic importance of tungsten are expected to influence procurement patterns, pricing and availability.

For Rapicut, key opportunities include:

- Mining & Construction supporting infrastructure development and mineral exploration.

- Oil & Gas, Energy & Power supplying wear-resistant components for drilling and energy applications.

- Automotive & Railway expanding tooling and wear-part applications.

- Defence & Aerospace participating in Indias expanding defence manufacturing and aerospace ecosystem.

- Diversified Industries increasing penetration into agriculture, food processing, chemicals, pharmaceuticals, electronics, paper, plastic and glass applications.

- Exports & Global Partnerships strengthening international customer relationships and expanding export opportunities, supported by established long-term business relationships, including more than 30 years of partnerships in China.

- Intermediate & Value-Added Products increasing the share of specialised and higher-value products to improve product mix and reduce dependence on conventional product segments.

The Company believes that its established manufacturing capabilities, technical expertise, customer relationships and

increasing focus on intermediate and value-added products provide a sound platform to benefit from emerging opportunities.

THREATS, RISKS AND CONCERNS

The Company continues to closely monitor the following key risks and uncertainties:

- Raw Material Price Volatility significant fluctuations in tungsten, cobalt and other input prices may affect product costs and margins.

- Supply Availability & Export Restrictions export controls and geopolitical developments may affect the availability, lead time and pricing of tungsten intermediates and raw materials.

- Global Trade Uncertainty changing trade policies, tariffs, licensing requirements and geopolitical tensions may impact international trade flows and export markets.

- High Production Costs increases in energy, labour, consumables and other input costs may continue to put pressure on margins.

- Competition & Pricing Pressure intense domestic and international competition may restrict the Companys ability to fully pass on increases in input costs.

- Demand Uncertainty fluctuations in global industrial activity and sector-specific demand may affect order patterns and capacity utilisation.

- Machining Limitations the inherent hardness and brittleness of tungsten carbide can create challenges in complex machining and specialised manufacturing.

The Company seeks to mitigate these risks through diversified sourcing, long-standing supplier relationships, prudent procurement, operational efficiency, improved product mix, investment in modern machinery, quality enhancement and continuous engagement with customers.

OVERALL OUTLOOK

FY 2025 26 was a year of significant market volatility and supply-chain uncertainty, particularly in relation to tungsten raw materials and intermediates. Despite these challenges, Rapicut Carbides Limited demonstrated resilience and achieved its highest sales including intermediates and other value-added products, together with stronger export performance.

The Company has :

- Expanded its presence in intermediate and value-added products.

- Improved export volumes and strengthened international customer relationships.

- Enhanced production capabilities through investments in modern machinery.

- Continued product development to address specialised customer requirements.

- Strengthened its market presence through domestic and international industry engagement.

- Maintained focus on quality, innovation, efficiency and customer relationships.

While the near-term market is expected to remain subject to raw material price volatility, supply constraints, geopolitical developments and changing trade policies, the strategic importance of tungsten and its applications across critical industries provides a favourable long-term foundation. The Company remains focused on improving its product mix, expanding exports, strengthening operational efficiency and developing higher-value products to create sustainable value for its customers and shareholders.

The Company remains cautiously optimistic about the future and will continue to adopt appropriate business,

procurement, sales and market strategies to navigate uncertainties and capitalize on emerging opportunities.

PRODUCTWISE PERFORMANCE WITH RESPECT TO OPERATIONS

Sr. No.	Particulars of Products Manufactured	12 months ended 31-03-2026	12 months ended 31-03-2025
1.	Metal Cutting	4,89,888 Nos.	92,634 Nos.
2.	Mining	36,634 Nos.	1,84,389 Nos.
3.	Wear Parts	90,063 Nos.	5,88,903 Nos.
4.	Intermediates	72,847.50 Kgs	39,278.50 Kgs.
5.	TC Tool Room Products	23,075 Nos.	40,114 Nos.
6.	Scrap	209 Nos.	3148.5 Nos.

The Company succeeded in securing reasonably strong volumes in intermediate, sintered, and other value-added products

despite significant volatility in market prices.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal Control Systems and procedures in the Company are commensurate with nature and size of its business.

It is to be noted that not only the assets of the Company are safeguarded and protected against any losses, but also all the

transactions are properly accounted and that they meet the test of legal compliances.

Apart from regular review and monitoring Internal Control Systems by the Companys Internal Control Department, an Independent Chartered Accountants firm is appointed to conduct the internal audit for the Companys manufacturing unit. This provides reasonable assurance to the effectiveness of the internal control systems and procedures and reliability of Financial Reporting.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company has only one reportable primary business segment as per Ind AS 108 i.e. Tungsten & Tungsten Carbide

Products.

SAFETY, HEALTH AND ENVIRONMENT (SHE) MANAGEMENT

Your Company continues to adopt best safety practices which have helped avoiding serious accidents. Regular safety

inspection of plant and machinery is carried out to prevent accidents.

HUMAN RESOURCES / INDUSTRIAL RELATIONS

Our people related policies span the entire spectrum of hiring the right talent as best as possible, up-skilling them and motivating them. This enables them in putting their best foot forward for fulfilling set targets. We do our best to provide our people healthy work environment that encourages sharing of knowledge, concerns and where the cross-pollination of ideas can always bloom. This reflects in their day-to-day performance at the ground level.

The details of employees are as under:

Number of Employees at the beginning of the year	93
Number of Employees recruited during the year	36
Number of Employees resigned during the year	26
Number of Employees retired/expired during the year	2
Number of Employees at the end of the year	101

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS DURING THE FINANCIAL YEAR 2025-26

The key financial ratios during FY 2025-26 vis a vis FY 2024-25 are as below:

Sr No. Key Financial Ratios	FY 2025-26	FY 2024-25
1 Current Ratio (in times)	1.38	2.36
2 Debt Equity Ratio (in times)	-	0.34
3 Debt Service Coverage ratio (in times)	5.51	(1.18)
4 Return on Equity ratio (%)	9.98	(11.21)
5 Inventory Turnover ratio (no. of days)	356.3	160.42
6 Trade Receivable Turnover Ratio (no. of days)	15.10	5.53
7 Trade Payable Turnover Ratio (no. of days)	15.33	5.06
8 Net Capital Turnover Ratio (in times)	5.96	2.77
9 Net Pro t ratio (%)	0.02	(0.06)
10 Return on Capital Employed (%)	0.12	(0.06)
11 Return on Investment (%)	0.03	0.02
12 Interest Coverage Ratio	NA	NA

Explanation on Significant changes in the above Ratios: -

1 Current Ratio	: Reduction in trade receivables majorly due to realisation of advances.
2 Debt Equity Ratio	: Decrease in utilisation of cash credit due to advances from debtors.
3 Debt Service Coverage Ratio	: Increase in profit in current year leads to favourable ratio.
4 Return on Equity Ratio (%)	: Increase in profit in current year leads to favourable ratio.
5 Inventory Turnover Ratio	: Inventory Turnover ratio higher due to increase in sales.
6 Trade Receivable Turnover Ratio	: The increase in the Trade Receivables Turnover Ratio is primarily attributable to higher sales during the year.
7 Trade Payable Turnover Ratio	: The increase in the Trade Payables Turnover Ratio is primarily attributable to timely settlement of trade payables.
8 Net Capital Turnover Ratio	: The increase in the Net Capital Turnover Ratio due to growth in net sales, resulting from successful market expansion and increased product demand.
9 Net Profit Ratio (%)	: Net profit ratio increased due to higher profitability in current year.
10 Return on Capital Employed (%)	: Return on Capital Employed is increased due to increase in profitability of the company.
11 Return on Investment (%)	: Return on investment ratio increased on account of higher return as compared to previous year.

CAUTIONARY STATEMENT

Statements made in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations are "forward looking" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.

The Management is confident that your Company with its Quality products and Brand Equity and enduring relations with its customers and commitment of its staff, will achieve growth in times to come.