RHI Magnesita India Ltd Management Discussions

FORWARD-LOOKING STATEMENT

The nancial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) noti ed under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time. The management of RHIM India has used estimates and judgments relating to the nancial statements on a prudent and reasonable basis, in order that the nancial statements re ect, in a true and fair manner, the state of a airs and pro t for the year.

The following discussions on our nancial condition and results of operations should be read together with our audited consolidated

nancial statements and the notes to these statements included in the annual report. Unless otherwise speci ed or the context otherwise requires, all references herein to ‘we, ‘us, ‘our, ‘the Company, ‘RHIM are to RHI Magnesita India Limited.

INDUSTRY OVERVIEW

Global Refractory Market

The global refractory material market is poised for steady growth, driven by robust demand from key industries such as iron and steel, cement, glass, and non-ferrous metals. According to Precedence Research, the market was valued at USD 29.68 billion in 2024 and is projected to reach USD 46.12 billion by 2034, expanding at a compound annual growth rate (CAGR) of 4.52% from 2025 to 2034.

This growth trajectory re ects the critical role of refractory materials in high-temperature industrial processes, underpinned by global industrialization, infrastructure development, and technological advancements.

Key Market Drivers

- Dominance of the Steel Industry: The iron and steel sector remains the largest consumer of refractory materials. The surge in global steel demand, fuelled by infrastructure projects and automotive production, particularly in fast-growing economy of India, continues to drive market expansion. For instance, Indias projected steel consumption of 230 MT per annum by 2030–31 highlights the sustained need for refractories in this sector.

- Infrastructure and Urbanization: Rapid urbanization and infrastructure investments, especially in the Asia-Paci c region, are boosting the demand for steel, cement, and glass, all of which rely heavily on refractory materials for thermal stability in their manufacturing processes.

- Sustainability and Recycling: The refractory industry is increasingly focused on sustainability, with advancements in recycling processes reducing production costs and environmental impact. Research indicates no signi cant di erence in thermal stability between new and recycled refractories, encouraging the adoption of cost-e ective opportunities for market growth.

- Growth in Glass and Non-Ferrous Sectors: The glass industry, driven by demand for sustainable packaging and modern architecture, is a growing consumer of refractories. Similarly, the non-ferrous metals sector, including aluminium and copper production, is contributing to market demand due to its reliance on refractories for high-temperature processes.

Market Segmentation Insights

- By Chemical Composition: The reclay segment dominated with a 62.2% market share in 2024, owing to its widespread use in cement and steel production. Fireclay-based refractories are favoured for their cost-e ectiveness and thermal stability.

- By Form: Shaped refractories held a 65.78% revenue share in 2024, driven by their ease of installation and suitability for complex furnace designs. The trend toward monolithic refractories is also gaining traction due to their exibility and enhanced performance.

- By Chemistry: Acidic refractories accounted for 48.93% of the market in 2024, valued for their resistance to acidic slag in applications like glass kilns and coke ovens.

- By End Use: The metals and metallurgy segment led with a

67.03% share, re ecting the critical role of refractories in steel and non-ferrous metal production.

Regional Insights

The Asia-Paci c region is the epicentre of market growth, driven by rapid industrialization, low-cost labour, and abundant raw material availability. The regions market size was USD 22 billion in 2024 and is expected to reach USD 35.26 billion by 2034. Meanwhile, North America and Europe are witnessing steady growth, propelled by infrastructure modernization and a shift toward energy-e cient refractories amid stringent environmental regulations.

Challenges and Opportunities

While the market bene ts from strong industrial demand, challenges such as raw material price volatility, geopolitical factors and environmental regulations pose risks. Prolonged exposure to materials like silica and ceramic bres can lead to health concerns, necessitating safer alternatives. However, these challenges present opportunities for innovation, particularly in developing eco-friendly and energy-e cient refractory products. Manufacturers are investing in advanced materials, such as low-cement and ultra-low-cement refractories, to enhance thermal e ciency and durability.

Companies that prioritize R&D, sustainable practices, and diversi ed applications beyond steel - such as in glass, petrochemicals, and power generation, are expected to be well-positioned to capitalize on evolving market dynamics.

Source: https://www.precedenceresearch.com/refractory-material-market

Indian Refractory Market

Indias refractory industry is undergoing a transformative shift, emerging from the shadows as a critical enabler of industrial growth. Traditionally tied to sectors like steel, cement, and glass, 2025 marks a pivotal year shaped by technology, sustainability, and national self-reliance. The ‘Make in India campaign has fuelled domestic production, reduced import dependency, and revitalized local manufacturing. Government incentives for upgraded mines and factories are powering a shift toward global-standard products. At the same time, advanced technologies like AI, robotics, and CNC machines are rede ning how refractories are designed, produced, and maintained. The rise of eco-friendly, low-carbon, and recyclable materials signals a green revolution in the sector. Compliance with ESG norms is becoming a strategic priority. Consolidation through mergers and global partnerships is strengthening Indias innovation and delivery capabilities. Export momentum has been growing rapidly, with Indian refractories gaining a stronghold in international markets. Meanwhile, the end-user industries are demanding more customized, high-performance solutions. There is a demand shiftin refractories from end-use industries like green steel, solar manufacturing and customized solutions. Skill development, supported by academia-industry tie-ups, is ensuring the availability of a future-ready workforce. As India aligns performance with purpose, it is not just meeting industrial needs the country is setting new global standards in refractory excellence.

Source: https://www.rhimagnesitaindia.com/blog/latest-trends-in-the-indian-refractory-industry/58

Global Steel Market

The global steel sector outlook for 2025 is neutral, with expectations of a modest recovery following a subdued 2024. This is driven by a more balanced Chinese market, easing costs, modest price increases, and improved producer margins.

Steel consumption is projected to grow in the low single digits, supported by Indias continued expansion, stable Chinese demand, and a recovery in the US and EU. While Chinese production is expected to decline slightly, improved margins are projected in Brazil, Turkey, Europe, and India due to reduced Chinese exports. Geopolitical factors and potential trade measures may pose risks, particularly from intensi ed protectionism.

Source: https://www. tchratings.com/research/corporate- nance/ neutral-sector-outlook-for-global-steel-in-2025-12-12-2024

Market Insights i. Market Size and Growth: The global steel market was valued at approximately USD 1.47 trillion in 2024 and is projected to reach USD 1.92 trillion by 2030, growing at a compound annual growth rate (CAGR) of 4.6% from 2025 to 2030. Global market demand for steel stood at 1.8 billion metric tons in 2024 and is expected to increase to 2.2 billion metric tons by 2030, re ecting a CAGR of 2.9%.

ii. Dominant Exporter and Importer: China remains the worlds leading steel exporter, while the European Union has emerged as the top steel importer. iii. Key End-Use Sectors: The construction sector continued to be the largest consumer of steel, accounting for 45.5% of the market share in 2024. Other signi cant sectors include automotive, heavy industry and consumer goods. iv. Regional Insights: Global steel demand decreased in the key markets of China and North America in 2024 but grew in India, West Asia & Africa, Europe and South America. Domestic production in some markets was displaced by exports from China where domestic consumption of steel reduced by approximately 6% and production by approximately 3%. The approximate 3% gap represents the increase in exports, which increased from approximately 90 million tons in 2023 to approximately 120 million tons in 2024. v. Sustainability Initiatives: There is a growing emphasis on sustainable steel production, with investments in green technologies such as electric arc furnaces and low-carbon steel production methods to reduce carbon emissions. vi. Technological Advancements: The steel industry is increasingly adopting digital technologies, including the Internet of Things

(IoT), Arti cial Intelligence (AI), and Data Analytics, to enhance operational e ciency and streamline manufacturing processes.

Source: https://www.grandviewresearch.com/industry-analysis/ steel-market https://www.globenewswire.com/news-release/2025/02/11/ 3023958/28124/en/Steel-Global-Industry-Industry-Business-Analysis-Report-2025-China-Remains-the-Dominant-Steel-Exporter-European-Union-Becomes-the-Top-Steel-Importer-Global-Forecast-to-2030.html

Challenges & Opportunities

The global steel industry is grappling with signi cant economic headwinds, primarily due to weak steel pricing and persistent overcapacity. Additionally, recent tari s and trade policies have introduced further complexities, leading to trade barriers and regional demand uctuations, compelling steel producers to navigate an increasingly volatile market landscape.

The global steel and iron industry in 2025 o ers substantial opportunities primarily driven by the rise of green steel production, leveraging low-carbon technologies like hydrogen-based methods that meet increasing demand for sustainable steel in construction and automotive sectors. Advances in AI, automation, and digitalization are revolutionizing and contributing to increased manufacturing e ciency and quality, enabling cost reductions and innovative product o erings. Additionally, strong infrastructure growth and urbanization in emerging markets, especially India, provide robust demand, while evolving automotive trends such as electric vehicles drive the need for advanced high-strength steels. These factors collectively position the industry for transformative growth despite ongoing challenges.

Source: https://www.reportlinker.com/article/10840

Indian Steel Market

Indias steel market is positioned for signi cant growth in 2025, with

CRISIL projecting an 8-9% increase in domestic steel demand, outpacing the global average of 0.5-1.5%. This surge is primarily driven by robust activity in the housing and infrastructure sectors, alongside rising demand from engineering and packaging industries. However, the domestic steel production is expected to be around 6-7% as domestic steel industry faces challenges from a substantial rise in imports, from countries like China, Japan, and Vietnam. In response, the Indian government has implemented a provisional

12% safeguard tari on select steel imports, primarily targeting

Chinese shipments. This 200-day measure aims to protect domestic producers from low-cost imports and has prompted smaller steel mills to pause job cuts and output reductions, indicating early signs of increased domestic demand. Despite these challenges, Indias steel industry is expanding its production capabilities, adding 14 million tons of new capacity since January 2024. This expansion is expected to o set the impact of restricted imports and may enable India to regain its net steel exporter status by 2025; a position last held in 2022. The industrys growth trajectory, bolstered by infrastructure development and strategic policy measures, positions India as a leading player in the global steel market.

Source: https://www.nbmcw.com/news/india-to-lead-global-steel-demand-with-8-9-growth-in-2025-crisil.html?utm_ source=chatgpt.com https://www.crisil.com/content/crisilcom/en/home/newsroom/ press-releases/2025/01/domestic-steel-demand-to-buck-global-slump-grow-8-9percent-in-2025.html?utm_source=chatgpt.com https://www.reuters.com/business/world-at-work/indias-small-steel-mills-pause-job-cuts-after-measures-curb-chinese-imports-2025-04-22/?utm_source=chatgpt.com

Challenges and Opportunities

The Indian steel industry faces signi cant challenges from persistent global overcapacity and weak steel prices, intensi ed by a surge in cheap imports from countries like China. Volatile raw material costs and delays in infrastructure projects have dampened domestic demand. Trade barriers andshifting tari s have redirected surplus steel to India, worsening oversupply and market instability. Low-capacity utilization in segments like stainless steel has added to the strain. Additionally, the industry must invest in greener technologies amid tight margins, pushing producers to focus on cost control and depend on policy support to navigate ongoing uncertainties.

Indias steel and iron industry is poised for signi cant growth, o ering a wide range of opportunities driven by both domestic and international demand. The rapid pace of urbanization and the governments aggressive infrastructure development plans including highways, metro rail projects, a ordable housing schemes, and smart cities are expected to substantially increase steel consumption across the country. Simultaneously, the expansion of rural infrastructure opens new markets, which remain largely untapped. Export potential is also on the rise, with Indian steel manufacturers looking to strengthen their footprint in global markets such as Southeast Asia, the Middle East, and Africa, where demand for a ordable and reliable steel products is growing.

Moreover, technological modernization presents a transformative opportunity. The adoption of cleaner, more energy-e cient steelmaking processes, along with increased automation and digitalization, can greatly enhance operational e ciency, reduce emissions, and improve global competitiveness. Indias favourable investment climate and policy support through initiatives like the Production Linked Incentive (PLI) scheme and ‘Make in India further attract foreign direct investment and enable capacity expansion. These combined factors position India not just as a growing steel consumer, but as a future hub for high-quality, globally competitive steel production. For companies like RHI Magnesita India, these trends create direct opportunities to expand product o erings, enter new markets, and align with emerging customer needs in a transforming industrial landscape.

Source: https://papersowl.com/examples/swot-analysis-industry-of-india/

Global Cement Market

The global cement market is projected to grow from USD 505.97 billion in 2024 to USD 686.41 billion by 2032, exhibiting a CAGR of 3.9% during the forecast period. The rising population has increased the need for residential buildings, driving the need for cement manufacturing across the globe. Additionally, the growing demand for non-residential buildings and public infrastructure, including healthcare centres and hospitals, has led to opportunities for product consumption. Hence, the rising demand from the expanding construction sector is currently one of the key market trends.

The rising adoption of green cement to construct eco-friendly and sustainable buildings will promote market growth.

Challenges & Opportunities

The primary raw materials used in cement production include limestone, clay, gypsum, and fuels such as coal and pet coke. The volatility in the prices of these materials poses signi cant challenges, impacting production costs, pro tability, and supply chain stability. Additionally, its production requires signi cant energy input, particularly for operating kilns.

Fluctuations in coal, natural gas, and oil prices a ect production costs, creating additional challenges for cement manufacturers. The adoption of 3D printing in construction is creating a demand for specialized cement formulations. 3D printing reduces construction time by up to 50% and minimizes material waste by depositing only the required amount. It also enables the creation of complex designs that are not feasible with traditional methods. The development of advanced cement types, such as self-healing and high-strength concrete, is creating new opportunities in emerging market segments. Source: https://www.fortunebusinessinsights.com/industry-reports/ cement-market-101825

Indian Cement Market

Indias cement industry, the worlds second largest, continues to demonstrate robust growth and resilience. The industry is projected to reach a demand of 450.78 MT by FY27, driven by signi cant infrastructure and housing initiatives. The sector is predominantly private, with 98% of capacity controlled by private players, where the top 20 companies account for 70% of production.

The demand is propelled by government-led infrastructure projects, including the National Infrastructure Pipeline (A 102 lakh crore) and the PM Awas Yojana, targeting an additional two crore houses by 2030. The industry anticipates a 7-8% production growth in FY25, supported by planned capacity additions of 150-160 MT by FY28.

Challenges & Opportunities

The Indian cement industry faces multiple challenges, including rising input and logistics costs, overcapacity concerns, infrastructure bottlenecks, and environmental sustainability pressures due to stringent emission norms. Additionally, uctuations in fuel and raw material prices, delays in large-scale infrastructure projects, and regional demand imbalances continue to impact operational e ciency and pro tability. It remains one of the most energy-intensive industries globally, with ongoing hurdles in reducing energy consumption and carbon emissions. Reluctance to adopt new technologies further slows modernization and e ciency gains, driven by high implementation costs and the labor-intensive nature of operations.

However, the sector also stands to bene t from signi cant opportunities, driven by the governments sustained focus on infrastructure development, urban housing expansion, and rural connectivity projects. Rising investments in renewable energy adoption, technological advancements in manufacturing, and increasing cement demand from the real estate and industrial sectors further strengthen the growth outlook for the industry. Additionally, Indias per capita cement consumption is still below global averages, indicating ample scope for expansion, particularly in emerging regional markets.

Source: https://www.ibef.org/download/1744101698_Cement-February-2025.pdf

ABOUT THE COMPANY

Company Overview

RHI Magnesita India Limited (RHIM India) stands as the market leader in the Indian refractory industry, supplying premium and end-to-end refractory products, systems, and solutions essential for high-temperature industrial processes. RHIM serves critical sectors such as iron, steel, cement, non-ferrous metals, glass, copper, aluminium and minerals. RHIM Indias products are fundamental to the safe and e cient functioning of industries where operating temperatures often exceed 1,200?C. The Companys portfolio includes magnesia and alumina-based bricks and mixes, as well as high-performance specialty items like isostatic products and slide gate systems, catering to a broad base of domestic and global customers.

RHI Magnesita India Limited was born out of the integration of three Indian subsidiaries of RHI Magnesita Group – RHI Clasil, RHI India and Orient Refractories Ltd. Subsequent acquisitions of refractory businesses of Hi-Tech Chemicals and Dalmia Bharat Refractories have helped build a market leader to serve the end-to-end needs of the customers. Headquartered in Gurugram, Haryana, RHIM India operates with eight manufacturing plants, over 25 project sites, and a world-class R&D center, supported by a workforce of more than 6,300 employees in all Indian legal entities.

Business Operations: Integrated, Localized, and Diversi ed

Refractory Solutions

RHIM Indias business model operates through two primary divisions: one dedicated to steel and iron industries the largest consumer of refractories and the other catering to a diversi ed industrial segment serving sectors including cement, lime, non-ferrous metals, chemicals, energy, and glass. This dual-division structure enables RHIM India to leverage deep industry expertise and deliver tailored, high-performance solutions that meet the unique operational needs of each sector.

Aligned with Indias ‘Make in India initiative, RHIM India adopts a robust ‘Local-for-Local manufacturing strategy, emphasizing domestic value creation, technology localization, and supply chain resilience. The Companys integrated operations cover the entire refractory lifecycle from cutting-edge research and development, manufacturing at the plants across India, to e cient supply chain management, expert installation, proactive servicing, real-time performance monitoring, and sustainable recycling practices. Complementing this approach, the 4PRO model is RHI Magnesitas integrated solutions platform that goes beyond refractory products to o er automation, digital tools, and process consultation in areas like connectivity, supervision, reduction, and circular ^CO2 economy. 4PRO aims to create long-term value through innovation, sustainability, and localized solutions for customers.

Sustainability remains a core pillar of RHIM Indias strategy, demonstrated through ongoing e orts in decarbonization, waste recycling, rigorous employee safety programs, and impactful community development initiatives. With India expected to continue as the fastest-growing refractory market globally, RHIM India is uniquely positioned to capitalize on this growth trajectory, reinforcing its leadership domestically and expanding its role as a global manufacturing and innovation hub.

Steel Division

In FY25, the Steel Division accounted for approximately 80% of RHI Magnesita Indias business, delivering advanced refractory solutions essential for the demanding conditions of steelmaking, where temperatures reach around 1,760?C. RHI Magnesita o ers a complete range of products and solutions for the steel making process. The lifespan of refractory products in the steelmaking process can range from hours to months depending on the application. The Companys comprehensive portfolio including slide gates, SEN tubes, tundish linings, purging plugs, tap hole clays, and magnesia alumina bricks and mixes is tailored for both integrated, mini steel plants and induction plants. In FY25, RHIM India expanded its market share in blast furnace applications in ironmaking and secured new projects by optimizing product range and solution o erings. The commissioning of Indias rst large-scale 5 MTPA pellet plant and a Letter of Intent for a second line, highlight the Companys growing role in the upstream steel value chain. Supported by robust R&D, acquired technologies, and localized products, RHIM India continues to develop high-performance products to meet evolving industry needs. With steel being a major consumer of refractories, RHIM is well-positioned to bene t from Indias increasing steel production and infrastructure investments. Notably, refractory management service contracts formed a signi cant portion of the divisions revenue, contributing approximately one-third of revenue during the year.

Industrial Division

In FY25, the Industrial Division accounted for approximately 20% of RHI Magnesita Indias business. RHI Magnesita is a leading supplier of refractory products and services to customers in the cement and lime, non-ferrous metals, glass, energy, environmental and chemicals industries. Refractory demand in non-steel industries is characterized by longer replacement cycles as compared to the steel sector. In the cement and lime industries, customers typically undertake annual maintenance shutdowns to replace rotary kiln refractories, ensuring optimal performance and safety. Conversely, in the non-ferrous metals and glass sectors, the replacement of refractories for lined only once every equipmentisrequired far less frequently often decade due to the longevity and durability of the installations.

Research and Development

RHI Magnesita India continues to strengthen its R&D capabilities to drive innovation, cost competitiveness, and product performance. The in-house R&D centre plays a pivotal role in new product development, recipe optimization, and technology transfer from global operations. Key innovations included the development of specialized products such as SHP stoppers, SEN slag bands, magnesia-spinel-carbon grades, and Solbonded castables tailored for steel and DRI applications. The Company also introduced recycling initiatives across product groups to promote sustainable production. With a focus on customer-centric innovation and localized product adaptation, RHIM Indias R&D e orts are integral to expanding its market presence and enhancing its technological edge.

RHIM continues to expand advanced solutions like LES scanning for cement rotary kilns and robotics for steel casting area at Indian

Steel Plant. This is the rst robotics in India in the steel casting area of a steel plant. By proving this capability in India, RHIM has strengthened its position as for advanced refractory solutions. This will help in expansion of our market share through additional 4PRO long-term contracts, under which, the company manages entire process ows for customers.

Manufacturing Operations

RHI Magnesita India operates one of the largest refractory production networks in the country, with 8 strategically located, modern manufacturing plants. The Companys manufacturing facilities are located in Bhiwadi (Rajasthan), Jamshedpur (Jharkhand), Visakhapatnam (Andhra Pradesh), Cuttack (Odisha), Rajgangpur (Odisha), Khambhalia (Gujarat), Dalmiapuram (Tamil Nadu), and Katni (Madhya Pradesh). Anchored in the ‘Make in India philosophy, the Companys manufacturing strategy focuses on cost-e ciency, localization, and customer proximity.

Signi cant operational advancements in FY25 include the establishment of a Centre of Excellence in Jamshedpur, equipped with automated taphole clay and castable lines to serve the steel sector. The company reinforced its Operational Excellence System to enhance productivity, safety, and lean practices. RHIMs safety campaigns in manufacturing plants are supported by DSS+ (operational consultants renowned for pioneering global safety practices) who are guiding us in elevating safety measures to the next level.

Key Strategic Achievements - FY25

- Revenue Resilience: Reported annual revenue of A 3,675 crores demonstrating resilience amid challenging macro-economic conditions and headwinds from input cost in ation and commoditization pressures.

- E cient Working Capital Management: Achieved record

Cash ow in FY25 resulting in a 53% reduction in net debt, strengthening the Companys nancial position.

- Capital Investment: Committed A 118 crores in capital expenditure, including establishment of a Centre of Excellence in Jamshedpur, equipped with automated tap hole clay and castable lines to enhance service to the steel sector.

- Strategic growth in Iron Making segment: Successfully expanded market share in key applications such as blast furnaces, coke ovens, and pellet plants.

- Increased R&D Investment: Raised R&D spend by 40% facilitating technology transfer from global operations and fostering new product development to meet evolving customer needs.

- Sustainability Initiatives: Strengthened recycling programs, improving recycling rate to 17% during the year, reinforcing the Companys commitment to sustainable operations.

- Safety & Operational Excellence: Conducted over 79,000 hours of safety training, achieving a Total Recordable Injury Frequency (TRIF) of 0.15 and a Lost Time Injury Frequency (LTIF) of 0.05, re ecting a strong safety culture.

SWOT ANALYSIS

RHIM demonstrates key strengths that reinforce its reputation as a market leader in the refractory industry and position it well to seize emerging opportunities in the rapidly growing Indian market.

Strengths

- Expansive Manufacturing Footprint with Sustainable Capabilities

RHI Magnesita India stands as the market leader with a dominant ~30% share in the Indian refractory industry, supported by eight strategically located plants across major steel and cement hubs. With an installed capacity of 512 kt and ongoing expansion plans such as the new Taphole Clay line at Jamshedpur, the Company is well-equipped to address both domestic and export demand. The Company combines local manufacturing with access to the RHI Magnesita Groups global production network, enabling energy-e cient, automated, and recycling-focused operations that support its net-zero ambitions.

- Strengthened Brand Value and E ciency Through Strategic

Mergers

As part of the 191-year-old RHI Magnesita Group present in over 100 countries with 65 production sites, 12 recycling facilities, and 5 R&D centres the Company bene ts from deep technical expertise and a legacy of innovation. Domestic acquisitions, including Dalmia Bharat Refractories and Hi-

Tech, have expanded capacity, diversi ed the product portfolio, and improved logistics. Global acquisitions such as

Seven Refractories, PD Refractories, and Resco have further strengthened the range and e ciency of operations. The

Jamshedpur facilitys proximity to major steelmakers delivers a signi cant logistical advantage.

- 4Pro Business Model

4PRO recognises the need to take a holistic approach covering ‘Planet, People, Partnership and Performance. The companys portfolio now includes recycled products, robotics, systems, sensors, digital solutions, decarbonisation solutions and green steel solutions. Due to the potential bene ts that can be captured by improving refractory performance, we are now able to approach customers with a much higher level of strategic engagement and not only as a supplier of commoditised or consumable items. It strengthens customer relationships by delivering end-to-end, customized, and automated solutions tailored to evolving industrial and societal demands fostering long-term partnerships, trust, and loyalty.

- Sustained focus on Innovation and R&D

With a 40% increase in R&D investment in FY25, RHI Magnesita Indias Bhiwadi R&D Center plays a pivotal role in driving innovation through technology transfer, new product development, and recipe optimization drawing on the global expertise of the RHI Magnesita Group. The Companys strong innovation pipeline consistently delivers advanced refractory solutions that enhance product performance, improve cost e ciency, and support the ‘Make in India initiative through localized, high-quality manufacturing.

- Safety-First Culture and Operational Excellence

Guided by global safety consultants DSS+, RHIM India achieved industry-leading safety metrics in FY25, including an LTIF of 0.05 and TRIF of 0.15, supported by over 79,000 hours of training. The Operational Excellence System (OES) continues to drive productivity, standardisation, and 6S compliance across sites, strengthening both performance and resilience.

- Strategic Expansion and Export Potential

RHI Magnesita India is actively pursuing growth initiatives by expanding into new segments such as private blast furnace projects and coke oven maintenance, leveraging synergies from recent acquisitions and strategic technology partnerships, including those with RESCO and Seven Refractories. Positioned as a key manufacturing hub within the RHI Magnesita Group, the Company is well-equipped to scale up regional exports, backed by access to global technology, expertise, and capital further strengthening its role in international markets.

Weaknesses

- Policy Gaps

Despite being essential to critical industries like steel, cement, and non-ferrous metals, the refractory industry lacks dedicated government policies or sector-speci c incentives. Unlike steel and cement, refractories are not recognized as a priority sector in industrial policy or production-linked incentive (PLI) schemes. This limits support for R&D, import substitution, and raw material security particularly important since India depends heavily on imported high-grade raw materials like magnesia and bauxite. The lack of a clear policy framework hinders long-term planning and investment in this niche yet strategic industry.

- Reliability of the End-to-End Supply Chain

Spanning several months and involving cross-border shipments, the Groups supply chain can limit agility in responding to sudden changes. Accurate demand forecasting is critical for e cient production planning, procurement, and inventory management, yet remains challenging in volatile markets.

- Cyclical Nature of Business

The business remains vulnerable to demand uctuations in core sectors like cement, glass and non-ferrous metal industry, where refractory consumption is tied to capex and maintenance cycles impacting revenue stability during industry downturns.

- Long-Term Contract Risks

Limited price escalation clauses in long-term contracts restrict industry players from passing on input cost increases to customers, leading to squeezed margins for a limited period.

During periods of raw material in ation or currency volatility, this can compress margins and impact pro tability. Strategic long-term contract structuring is essential for sustaining consistent revenue.

Threats

- Commoditization and Shift to Smaller Players

As certain segments of the refractory market become commoditized, some customers may shift towards smaller and low-cost local suppliers. This poses a risk to RHIM Indias premium positioning, potentially impacting volumes and pricing in segments where di erentiation is minimal. To mitigate this, the

Company focuses on high-value, performance-driven solutions, bundles products with technical services, and leverages long-term contracts with key customers. Additionally, continuous R&D investment enables the development of innovative, customised products that low-cost competitors cannot easily replicate, helping to preserve market share and pricing power.

- Import and Pricing Pressure

Indian refractory players face intense competition from low-cost manufacturers, particularly from China. These imports enter the market at aggressive prices, creating downward often pressure on domestic pricing. This not only a ects margins but also challenges the viability of local manufacturing, especially in commoditized or low-di erentiation product segments where price becomes the key deciding factor. We mitigate import and pricing pressure through high-value product di erentiation, long-term customer contracts, and cost-e cient local manufacturing.

- Raw Material Price Volatility

The refractory industry is highly exposed to global price

uctuations of key raw materials like magnesite, bauxite, graphite, and alumina. Supply-demand imbalances, heavy dependence on imports (particularly from China), geopolitical tensions, exchange uctuations and rising logistics costs can signi cantly increase input costs and compress margins. While the industry continues to manage risks through strategic sourcing and localization, a dedicated government policy supporting raw material security, domestic mining, and incentivizing backward integration could play a pivotal role in mitigating this structural vulnerability.

- Macroeconomic and Geopolitical Environment

Global economic shifts, nancial market volatility, and geopolitical tensions can reduce demand for refractories, a ecting capacity utilisation, pro tability, and gearing. This risk is mitigated through close monitoring of production costs, timely price adjustments to o set in ationary pressures, and prudent treasury practices, including the use of nancial instruments to manage market exposures.

- Over-Capacity Addition

The entry of new players and capacity expansions by existing competitors may lead to an oversupplied market, intensifying price competition which could lead to lower margins.

Maintaining di erentiation through technology, service, and high-performance o erings will be key to defending market share and pro tability.

Opportunities

- Domestic Market Expansion

The rapid growth of Indias steel and cement sectors o ers strong potential for volume and margin expansion. With performance exceeding organic growth, there is a clear opportunity to capture greater market share, particularly in underrepresented segments like Ironmaking, by leveraging scale, technology, and comprehensive solutions.

- Global Footprint

An established presence in international markets strengthens competitive positioning and export potential. It also reduces dependency on any single geography, o ering supply chain exibility. This diversi cation helps mitigate raw material sourcing risks by enabling alternate procurement routes during disruptions.

- Consolidation in Cement Sector

The ongoing consolidation in the cement industry o ers RHIM

India an opportunity to deepen strategic partnerships with larger, integrated players. With centralized decision-making and a preference for standardized solutions, the Company can leverage its broad portfolio, local manufacturing, and global technology to capture a higher share of wallet and drive adoption of value-added services across multiple plants.

- Broad and Integrated Product Range

With the successful integration of DBRLs Indian refractory operations and Hi-Tech Chemicals business, RHIM India now boasts a comprehensive and diverse product portfolio. This allows the Company to serve a wide array of end-use applications, catering to the speci c requirements of multiple industries with greater e ciency and adaptability. This also reduces dependence on any particular sector.

- Specialized Solutions for Iron Making

RHIM India is uniquely positioned to capitalize on the growing demand for specialized refractory solutions in advanced iron making technologies such as DRI and blast furnaces.

- New Product Innovations

RHIM India continues to enhance its R&D capabilities through focused investments in recipe optimization and new product development tailored to local and global industry needs.

Leveraging its world-class R&D center and deep integration within the global RHI Magnesita Group, the Company is driving innovations in product performance, energy e ciency, and sustainability. The acquisition of RESCO will further strengthen RHIM Indias technical know-how and product development capabilities, enabling faster localization of advanced refractory technologies and expanding the portfolio for critical applications in steel and industrial processes.

- Import Substitution and Localization

Increased local manufacturing aligns well with the governments ‘Make in India initiative and the Groups ‘Local for Local strategy, positioning the Company as a preferred partner for domestic clients and public sector projects. By strengthening its local supply chain, RHIM India reduces dependency on imports, mitigates global logistics risks, and ensures faster delivery timelines. This not only enhances cost-e ciency and operational agility but also improves the companys ability to serve high-growth sectors like steel and cement more reliably - creating a strong competitive advantage in the Indian market.

FINANCIAL & OPERATIONAL PERFORMANCE

Snapshot of FY25 on consolidated basis

- The total revenue from operations stood at 3,67,450 lakh in FY25 as compared to 3,78,110 lakh in FY24.

- The EBITDA was 50,515 lakh as in FY25 as compared to 55,691 lakh for FY24.

- The operating cash ow is 37,308 lakh improved by 38% from FY24

- The capital expenditure (CAPEX) is 11,768 lakh improved by 47% from FY24

- The adjusted earnings per share (EPS) was 9.80 per share

- The net debt to adjusted EBITDA ratio reduced to 0.3x from 0.6x in FY24.

INTERNAL CONTROL SYSTEMS & ADEQUACY

The Board evaluates the e ectiveness of the internal nancial, operational, and compliance controls, as well as the risk management framework. RHI Magnesita India adheres to corporate governance regulations, with the Board assessing the operational e ciency of internal controls throughout the year and making recommendations when appropriate. Regular discussions between the Board and the Audit & Compliance Committee have addressed improvements in the internal control systems, both implemented and planned. These systems were in place throughout 2025 and remain e ective as of the report date.

They follow the three lines of defence model, supported by an end-to-end process model and a delegation of authority structure re ecting responsibility for risk management and internal controls at all management levels. The Company has a dedicated risk management approach and an internal control framework for its nancial reporting process and the preparation of nancial statements. These systems include policies and procedures to ensure that adequate accounting records are maintained, and transactions are recorded accurately and fairly, allowing for the preparation of nancial statements in accordance with applicable accounting standards.

HUMAN RESOURCES

RHI Magnesita India Ltd. upholds a dynamic people and culture framework that aligns with its strategic vision. RHI Magnesita fosters a culture of innovation, openness, pragmatism and high performance to support the delivery of its strategy. Hiring and retaining talented teams and individuals is essential for the Group to grow and maintain its leadership position. Leveraging the diversity, we enjoy across our regions brings di erent viewpoints, ways of approaching and solving problems, and generating learnings about how we can all succeed together. We are committed to fostering a culture of lifelong learning and supporting both personal and professional growth, ensuring that our employees are equipped to meet evolving business needs while contributing to our organisations long-term success. As of March 31, 2025, the Companys workforce comprised more than

6,300 employees, including both permanent and contractual sta in all Indian legal entities.

Outlook

In FY26, RHIM India will concentrate on translating its scale, technological capabilities, and sustainability initiatives into sharper competitive advantage. Building on operational e ciencies achieved in FY25, the Company aims to further optimize its manufacturing footprint, expand high-value product lines, and increase the share of service-based revenue.

Investmentwillbedirectedtowardacceleratingthecommercialization of locally developed innovations, deepening integration of digital monitoring and predictive maintenance tools, and expanding the adoption of recycled raw materials in manufacturing. These actions will strengthen customer relationships, enhance margin resilience, and position RHIM India to respond quickly to evolving demand patterns. Strategic export expansion into targeted emerging markets and niche developed segments will provide additional growth levers. While external pressures such as import competition, raw material cost volatility, and global economic uncertainty persist, RHIM Indias robust balance sheet, disciplined pricing, and access to the Groups global R&D and procurement network provide a strong foundation for sustained growth. Management expects FY26 to be de ned by a balanced focus on market expansion, operational agility, and long-term stakeholder value creation.

Strategic Priorities – FY26:

- Strategic Pricing for Margin Protection- Implement targeted price revisions to o set input cost in ation and strengthen operating margins in a challenging cost environment.

- Expansion in Iron-making Segment- Expand presence in direct reduced iron (DRI) and pellet applications, positioning RHIM India as a preferred refractory supplier.

- Accelerated Product Innovation- Launch a pipeline of new o erings including special castables for DRI and pellet plants, magnesia–spinel–carbon grades, and advanced solutions for the iron, steel, power, and cement sectors, reinforcing the

Companys focus on innovation and sector diversi cation.

- Expansion of 4PRO Models- Scale comprehensive refractory management contracts to deepen lifecycle engagement with customers and enhance value delivery.

- Sustainability & Circularity Leadership- Increase recycled raw material usage and reduce carbon intensity per tonne of product, aligning with the Groups 2025 and 2030 sustainability targets and strengthening the Companys ESG positioning.

- Process E ciency, Digitalization and Supply Chain Automation-

Deploy predictive maintenance systems, advanced plant monitoring, and recipe optimisation, while automating supply chain processes to improve scalability, operational e ciency, and cost competitiveness.

- Improved capacity utilisation and Modernisation- Leverage automation, debottlenecking, and targeted process improvements across key manufacturing sites to increase capacity utilisation from current underused levels, enabling the

Company to meet anticipated demand growth more e ciently.

Disclaimer

Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward-looking within the meaning of applicable securities laws and regulations. These Forward-looking statements are based on certain assumptions and expectations regarding future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise forward-looking statements, on the basis of any subsequent developments, information or events. Actual results may di er materially from those expressed in the statement. Important factors that could in uence the Companys operations include changes in government regulations, tax laws, economic developments within the country and such other factors within India and globally.