Rolcon Engineering Company Ltd Management Discussions

ANNEXURE ‘B To BOARDS REPORT

Pursuant to Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis Report covering business performance and outlook (within limits set by Companys competitive position) is given below:

A. INDUSTRY STRUCTURE AND DEVELOPMENT

Global Economy

Global growth is expected to hold steady at 2.7 percent in 2025-26, however, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development, while IMF said Global growth is projected at 3.3 percent both in 2025 and 2026. Growth in emerging markets and developing economies is projected to slow, with a 3.7% growth rate forecast for 2025, though still above the global average. It has added Managing these risks requires a keen policy focus on balancing trade-offs between inflation and real activity, rebuilding buffers, and lifting medium-term growth prospects through stepped-up structural reforms as well as stronger multilateral rules and cooperation. Forecasts for global growth have been revised markedly down compared with the January 2025 World Economic Outlook (WEO) Update, reflecting effective tariff rates at levels not seen in a century and a highly unpredictable environment. Global headline inflation is expected to decline at a slightly slower pace than what was expected in January-2025. The worlds largest economy, the US, is projected to grow by just 1.8%, significantly lower than last years expectations due to policy uncertainty and trade tensions.

Indian Economy

India is poised to lead the global economy once again, with the International Monetary Fund (IMF) projecting it to remain the fastest growing major economy over the next two years. According to the April 2025 edition of the IMFs World Economic Outlook, Indias economy is expected to grow by 6.2 percent in 2025 and 6.3 percent in 2026, maintaining a solid lead over global and regional peers.

The April 2025 edition of the WEO shows a downward revision in the 2025 forecast compared to the January 2025 update, reflecting the impact of heightened global trade tensions and growing uncertainty despite this slight moderation, the overall outlook remains strong. This consistency signals not only the strength of Indias macroeconomic fundamentals but also its capacity to sustain momentum in a complex international environment. As the IMF reaffirms Indias economic resilience, the countrys role as a key driver of global growth continues to gain prominence.

India is set to maintain its leadership in global economic growth. Supported by strong fundamentals and strategic government initiatives, the country is well-positioned to navigate the challenges ahead. With reforms in infrastructure, innovation, and financial inclusion, India continues to enhance its role as a key driver of global economic activity.

Industrial & Engineering Market

De-licensed engineering sector; 100% FDI permitted. Ministry of Heavy Industries has notified the Scheme on Enhancement of Competitiveness in the Indian Capital Goods Sector- Phase-II for providing assistance to Common Technology Development and Services Infrastructure. The scheme has a financial outlay of Rs. 1207 crores (US$ 145.1 million) with budgetary support of Rs. 975 crore (US$ 117.2 million) and industry contribution of Rs. 232 crore (US$ 27.9 million) Engineering accounts for about 25% of Indias total global exports in the goods sector and is one of the largest foreign exchange earners. In FY24, exports of engineering goods stood at US$ 109.32 billion, reflecting a marginal growth of 2.1% of YoY growth. In June 2024, exports of engineering goods reached at US$ 27.78 billion. Indias engineering goods are exported to key markets such as the US, Europe, and UAE. The value of shipments to the US, the top market for Indias engineering goods, stood at US$ 17.63 billion in FY24. Export of engineering goods is expected to reach US$ 200 billion by 2030. In FY25 (until December), exports of engineering goods reached at Rs. 7,61,343 crore (US$ 87.22 billion). Manufacturing is emerging as an integral pillar in the countrys economic growth, thanks to the performance of key sectors like automotive, engineering, chemicals, pharmaceuticals, and consumer durables. The Indian manufacturing industry generated 16-17% of Indias GDP pre-pandemic and is projected to be one of the fastest growing sectors. The Indian manufacturing sector is steadily moving toward more automated and process-driven manufacturing, which is projected to improve efficiency and enhance productivity.

India now has the physical and digital infrastructure to raise the share of the manufacturing sector in the economy and make a realistic bid to be an important player in global supply chains.

B. OPPORTUNITIES AND THREATS Opportunities

Infrastructure, Road & Transport growth and continuous focus by the government will be rise robust demand for Cement and steel where our products demand will increase.

Indian cement demand is projected to grow by 6-7% in FY25, following a strong 7-8% YoY growth in the last quarter of FY24.

Indias top four cement companies Ultra Tech, ACC-Ambuja, Shree Cement, and Dalmia Cement are set to add over 42 million tonnes of capacity in FY25, increasing their market share from 48% in FY23 to an expected 54% by FY26.

UltraTech Cement projects a 7-8% growth in cement demand for FY25, driven by increased construction activities, leading to a rise in industry capacity utilization to 72% and the addition of 35-40 million tonnes of capacity, primarily in eastern and southern India.

As per the Union Budget 2025-26, the government approved for the Ministry of Road Transport and Highways i.e., 3% higher as compared to the previous budget.

Indias domestic steel demand is estimated to grow by 9-10% in FY25 as per ICRA.

In the Budget for 2024, the governments power sector initiatives have been allocated funds that are 50% higher. Increased funds have been allocated to green hydrogen, solar power, and green-energy corridors in line with the renewable energy target for 2030.

Threats

Slower Growth: Global GDP growth is projected to slow down to around 2.9% in both 2025 and 2026, down from 3.3% in 2024.

Trade Tensions: The imposition of tariffs and trade barriers is expected to negatively impact global trade and economic activity.

Geopolitical Risk: Geopolitical tensions and potential conflicts, particularly in regions like Ukraine and the Middle East, pose significant risks to global stability and economic prospects.

Developing countries like India are particularly vulnerable due to their reliance on global trade and exposure to commodity price fluctuations.

The US economy is expected to slow down considerably, with lower GDP growth rate.

Imposition of tariff from US

C. OUTLOOK

Company has emphasis on improving mechanical process by investing more in machinery and equipment. The said process of modernisation will continue along with man power improvement for better customer satisfaction.

The Company has firm belief that to achieve and sustain the desired growth, constant focus on quality of the product is required and same can be transferred to shareholders. The following area are where company shall continue to focus:

Quality Improvement.

Atomisation of production process.

To Sustain the EBITDA and Operating margin levels.

Foray in new segment for the existing product.

More Focus on Marketing all over the globe along with domestic footprint.

Increase Export sales.

D. D I S C U S S I O N O N F I N A N C I A L PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Highlights of the Companys performance is provided below:

Turnover increased by 13.18% and stood at 5828.77 Lakh Show steady growth (YoY).

PBT declined by 18.15% from 532.71 Lakh to 436.01 Lakh

PAT Increased by 29.18 % from 290.88 Lakh to 410.71 Lakh

EBITDA fall by 10.42 % from 663.57 Lakh to 594.44 Lakh

Long term borrowing has down by 55.61 % from 11.76 Lakh to 5.22 Lakh

Operating cash flow (Consolidated) now stands at 372.75 Lakh as against 193.80 Lakh in LY

Segment: The Company has identified its business of Manufacturing ‘Engineering Goods which is only ‘operating Segment as primary reportable segment.

E. KEY FINANCIAL RATIOS

Ratios	Units	FY 2024-25	FY 2023-24	% Change
Current Ratio	Times	1.94	1.62	0.32
Debt Equity Ratio	Times	0.49	0.76	(0.27)
Ratios	Units	FY 2024-25	FY 2023-24	% Change
Return on Equity/Net worth	%	17.46	14.59	2.87
Inventory Turnover	Times	5.41	5.25	0.16
Return on Capital Employed	%	17.14	25.16	(8.02)
Net Profit Ratio	%	7.06	5.65	1.41

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has tremendous requisite internal control system with its size and complexity. It also ensures that they are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles, along with the assets of the Company being adequately safeguarded against significant misuse or loss. In the opinion of the Management, the Company has adequate internal audit and control systems to ensure that all transactions are authorized, recorded and reported correctly. An independent internal audit function is an important element of the Companys internal control systems. This is supplemented through an extensive internal audit program and periodic review by the management and the Audit Committee. The Corporate Governance and compliance practices are well formed with internal and independent professional consultancy practice from time to time review and on periodical requisites amendments as and when require as per the Companies act 2013, and SEBI regulations.

G. RISKS AND CONCERNS

The Management maintains an active oversight of the risk and the effectiveness of the risk mitigation strategies and plans put in place by the Company specially, define and implement strategies to address uncertain or contingent risk as one of the key business risks facing the Company. The Company has appropriate mitigation plans to protect margins while continuing to grow and transform the business. While the Companys focus on long term strategic drivers and brand building continues. Strategic and pricing interventions as well as cost and efficiency management programs were undertaken keeping in mind input costs, competitive positioning and product brand strategy. The Company has a robust risk mitigation plan to minimize identified risks through continuous monitoring and mitigating actions as may be required.

H. HUMAN RESOURCE AND INDUSTRIAL RELATIONS

Companys Human Resource development continues to be our top focused area which will ensure intentions are converted to realities. The emphasis was on reskilling and up skilling to enable the teams in navigating change and remaining compliant with evolving processes. Industrial Relations with employees remained cordial throughout the year under review. The Company extensively invests in training programs and learning modules. The Company consciously works and maintains harmonious industrial relations at its offices and plants. It believes and nurtures a culture of complete transparency through open communication channels with easy access. The Company further refines its policies in alignment with its organizational interest, benefitting everyone at the same time.

CAUTIONARY STATEMENT

The statement forming a part of this Report may contain certain forward-looking remarks with the meaning of applicable Securities Law and Regulations. Many factors could cause the actual results, performances, or achievements of the Company to be materially different from any future results, performances, or achievements. Significant factors that could make a difference to the Companys operations include domestic and international economic conditions, changes in government regulations, tax regime and other statutes.

For and on behalf of Board of Directors of

Rolcon Engineering Company Limited

Sd/-

Suresh H. Amin

Chairman & WTD

DIN: 00494016

Vallabh Vidyanagar

May 16, 2025.