Sahyadri Industries Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

The global economic landscape in 2025 remains dynamic and influenced by rapid changes, such as escalating trade tensions and Unstable geopolitical situations. Recent trade tariff measures have intensified uncertainties across regions, creating headwinds for global growth and inflation. The Indian rupee experienced fluctuations with a weakening trend due to a stronger US dollar, impacting emerging market currencies.

Widespread tariffs introduced by major countries have disrupted global trade and raised worries about a longer-lasting economic slowdown. These developments have triggered pronounced market volatility and added to the complexity of an already uncertain operating environment. Subdued global demand, tightening financial conditions, and mounting pressure on supply chains are collectively posing challenges for businesses and policymakers.

MPC committee of RBI has given balanced view on inflation, supported by strong domestic conditions and positive external indicators like easing commodity prices. Policymakers are actively working on reducing currency fluctuations & inflation. The India Meteorological Departments forecast of above-normal rainfall for FY26, paired with evenly distributed rains across regions, supporting robust crop yields and thus improving farmers income & rural demand.

The RBIs MPC has taken a balanced stance on inflation, aided by strong domestic conditions and easing global commodity prices. While uneven rainfall may lead to localised flooding, overall crop yields are expected to remain robust with limited geographic impact, supporting rural demand and farm incomes.

Indias economic momentum remains encouraging, with a projected real Gross Domestic Product (GDP) growth of 6.5 per cent for the fiscal year 2024-25, building on the strong 9.2% growth of the previous year. Looking forward to 2025-26, the agriculture sectors prospects appear promising, supported by healthy reservoir levels and strong crop production. There is an anticipation of sustained demand from rural areas, coupled with a likely revival in urban consumption, to serve as key drivers for continued economic expansion. The Consumer Price Index (CPI) inflation for the financial year 2025-26 is projected to be at 4.0 per cent.

Indias construction sector continues to grow at a healthy pace, supported by government initiatives such as “Housing for All,” rising investments in residential and commercial real estate and continuous infrastructure development. This ongoing momentum is driving consistent demand for fiber cement boards.

The Indian roofing sector is experiencing intense competition which is limiting ability to fully pass on the increase in prices to customers, resulting in moderation in realisation.

The major raw material is prone to seasonal variations: one of the raw materials is cement prone to seasonal price variations. However excess cement manufacturing capacity vis a vis demand partly protects from possible losses.

Demand for the Roofing industry: It mostly depends on monsoons in India, especially in rural areas. Better performance from monsoons boosts demand and vice versa.

Raw material cost: The key raw material used in our products, primarily imported from Kazakhstan and Brazil, has experienced persistent price volatility with a consistent upward trend over the past few years. Although there was a stabilization in 2024-25, the overall trajectory remains elevated.

This increase is largely attributed to geopolitical developments, particularly the Russia-Ukraine conflict, which has disrupted traditional shipping routes and significantly impacted global supply chains. Additionally, we are exposed to considerable currency risks, as evidenced during the previous year.

Increase awareness, providing high quality right products, identify credit risk well in advance, study of competitors and pricing strategy based on what the target market is willing to pay for comparable quality provided over competitors, innovative alternate solution, gathering market intelligence, timely response to changes in policies.

Currently, the company has a strong market share in the Western side of India and has a presence in Southern side of India with that, the company is planning to expand its footprint by establishing new manufacturing facilities to cater mainly the Eastern states. The company is enhancing their presence in western India through an upcoming manufacturing facility in Maharashtra. The Company is also expanding its export and entering newer markets.

Operational performance of the Company for the Year 2024-25 is explained in detail in Board of Directors report of the Company. FINANCIAL OVERVIEW:

*Not being significant change.

At Sahyadri we continuously strive to add value to its existing products while developing new products for the market. The Company believes in strengthening its R & D capabilities and utilises advanced technology to improve its manufacturing capacities.

Sahyadri has well equipped R & D department with skilled man power and tools. The Objective of R & D Department is to identify new ideas or knowledge, apply it to the process and increase companys sales and profit.

The R & D Department is in the pursuit for continuous improvement and delivering more value to our customers. As a result, we have successfully developed and patented our products and processes in India. Our dedicated team constantly work on product upgradation, optimum utilisation of raw materials, development of environment friendly products and applications.

Sahyadri Industries Limited is committed to improving the lives of people by empowering communities and creating sustainable impact in the areas in which it operates. It undertakes its CSR initiatives either directly or in association with external NGOs, Trusts, etc. to bring expertise and strength to ensure a larger and sustainable impact.

During the year, Board has undertaken various activities under the constructive framework of its CSR Policy designed as per Schedule VII of the Companies Act, 2013. Key highlights of activities undertaken during the year are as follows.

Your company in collaboration with The Lila Poonawalla Foundation (LPF) has undertaken Undergraduate Scholarship and Skill Building Program (Women Empowerment Through Education and Skill Building) for period of 4 years to provide scholarships to academically bright but socially deprived and financially disadvantaged LILA Girls who wish to pursue a Bachelor of Engineering/ Technology - 4 years course.

Your Company in association with VOICE 4 Girls, an NGO working with marginalised adolescent girls across India. VOICE conducts activity-based camps in government and low-cost private schools for students to acquire critical knowledge, life skills and spoken English knowledge pieces. VOICE 4 Girls conducted the Parichay module from the Her VOICE programme in association with Sahyadri Industries and District collector of Kalburagi, across 5 KGBV schools. During this camp, VOICE enrolled 630 students for the camp. A total of 518 girls from 5 Kasturba Gandhi Balika Vidyalaya (KGBV) schools successfully completed the 10-day Her VOICE Parichay Camp, receiving their certificates in recognition of their efforts and achievements.

Your company in association with Rotary Club have undertaken this project called Saksham. Under this project, E learning kits were provided which helped the students to learn more interestingly and understand the topics with animated graphics. 122 E-learning kits were installed in 87 Schools in Maharashtra and around 25000 Students are benefited by such E-learning kits. Your Company was conferred with Rotary CSR Award 2025 for supporting education through its Digital Classroom Project.

Your Company is a proud supporter of Lakshya Institute, a Rastriya Khel Puraskar awardee sports NGO. The NGO identified and supports young and budding talented sports persons and nurture them to enhance their performance in National and International Games. In FY 2024-25, your Company supported players like Kunal Ghorpade, Boxing, Sneha Soren, Weightlifting and Shravani Lavhate, Wrestling which heled them to win medal at National level championships.

Muni Seva Ashram, an Institution dedicated to improving the lives of the less privileged through various humanitarian, educational, and health-related initiatives. Your company contributed to help them in construction of classroom/rooms for Empowering individuals with skills and training in traditional as well as new-age employment opportunities to enhance their employability and financial independence.

Purna Vidya Trust is helping in providing education to under privileged kids, free tuitions to children and imparting Purna Vidya study programs through value based cultural education to schools, colleges, institutions, villages and communities. Your Company supported them to give food to the needy as well as the students in the nearby villages. Also provided medical assistance to the less privileged in rural areas.

The Company believes that its dedicated and motivated employees are its greatest asset. The Company offered competitive compensations, and healthy work environment. The Company intends to develop a workplace where every employee can recognize and attain his or her true power. The Company motivates individuals to undertake voluntary projects apart from their scope of work that help them to learn and nurture creative thinking. The Company enjoys cordial relationship with its staff and workers.

As on March 31, 2025, there were 727 permanent employees on the payroll of the Company.

Sahyadri Industries has a robust internal control system in place, adequate for the size and complexity of the organization. A comprehensive review of all internal control systems have been carried out to monitor Companys expanding size and resulting needs and compliance with the legal obligations and the Companys policies & procedures. This ensures high degree of system-based checks and control and continuous monitoring of the effectiveness of the controls.

An independent agency has been appointed for auditing internal control system of the Company. Suggestions, improvements, concern points of internal auditors are considered by Audit Committee and get implemented according to instructions of committee. The audit findings and managements resolution plans are reported on quarterly basis to the Audit Committee of the Board, headed by a Nonexecutive Independent Director. Based on its evaluation, the Audit Committee has concluded that the internal financial controls were adequate and operating effectively as of March 31, 2025.

As at March 31,2025, Net Worth of Sahyadri Industries Limited is Rs. 378.29 Crores as compared to Rs. 360.02 Crores in the previous year. Change in Net Worth is due to profit earned during the year net of dividend paid.

Certain Statements in Management Discussion and Analysis Report describing the Companys views about Industry, objectives, projections, estimates and expectation etc. may be considered as forward looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied in the statement. The Companys operations may be affected with supply and demand situation, input prices and their availability, changes in Government regulations, tax laws and other factors such as Industrial relations and economic developments etc. These statements are not expected to be updated or revised to take care of any changes in the underlying presumptions.