Shankara Building Products Ltd Management Discussions

I. Overview

Shankara Building Products Limited (hereinafter referred as Shankara, SBPL or We) historically had two businesses. The first was an omni channel market place for building products and the second was processing and manufacturing of steel tubes, cold rolled strips and roofing profiles. The manufacturing activities were housed in three wholly owned subsidiaries:

i.VishaL Precision Steel Tubes & Strips Private Limited (VPL), ii. Centurywells Roofing India Private Limited (CWI), iii. Taurus Value Steel & Pipes Private Limited (Taurus).

The Company filed for a demerger of its marketpLace business into a separate entity in January 2024 to the BSE and NSE respectively. After obtaining approval from the stock exchanges and SEBI (The Securities Exchange Board of India). SBPL filed with the NCLT (NationaL Company Law TribunaL) for its approvals for the Companys scheme of demerger. The final approvals from the Honble NCLT and all due processes were completed by September, 2025 and listing of the new entity of Shankara Buildpro Limited in the exchanges was duly completed in the first half of January, 2026.

Consequently, Shankara Building Products Limited today conducts the business of manufacturing and processing of precision steel tubes, cold rolled strips, roofing profiles and accessories.

Historical Perspective

Shankara Building Products Limited (hereinafter referred as Shankara, SBPL or We) was one of Indias largest omni channel market places for building products. The Company dealt with a large variety of steel material, construction, plumbing and sanitary items, flooring, electrical, roofing and other related products. Shankara owned and operated 90+ retail stores, warehouses and processing units across aLL of South India including Goa and Puducherry as well as the states of Maharashtra, Madhya Pradesh, Gujarat and Odisha. This was the major business of SBPL. On a much smaller scale, the Company

has a processing and manufacturing facilities housed under its three subsidiaries i.Vishal Precision SteeL Tubes & Strips Private Limited (VPL), ii. Century wells Roofing India Private Limited (CWI), iii. Taurus VaLue SteeL & Pipes Private Limited (Taurus).

Key Developments in FY26

Your Company has undergone a strategic transformation following its demerger, aimed at improving business focus and unlocking shareholder vaLue. Post-demerger, the company will be able to focus more effectively on its manufacturing operations, Leading to better operational clarity and streamlined decision-making. Due to the demerger, the financials and consequent ratios of SBPL have been impacted, but the overall quality of earnings is expected to improve, particularly through a stronger emphasis on the manufacture of niche products and better efficiency.

Operationally, the company benefits from reduced complexity and enhanced management accountability, though short-term challenges such as transitional and restructuring costs may arise. The demerger also positions the company to pursue growth opportunities more aggressively, especially in expanding its manufacturing footprint. Despite risks related to market competition and cyclically in the construction sector, the Long-term outlook remains positive, supported by improved capitaL allocation, better return ratios, and a clear strategic direction.

The demerger was strategically driven by:

Business Focus: Separating distinct verticals (trading and manufacturing) to allow sharper management attention.

Operational Clarity: Simplifying reporting

structures and improving accountability.

II. Industry Structure and Developments

The steel industry in India in FY26 is structured around a vertically integrated value chain, strongly influenced by government policy support and infrastructure-led demand. Upstream, India benefits from abundant iron ore

but depends on imported coking coal, while midstream production is dominated by large integrated players such as Tata Steel and JSW Steel alongside a fragmented secondary sector.

A key structural driver in FY26 is the active role of the Ministry of Steel, which is implementing long-term initiatives Like the National Steel Policy targeting 300 million tonnes capacity by 2030 and supporting large-scale investments across public and private players. Government-backed programs such as the Production Linked Incentive (PLI) scheme for specialty steel, infrastructure missions like PM Gati Shakti, and housing schemes like Pradhan Mantri Awas Yojana are significantly boosting steel demand, particuLarLy in construction and manufacturing sectors.

In addition, FY26 is witnessing direct project-level interventions, including capacity expansions by public sector units and new greenfield plants coming in states like Andhra Pradesh, Odisha and Maharashtra. Further, almost all the existing steel plants are expanding capacities in their existing factories apart from greenfield initiatives. Government capitaL expenditure and poLicy support are aLso acceLerating technoLogicaL upgrades, incLuding emission reduction targets and promotion of scrap-based and gas-based steelmaking.

The Indian steel industry is currently growing at a pace of around 10%. The growth is not only market driven but policy-led, where government initiatives in infrastructure, industriaL corridors, capacity expansion, and sustainability are central to shaping the industry structure and long-term competitiveness, positioning India as the primary growth engine in the global steel landscape.

III. Opportunities and Threats

The ongoing geopolitical conflicts in FY26, particularly tensions in the Middle East, have had a significant cost-push impact on steel prices in India. War-driven disruptions in global energy markets have led to a sharp rise in prices of key inputs such as coking coal, natural gas, and oil, all of which are critical for steel production and transportation. Since India is heavily dependent on imports for its energy requirements, this has directly increased production costs for domestic

steel manufacturers. At the same time, supply chain disruptions, especially in major shipping routes, have increased freight costs and caused delays, adding further upward pressure on prices.

Fortunately, India has witnessed a steady increase in steel consumption of between 8 to 10% over the last few years. Precision steel tubes demand has grown by over 15% thanks to the growth in the automobile industry, transport sector, storage and interiors business etc. Roofing segment likewise is growing at over 15%. There has been a rapid replacement of conventional roofing products like cement, asbestos sheets, for industrial sheds and warehousing.

IV. Segment wise/Product wise performance

Roofing Segment

We grew at about 20% in the roofing segment in the FY 2025-26. Our total turnover in the wholly owned subsidiary Centurywells Roofing India Private Limited was T433.91 crores as compared to T359.13 crores the previous year FY 2024-25.

Tubes & Strips Segment

We produced about 1,31,500 tons in FY 2025-26 as compared to 1,51,450 tons in FY 2024-25. This segment is captured in our wholly owned subsidiary VishaL Precision SteeL Tubes & Strips Private Limited and Taurus VaLue Strips Private Limited.

V. Outlook

The FY27 outlook for the steel industry is a phase of global recovery with strong India-led growth, following a weak and volatile FY26. According to the World Steel Association, global steel demand is expected to grow by around 2.2% in 2027 to about 1.76 billion tonnes, after a near-flat 0.3% growth in 2026, indicating a cyclical recovery in global steel markets. This recovery is driven by stabilisation in China, gradual improvement in developed economies such as the US, and improving demand conditions across infrastructure and manufacturing sectors globally.

India, however, remains the fastest-growing major steeL market in the worLd, with demand expected to grow around 9.2% in FY27, supported

by strong infrastructure spending, construction activity, automotive demand, and capital expenditure cycles. Government initiatives such as PM Gati Shakti, National Infrastructure Pipeline, housing programs, and railway expansion continue to provide strong structural support to domestic steel consumption. On the supply side, India is expected to witness continued capacity expansion, backed by significant investments from both public and private players, improving long-term competitiveness but also adding short-term pressure on utilisation levels.

Overall, FY27 represents a recovery phase globally but a structural growth phase for India, where global steel markets stabilise after overcapacity-driven stress, while India continues to outperform due to sustained domestic demand and policy-led infrastructure expansion.

Despite the current global uncertainty due to the Iran & U.S conflict, we see a stable demand for our products in India. SBPLs entire production is sold in the Indian markets. We expect to grow around 15% in volumes in the coming financial year 2026-27.

VI. Risks and Concerns

Risk is part of any business. It is not possible to detail every risk to the business. For our business, we have identified key risks:

- Market Risks: The Company operates in a highly competitive steel industry that is subject to economic cycles and is exposed to significant market risks arising from fluctuations in steel prices, raw material costs, and demand across key end-use sectors such as construction, infrastructure, and automotive. Demand for steel is closely linked to overall economic activity, and any slowdown may result in reduced consumption, lower sales volumes, and accumulation of inventory. Changes in government policies, including import duties, export restrictions, and environmental regulations, may affect the Companys operating environment and financial performance.

- Product Risks: As the Companys business is related to steel manufacturing, the core products are largely non-substitutable in their primary applications, and therefore the risk of

replacement by alternative materials remains relatively low in the near term. However, the Company is significantly exposed to fluctuations in steel prices, which are influenced by global supply-demand dynamics, raw material costs, and macroeconomic conditions. Any adverse movement in steel prices can have a direct and material impact on the Companys operating margins and profitability.

In addition, the steel manufacturing business requires careful management of production planning and inventory levels. Holding high levels of inventory during periods of declining prices may result in inventory losses, while insufficient inventory during price increases may lead to missed revenue opportunities. The Company therefore continuously monitors market trends, align procurement and production strategies accordingly, and maintain optimal inventory levels to mitigate the impact of price fluctuations and ensure operational efficiency.

- Financial Risks: The Companys steel

manufacturing operations are capital intensive in nature and require significant investment in machinery and working capital. As a result, the Company is exposed to financial risks arising from its capital structure, funding requirements, and reliance on external borrowings. Any increase in interest rates or tightening of credit conditions may lead to higher finance costs, thereby impacting profitability and cash flows.

The Company is also exposed to working capital risks due to the need to maintain inventories and extend credit to customers. Delays in receivables or slowdown in collections may impact liquidity and the Companys ability to meet its short-term obligations. Effective management of cash flows, credit exposure, and cost structures is therefore critical to mitigate financial risks and ensure sustained business performance.

- Business Risks: A significant portion of the Companys revenue is generated from a broad base of customers across its manufacturing operations. As a result, the Companys business performance may be influenced by several factors, including the loss of key customers, variations in customer demand, fluctuations in sales volumes, and changes in the timing and scale of customer procurement or capital

expenditure cycles. In addition, customer inventory management practices and purchasing behaviour may also impact order flow and revenue recognition patterns. Any adverse changes in these factors could lead to fluctuations in the Companys operational performance and financial results. The impact, if any, due to the emergence of Artificial Intelligence (AI) is being evaluated though preliminary assessment is that there will be negligible impact in our business.

VII. Internal control systems and their adequacy

In accordance with the provisions of Section 134(5)(e) of the Companies Act, 2013, and the applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has established a comprehensive and robust Internal Control System to ensure the orderly and efficient conduct of its business operations.

The Management of the Company has carried out an evaluation of the effectiveness of internal controls over financial reporting, as defined under Regulation 17 of the SEBI (LODR) Regulations, 2015, as at March 31, 2026. The Statutory Auditors, Sundaram & Srinivasan, have audited the financial statements of the Company and provide independent assurance on the financial reporting framework.

The internal control framework is an integral component of the Companys corporate governance structure and plays a critical role in safeguarding assets, ensuring accuracy and reliability of accounting records, and promoting operational efficiency. It also supports the Company in identifying, assessing, and managing various operational, financial, and compliance-related risks in a structured and timely manner.

The Company has implemented a well-defined Risk Management Policy, which is applicable across all its business segments. This policy enables a systematic approach for identifying potential risks, evaluating their impact and likelihood, and implementing appropriate

mitigation strategies. It also ensures continuous monitoring of risks that may affect the Companys operational performance and strategic objectives.

To further strengthen the risk governance framework, the Company has constituted a Risk Management Committee comprising Independent and Executive Directors. The Committee meets on a quarterly basis to independently review all key risks, including emerging risks, and assesses the adequacy and effectiveness of the mitigation measures and action plans implemented by the management. This ensures continuous oversight and improvement of the risk management framework.

The Company has adopted accounting policies in compliance with Indian Accounting Standards (Ind AS), ensuring consistency, transparency, and reliability in financial reporting. In line with the provisions of Section 134(5)(f) of the Companies Act, 2013, the Company has developed and continues to maintain robust systems and processes to ensure compliance with all applicable laws, regulations, and statutory requirements. Any compliance-related matters identified are promptly addressed and resolved in a timely manner, ensuring minimal exposure to regulatory risk.

Overall, the compliance framework of the Company is considered adequate and has been operating effectively during the year under review. The Directors have confirmed the same in the Directors Responsibility Statement.

The Internal Auditors play a key role in strengthening the internal control environment by regularly reviewing and evaluating the adequacy and effectiveness of internal control systems across the Company. This includes verification of compliance with established operating procedures, accounting policies, and internal systems at all locations of the Company and its subsidiaries. Their periodic reports and recommendations assist management in continuously improving systems and ensuring adherence to best practices in governance and control.

VIII. Discussion on financial performance with respect to operational performance.

(f in Crores)

Financial Highlights/ Year Ending 31st March	2025 -26		2024-25
	Consolidated	Standalone	Consolidated	Standalone
Revenue from operations	1,364.01	128.55	1,362.47	0
Total Income	1,370.75	135.02	1,364.82	1.44
Earnings Before Interest, Exceptional Items & Taxes (EBIT)	22.00	(6.41)	12.14	(4.01)
Profit/(Loss) before Exceptional items & tax	8.19	(6.42)	2.15	(4.01)
Exceptional Items	(0.37)	(0.17)	0	0
Profit/(Loss) before tax	7.82	(6.59)	2.15	(4.01)
Tax expenses	3.98	0.16	2.94	1.17
Profit/ (Loss) after tax	3.84	(6.75)	(0.79)	(5.18)
Other comprehensive income	0.08	(0.01)	0	0
Share Capital	24.25	24.25	24.25	24.25
Other Equity	423.06	211.65	386.71	185.75
Net worth	447.31	235.90	410.96	210.00

Share Capital

During the year under review, there was no increase in paid-up equity share capital of the Company.

As a result of the above, the paid-up equity share capital stands at f24,24,93,260/- comprising of 2,42,49,326 equity shares of f10/- per share fully paid up, as on March 31, 2026.

Reserve & Surplus

On standalone and consolidated basis, the balance of security premium as at March 31, 2026 amounted to f214.88 crores.

Goodwill

On a consolidated basis, carrying value of goodwill as at March 31, 2026 stood at f14.04crores.

Trade Receivables

On a consolidated basis trade receivable amounted to f93.85crores (previous year f47.82crores) net of provision for doubtful debts of f4.41 crores (previous year f0.15 crores).

Borrowings

On a consolidated basis, borrowing current as at March 31, 2026 is f189.64 crores and non-current borrowing f 2.39 crores.

Other Income

Please refer note no. 32 in consolidated financials.

Expenditure

The employee benefits expenses increased to f9.49 crores compared to previous year at f7.65 crores on consolidated basis.

Profit before Tax

Our profit before tax increased by f7.82 crores from a profit before tax of f2.15 crores for FY 2025.

Tax Expense

For the year ended March 31, 2026, there was a tax expense of f0.16 crores (Previous year: tax expense of f 1.17 crores) on a standalone basis. On a consolidated basis, tax expense was f3.98 crores (previous year f2.94 crores).

Net Profit

On consolidated basis, the net profit of the Company amounted to f3.84 crores as against f(0.79) crores during the previous year. Total Comprehensive profit for the year is f3.92 crores

as compared to ^(0.79) crores during previous year.

On standalone basis, the net loss of the Company amounted to ^6.75 crores as against loss of ^5.18 crores during the previous year.

Earnings per Share

On a standalone basis, basic earnings per share computed based on number of common stock outstanding, as on the Balance Sheet date is ^(2.78) per share (Previous year: ^(2.14) per share. On a consolidated basis, earning per share is ^1.58 (Previous year: ^(0.33) per share).

IX. Material developments in Human Resources/Industrial Relations front, including number of people employed

In an evolving business environment and an increasingly competitive marketplace, the

Company recognizes that its sustained competitive advantage is driven primarily by the knowledge, skills, and experience of its employees.

Accordingly, the Company places strong emphasis on aligning its human resource practices with overall business objectives to ensure long-term organizational growth and performance.

The Company is committed to the highest standards of corporate governance, business

ethics, and social responsibility. This commitment has enabled the creation of a positive and inclusive work culture that fosters empowerment, transparency, accountability, and a strong sense of ownership among employees at all levels. The HR policies and practices are designed to encourage employee engagement, continuous learning, and professional development, thereby contributing to both individual and organizational effectiveness.

The Company has established a strong foundation of policies, systems, and processes to ensure the health, safety, and overall well-being of its employees. A structured approach is followed to maintain safe working conditions across all locations, supported by regular monitoring and adherence to safety standards.

During the year, the Company organized medical checkups for employees reinforcing its commitment to preventive healthcare and overall well-being. The Company has maintained harmonious industrial relations throughout the year and continues to adopt proactive, participative, and inclusive practices in its engagement with all employee bodies. Regular communication and collaborative decision-making processes have helped in building mutual trust and ensuring a stable and productive work environment.

X. Key financial ratios:

The comparison of key financial ratios for FY 26 and FY 25 is detailed below:

Particulars	2025-26	2024-25
	Consolidated
Debtor Turnover in Days (on gross sales)	21	11
Inventory Turnover in Days	67	52
Interest Coverage Ratio	1.59	1.22
Current Ratio	1.47	2.01
Debt Equity Ratio	0.69	0.39
Operating Profit Margin (%)	2.22	1.53
Net Profit Margin (%)	0.28	(0.06)
Return on Net Worth	0.86	(0.19)

In FY26, Profit after Tax was Rs. (3.84) crores as against Rs. (0.79) crores in the previous year. Therefore, Return on net worth improved in FY26.

Detailed explanation of significant changes (i.e 25% or more as compared to the immediately previous financial year. - Not Applicable