Shankara Buildpro Ltd Management Discussions

I. Overview

Shankara BuiLdpro Limited (hereinafter referred to as "BuiLdpro”, "SBL”, or "the Company") is one of Indias leading omni-channel marketplaces for building and construction products, serving a diverse customer base comprising individual homeowners, contractors, fabricators, institutions, and industrial consumers. The Company has established a strong market presence through its extensive distribution network, wide product portfolio, and customer-centric approach, positioning itself as a trusted one-stop destination for construction and infrastructure-related requirements.

SBL offers a comprehensive range of products across multiple categories, including steel products, construction materials, plumbing and sanitaryware solutions, flooring products, electrical items, roofing products, paints, hardware, and various allied building materials. By partnering with reputed brands and manufacturers, the Company ensures the availability of quality products that cater to both retail and institutional demand across residential, commercial, and industrial segments.

The Company operates a robust and integrated supply chain infrastructure consisting of 130 fulfilment centres across India. This network includes 95 retail stores operating under the brand name "Shankara BuiLdpro”. The widespread network enables the Company to ensure seamless product availability, timely deliveries, operational efficiency, and superior customer service across its operating regions.

Shankara BuiLdpro has a particularly strong footprint across South India, with operations spread across Karnataka, Tamil Nadu, KeraLa, Andhra Pradesh, TeLangana, Goa, and Puducherry. In addition, the Company has expanded its operations into western and central India, including Maharashtra, Madhya Pradesh, Gujarat, and Odisha, thereby strengthening its pan-India presence and Long-term growth strategy. In Line with changing consumer preferences and increasing digital adoption, SBL has aLso deveLoped a strong onLine and omni-channeL presence. The Company operates its dedicated e-commerce pLatform, BuiLdpro Store, through which customers can convenientLy browse and purchase a wide variety of products onLine. AdditionaLLy, the Company activeLy seLLs its products through Leading e-commerce marketpLaces such as Amazon India and FLipkart, enabLing broader customer reach and enhanced accessibiLity across geographies.

The Company has estabLished strong partnerships with severaL Leading nationaL brands across its product categories, enabLing it to provide customers with high-quaLity and reLiabLe buiLding soLutions under one roof. In the steeL segment, the Company is associated with some of the most reputed manufacturers in India, incLuding JSW SteeL, JSOL, SAIL, AM/NS India and APL ApoLLo, amongst others. These partnerships strengthen the Companys abiLity to cater to a wide range of structuraL and industriaL steeL requirements across muLtipLe customer segments. For paints, waterproofing soLutions, and construction chemicaLs, the Company has partnered with renowned brands such as Nippon Paint India, enabLing it to offer comprehensive surface protection and finishing soLutions. In the pLumbing, sanitaryware, and bathroom soLutions segment, Shankara BuiLdpro sources its requirements with Leading brands incLuding Jaquar, KohLer India, and Parryware, thereby providing customers with premium and aestheticaLLy advanced products for residentiaL and commerciaL appLications.

In the tiLes and surface soLutions category, the Company has tie-ups with prominent brands such as Kajaria Ceramics, Somany Ceramics, SimpoLo, Nitco, RAK Ceramics, aLong with severaL other manufacturers. This enabLes customers to access a broad range of tiLing, flooring, and decorative surface soLutions. AdditionaLLy, Shankara has estabLished reLationships with companies such as GrindweLL Norton Limited, HP Landmark, and Aqua Star for roofing products, fabrication accessories, and aLLied industriaL appLications.

As part of its strategic corporate restructuring initiative, Shankara BuiLdpro Limited emerged as the resuLting entity pursuant to the demerger of the trading business of Shankara BuiLding Products Limited. The Scheme of Arrangement was sanctioned by the NationaL Company Law TribunaL (NCLT), BengaLuru Bench, with the objective of creating focused business verticaLs, improving operationaL efficiency, and unLocking sharehoLder vaLue. Under the approved scheme, the trading business undertaking of Shankara Building Products Limited was transferred and vested into Shankara Buildpro Limited with effect from the appointed date of April 1, 2024.

The Company strongly believes that deep market penetration and localized customer engagement are critical to achieving long-term growth, stability, and sustainability. In line with this strategy, the Company continues to focus its expansion efforts on smaller cities and emerging towns within its operating regions, rather than limiting itself only to metropolitan markets. By building a large and diversified customer base across multiple geographies and customer profiles, the Company seeks to create a resilient and scalable business model capable of sustaining long-term demand across economic cycles.

Key Developments in FY26

FY26 marked a transformational year for Shankara Buildpro Limited ("SBL"), driven by the successful demerger distribution and retail business, strong operational growth, geographical expansion, and continued strengthening of its omni-channel building materials platform.

Demerger and Independent Listing

One of the most significant milestones during FY26 was the successful demerger of the Omni Channel business from Shankara Building Products Limited into Shankara Buildpro Limited. The Scheme of Arrangement was approved by the Honble National Company Law Tribunal (NCLT), Bengaluru Bench, enabling the creation of a focused and independent retail and distribution platform for building materials and home improvement products.

Following the demerger, Shankara Buildpro Limited was listed separately on the stock exchanges during FY26, thereby unlocking shareholder value and enabling sharper business focus, improved capital allocation, and greater operational flexibility. The restructuring also created a clearer distinction between the retail/omni channel business and the manufacturing/processing operations of the parent entity.

Strong Volume Growth and Operational Performance

During FY26, the Company achieved a major operational milestone by surpassing its annual volume target of 1 million tonnes. Shankara Buildpro delivered approximately 10.2 lakh tonnes during FY26, representing a robust year-on-year growth of around 32% compared to FY25 volumes of approximately 7.7 lakh tonnes.

II. Industry Structure and Developments

The Indian building materials and construction products industry continued to demonstrate strong structural growth in FY26, supported by sustained government capital expenditure, infrastructure expansion, urbanization, and rising demand from both residential and industrial segments.

Industry Structure

India remains one of the fastest-growing construction markets globally, driven by large-scale public infrastructure programs and increasing private sector participation in real estate and industrial development. The building materials industry in India is highly fragmented, comprising a mix of large organized manufacturers, branded distributors, and a wide network of unorganized regional traders. The sector spans multiple product categories including steel, cement, tiles, sanitaryware, plumbing products, electricals, paints, roofing materials, and construction chemicals.

Within this ecosystem, the retail building materials business plays a critical role in connecting manufacturers with end users such as homeowners, contractors, fabricators, builders, and small to mid-sized enterprises. Traditionally dominated by unorganized trade counters and local dealers. This segment is witnessing a very slow transformation towards organised retail formats. Organized retail of building materials means that the business owners have to understand the customer requirements across multiple regions and quite often vary significantly from one area to the other. India is a complex market and micro-managing myriad consumer behavioral patterns is an art and businesses have to constantly adapt and change and it is very difficult to have a cookie cutter approach to plan and forecast business model. Buildpro has over the years understood these requirements and has a robust model in place. Modern retailing requires backend warehousing, logistics apart from the physical stores at appropriate locations across multiple geographies. ALL this calls for significant investments, hands-on micro management and flexibility to cope with constant change.

Growth of Retail Building Materials Business

The retail building materials segment continued to expand during FY26, supported by:

• Rising demand for home construction and renovation activities

• Growth in Tier-2 and Tier-3 cities

• Increasing preference for branded and quaLity-assured products

• Expansion of contractor-led and project-based purchasing

• Shift from fragmented local procurement to integrated supply solutions

The retail model is also benefiting from greater digital adoption, where customers use online pLatforms for product discovery, comparison, and ordering, whiLe reLying on physicaL stores and warehouses for fulfilment and technical support. This hybrid modeL is acceLerating the evoLution of the industry towards a true omni-channeL ecosystem.

“Make in India Initiative” continues to support domestic manufacturing and strengthen the organised ecosystem in construction-reLated industries. The industry is well supported by a structured suppLy chain invoLving manufacturers, distributors, contractors and influencers like architects, structuraL engineers and interior decorators. This ensures efficient movement of materiaLs to end users such as homeowners, buiLders, infrastructure deveLopers, and industriaL customers.

A graduaL transition from excessiveLy fragmented and unorganised trade to organised retail and omni-channeL distribution modeLs is being observed. Customers increasingly prefer integrated procurement platforms offering multiple brands, assured avaiLabiLity, technicaL support, and efficient logistics. The sector is also evolving with growing emphasis on sustainability, energy efficiency, and technology-enabled construction materials, along with increased adoption of digital procurement and supply chain systems.

The construction sector remains a key driver of economic growth and employment, strongly supported by sustained pubLic infrastructure investment and urban development initiatives.

Key Recent Government Initiatives

• PM Gati Shakti National Master Plan - Integrated multimodal infrastructure planning across transport and Logistics networks.

• National Infrastructure Pipeline (NIP) - Continued multi-year infrastructure investment across core sectors.

• Smart Cities Mission - Urban infrastructure modernization and redevelopment of cities.

• PM Awas Yojana (Urban & Rural) - Affordable housing development driving demand for building materials.

• Har Ghar JaL (jaL Jeevan Mission) - Rural water infrastructure expansion boosting demand for pipes and construction materiaLs.

• The Government has target that India shouLd produce 300 miLLion tonnes of steeL by 2030.

These programmes coLLectiveLy continue to generate sustained demand across steeL, cement, pLumbing, roofing, and aLLied construction materiaL segments, with strong participation across both urban and rural markets due to decentraLised project execution. SteeL demand has been growing at between 8 to 10% year on year. The industry outLook remains positive, supported by infrastructure growth, housing demand, industriaL expansion, and the steady shift toward organised, technoLogy-enabLed retaiL and distribution channeLs.

III. Opportunities and Threats

Opportunities

The Indian construction and infrastructure sectors continue to demonstrate strong and sustained growth, supported by rapid urbanisation and significant government-Led infrastructure investment. According to the Government of Indias Long-term infrastructure framework, the NationaL

Infrastructure Pipeline (NIP) outlines large-scale capital expenditure across transport, energy, urban infrastructure, and logistics, creating a strong multi-year demand outlook for building materials. In addition, integrated infrastructure development under the PM Gati Shakti National Master Plan is expected to improve execution efficiency and accelerate infrastructure creation across roadways, railways, ports, and logistics networks, thereby supporting sustained demand for construction inputs.

The continued implementation of PM Awas Yojana (Urban & Rural) is driving growth in affordable housing and urban redevelopment, thereby strengthening demand for core building materials such as steel, cement, pipes, tiles, and sanitaryware. Furthermore, the Jat Jeevan Mission, focused on providing tap water connections to rural households, continues to generate sustained demand for pipes, fittings, and allied construction materials, particularly in semi-urban and rural markets.

Shankara Buildpro Limited is well positioned to benefit from these structural drivers due to its strong geographic presence, diversified product portfolio, and integrated omni-channel distribution network across India.

Threats

The building materials industry remains cyclical and closely linked to macroeconomic conditions, particularly housing demand, residential construction activity, and infrastructure investment cycles. Any slowdown in these segments may impact demand for construction materials. The industry is also highly competitive and margin-sensitive, with pricing pressures arising from both organised and unorganised players. Additionally, changes in interest rates, inflationary pressures, and delays in infrastructure execution can adversely affect demand conditions in the short term. The industry is also closely linked to broader demand trends in housing, real estate, and infrastructure investment. In particular, the Companys exposure to steel a largely commoditised product category results in periodic price volatility, which may impact both demand patterns and margin performance.

The building materials sector remains highly competitive and margin-sensitive, where operational efficiency, supply chain strength, and customer service are key differentiators. Despite these challenges, Shankara Buildpro Limited benefits from over five decades of industry experience, strong supplier partnerships, and an established and diversified customer base across retail, contractor, and institutional segments.

The global scenario of disruptions of energy resources to India due to the prolonged U.S- Iran conflict could affect some industries in this sector. Rising fuel prices could stoke inflation. This scenario could also dampen customers sentiments.

IV. Segment wise/Product wise performance

I. Steel Segment

Our business is structured across two key revenue streams - steel and non-steel. Our steel segment includes steel pipes, tmt bars, angles channel and heavy structural. We also offer wide range of steel flat products like Hot rolled (HR) sheets Plates and Coils, Cold Rolled (CR) sheets and coils, Color Coated (CC) Coils and Profiles, GP/GC sheets and coils. We represent most of the leading manufacturers of steel in India like JSW, AM/NS, SAIL, NMDC, JSOL and APL Apollo etc.,

About 90% of our Company turnover comes from this segment. Buildpro crossed a milestone in FY 2025-26 by selling over 1 million tonnes for the financial year which represents a volume metric growth of over 32% as compared to the previous FY 2024-25. The Company is undoubtedly one of the largest steel retailers and distributors in the Country.

II. Non-Steel Segment

Our Non-Steel segment includes (i) plumbing products which includes CP fittings, Sanitaryware, PVC pipes and fittings etc. We represent leading manufactures like Jaquar, Kohler, Parryware, Grohe, Geberit, Viega, Aashirvad Pipes and Supreme etc (ii) Flooring which includes ceramic tiles, laminates etc and we represent Kajaria, Somany, Simpolo, RAK and we have our private label Fotia. (iii) Electrical cables and fittings representing Polycab, Havells and Finolex etc. (iv) Paints, Adhesives and sealants representing Nippon paints, MYK Laticrete and Asian Paints. We have numerous other products to complete the building material basket.

We have an entire range of roofing materials (steel profiles, puff panels, UPVC sheets etc) and accessories. We represent HP Landmark, Grindwell Norton and Aqua Star etc.

The revenue for this segment was ^605.55 for FY 2025-26.

BuiLdpro operates through an omni channel which includes retail stores, distribution and e-commerce. We have 95 stores in our areas of operation. Our retail division did a revenue of Rs. 3,627.32 crores.

Our distribution division including channel and enterprise did a revenue of Rs. 3,198.39 crores.

Our e-commerce division which sells through Amazon, Flipkart and our own e-commerce portal. We are seeing significant traction in this segment, though very small as yet. We did a turnover of ^22.18 crores which is a 322% growth over the previous year FY 25.

Supply chain management

Supply chain is an integral part of our business. We have a warehousing network spread over ~8 lakhs sq.ft across our area of operations. Warehousing is very critical in ensuring storage of the required range of materiaL and timeLy deLivery to our customers.

V. Outlook

The Indian economy is expected to remain one of the fastest growing large economies globally, supported by sustained domestic demand, infrastructure investment, and capex spending by the government. According to recent RBI projections and by other gLobaL anaLysts, India is expected to grow in the range of around 6.5- 7% in FY27, despite gLobaL uncertainties.

However, gLobaL headwinds such as geopoLiticaL tensions triggered by the U.S- Iran war which has affected energy supplies to the whole world could affect economic growth. India imports around 80% of its fossil energy needs. About 40% of this comes from the Middle-East which is currently blockaded due to the ongoing standoff between the U.S and Iran. Petroleum prices have rise sharply over the last few months which will have an adverse impact on any economy. The rupee has depreciated substantiaLLy. The current situation couLd stoke inflation. The Government of India is taking substantiaL measures to mitigate the adverse effects on the economy.

Despite these challenges, we believe that Shankara Buildpro will sustain its growth momentum. The Companys products are highly diversified catering to infrastructure, housing, industrial and general engineering. And all these areas are the backbone of any economy. Buildpro has a widespread geographic presence in South, West, CentraL and parts of Eastern India. Our well established supply chain and omni channel distribution will hold the Company in good stead.

VI. Risks and Concerns

As our investor, you already understand that risks are 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 retail building materials industry operates in a highLy competitive and fragmented environment, with significant participation from both organised and unorganised players. Intense competition, particuLarLy from smaLL and owner-driven trading businesses, often Leads to aggressive pricing strategies, Limited pricing discipLine, and heightened pressure on margins across key product categories. Such competitive intensity can constrain the Companys ability to maintain pricing power, protect profitability, and sustain consistent margin performance, especially in commoditised segments such as steel and basic construction materials. The expansion of informal trade channeLs further intensifies competition through flexible credit terms, localised relationships, and non-standardised operating practices.

In addition, the presence of certain market participants engaging in non-standard or Less structured business practices may create an uneven competitive environment, impacting fair pricing dynamics and increasing operationaL chaLLenges for organised pLayers adhering to compliant and structured business processes. ProLonged pricing pressure and margin compression arising from such market conditions may adverseLy affect the Companys profitabiLity, market positioning, and overaLL business performance.

• Credit Risk: The retail building materials business is significantly exposed to credit risk due to the nature of its customer base, which includes contractors, builders, fabricators, wholesalers, and other trade intermediaries. The industry typically operates on extended credit cycles, and delays or defaults in customer payments can adversely impact the Companys cash flows and working capital cycle.

The Companys ability to effectively manage credit risk depends on continuous monitoring of customer exposure, disciplined credit assessment, and efficient collection processes. Failure to adequately control credit exposure may adversely affect cash flows, working capital requirements, and overall financial performance.

• Inventory and Breakage Risk: The retail building materials business involves a large and diverse SKU base across categories such as steel, tiles, sanitaryware, plumbing, electricals, and allied products. Inefficient inventory planning may lead to accumulation of slow-moving or obsolete stock, particularly in non-steel categories. Products such as tiles and sanitaryware are also exposed to higher obsolescence risk due to frequent changes in designs, models, and colours, which may result in unsold inventory or price adjustments impacting margins. Additionally, breakage risk during storage, handling, and transportation of fragile products can lead to inventory losses and higher logistics costs. Overall, poor inventory management, product obsolescence, and handling-related damages may adversely impact profitability and working capital efficiency.

VII. Internal control systems and their adequacy

In accordance with Section 134(5)(e) of the Companies Act, 2013 and the applicable provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has established a comprehensive internal control system commensurate with the size and complexity of its operations.

The management has assessed the effectiveness of the Companys internal controls over financial reporting as at March 31, 2026, as defined under Regulation 17 of the SEBI LODR Regulations, 2015. The financial statements for the year have been audited by the statutory auditors, ASA & Associates LLP, Chartered Accountants, who have expressed their opinion thereon.

The internal control framework forms an integral part of the Companys corporate governance structure and plays a key role in managing operational, financial, and compliance risks. The Company has in place a structured Risk Management Policy applicable across all business verticals, which facilitates systematic identification, assessment, and mitigation of risks that may impact business performance and achievement of strategic objectives.

A Risk Management Committee, comprising Independent and Executive Directors, oversees the risk management framework. The Committee periodically reviews key existing risks as well as emerging risks on a quarterly basis and evaluates the adequacy and effectiveness of mitigation measures implemented by the management.

The Company has adopted accounting policies in line with Indian Accounting Standards (Ind AS) and continues to ensure compliance with all applicable statutory and regulatory requirements. The compliance systems are reviewed regularly and are considered to be adequate and operating effectively. Any deviations or matters requiring attention are promptly addressed by the management.

The Internal Auditors independently monitor and evaluate the adequacy and effectiveness of internal controls, compliance with established policies and procedures, and adherence to operating and accounting systems across all locations, including subsidiaries. Their observations are periodically reviewed by the Audit Committee, and corrective actions are taken wherever required to strengthen the control environment.

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

Rs. in Crores

Financial Highlights/ Year Ending 31st March	2025 -26		2024-25
	Consolidated	Standalone	Consolidated	Standalone
Revenue from operations	6,825.71	6,824.65	5,267.38	5,267.38
Total Income	6,827.11	6,826.14	5,268.64	5,268.64
Earnings Before Interest, Exceptional Items & Taxes (EBIT)	218.61	218.01	143.34	143.34
Profit/(Loss) before Exceptional items & tax	176.37	175.82	101.07	101.07
Exceptional Items	(2.61)	(2.61)	-	-
Profit/(Loss) before tax	173.76	173.21	101.07	101.07
Tax expenses	45.80	45.65	22.91	22.91
Profit/ (Loss) after tax	127.96	127.56	78.16	78.16
Other comprehensive income	0.81	0.81	0.10	0.10
Share Capital	24.25	24.25	24.25	24.25
Other Equity	521.39	521.21	432.76	432.76
Net worth	545.64	545.46	457.01	457.01

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 ^24,24,93,260 comprising of 2,42,49,326 equity shares of ^10 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 is NIL.

Goodwill

On a consolidated basis, carrying value of goodwill as at March 31, 2026 is NIL.

Trade Receivables

On a consolidated basis trade receivable amounted to ^942.48 crores (previous year ^769.94 crores) net of provision for doubtful debts of ^ 4.32 crores (previous year ^3.53 crores).

Loans and Advances

On a consolidated basis loans and advances amounting to ^54.58 crores.

Borrowings

On a consolidated basis, borrowing current as at March 31, 2026 is ^60.81 crores and non-current borrowing is NIL.

Other Income

Please refer note no 31 in consolidated financials.

Expenditure

The employee benefits expenses increased to ^53.54 crores compared to previous year at ^50.44 crores on consolidated basis.

Profit before Tax

Our profit before tax and exceptional items increased by ^176.37crores from a profit before tax of ^101.07 crores for FY 2025.

Tax Expense

For the year ended March 31, 2026, there was a tax expense of ^45.65 crores (Previous year: tax expense of ^22.91 crores) on a standalone basis. On a consolidated basis, tax expense was ^45.80 crores (previous year ^22.91 crores).

Net Profit

On consolidated basis, the net profit of the Company amounted to ^127.96 crores as against ^78.16 crores during the previous year. Total

Comprehensive profit for the year is ^128.77 crores as compared to ^78.26 crores during previous year.

On standalone basis, the net profit of the Company amounted to ^127.56 crores as against of ^78.16 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 ^52.60 per share (Previous year: ^32.23 per share. On a consolidated basis, earning per share is ^52.77 (Previous year: ^32.23per share).

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

In a dynamic and increasingly competitive business environment, the Company acknowledges that its long-term competitive strength is anchored in the capability, experience, and commitment of its people. Human resource development therefore remains a core strategic focus, and the Company continuously strives to align its people practices with organisational goals to drive sustained growth and operational excellence. The Company upholds the highest standards of corporate governance, ethical conduct, and social responsibility, which together have helped build a collaborative, inclusive, and performance-driven workplace culture. The HR systems and policies are structured to improve employee engagement, foster continuous upskilling, and support career development, thereby enhancing both individual growth and organisational productivity.

A strong framework of policies and processes has been established to safeguard employee health, safety, and well-being across all operating locations, including retail outlets, warehouses, and processing units. The Company follows a systematic safety management approach supported by regular inspections, training programmes, and strict compliance with safety norms to ensure a secure working environment.

During the year, the Company also undertook several employee welfare initiatives, including preventive health check-ups, reinforcing its commitment to employee wellness and proactive healthcare. These measures reflect the Companys continued emphasis on building a healthy, motivated, and resilient workforce.

The Company has continued to enjoy cordial and stable industrial relations throughout the year. It adopts an open, participative, and consultative approach in engaging with employees and workforce representatives. Effective communication channels and collaborative practices have helped strengthen trust, improve employee relations, and maintain a stable and productive workplace culture across the organisation.

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)	43	45
Inventory Turnover in Days	26	26
Interest Coverage Ratio	5.18	3.39
Current Ratio	1.46	1.51
Net Debt Equity Ratio	1.94	1.74
Operating Profit Margin (%)	3.35%	2.87%
Net Profit Margin (%)	1.87%	1.48%
Return on Net Worth (%)	36.04%	28.12%

In FY26, Profit after Tax was ^127.96 crores as against ^78.16 crores in the previous year. There- fore, 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).- Refer Note No. 62 of Consolidated Financials