Shiva Cement Ltd Management Discussions

Global Economy Real

The world economy in 2024 demonstrated resilience amid rising trade uncertainties. Economic growth was primarily driven by declining inflation and a shift toward more accommodative monetary policies. While global financial conditions remained generally supportive, they differed across regions. According to the IMFs ‘World Economic Outlook, global GDP growth slowed to 3.3%, with varied growth rates across different regions.

In 2024–25, the global economy faced rising trade tensions, persistent inflation, and elevated sovereign debt levels. Geopolitical conflicts and climate-related disruptions further strained supply chains and energy markets. While monetary policies began easing, growth remained uneven across regions. These challenges underscored the need for resilience, innovation, and adaptive strategies in navigating economic uncertainty.

Government reforms, substantial investments in physical and digital infrastructure, and initiatives like ‘Make in India and the Production-Linked Incentive (PLI) scheme have played a vital part in improving the countrys growth path and encouraging self-reliance.

Despite these challenges, the US economy achieved 2.8% growth, driven by a strong labour market and easing inflation. The Eurozone experienced slower growth of 0.9%, including a slight reduction in Germany. Emerging markets, especially those in Asia, maintained stronger growth, reaching 4.2% overall, driven by investments in technology and infrastructure. Chinas economy grew by 4.8%, supported by government policy and a recovering property sector.

Global inflation is decreasing, estimated at 5.7% in 2024, down from 6.7% in 2023. Advanced economies are expected to reach this target faster than emerging markets and developing economies, where the decrease may be slower. Inflation in advanced economies should average 2.6% in 2024, likely reaching target levels by late 2025. Emerging markets will see a slower, though positive, trend.

Outlook

The world economy is expected to continue growing at a consistent pace, with forecasts of 3.3% growth in both 2025 and 2026. This optimistic view is supported by strong growth in the United States and significant emerging economies. US growth is expected to dip at 1.8% in 2025 before slowing to 1.7% in 2026 as labour market conditions change and consumer spending reduces. The Eurozone is expected to fall at 0.8% in 2025 and increasing to 1.2% in 2026, driven by higher consumer spending and lower inflation. Growth in developed economies overall is expected to remain steady at around 1.4-1.5% during this time.

Although global disinflation continues, some areas are seeing slow progress due to persistently high inflation. Global inflation is predicted to fall to 4.3% in 2025 and 3.6% in 2026, with developed economies expected to reach their targets ahead of others. Monetary policies are likely to differ across regions.

(Source: WEO)

Indian Economy

Indias economy continued to expand steadily in FY 2024-25, maintaining its position as one of the worlds fastest-growing major economies. Real GDP is estimated at 6.5% in FY 2024-25, following a significant 9.2% growth in FY 2023-24. This consistent growth reflects the countrys strong economic foundations, supportive government policies, an expanding services sector, and high domestic demand, leading to increased confidence in Indias long-term growth potential. Government reforms, substantial investments in physical and digital infrastructure, and initiatives like Make in India and the Production-Linked Incentive (PLI) scheme have played a vital part in improving the countrys growth path and encouraging self-reliance.

The services sector continued to grow strongly, at 7.2% in FY 2024-25, supported by positive activity across sectors such as finance, property, professional services, public administration, and defence.

Indias economic standing continues to improve, now ranking as the worlds fifth-largest economy by nominal GDP and third-largestbypurchasingpowerparity(PPP).Nationaltargets aim for a US$ 5 trillion economy by FY 2027-28 and a US$ 30 trillion economy by 2047. These goals are intended to be reached through infrastructure investment, ongoing policy adjustments, and widespread technology implementation. The 2025-26 capital investment budget reflects this aim, rising to 11.21 lakh crore, which represents 3.1% of GDP.

Outlook

Indias economy is expected to expand between 6.3% and 6.8% in FY 2025-26. By 2030, India is projected to become the worlds third-largest economy, propelled by infrastructure investment, private capital expenditure, and the growth of financial services. Continued policy changes are expected to support this long-term growth.

This favourable outlook is supported by Indias demographic advantages, increased capital investment, forward-thinking policies, and strong consumer demand. Increased rural spending, aided by easing inflation, also contributes to this trend. The governments emphasis on capital expenditure, fiscal responsibility, and growing business and consumer confidence supports both investment and consumption. Initiatives like Make in India 2.0, Ease of Doing Business reforms, and the PLI scheme aim to promote infrastructure, manufacturing, and exports, positioning India as a global manufacturing centre. With inflation expected to meet targets by 2025, a more flexible monetary policy is anticipated. Infrastructure development and public policies will drive capital formation, while rural demand will be supported by initiatives like PMGKAY.

(Source: PIB, MoSPI, Economic Survey)

Union Budget 2025-26

The Union Budget 2025-26 offers a well-balanced and growth-oriented financial strategy, designed to address both current and future economic needs. By increasing disposable income, prioritising infrastructure development, and encouraging domestic manufacturing, the budget creates a base for ongoing economic expansion while maintaining fiscal responsibility.

A significant aspect is the increased income tax exemption limit of 12 lakhs annually, which will substantially increase disposable income for middle-class households. This change is expected to boost consumer spending and savings, directly benefiting salaried individuals and contributing to economic growth. The focus on infrastructure, a key development driver, includes substantial investments in roads, railways, and urban infrastructure. These investments will improve connectivity, create employment, and stimulate demand in related industries.

The budget also supports the Production Linked Incentive (PLI) scheme, focusing on sectors like electronics and textiles, and works alongside the "Make in India" initiative to establish India as a global manufacturing hub. Changing India Post into a driver of the rural economy will improve logistics and financial inclusion, further connecting rural areas to the wider economy.

The governments commitment to clean mobility and renewable energy is shown through extended subsidies under the FAME India Phase II scheme and investments in EV charging infrastructure, encouraging a greener economy. With a targeted fiscal deficit of 4.4% of GDP for FY 2025-26, reduced from 4.8%, the government shows its commitment to fiscal prudence, ensuring that growth-focused changes are implemented sustainably.

In 2024, the global cement market was valued at approximately US$ 403.70 billion, with projections indicating growth at a Compound Annual Growth Rate (CAGR) of 5.40% between 2025 and 2034, potentially reaching US$ 683.07 billion by 2034.

Industry Overview Global Cement Industry

In 2024, the global cement market was valued at approximately US$ 403.70 billion, with projections indicating growth at a Compound Annual Growth Rate (CAGR) of 5.40% between 2025 and 2034, potentially reaching US$ 683.07 billion by 2034. This expansion is primarily driven by urbanisation, infrastructure development, and a surge in construction activities across emerging economies.

Despite these growth prospects, the industry faced challenges in 2024, with global cement consumption languishing 9% below pre-pandemic levels. Factors such as high interest rates, a downturn in Chinas real estate sector, and weakened demand in mature markets contributed to this decline. However, a mild recovery is anticipated in 2025, with expected growth in global cement consumption ranging between 1% and 2%, excluding China. This optimism is fuelled by anticipated interest rate cuts, which are projected to rejuvenate housing demand, particularly in Western Europe and the United States.

Regionally, the Middle East, India, and Africa are poised for increased cement demand, while markets in Turkey, China, and Europe may experience stagnation or decline. The industrys profitability has seen improvement, attributed to stable pricing and reduced input costs. Additionally, there is a growing emphasis on sustainable practices, with the global green cement and concrete market projected to grow at a CAGR of 3.3% between 2023 and 2030, reaching a value of US$ 990 million by 2030.

(Source: Expert Market Research, World Cement, World Cement Association, Global Cement)

Indian Cement Industry

It was a transformative period for Indias cement industry, marked by strategic consolidations, capacity enhancements, and adaptive strategies in response to market fluctuations in FY 2024-25. The Indian cement sector closed FY 2024-25 with a 6.3% volume growth. While the first half of the fiscal year saw modest 1.7% year-on-year growth to 212 million metric tonnes (MMT) due to factors like general elections, extended monsoons, and slower private capital expenditure, the second half marked a strong turnaround. Volumes in H2 FY 2024-25 increased by a healthy 10.7% YoY, reaching 241 MMT, as construction activity picked up. Capacity additions during the year stood at 32 to 35 MMT per annum (MTPA).

For FY 2025-26, cement volumes are projected to expand by 6% to 7%. This growth anticipates increased demand from both the housing and infrastructure sectors. Capacity addition in the sector is forecast to rise to 43 to 45 million MTPA. Large cement companies are actively expanding their capacities, through both internal growth and acquisitions, to strengthen their market position in view of this expected demand.

Indias cement industry, the worlds second-largest producer, experienced a period of consolidation and strategic expansion, despite facing challenges such as moderate capacity utilisation and declining sales realisation. The industrys installed capacity stood at approximately 553 MTPA in FY 2024-25, with production levels reaching 298 MTPA. Projections indicate that by the end of FY 2025-26, an additional 63-70 MTPA will be added by the end of FY 2025-26. According to ICRA the per capita cement consumption growth is at 4-5% in FY 2024-25, reaching 445-450 million metric

tonnes. It has declined from the earlier due to slower-than- expected construction activity during the first half of the year due to the elections followed by heavy monsoons. Of all industrial sectors in India, the cement industry has the greatest potential for Waste Heat Recovery Systems (WHRS), exceeding 1 GW. Approximately 99%, of Indias cement production facilities utilise dry manufacturing technology. For every million tonne of cement produced and used, the Indian cement industry creates 20,000 downstream employment opportunities. The cement sectors growth has been influenced by several key factors. Increased government spending on infrastructure projects, including housing schemes and urban development, has boosted demand for cement. This commitment to infrastructure is evident in the governments allocation of 11.21 lakh crore (approximately US$ 129.54 billion) for infrastructure development in the coming fiscal year. Rapid urbanisation has also led to a surge in housing requirements, particularly in urban and semi-urban areas, further driving cement consumption. Finally, industry consolidation, has also played a pivotal role, with major players engaging in significant mergers and acquisitions to enhance market share and operational efficiency. Recent government foreign policies have encouraged investment from international cement companies like Lafarge-Holcim, Heidelberg Cement, and Vicat Cement. The sectors growth is also supported by the easy access to essential raw materials, including limestone and coal. Per capita cement consumption in India stood at approximately ~290 Kgs in FY 2024-25, significantly lower than the global average of 540 Kgs. This indicates substantial potential for increased consumption as the countrys infrastructure and housing sectors continue to develop .

Industry Drivers

Infrastructure Development

The 2025-26 Union Budget has allocated 11.21 lakh crore for the infrastructure sector, which is expected to significantly boost cement demand. This substantial investment presents a prime opportunity for cement manufacturers to expand their market share and increase production to meet the growing needs of large-scale infrastructure projects.

With an allocation of 96,777 crore for urban development in the 2025-26 budget, marking a 17% increase from the previous year, the cement industry stands to benefit from increased construction activities in urban areas. The focus on transport and housing in urban development projects will likely lead to a surge in cement consumption.

The budget has also allocated 1,16,292 crore specifically for roads and bridges, representing a 5% increase over the previous years revised estimates. This continued focus on enhancing road connectivity provides a steady stream of opportunities for cement manufacturers to supply materials for these extensive projects.

Go vernment schemes such as the Pradhan Mantri Yojana (PMAY) continue to drive demand for affordable housing. The cement industry can capitalise on this opportunity by supplying materials for the construction of millions of affordable homes, particularly in rural areas where housing demand is increasing.

Export Expansion

Indian cement manufacturers have the opportunity to expand their export footprint, particularly in regions such as Africa, the Middle East, and Southeast Asia, where infrastructure development is booming. The competitive pricing and quality of Indian cement can be leveraged to capture market share in these regions.

Sustainable Production Practices

The gr owing emphasis on sustainability opportunities for cement manufacturers to develop and market eco-friendly products. The use of alternative raw materials like fly ash, slag, and pozzolans can help reduce carbon footprints and appeal to environmentally conscious buyers.

Railway Infrastructure Development

With the government allocating 2.4 lakh crore for railways in the recent budget, cement manufacturers can expect increased demand from railway infrastructure projects. This presents an opportunity to supply cement for the construction of new railway lines, stations, and related infrastructure.

Public-Private Partnerships

F urther, the governments emphasis on public-private partnerships for infrastructure development opens up opportunities for cement companies to engage in long-term supply contracts and potentially participate in project execution.

Rural Market Expansion

The f ocus on rural housing demand under schemes like PMAY offers an opportunity for cement manufacturers to expand their presence in rural markets, which have traditionally been underserved.

Outlook

The Indian cement industry is positioned for a strong recovery in the second half of FY 2025-26, driven by pent-up demand, a rebound in government capital expenditure, and a revival in rural housing demand. The industry anticipates an 8% growth in sales, supported by increased infrastructure spending and housing demand. To meet the rising needs of infrastructure and housing, Indian cement producers, according to CRISIL Ratings, plan to add 150-160 MT of capacity between FY 2024-25 and FY 2027-28. This follows the 119 MT of annual capacity added in the previous five years. It is anticipated that cement use will reach 450.78 MT by the end of FY 2026-27.

However, challenges persist, including maintaining capacity utilisation levels and managing input costs. The industrys ability to navigate these challenges while capitalising on growth opportunities will be crucial in sustaining its upward trajectory.

(Source: CMA, jmbaxico.com, Reuters, Business Standard, Economic Times)

Company Overview

Shiva Cement Limited (herein referred to as ‘the Company), an affiliate of the well-known JSW Group, was founded in 1985. Clinker production and related product trade are the companys activities. In an effort to become the market leader in the area, the Company has expanded its clinker production capacity to 1.36 MTPA in order to meet the new prospects in the eastern India markets.

The companys production plant is ideally situated in Odisha, giving it a competitive edge because of its close proximity to offersimportant markets and a wealth of raw material resources. The Company can provide clinker to JSW Groups eastern operations in Salboni, West Bengal, and Jajpur, Odisha, because to its advantageous position. In Khatkurbahal, Odisha, the company has captive limestone quarries with sufficient reserves, guaranteeing a steady supply of high-quality raw materials for the future. The company has the ability to grow because to its cutting-edge infrastructure and excess core equipment capacity.

In May 2024, Shiva Cement successfully raised 40,000 lakh through a rights issue, priced at 40 per share, including a premium of 38 per share. The proceeds have been allocated towards loan repayment, general corporate purposes, and covering share issue expenses. This capital infusion has strengthened the companys financial position, enabling it to pursue growth opportunities and enhance shareholder value.

Operational & Financial Overview Operational Highlights FY 2024-25

1. Commissioned the AFR circuit and achieved Thermal Substitution Rate (TSR) of 13.62% by using 38,120 MT RDF/MSW and contributed towards Swachh Bharat Mission.

2. 27 ,131 MW generated through the Waste Recovery System, with an overall contribution 60% of Plant requirement.

3. The Company constructed a rainwater harvesting system with a capacity of 11,000 cubic metres.

4. The Company has achieved zero Lost Time Injuries (LTI) and completed 47,136 hours of safety training.

5. W e achieved highest clinker production of 1,37,072 in March 2025, operating at an impressive average rate of 4,427 TPD, with the specific heat consumption of 740 kcal/kg of clinker and specific power consumption of 43.09 kWh/MT of clinker.

Financial Performance

Rs Lakhs

Particular	FY 2024-25	FY 2023-24	Change %
Gross Turnover	31,117.22	34,681.23	(-)10.28
Operating EBITDA	(1,135.55)	3,899.27	(-)115.93
Other Income	673.61	236.22
Depreciation & Amortisation	4,207.34	3,148.92	33.61
Finance Cost	11,540.42	10,149.21	13.71
Loss before exceptional items	(16,209.69)	(9,162.64)	76.91
Loss for the year	(14,247.66)	6,832.48	108.53

The Companys operating EBITDA is (-) 1,135.55 lakhs as against 3,899.27 lakhs in FY 2023-24, reporting negative operating EBITDA decrease by 123% on Y-o-Y basis.

Other Financial Statement Line Items

Rs Lakhs

Particular	FY 2024-25	FY 2023-24	Change %
Raw Material Cost	9,311.03	7,705.32	20.84%
Employee Benefits Expense	2,731.72	1,649.80	65.58%
Power and Fuel Cost	12,962.55	13,687.44	-5.30
Profit/(Loss) on Asset	(514.21)	4.62	-11,230.09
Written-off*
Other Expense	3,596.91	2,716.88	32.40%
Finance Cost	11,540.42	10,149.21	13.71%
Depreciation and	4,207.34	3,148.92	33.61%
Amortisation Expense

* We have incurred a Loss on Assets write-off amounting to 514.21 lakhs in FY 2024-25, mainly on account of writing off the residual value of the assets whose life was already exhausted.

Other Non-Current Assets

Rs Lakhs

Particular	FY 2024-25	FY 2023-24	Change %
Other Non-Current Assets	15,433.02	9,540.24	63%
Inventories

Rs Lakhs

Heat Particular	FY 2024-25	FY 2023-24	Change %
Raw materials	74.35	27.08	175%
Semi-finished goods	1,668.96	647.70	158%
Finished goods including stock in transit	2,171.62	2,082.07	4.30%
Stores and spares	1,969.33	453.34	334%
Fuel	580.89	1,250.35	(-) 54%
	6,465.15	4,460.54	45%
MT
Trade Receivables
			Rs Lakhs
Particular	FY 2024-25	FY 2023-24	Change %
Trade Receivables	57.84	-	100%
Non-Current Liabilities
			Rs Lakhs
Particular	FY 2024-25	FY 2023-24	Change %
Borrowings	1,34,577.64	1,39,650.72	(4)%
Current Liabilities
			Rs Lakhs
Particular	FY 2024-25	FY 2023-24	Change %
Borrowings	6,800.00	2,664.10	155%
Other Financial Liabilities	4,893.25	5,614.05	(-)13%
Trade Payable
			Rs Lakhs
Particular	FY 2024-25	FY 2023-24	Change %
Trade Payables	6,329.21	5,789.21	9%
Other Current Liabilities	5,078.36	13,793.41	63%
Capital Employed
			Rs Lakhs
Particular	FY 2024-25	FY 2023-24	Change %
Total Capital Employed	1,51,713.64	1,27,638.04	18%
Average Return on Capital	(3.52)%	0.86%	N.A.
Employed
Own Funds
			Rs Lakhs
Particular	FY 2024-25	FY 2023-24	Change %
Total Equity	10,336.00	(14,676.78)	9%

Other Key Financial Indicators

Particulars	Ratios for the year ended		Variance	Change in ratio in excess of 25% compared
	31.03.2025	31.03.2024	(%)	to preceding year
Current Ratio (times)	0.65	0.50	32%	Increase due to increase in inventories
Net Debt Equity Ratio (times)	13.68	(9.70)	(-)241%	f
				at a premium and partial repayment of Loan.
Debt Service Coverage Ratio	0.25	N.A.	85%	f
(times)				and repayment of debt.
Return on Equity (%)	N.A.	N.A.	-	The ratio is not applicable since Average
				Shareholders Equity is negative
Inventory Turnover Ratio (Days)	66	51	28%	f
				compared to previous year.
Trade Receivable Turnover Ratio (Days)	-	-	-	There is no trade receivable as all sales are done against advance.
Trade Payable Turnover Ratio	81	46	77%	Due to increase in Trade payable.
(Days)
Net Capital Turnover Ratio (times)	(3.86)	(2.46)	57%	f
				and reduction in net sales.
Net Profit Ratio (%)	(0.46)	(0.20)	133%	Ratio reduced due to increase in Loss after tax and reduction in net Sales.
Return on Capital Employed (%)	(3.52)	0.86	508%	Reduced due to increase in capital employed from Rights issue and reduction in EBIT.
Return on Investment (%)	(0.81)	3.14	126%	Reduced due to increase in average capital employed from Rights issue and reduction in operating EBIDTA.
Operating Profit Margin (%)	(15.01)	2.84	(-)628%	Reduction due to decrease in operating profit primarily due to decrease in sales price.
Interest Coverage Ratio	(0.40)	0.10	(-)5%	Reduction due to decrease in EBIT and increase in interest cost during the year.

Outlook (Way forward)

The Indian cement industry, the world second-largest, is set for significant growth, driven by infrastructure projects and urban development. Cement demand is projected to grow by 6-7% year-on-year in FY 2024-25, supported by GDP growth, rising income and growing workforce. With recent tax cuts and sustained government investments in infrastructure, including roads, housing, and urban development programmes such as the PM Awas Yojana (Grameen) and the Smart Cities Mission will further boost the Cement demand. The Company is focused on improving its operational performance by undertaking following measures: a. Commissioning of dedicated Railway siding at Sagra for smooth and sustainable movement of Clinker, Raw Material and Fuel. b. Commissioning of 1 MTPA grinding unit to set up footprint in western Odisha. c. U sage of various Alternative Raw Materials (ARMs) DRI Kiln Hot ESP dust, Lime sludge etc. in order to replace alumina and iron source. d. Ins tallation of Trommel screen in AFR circuit improving Municipal / sewerage waste (MSW) & Refuse derived fuel (RDF) usage into Pyro process and achieve improvement on the fuel cost. e. Ins tallation of 1TPD Carbon Capture Utilisation & Storage [CCUS] project in technical collaboration with Indian institute of Technology – Kanpur (IITK) envisages to scale up and deploy the Integrated Carbon Capture and Mineralisation [ICCM] technology at pilot scale and conduct pilot studies using multiple waste streams from flue gas.

Cement demand is projected to grow by 6-7% year-on-year in FY 2024-25, supported by GDP growth, rising income and growing workforce. With recent tax cuts and sustained government investments in infrastructure, including like roads, housing, and urban development programmes such as the PM Awas Yojana (Grameen) and the Smart Cities Mission for will further boost the Cement demand.

Risk Management and Mitigation

In order to properly analyse the Companys business risks, it has a strong risk management policy. It is also in charge of promptly and efficiently identifying, evaluating, mitigating, and reporting business risks while also taking advantage of business opportunities.

The Company understands that in order to protect the interests of its stakeholders and shareholders, accomplish its goals, and promote sustainable growth, it is critical to manage and mitigate emerging and detected risks. The company drives enterprise risk management (ERM) using a holistic strategy that combines top-down and bottom-up tactics. It is an annual exercise aimed at identifying key risks and opportunities, enhancing the Companys capability to build a sustainable business and fostering a strong, cross-functional risk intelligence ecosystem.

The Board oversees the Enterprise Risk Management framework to make sure that:

Expected risks are handled carefully in order to plan for the best possible outcomes and be ready for unfavourable ones Putting deliberate strategy and plans into action, giving decisive actions priority Unintended risks are avoided, reduced, transferred (as in insurance), or shared (via subcontracting), and include performance, incident, process, and transaction risks. Among other things, executive and strategic management, rules, procedures, built-in system controls, MIS, and internal audit reviews all help to reduce the likelihood or effect of these hazards Across a number of areas, including business, production, raw materials, infrastructure and logistics, operations, finance, the environment, safety, and statutory compliance, the company has identified key risks and implemented mitigation procedures and measures. Periodically, these procedures and policies are reviewed and updated.

The key risks and their corresponding mitigation measures are mentioned below:

Risk	Impact	Mitigation
Industry risk	The cement industry is inherently vulnerable to imbalances between supply and demand.	Government investment in infrastructure, industry, and housing is currently driving favourable demand and supply conditions for the cement industry
	Furthermore, it experiences cyclical fluctuations in its end-user sectors.	The company aims to expand its market share and cultivate stronger customer relationships by providing high-quality products
		A continuous focus on cost optimisation and enhanced market understanding through marketing insights are key priorities
Raw material risk	Difficulties in obtaining sufficient raw materials with suitable quality, such as limestone, combined with increasing costs for these materials, energy, coal, and pet coke, may drive up input costs, negatively affecting the companys operations and profits.	The company manages risk by:
		Monitoring commodity markets
		Exploring diverse sourcing options.
		Securing raw materials through access to captive limestone mines
		Maintaining sufficient inventory to ensure a continuous limestone supply
		Developing long-term supplier relationships for consistent supply and timely information on future trends
		Staying informed about government policies and developments in sourcing countries
		Appointed consultant for giving optimum utilisation of resource
		(i.e. limestone deposits), feasibility report and sensitive analysis
Infrastructure and logistics risk	The cement industry experiences logistical challenges due to higher freight costs and the need for sufficient infrastructure and rail freight capacity.	The company addresses these challenges by:
		Optimising logistics costs and using the most cost-effective transport methods.
		Building an additional railway siding to handle increased volumes.
		Installing an overhead belt conveyor for limestone transport.
		Allocating budgets and prioritising resources to meet current and future infrastructure development needs.
Environment, health & safety (EHS) risk	Growing environmental concerns and regulatory requirements regarding greenhouse gas (GHG) emissions could limit the companys operations. The industry also faces strict labour laws and health and safety regulations.	The company mitigates these risks by:
		Holding monthly top-level safety meetings to review safety, fatal accidents, and near misses.
		Closely monitoring and complying with environmental regulations.
		Regularly tracking technological advances and future standards.
		Making safety a mandatory Key Result Area (KRA) for employees.
		Providing safety training, mock drills, best practices, and safety audits.
		Establishing fire prevention and management procedures.
		Implementing robust security measures, including security checkpoints, entry passes/ID cards, access control systems, and CCTV surveillance in key areas. t their families.
		Conducting safety walk-downs with all Heads of Departments (HODs) and evaluating road safety through rewards and recognition.
		Performing pre-qualification assessments and CARES (Contractor Assessment and Rating for Excellence in Safety) validation for contractors.
		Providing annual health check-ups for all employees.
Human resource risk	Human resources risks include a shortage of skilled workers, high staff turnover, unionisation, work stoppages, and rising labour costs.	The company mitigates this risk by:
		Maintaining positive employee relations.
		prioritising the hiring, training, and retention of skilled workers.
Financial risk	The companys financial health may be affected by interest rate exposure, commodity price volatility, and low cash flow.	The company mitigates this risk by: Linking project loans to the 1-year MCLR rate with an annual reset. Monitoring external events that could affect financial performance.
		Regularly reviewing financing, pricing, and procurement policies, taking into account exposure, emerging situations, past performance, and other factors. Actively monitoring internal performance and cash flow through regular internal meetings and maintaining strong operational discipline to control cost increases.

Human Resource

As the role of human resources changes, the Company aims to optimise efficiency and maintain lean staffing levels through strategies such as multitasking and automation, targeting ongoing workforce reductions. Employees are key to all business operations, and the Companys human resource policies are designed to attract, develop, and retain talent. The Company also uses third-party staffing agencies to provide contract labour for its manufacturing facility operations. Regular employee training sessions cover various aspects of manufacturing operations, machine use, operations flow, quality management, and workplace safety. As of March 31, 2025, the Company had 220 permanent employees.

Internal Controls, Audit & Internal Financial Controls

Internal Control

The Company has an internal control system appropriate to its size and business activities. This system, comprising policies and procedures, aims to ensure efficient operational management in line with the Companys strategic goals. It covers governance, compliance, audit, control, and reporting, forming an integral part of the Companys corporate governance. Key features of the internal control systems are: Documented policies, guidelines, authority levels, and approval processes for all key Company functions.

Complete compliance with laws, regulations, standards, and internal procedures.

Protection of Company assets and resources, and minimisation of potential losses.

Maintenance of accounting system integrity, ensuring accurate and authorised transaction recording and reporting.

Preparation and monitoring of annual budgets.

Reliable financial and operational information. The Audit Committee, a sub-committee of the Board of Directors with Independent Directors, regularly reviews audit plans, key audit findings, the adequacy of internal controls, compliance with Accounting Standards, and other relevant matters.

The internal control systems and procedures are designed to help identify and manage risks, verify compliance, and raise awareness of controls.

Internal Audit

Shiva Cement Limiteds internal audit function uses leading global standards and international best practices. The Company has a dedicated internal audit department reporting to the Audit Committee which consists of Independent Directors with relevant expertise. Extensive delegation of authority within the team allows for effective checks and balances. The internal audit team has access to all organisational information, and the Internal Audit functions scope and authority are detailed in the Internal Audit Charter. For objectivity and independence, the Internal Audit function reports to the Audit Committee Chairman.

The Internal Audit Department creates a risk-based audit plan, approved by the Audit Committee. Audit frequency is based on the risk ratings of different areas and functions. The internal team carries out the audit plan and regularly reviews it, adding areas of increasing importance due to emerging industry trends and the Companys growth. The Audit Committee also uses internal feedback and external events to develop the audit plan. Process owners implement corrective actions in their areas based on internal audit reports, and significant audit observations and corrective actions are reported to the Audit Committee. The Audit Committee also meets independently with the statutory auditor and management to assess the suitability and effectiveness of internal financial controls.

Internal Financial Controls

As per Section 134(5)(e) of the Companies Act, 2013, the Directors are responsible for ensuring the Company has a system of internal financial controls. This gives the Directors reasonable assurance about the suitability and effectiveness of controls for reporting, operational, and compliance risks. The Company has established systems and a framework, including clear delegation of authority, policies and procedures, effective IT systems aligned with business needs, risk-based internal audits, a risk management framework, and a whistle-blower mechanism. A framework has been developed and implemented to ensure internal controls over financial reporting, covering entity-level policies, processes, and Standard Operating Procedures (SOPs). Entity-level policies include anti-fraud policies (such as a code of conduct, confidentiality, and a whistle-blower policy) and other policies addressing organisational structure, insider trading, HR policies, etc. The Company has also created SOPs for each process. During the year, controls were tested, and no significant weaknesses in design or effectiveness were found.

Cautionary Statement

The Management Discussion and Analysis may contain some statements describing the Companys objectives, expectations or predictions, which involve a number of risks and uncertainties. Actual results may differ materially from those expressed or implied. Key risks and uncertainties that could impact the Companys operations include domestic demand and supply, conditions affecting selling prices, new capacity additions, availability and costs of critical raw materials, changes in government policies and tax laws, economic development of the country, and other factors which are material to the business operations of the Company. This MD&A should not be considered as a recommendation that any investor should subscribe for or purchase any of the Companys shares. The Company makes no representation or warranty, express or implied, as to and does not accept any responsibility or liability with respect to the fairness, accuracy, completeness or correctness of any information or opinions contained herein. Investors are advised to exercise due care and caution while interpreting these statements.