Shiva Cement Ltd Management Discussions

Global Economy

The global economy maintained stability throughout 2025, successfully managing evolving trade policies alongside varied regional performances. Technology investments proved essential in countering the effects of new tariffs and policy changes. Global inflation settled at a steady 4.1%, as multiple countries reported figures lower than initial market expectations. Household consumption expanded consistently worldwide, driven by technology investments and wage growth across key regions. Particularly in the United States and emerging Asia, spending on goods and services gained momentum as financial conditions improved, effectively offsetting tariff pressures.

The year unfolded against a backdrop of elevated geopolitical uncertainty and intermittent regional conflicts, which drove volatility across global energy markets. Notably, developments in West Asia contributed to rising oil and energy prices, exacerbating inflationary pressures. As a result, cost inflation remained persistent across key operating areas, including fuel, logistics, and input materials. These pressures strengthened towards the latter part of the year and are anticipated to continue in the near term.

The World GDP growth reached 3.4% in 2025, though regional performances differed markedly. Growth across advanced economies is expected to remain steady but modest over the medium term. The United States is likely to lead relative performance, expanding by 2.3% in 2026, supported by fiscal stimulus and easing monetary conditions, while the drag from higher trade barriers gradually diminishes. The euro area is projected to sustain stable growth, inching up from 1.1% in 2026 to 1.2% in 2027. In contrast, Japans growth is expected to soften, declining from 1.2% in 2025 to 0.7% in 2026 and 0.6% in 2027. In India, the growth outlook for 2025 has been revised upward by 0.10 percentage points to 7.6%, driven by a better-than-anticipated performance in the third quarter and resilient momentum carried through the fourth quarter.

World trade volumes rose to 5.1% in 2025 from 3.6% in 2024. Trade tensions eased after a US-China agreement reduced tariffs and lifted export restrictions on electronic components and critical minerals. The United States also removed certain agricultural tariffs, keeping overall rates at levels similar to previous years. While policy uncertainties had decreased from late-2025 highs, they remained higher than the prior year. Financial conditions generally remained supportive despite market volatility, with high-growth technology stocks outperforming broader indices. Asias strong technology exports sustained global trade stability.

Central banks successfully managed inflation through targeted policy measures, including rate cuts in the United States and the United Kingdom. These steps maintained a favourable financial backdrop against persistent trade and geopolitical headwinds.

(Source: World Economic Outlook (IMF))

Outlook

The global economy moves toward greater stability in 2026, with expected growth of 3.1% before easing slightly to 3.2% in 2027. This outlook stems from a clear pivot to technology-driven productivity improvements, especially as artificial intelligence embeds further into industrial operations and medical applications, countering ongoing trade tensions and shifting political landscapes.

Advanced economies should see 1.8% growth in 2026, with the United States leading at 2.3%. This performance draws strength from tax incentives in the One Big Beautiful Bill Act, alongside market rebound after the short-lived 2025 federal shutdown. Such factors foster ideal conditions for private investment and household spending. The Eurozone anticipates a steadier 1.1% expansion, continuing its function as a dependable pillar of global markets, while Japan adjusts to 0.7% growth following recent policy modifications.

Emerging markets maintain a strong pace above 3.9%, as China projects 4.4% growth backed by domestic financial measures and steadier US trade ties. India stands out with 6.5% expansion, solidifying its essential role in manufacturing and digital advancement.

Headline inflation is projected to increase to 4.4% in 2026 and 3.7% in 2027, although advanced economies progress toward targets more gradually – especially the United States. Central bank policy rates ease consistently in the United States and the United Kingdom, stay level in the euro area, and increase gradually in Japan. World trade growth slows to 2.8% in 2026 due to tariff adjustments, but technology exports continue providing reliable support.

(Source: World Economic Outlook (IMF))

Indian Economy

India continues to remain one of the worlds fastest-growing major economies, supported by resilient domestic demand, strong investment activity, and ongoing structural reforms. Latest estimates indicate that India has slipped from the position of the 4 th largest to the 6 th largest economy in the world, with a nominal GDP of about $4.15 trillion in 2026. The country is expected to maintain its strong growth momentum and may improve its global ranking over the medium term as economic expansion continues.

During 2025-26, the Indian economy displayed consistent strength amid global trade uncertainties and market volatility. Second Advance Estimates forecast real GDP growth at 7.4% alongside Gross Value Added (GVA) expansion of 7.3%, underscoring the robustness of a growth framework driven primarily by domestic consumption. Robust agricultural production bolstered rural incomes, while urban spending gained momentum through stable employment conditions and moderating inflation.

The global cement industry continues to demonstrate steady growth, with market value estimated at $384 billion in 2025 and projected to increase to $394.8 billion in 2026. Looking ahead, the market is expected to expand to $500.3 billion by 2034, reflecting a CAGR of 3.3% over 2026–2034, driven by sustained investments in infrastructure, housing, and urban development worldwide.

Private consumption continues as a primary growth engine, supported by declining inflation and rising real incomes. Investment activity gained momentum through public capital expenditure of Rs. 12.2 lakh crore outlined in the Union Budget 2026-27, which strengthened infrastructure development and stimulated sectors including manufacturing, construction, and energy. Government initiatives such as Viksit Bharat 2047 advance self-reliance and capacity enhancement even amid external challenges.

Average Headline Consumer Price Index (CPI) inflation averaged 1.7% during the first nine months of FY 2025-26, reflecting a relatively stable inflation environment. However, inflationary pressures arising from global developments resulted in CPI inflation reaching 3.4% as of March 2026. The banking sector demonstrates resilience through robust capital buffers and minimal non-performing assets. With foreign exchange reserves surpassing $700 billion, India stands well-equipped to navigate global volatility.

(Source: PIB, AngelOne)

Outlook

The outlook for the Indian economy remains positive and stable. Real GDP growth for FY 2026-27 is projected between 6.8% and 7.2%, reflecting Indias capacity to sustain strong momentum even amidst global uncertainties.

This expansion should draw support from sustained government infrastructure spending, gradually rising private sector investments, and a fortified manufacturing foundation. The services sector will likely continue its reliable growth trajectory. Backed by economic stability and consistent policies, India stands well-prepared to address global challenges while fostering long-term inclusive and sustainable progress.

(Source: PIB)

Industry Overview Global Cement Industry

The global cement industry is a large-scale, resource-intensive, and infrastructure-anchored sector that supplies the primary binding material for concrete used in residential, commercial, industrial, and public infrastructure projects worldwide. The industry is closely tied to the construction cycle, urbanisation, and government-led infrastructure-spend programmes, and is undergoing a gradual shift toward lower-carbon and blended-product-oriented technologies. The global cement industry continues to demonstrate steady growth, with market value estimated at $384 billion in 2025 and projected to increase to $394.8 billion in 2026. Looking ahead, the market is expected to expand to $500.3 billion by 2034, reflecting a CAGR of 3.3% over 2026–2034, driven by sustained investments in infrastructure, housing, and urban development worldwide. This growth reflects the continuing demand for new housing, commercial buildings, roads, bridges, dams, and industrial facilities in both developed and emerging-economy regions, even as the sector faces stricter environmental and energy-efficiency standards. By type, the market is segmented into Portland cement, blended cement, and other types such as coloured, low-alkali, quick-setting, and air-entraining cement. Within this, blended cement held the largest share in 2025, owing to its improved workability, reduced water demand, and lower-crack-formation characteristics, which make it attractive for buildings, road construction, and mining-linked applications. Portland cement remains the core base product, widely used in concrete for beams, panels, dams, and major structures, while other special-grade cements are gaining share in niche engineering and decorative uses.

By application, the market separates into non-residential and residential segments, with the non-residential segment dominating the overall revenue base due to the scale of infrastructure-linked consumption. The non-residential segment is projected to account for about 53.77% of the market share in 2026, driven by large-scale projects in roads, dams, commercial complexes, industrial buildings, stadiums, transportation hubs, and essential public infrastructure such as hospitals and schools. The residential segment, while smaller in share, is growing steadily due to rising global population, housing demand in fast-urbanising regions, and the need for safe and modern living spaces, especially in the Asia-Pacific and Middle East & Africa.

The sectors growth is being driven by several major impulses: Surging demand from construction activities, including rising need for residential spaces (apartments, bungalows, affordable housing) and non-residential infrastructure (malls, airports, industries, roads, office buildings), which together increase the volume of concrete and thus cement required per project.

Government-led infrastructure-investment programmes, such as large-scale road repair, bridge replacement, public transit expansion, and urban connectivity projects in the United States, Europe, India, China, and other emerging economies, which lock in multi-year demand for cement and concrete.

Rising demand for precast and modular-construction products, including blocks, panels, roof tiles, and façade elements, which can increase per-project cement consumption while improving speed and quality control.

At the same time, the industry is under mounting pressure from environmental regulations, as cement manufacturing is one of the most energy-intensive and carbon-emitting industrial processes, with significant emissions of nitrogen oxide, carbon monoxide, and sulphur dioxide. As a result, regulatory limits on carbon emissions and local-air-quality standards are acting as a restraint, encouraging players to adopt alternative fuels, carbon capture and storage (CCS) technologies, and lower carbon binders such as green and blended cement variants.

(Source: Fortune Business Insights)

Indian Cement Industry

The Indian cement sector, the worlds second-largest producer, has entered FY 2025-26 with a strong volume foundation, primarily driven by substantial government capital expenditure. The cement industry is a critical infrastructure-backed, volume-driven sector that supplies the core binding material for concrete used in residential, commercial, and large-scale infrastructure projects across the country. The market is directly tied to the health of construction, real estate, and government-led infrastructure-spend programmes, and is undergoing a structural shift toward blended and low-carbon-type-cement variants.

The Indian cement market was valued at $21.0 billion in 2025 and is projected to reach $40.4 billion by 2034, growing at a CAGR of 7.52% from 2026 to 2034. This growth is driven by accelerated urbanisation, ambitious infrastructure-development initiatives, and sustained housing demand, supported by government-backed programmes such as National Infrastructure Pipeline-linked projects, smart-city development, and affordable-housing schemes that generate multi-year visibility for cement volumes.

The sectors growth trajectory is intrinsically linked to government-led investment. Infrastructure spending remains the primary catalyst, with allocations for key projects such as Pradhan Mantri Awas Yojana (PMAY) and the Central Governments infrastructure focus driving high demand. Following a growth rate of 9.4% in the construction sector in FY 2024-25, cement consumption grew by 6-7% in FY 2025-26. (Source: PIB, ICRA)

Indias total installed cement capacity stood at approximately 690 million tonnes per annum (MTPA) in FY 2024-25, and production reached around 453 million tonnes. The industry comprises approximately 160 integrated large cement plants, 130 grinding units and 62 mini cement plants. Encouraged by robust demand prospects, leading cement companies are pursuing capacity expansion through a combination of organic investments and inorganic growth initiatives. The industry is expected to add approximately 50–55 MTPA of capacity in FY 2025–26, with an additional 42–44 MTPA planned for FY 2026–27, reflecting continued confidence in the sectors long-term growth trajectory. (Source: Cemnet)

The Indian cement sector is actively pursuing sustainability goals, with an increasing focus on reducing the clinker-to- cement ratio through the greater use of blended cements such as Portland Slag Cement (PSC) and Portland Pozzolana Cement (PPC). Additionally, the sector is currently undergoing a significant consolidation phase, with major players rapidly acquiring assets to expand their capacity and market share. This trend is creating a more streamlined, though concentrated, competitive structure, which is expected to enhance operational efficiencies across the sector in the foreseeable future. (Source: Financial Express).

Growth drivers

The sectors growth is being driven by several explicit impulse factors highlighted in the source report: Government infrastructure investment and policy support, including flagship programmes such as Bharatmala, PM Gati Shakti, and Vande Bharat corridor initiatives, and the Union Budget 2025-26 allocation of about Rs. 11.2 lakh crore for infrastructure, which ensures long-term visibility for cement consumption.

Affordable-housing programmes and residential-construction growth, with PMAY-G and PMAY-Urban targeting hundreds of millions of new and upgraded homes and large numbers of new house approvals, backed by expanding bank credit outstanding to housing construction.

Rapid urbanisation and smart-city development, with about 36.87% of Indias population now in urban areas, and smart city-linked modernisation activities driving demand for high-quality and more complex construction systems that use cement-intensive techniques.

At the same time, the industry is shifting toward green cement and blended product optimised portfolios, with Indias green-cement market projected to grow at about 6.11%

CAGR from 2025-2033, as operators adopt Portland limestone cement and pozzolanic blends to reduce carbon footprint while meeting public procurement and sustainability mandates. Digital transformation and Industry 4.0-linked integration, including IoT and AI-driven process monitoring and predictive maintenance, and the expansion of the ready-mix-concrete (RMC) segment are also reshaping efficiency and quality profiles across the value chain.

Company Overview

Shiva Cement Limited (hereafter mentioned as the Company or Shiva Cement), an affiliate of the well-known JSW Group, established in 1985, is a prominent cement manufacturer in Eastern India, specialising in high-quality Portland Slag Cement (PSC), Portland Pozzolana Cement (PPC) and Portland Composite Cement (PCC), known for its eco-friendly and cost-effective properties. Strategically located in Sundargarh, Odisha, the Company enjoys proximity to abundant limestone reserves, enabling it to effectively serve key markets including Odisha, West Bengal, Jharkhand, and Bihar.

As part of the JSW Group since 2022, Shiva Cement has integrated into one of Indias leading industrial conglomerates, renowned for its strong operational expertise and commitment to sustainable growth. This association strengthens Shiva Cements access to advanced technologies, wider distribution networks, and capital resources, further accelerating its capacity expansion and product portfolio diversification. The Companys manufacturing facilities comprise a clinkerisation plant, cement grinding unit, and waste heat recovery power plant, ensuring energy-efficient and sustainable production. With captive limestone mines securing raw material supply, Shiva Cement maintains high operational efficiency and consistent product quality.

Through JSW Groups guidance, Shiva Cement is poised to expand its clinker capacity further and introduce innovative cement blends like Portland Composite Cement (PCC) to meet evolving infrastructure needs. The combined strengths underscore Shiva Cements vision to be a preferred supplier in the Eastern Indian cement market, supporting the regions growing construction and infrastructure development goals.

Operational & Financial Overview Operational Highlights FY 2025-26

Financial Performance

(Rs. lakhs)

	FY 2025-26	FY 2024-25	Change %
Gross Turnover	43,516.77	31,117.22	39.85%
Operating EBITDA	1,353.41	(621.36)	317.81%
Other Income	542.08	673.61	19.53%
Depreciation & Amortisation	4,175.13	4,207.34	-0.77%
Finance Cost	13,104.06	11,540.42	13.55%
Loss before exceptional items	(15,383.71)	(16,209.69)	-5.10%
Loss for the year	(12,553.25)	(14,247.66)	-11.89%

Other Financial Statement Line Items

Particulars	FY 2025-26	FY 2024-25	Change %
Raw Material Cost	11,314.08	9,311.02	21.51%
Employee Benefits Expense	2,759.53	2,731.72	1.02%
Power and Fuel Cost	16,592.60	12,962.55	28.00%
Profit/(Loss) on Asset Written off	-	-514.21
Other Expense	6,542.24	3,596.92	81.88%
Finance Cost	13,104.06	11,540.42	13.55%
Depreciation and Amortisation Expense	4,175.14	4,207.34	-0.77%

The Companys operating EBITDA is Rs. 1,353.41 lakhs as against Rs. (-) 621.36 lakhs in FY 2024-25, reporting an Operating EBITDA increase by 318% on a Y-o-Y basis.

Other Income

Other Income for the year is Rs. 542.08 lakhs as compared to Rs. 673.61 lakhs in FY 2024-25.

Material Cost

The Companys expenditure on raw material consumption for FY 2025-26 has increased to Rs. 11,314.08 lakhs from Rs. 9,311.02 lakhs in FY 2024-25.

Employee Benefits Expense

Employee benefits expense increased to Rs. 2,759.53 lakhs from Rs. 2,731.72 lakhs in FY 2024-25. The implementation of the new Labour Codes has resulted in an increase of Rs. 186.04 lakhs towards Gratuity for past service cost and disclosed as an Exceptional Item in the financial results during FY 2025-26 (previous year FY 2024-25- Nil).

Power and Fuel Cost

Power and fuel costs have increased to Rs. 16,592.60 lakhs from Rs. 12,962.55 lakhs in FY 2024-25.

Loss on Asset Write-off

There has been no Loss on Sale/Write off of Assets in FY 2025-26. In the previous year, there was a loss on the Assets write-off amounting to Rs. 514.21 lakhs, mainly on account of writing off the residual value of the assets whose life has already been exhausted.

Other Expenses

Other expenses have increased by 81.88% to Rs. 6,542.24 lakhs from Rs. 3,596.91 lakhs in FY 2024-25. The increase is mainly on account of Jobwork charges incurred for operating the BPSL cement grinding unit commissioned on September 03, 2025.

Finance Cost

The Companys finance cost increased by 13.55% to Rs. 13,104.06 lakhs from Rs. 11,540.42 lakhs in FY 2024-25.

Depreciation and Amortisation Expenses

The depreciation and amortisation cost has been decreased to Rs. 4,175.13 lakhs from Rs. 4,207.34 lakhs.

Non-Current Assets

Rs. lakhs

Particulars	31.03.2026	31.03.2025	Change
Other	34,422.00	17,614.70	95%
Non-Current Assets

Inventories

Rs. lakhs

Particulars	31.03.2026	31.03.2025	Change
Raw materials	222.31	74.35	199%
Semi-finished goods	730.11	1,668.96	(-)56%
Finished goods, including stock in transit	2,281.72	2,171.62	5%
Stores and spares	2,508.61	1,969.33	27%
Fuel	1,960.69	580.88	238%
	7,703.44	6,465.14	19%

Trade Receivables

Rs. lakhs

Particulars	31.03.2026	31.03.2025	Change
Trade receivables	0	57.84	(-) 100%

Non-Current Liabilities

Rs. lakhs

Particulars	31.03.2026	31.03.2025	Change
Borrowings	1,41,376.55	1,34,577.84	5%

Current Liabilities

Rs. lakhs

Particulars	31.03.2026 31.03.2025		Change
Borrowings	28,073.41	6,800.00	313%

Rs. lakhs

Particulars	31.03.2026 31.03.2025		Change
Other financial liabilities	4,100.93	4,893.25	(-)16%

Trade Payable

Rs. lakhs

Particulars	31.03.2026 31.03.2025		Change
Trade payables	8,555.88	6,329.21	35%

Rs. lakhs

Particulars	31.03.2026	31.03.2025	Change
Other current liabilities	9,117.96	5,078.36	80%

Capital Employed

Total capital employed has increased to Rs. 1,67,254.52 lakhs from Rs. 1,51,713.64 lakhs in FY 2024-25. Average return on capital employed is (-ve) 0.01% vis-à-vis (-ve) 3.08% in FY 2024-25.

Own Funds

Total equity has decreased to (-ve) Rs. 2,195.44 lakhs vis-à-vis Rs. 10,336.00 lakhs in 2024-25.

Other Key Financial Indicators

Particulars	Ratios for the year ended		Variance (%)	Change in ratio in excess of 25% compared to the preceding year
	31.03.2026	31.03.2025
Current Ratio (times)	0.28	0.56	(-) 49%	Reduction due to an increase in current maturities of LT borrowings from DBS Bank.
Debt Equity Ratio (times)	(77.18)	13.68	(-)664%	Debt increased due to the availment of a fresh term loan for project activity and equity erosion, resulting in negative net worth due to net loss for the year.
Debt Service Coverage Ratio (times)	0.16	0.25	36%	Reduced due to an increase in current maturities of LT debt. DBS Bank term loan bullet payment of Rs. 201.50 Cr due in March 2027.
Return on Equity (%)	(-) 308%	(-) 353%	13%	Increase due to a reduction in net loss for the year compared to the previous year.
Inventory Turnover Ratio (Days)	63	65	(-3)%	Ratio decreased due to an increase in manufacturing cost compared to the previous year.
Trade Receivable Turnover Ratio (No. of Days)	-	-	-	There are no trade receivables, as all sales are made against advance.
Trade Payable Turnover Ratio (No. of Days)	74	84	(-) 11%	Due to an increase in cost of goods sold compared to the previous year.
Net Capital Turnover Ratio	(1.22)	(3.04)	60%	Increased due to a decrease in working capital and an increase in net sales.
Net Profit Ratio (%)	(0.29)	(0.46)	37%	Increased due to a decrease in net loss after tax and an increase in net sales.
Return on Capital Employed (% age)	(1.70)	(3.52)	52%	Increased due to an increase in EBIT compared to an increase in borrowings.
Return on Investment (%)	0.85	(0.81)	205%	Increased due to an increase in operating EBIDTA compared to an increase in average capital employed.
Operating Profit Margin (%)	(-)5.67%	(-)15.01%	62%	Increase due to an increase in EBIT compared to an increase in Revenue from operations.
Interest Coverage Ratio	(0.19)	(0.40)	53%	Increase due to an increase in EBIT compared to an increase in Interest cost during the year.

Outlook (Way forward)

The country is entering a defining phase of its growth journey. However, the near-term environment remains characterised by demand moderation, cost volatility and evolving execution dynamics. Rapid urbanisation, sustained infrastructure investments and rising demand across the housing and core sectors are reshaping the construction landscape at an unprecedented pace.

The operating environment during FY 2025-26 remained dynamic, with cost pressures stemming from fluctuations in global energy markets, logistics constraints and currency movements. These pressures intensified towards the latter part of the year and are expected to persist in the near term. In response, the Company has further sharpened its focus on cost optimisation and operational efficiency.

Shiva Cement continues to enhance operational efficiency to optimise resource utilisation. The Company is also prioritising resource conservation, reuse and recycling through initiatives aimed at improving the clinker factor and thermal substitution rate. In addition, it is investing in renewable energy and Waste Heat Recovery Systems (WHRS) to reduce dependence on non-renewable energy sources and strengthen its sustainability performance.

Risk Management and Mitigation

The Company uses a well-defined risk management framework. Its purpose is to identify, assess, and mitigate business risks promptly while also making the most of new opportunities. We understand that excellent risk oversight is essential for protecting stakeholder interests, hitting our strategic goals, and ensuring long-term growth.

The Company uses a comprehensive Enterprise Risk Management (ERM) approach that combines input from both senior leadership (top-down) and operational teams (bottom-up). The Board makes sure that expected risks are managed carefully to achieve the best results. Our framework focuses on proactive measures and clear decision-making to cut down on unwanted risks, such as those related to operations, internal processes, and transactions.

Our strategy for mitigation involves several methods, such as avoiding the risk entirely, reducing its impact, transferring it (via insurance), or sharing it (through subcontracting). These efforts are strongly supported by: Strong internal controls Strict adherence to procedures Continuous monitoring via management information systems (MIS) Regular internal audit reviews

The Company constantly monitors key risk areas across all parts of the business, including raw material sourcing, infrastructure, logistics, finance, safety, environmental compliance, and statutory regulations. We regularly review and update our risk policies and mitigation practices to adapt to market changes and new threats, which helps maintain our operational resilience.

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

Industry risk	Raw material risk	Infrastructure and logistics risk
Impact	Impact	Impact
The cement sector is prone to supply-demand mismatches. Furthermore, it faces fluctuations in its end-user sectors	The Company faces the continual risk of margin erosion due to volatile input costs. Production is constrained by difficulties in sourcing sufficient, suitable-quality limestone. Further cost pressures arise from rising global commodity prices for key energy components, notably coal and pet coke, which directly increase manufacturing expenditure.	The cement industry is highly exposed to logistical inefficiencies. Operations are challenged by higher freight costs and the inadequacy of critical infrastructure, particularly regarding rail freight capacity and last-mile connectivity. These factors directly translate into increased lead times and escalated costs for product distribution.
Mitigation	Mitigation	Mitigation
The cement industry is experiencing favourable demand and supply conditions due to government investment in infrastructure, industry, and housing.	The Company actively mitigates input cost and raw material risks by:	The Company actively addresses freight and infrastructure constraints by:
The Company aims to increase market share and strengthen customer relationships by offering high-quality products.	Continuous monitoring of commodity markets and pricing trends.	Optimising logistics costs through the selection of the most cost-effective transport methods.
Cost optimisation and market understanding through marketing insights are top priorities.	Diversifying sourcing options to reduce dependency and enhance supply resilience.	Expanding rail capacity via the construction of an additional railway siding to accommodate increased dispatch volumes.
	Securing raw materials via access to captive limestone mines, ensuring supply continuity.	Enhancing raw material flow by installing an overhead belt conveyor for efficient limestone transport.
	Maintaining strategic inventory levels for key materials to buffer supply disruptions.	Strategic resource allocation and prioritisation of budgets to meet both current and projected infrastructure development needs.
	Cultivating long-term supplier relationships to guarantee consistent supply and early trend visibility.
	Proactively tracking government policies and geopolitical developments in sourcing countries.
	Engaging specialised consultants to provide optimal resource utilisation plans (limestone deposits), feasibility analysis, and sensitive cost-impact studies.

Environment, health & safety (EHS) risk	Human resource risk	Financial risk
Impact	Impact	Impact
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.	Operational stability is threatened by human capital risks. These include a shortage of skilled workers, high staff turnover, and the adverse impact of unionisation, potential work stoppages, and rising labour costs	The Company\u2019s financial performance is exposed to multiple external market risks. These include significant interest rate exposure, persistent commodity price volatility, and the potential impact of low cash flow on liquidity and capital planning.
Mitigation	Mitigation	Mitigation
The Company manages operational and compliance risks concerning Environment, Health, Safety (EHS), and Security through the following actions:	The Company mitigates labour and human capital risks by:	The Company mitigates market and financial risks by:
Conducting monthly top-level safety meetings to review performance, fatal accidents, and near misses.	Maintaining positive employee relations to promote a stable and cooperative work environment.	Linking project loans to the 1-year MCLR rate with an annual reset mechanism.
Closely monitoring and ensuring full compliance with environmental regulations and regularly tracking technological advances and future EHS standards.	Prioritising the hiring, comprehensive training, and retention of skilled personnel to address workforce scarcity and manage turnover.	Actively monitoring external events and emerging situations that could materially affect financial performance.
Making safety a mandatory Key Result Area (KRA) for all employees.		Regularly reviewing and adjusting financing, pricing, and procurement policies based on exposure, market developments, and past performance.
Providing continuous safety training, mock drills, best practice sharing, and comprehensive safety audits.		Maintaining strong operational discipline to control cost increases and actively monitoring internal performance and cash flow through regular internal meetings.
Establishing detailed fire prevention and management procedures.
Implementing robust security protocols, including security checkpoints, mandatory entry passes/ID cards, access control systems, and CCTV surveillance in key areas.
Providing annual health check-ups and comprehensive medical facilities, and health insurance for employees and their families.
Conducting safety walk-downs with all Heads of Departments (HODs) and promoting road safety through rewards and recognition.
Performing stringent pre-qualification assessments and CARES (Contractor Assessment and Rating for Excellence in Safety) validation for all contractors.

Human Resource

The Company seeks optimal efficiency by maintaining lean staffing levels. This is achieved through strategies such as multitasking and automation, and supporting ongoing workforce reductions, among others. Recognising that employees are vital to operations, HR policies are specifically designed to attract, develop, and retain talent.

To maintain operational flexibility, the Company utilises third-party agencies to provide contract labour at its manufacturing facilities. Employee capability is ensured through regular training that covers manufacturing operations, machine usage, operations flow, quality management, and mandatory workplace safety.

As of March 31, 2026, our workforce comprised 208 talented individuals, including 3.85% female employees. During FY 2025-26, we welcomed 25 new employees to our organisation.

Internal Controls, Audit & Internal Financial Controls

Internal Control

Shiva Cement Limited maintains an internal control system appropriately scaled to its size and business activities. This comprehensive system, defined by specific policies and procedures, is designed to ensure efficient operational management fully aligned with the Companys strategic goals. It forms an integral part of the corporate governance framework, encompassing governance, compliance, audit, control, and reporting functions. The structure is specifically designed to identify and manage risks, verify adherence to policies, and enhance control awareness across the organisation.

The key features of these robust internal controls include:

Formalised Structure: Documented policies, guidelines, authority matrices, and definitive approval processes established for all critical Company functions.

Compliance Assurance: Ensuring complete adherence to all applicable laws, regulations, external standards, and internal procedures.

Asset Protection: Comprehensive measures for the protection of Company assets and resources, actively minimising potential losses.

Accounting Integrity: Maintaining the integrity of the accounting system, ensuring accurate, authorised transaction recording and reliable reporting.

Financial Planning: Systematic preparation and continuous monitoring of annual budgets.

Information Reliability: Generation of reliable and timely financial and operational information for management decision-making.

Data Accuracy and Record Retention: Controls to ensure completeness, accuracy, confidentiality, and retention of business records in accordance with legal and regulatory requirements.

Fraud Prevention and Detection: Established mechanisms, including monitoring systems, whistleblower channels, and investigation procedures, to prevent, identify, and address fraudulent activities.

Operational Efficiency Monitoring: Continuous review of operational processes to enhance productivity, optimise resource utilisation, and ensure achievement of business objectives.

The Audit Committee, a sub-committee of the Board of Directors comprising Independent Directors, provides essential oversight. The Committee regularly reviews audit plans, critical audit findings, the adequacy of internal controls, adherence to Accounting Standards, and other pertinent compliance matters, thereby ensuring the controls remain effective and dynamic. It monitors the implementation of internal audit recommendations, including those relating to strengthening risk management policies and systems.

Internal Audit

The Companys Internal Audit function operates using leading global standards and international best practices, ensuring objectivity and effectiveness. The dedicated department reports directly to the Audit Committee, which comprises Independent Directors with relevant expertise. To maintain strict independence, the function reports directly to the Audit Committee Chairman. The team is granted extensive delegation of authority and full access to all organisational information, establishing robust checks and balances. The functions scope and authority are formally defined in the Internal Audit Charter. At the start of the year, the Internal Audit Department formulates a comprehensive risk-based audit plan that is reviewed and approved by the Audit Committee. Audit frequency is systematically determined by the risk ratings of various functional areas. The internal team executes this plan and periodically reassesses it to address areas of increasing importance arising from emerging industry trends and the Companys growth trajectory. The Audit Committee leverages internal feedback and external developments to inform and refine the annual audit plan.

Process owners are responsible for the timely implementation of corrective actions based on internal audit reports. All significant audit observations and corresponding corrective actions are formally reported to the Audit Committee. For comprehensive assurance, the Audit Committee also conducts independent meetings with the statutory auditor and management to evaluate the suitability and overall effectiveness of the internal financial controls framework.

Internal Financial Controls

Pursuant to Section 134(5)(e) of the Companies Act, 2013, the Board of Directors acknowledges its responsibility for establishing and maintaining an adequate and effective system of Internal Financial Controls within the Company. These controls are designed to provide reasonable assurance regarding the reliability of financial reporting, the efficiency and effectiveness of operations, compliance with applicable laws and regulations, and the safeguarding of the Companys assets. The framework is continually reviewed and strengthened to address reporting, operational, and compliance risks across the organisation. The Company has established a comprehensive framework and integrated systems to support effective IFC. Key elements include:

Delegation and Policy: Clear delegation of authority, defined policies, and standardised procedures across functions.

Technology: Effective IT systems that are appropriately aligned with current business requirements.

Risk Management: A structured risk management framework supported by regular, risk-based internal audits.

Ethical Infrastructure: An implemented whistle-blower mechanism to support ethical reporting.

A dedicated framework has been developed and implemented to ensure controls specifically over financial reporting (ICFR). This framework incorporates entity-level policies and detailed Standard Operating Procedures (SOPs) for critical processes. Entity-level policies include essential anti-fraud measures (such as the code of conduct, confidentiality, and whistle-blower policies), along with protocols governing the organisational structure, insider trading, and human resources. The effectiveness of these controls was reviewed and tested during the year. Based on the assessment, no material weaknesses or significant deficiencies were identified in the design or operating effectiveness of the controls.

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.