Siddhika Coatings Ltd Management Discussions

1. Industry structure and developments

Paint market is consolidating with big business houses marking entry and lots of M&A activity for acquisitions of smaller local players. Market is continuing the movement from unorganised to organised at least on the manufacturing front. The same must be followed in service segment later or sooner and we at Siddhika are ready to play pioneer role in that segment.

2. Opportunities and Threats

With real estate prices increasing, client demand is changing for better paint product mainly in exterior and that kind of product needs an organized service provider. Siddhika is an important player to provide high end services with proper compliances. Our increasing geographical presence is an advantage as there is rarely a paint contractor with pan india presence like ours and it gives us an edge with clients who need this product on pan india basis. Threats to the business are mainly due to delay in execution of projects which can affect targets for a particular year. Increasing cost of manpower cannot be passed on to clients immediately and this may have some impact for a shorter period. However, increasing cost of manpower is a long-term benefit for us.

3. Financial Performance of the Year

Revenue: Net revenue from operations for the year under review amounted to Rs. 4802.41 lacs compared to Rs.3681.98 lacs in 2023-2024 registering an increase of 30.43%. The company expects to improve the revenue in the coming year due to expansion in service portfolio.

Financial Expenses: For the year under review amounted to Rs 1.67 lacs as against Rs.2.03 lac in Financial Year 2023-24 translating to 0.03% and 0.06% of the total revenue, respectively. This decrease was on account of decrease in BG charges as current year BGs issued by Bank are mostly against fully secured by FDR.

At Rs.26.92. lakh for the year under review was increased as compared to 19.32 lakh in the previous year. The increase was mainly on account of increase in additions of assets in current year.

Earnings: -

Earnings before Interest, Depreciation and Tax (excluding other income) increased to Rs. 952.33 lakh in FY 2024-25 as compared to Rs.580.96 lakh in FY 2023-24. EBITA as a percentage of net revenue (excluding other income) increased to 63.92% in FY 2024-25. Increase in EBITA was primarily due to an Increase in Revenue in 2024-25 as compared to 2023-24.

Return on Capital Employed: -

For the current year at 26.30% as compared to 19.43% in the previous year. The increase in return on capital employed is due to increase in sales & better utilization of resources.

Net worth of the company increased by Rs.701.17 lakh to Rs. 3620.85 lacs as of March 31, 2025, from Rs.2919.68 Lakh as of March 31, 2024.The Increase is due to increase in Reserve & Surplus on account of profit as compared to last year.

Book Value per share decreased to Rs 58.60 in FY 2024-25 as compared to Rs 94.50 in the previous year. The decrease is due to 30,89,500 nos. of Bonus shares issued during 2024-2025.

Segment wise performance

Company operates in single segment. Repeated clients are our major strength. In FY 2024-25 increase in revenue was mainly due to faster recovery in operations from all over India. The order book seems to be healthy & we continue to focus on our core segment of repeat client business.

4. Outlook Demand for premium paints & services, mainly complete package are still good. We are also getting approached by manufacturers of unique construction products to be their channel partners, and this can help us a lot once we decide to expand more on product portfolio.

5. Risks and concerns Any change in tax regime, import tax can affect business margins. Also, inflation may add cost on front of workforce & material.

6. Internal control systems and their adequacy - The internal control system is an integral part of the general organizational structure of the Company. The system is highly structured and totally coordinated with the size and nature of its business. This process is aimed at pursuing the values of both procedural and substantial fairness, transparency, and accountability. External audit firms are appointed at various locations of the Company to conduct regular audits. The internal HR control system is a set of rules, regulations, policies, and procedures which run on software with in-built authorizations for enhanced control. The organisation is appropriately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment.

7. Discussion on financial performance with respect to operational performance - Statements in the management discussion and analysis describing the companys objectives, projections, estimates, expectations may be "forward looking statement" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Key factors that could make a difference to the Companys operations include among others, economic conditions affecting demand/supply and price conditions in the domestic markets in which the Company operate, changes in the Government Regulations, tax laws and other statutes and incidental factors.

8. Entry/Exit of Key Managerial Personnel and overall employment status of the company - We continued our endeavor of attracting & retaining best-in-class talent through multiple talent engagement initiatives. We improvised applicator and employee recognition initiatives with an attempt to reach all levels of HR resource connected to our business.

9. Details of significant changes (i.e., change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including (Consolidated Basis)

*Calculated on total sales

Change in Return on Net Worth in comparison to the previous year - During the financial year ended 31st March 2025, the return on net worth of the Company was 24.15% as compared to the previous financial year ended 31st March 2024 which was at 16.17%.

10. Disclosure of Accounting Treatment - The Company has followed the same accounting treatment as prescribed in the relevant Accounting Standards while preparing the Financial Statements.

Note on Investment in Mutual Funds:

All investments in Mutual Funds are for cash management only with money parked in Liquid / Debt / Arbitrage Mutual Funds. Small exposure of less than Rs.6 lakh is towards Equity Mutual fund by our subsidiary AB Coatings Pvt. Ltd.