Solar Industries India Ltd Management Discussions

Economic Overview

Global Economy1

Despite last years sharp rise in trade tensions and policy uncertainty, the global economy proved more resilient than anticipated. In CY 2025, it achieved steady GDP growth of 3.4%, supported by front-loaded trade activity, supply chain adjustments, strong AI-led investments and easing financial conditions following U.S. monetary policy relaxation.

Advanced economies expanded by 1.9%, with the U.S. growing 2.1% due to strong market confidence despite a softening job market. Europe recorded growth of 1.4%, navigating continued trade-related headwinds. Emerging and developing economies led with 4.4% growth, driven by Chinas 5.0% rise from fiscal stimulus and resilient exports, though low-income economies continued to lag.

Policy responsiveness and ongoing technological advancement continued to support global economic stability. However, the global economy remains vulnerable to renewed trade disruptions and geopolitical disruptions. Escalating tensions in West Asia have introduced additional uncertainty into the global macroeconomic environment. Global growth has held steady, but the international landscape remains vulnerable to geopolitical risks. Heightened tensions in West Asia, such as disruptions at the Strait of Hormuz are constraining vital energy supply routes. This has triggered volatility in oil markets, driving up fuel costs and creating ripple effects across logistics and industrial production worldwide. In response, several countries have intensified diplomatic engagement while also diversifying energy sources and crude import channels to mitigate supply risks.

Zambia2

Zambias economy has demonstrated notable resilience despite external and domestic shocks, supported by the IMFs Extended Credit Facility (ECF) programme. The Real GDP grew by 5.2% in CY 2025, driven by robust mining output and record maize production. Fiscal consolidation, progress in debt restructuring, with five bilateral creditor agreements signed and strengthened revenue mobilisation have also helped reduce macroeconomic imbalances.

Growth is forecasted to rise to 5.8% in CY 2026, supported by improved electricity generation, continued momentum in the mining sector and services sector gains. Inflation is expected to ease gradually towards the central banks 6-8% target by CY 2027. Public debt is assessed as sustainable, although the risk of debt distress remains high, underscoring the need for sustained fiscal discipline, private sector investments, governance reforms and diversification efforts to support inclusive and resilient expansion.

Nigeria3

Nigerias economy performed well in CY 2025, by growing at 3.89%, up from 3.38% in CY 2024, supported by improved performance across both oil and non-oil sectors. Inflation eased to an average of 21.26%, aided by tight monetary policy and a more stable exchange rate. The banking sector remained broadly sound, while external reserves rose to about USD 45.01 billion, supporting a balance of payments surplus.

In CY 2026, growth is expected to strengthen further to 4.49%, driven by reforms, easing monetary conditions, higher oil output and improved domestic refining capacity. Inflation is projected to decline sharply to around 12.94%, while reserves are forecast to rise to about USD 51.04 billion. However, risks remain from potential inflation spikes, disruptions in oil production, global financial volatility and banking-sector pressures, underscoring the importance of continued fiscal discipline and financial sector oversight.

South Africa4

South Africas economy expanded by 1.1% in CY 2025, up from 0.5% in CY 2024, supported by a recovery in agriculture and stronger activity across the finance, real estate, business services, and trade sectors. Growth was primarily driven by household spending, while inflation eased to 3.2% from 4.4%, enabling the central bank to reduce its policy rate to 6.75% by November 2025. The financial sector remained resilient, with improved capital adequacy and lower non-performing loans, although the current account deficit widened marginally as export growth moderated.

Growth is projected to improve modestly to 1.2% in CY 2026 and 1.6% in CY 2027, supported by improved energy supply, robust mining activity and continued structural reforms across the energy, logistics, water and governance sectors. However, the outlook remains constrained by infrastructure bottlenecks, electricity and water supply challenges, freight rail and port inefficiencies, fiscal pressures and geopolitical uncertainties, alongside external risks from trade tensions and climate-related disruptions.

Australia5

Australias economy is in a recovery phase, with growth shifting from government-led support to more private-sector-driven momentum as household incomes improve and interest rates ease. GDP grew by around 1.8% in CY 2025, supported mainly by stronger household consumption, low and stable inflation within the 2–3% target band and a still-resilient labour market. However, business investment and export volumes remained relatively subdued amid global trade tensions.

Growth is projected to strengthen to around 2.3% in both CY 2026 and CY 2027, supported by lower interest rates, rising disposable incomes and improving consumer and business spending. Policy settings are expected to remain balanced, with limited further rate cuts and modest fiscal tightening. Structural reforms in taxation, regulation, housing supply and the net-zero transition will remain critical to lifting medium-term growth and managing risks from a softer labour market and weaker external demand.

Ghana6

Ghanas economy maintained strong momentum in CY 2025, with GDP growth improving to 5.8% from 5.6% in CY 2024, supported by robust performance in the services sector and resilient private consumption. Macroeconomic conditions strengthened during the year, with inflation declining to 14.6% from 22.9%, enabling the central bank to reduce its policy rate to 18%. Fiscal consolidation progressed steadily, narrowing the fiscal deficit to 2.4% of GDP, while public debt declined to 45.5% of GDP. The external position also improved, with the current account surplus widening to 4.4% of GDP, supported by strong exports and remittance inflows.

Growth is projected at 5.0% in CY 2026 and 5.4% in CY 2027, supported by prudent macroeconomic management, improving business confidence and continued strength in services and domestic consumption. Inflation is expected to decline to single digits, while fiscal discipline and debt restructuring are anticipated to keep the fiscal deficit within target and sustain a current account surplus. However, the outlook remains exposed to external risks, including geopolitical tensions and global economic uncertainties, highlighting the need for continued fiscal prudence, stronger domestic resource mobilisation and accelerated economic diversification.

Tanzania7

Mainland Tanzanias economy grew by 5.9% in CY 2025, up from 5.5% in CY 2024, supported by strong performance across agriculture, mining, construction and financial services. Zanzibar recorded even faster growth of around 6.8%, while credit to the private sector rose by just over 20%, reflecting support for businesses and investment activity.

In CY 2026, growth is expected to remain robust, with Mainland Tanzania projected to grow by around 6.0–6.1% and Zanzibar by about 7.2%. Inflation remained low and stable within the 3–5% target range in CY 2025 and is expected to stay within this band in early CY 2026, supported by favourable harvests, adequate food stocks, a steady energy supply, moderate global oil prices and a stable exchange rate.

Indonesia8

In CY 2025, Indonesias GDP grew by 4.95%, supported by resilient domestic demand. Manufacturing output strengthened to 5.68%, while household consumption grew by 4.97%, with consumption accounting for 52.9% of GDP. Investment remained robust, reaching IDR 491.4 trillion in Q3, alongside a USD 9.67 billion trade surplus and inflation being maintained at 2.65%.

For CY 2026, growth is expected to remain stable at around 4.9%–5.0%, underpinned more by domestic demand, manufacturing momentum and sustained investment than by exports. Overall, the outlook remains broadly positive. If Indonesia continues to maintain low inflation, attract high-quality investment and manage global risks effectively, it should be able to sustain growth near 5%, although achieving a significantly faster growth trajectory may remain challenging.

Turkey9

Turkeys economy grew by 3.6% in CY 2025, supported primarily by resilient domestic demand despite a challenging macroeconomic environment. Private consumption remained the largest contributor to growth, while the broad services sector was the principal driver on the production side. Construction and industry also contributed positively, although external demand weighed on overall economic activity amid subdued global trade conditions. The economy reached USD 1.59 trillion in size, with per capita income increasing to USD 18,040 in 2025.

Growth is forecast to strengthen to 4.0% in CY 2026, supported by the carry-over effect from 2025, resilient domestic demand and a calibrated policy mix aimed at sustaining moderate growth while supporting disinflation. However, the outlook remains subject to downside risks from geopolitical tensions in the Middle East, global tariff uncertainties and potential increases in energy prices, which could adversely affect trade, the current account balance, inflation and overall economic activity. Continued fiscal and monetary policy measures are expected to help preserve financial stability and mitigate these external headwinds.

Zimbabwe10

Zimbabwes economy rebounded strongly in CY 2025, with real GDP growth accelerating to 7.6% from 1.7% in CY 2024, driven by a sharp recovery in agriculture following favourable rainfall and supported by continued growth in mining and manufacturing. Economic activity was underpinned by higher consumption and investment, while sustained monetary tightening, prudent fiscal management and improved liquidity conditions helped stabilise the exchange rate and reduce annual inflation to 89% from 736% in the previous year. The fiscal deficit narrowed to 0.5% of GDP, supported by stronger tax revenues, while the current account surplus widened to 4.1% of GDP, reflecting resilient mineral exports, remittance inflows and lower imports.

Growth is projected to moderate to 4.3% in CY 2026 and 4.5% in CY 2027 as agricultural output normalises and tighter policy settings take effect. Continued economic reforms, favourable weather conditions and rising exports are expected to support activity, while inflation is forecast to ease further to 14.7% in CY 2026. However, the outlook remains subject to risks from global economic uncertainty, commodity price volatility, geopolitical tensions, unresolved external debt arrears and tight financing conditions, highlighting the importance of strengthening macroeconomic stability and improving access to long-term development finance.

Kazakhstan11

Kazakhstans economy is projected to grow by 4.9% in CY 2025, supported by higher oil production following the launch of the Future Growth Expansion Project at Tengiz. The increase in oil output is expected to strengthen merchandise exports and narrow the current account deficit, while tight monetary policy and a stable exchange rate are projected to moderate inflation to 8.2%. The economy continues to benefit from steady growth, although fiscal consolidation and public financial management reforms remain important to reduce reliance on the National Fund and enhance resilience to external shocks.

Growth is forecast to moderate to 4.1% in CY 2026 as higher taxes and moderated fiscal spending take effect under the governments fiscal consolidation measures. Inflation is expected to ease further to 6.5%, while the fiscal deficit is projected to narrow to 1.7% of GDP. However, the outlook remains exposed to downside risks from global economic uncertainties and potential disruptions to oil export routes, underscoring the importance of structural reforms, stronger fiscal governance and continued private sector development to sustain long-term economic growth.

Outlook12

Due to potential escalations in trade tensions and a deterioration in financial sentiment the Global growth is expected to moderate at 3.1% in CY 2026 then slightly improving to 3.2% in CY 2027. Over the longer term, this reflects the impact of easing inventory cycles, trade-related pressures and softer consumption trends across major economies.

Inflation is expected to be volatile with Global headline inflation is projected to rise to 4.4% in CY 2026 before easing to 3.7% in CY 2027, with upward adjustments made to forecasts for both years.13 The uptick is due to the evolving geopolitical developments, that could particularly impact energy markets, resulting in temporary cost pressures and supply-side disruptions. Overall, while the growth trajectory remains stable in the long run, the global environment warrants a measured approach in the near term, with a continued focus on resilience and adaptability.

While accommodative monetary and fiscal policies across many economies may help cushion risks, the global outlook remains exposed to escalating trade tensions, geopolitical disruptions and tighter financial conditions. At the same time, productivity gains from AI adoption and more resilient supply chains offer upside potential. However, strengthening global trade cooperation and accelerating structural reforms in emerging markets will be critical to sustaining employment creation and supporting long-term economic resilience.

Indian Economy14

India has reinforced its position as one of the worlds fastest-growing major economies, with real GDP expand by 7.7% in FY 2025-26, up from 7.1% in FY 2024-25. This momentum is being driven by resilient rural consumption, strong agricultural and industrial output supported by Production Linked Incentive (PLI) schemes and sustained strength in services alongside continued public infrastructure spending.

The latest CPI release of 3.40%15, based on the revised 2024 base year, indicates controlled headline inflation, strengthening real purchasing power and supporting a broader recovery across both urban and rural demand. At the same time, India has deepened its integration into global value chains through the recent India–US and India–EU trade negotiations, which are expected to support exports, technology transfer and long-term investment flows. India has responded to geopolitical developments in the Middle East by diversifying its crude oil sources and strengthening alternative supply channels, thereby enhancing overall energy security.

Outlook

Looking ahead, India is expected to remain the fastest-growing large economy with Real GDP growth for FY 2026-27 is expected at 6.6%16, underpinned by strong government capital expenditure and a robust pickup in private consumption. Real Private Final Consumption Expenditure alone is projected to grow by around 7.0% in FY 2025-26.

Continued structural reforms, including further GST rationalisation, new and upgraded free trade agreements and measures to improve the business climate, are likely to accelerate Indias growth trajectory in the years ahead. With inflation on the revised base continuing to trend downward and remaining manageable, the Reserve Bank of India has room to maintain a supportive monetary stance, helping sustain investment and credit growth even amid global tariff pressures and geopolitical uncertainties.

Industry Overview

Global Industrial Explosives Industry17

The global industrial explosives market comprises specialised products used primarily in mining, quarrying and construction for controlled blasting operations. As per the Persistence Market Research report, the sector continues to witness steady growth, supported by ongoing infrastructure development and sustained resource extraction needs.

The market was valued at USD 14.0 billion in CY 2025 where bulk explosives remain the dominant category, accounting for 75.6% of the overall market, driven by their operational effectiveness and relatively lower-emission footprint, particularly across mining and infrastructure projects.

The market is broadly segmented by explosive type, including high explosives, blasting agents, initiating systems and by application areas such as open-pit mining, underground operations and construction projects. Growth is further supported by continued technological advancements, including improved safety standards and precise detonation systems, alongside rising global demand for metals and minerals.

Outlook

The industrial explosives market is projected to expand to USD 22.7 billion by CY 2032, registering a compound annual growth rate (CAGR) of 7.1% from CY 2025 onwards. This growth outlook reflects increasing investments in mining activities and accelerated urbanisation, particularly across the Asia-Pacific region.

The market is also benefitting from ongoing innovation in environmentally compliant explosives, driven by tightening regulatory norms and a greater emphasis on sustainability. While factors such as supply chain disruptions and stringent safety regulations may pose challenges, sustained demand from the energy and construction sectors is expected to support long-term growth momentum.

Global Industrial Explosives Market

Indias Industrial Explosives Industry

The Indian industrial explosives industry continues to serve as a critical enabler of the nations core industrial development. The sector is undergoing_rapid modernisation, supported by evolving regulatory frameworks and a strategic pivot towards indigenous defence manufacturing. India remains one of the most attractive markets within the Asia-Pacific region and is expected to grow at a CAGR of 9.0%18, driven by sustained demand from mining and infrastructure expansion. The mining sector accounts for a substantial share of consumption, supported by rising coal and mineral targets, while large-scale infrastructure projects further strengthen demand.

The industry landscape is characterised by a shift towards advanced bulk emulsion systems and the adoption of digital blasting technologies. This transition is further supported by the introduction of the_Explosives Regulation Bill, 2025, which replaces century-old legislation with a_modern legal framework_focused on national security, digital licensing and standardised safety protocols across the supply chain.

Key Trends in the Indian Explosives Industry

Finalisation of the Electronic Transition19:_A major regulatory transition was completed in_July 2025, with the prohibition on the manufacture and possession of traditional electric detonators. This has resulted in an industry-wide shift towards_Electronic Detonation Systems (EDS), which provide superior precision, reduced ground vibration and enhanced safeguards against unauthorised use.

Strategic Entry into Defence:_Supported by the Aatmanirbhar Bharat initiative, the industry has entered high-margin defence production. Manufacturers are playing a key role in domestic supply chains for high-energy materials used in warheads, rockets, missiles and space applications, thereby reducing reliance on imports.

Regulatory Modernisation: The Explosives (Amendment) Rules, 2025, effective May 1, 2025, have streamlined compliance requirements by extending license validity and record-keeping periods from five to ten years. This development is expected to improve long-term accountability while reducing administrative burdens for compliant operators.

Sustainability and Environmental Standards:_The industry is witnessing a growing focus on sustainability, with increasing adoption of ‘Green Blasting solutions. These include low-emission formulations and nitrate-free alternatives aimed at reducing the environmental impact of large-scale mining operations._

Outlook

The outlook for the Indian explosives industry remains optimistic, with demand expected to scale-up_and a continued push for self-sufficiency in energy and minerals. Enhanced safety norms mandating_QR code and GPS track vehicals are expected to improve traceability, transparency and security across the logistic chain. While volatility in key raw material prices, particularly ammonium nitrate, remains a risk, the sectors expansion into specialised civil engineering applications and defence exports is expected to provide a resilient growth buffer. Going forward,_technological innovation and automation_will remain central to improving efficiency and strengthening Indias competitiveness in the global market.

Mining and Quarrying Industry Coal20

The Coal production in FY 2025-26 was quite muted and could achieve 1036 million tonnes (MT) due to Lower production in Coal India and Singareni Collieries on account of heavy monsoons and prolonged rain fall. However, captive, commercial and other coal mines have emerged as a key growth driver within Indias coal sector, with production and dispatch crossing the 200 million tonnes (MT) milestone for the first time in FY 2025–26. As on 31 March 2026, coal production from captive and commercial mines stood at 210.46 MT, registering a year-on-year growth of 10.22% over 190.95 MT in the previous fiscal. Dispatches also increased to 204.61 MT, reflecting a growth of 7.35% year-on-year.21 This growth has been supported by capacity additions and faster operationalisation of assets, with 12 coal blocks becoming operational during the year and 7 additional blocks commencing production, significantly expanding the sectors production base. Coal imports in FY 2025–26 stood at approximately 247.53 million tonnes (MT), reflecting a marginal increase of 1.6% YoY, despite a 9% YoY decline in March 2026 imports to 20.82 MMT, indicating late-year moderation in import volumes driven by improved domestic availability.22,23 The sustained increase in production and dispatch highlights improving operational efficiency, stronger logistics and evacuation infrastructure and a structural shift towards higher contribution from captive and commercial mining. This trend is expected to play a critical role in augmenting domestic coal availability and supporting Indias rising energy demand.

Growth Drivers

Increased investments in mining capacity and allied infrastructure supported coal production growth beyond the 1 billion tonne milestone.

Enhanced rail connectivity, mechanisation and inventory management reduced bottlenecks and improved supply reliability.

Initiatives such as commercial coal mining, revised linkage frameworks and platforms like CoalSETU increased market efficiency and broadened access.

Greater mechanisation and digital monitoring improved productivity, operational efficiency and safety.

Continued efforts to reduce dependence on imports strengthened domestic coal utilisation and supported foreign exchange savings.

Land reclamation, afforestation and energy efficiency initiatives supported responsible mining practices.

Growth Drivers

Large-scale investments in roads, railways, metro networks, housing and smart city development continue to drive structural steel demand.

Growth in automobiles, capital goods, engineering and defence manufacturing is supporting higher consumption of value-added steel.

Government initiatives such as the PLI scheme for specialty steel and domestic procurement preference policies are strengthening the competitiveness of domestic producers.

Ongoing brownfield and greenfield expansions, along with modernisation initiatives, are improving productivity and quality.

Improved positioning in global markets is supporting export opportunities and diversification beyond domestic demand.

Outlook

Indias coal demand is expected to remain strong, with estimates indicating consumption could reach around 1.5 billion tonnes by FY 2029-30. The Ministry of Coal projection of demand for FY 2029-30 is 1665.03 million tonnes (MT). With further auction of Coal blocks, the private and Captive coal mines production is bound to grow substantially, and coal will continue to play a critical role in meeting baseload power requirements, even as renewable energy capacity expands.

Going forward, continued focus on increasing domestic production, improving logistics and reducing imports is expected to further strengthen the sectors contribution to national energy security. Simultaneously, efficiency improvements and sustainability initiatives will remain important as the industry balances growth with environmental considerations.

Steel24

As per recent updates from the Ministry of Steel, Indias steel sector continues to demonstrate strong growth momentum. India remains the worlds second-largest crude steel producer, with production and consumption trends strengthening in FY 2025-26. During this period crude steel production increased by about 10.7% year-on-year to around 168.4 million tonnes and with that the finished steel exports rose by 35.9% to over 6 million tonnes, while imports fell sharply by 31.7%, reflecting sustained domestic demand driven by infrastructure, construction and manufacturing activity with rising export strength. The sector remains a key contributor to industrial growth and employment generation.

Outlook

The outlook for the Indian steel industry remains positive, supported by sustained infrastructure spending and continued momentum in manufacturing activity. Domestic demand is expected to remain strong over the medium term, while policy support and capacity expansion are likely to further strengthen Indias global standing. Emphasis on value-added steel, operational efficiency and sustainability initiatives will be key priorities going forward.

Minerals25

Indias minerals industry continued to demonstrate strong performance in FY 2025-26, supported by record production levels achieved in recent years. Iron ore production reached around 312 million metric tonnes (MMT)26, remaining the largest contributor and accounting for nearly 70% of the total mineral production value. Production of other key minerals also remained healthy, with manganese ore at about 3.85 MMT and bauxite at around 25.96 MMT.

In the non-ferrous segment, primary aluminium output reached about 42 lakh tonnes, while refined copper production increased to nearly 5.7 lakh tonnes, reflecting steady demand from steel, power, construction and manufacturing sectors. Overall, the sector demonstrated stable growth momentum, supported by industrial expansion and infrastructure development.

Growth Drivers

Sustained consumption of iron ore and other bulk minerals driven by growth in steel production and construction activity.

Rising demand for aluminium and copper from power, automotive and electrical industries.

Continued regulatory simplification and auction-based mineral allocation improving transparency and investment.

Increased focus on exploration activity and development of new mining blocks to strengthen supply availability.

Strategic emphasis on securing minerals essential for clean energy transition and advanced manufacturing requirements.

Outlook

The outlook for the Indian minerals industry remains favourable, supported by sustained infrastructure spending, growth in manufacturing activity and rising domestic steel production. Continued policy reforms, improved exploration activity and emphasis on critical and strategic minerals are expected to strengthen Indias mineral security. With stable demand across core industries, the minerals sector remains well positioned to support Indias long-term industrial and energy objectives.

Real Estate and Construction Industry

Indias real estate and construction sector continues to remain a key pillar of economic growth in FY 2025-26, supported by infrastructure expansion and urban development. While housing sales volumes have moderated in select markets, overall demand remains resilient, particularly across the mid and premium segments. Property prices have remained stable, with selective appreciation across major cities.

The construction industry is expected to grow at around 8–10% in FY 2025-2627, backed by strong infrastructure spending on roads, railways, metro networks and urban infrastructure projects. Rising urbanisation, improving buyer sentiment and steady project execution continue to provide momentum to the sector.

Growth Drivers

Continued government investment in transport networks, urban infrastructure and smart city development.

Rising urban population and improving income levels driving sustained housing demand.

Relatively stable interest rates and improved availability of housing finance aiding affordability and demand.

Construction companies maintaining strong order books.

Greater consolidation and preference for reputed developers improving sector stability.

Outlook

The outlook for the upcoming years remains positive, supported by sustained public infrastructure spending and steady residential demand. Expansion into Tier-II and Tier-III markets, coupled with improved financing access and policy support, is expected to drive medium-term growth. While affordability and input cost pressures remain key areas to monitor, structural drivers such as urbanisation and infrastructure development continue to underpin the sectors long-term growth prospects.

Roads and Infrastructure Sector28

Indias roads and infrastructure sector is entering a renewed growth phase, anchored by a strong public capital expenditure push and improving momentum in industrial and construction activity. Government capex has scaled up significantly over the last few years, with public capital outlay budgeted at C12.2 lakh crore in FY 2026-27 and effective public capital expenditure at about C15.48 lakh crore, over four times higher than FY 2017-18 levels. This sustained investment is driving expansion of highways, bridges, logistics parks and Urban infrastructure, railways & ports expansion.

This sector is further supported by strengthening domestic capital goods activity, reflected in 8.1% year-on-year growth in capital goods IIP and rising imports of construction machinery, improving access to modern equipment and technology for road-building and related infrastructure projects.

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Growth Drivers

Union Budget 2026-27 prioritising infrastructure led growth to crowd in private investment and enhance productive capacity.

Policy support for high precision tooling, construction equipment and container manufacturing is improving domestic availability of advanced machinery.

Customs duty exemptions on select capital goods and tax incentives for tolling and electronics manufacturing are lowering the cost of critical equipment for developers.

Accelerating manufacturing GVA growth and broad based IIP gains are creating sustained demand for highways, industrial corridors and urban infrastructure.

Increased spending on containers, material handling systems and related capital goods is improving freight efficiency and supporting road based trade networks.

Outlook

The outlook for Indias roads and infrastructure sector remains positive, with rising public capex and a strong project pipeline of national highways, expressways, logistics and urban infrastructure. As capital goods capacity strengthens and policy incentives reduce equipment and financing costs, execution efficiency is expected to improve, supporting faster project completion and better asset quality.

These trends position the sector to support Indias long-term growth by enhancing connectivity, reducing logistics costs and enabling the Viksit Bharat 2047 vision through sustained expansion of high-quality transport and urban infrastructure.

Ports29

Indias seaport ecosystem is entering a scale-up phase, supported by infrastructure investments. The port network currently handles nearly 95% of Indias merchandise trade by volume, supported by 12 major ports and over 200 non-major ports. In addition, two new major ports are expected to become operational over the next few years.

The Government has set ambitious target for increasing Ports capacity from the current 2,700 million Tons to 10,000 million Tons by 2047.

Port-led investments and modernisation initiatives aggregating around INR 5.8 trillion are strengthening industrial corridors, accelerating coastal development and improving multi-modal connectivity through enhanced linkages with road, rail and inland waterways. This expansion is also driving development of port-adjacent industrial ecosystems, with industrial parks, logistics parks, FTWZs and SEZs increasingly clustering around key gateways, reinforcing ports as integrated logistics and manufacturing hubs.

Growth Drivers

Expansion of container terminals is supporting export oriented manufacturing and deeper integration with global supply chains.

Growth in FTWZs, SEZs and freight corridor connectivity is reducing transit time and improving logistics efficiency.

Public and private investments under national maritime and logistics programmes are focused on capacity augmentation, mechanisation and digitisation of port operations.

Strengthening of rail sidings, highways, coastal shipping and inland waterways is expanding hinterland reach and improving catchment areas for major ports.

Increased participation from institutional investors and developers is supporting growth in port adjacent logistics, industrial real estate and urban infrastructure, aided by stable cargo volumes and long concession tenures.

Outlook

The outlook for Indias port infrastructure remains strong, supported by rising trade volumes and increased manufacturing activity.

Continued investments in capacity, technology and connectivity are expected to improve vessel turnaround times, enhance operational efficiency and enable handling of larger vessels and diversified cargo mixes.

Further, governance reforms, digitalisation initiatives, sustainability focus and greater private participation are expected to enhance global competitiveness. Port-led development is also likely to unlock new opportunities across logistics, industrial real estate and coastal urbanisation. Overall, Indias seaport sector remains well positioned to support the next phase of trade- and manufacturing-led growth.

Cement and Limestone

Indias cement and limestone ecosystem is entering a new capacity expansion phase, underpinned by strong demand visibility and a supportive policy shift. Cement production in FY 2025-26 reached 485 million tonnes, reflecting a growth of 9.2% over the previous year. Cement grinding capacity is projected to rise by about 160–170 million metric tonnes (MT) over FY 2026–2830, a sharp acceleration from the 95 MT added over the last three years. In parallel, the industry is expected to expand its installed capacity from 680 million tonnes at present to 850 million tonnes by FY 2029-30.

This build-out is being driven by robust cement demand (around 9.5% CAGR in recent fiscals), supported by housing, infrastructure and industrial activity, which has already lifted utilisation levels to nearly 70%.

On the supply side, limestone, the key raw material for cement, has been fully reclassified as a major mineral31. This removes restrictive end-use conditions and allows leaseholders to sell limestone freely across industries, including cement. The change is expected to ease raw material constraints and support faster capacity ramp-up.

Growth Drivers

Sustained public and private investment in infrastructure and housing, sustaining underlying cement demand.

Increasing shift towards split grinding units closer to consumption centres, reducing logistics costs and improving supply responsiveness; nearly two thirds of new capacity is expected in this format.

Strong capex momentum among cement producers, with a large portion of additions being brownfield and largely funded through internal accruals, supporting stable leverage and credit metrics.

Full classification of limestone as a major mineral, eliminating earlier minor/major distinctions and enabling more flexible supply to cement plants.

Higher limestone availability boosting employment and income generation in mining regions, while improving raw material security for new and existing cement plants.

Outlook

The outlook for Indias cement and limestone sector remains favourable. In the near term, commissioning of ~70–75 MT of new capacity in the current fiscal year may temporarily soften utilisation. However, over FY 2026–28, demand is expected to broadly keep pace with supply additions, keeping utilisation at around 70% and supporting stable profitability.

Over the medium term, the combination of large capacity expansion, regulatory streamlining in limestone mining and strong infrastructure and housing pipeline should further strengthen Indias position as one of the fastest-growing cement markets globally. While competitive intensity may rise in regions witnessing aggressive capacity additions, the sector appears well placed to absorb higher volumes without undue balance sheet stress, provided project execution and limestone lease transitions remain smooth.

Affordable Housing Driving Cement & Limestone Demand

The Governments push for affordable housing under Pradhan Mantri Awas Yojana - Gramin and Pradhan Mantri Awas Yojana – Urban, targeting 20 million rural and 10 million urban houses between FY 2024-25 and FY 2028-29, is expected to sustain construction activity.

Given the cement-intensive nature of housing, this scale-up will drive strong cement demand, particularly in rural and semi-urban markets and in turn support increased demand for limestone, which is a key input in cement production.

Global Defence Sector32

The global defence industry is entering a sustained growth phase through the second half of the decade, underpinned by rising defence budgets, elevated threat perceptions and large modernisation programmes across major powers and key emerging economies. Governments are prioritising mission readiness, replenishment of munitions inventories and accelerated procurement of next-generation platforms across air, land, sea and space. This is translating into strong order visibility for prime contractors and their wider supply chains.

The recovery in commercial aerospace is providing an additional tailwind. Higher passenger and cargo traffic, persistent aircraft backlogs and ageing fleets are driving demand for new aircraft, while also supporting defence-relevant technologies and capabilities that overlap with the civil aviation ecosystem.

Growth Drivers

Large multi year procurement programmes for fighters, transport planes, missiles, air and missile defence systems, naval vessels and space based assets, as countries rearm and replace ageing equipment.

Rising and recurring demand for maintenance, repair and overhaul, with global aftermarket activity projected to expand steadily; engines are expected to account for over half of total MRO spend over time.

Expansion of defence industrial bases across the Middle East, Eastern Europe and the Indo Pacific, driven by localisation mandates and the development of domestic production capacity.

Structural investments across supply chains through new facilities, dual sourcing, vertical integration and long term contracting, supporting higher output of missiles, munitions, drones and critical components.

Procurement reforms and faster acquisition cycles, improving contract execution timelines and creating greater opportunity for both established primes and niche players.

Outlook

Overall industry growth is expected to remain strong, with defence spending continuing to outpace GDP growth in several markets and significant backlogs providing multi-year revenue visibility. The key constraint is likely to be execution rather than demand. Supply chain bottlenecks, skilled workforce shortages and capacity limitations could restrict the pace of deliverables.

Companies that can scale manufacturing, stabilize supplier networks and execute efficiently on long-term service contracts are likely to be well positioned to benefit from rising budgets and deliver steady revenue and earnings growth globally.

Indian Defence Sector33 Defence Budget 2026–27

Total: J 7.85 Lakh Crore

Category	Amount	Percentage
	(D Lakh Cr)
Capital Expenditure	2.19	27.95%
Personnel	2.07	26.40%
Operations	1.58	20.17%
Defence Pensions	1.71	21.84%
Civil Organisations Under MoD	0.29	3.64%
Source: PIB, Union Budget 2026-27

Indias defence sector is entering a strong investment cycle, anchored by a sharp increase in budgetary allocations and a clear policy push towards self-reliance. In the Union Budget 2026-27, the Ministry of Defence received its highest-ever allocation of C7.85 lakh crore, nearly three times the level in FY 2013-14 and around 15% higher than the previous years budget estimateallocation. Defence spending now accounts for close to 15% of total central government expenditure.

Around 28% of the allocation has been earmarked for capital expenditure, with the balance directed towards operations, salaries and pensions. This reflects a balanced focus on modernization and force sustenance. The overall agenda is to upgrade three services, strengthening border infrastructure, expanding indigenous manufacturing and ensuring robust welfare support for veterans, in line with the longer-term Viksit Bharat 2047 vision.

Indias domestic defence production has increased from C1.54 lakh crore in FY 2024-25 to H1.7578 lakh crore in FY 2025-26, reflecting steady capacity expansion and policy support.34

Indian defence products are also witnessing strong acceptance in international markets. Defence exports in FY 2025-26 stood at C38,424 crore, compared to C23,622 crore in FY 2024-25, with exports now reaching over 80 countries, highlighting the growing global competitiveness of Indias defence manufacturing sector.35

Indian Defence Export Value

Growth Drivers

Rising capital outlays for modern platforms, including next generation fighter aircraft, advanced weapons systems, naval vessels, submarines, UAVs and drones, backed by a capital allocation of over H2.19 lakh crore in FY 2026-27.

Strong Atmanirbhar Bharat policy thrust, with about H1.39 lakh crore reserved for procurement from domestic defence industries and roughly three quarters of the capital acquisition budget ring fenced for Indian manufacturers, encouraging localisation and private sector participation.

Higher funding for defence R&D, with DRDOs allocation increased to about H29,100 crore and roughly a quarter of defence R&D budget opened to industry, start ups and academia, supported by 15 DRDO–industry–academia Centres of Excellence and a network of ~2,000 partner industries.

Targeted investments in strategic infrastructure, including enhanced allocations for the Border Roads Organisation, tunnels, bridges, airfields and defence optical fibre networks, improving mobility and operational readiness along sensitive frontiers.

Expanded allocations for veterans welfare, including over H12,100 crore for the Ex Servicemen Contributory Health Scheme and about H1.71 lakh crore towards defence pensions, supporting morale and long term attractiveness of defence careers.

Outlook

The outlook for Indias defence sector is broadly positive, supported by multi-year budget visibility and expanding domestic manufacturing opportunities. Higher and more predictable capital allocations, combined with a procurement framework that prioritises Indian suppliers, should further deepen the domestic defence industrial base and attract private investment, joint ventures and technology transfers.

At the same time, increased R&D spending and stronger industry-academia collaboration are expected to gradually shift the ecosystem from licensed manufacturing towards higher indigenous design, innovation and IP creation, particularly in complex platforms and subsystems. With sustained focus on modernisation, border infrastructure and veteran welfare, the sector appears well positioned to deliver stronger growth, greater self-reliance and improved operational readiness over the next decade.

Company Overview

Founded in 1995 in Nagpur, India, Solar Group is a leading manufacturer of industrial explosives, initiating systems and defence products, with operations spanning the entire value chain. The Company has built integrated manufacturing capabilities across industrial explosives, ammunition, rocket systems, propellants, unmanned systems and advanced defence technologies, supported by world-class manufacturing facilities and a strong focus on indigenous innovation.

With exports to over 90 countries, Solar Group continues to strengthen its global presence while expanding its defence portfolio under the Atmanirbhar Bharat initiative. Its emphasis on automation, quality, safety, research and development, and responsible manufacturing has enabled the Company to deliver reliable, technology-driven solutions for mining, infrastructure and defence applications, reinforcing its position as a trusted partner in domestic and international markets.

Opportunities and Threats

Opportunities

Structural Upswing in Global Defence Spending

Heightened geopolitical tensions and replenishment cycles across Europe, Asia and the Middle East have created a multi-year demand cycle for ammunition, rockets and high-energy materials. The industry indicates a sustained demand visibility for the next 5–7 years, particularly in artillery systems, rocket platforms and explosives.

Solars Alignment:

The Company has built a robust defence order book of over H18,000 crore, reinforcing its position as an established global supplier. With products already qualified and facilities ramping up, Solar is structurally aligned to convert this demand into sustained revenue growth over the medium term.

Scaling Domestic Defence Indigenisation

Indias continued focus on self-reliance in defence manufacturing is accelerating procurement from domestic private sector players. Long-term programs in rockets, ammunition and advanced weapon systems are creating recurring supply opportunities.

Solars Alignment:

Solar continues to execute the Pinaka rocket programme, supported by supplies made during FY 2025–26, while expanding its participation in long-term defence programmes such as MPATGM and other missile systems. The Company is also broadening its ammunition portfolio across 23 mm, 30 mm and 155 mm calibres. These initiatives enhance long-term revenue visibility and further strengthen its strategic position within Indias defence ecosystem.

Expansion of Artillery & Ammunition Demand Globally

There is a well-documented global shortage of medium and large calibre ammunition, especially 155mm artillery shells, with several countries rebuilding inventories.

Solars Alignment:

The Company has initiated production of 155mm shells and is progressing through qualification stages. With existing capabilities in high-energy materials and ammunition systems, Solar is well placed to participate in both domestic and export demand as capacity ramps up.

Rapid Growth in International Mining & Industrial Explosives Demand

Global demand for commodities such as copper, gold and industrial metals is rising, driven by energy transition, electrification and infrastructure buildouts. Mining activity across Africa, Southeast Asia and select Eurasian markets is witnessing renewed traction.

Solars Alignment:

Solars international business is supported by manufacturing footprints across multiple geographies. Years of capacity building in Africa, Turkey and Southeast Asia are now yielding scale benefits, enabling the Company to capitalize on the global mining upcycle.

Operating Leverage from Defence & International Mix Shift

The industry shift toward higher-value, technology-intensive defence products is structurally improving margin profiles for specialised players.

Solars Alignment:

Solars defence revenue witnessed a significant growth in the recent quarters fuelled by expanding international business. As these segments form a larger share of total revenues, the Company expects sustainable EBITDA margins in the 27–28% range, reflecting improved product mix and scale efficiencies.

Capacity Expansion Backed by Strong Order Visibility

With strong order inflows across defence and exports, the industry is entering a scale-up phase where timely capacity creation will determine market share gains.

Solars Alignment:

The Company is undertaking significant capex, expanding facilities in Dhule and Dholpur and ramping up defence manufacturing infrastructure. With qualified products and long-term contracts already secured, capacity expansion is directly linked to executable demand rather than speculative growth.

Emerging Opportunities in Advanced Defence Technologies

Modern warfare is increasingly shifting toward unmanned systems, loitering munitions and high-technology platforms including robotics. Government is encouraging indigenous development in these strategic segments, expanding the addressable opportunity beyond conventional ammunition and explosives.

Solars Alignment:

Solar is actively developing loitering munitions and working on MALE category UAV programs, as part of its strategic focus on next-generation defence technologies. The Company is also in the process of strengthening its capabilities through the establishment of a dedicated centre for robotics and UAV development, which is expected to support advanced product design, testing and system integration.

These initiatives position Solar to expand beyond traditional war theater platforms into technology-driven defence platforms, enhancing its long-term relevance and participation in evolving warfare ecosystems.

Threats

Execution Risk in Large Defence Programs

Defence projects involve lengthy qualification cycles, trials and phased ramp-ups. Delays in trials can defer revenue recognition. Scaling up complex ammunition and missile systems requires precision execution and supply chain synchronization.

Geopolitical and Export Policy Risks

While geopolitical tensions currently support defence demand, changes in export controls, international sanctions,logistic bottlenecks, bilateral trade dynamics or political shifts in importing countries may affect order flows and execution schedules. Also, large exposure to international defence markets introduces sovereign and regulatory risks.

Cyclicality in Domestic Mining Demand

Domestic mining and infrastructure demand remained subdued during the year due to:

Heavy monsoons

Slower growth in coal offtake

Flat electricity demand

Although the Company expects long-term recovery, short-term fluctuations in mining activity may impact volumes.

Commodity Price and Raw Material Volatility

The explosives business depends on key inputs such as ammonium nitrate and other energetic material precursors. Volatility in raw material prices or supply disruptions could pressure margins if not passed through in a timely manner.

Regulatory and Safety Compliance Risk

Manufacturing of explosives and ammunition operates under stringent regulatory frameworks. Any safety incident, compliance lapse, or tightening of environmental and defence regulations could result in operational disruptions, penalties or reputational impact.

Capital Allocation and Scale Management

With significant planned capex across defence capacity expansion and international operations, efficient capital deployment and timely ramp-up remain critical. Any delay in capacity absorption could temporarily affect return ratios.

Technology Development and Competitive Intensity

Entry into advanced platforms such as UAVs and next-generation munitions involves technological complexity and global competition. Delays in product qualification or inability to secure large platform contracts may impact anticipated growth trajectories.

Product-Wise Performance

Product portfolio

Industrial Explosives

Bulk Explosives

Packaged Explosives

Initiating Systems

Defence Products

High Energy Materials (HMX, RDX, TNT and their compounds)

Composite Propellants for Akash, Pinaka and Brahmos

Complete integration of Rockets

Ammunitions (30mm, 81mm ATAL, 155mm, Multi mode hand Grenade, Mines, Bombs, Warheads, Bund Blasting device)

Drones and UAVs

Pyros and Ignitors

Propellants for Space Applications

Financial Overview

Sr. No. Key Financial Ratio	FY 2025-26	FY 2024-25
1 Debtors Turnover	5.95	6.67
2 Inventory Turnover	17.00	21.19
3 Interest Coverage Ratio	20.10	15.50
4 Current Ratio	2.06	1.95
5 Debt to Equity Ratio	0.23	0.21
6 Adjusted Operating Profit Margin (%)	24.10%	23.67%
7 Adjusted Net Profit Margin (%)	17.65%	17.08%
8 Return on Net Worth (%)*	27.67%	29.18%

* The decrease of 1.51% in the Return on Net Worth was primarily attributable to the increase in shareholders funds through the accumulation of reserves and surplus. While profitability improved, the expansion in the net worth base was proportionately higher, resulting in a marginal decline in the return generated on shareholders equity as compared to the previous year.

1. There is a change of 29.70% in Interest Service coverage ratio on account of an increase in EBITDA during the current year.

2. There is no significant change (i.e. change of 25% or more as compared to the immediately previous financial year) in the other key financial ratios.

Risk Management

Solar Industries India Limited follows a comprehensive risk management framework focused on regulatory compliance, protection of brand reputation, mitigation of potential adverse impacts and identification of emerging opportunities. The Company adopts a proactive approach to managing financial, operational, reputational and market-related risks, enabling it to respond effectively to evolving business conditions. This framework supports business resilience and underpins long-term growth and stability.

Read the details about Risk Management of the Company on Page 31.

Human Resource

As of March 31, 2026, Solar Industries India Limited had a workforce of 15,727 employees, supporting its expanding operations across domestic and international markets. The Company continues to invest in building a future-ready workforce through structured talent acquisition, competency-based learning, leadership development and succession planning, ensuring organisational capability remains aligned with evolving business requirements.

Employee development is driven through role-specific technical, behavioural and leadership training, complemented by structured career progression programmes, mentoring and continuous capability enhancement. The Company also fosters an inclusive workplace by promoting employee engagement, diversity and equal opportunity, while extending comprehensive well-being initiatives encompassing physical, mental, financial and psychological health.

A strong safety culture remains embedded across the organisation through continuous learning, standardised operating practices and technology-enabled safety systems. Backed by collaborative employee relations and a sustained focus on capability building, engagement and workplace well-being, the Company continues to strengthen a resilient and high-performing workforce that supports its long-term growth strategy.

More on human resources is in the "Human Capital" chapter of the Integrated Report on Page 50.

Outlook

Looking ahead, Solar Industries is well positioned to sustain its strong growth momentum, supported by a record defence order book and improving execution across key programs such as Pinaka rockets and ammunition systems. The ramp-up of defence supplies and expanding participation in long-term domestic and international contracts provide multi-year revenue visibility.

The international explosives business continues to gain traction across key geographies, benefiting from steady commodity demand and strengthened global operations. With an improving business mix led by defence and exports, margins are expected to remain healthy.

Backed by continued investments in advanced defence technologies, capacity expansion and operational excellence, Solar Industries remains confident of delivering sustainable growth and long-term value for its stakeholders.

Internal Control Systems and their Adequacy

The Solar Group has established a comprehensive internal control framework and procedures to ensure the efficient management of its business operations. Clearly defined roles and responsibilities across management support a structured governance framework. To strengthen financial monitoring and operational oversight, the Company leverages a customized We are using SAP S/4HANA designed to meet the scale and complexity of its operations.

The Audit Committee plays a key role in assessing the effectiveness of the internal control framework and recommending continuous improvements. The Company benchmarks its internal processes against industry standards and operates a robust Management Information System to support informed decision-making. The Audit Committee works closely with the statutory auditors, regularly reviews key observations and reports significant findings to the Board of Directors. Internal audits are conducted by an independent firm of chartered accountants in accordance with an annual audit plan approved by the Audit Committee.

The Company has identified key financial reporting risks and implemented appropriate control mechanisms to mitigate them. These controls are periodically reviewed and updated to align with evolving business requirements, regulatory developments and technology advancements. Pursuant to Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI (LODR) Regulations, 2015, the Audit Committee has confirmed that, as of March 31, 2026, the Companys internal financial controls are adequate and operating effectively.

Cautionary Statements

This document contains forward-looking statements based on the Companys expectations regarding future events and its anticipated financial and operational performance. These statements are subject to assumptions, uncertainties and risks that may cause actual outcomes to differ materially from those expressed or implied. Readers are advised not to place undue reliance on such statements. The accompanying disclaimer should be read together with the assumptions, qualifications and risk factors outlined in the Management Discussion and Analysis section of Solar Industries India Limiteds Annual Report for FY 2025–26.