Solar Industries India Ltd Management Discussions

Economic overview

Global economy¹

The global economy exhibited steady growth, achieving a 3.3% expansion in the reported calendar year. This steady pace, despite various headwinds, highlights the remarkable resilience of economies worldwide. The sharp upward shift in the US economy highlights its vitality, countering the sluggish prospects of some large European nations. Moreover, disruptions such as geopolitical upheavals, volatile commodity prices and extreme weather patterns have presented challenges in many regions while simultaneously driving adaptation and innovation.

Emerging markets in Asia demonstrated robust growth, fuelled by high demand across various sectors. These regions are anticipated to remain key drivers of global growth, creating new opportunities worldwide. Although regions like the Middle East, Central Asia and Sub-Saharan Africa face persistent economic headwinds, the growing appeal of emerging markets is attracting increasing capital inflows, adding further dynamism to the global economy.

In CY 2024, global headline inflation stood at 5.7%, and it is projected to decline to 4.3% in CY 2025, indicating a gradual easing of price pressures across major economies. This declining trajectory highlights the efficacy of monetary policy measures implemented by central banks in major economies to mitigate inflationary pressures. Moreover, advanced and few emerging economies particularly the ones where the production facilities of Solar are located are undertaking structural reforms to mitigate demographic challenges and productivity constraints, utilising digitalisation and sustainable investments to foster long-term economic growth.

Zambia, one of the worlds youngest nations by median age, is undergoing demographic shifts while recovering from the COVID-19 recession. Despite challenges, including an El Nino-induced drought affecting nearly 10 million people and slowing GDP growth to 1.9% in early CY 2024, the country remains resilient.

Key sectors like agriculture and energy faced setbacks, but mining showed positive growth, supported by over $7 billion in new investments. Ongoing debt restructuring, supported by the G-20 Common Framework and recent agreements with the IMF, is helping stabilise the exchange rate, which should bring more stability to the economy and lower inflation in the coming months.

Looking forward, Zambias economy is expected to bounce back, with growth predicted to average 6.3% annually over the next two years. This positive outlook is based on higher mining production, successful reforms and normalisation of rainfall patterns.

Nigeria has made significant strides in stabilising its economy through key reforms, leading to modest growth, improved fiscal health and a rise in foreign exchange reserves in CY 2024. Despite short-term pressures on households and businesses, these measures were crucial to avoid a financial crisis and set the country on a stronger path for development.

The Federal Governments fiscal deficit has reduced to 3.37% of GDP in CY 2024, down from 4.19% in CY 2023, mitigating debt risks. Foreign exchange reserves have increased from $32.9

billion at the end of CY 2023 to over $38.8 billion in CY 2024, bolstering the economys resilience against external shocks. However, inflation remains elevated, driven by rising gasoline prices and flooding. With the current policy mix, inflation is expected to decline to 14.3% by CY 2027.

South Africas economy is characterised by its diversity and industrialisation, positioning the country as a leader in key sectors such as mining, manufacturing and finance within the African continent. Economic growth accelerated in the latter half of CY 2024, driven by several favourable factors, including the cessation of load-shedding, moderated inflation, and reduced interest rates. These conditions have reinforced the financial positions of households and corporations, thereby enhancing overall economic momentum. In CY 2024, the Consumer Price Index (CPI) inflation decreased to 4.4%, marking the lowest level since the 2020 Covid-19 pandemic surge. This reduction was primarily attributable to the appreciation of the rand, declining fuel prices.

Global organisations like the International Monetary Fund have revised upward the medium-term outlook for South Africas economy. The South African Reserve Bank (SARB), in its September CY 2024 estimates projected steady growth of 1.6% in CY 2025, 1.8% in CY 2026, and 2.5% in CY 2027. Over the next three years, growth is expected to average around 2%, with inflation staying steady near the midpoint of 4.5%.

Australias economy has been bolstered by strong public spending and infrastructure projects, even though the labour market has softened slightly. Job creation remains steady and inflation has reached 2.8% year-on-year in CY 2024, a significant drop from post-pandemic highs. Growth slowed to 1.2% in CY 2024, mainly due to weak household spending and lower real incomes. Unemployment has risen slightly, but the labour market has stayed fairly stable.

Looking ahead, growth is projected to reach 2.1% in CY 2025, supported by a recovery in private demand and sustained public investment. While efforts are being made to avert a sharp slowdown, risks such as subdued private spending and potential decelerations in key trading partners persist. Nevertheless, the economy is expected to gain momentum, with public demand and infrastructure projects continuing to underpin the recovery.

Ghanas economy has demonstrated resilience, navigating challenges and reinforcing its position as one of Africas most dynamic economies. By the end of CY 2024, real GDP growth reached 5.7%, a substantial increase from 3.1% in CY 2023 and is projected to grow by 4% in CY 2025.

This growth trajectory is supported by strategic government initiatives focused on promoting resilience and improving the living standards of Ghanaians. Ghanas recovery emphasises its commitment to fiscal consolidation, debt restructuring and inclusive growth. The countrys ability to rebound and lead the region in economic recovery showcases its determination, positioning it as a key player in Africas economic landscape.

Tanzanias growth has remained strong. The inflation has remained low with narrowing fiscal and current account deficits, driven by better tax collection and robust trade performance. While pressures in the foreign exchange market persist, signs of moderation have been seen. The medium-term outlook is positive, with GDP growth expected to align more closely with long-term potential, supported by ongoing structural reforms. Inflation decreased from 3.8% in CY 2023 to 3.2% in CY 2024 and is projected to be 4% in CY 2025, well below the Bank of Tanzanias target of 5%.

Over the medium term, growth is forecasted to average around 6%, driven by improved business climate. Implementation of reforms are likely to attract greater investment, including Foreign Direct Investment (FDI). Headline inflation is also expected to remain low and stable.

Indonesias economy continues to demonstrate resilience, with GDP growth projected at 5.1% in CY 2024 and 5.2% in CY 2025. Headline inflation slowed to 1.7% in CY 2024 and domestic demand remained the key driver of growth throughout the reported calendar year. Election-related spending, increased public wages and lower non-food inflation boosted private consumption. Additionally, public infrastructure investments fuelled a rise in construction, with growth accelerating from 2.7% to 7.4%. Public infrastructure spending and investment also supported a modest increase in mining activity. Although real imports grew faster than exports, net exports still contributed modestly to GDP growth. The gradual expansion of the current account deficit reflects this trade dynamic, but it remains manageable given the broader economic stability.

Indonesia is well-positioned to sustain strong growth around 5%, driven by robust domestic demand and effective macroeconomic policies.

Indian economy⁹

The Indian economy has continued to exhibit resilience amid global uncertainties, with GDP expanding by 6.5% in FY 2024-25. This momentum has been driven by strong sectoral performance, improving consumption trends and proactive government policies. Private consumption is on a steady rise, reflecting robust consumer confidence and sustained demand. Concurrently, a notable increase in government expenditure has further energised economic activity. Core sectors such as construction, financial services and trade have remained key pillars of growth. The manufacturing sector played a crucial role, marked by heightened purchasing activity and increased employment in the latter half of the year. The services sector also recorded a healthy uptick, propelled by a rise in new businesses and job creation.

Indias exports added positively to this narrative, rising by 10.4% despite global trade headwinds. As overseas shipments outpaced imports, net exports contributed 2.5 percentage points to GDP expansion. This performance was supported by robust rural demand, a surge in foreign investments and targeted policy initiatives aimed at boosting consumption and investment.

Outlook

Indias economic outlook for FY 2026 is optimistic, underpinned by a solid foundation of domestic stability.

The country is poised to maintain its position as one of the worlds fastest-growing economies. Growth is anticipated to accelerate, driven by reduced inflation, favourable weather conditions enhancing agricultural productivity and stronger rural consumer spending.

Furthermore, as multinational corporations seek cost- effective locations for expansion, India is well-positioned to attract increased investment. This influx of capital is expected to foster long-term job creation and contribute to sustained economic development. v /

Industry overview

Global Industrial Explosives Industry ¹⁰

The global industrial explosives market has experienced consistent growth, primarily driven by the increasing demand from the mining sector for advanced methods of resource extraction. The increase in construction projects, supported by higher incomes and efforts to improve extraction methods, has further fuelled this growth. Technological advancements in explosives, which enhance safety and efficiency have also played a major role in driving adoption across industries.

However, the market is confronted with challenges, including the imposition of stringent environmental regulations and safety standards, which present considerable constraints for both manufacturers and end-users. Furthermore, the growing adoption of non-explosive excavation methods in select regions represents an additional factor that may impede the markets growth trajectory.

The Asia-Pacific region dominates the market, driven by robust demand from mining and construction activities. North America also experiences steady growth, underpinned by its active mining and construction sectors. In Europe, the focus is on innovation, while simultaneously adhering to stringent environmental and safety regulations. Despite facing challenges, the market continues to evolve and expand, shaped by the inherent opportunities and challenges within the industry.

Outlook

The global industrial explosives market is expected to reach US$22 billion by CY 2031. This growth is driven by rising demand from mining and construction, along with advances in technology that make explosives safer and more ecofriendly. Moreover, rapid urbanisation and infrastructure expansion in emerging economies, particularly the Asia Pacific region, are acting as significant catalysts. While strict safety and environmental rules can be challenging, they help build trust and ensure steady progress. Overall, the market is set to expand as it balances innovation with meeting regulatory requirements.

Indias industrial explosives industry

Industrial explosives, propelled by government initiatives and the increasing demand for large-scale projects play a crucial role in Indias infrastructure growth. As the backbone of economic progress, infrastructure projects like roads, bridges, tunnels, dams and railways support communities and industries alike. With India aiming to become a $7 trillion economy by FY 2030,

the demand for industrial explosives has surged, fuelled by investments in infrastructure and mining. The industry is supported by government initiatives requiring extensive blasting activities such as the National Infrastructure Pipeline (NIP), Make in India campaigns, key projects such as Bharatmala Pariyojana, Sagarmala and metro rail and airport expansions.

Key trends in Indian explosives industry Rising Demand from Mining

The industrial explosives market is growing as mining activity increases to meet the need for minerals and metals across many industries.

Enhanced Safety and Efficiency

Manufacturers are focusing on developing safer, more efficient explosives with greater control and less sensitivity to external factors.

Boost from Construction and Infrastructure

Rising construction, growing cities, and major infrastructure projects especially in developing countries are creating strong opportunities for the industrial explosives market.

Mining and quarrying industry Coal ¹¹

Indias coal sector is growing strong, with production crossing 1 billion tonne in FY 2024-25, nearly 5% more than last year which is making India the worlds second-largest coal producer after China. Coal is still the main source of energy in the country, providing over 55% of its energy and nearly 74% of its electricity. The government is making many improvements by allowing companies to mine their own coal, speeding up approvals, and strengthening transportation with special railway lines and a Rail-Sea-Rail system. This is helping create more jobs directly for over 5 lakh people and many more indirectly, while reducing the need to import coal. At the same time, strong safety and environmental measures are in place, alongside health programs for workers, training, and community initiatives to make sure mines are managed responsibly. Smart technologies, like a 5G lab, are also helping make operations more efficient and safer. All these steps aim to make sure Indias energy is reliable, strong, and helps support its growth while taking care of people and nature.

The International Energy Agency (IEA) projects that Indias electricity demand will grow at an average annual rate of 6.3% through FY 2027, necessitating a 5-6% increase in power generation. To support this, the Ministry of Power has outlined plans to add 80,000 MW of coal-based power plants by FY 2032, which will require an additional 350 million tons of coal annually.

In FY 2024-25, Indias total installed power generation capacity reached 451 GW, with 218 GW derived from coal-fired plants. While India has aggressively expanded renewable energy, the role of coal remains dominant, as the country aims to achieve 500 GW of renewable energy capacity by FY 2030. India is poised to drive global coal demand growth for the next decade.

Outlook

India is set to maintain its position as a global leader in coal demand through FY 2027. Coal consumption is expected to rise across all grades, growing at an annual rate of 2.6% with total consumption expected to reach 1,421 million tons by FY 2027. The Ministry of Coals strategic initiatives to boost production and improve coal availability are central to strengthening the nations energy security. These efforts, aimed at reducing import dependency, align with the governments goal of achieving self-sufficiency in coal production. This focus on increasing domestic output is key to sustaining Indias economic growth and ensuring a stable energy future.

Steel

The Indian steel industry has witnessed significant developments in FY 2025, marked by both growth and challenges. While demand remained strong across sectors such as construction, automotive, infrastructure and housing, steel production grew at a slower pace, reaching approximately 150.7 million tons, a 4.4% increase over the previous year. This moderated growth was attributed to lower housing construction amid general elections and unusually heavy monsoons.

The industry also faces challenges, such as fluctuating global steel prices and a rise in imports from countries like China and Vietnam, making it harder for local steel to compete.

Despite these issues, the government is working to support the domestic steel industry by investigating unfair import practices and implementing measures like tariffs to protect local manufacturers.

According to Acuite Ratings & Research, the Indian steel industry is anticipated to expand at an annual rate of 8% in the medium term, driven by robust demand from the automotive, real estate and infrastructure sectors. This growth trajectory is expected to increase by 20 million tons in annual capacity by FY 2026-27. In addition, the Government of Indias emphasis on "Housing for All," with a plan to develop 3 Crores houses over the next five years under the Pradhan Mantri Awas Yojana (PMAY,) augurs well for the steel, cement and aggregate industries.

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Minerals

Indias minerals and metals industry has seen strong growth in FY 2024-25, supported by its rich natural resources and helpful government policies. As one of the top producers of iron ore, bauxite and chromite, Indias mineral wealth plays a key role in building infrastructure, powering industries and meeting energy demands. Policies like the National Mineral Policy (NMP) 2019 and reforms to the Mines and Minerals Development and Regulation Act (MMDR) have been instrumental in promoting efficiency and sustainability in mineral exploration and mining. These changes have also attracted private companies and boosted efforts to explore untapped resources.

Recent statistics indicate a positive trajectory in mineral production. In FY 2024-25, Indias iron ore production increased to 289 million metric tonnes (MMT) from 276 MMT in the same period of the previous year, marking a 3.5% growth.¹³

The outlook for Indias minerals and metals industry is positive, with strong growth expected in the coming years. Demand for key resources such as iron ore, bauxite and copper will continue to rise, driven by infrastructure development, manufacturing and the push for renewable energy. Additionally, the growing need for minerals like lithium and cobalt for electric vehicles and solar panels presents new opportunities for exploration. With strategic reforms and technological advancements, the industry is set for steady expansion, supporting Indias economic and industrial ambitions.

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Growth drivers

* The Indian government has implemented policy reforms to attract private investments in the mining sector, including the auctioning of coal blocks to private companies. This strategy is expected to enhance production efficiency and meet the countrys energy requirements.

* The Mines and Minerals (Development and Regulation) Amendment Act, 2023, removed six minerals, including lithium and titanium, from the list of atomic minerals restricted to state exploration. This legislative change opens avenues for private sector participation in exploring and mining these critical resources.

Real estate and construction industry

The Indian real estate and construction industries are undergoing substantial transformation, marked by steady growth and evolving market dynamics. The construction sector is projected to expand by8-10% in FY 2025-26,¹⁴ driven by both public and private investments in key infrastructure projects, residential developments, and green energy initiatives. The residential market, particularly the luxury residential market has gained momentum with developers reporting record sales. Additionally, sustainability has become a central theme, with developers adopting eco-friendly designs, energy-efficient systems and green materials.

Growth drivers

* Rapid urbanisation and a growing population are increasing the need for residential and commercial spaces. This demographic shift is a significant driver for the expansion of real estate developments across the country.

* The relaxation of FDI norms in the real estate sector has led to increased foreign investments, providing a substantial boost to the industrys development and expansion.

* The adoption of new technologies in construction and real estate, such as smart home systems and advanced building materials, is enhancing efficiency and attracting investment, contributing to the industrys growth.

Outlook

The outlook for the Indian real estate and construction industries remains promising, underpinned by strong domestic demand, government initiatives, and technological advancements. The real estate market is projected to experience a 6.0% increase in home prices in FY 202526, driven by heightened demand from high-net-worth individuals. However, the middle-class may encounter affordability challenges due to escalating living costs.¹⁵ \ /

Roads and infrastructure sector

The Indian roads and infrastructure sector plays a vital role in the countrys economic growth, encompassing highways, bridges, urban roads, airports and other related infrastructure. It has seen significant growth, driven by major government investments and a strong focus on improving connectivity. As India works towards its Viksit Bharat vision, improving infrastructure is crucial. In support of this, the Union Budget 2025-26 has allocated H 11.11 trillion towards capital expenditure with major developments planned across roads, railways, ports and airports.

Growth drivers

* In FY 2024-25, India added approximately 10,000 to 10,500 kilometres of new highways.¹⁶ The first half of the fiscal year experienced a slowdown in road construction due to the General Elections and prolonged monsoon seasons, which reduced productive days. Despite these challenges, the growth was supported by a substantial pipeline of projects. Increased capital outlay by the government and

a focus on project completion by the Ministry of Road Transport and Highways have acted as significant growth drivers for the industry.

* The inauguration of the Z-Morh Tunnel in Sonamarg,

Kashmir, by Prime Minister Modi on January 13, 2025, exemplifies the governments focus on strategic infrastructure. This C 2700 Crores project aims to enhance connectivity between Kashmir and Ladakh, thereby boosting tourism and regional development.

* The National Highways Authority of India (NHAI) has identified 24 road assets totaling 1,472 km for monetization in FY 2025-26, generating approximately H1,863 crore in annual revenue. These assets are expected to be monetized primarily through the Toll Operate Transfer (TOT) model, with the option to consider other modes if revised later. This initiative aims to reduce NHAIs debt burden and generate funds for further infrastructure development, continuing the monetization momentum seen in FY 2024-25.¹⁷

Outlook

In FY 2025-26, the Indian roads and infrastructure industry is set to experience sustained growth, with key projects continuing to shape the sector. The government is likely to continue its efforts to improve both intercity and rural road connectivity, with more funds expected to be allocated for these developments. Additionally, the industry will likely see more private sector involvement through Public Private Partnerships (PPPs), to help build and maintain highways.

The push for electric vehicle (EV) infrastructure will also gain momentum, as more charging stations are built across major highways.

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Ports

Indias port infrastructure is experiencing significant advancements, driven by substantial investments in modernisation and expansion to enhance capacity and operational efficiency. With a coastline spanning 7,516 kilometres, Indias ports handle approximately 95% of the countrys trading by volume and 70% by value, highlighting their indispensable role in the nations economy.¹⁸ The governments commitment to port-led development is evident through initiatives like the Sagarmala Programme, which has identified 802 projects worth C5.5 lakh Crores for implementation by 2035. As of FY 2024, approximately 215 projects worth C99,173 Crores have been completed, with another 216 projects valued at C2.12 lakh Crores under various stages of execution.¹⁹ These efforts aim to reduce logistics costs, improve port infrastructure and fuel trade competitiveness.

Growth drivers

* Indias position along key international shipping routes makes it a pivotal maritime hub, facilitating efficient trade between the East and the West.

* The increase in containerised cargo has been a primary driver of growth at Indian ports, reflecting heightened trade activities and the need for efficient handling facilities.

* Expanding facilities for storing and refuelling green fuels at ports positions India as a key player in sustainable maritime practices, appealing to eco-conscious shipping companies.

Indias ports sector has a promising outlook, driven by modernisation, sustainability, and regulatory advancements. The Indian Ports Bill, 2024 and Merchant Shipping Bill, 2024, align the industry with global standards and boost efficiency. The $2.9 billion Maritime Development Fund announced in Union Budget 2025-26 will enhance port infrastructure by strengthening shipbuilding and repair facilities. Automation and digitalisation are set to improve operations and global competitiveness, while renewable energy adoption supports sustainability. These developments position India as a

stronger player in global maritime trade. v /

Cement and limestone

In FY 2024-25, Indias cement production reached approximately 457 million tonnes, marking a 7-8% year- on-year growth.²⁰ The cement industry remains essential for construction and engineering projects, playing a key role in Indias infrastructure growth. However, the sector saw only moderate growth, largely due to the impact of an extended monsoon season and elections in the country. In FY 2025, key industry players have expanded their market presence through strategic acquisitions. The ongoing trend of urbanisation continues to drive demand, as increasing migration to cities fuels the need for residential, commercial and industrial infrastructure.

This shift is driving demand for better infrastructure, including schools, hospitals and transportation systems.

Even smaller cities and towns are seeing an increase in construction as local businesses grow and new industries emerge. The demand for sustainable, eco-friendly building

materials is also on the rise, urging cement companies to adopt greener practices. Limestone, a key part of cement production is experiencing steady demand as construction activity spreads across urban and rural areas. With an uptick in infrastructure and a shift towards sustainable building materials, the future for both the cement and limestone industries remains strong. Looking ahead to FY 2025-26, the industry anticipates a growth rate of 6-7%, driven by increased housing and infrastructure development.²¹ This projected expansion is expected to significantly boost the demand for limestone, a critical raw material in cement manufacturing.

Growth drivers

* The governments focus on affordable housing has led to an increase in demand for cement. The Pradhan Mantri Awas Yojana (PMAY) aims to build 30 million affordable homes in the next five years, creating significant demand for construction materials like cement, steel & aggregate.

* The expansion of industrial and commercial activity in smaller cities and towns has contributed to the growing demand for cement and limestone. Supported by government initiatives for rural development, states such as Uttar Pradesh and Bihar are experiencing rising cement consumption, driven by large-scale infrastructure projects.

* Initiatives such as the Smart Cities Mission and Atal Mission for Rejuvenation and Urban Transformation (AMRUT) have accelerated urban development. The governments focus on these projects is expected to channel C2.4 trillion into urban infrastructure thus helping the cement industry to grow and thrive.

According to Manufacturing Today forecasts, the outlook for the Indian cement and limestone industries in FY 2025-26 looks positive, with expected growth of about 8%.²² Despite challenges in FY 2024, cement demand will stay strong due to ongoing infrastructure projects and the need for more residential and commercial buildings. Sustainable construction practices are gaining traction and cement companies are focusing more on eco-friendly products to meet market demands. As urbanisation continues, smaller cities and towns will see increased demand for cement, providing further growth opportunities. With plans to expand capacity and adopt new technologies, the industry is ready to face challenges and keep growing.

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Global defence sector

Over the past year, the defence industry has seen significant transformations, driven by rising geopolitical tensions, rapid technological advancements and a sharp increase in military spending. Global military expenditures have exceeded $2 trillion and continue to rise, reflecting a major shift in government priorities, with defence now at the forefront.²³ While the US remains the largest defence spender and a leader in military technology, countries such as China, India and Russia are emerging as key players, with growing investments in their defence sectors. The defence industries in Europe, Asia and the Middle East have gained momentum, allowing new opportunities for collaboration and competition. This growing global investment is not only pushing technological innovation but also strengthening international partnerships, especially in areas like cybersecurity, space technology and artificial intelligence.

Amid ongoing geopolitical conflicts and escalating tensions among major global players, concerns about global security are rising significantly. The global defence market is expected to reach $676.64 billion by CY 2029.²⁴ This growth is driven by several factors, including the rising adoption of military drones, growing demand for advanced attack and transport helicopters, and increased investment in military equipment. Additionally, the development of autonomous fighter jets, modernisation of armed forces, advancements in defence technology and initiatives by governments are contributing to this expansion. The need to address both internal and external security threats further highlights the importance of heightened military readiness worldwide. v

Indian defence sector

iIndias defence manufacturing sector is rapidly becoming a key pillar of the countrys strategic and economic ambitions.

The government has prioritised this sector, recognising its critical role in national security and economic growth. Aiming to become a leading exporter of military equipment, India is increasingly focusing on domestic production. In the Union Budget for 2025-26, the Ministry of Defence (MoD) received an allocation of H 6.81 lakh crore, ²⁵ the highest among all Ministries. This highlights Indias expanding role as a global defence exporter. The establishment of Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu further supports this ambition, driving indigenous production, attracting investment and encouraging innovation in defence technologies. Through the Atmanirbhar Bharat (Self-Reliant India) initiative, the government is encouraging domestic companies to develop advanced defence products, reducing reliance on imports.

With these efforts, India is positioning itself as a hub for defence manufacturing, strengthening national security and creating jobs.

The Indian defence sector is set to grow rapidly, driven by new technologies like artificial intelligence, robotic and autonomous systems that are improving defence capabilities. Additionally, India has proposed a defense budget of C6.81 trillion for 2025-26, reflecting a 9.5% increase from the previous year. The government is streamlining procurement processes and promoting innovation through initiatives such as the Innovations for Defence Excellence (iDEX) programme, which aims to enhance research and development in the sector. Increasing regional tensions are pushing India to focus more on securing its borders and strengthening maritime defence. Defence exports are expected to rise further as India positions itself as a reliable global supplier. Together, these factors are making the sector more competitive and critical to the countrys security goals. v /

Growth drivers

* The Indian governments Make in India and Atmanirbhar Bharat initiatives have emphasised self-reliance in defence manufacturing. Measures such as reserving specific defence items for domestic suppliers and easing FDI norms have significantly boosted local production.

* Steady increases in defence budget allocations have facilitated the modernisation of the armed forces and the acquisition of advanced technologies thus driving the growth of the domestic defence sector.

* Partnerships between government agencies and private enterprises have accelerated progress in defence technologies, including weaponry, ammunition, aerospace systems and electronics, thereby strengthening domestic manufacturing capabilities.

* International collaborations such as the joint venture between Germanys ThyssenKrupp and Indias Mazagon Dock Shipbuilders Ltd for submarine production have advanced technological expertise and scaled-up manufacturing capabilities within the Indian defence industry.

Company overview

Established in 1995 in Nagpur, India, Solar Group has emerged as a global leader in industrial explosives and initiating systems. Under the strategic leadership of Mr. Satyanarayan Nandlalji Nuwal, the Company continues to expand into advanced ammunition markets and the space sector, positioning itself at the forefront of innovation in the defense and explosives industries. With our products used in over 90+ countries, Solar Group houses cutting-edge manufacturing facilities across 9 nations. Its portfolio is diverse, featuring industrial explosives, detonators, propellants and innovative defense technologies.

The Company is recognised for its commitment to innovation, exemplified by the introduction of eco-friendly blasting solutions and pioneering products such as the three-layer shock tube, which enhance safety and efficiency in the global mining and infrastructure sectors. These advancements redefine safety and efficiency in the global mining and infrastructure sectors.

Adhering to the highest quality and safety standards, Solar Group holds certifications including ISO 9001:2000, ISO 14001:2004, and OHSAS 18001:2007. A well-integrated logistics network ensures the seamless distribution of products globally. Sustainability remains a fundamental pillar of the Companys vision, with a strong emphasis on environmental responsibility and community engagement. By integrating environmental responsibility into its core strategies, Solar Group balances growth with a positive impact on communities and ecosystems.

* Infrastructure growth -

India is steadfast in its pursuit of sustained economic growth exceeding 8%, aiming to develop infrastructure on par with developed nations. The governments visionary Developed India by 2047 initiative is propelling significant advancements in the infrastructure sector, with the transformative PM Gati Shakti programme at its core. This comprehensive plan integrates key projects such as Bharatmala for highways, Sagarmala for port-led development, inland waterways, dry/land ports and regional airports under the UDAN scheme. Significant progress has been made in constructing national highways to connect passenger, trade and freight hubs, laying a robust foundation for Indias infrastructure advancement by 2047. The PM Gati Shakti initiative has evaluated 208 major infrastructure projects worth C15.39 lakh Crores, adhering to its principles of integrated planning and coordinated implementation.^{26 *}

* Mining Expansion -

As of 2025, global coal consumption reached a record high of 164 exajoules (EJ), with the Asia-Pacific region, encompassing China, India and Southeast Asia, accounting for approximately 83% of this demand. Notably, Chinas consumption alone constitutes 56% of the global total,

while Indias usage has surpassed that of both the United States and the European Union.²⁷ Looking ahead, the International Energy Agency projects that global coal demand will plateau through CY 2027, with consumption stabilising around 8.87 billion tonnes.²⁸ While declines are anticipated in advanced economies, this is expected to be offset by growth in emerging markets such as India, Indonesia and Vietnam.

* Leveraging Alliances for Strategic Advantage -

Partnering with companies at both local and global levels grants manufacturers invaluable market insights, enabling them to adapt seamlessly to regional and international nuances. These collaborations also act as a bridge to understanding complex regulatory frameworks, ensuring smooth operations in unfamiliar territories. Global alliances, in particular, helps to expand market reach, access advanced technologies and share resources efficiently. By leveraging both local and global expertise, manufacturers can enhance their strategic approach and establish a stronger foothold in diverse markets.

* Innovating Custom Solutions for Emerging Markets -

A promising opportunity exists to develop explosive products that are meticulously designed to meet the specific requirements, applications and budget constraints of emerging markets. By focusing on developing advanced, cost- efficient and safer explosive materials, manufacturers can address specific market demands while ensuring enhanced safety standards. Such innovation caters to localised needs, fostering greater accessibility and long-term sustainability in these regions.

* Indias Ambitious Space Sector Expansion -

The global space sector is experiencing unprecedented growth, with projections estimating its valuation to reach $1.8 trillion by CY 2035.²⁹ India is actively strengthening its position in this expanding market. The government has set ambitious targets to increase Indias share of the global space economy from the current 2% to 10% by CY 2030, and further to 15% by FY 2047.³⁰ Recognising the significant role of the private sector, the government has introduced initiatives to foster collaboration with over 400 industrial organisations. Notably, the establishment of a C10 billion ($119 million) venture capital fund aims to stimulate innovation and investment within the space industry.³¹ These strategic efforts lay a robust foundation for the advancement of Indias industrial explosives sector, aligning with the nations broader aspirations in the global space arena.

* Government Initiatives to boost Defence Sector -

The Indian government has taken several steps to strengthen the defence sector and promote self-reliance. Through the "Make in India" initiative, India now produces 65% of its defence equipment domestically, reducing reliance on

imports. In the financial year 2023-24, defence production reached a record C1.27 lakh Crores, with exports hitting C23,622 Crores in FY 2024-25. The government has also introduced policies to support private companies, start-ups and small businesses in defence manufacturing, making it easier for them to participate. Initiatives like the MAKE projects and the ADITI scheme provide funding and support for developing new defence technologies. Additionally, two Defence Industrial Corridors have been established in Uttar Pradesh and Tamil Nadu to boost local manufacturing. These efforts aim to make India a global hub for defence production and innovation.³²

* Stringent Regulations -

The explosives industry is subject to strict government rules. Any changes in these regulations can increase compliance costs and may lead to production delays or penalties if not adhered to properly.

* Geo-political Risks -

International tensions, such as trade disputes or conflicts, can disrupt supply chains and affect export operations.

For instance, tariffs or sanctions in certain countries may impact the companys ability to conduct business smoothly.

* Security Concerns -

Handling explosives inherently carries safety risks. Any accidents can lead to serious consequences, including loss of life, operational shutdowns, and reputational damage. Ensuring strict safety protocols is essential to mitigate these risks.

* Raw Material Dependency -

The company relies on specific raw materials like ammonium nitrate. Fluctuations in the availability or price of these materials can affect production costs and profitability.

* Economic Cycles -

The demand for explosives is closely tied to industries like mining and construction. Economic downturns in these sectors can lead to reduced demand for the companys products, impacting revenue.

* Competition Risk -

Solar Industries faces competition from both local and international players. Competitors with advanced technologies or larger market shares can pose challenges to the companys growth and market position.

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 2024-2025	FY 2023-2024
1 Debtors Turnover	6.67	6.51
2 Inventory Turnover	20.86	15.29
3 Interest Coverage Ratio	15.50	12.50
4 Current Ratio	1.95	1.76
5 Debt to Equity Ratio	0.22	0.34
6 Adjusted Operating Profit Margin (%)	23.67 %	20.20%
7 Adjusted Net Profit Margin (%)	17.08 %	14.42%
8 Return On Net Worth (%)*	29.00 %	25.29%

* The increase of 14.67% in the Return on Net Worth is primarily attributable to increase in profits.

1. There is change of 2.46% in Debtors Turnover Ratio FY 2024-25.

2. The Debt to Equity Ratio declined by 35.29% due to the repayment of loans and an increase in retained earnings/ cash generations, strengthening the overall financial position.

3. There were no other significant changes (i.e., changes of 25% or more) in the remaining key financial ratios as compared to the previous financial year.

Risk Management

Our holistic strategy guarantees adherence to regulations, protects our brand integrity, mitigates negative consequences and positions us to capitalise on emerging opportunities. By adopting a proactive and thoughtful approach, we effectively manage financial challenges, operational hurdles, reputational risks and shifting market conditions. This approach ensures the long-term growth and stability of our business.

Read the details about Risk Management of the Company on Page 48.

Human Resource

Employees are considered the most important asset and pivotal for the Companys growth and success. Solar Industries India Limited promote a conducive, inclusive and collaborative work environment, ensuring that employees feel valued and empowered. The Company also encourage employees with recognition and rewards and organize various training programs to boost their skills and capabilities. The overall industrial relations continued to remain harmonious.

Further details on Human resources form part of the "Human Capital" chapter of the Integrated Report.

Outlook

Looking ahead, Solar Industries is well placed for strong and sustainable growth. The Company is focusing on developing new and advanced defence products, expanding its electronic manufacturing services and strengthening its capabilities through innovation and collaboration with leading organizations. Its growing order book, growing export opportunities and ongoing technology improvements are expected to help the Company reach new markets and serve its customers even better. At the same time, Solar Industries remains committed to conserving resources, reducing emissions and making a positive contribution to society. With these strong foundations, the Company is poised to continue its growth and create value for all its stakeholders in the years to come.

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Internal control systems and their adequacy

The Solar Group has instituted comprehensive internal control systems and procedures to effectively oversee its diverse array of business operations. The Company has established clear and well-defined roles and responsibilities for all managerial positions, ensuring a highly organised and efficient corporate structure. To monitor and regulate financial parameters with precision, the Solar Group utilises the SAP ERP software system, which has been tailored to meet the complexities and scale of the Companys operations.

The Audit Committee plays a pivotal role in assessing the sufficiency and effectiveness of these internal controls, offering invaluable insights and recommendations for continual

improvement. With a focus on aligning internal processes and controls with industry best practices, the Solar Group upholds a robust Management Information System. The Audit Committee also works closely with statutory auditors to gain their perspectives on the adequacy of the internal control framework, periodically reporting any key observations to the Board of Directors. For the internal audit function, an independent firm of chartered accountants has been appointed to oversee audit activities, with a comprehensive plan that is reviewed annually in collaboration with statutory auditors and approved by the Audit Committee.

The Company has proactively identified potential reporting risks within critical areas of its financial statements and implemented stringent controls to mitigate these risks. These controls are periodically reassessed to account for changes in business dynamics, IT systems, regulations and internal policies. In compliance with Section 177 of the Companies Act 2013 and Regulation 18 of SEBI Regulations 2015, the Audit Committee has confirmed that, as of March 31, 2025, the internal financial controls are deemed to be both adequate and functioning effectively.

Cautionary statements

This document contains forward-looking statements that reflect anticipated future events, as well as the expected financial and operational performance of Solar Industries India Limited. These statements are based on certain assumptions and are inherently subject to risks and uncertainties. There is a significant possibility that the assumptions, projections and other forwardlooking statements may not materialise as anticipated. Readers are urged to exercise caution and refrain from placing undue reliance on these statements, as various factors could cause actual outcomes and events to differ substantially from those predicted. Hence, this document is accompanied by a disclaimer and is fully subject to the assumptions, qualifications and risk factors discussed in the Managements Discussion and Analysis section of Solar Industries India Limiteds Annual Report for the financial year 2024-2025.