Somi Conveyor Beltings Ltd Management Discussions

The Management Discussion and Analysis Report outlines the key business and performance highlights of the Company for the financial year 2024-25. The discussion on the Companys financial condition and operational results should be read in conjunction with the reports presented in the earlier sections of this Annual Report, along with the financial statements, accompanying notes, and other information provided herein. The financial statements have been prepared in compliance with Indian Accounting Standards (Ind AS), the provisions of the Companies Act, 2013, and the SEBI (LODR) Regulations, 2015.

FINANCIAL HIGHLIGHTS

The financial statements have been prepared in accordance with the requirement of the Companies Act, 2013, and applicable accounting standards issued by the Institute of Chartered Accountants of India. The management accepts the integrity and objectivity of these financial statements as well as the various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements are reflected in a true and fair manner and also reasonably present the Companys state of affairs and profit for the year.

During the year your Company has made a steady progress and achieved positive results, by adapting new market practice, commitment to innovation and strategic planning.

The following table gives an overview of the financial results of the Company and its comparison with previous year results:

During the Financial year under review, the Company sustained its strategic initiatives aimed at delivering improved performance over the prior year. Company achieved Revenue from Operations for the year amounted to Rs.10123.77 Lakhs registering a slight decline of 0.85% as compared to previous years revenue of Rs.10210.69 Lakhs.

Segment-Wise and Product-Wise Performance

The Company has only one Segment which is manufacturing and sale of Industrial Conveyor Belts.

Key Financial Ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018) (Amendment) Regulations,2018, the Company is required to give details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios. The Company has identified the following ratios as key financial ratios: -

Change in Return on Net Worth

INDIAN ECONOMY

Indian economy demonstrated a strong and resilient performance during the fiscal year 2024-2025. According to Ministry of Statistics and Programme Implementation (MoSPI), Indias real GDP grew by 6.5% in FY 202425. While the year over year GDP growth of the country is below potential, India still remains one of the fastest growing economies in the world.

Despite of several global and domestic challenges, like geopolitical tensions, high inflation & debt, supply chain disruptions, and slowdown in global growth, throughout the fiscal year, the Indian economy showcased durable growth and a capacity to withstand external shocks

The governments focus on self-reliance, ease of doing business and infrastructure development has further enhanced the investment climate. Key sectors like manufacturing, trading, technology & digital infrastructure contributed significantly to economic expansion.

INDUSTRIAL SCENARIO

Conveyor Belt Market Forecast

Size, By Type, 2024-2033 (USD Billion)

(Source: iMARC Group - Conveyor Belt Market Size, Share & Trends Report 2033)

The global conveyor belt market was valued at USD 6.94 Billion in 2024 and is projected to reach USD 8.86 Billion by 2033, growing at a CAGR of 2.53% during 2025-2033, according to IMARC Group. Asia-Pacific continues to lead the market, accounting for over 37.1% share in 2024.

The market is driven by increasing demand for efficient material handling, automation trends, growing e- commerce and logistics operations, rising infrastructure development, and advancements in belt technologies focusing on sustainability and energy efficiency.

In 2024, Asia-Pacific held the largest market share, exceeding 37.1%, establishing itself as a key growth driver of the global conveyor belt market. The regions strong performance is underpinned by several critical factors. Rapid industrialization and urbanization are driving the need for efficient material handling solutions, while rising production requirements across industries such as mining and manufacturing further support market expansion. Additionally, the booming e-commerce sector

has fueled the development of distribution centers and warehouses, where conveyor belts play a vital role in automating material movement and product sorting. This automation not only streamlines supply chain and logistics operations but also ensures timely and efficient deliveries.

ABOUT THE COMPANY

Somi Conveyor Beltings Limited is a leading and reputed name in Indian conveyor belt industry. Incorporated in the year 2000, the company proudly completes its 25 years of excellence and growth. It is one of the leading manufacturer and exporter of conveyor belts in India with its registered office and works situated in Jodhpur, Rajasthan.

With decades of experience, a skilled labour force, and a positive vision, SCBL continues to grow with innovation and efficiency in the conveyor belt market. Our plants are equipped with fully automatic technologies and with the high production capacity.

The company offers high quality conveyor belts through a diversified product line, which are used in various industries including manufacturing, cement, automotive, power and mining. Our products range is trusted and preferred by a wide customer base across the globe.

OPPORTUNITIES

1. Expansion into Emerging Markets

Leveraging rising demand and favourable economic trends, our company is exploring growth opportunities in both domestic and global market.

2. Digital Transformation and Innovation

On-going investment in technology and innovation presents opportunities to enhance operational efficiency, improve customer experience.

3. Industrial Form

The rapid shift towards smart factories and automated production lines is increasing demand for intelligent conveyor belt system.

4. Growing Construction and Raw Material Demand

Housing growth and rise in infrastructure in countries are boosting the need for bulk handling of raw materials and cement, increasing conveyor belt deployment.

RISKS AND CONCERNS

While the Conveyor Belt Industry is exposed to a variety of strategic, operational, and financial risks, the company remains well positioned to navigate these challenges through vigorous operational framework, and strategic decision making.

The rise in competition in the industry, both domestically and globally, is a well-known challenge for the company. However the company has successfully maintained its market position by focusing on costumer centricity and innovation. Its strong brand reputation and quality assurance helps to continue market trust. For protecting the interest of its shareholder and stakeholders including customers, suppliers and investors, the company has established a strong risk management framework.

The process of managing the Companys financial exposures is governed by the Companys Audit Committee under the guidance of the Board, ensuring proper use of funds and also provides measures for controlling the same.

Ongoing geopolitical tensions, continues to pose significant risks to supply chain, leading to increase in uncertainty in the availability and cost. Despite of that, SCBL remains vigilant and has taken appropriate measures.

The risks are identified and monitored by the senior management team through a strategic approach and all the necessary safeguards to maintain desired security and resiliency levels have been deployed within the organization.

Our risk management objectives are:

v Identify and assess potential risks that may impact business performance, v Foster a risk-aware culture across all levels of the organization.

v Strengthen strategic decision-making through comprehensive risk analysis and reporting, v Ensure adherence to applicable laws, regulations, and industry standards, v Build stakeholder confidence through transparency and effective communication, v Design and implement robust controls to effectively mitigate identified risks.

Some of the key existing and emerging risks affecting the Company are as follows

OUTLOOK

India is poised for continued growth in the upcoming fiscal year, buoyed by robust financial and macroeconomic conditions. GDP is forecasted to remain strong at 7.0%, while inflation is expected to fall Estimates indicate that India will experience sustained growth, driven by contributions from labour and human capital. However, global headwinds may pose challenges, potentially leading to a slowdown in global economic activity, which could impact Indias financial and trade channels. There is a continuous thrust from the management to develop a strong R&D and technical service team to develop new products, explore new applications and understand better the changing customer needs.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company believes that internal controls is one of the key pillars of governance, which provides freedom to the management to operate within a framework of appropriate checks and balances. The Company maintains a robust framework of internal controls that are in accordance with the nature and size of the business. The framework addresses the evolving risk complexities and underpins the Companys strong corporate culture and good governance. The purpose of an internal audit is to examine and evaluate the internal controls and risks associated with the Companys operations. It covers factories, warehouses, and centrally controlled businesses and functions.

The Internal Audit team is entrusted with the responsibility of overseeing internal financial processes, policies and providing recommendations for effective internal controls. Implementing these robust internal controls upholds compliance with the Companys adopted policies and procedures, thereby fostering seamless and efficient operations. These internal controls play a pivotal role in safeguarding assets, detecting and preventing instances of fraud or errors, and ensuring the accuracy and completeness of accounting and financial records. Furthermore, they contribute to the timely preparation of transparent, comprehensive, and accurate financial information and statements, aligning with the prescribed accounting standards and principles.

Internal checks and controls covering operations of the Company are in place and are constantly being improved upon. Adequate systems exist to safeguard Companys assets through insurance on reinstatement basis and maintenance of proper records. The company has well-defined procedures to execute financial transactions.

The Internal Audit framework comprises of a well defined organisation structure, roles and responsibilities, documented policies and procedures, financial delegation of authority, ERP controls, among others. IT policies and processes ensure mitigation of business risks through controls. These policies are complimented by a management information and monitoring system, which ensures compliance with internal processes, as well as with applicable laws and regulations.

The Companys internal control environment ensures efficient conduct of operations, security of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and the timely preparation of reliable financial information.

Most importantly, the senior management adopts policy of ‘zero tolerance to non-compliance and promotes a culture of continuous innovation and improvement. The management also supports independent and objective internal auditing and implements recommendations of the internal audit.

HUMAN RESOURCES

The companys approach towards Human Capital is built on a commitment to not only attract and retain the best talent but also to foster an environment where innovation, diversity, transparency and productivity thrive. Over the past year, the Company continued to enhance its Human Capital Management practices to support our workforce and drive organizational success. The companys Talent acquisition strategies helps it to attract diverse professionals at various levels who align with its corporate values and business objectives.

Your Company believes that recognizing employees contributions and achievements at the right time is vital for fostering a positive work environment, motivating them, improving job satisfaction, enhancing performance, and commitment & loyalty towards the organization.

Your Company strongly believes that to achieve continual success, a dedicated and devoted workforce is very much required to get high performance and improved productivity. This has been endlessly encouraged by evolving human resource management systems and processes of your Company. Your Company believes that its employees are its core strength and accordingly development of people and providing a best-inclasswork environment is a key priority for the organization to drive business objectives and goals. Robust HR processes and policies along with Digital HR tools are in place, which enables building a stronger performance culture and at the same time developing current and future leaders.

Further, your Company is strongly focused towards utilisation of its manpower to the optimum level. The positive approach and cordial relationship between the Management and Unions has resulted in smooth industrial relations during the year under review. The relationship has developed over the years and has played a significant role in smooth running of your Company.

The Company is proud of the strides it has made in human resource practices and is committed to continuing its investment in the employees. The Companys people are the cornerstone of its success, and it believes that by supporting them, it is building a stronger, more sustainable business. An effective human capital practice demonstrates how organization values its people and contributes to overall business success.

As on 31st March, 2025, the Company had 109 on roll employees. These employees provide an excellent combination of experienced and young workforce and talented technical managers.

STATUTORY COMPLIANCE

The role of the Company Secretary as the Compliance Officer is to ensure the Companys compliance with SEBI requirements and listing regulations. In addition to the Company Secretary, the Chief Financial Officer (CFO) and Managing Director (MD) also function as compliance officers to prevent insider trading. Compliance certifications are obtained from various management personnel, affirming adherence to key statutes. Managing Director gives a declaration of compliance to the Board with respect to the applicable provisions of Companies Act, 2013, SEBI (LODR) Regulations, 2015 with the Stock Exchanges.

CAUTIONARY STATEMENT

Any forward-looking statements in the Management Discussion & Analysis describing the Companys objectives, projections, estimates and expectations regarding expected future events and the financial and operating results of the Company are based on certain assumptions, the fulfillment of which the Company does not guarantee. These statements are subject to risks and uncertainties and the actual results may materially differ from those expressed or implied. Important developments that could affect the Companys operations include industry downtrends, whether global or domestic, significant changes in the political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, technological changes, investment and business income, cash flow projections, interest and other costs. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date thereof.