Ashapura Minechem Ltd Management Discussions

OVERVIEW

This Management Discussion and Analysis (MDA) is part of the Boards Report and outlines the managements perspective on the economic environment, industrial scenario, companys performance, opportunities and threats, future outlook, internal controls etc during the Financial Year 2024-25. This should be read in conjunction with the Companys audited financial statements and other information included elsewhere in the Annual Report.

ECONOMIC ENVIRONMENT

Over the last year, the global economic environment is marked by uncertainties and complexities, with global growth showing signs of slowdown. The sharp increase in tariffs and the ensuing uncertainty, are contributing to a broad-based growth slowdown and deteriorating prospects in most of the worlds economies. Global growth is projected at 3.3% for both 2025 and 2026, below the historical average of 3.7%. Global headline inflation is expected to decline to 4.2% in 2025 and to 3.5% in 2026, with advanced economies expected to reach their inflation targets earlier than emerging markets. According to the International Monetary Fund (IMF), the outlook faces medium-term downside risks and requires careful policy management to balance inflation and growth.

Major central banks monetary policy rates are expected to continue their downward trajectory, albeit at varying rates. Additionally, a tightening of fiscal policy is expected during 2025·2026, especially in advanced economies such as the United States. The global financial markets faced the negative sentiment around Geo-politics, tariff wars & trade policies. Geopolitical risks remain elevated due to ongoing conflicts, which pose significant risks to the global economic outlook. These risks can influence growth, inflation, financial markets and supply chains.

With regard to Indian Economy, the Reserve Bank of India (RBI) has projected Indias real GDP growth at 6.5 % for the financial year 2025-26, revised downward from the earlier estimate of 6.7%. The downward revision of the GDP forecast was mainly due to growing risks in global trade and policy developments, particularly the imposition of tariffs by the United States, which could impact Indias export sector and overall economic momentum. The RBIs outlook suggests that while domestic demand remains resilient, external factors such as global trade disruptions and geopolitical tensions could pose challenges to Indias growth trajectory.

INDUSTRY SCENARIO

India has one of the most diverse landscapes and topography and has mineral resources in abundance; it is endowed with huge mineral resources of fuel, metallic and non-metallic minerals including minor minerals. The Indian mining sector contributes about 2.5% to the nations GDP and creates millions of direct and indirect jobs. It is an essential sector for reducing Indias fiscal deficit and is critical for the socio-economic growth of the country. The Indian mining industry comprises mostly small-scaled operations, with a total of 1,426 operational mines. Notably, the private sector plays a significant role in the industry, contributing 60% of the industrys overall revenue.

As per the data from Ministry of Mines, since independence, there has been a pronounced growth in the mineral production both in terms of quantity and value. India produces as many as 95 minerals, which includes 4 fuel, 10 metallic, 23 non-metallic, 3 atomic and 55 minor minerals (including building and other materials).

Indias mining sector recorded robust growth in the FY 2024·25, building on the momentum of the previous year, with several key minerals achieving all-time high production levels, according to the data released by the Ministry of Mines. The total value of mineral production (excluding atomic minerals, fuel minerals and minor minerals) for FY 2024·25 has been estimated at Rs. 1,41,061 crores, reflecting a marginal decline of approximately 0.47% compared to the previous year. However, several non-fuel minerals such as iron ore, bauxite, lead, manganese ore and phosphorite recorded positive growth during the year.

The demand for key minerals like iron ore and bauxite witnessed a notable increase, driven by rising infrastructure investments and the growing automotive sector, particularly the shift towards electric vehicles (EVs). Additionally, demand for aluminium and coal surged in response to increased power generation requirements. Cement production also saw an uptick, contributing to higher coal consumption. Furthermore, iron and steel continued to play a pivotal role in supporting the expanding real estate and construction sectors.

References: Media Reports, Press Information Bureau (PIB), Union Budget 2025-26, Ministry of Mines, DPIIT

OPPORTUNITIES

There is a significant scope for new mining capacities in iron ore, bauxite and coal and considerable opportunities for future discoveries of sub-surface deposits. Rapid Industrial Development & Infrastructure projects continue to provide lucrative business opportunities for steel, zinc and aluminium producers. Iron and steel make up a core component for the real estate sector. The demand for these metals is expected to remain strong, driven by robust growth in the residential and commercial construction sectors, along with the Governments increased emphasis on infrastructure development. India will be the “stand-out growth market” for aluminium consumption in the coming years as it pursues construction projects to resolve an infrastructure deficit, which sees usage more than tripling to 9.5 million tons by 2030 from 2.6 million tons in 2021.

India, being the third-largest energy consumer globally, continues to witness robust growth in demand for power and electricity. This sustained energy requirement is driving a corresponding surge in coal consumption, presenting a significant opportunity for the mining sector.

India has retained its position as the second-largest aluminium producer in the world, with production reaching 3.15 million tons in FY 2024·25 (up to December). Rapid industrialization and urban expansion, alongside growth in the automobile, housing and transportation sectors, are expected to further boost demand for key minerals such as iron ore, bauxite, copper, limestone, chromium and zinc. Additionally, the increasing adoption of advanced technologies, automation and data analytics across the mining value chain is transforming operational efficiency and safety. These digital advancements provide immense opportunities for enhancing productivity, reducing costs and improving sustainability practices in the sector.

The governments ongoing policy support including reforms in mining laws, simplification of the auction process and incentives under Production Linked Incentive (PLI) schemes continues to boost investor confidence and attract domestic and foreign investments into the mining and metal industries.

Your Company is well-positioned to capitalize on strong industry momentum with rising demand for Companys minerals such as bauxite, silica, Kaolin and bentonite driven by rapid infrastructure development, accelerating industrialization etc. With strategic assets such as fully operational ports in Guinea, a global partnership with China Railway and robust domestic performance across core minerals, the Company is enhancing export capabilities and operational efficiency. Growing demand in construction, housing and transportation further strengthen the Companys outlook.

THREATS

As the world shifts toward sustainable energy, the mining industry must innovate and adopt eco-friendly practices. Global economic conditions and geopolitical tensions impact resource demand and pricing, while risks like climate change, trade wars and supply disruptions demand agility. Stricter environmental norms will require ongoing investment in technology, capital and sustainable resource development.

CHALLENGES

The industry faces several challenges despite its growth potential. Regulatory complexities, delays in environmental and forest clearances continue to impede project timelines. Volatility in global commodity prices, driven by geopolitical tensions and trade uncertainties, adds financial risk. Additionally, rising environmental concerns, stricter compliance norms and pressure to adopt sustainable mining practices demand continuous investment in technology and green operations. The industry also grapples with a shortage of skilled manpower and the need for faster digital transformation to enhance productivity and safety.

For a global player like Ashapura, managing cross-border operational risks and geopolitical dynamics, especially in regions like Guinea, adds further complexity to its ambitious growth agenda.

FINANCIAL PERFORMANCE

The Financial Statements for the year ended 31^st March, 2025, have been prepared in accordance with the Companies (Indian Accounting Standards) Rule, 2015 (Ind AS) prescribed under Section 133 of the Companies Act, 2013 and other recognized accounting practices and policies to the extent applicable.

At Standalone level, the Income from Operations and other income stood at Rs. 38,668 lakhs while total expenses amounted to Rs. 31,500 lakhs which resulted into Net Profit of Rs. 8,455 lakhs.

At Consolidated level, the Income from Operations and other income stood at Rs. 281,382 Lakhs while total expenses stood at Rs. 2,53,585 Lakhs which resulted into a Consolidated Net profit of Rs. 28,907 Lakhs. As compared to FY 2023-24, the Companys Consolidated Total income in FY 2024-25 increased by 3.62%, while Operational profit after tax (without exceptional income) rose by 44.82%.

OUTLOOK

Indian Economy Outlook

Indias economic outlook remains positive, with GDP growth for FY 2025·26 projected at 6.3% · 6.5% by various independent agencies. The Reserve Bank of India (RBI) has estimated real GDP growth at 6.5%, noting the outlook as “evenly balanced” despite global uncertainties. In 2025, India surpassed Japan to become the worlds fourth-largest economy, with a GDP of $4.18 trillion. Supportive, industry-focused government policies continue to strengthen the manufacturing ecosystem and bolster business and consumer confidence.

While global headwinds such as tariff pressures, geopolitical tensions and financial market volatility pose potential risks, the Indian economy remains resilient, backed by strong and rising domestic demand. The RBI also expects inflation to ease to an average of 3.7% in FY 2025·26, down from a previous forecast of 4%, offering further stability to the macroeconomic environment.

Company Outlook

Your Company anticipates growth across all business verticals, driven by sustained demand from infrastructure development, renewable energy and the automobile sector.

Steady and rising demand from China is expected to continue, particularly benefiting the Companys Bauxite operations, as aluminium gains wider adoption in global carbon reduction initiatives, including electric vehicles and solar energy projects.

To strengthen its export capabilities, the Company has commissioned the advanced ABB Boffa Port in Guinea its third captive port in the region with a daily loading capacity of 25,000 tons and located just 52 km from the Boffa Mines. Additionally, the Company has entered into a long-term arrangement with a leading Chinese firm for end-to-end mining, transportation and marine logistics services in Guinea, aimed at scaling up the volume and value of Bauxite exports.

In line with its global growth strategy, the Company has also invested in expanding production capacity, modernizing its facilities, launching new products and entering new international markets.

RISK & CONCERNS

The Company anticipates potential challenges arising from supply chain disruptions, geopolitical tensions and commodity price volatility. Regulatory hurdles, including delays in mining permits, environmental clearances and evolving compliance norms, may constrain domestic mineral production and increase production costs. This could result in higher dependence on imports of critical minerals, impacting the industrys overall competitiveness. Additionally, global trade dynamics such as U.S.-China trade tensions and potential tariff impositions on exports from India and China may affect demand for the Companys products in key international markets.

Nonetheless, Ashapura remains resilient, backed by a robust risk management framework and diversified operations across geographies, enabling it to mitigate these risks effectively.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

In alignment with the scale, scope and complexity of its business operations, the Company has instituted appropriate internal control mechanisms. These controls are established under the oversight of the Audit Committee and the Board of Directors, who bear the responsibility for maintaining an effective internal control framework. They carry out periodic reviews of the internal audit plan, verify the adequacy of the control system, marks its audit observations and monitors the sustainability of the remedial measures.

For the financial year 2024·25, based on the Audit Committees recommendation, the Company continued the appointment of M/s Atul HMV & Associates LLP as its Internal Auditors. The Internal Auditors periodically examine business processes, systems and internal procedures. Their findings/ observations along with updates on the implementation of suggested improvements are reviewed by the Audit Committee on a quarterly basis.

The Companys internal control system is designed to ensure management efficiency, measurability and verifiability, reliability of accounting and management information, compliance with all applicable laws and regulations and the protection of the Companys assets. This is to timely identify and manage the Companys operational, compliance-related, economic and financial risks.

RESEARCH & DEVELOPMENT

The Company continues to place strong emphasis on innovation and value-driven research through its dedicated Information & Knowledge Center (IKC), the Companys in-house R&D facility. Operating 24x7, IKC focuses on new product development, process optimization and delivering customized mineral solutions to meet the evolving needs of diverse industry segments.

Spread across a 12,000 sq. ft. area, IKC is equipped with advanced instrumentation for chemical, mineralogical, morphological and granulometric analysis, along with state-of-the-art pilot plants that support scale-up trials and process simulations. The center is recognized by the Department of Scientific and Industrial Research (DSIR), Government of India, affirming its credibility and research capabilities.

Ashapura has also established strategic alliances with leading CSIR laboratories across India to co-develop innovative products and cutting-edge technologies. This collaborative and technology-forward approach support Ashapuras ongoing commitment to quality enhancement, sustainability and customer-centric innovation.

With several new advanced and value-added & specialty products in the pipeline, the Company is set to begin their commercialization shortly, further strengthening its product portfolio and market presence across domestic and international geographies.

The brief details of the R & D activities during the year are given under ‘Annexure - C forming part of the Directors Report.

HUMAN RESOURCES DEVELOPMENT

Human Resource remains the most valuable asset of the Company. Your Company firmly believe that employee engagement is essential for shaping the future, fostering continuous innovation and achieving organizational excellence. The quality and dedication of our workforce are key drivers of success. Accordingly, the Company places strong emphasis on nurturing a culture that values recognition, technological innovation, talent alignment and continuous process enhancement.

Our core values and ethical principles have helped cultivate a positive, inclusive work environment across all locations be it at our manufacturing units or corporate offices. Employees are consistently treated with respect and dignity, with senior leadership remaining approachable and responsive to counselling needs and grievance redressal.

As of 31^st March 2025, your Company had a dedicated team of over 357 employees across various locations, all contributing to the collective growth and performance of the organization.

KEY FINANCIAL RATIOS

The Key Financial Ratios for FY 2024-2025 and FY 2023-2024, along with explanation for significant changes (change of 25% or more) are as follows:

Sr. No.	Particulars	2024-2025	2023-2024	% change
1	Debtors turnover Ratio (Days)*	185	136	36%
	Avg. Debtors/Sale
2	Inventory turnover Ratio (Days)	124	168	-26%
	Cost of goods sold/Avg. Inventory
3	Interest coverage ratio**	28.47	5.03	466.14%
	(EBIT: Profit before Exceptional Item and tax + interest on
	borrowing) / Interest Expenses
4	Current ratio	2.62	1.89	39%
	Current assets /Current Liability
5	Operating Profit Margin **	20%	26%	-23%
	(EBIT- other Income) /Net revenue from Operation
6	Net Profit Margin **	23%	28%	-18%
	(Net Profit /Revenue from Operation)
7	Return on Net worth **	33%	142%	-77%
	(Net Profit /Average net worth )
8	Debts Equity Ratio***	0.25	0.22	14%
	Total debts /Shareholders fund

Notes:

Exceptional items are excluded from Net Profit

* Due to increase in average trade receivable during the financial year 24-25 compared to previous year.

** Due to reduction in other operational income and increase in selling & distribution overheads, Profit has reduced by 18% during the financial year 24-25 compared to 23-24.

*** Due to profit for the year resulting in increase in shareholders fund.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be “forward-looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among others, downtrend in the industry, economic conditions affecting demand/supply and price conditions in the domestic market in which the Company operates, changes in political and economic environment in India, changes in the Government regulations, tax laws and other statutes, litigations and incidental factors.