Nitco Ltd Management Discussions

Indias real estate sector continues to be a key pillar of economic growth, contributing about 7–7.5% to national GDP in FY 2024, with projections indicating a rise to 13–15% by 2025–2030 (IBEF, Cushman

& Wakefield). The sector has witnessed an 11-year high in housing sales, with premium and luxury homes forming a substantial share, thereby creating strong demand for high-quality tiles, marble, mosaics, and design-led surfaces. Urbanisation, infrastructure expansion, and premiumisation of housing have together fuelled demand for high-quality surfaces—tiles, marble, and mosaics. Against this backdrop, NITCO Limited undertook a strategic transformation under its"Transformation 2.0" roadmap. The Company strengthened its go-to-market strategies, inducted experienced leadership alongside new talent, and optimised business processes with technology-enabled systems. As a result, FY 2024–25 marked a pivotal year where the Company achieved break-even, expanded retail presence, and secured keyerentiated diff account wins. "The Pioneer Returns." -Part 1 NITCO back to redefine surfaces, just like we did before. Old name. New fire. Same mission to inspire.

Global Industry & India Business Outlook

Tiles, Marble & Mosaic Division:

This segment recorded encouraging growth, aided by innovative product launches, design-led differentiation, and strong traction in premium surfaces. The revival of designer mosaics and rising demand for sustainable and digitally enhanced tiles has created new opportunities for NITCOs comprehensive product portfolio.

Real Estate Division:

The Company successfully launched three premium residential projects in Mumbai and Pune, covering over 2.5 million sq. ft., and acquired prime land in MMR and Bengaluru for upcoming mixed-use luxury developments. Pre-bookings in the ultra-luxury category reinforced NITCOs positioning as a credible developer in Indias premium housing ecosystem. Sustainability-focused design and collaborations with international architecture and hospitality firms further the Companys projects.

I n 2023, India became the worlds most populous country with 1.429 billion inhabitants. This year, it is poised to become the fourth-largest economy globally, and within two years may pose a serious challenge to Germany, which recently claimed third place after overtaking Japan. According to International Monetary Fund forecasts, India is the most likely contender over the next decade to challenge the dominance of the two economic superpowers, the United States and China. Construction is without question one of the strongest sectors in the Indian economy, driven by massive public and private investments, technological innovations and large-scale infrastructure projects. By 2030, the sector is expected to account for 15% of the countrys GDP and employ more than 70 million people.

According to Next Move Strategy Consulting, the Indian construction market was valued at US $884.72 billion in 2023 and is predicted to reach $2,134.43 billion by 2030, at a compound annual growth rate (CAGR) of 12.6% from 2024 to 2030.

Based on Global Data estimates, India ranks among the top five largest construction markets in the world alongside China, the USA, the UK and Indonesia.

Further insights into this sustained growth can be found in the Indian press, which highlights the construction sectors rapid expansion, primarily driven by government-backed initiatives focused on infrastructure development and urbanisation. Central to these efforts is the National Investment Pipeline (NIP), a government programme with a $1.4 trillion investment budget for infrastructure projects and substantial allocations for renewable energy, roads and highways, urban infrastructure and railways.

The case for investing in Indias construction sector is explained by the government portal Invest India, which estimates that 50% of Indias population will live in urban areas by 2046 and notes that India already boasts the third-largest metro network in the world, transporting approximately 10 million passengers daily — two good reasons for the government to give a further boost to the urban construction market. Real Estate Market expected to reach $1 Trillion by 2030 - In parallel with construction, Indias real estate market is also advancing rapidly. According to the report entitled Indian Real Estate: The Quantum Leap, a collaboration between the Confederation of Real Estate Developers Associations of India (CREDAI) and Colliers, the sector is projected to grow significantly to reach $1 trillion by 2030. Under an optimistic scenario, it could achieve a size of $7-10 trillion by 2047. The report also predicts market consolidation across all real estate segments and anticipates expansion beyond metropolitan areas into smaller cities. The number of Indian cities with populations exceeding 1 million is expected to grow from around 60 to over 100 by 2050.

Opportunities and Threats: Opportunities

The Company is well placed to from favourable trends across its business segments:

• The global ceramic tiles market is expected to expand by ~USD 46.9 billion during 2024–2029 at a CAGR of ~7.9%, supported by rapid urbanisation and advanced designs such as 3D printing. The Indian tile market is projected to grow at a CAGR of 9.1%, from USD 5.18 billion in 2023 to USD 9.54 billion by 2030.

• The global marble market is estimated at USD 22.97 billion in 2025 and projected to reach USD 28.8 billion by 2030, growing at 4.7% CAGR, with APAC leading demand. In India, reduced imports from Turkey create an opportunity for indigenous sourcing, while sustainability considerations enhance marbles premium appeal.

• Designer mosaics are gaining traction in luxury housing, spas, pools, and fa?ades, supported by architects and interior designers seeking bespoke, high-value solutions. This niche is positioned for high-margin growth.

• In real estate, luxury and ultra-luxury housing (>rs1.5 crore) accounted for ~42% of new launches in Q1 2025, with premium housing contributing ~27%. Rising affluence and demand for aspirational living in markets like Mumbai and Bengaluru support demand for premium surfaces and integrated real estate offerings.

Threats

At the same time, the business faces challenges that require careful management:

• Volatility in input costs, particularly clay, feldspar, and energy, coupled with tightening environmental regulations, can impact margins.

• The tile sector is intensely competitive and fragmented, with substitutes such as vinyl, wood, and laminates posing risks to market share.

• Marble remains a high-cost product vulnerable to substitution by lower-priced look-alikes, while regulatory compliance in mining and silica dust norms may increase costs.

• The mosaic segment, while high in design appeal, lacks scale and visibility and may remain niche without significant marketing investment.

• The luxury real estate market is cyclical and sensitive to interest rates, policy changes, and broader macroeconomic shocks, requiring prudent execution and strong differentiation.

Strategic Moves by NITCO

Leverage premium tile growth by rolling out innovation-led products (digital-clad, eco-certified) and intensifying design partnerships.

• Capture marble opportunity by positioning Indian marble as a strong alternative to imports (especially Turkish), backed by traceability and quality assurance.

• Elevate mosaic presence through curated luxury collections, project-channel focus, and designer outreach to build aspirational cachet.

Align with luxury housing flows, offering end-to-end design-supported surface packages, and target metros & new project drops where developer intent is premium.

Managing Risks at Nitco

At NITCO, risk management is a continuous process of identifying, assessing, and evaluating risks and taking proactive measures to minimise or eradicate potential losses arising due to an exposure to particular risks. The consistent implementation of this framework is monitored through audits and reviews, resulting in an accurate understanding of the Companys competitive position. In doing so, the Company takes decisions that balance risks and rewards. Key risks include raw material cost volatility, regulatory approvals in real estate, and sensitivity of premium housing to macroeconomic cycles. The Company has instituted robust governance and risk management frameworks to mitigate these challenges.

Risk	Mitigation
Perception Risk	Owing to a dynamic and sustainable business plan, continual innovation towards a
Inability to sustain historical growth rates could	prudent sales-mix and improving operational efficiencies, the Company will be able to
adversely impact brand perception.	better its sales in absolute terms.
Business Slowdown Risk	The Company has emerged as a one-stop shop for tile solutions, providing floor as well as
Indian economy could create a widening chasm	wall tiles and marble. Metros and urban cities are majorly hit by an economic deceleration
between budgeted and actual ground realities.	while in recent times a majority of the demand for consumer products is emerging from
	Tier-II and Tier-III locations, which usually remains largely unaffected by economic
	slowdowns. Thus, as a precautionary measure, the Company strengthened its distribution
	network in new demand pockets
Competition Risk	Competition from the unorganised sector is expected to decline with rising consolidation,
Increasing competition can have an impact on	effected by organised players partnering with unbranded players (with low-cost
margins.	manufacturing expertise) as a part of their cost-efficient expansion strategy. Nitco has
	developed relationships with several low cost manufacturers for outsourcing its product
	requirements
Technology or software obsolescence Risk	The Company invested in SAP ERP module, scaling up its IT infrastructure across its sales,
Technology or software obsolescence may result	distribution and manufacturing divisions and upgraded it to SAP S4 HANA in the FY 2022-
in compromise of quality standards and losing out	23. Design technology will further be enhanced to further strengthen NITCOs aspirational
on the competitive advantage.	brand position in the minds of the architect, builder, dealer and community in large.
Client Attrition Risk	Providing post-sale services to retail and key account customers and offering guidance
A substantial portion of the Companys total sales	programs for institutional customers have been an integral part of Companys initiatives
comes from retail clients and large key accounts.	to reinforce relationships. The Company also customises products to cater to specific
Hence, client attrition can impact both revenues	requirements. Some of its brand-enhancing customers include Tata Group, Reliance
and prospective growth	Group, Prestige, Rahejas, Godrej, Oberoi Construction, DLF, L&T, Shapoorji Pallonji Group,
	among others.
Human Resource Risk	Nitco has initiated various measures such as deploying strategic talent management
Attrition of key executives and personnel could	system, training and integration of learning activities. Various HR initiatives were initiated
affect the Companys growth prospects	to encourage staff towards enhancing productivity and building the spirit of team work.
Dealer attrition risk	The Company has introduced a fast-moving range of tiles new product launches, which
Dealers represent the Companys face to	has revitalised its distribution network and also has adopted franchisee model to expand
customers. Reduction in the number of dealers	its network of distribution partners.
could affect sales and negate brand image.

Internal Control Systems and their Adequacy

The Company has in place adequate internal control systems, including internal financial controls, commensurate with the nature and scale of its operations. The efficacy of these controls is continuously monitored and, whenever required, upgraded to meet evolving business needs. These internal control mechanisms ensure that the Companys assets are safeguarded, regulatory compliances are adhered to, and any pending issues are addressed in a timely manner.

The internal auditor periodically reviews the effectiveness of the internal control process and compliance framework on a quarterly basis, and their findings are reported to the Audit Committee of the

Board of Directors. The Audit Committee in turn reviews these reports on a routine basis, takes note of the observations, and where necessary recommends corrective actions. The Committee also maintains a continuous dialogue with both statutory and internal auditors to ensure that the internal control systems remain effective and reliable.

Financial Review:

Analysis of Profitand Loss statement and Balance Sheet based on standalone results

During FY 2024-25, your Company was able to achieve total revenue of Rs. 324.75 Crore. The Company is enjoying strong brand equity in the market. EBITDA loss was Rs. (20.85) Crore in FY 2023-24.

Restructuring of Borrowings

In April 2024, JMFARC notified the Company that pursuant to the

Assignment Agreement dated 20th April, 2024, JMFARC had assigned the financial assets of the Company together with all underlying rights, titles, interests, securities, guarantees etc. thereof in favour of Authum Investment & Infrastructure Limited ("Authum/AIIL").

Further, the Company and AIIL entered into a restructuring agreement dated October 22, 2024. The restructuring was based on reinstatement of debt of Rs.2,87,581.07 Lakhs as of 20 October, 2024 and included the following terms: • revised repayment terms for sustainable debt of Rs.15,000.00

Lakhs which was paid off from the fresh issue proceeds in the current quarter and conversion of part of unsustainable debt amounting to Rs.1,03,781.25 Lakhs into 11,25,00,000 equity shares of face value Rs. 10 each at a rate of Rs. 92.25 per equity share issued to AIIL.

• infusion by the existing promoter of an amount of Rs.3,228.75 Lakhs through fresh issue of 35,00,000 equity shares of face value Rs.10 each at a rate of Rs. 92.25 per equity share and infusion of an amount of Rs.5,398.93 Lakhs (being 25% of warrant amount) through issue of 2,34,10,000 convertible warrants at a rate of Rs. 92.25 per warrant on preferential allotment basis.

• raising an aggregate amount of Rs.37,696.12 Lakhs through fresh issue of equity shares to third party investors of face value Rs.10 each at a rate of Rs. 92.25 per equity share on preferential allotment basis.

• to strengthen the Companys operational foundation and support future growth, the Company acquired selected identified real estate assets/ shares of company(ies) from

Related Parties of the Company for an aggregate amount of not more than Rs. 30,000 lakhs to develop the same as real estate projects.

Equity Share Capital

The Companys equity share capital is stated at Rs. 22,872.20 Lakhs as on March 31, 2025.

Borrowings

The total debt of the Company is as under:

Particulars	2024-25	2023-24
Non-Current borrowings	20,000.00	20,000.00
Current borrowings	1,154.05	76,283.00
Total Debt	21,154.05	96,283.00

Working Capital:

• Inventory has increased from Rs. 5,574.60 Lakhs in 2023-24 to Rs. 6,283.51 Lakhs in 2024-25.

• Inventory – Real Estate has increased from Rs. 15,000.00 Lakhs in 2023-24 to Rs. 26,389.30 Lakhs in 2024-25.

• Trade receivables have increased from Rs. 3,718.09 Lakhs in 2023-24 to Rs. 6,444.42 Lakhs in 2024-25.

• Trade payables have decreased from Rs. 15,749.05 Lakhs in 2023-24 to Rs. 9,250.37 Lakhs in 2024-25.

Human Resources:

NITCO regards its employees as the cornerstone of its transformation. FY 2024–25 witnessed the return of experienced professionals and induction of new talent, supported by ongoing training, skill development, and cross-functional integration. Industrial relations remained cordial.

Details of significant changes in Key Financial Ratios

Sr. No. Ratio Analysis	March 31, 2025	March 31, 2024	Variance	Variance
1 Debtors	6.14	5.81	5.5%	-
Turnover Ratio
2 Inventory	3.97	4.16	-4.5%	-
Turnover Ratio
3 Debt Service	(41.07)	(0.04)	97088.4%	Decrease in
Coverage Ratio				borrowings
				in the year
				2024-25
4 Debt Equity	0.81	(1.92)	142.2%	Reduction
Ratio				in debt and
				increase in
				equity in the
				year 2024-25
5 Operating Profit	(1.56)	(5.37)	70.95%	Improvement
Margin Ratio				in operating
				profit in the
				year 2024-25

Impact and Outcomes of key initiatives:

These initiatives enabled the Company to achieve break-even, drive business growth, win new key accounts, expand its retail footprint, and induct a revitalised team blending experience with fresh talent. In summary, FY 2024–25 was a year of consolidation and renewal for NITCO. With a sharpened focus on premiumisation, sustainability, and customer-centric innovation, the Company is well-positioned to create long-term value for its stakeholders in both the surfaces and real estate domains.

Disclaimer: Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied.