RHI Magnesita India Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

Forward looking statement

Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events.

The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise forward looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include changes in government regulations, tax laws, economic developments within the country and such other factors within India and globally.

The financial statements are prepared as per the IND AS guidelines and comply with the applicable Accounting Standards notified under Section 211(3C) of the Act read with the Companies (Accounting Standards) Rules, 2015. The management of RHIM India has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements, reflect in a true and fair manner, the state of affairs and profit for the year.

The following discussions on our financial condition and result of operations should be read together with our audited consolidated financial statements and the notes to these statements included in the annual report. Unless otherwise specified or the context otherwise requires, all references herein to "we", "us", "our", "the Company", "RHIM" are to RHI Magnesita India Limited

About the Company

RHIM India holds the position as a premier manufacturer and supplier of top-tier refractory products, systems, and solutions crucial for high-temperature processes surpassing 1,200?C across diverse industries such as steel, cement, nonferrous metals, and glass. Its offerings encompass Magnesia and Alumina-based bricks and mixes tailored for major industrial clients, alongside specialty refractory items like Isostatic products and Slide Gates. The Company prides itself on being the foremost refractory market leader in India and has established a robust global reputation for delivering superior- quality products.

The organizational structure of RHI Magnesita India Limited was established following the integration of three former Indian subsidiaries of the global RHI Magnesita group (RHI Magnesita N.V. and its subsidiaries) — RHI Clasil Private Limited, RHI India Private Limited, and Orient Refractories Limited in 2021. This integration aimed to synergize, simplify, and consolidate the strengths of these entities, enabling them to serve customers more efficiently as a unified entity. The merger positioned the Company as the largest manufacturer of refractory products in India, offering a comprehensive range of refractory solutions for the Indian market. This includes capabilities spanning from innovation, research, and development (R&D) to production, marketing, sales, installation, services, monitoring, and recycling of refractories.

RHIMs products and services are divided into two operational divisions, each catering to specific customer industries. The first division focuses on supplying products and services to the steel industry, known as the "Steel Division". The second division serves industries such as cement and lime, non-ferrous metals, chemicals, energy, glass, and others, referred to as the "Industrial Division".

Steel Division

In fiscal year 2024, the Steel Division constituted approximately 76% of RHIMs revenue from operations. RHIM provides an extensive array of refractory products under its Steel Division, allowing the Company to offer holistic solutions to fulfill the refractory needs of steel manufacturers. Refractory management service contracts represent a substantial segment of the Steel Divisions revenue, contributing around 33% in fiscal year 2024.

Industrial Division

Demand for refractories in non-steel industries follows a longer replacement cycle, where customers in the cement and lime sectors typically conduct annual maintenance to replace rotary kiln refractories. On the other hand, customers in nonferrous metals and glass industries may only require refractory replacements for lined equipment every ten years. RHIM aimed to provide a diversified local market solution for this segment by acquiring the Indian refractory business of Dalmia Bharat Refractories Limited (DBRL), part of the Dalmia Bharat Group. This acquisition, detailed elsewhere in the report, provides RHIM with a well-diversified product and end-industry mix.

Tailored Customer Solutions

Historically, the Company has served its domestic and international customers primarily through its own facilities, supplemented by facilities within the broader RHI Magnesita Group for certain additional international customers. Its revenue streams encompass sales within India of products manufactured by the Company, sales outside India of its own products, sales within India of imported products from other entities within the global RHI Magnesita group, and services rendered to the larger RHI Magnesita Group. RHIM places a strong emphasis on research and development (R&D), supported by a state-of- the-art R&D center in Bhiwadi. This center leverages the global R&D expertise and experience of its parent company. Given the varying requirements and specifications across customer facilities, RHIMs R&D efforts are directed toward customizing products and services according to customer needs, with a continuous focus on innovation and improvement.

As of the current date, the Company possesses and manages eight production facilities in India, inclusive of its subsidiaries, with a combined refractory production capacity of approximately 525 KTPA. These modern manufacturing facilities are strategically situated in Bhiwadi (Rajasthan), Jamshedpur (Jharkhand), Visakhapatnam (Andhra Pradesh), Cuttack (Odisha), Rajgangpur (Odisha), Khambhalia (Gujarat), Dalmiapuram (Tamil Nadu) and Katni (Madhya Pradesh). Additionally, RHIM, via its subsidiary Intermetal Engineers (India) Private Limited, manages a plant in Mumbai dedicated to manufacturing metallurgical equipment.

The Company maintains a strong commitment to sustainable manufacturing practices, in line with the approach of the global RHI Magnesita group. Aligned with efforts to minimize its environmental footprint, the group focuses on achieving net- zero emissions, investing in innovative technologies, enhancing recycling initiatives, improving energy efficiency, transitioning to sustainable fuels, and utilizing renewable electricity sources. RHIM intends to capitalize on the Groups investments in these areas and enhance its own processes to reduce CO₂ emissions in refractory production.

Strengths:

RHIM exhibits several core strengths that solidify its position as a reputable leader in the refractory industry and enable it to capitalize on opportunities within the swiftly expanding Indian market:

A. Brand Trust and Operational Excellence Post-Merger:

RHIM benefits from the esteemed brand reputation, industry relationships, and technical expertise of the global RHI Magnesita group, which boasts a remarkable 189-year track record and a presence in over 125 countries. Leveraging the resources of the global RHI Magnesita group, RHIM has established a robust operational platform that enables efficient and effective service delivery to customers.

B. Leading Position in the Indian Refractory Market:

Following the integration of three Indian subsidiaries of the global RHI Magnesita group and the recent acquisition of two leading refractory companies in India, RHIM India has solidified its position as a premier manufacturer and supplier of high-grade refractory products and solutions in India. With an expanded manufacturing capacity and a diverse customer base spanning industries such as steel, cement and lime, non-ferrous metals, and glass, RHIM is well-positioned to capitalize on the substantial growth opportunities within the Indian refractory market.

C. Comprehensive Product Portfolio and Heat Management Solutions:

RHIM distinguishes itself with a wide range of refractory products and services catering to major customer industries in India. Unlike competitors specializing in specific product ranges or customer segments, RHIM offers a comprehensive "one-stop-solution" for refractory products and solutions. The Companys capabilities extend from innovation and Research and Development to raw material recycling, production, marketing, installation, and monitoring. This comprehensive portfolio enables RHIM to capture various touchpoints in the refractory value chain and foster long-term customer relationships.

D. Strong Focus on R&D:

R&D is a pivotal focus for RHIM as it endeavors to develop optimized and tailored products and solutions to meet diverse customer requirements. Leveraging the global R&D expertise and technical experience of the global RHI Magnesita group, RHIMs R&D activities primarily occur at its dedicated center in Bhiwadi, Rajasthan. These efforts encompass the customization of refractory products and the exploration of innovative technologies. Through ongoing R&D initiatives, RHIM aims to enhance customer satisfaction, drive product quality improvements, and maintain a competitive edge in the market.

E. Extensive Manufacturing Capacity with Sustainable Practices:

RHIMs eight refractory manufacturing facilities strategically located across key steel and cement producing markets in India represent the widest refractory production footprint in the country. These facilities feature state-of-the-art machinery and employ modern automation technologies to ensure the production of high-quality refractories. The Company also demonstrates its commitment to sustainable manufacturing practices, aligning with the global RHI Magnesita groups vision of achieving net-zero emissions. By investing in new technologies, increasing recycling efforts, improving energy efficiency, and adopting environmentally friendly practices, RHIM aims to reduce its environmental impact while maintaining operational excellence.

In conclusion, RHIMs strengths in brand reputation, operational platform, market positioning, product portfolio, R&D capabilities, and manufacturing capacity solidify its position as a trusted leader in the refractory industry. With a strong foothold in the fast-growing Indian market and a commitment to innovation and sustainability, RHIM is poised for continued success and growth.

Strategic Initiatives:

A. Synergies from Acquisitions: RHIM aims to capitalize on the acquisitions of the Indian refractory business of DBRL and the refractory business of Hi-Tech Chemicals to create enduring value for its stakeholders. By integrating the acquired businesses local expertise with the support of the global RHI Magnesita group, RHIM seeks to optimize manufacturing operations, reduce import-related costs, and broaden its product portfolio. The Company will pursue cross-selling and upselling opportunities to enhance market share in domestic and export markets.

B. Expansion and Upgrading of Manufacturing Capacities:

RHIM plans to enhance its local manufacturing capabilities to efficiently meet the growing demand from existing and new customers. This involves achieving operational excellence, productivity improvement, and performance enhancement of the manufacturing capacities at existing facilities and newly acquired plants. Automation initiatives are underway to improve efficiency, and facility-specific upgrades will be implemented based on ongoing assessments. The objective is to streamline production processes and align manufacturing practices with those of the global RHI Magnesita group.

C. Utilization of Existing R&D Capabilities: RHIM will continue to prioritize Research and Development to customize products and meet customer requirements effectively. The Company will leverage the R&D capabilities of the global RHI Magnesita group to facilitate technology transfers and develop high-quality products in India. With increasing demand from steel customers for green steel production, RHIM will focus on increasing its share of production and sale of recycling while developing more carbon-efficient products locally.

D. Expansion of Solutions Contract Business:

The Company aims to grow its solutions contract business by increasing the proportion of revenue derived from services. RHIM plans to offer a comprehensive range of refractory products and services as a "one-stop-solution" to various industries. Through targeted marketing and business development activities, RHIM aims to deepen collaboration between the technical marketing team and the sales team to showcase the full range of capabilities to potential customers for transitioning to full line solution contracts.

E. New Business Development:

With the recent acquisitions, opportunities have emerged in less leveraged industry segments such as Iron Making and Direct Reduced Iron (DRI). RHIM is building a dedicated sales and technical experts team from existing resources to focus on developing the Companys business in these promising segments.

By implementing these strategic initiatives, RHIM intends to reinforce its position as a leading player in the Indian refractory market, seize growth opportunities, and deliver long-term value to its stakeholders.

Opportunities & Threats:

RHIM presents several compelling growth opportunities:

A. Strong Global Presence:

The Company has established a prominent position in its sector both domestically and globally, solidifying a robust global presence that bolsters its competitive advantage.

B. Diversified Product Portfolio: RHIM, especially following the integration of the Indian refractory business of DBRL and the refractory business of Hi-Tech Chemicals, possesses a diverse range of products, enabling effective catering to a wide range of end applications. This versatility enhances the Companys capability to address the specific needs of various industries.

C. Favorable Domestic Industry Growth:

The domestic markets user industries, such as steel and cement, are experiencing significant growth overall. This favorable trend creates an enabling environment for RHIM to capitalize on the rising demand for refractory products, positioning the Company for increased market share and improved profitability.

D. Synergies from Inorganic Expansion:

The Company has pursued initiatives in inorganic expansion, expected to yield synergistic benefits. By leveraging strategic acquisitions and partnerships, RHIM can drive overall growth and unlock new business development opportunities.

RHIM faces several significant threats that warrant careful consideration:

A. Competition from Commodity Traders:

The Company operates within a highly competitive market and contends with established global refractory players. Maintaining market share and profitability may pose challenges amid aggressive competition, necessitating continuous innovation and differentiation.

B. Integration Challenges with Recent Acquisitions:

Successful integration of recent acquisitions is pivotal for RHIMs growth and operational efficiency. We are in the process of integrating our processes and systems, which could impact our ability to operate seamlessly and will require a training curve across the organization. Additionally, global supply chain challenges, such as fluctuating freight prices, may affect our performance and hinder the realization of synergies.

C. Unfavorable Macroeconomic and Policy Changes:

The business environment is susceptible to macroeconomic fluctuations and policy changes that can affect the refractory industry. Unexpected economic downturns, shifts in government regulations, or geopolitical instability could present risks and disrupt business operations.

D. Volatility in Raw Material Prices & Supply chain disruption:

RHIM relies on raw materials such as magnesite and alumina, the prices of which can be volatile. Fluctuations in raw material prices can influence the Companys cost structure, profitability, and pricing competitiveness. The recent supply chain challenges was also evident of a threats due to Singapore blockade or red sea crisis have impacted our business in terms of lead time to bring the raw materials or finished goods on time but with increased costs. Despite RHIM has long term contracts with our sea freight providers, such disruptions along with geopolitical uncertainty brings challenges to have a smoother operations.

RHIM proactively monitors and strategizes to mitigate these risks and uphold a competitive advantage in the refractory market.

Industry Overview

Global Steel Market Outlook

The global steel market stands at a pivotal juncture, having reached a valuation of US$ 942.3 billion in 2023, and is poised for substantial growth, with forecasts projecting a robust expansion to US$ 1,279 billion by 2032. This trajectory reflects a Compound Annual Growth Rate (CAGR) of 3.3% during the forecast period spanning from 2024 to 2032. Such anticipated growth is underpinned by a confluence of factors propelling demand and fostering innovation across diverse sectors, positioning steel as a cornerstone of industrial and economic development worldwide.

Market Analysis:

Market Growth and Size: The global steel market is experiencing steady growth, owing to its indispensable role in critical industries such as construction, automotive, and infrastructure development. The markets resilience amidst economic fluctuations underscores its enduring value and adaptability to evolving market dynamics.

Major Market Drivers: Key drivers fueling the markets growth include heightened construction activities across residential and commercial sectors globally, coupled with significant advancements in steel manufacturing technologies. These advancements are enhancing product quality, driving efficiency gains, and expanding the applicability of steel across a spectrum of end-user industries.

Key Market Trends: A notable trend shaping the market landscape is the increasing adoption of high-strength and lightweight steel variants, particularly evident in the automotive and aerospace sectors. This strategic shift is driven by imperatives for enhanced fuel efficiency, reduced emissions, and improved performance, aligning with stringent regulatory standards and consumer preferences.

Geographical Trends: Geographically, Asia Pacific remains a dominant force in the global steel market, propelled by extensive infrastructural developments and robust manufacturing activities. Concurrently, North America is emerging as a fastgrowing market, characterized by a heightened focus on recycling and sustainable steelmaking practices, reflecting regional shifts towards environmental stewardship and resource efficiency.

Competitive Landscape:

The competitive landscape of the global steel market is marked by significant investments in research and development to foster innovation, improve product quality, reduce production costs, and mitigate environmental impacts. Key market players are actively pursuing strategic initiatives to fortify their market positions and drive sustainable growth.

Challenges and Opportunities:

Challenges: The industry faces challenges stemming from volatile raw material prices, stringent environmental regulations, and the imperative for continuous technological advancements to mitigate carbon footprints. Navigating these challenges requires proactive strategies and agile responses from industry stakeholders.

Opportunities: Amidst challenges, opportunities abound for market players to innovate in recycling techniques, develop new materials, and expand into emerging markets. Strategic initiatives focused on sustainability, efficiency gains, and market diversification are instrumental in overcoming challenges and unlocking growth prospects.

Emerging trends underscore steels integral role in shaping modern industries. The automotive sector, for instance, is witnessing a transformative shift towards electric and autonomous vehicles, driving demand for advanced steel solutions that offer strength, safety, and sustainability. Similarly, the defense industrys demand for high-performance steel alloys for military applications underscores the materials criticality in ensuring national security and technological superiority.

Technological advancements continue to redefine the steel market landscape. From digitalization and automation in manufacturing processes to the integration of artificial intelligence and data analytics, the industry is embracing innovation to optimize efficiency, reduce costs, and enhance product quality.

In conclusion, the global steel markets outlook remains positive and dynamic, characterized by steady growth, transformative trends, and strategic imperatives for sustainability and innovation. Continued investments in R&D, market diversification, and strategic partnerships are pivotal in navigating challenges, seizing opportunities, and sustaining the steel industrys enduring relevance in the global economy.

Source: IMARC Services Pvt Ltd. (https://www.imarcgroup. com/steel-market & https://www.linkedin.com/pulse/global- steel-map-comprehensive-overview-regional-trends- expectations-bquac/)

Indian Steel Market Outlook

The Indian steel industry continues to showcase resilience and growth potential, with an estimated market size of 135.81 million tons in 2024, projected to reach 209.93 million tons by 2029 at a CAGR of 6% to 9%. Despite challenges posed by the COVID-19 pandemic, the sector witnessed a strong recovery driven by the gradual reopening of end-user industries and government initiatives to curb the spread of the virus.

Key drivers bolstering the Indian steel market include robust policy support from the Indian Government, substantial investments in the sector, increasing urbanization, and heightened spending on construction and infrastructure projects. These factors are anticipated to fuel market expansion during the forecast period, reflecting a positive outlook for the industry.

However, the industry faces challenges such as low per capita steel consumption and high production costs, leading to decreased profit margins for manufacturers. Price fluctuations have also impacted importers, contributing to market volatility.

Despite these challenges, the industry is poised for growth with initiatives focusing on hydrogen-based steel manufacturing and the potential for increased trade and investment opportunities.

Foreign Direct Investment (FDI) has played a significant role in boosting investments in the steel industry, with policies allowing 100% FDI via the automatic route. Between April2000 and September2023, Indian metallurgical industries attracted FDI inflows of US$ 17.40 billion, reflecting investor confidence and opportunities for expansion.

India stands as the second-largest producer of crude steel globally, with notable achievements in steel production. For instance, in FY24, the production of crude steel and finished steel reached 94.01 million tons and 88.81 million tons, respectively. The Steel Authority of India Limited (SAIL) recorded its best- ever annual production, highlighting the industrys capacity and growth potential.

Looking ahead, the industry anticipates significant growth driven by post-COVID-19 economic recovery plans, investments in key sectors like infrastructure, transportation, and affordable housing. The governments focus on increasing steel capacity and promoting specialty steel production through schemes like the Production-Linked Incentive (PLI) scheme is expected to stimulate investment and create additional capacity.

Indias abundant iron ore reserves, easy availability of low- cost manpower, and ongoing industry consolidation further strengthen its position in the global steel market. Continued government support, strategic investments, and technological advancements are pivotal in shaping the Indian steel industrys trajectory, paving the way for sustainable growth and competitiveness on the global stage.

Source: (https://www.mordorintelligence.com/industry-reports/india-steel-market & https://www.ibef.org/ download/1707292065_Steel-December-2023.pdf)

Indian Cement Market Outlook

The Indian cement industry stands as a cornerstone of the nations infrastructure and construction sectors, ranking as the worlds second-largest cement producer. With an installed capacity of 570 million metric tonnes per annum (MTPA) and a production of 298 MTPA, the industry plays a pivotal role in driving economic growth and development across various sectors.

In FY24, Indias cement production is projected to grow by 7-8%, fueled by investments in infrastructure and mass residential projects. The industry has witnessed substantial capacity expansion, with installed capacity growing by 61% from 353 MT in FY12 to 570 MT in FY23, reflecting a robust trajectory of growth and development.

Private players dominate the Indian cement market, accounting for 98% of the total capacity, with the top 20 companies contributing around 70% of the total production. The industry is characterized by large plants, with 210 large cement plants boasting a cumulative installed capacity of over 410 MT, complemented by over 350 mini cement plants with an estimated production capacity of nearly 11.10 MT.

Geographically, the concentration of cement production is significant in South and West India, particularly in states like Andhra Pradesh, Rajasthan, and Tamil Nadu, where 77 out of the total 210 large cement plants are situated.

Market projections indicate a positive outlook for the Indian cement sector, with Crisil Ratings forecasting the addition of approximately 80 MT capacity by FY24, the highest in a decade. This growth is attributed to increased spending on housing and infrastructure activities, coupled with initiatives like the National Infrastructure Pipeline (NIP), which introduces projects worth Rs.102 lac crore for the next five years.

Government initiatives such as the PM Gati Shakti - National Master Plan (NMP) for multimodal connectivity and substantial investments in infrastructure, including roads, railways, and ports, are expected to drive cement demand in the coming years. The industrys focus on green practices and sustainability, coupled with technological advancements, positions Indian cement manufacturers among the worlds greenest and most efficient producers.

Opportunities in sectors like housing, dedicated freight corridors, ports, and other infrastructure projects are key drivers of growth, attracting investments and fostering innovation within the industry. The ongoing expansion plans of major players like UltraTech Cement, Adani Group, and Shree Cement further underscore the industrys dynamism and potential for continued expansion and development.

In conclusion, the Indian cement industry remains poised for sustainable growth, supported by robust demand from infrastructure and real estate sectors, government initiatives, and a commitment to environmental sustainability and technological advancement.

Source: (https://www.ibef.org/download/1707217962_

Cement-December-2023.pdf)

Global Refractory Market Outlook

The global refractories market is poised for significant growth, projected to reach around USD 51.46 billion by 2033, expanding from USD 32.98 billion in 2023 at a steady CAGR of 4.60% during the forecast period from 2023 to 2033.

The Asia-Pacific region, with a refractories market size of USD 20.26 billion in 2023, is projected to reach USD 43.56 billion by 2033, registering a CAGR of 8.00% from 2024 to 2033. The regions growth is fueled by ambitious goals in coal-power capacity, particularly in China under its 14^th Five-Year Plan (2021-2025). A healthy steel, cement, and manufacturing sectors, coupled with significant infrastructure development and a construction boom, are key drivers for growing demand for refractory materials in high-temperature processes and insulation applications.

The subdued demand for refractories observed in North America and Europe during 2023 persisted throughout the first half of 2024, with no catalyst visible to alter the trend for the remainder of the year. These main drivers for the development in these markets were high inflation, monetary tightening, and energy price volatility as well as geopolitical challenges in Europe. Stringent environmental regulations and sustainability objectives have driven the adoption of more advanced and sustainable refractory materials. These materials contribute to energy efficiency improvements and are further supported by ongoing infrastructure projects and a resurgence in manufacturing activities in these geographies.

Despite the macroeconomic weakness affecting many western nations and developed economies, the structural drivers of the refractory market remain intact and we are confident that refractories will participate in any form of long term GDP growth. Refractory products play a crucial role across industries providing thermal insulation and protection from corrosion and are therefore critical in the manufacturing process of iron, steel, glass and cement, as well as petrochemical and non-ferrous metals sectors like copper. Innovation to solve mankinds biggest challenges, for example the global energy transition, will drive long term growth and development in the refractories industry.

Source: (https://www.precedenceresearch.com/refractories-

market & https://www.fortunebusinessinsights.com/ refractories-market-103287 & https://worldsteel.org/media/ press-releases/2024/worldsteel-short-range-outlook- april-2024/)

Indian Refractory Market Outlook

Indias aggressive domestic manufacturing and infrastructure development targets have catalyzed the growth of the refractory industry, driven by increasing global demand for Indian steel. The governments emphasis on manufacturing and infrastructure is propelling the refractory sector forward. Refractories are indispensable for high-temperature processes across various sectors such as steel, cement, glass, non-ferrous metals, and petrochemicals. They play a crucial role in ensuring the efficiency and quality of products in these industries.

Initiatives like Atmanirbhar Bharat underline the importance of self-reliance, although the refractory industry still heavily relies on raw material imports. Post-Covid, India has emerged as a major sourcing hub for refractory products. The industrys growth trajectory suggests a potential shift from global to Indian raw materials, enhancing domestic manufacturing and strengthening Indias position as a global manufacturing powerhouse.

The governments initiatives to increase steel capacity and substantial investments in infrastructure development position the refractory sector at the forefront of Indias manufacturing narrative. The sector supports high-temperature processes, contributing directly to Indias manufacturing ambitions, fostering sustainable growth, and bolstering the nations industrial competitiveness globally.

Despite promising prospects, the industry faces challenges such as volatile commodity prices, high dependency on raw material imports, and limited domestic sourcing due to geological and technological constraints. However, by leveraging favorable market conditions and addressing these challenges through strategic planning and innovation, the Indian refractory industry is poised for sustained growth.

This unprecedented growth potential underscores the critical role of refractories in steel and cement manufacturing, as well as in the production of other materials requiring high-temperature processes. Refractories are essential for lining furnaces and equipment, ensuring the smooth operation and efficiency of these industrial processes. In essence, the production of steel, cement, glass, aluminum, copper, and other metals and nonmetals would be impossible without refractory materials.

Financial & Operational Performance

Snapshot of FY24 on consolidated basis

- The Total Revenue from Operations was Rs.3,78,110 Lacs as in FY24 as compared to Rs.2,72,627 Lacs for FY23, with a change of 39% driven by a strong increase in volume.

- The adjusted EBITDA* was Rs.57,825 Lacs as in FY24 as compared to Rs.43,877 Lacs for FY23, with a change of 32%.

- The operating cash flow is Rs.27,060 Lacs, the capital expenditure (CAPEX) is Rs.8,004 Lacs.

- The adjusted earnings earnings per share (EPS) is Rs.11.99 per share

- The proposed dividend per share is Rs.2.50 per share.

- The net debt to adjusted EBITDA ratio is 0.76.

Adjusted EBITDA is profit before tax excluding depreciation, amortization, finance cost and one timer expenses of 12,134 Lacs. Adjusted EPS is computed after reducing impact of impairment loss of goodwill and one timer expenses.

Internal Control Systems & Adequacy

The Board evaluates the effectiveness of the internal financial, operational, and compliance controls, as well as the risk management framework. RHI Magnesita India adheres to corporate governance regulations, with the Board assessing the operational efficiency of internal controls throughout the year and making recommendations when appropriate. Regular discussions between the Board and the Audit & Compliance Committee have addressed improvements in the internal control systems, both implemented and planned.

These systems have been in place throughout 2023 and up to the date of this report and are based on the three lines of defense model, supported by an end-to-end process model and a delegation of authoritys structure reflecting the responsibility for risk management and internal controls at all management levels.

The Company has a dedicated risk management approach and an internal control framework for its financial reporting process and the preparation of financial statements. These systems include policies and procedures to ensure that adequate accounting records are maintained, and transactions are recorded accurately and fairly, allowing for the preparation of financial statements in accordance with applicable accounting standards.

Human Resources

RHI Magnesita India Ltd. maintains robust people and culture policies aligned with its strategic objectives. The Company is committed to developing its employees, offering training programs to cultivate a diverse talent pool. By combining experienced and young professionals, RHIM drives growth and achieves its business goals. As on 31 March 2024, the Company had a workforce of 3,383 (permanent and contractual).

Outlook

India is the highest growth major market for refractories globally, with a forecast of 6-9% CAGR. RHI Magnesita India Limited is well-positioned to leverage on this opportunity for a sustainable and profitable growth in the coming years, backed by a comprehensive strategy focused on both organic and inorganic initiatives. The refractory industry is anticipated to witness substantial expansion, driven by key end-user industry such as steel, cement, and glass, among others, in line with Indias economic and infrastructure development trajectory.

The governments ambitious targets, including reaching a US$ 7 trillion economy by fiscal year 2030 and achieving 300 million tonnes of steel production by 2030, coupled with initiatives like Atmanirbhar Bharat, provide a strong foundation for economic growth. These factors create a conducive environment for increased demand for refractory products aligning with RHIMs market leadership position and local-for- local manufacturing strategy under the Make in India initiative.

RHIMs recent acquisitions, including the integration of the Indian refractory business of DBRL into RHI Magnesita India Refractories Limited and the acquisition of the refractory business of Hi-Tech Chemicals, have significantly expanded the Companys production capacity and diversified its product portfolio. These strategic moves enhance RHIMs ability to cater to a broader range of end applications and customer segments effectively.

The Companys operations in west and south India, supported by a well-established production footprint, strategically position RHIM to serve these regions efficiently. Leveraging a strong industrial product offering, RHIM aims to optimize its go-to-market portfolio by providing comprehensive solutions across all segments and industries. Cross-selling opportunities are expected to drive revenue growth as synergies from the acquisitions materialize.

RHIM is focused on optimizing its cost structure through initiatives such as fixed cost optimization, resource bundling, and leveraging economies of scale. These efforts are aimed at improving the cost baseline and enhancing profitability, reflecting the Companys commitment to operational excellence and efficiency.

Looking ahead, RHIM plans to capitalize on its strong global presence, diversified product portfolio, localization of imported products, and favorable domestic industry growth. Anticipated synergies from inorganic expansion, coupled with strategic partnerships and investments, position RHIM for sustained growth and profitability in the Indian refractory industry.

In conclusion, RHI Magnesita India Limited is well-positioned to continue its trajectory of growth, innovation, and market leadership, driving value creation for stakeholders and contributing significantly to Indias refractory sectors development and success.