Carborundum Universal Ltd

Building for the long term

Dear Shareholders,

I am delighted to present the 71st Annual Report of Carborundum Universal Limited (CUMI) for the financial year ended 31st March 2025, a year characterised by evolving external business dynamics and one in which the Company continued to demonstrate inherent agility, resilience, and enduring strength. I extend my heartfelt appreciation to every member of the CUMI family, for their support and perseverance. In the face of a constantly shifting landscape, the team has consistently upheld our values and built upon robust institutional foundations to deliver sustained performance.

The year 2025 unfolded with heightened uncertainty and complexity, as the global economy navigated a phase of moderating growth, shifting policy priorities, and escalating geopolitical tensions. Growth across advanced and emerging economies remained uneven, challenged by inflationary pressures, trade disruptions, and capital volatility. The recent introduction of extensive tariffs by the United States, and the retaliatory measures that followed, further complicated an already fragile ecosystem, weighing heavily on global trade flows.

In contrast to the global scenario, India continued to chart a stable growth path; as one of the fastest-growing major economies, driven by sustained infrastructure investment, robust activity in construction and financial services, and a steady revival in rural demand. The Reserve Bank of India's measured and forward-looking monetary policy stance, coupled with the Government's strategic fiscal and sectoral interventions, created a stable macroeconomic environment that fostered confidence and enabled broad- based growth.

Amidst persistent global headwinds,

India's structural strengths, including a favourable demographic profile, rapidly advancing digital infrastructure, and a stable policy ecosystem, aided positioning the country as a dynamic leader in an evolving global order. CUMI is firmly aligned with India's long-term trajectory and is committed to the country's transformative progress.

In this complex environment, CUMI delivered a resilient performance, marked by steady revenue growth and disciplined operational execution. Consolidated revenue grew by 4.4% to '48,335 Million, while standalone revenue rose by 7.3% to reach '27,837 Million. These outcomes reflect the inherent strength of our diversified business portfolio and our ability to adapt swiftly to dynamic market conditions. Profitability, however, was impacted by a range of

challenges. Standalone profit before tax declined by 8% to '4,253 Million, while consolidated profit before tax before exceptional items decreased to '5,720 Million. Notwithstanding various market pressures, our balance sheet remained robust throughout the year. The Company concluded the year debt-free on a standalone basis and significantly reduced consolidated debt, bringing the debt-equity ratio down to a minimal 0.03. Strong operational cash flows enabled us to fund the majority of our Capital Expenditure through internal accruals, underscoring our commitment to fiscal discipline, long-term value creation, and strategic self-reliance. With a consolidated Capital Expenditure of '2,815 Million in FY 2024-25 - one of the highest since inception, this milestone underscores our strategic commitment to longterm growth.

Our step down subsidiary in Russia,

VAW, closed the year with a profit before exceptional item and tax of 1,777 Million Rouble after registering a revenue of 9,403 Million Rouble reflecting strong operations despite growing challenges. VAW's inclusion in Specially Designated and Blocked persons' list administered by OFAC, US for operating in Russia's manufacturing sector significantly impacted its performance towards the end of the FY 2024-25. VAW is actively managing risks, optimising capacity, and focusing on domestic demand to sustain resilience amid these uncertainties. At CUMI International Limited (VAW's parent company) and CUMI, requisite steps have been taken to ensure compliance of the OFAC sanction in relation to our dealings with VAW.

In another significant move aligned with our advanced Ceramics strategy, CUMI signed a definitive agreement in September 2024 to acquire 100% equity in Silicon Carbide Products LLC (SCP),

USA. With over 3 decades of experience in Nitride Bonded Silicon Carbide (NBSiC) solutions, SCP brings differentiated forming, firing, and tooling capabilities. This acquisition not only enhances our technological depth but also provides access to a strong customer base across

North America. It opens up opportunities to leverage synergies across our value chain, from supplying proprietary raw materials to co-developing advanced Ceramics for critical applications in power, steel, mining, glass, and petrochemicals. This acquisition has led to CUMI expanding its presence in the USA and entities CUMI USA & SCP LLC are now a part of the CUMI group.

During the year, CUMI amended the terms of the Shareholders Agreement between Wendt GmbH, Germany in connection with Wendt GmbH's intention to divest its entire holding in Wendt (India), which was consummated by Wendt GmbH in May 2025, resulting in the termination of the joint venture with them in Wendt (India). As part of this strategy, Wendt (India) has acquired the global ownership of the "Wendt" brand and also secured long term bond supply arrangements with Wendt GmbH besides acquiring from them the technology license for its machine building business. This technology will help Wendt (India) tap into the global market for peripheral insert grinding machines with a strategic focus on the sale of new machines, service revenue and also to upgrade the installed machines worldwide.

I believe that the acquisition of SCP and strengthening of Wendt (India), aligns with our strategic priorities, furthering our ability to create sustainable long-term value for all our stakeholders.

In FY 2024-25, the Abrasives business navigated a complex operating environment, shaped by sectoral slowdown, elevated input costs, and changing global trade dynamics. Against this backdrop, the business posted a consolidated revenue of '21,594 Million, registering a growth of 3.3%. Consolidated profit before interest and tax declined by 17% to '1,514 Million. While short-term profitability came under pressure, the focus remained on driving operational efficiency, advancing R&D, and executing strategic investments, thus positioning the business for sustainable value creation.

On a standalone basis, Abrasives business recorded a revenue of '11,954 Million, with a growth of 4%, led by volume expansion across industrial and retail segments. The business segment emphasised on discipline execution, product differentiation, and distribution depth helping absorb external shocks.

Our international subsidiaries exhibited differentiated performance, shaped by region-specific opportunities and challenges. RHODIUS in Germany reported a revenue growth of 5.5% and made considerable strides in narrowing its losses. While AWUKO (Germany) grew by 10%, it faced significant margin pressure. Both RHODIUS and AWUKO play an important role as part of the global Abrasives strategy. Sterling Abrasives maintained stable performance, while our operations in the United States remained responsive to local dynamics.

Looking ahead, our strategic focus is to solidify our market leadership in India, bolster our footprint in high-potential global markets, and grow substantially over the next 5 years. With planned investments in R&D, thin wheel capacity, and customer-centric initiatives, the Abrasives business is well-placed to deliver sustained and profitable growth.

In FY 2024-25, the Electrominerals business delivered mixed results. Consolidated revenue grew by 1.9% to '15,736 Million on the back of sound performance in India as well as at Foskor Zirconia in South Africa. However, consolidated profit before interest and tax witnessed a decline by 25% to '1,774 Million primarily due to a sharp reduction in earnings contribution from the Russian operations. Foskor Zirconia posted a 9% growth in local currency, demonstrating resilience amidst market pressures with improved capacity utilisation and a growing product portfolio, reflecting its long-term strategic potential.

On a standalone basis, the Indian Electrominerals business registered a healthy 10% growth in revenue to reach '8,155 Million. This was driven by volume growth in India, domestic as well as export. However, rising input costs and intensifying competition from low-cost imports, particularly in Alumina impacted the margins. In response, the business focussed on value-accretive offerings, particularly treated grains, a strategic move that is expected to gain traction in the coming year. To further strengthen its position, the business is investing in capacity expansion across stabilised Zirconia, Alumina-Zirconia, and Thermal Spray Powders - advancing the transition to a differentiated specialty materials platform. Aligned with this direction, our strategic ambition is to evolve from a volume-driven minerals business to a value-led specialty materials player.

In FY 2024-25, the Ceramics business, comprising Industrial Ceramics and Super Refractories, reported consolidated revenue of '11,601 Million, an increase of 7.7% over the previous year. Robust performance in our standalone operations and escalating global demand across high- performance segments contributed to this growth. Despite input cost pressures, consolidated profit before interest and tax held steady at '2,865 Million, showcasing executional prudence and operational efficiency.

The standalone Ceramics business registered a growth of 6.5%, supported by higher volumes and improved price realisation. Engineered Ceramics, Metallised Cylinders, and Fired Refractories - all growing above 18% - added strong tailwinds to this momentum. Meanwhile, corrosion protection and composites business saw a temporary dip, linked to project delays within fertiliser and non-ferrous sectors.

The Ceramics business continued to invest in future-ready capacity and capability. During the year, the business commissioned a Tunnel Kiln for Engineered Ceramics, enabled high utilisation levels across Metallised Cylinder lines, and activated full- scale ramp up of new kilns and screw presses for high-alumina Refractories. Simultaneously, the business is building dedicated infrastructure to support emerging applications in Semiconductors, Fuel Cells, Defence, and E-mobility - positioning the business for longterm strategic relevance. Looking ahead to FY 2025-26, the consolidated Ceramics revenue is anticipated to grow due to rising demand from key sectors leading the energy and digital transitions, including Clean Energy,

Power Distribution, AI Data Centres, and Semiconductors. Our aim is to scale specialised Ceramics and fortify our core Refractory offerings in India and overseas.

Super Refractories is focused on building a scalable, globally competitive platform out of India. Leveraging our proven expertise in monolithics and fired products, coupled with strategic relevance of segments, such as carbon black, cement, and petrochemicals, the business is well-placed to address domestic demand and capitalise on burgeoning export opportunities.

Our portfolio of other businesses, while accounting for a smaller share of consolidated revenue, play a vital role in driving diversification, innovation, and long-term growth. Southern Energy Development Corporation Limited (SEDCO) reported revenue of '297 Million in FY 2024-25, recording a fall of 9% as opposed to the previous year. However, loss after tax narrowed significantly to '11 Million. The business made the strategic decision not to renew the gas supply agreement from ONGC in December 2024 due to the non-viability of the business owing to rising gas price. SEDCO will continue to focus on solar energy solutions, aligned with our broader sustainability agenda.

Net Access India Limited, our IT facility management subsidiary, achieved revenue of '597 Million, with a growth of 4.2%. Profit after tax moderated to '23 Million compared to '34 Million the previous year, reflecting planned investments in capability development and scale. These efforts are intended to enhance long-term resilience and value creation.

PLUSS Advanced Technologies Limited recorded a revenue of '806 Million, with a strong revenue growth of 31%. The business continues to be a front-runner in thermal management and specialty materials innovation. Loss after tax stood at '36 Million, slightly higher than the previous year, however consistent with its ongoing investment-led growth strategy. Joint ventures with Morgan Advanced Materials; Murugappa Morgan Thermal Ceramics Limited & CIRIA India Limited performed well during the last financial year.

Collectively, these businesses serve as catalysts for the Group's innovation agenda, sustainability aspirations, and long-term diversification strategy. By supporting their progress through targeted investments and disciplined execution, CUMI remains committed to amplifying value and strengthening resilience.

CUMI's commitment to excellence was celebrated through several prestigious accolades during FY 2024-25. CUMI received the esteemed Golden Peacock Award for Risk Management from the Institute of Directors - a sound endorsement of our governance maturity. Our Abrasives division was recognised with the Silver Medal at the National Award for Manufacturing Competitiveness, while the Electrominerals division earned the distinguished IEI Industry Excellence Platinum Award.

Multiple business units earned safety and manufacturing excellence awards, reaffirming our culture of safety, operational discipline and accountability. The Company celebrated excellence through the SHINE Awards, which recognised employees who embody the Murugappa Group's Five Lights which are Integrity, Passion, Quality, Respect, and Responsibility. These recognitions reaffirm our pursuit of quality, consistency, innovation, and responsible business practices.

CUMI's enduring strength lies in the calibre, commitment, and creativity of our people. Our learning and development agenda focused on enhancing leadership, aligning performance, and strengthening functional capabilities. By fostering open communication, inclusivity, and a culture of recognition, the Company continues to build trust and unity across the organisation. I extend my heartfelt gratitude to all employees for their unwavering dedication towards the continued growth of CUMI.

At CUMI, our CSR philosophy is centred on the belief that 'prosperity in harmony with people and planet' is the path to collective and sustainable progress.

In FY 2024-25, this guiding principle continued to shape our initiatives across 4 core areas, healthcare, education, skill development, and environment. Our CSR programmes are thoughtfully designed and implemented to drive a long term impact, going beyond one-time contribution.

At CUMI, sustainability is a core business imperative, reflected in the formation of a new function - Environment, Health and Safety (EHS). Our efforts are guided by measurable goals, a long term vision, and responsible resource management. The Company is set to achieve the 2030 Sustainability targets with 2025 as new baseline. Our ambition is to lead the industry in sustainable and responsible manufacturing practices, while building advanced, differentiated solutions across Abrasives, Electrominerals, and Ceramics.

In FY 2024-25, the Company undertook pivotal leadership transitions, reaffirming our commitment to future-readiness.

The Senior Leadership Team was strengthened with the on boarding of new functional heads for IT, Finance, and HR, along with the creation of critical roles, including Head of EHS and Head of the Manufacturing Centre of Excellence. This organisation strengthening, is in line with strategic focus on building a high performance organisation to achieve our long term aspirations. Towards the end of the year, Trevor Allen, who has been leading our Australian subsidiary - CUMI (Australia) Pty Limited (CAPL), for over 25 years, retired from service.

We thank Trevor for his long association with CAPL as its Managing Director and for being instrumental in the growth of the Industrial Ceramics business of CUMI not only in Australia but globally. We also extend a warm welcome to the new leadership in CAPL comprising of Scott Hemmings and Susil Kumar as the subsidiary's joint Managing Directors and Craig Allen who has taken up the directorship role. We wish them great success.

The Board composition also underwent changes last year with Mr. Sanjay Jayavarthanavelu, Mr. Aroon Raman, and Mrs. Soundara Kumar retiring after completing their tenure of office. I thank them for their time and involvement in the Company. Their guidance and commitment were instrumental in shaping CUMI's journey. I welcome Mr. Sriram Viji and Ms. Usha Rajeev as Independent Non-Executive Directors and Mr. Muthu Murugappan as a NonExecutive Director. We are pleased to share that Ms. Usha Rajeev now chairs the Audit Committee, following Mr. Jayavarthanavelu's retirement. Their association will be a valuable asset to the Company, and I look forward to working together and drawing from their collective experience to steer the Company toward continued growth and transformation.

The CUMI team, ably led by Mr. Sridharan Rangarajan and colleagues in India and worldwide have worked tirelessly in the face of many challenges. I thank them for their dedication, diligence, and sincerity of purpose towards building a robust institution while embracing and spearheading change. These changes bring renewed depth, agility, and perspective to our governance and strategic direction. With a strong Board and leadership team in place, I am confident that CUMI is well- poised to navigate the growth trajectory with greater resilience and sharper focus.

The journey of FY 2024-25 stands as a reflection of our shared purpose and collective strength. At this crucial juncture,

I express sincere appreciation to all our stakeholders - employees, customers, suppliers, dealers and channel partners, authorities, bankers, investors, and communities. As shareholders, your trust, collaborative spirit, and proactive engagement inspires us to reach higher and strive harder. The year, just gone by, reinforced the values of resilience and adaptability, while it reaffirmed our belief in long-term thinking, responsible action, and innovation-led transformation. As we move ahead, let us come together with renewed focus - Strengthening Our Core, Steering Strategic Growth.

Best regards,

Chairman.