Paramount Communications Ltd

Dear Shareholders,

The ideology is exactly what we have followed at Paramount Communications and made each passing reporting period a milestone. FY 2023-24 is marked by our true progress in strategic endeavors and posted stellar growth in the charts. This further facilitated a strong value return to the stakeholders who kept their faith and positioned us among the market leaders in the wires and cables industry. Our focus and determination remained resolute during the period to transform the operations and regularly outperform our best performance so far.

Capitalizing on the contemporary market opportunities, we have up-scaled our performance to register our highest-ever revenue surpassing ' 10 Billion mark. Keeping the momentum alive, we are constantly looking for other business prospects in the wires and cables industry and expanding outreach to capture a greater market share. Thus, "Unleashing PARAMOUNT Growth" exemplifies the approach we have adopted for the organization to attain greater goals in the near future.

MACRO-ECONOMIC RESILIENCE THAT GAVE THE INITIAL BOOST

Post tackling a series of slowdowns due to multiple headwinds, the global economy has posted resilient sustained growth.

The momentum has added to the business sentiment around the globe and positively impacted the adjacent environment. The advanced economies are expecting a growth rate of 1.7% and 1.8% for CY 2024 and 2025 respectively, whereas, the emerging markets and developing economies expect to maintain a growth rate of 4.3% in CY 2024 and 2025. The overall global economy is more likely to grow by 3.2% and 3.3% in CY 2024 and 2025.

Amidst the resilient global economic performance, the Indian economy has been continuing with a solid momentum for quite some time. The country has achieved the fifth-largest position among the global economic contenders while posting a GDP growth rate of 8.2% in FY 2023-24 according to NSO. Strong domestic demand coupled with public-private partnership investment has majorly supported the growth. Additionally, the pent-up budgetary allocation of Rs. 11.11 Lakh Crore to the country's infrastructure regime has provided an extra boost to the country's overall growth along with creating opportunities for us to scale the business. With inflation being at moderate levels and prudent Government strategies in place, the momentum is much more likely to impact us positively in the longer run and sustain our momentum.

INDUSTRIAL OPPORTUNITIES TO SET THE MOMENTUM

Assessing the opportunity landscape for wires and cables in the Indian context, the trajectory seems to be in the upward momentum with lucrative demand generated from the country's infrastructure regime such as the National Infrastructure Pipeline, rural electrification, renewable energy, RDSS (Revamped Distribution Sector Scheme), Rail connectivity, smart cities, data centers and Digital India. Besides the

Government, private infrastructure/construction-linked sectors are also adding up to the opportunities in the market while a higher level of private sector financing and resource mobilization from new sources is crucial to sustain growth. This will add to robust power demand in future and create opportunities for our products. Additionally, various targeted initiatives to boost domestic production like Make in India, and Production Linked Incentive (PLI) schemes are going to add to our competency in the further run. These initiatives will ultimately uplift our credibility to cater for the market demand effectively.

According to Motilal Oswal Financial Services, the wires and cables industry is likely to grow with a 12-14% CAGR between FY 2022-23 and FY 2026-27. The growth will be supported by increased traction in the infrastructure and real estate sectors. The wires and cables constitute ~39% of the total electrical industry and form an integral part of construction and infrastructure activities. While the domestic figures seem promizing in the charts, the international business of wires and cables is also maintaining a steady momentum. India is amongst the largest exporter of wires and cables in the world, trailing behind China and Vietnam. These trends will lead to growing the domestic industry on a global stage and creating ample opportunities for players like us in the industry. Further, this will enable us to participate in the nation's development and ensure greater socio-economic prosperity.

STRATEGICAL ADVANCEMENTS TO POST STELLAR GROWTH

Our strategic advancements have supported the robust growth so far and are reflected in FY 2023-24 results as well. One of the notable advancements is our Rs. 10,000 Million+ revenue mark. Another long-term success is our ARC debt-management which we have closed as on the date of this report. This highlights our ability to carry forward the strategic decisions undertaken to sustain the growth momentum created with hard work and resilience. The diversified product portfolio we have created is targeted towards meeting the incremental dynamic demand of the customers domestically and abroad. Moreover, our strong technical capabilities and stringent quality parameters to obtain region-specific certifications and approvals have added to our strengths to operate effectively in international regions. These approvals have been received from international agencies including Underwriters Laboratories USA and LPCB UK, and various leading customers and Government organizations like NTPC, PGCIL, DMRC, MMRC, L&T, Siemens, Tata Power, ABB, BSNL, Reliance, Adani, Kalpataru, Hitachi, JSW Steel, etc. Along with the international approvals, the capital infusion of ?2,723 Million with the objective of debt repayment, Capex for upgradation of plant & machinery and addition of production capacity has opened up new market opportunities and scale growth on our already diversified base. These efforts have added robustness to us as a brand and enabled us to uphold the customers' trust as a preferred partner-in-growth. During the reporting period, our revenue from exports has registered to Rs. 2,761 Million, 10X+ since FY 2019-20.

To keep the growth momentum alive while meeting the customers' demands effectively, we have made all-out efforts to enhance production and expand our dealer network.

Our debottlenecking and greenfield expansion plans are on track with Rs. 510.4 Million capex investment in FY 2023-24. This, along with further capex being incurred will lead to an increase in our production capacity to around 33,000 MT of metals per annum. Further, the increasing number of new onboarded dealers will ensure widespread product availability and accessibility with a greater market penetration. Further, to enhance our competitive advantage, we have optimized our operations with a robust digital infrastructure. We have integrated latest technologies like SAP and CRM software to automate various operations procedures which will lead to minimizing human error and generate optimal results. To this extent, the launch of our "Paramount Parivar" app will enable direct connection with our stakeholders like retailers and electricians, fostering an effective dialogue to value creation.

Going forward, we have undertaken the following strategies during the reporting period.

S6: Human resource management

(Read more about our strategies in Pages 14-17)

FINANCIAL PERFORMANCE ATTRIBUTING OUR DISCIPLINE

Our disciplined approach to financial robustness is attributed to the revenue growth of 39% in FY 2022-23 and 30% in FY 2023-24. Despite facing financing constraints from the banks, we held our resilience to the heights and achieved the milestone. Strong demand for our products and healthy relationships with the clients has enabled us to cherish the landmark of success in such a short time. Further, our prudence and efficiency have been reflected through our enhanced profitability. We have proved the robustness of our business model with the EBITDA margins improving from 4.1% in FY 2021-22 to 7.9% in FY 2022-23 and 9.1% in FY 2023-24 and PAT margins increasing from 1.4% in FY 2021-22 to 5.9% in FY 2022-23 and 8.1% in FY 2023-24. The achievements together highlighted our ability to generate sustainable value for our stakeholders while maintaining a strong financial position.

Delineating our balance sheet performance, on a consolidated basis, our revenue from operations has marked the historical figures of Rs. 10,786 Million with 32.7% y-o-y growth. EBITDA grew by 51.5% y-o-y to Rs. 973 Million on the back of increasing scale of operations, and efficient cost control measures. Further, our efficient tax account management has led to registering the PAT growth by a stellar 79.3% y-o-y to Rs. 856 Million. Delineating our financial discipline, we have been on a comfortable capital structure with an healthy net worth of over Rs. 6,262 Million as of March 2024 post equity infusion of Rs. 3,172 Million over Q4 FY2022-23 to Q4 FY2023-24. We have progressed with our continuous reduction in gross debt levels with debt to equity standing at 0.16 in FY 2023-24 compared to 1.05 in FY 2020-21 which impacted our profitability on a positive note. Our commitment to top-notch quality delivery has gained us an order book of Rs. 4,950 Million as on FY 2023-24 which is giving us a clearer visibility to the revenue flow. Additionally, our strength in nurturing client relationships has added to strengthening the order book status. These accomplishments demonstrate our commitment to prudent financial management and underscore our ability to effectively manage our liabilities, further strengthening our balance sheet.

ACCENTUATING OUR SOCIAL QUOTIENT

Our social responsibility begins with addressing the people who are associated with us regularly. These include our employees, and the people residing in the society. We have revamped our HR practices in recognition of the importance of our people who relentlessly dedicated their efforts and intellects to achieving the greater goal. Nurturing a well-versed workforce, we have undertaken 53 learning and development programs during the reporting period. This encapsulates 159 hours of training time dedicated to a total of more than 1,300 employees. Further, to align our broader goal of inclusive growth with our efforts to nurture the relationship with our people, we have introduced ESOPs for our employees. This is targeted towards motivating them to contribute to achieving the Company's goals and fulfil personal gains as well. Additionally, to nurture a robust workforce, we emphasize top and diverse talent acquisition so that they bring fresh ideas to the table.

Focusing on sustainable growth, we have curated our ESG principles to integrate the sustainability philosophy into each business strategy. We are committed towards minimizing our carbon footprint through efficient energy usage, and waste management practices. This further gets enhanced through our water-positivity approach and biodiversity nourishment activities. Measuring the impact, we have recycled 2,425 Kilolitres of water. To increase the green cover in the vicinity of our facilities, we organize annual plantation programs during the monsoon season, carefully planting a variety of trees including fruit-bearing, medicinal, and flowering species to foster biodiversity preservation and enrichment. During the reporting period, we planted 300 trees to enrich the greenery.

On the CSR front, we identify the most pressing social issues and develop intervention plans to impact people's lives positively. During the reporting period, our initiatives in promoting education, eradicating hunger, community farming, and check dams have benefited 12,847 lives. The initiatives will be carried forward with a target to impact the maximum number of people at a time and create value for them to the fullest of their potential.

THE BEGINNING OF NEW VIGOR

As we step into new times, with fresh opportunities and challenges ahead, it is essential to maintain the mindset that has driven our success so far. The momentum we have built must be carried forward with renewed vigor. We will leave no stone unturned in seizing the opportunities before us and turning them into tangible outcomes. With a dedicated team onboard and an efficient Board guiding us towards leadership, we will continue to accelerate our growth & progress, as we have done up to now.

I would like to take a moment to express my sincere gratitude for the Board's guidance and appreciate the contributions of our people, and above all, our stakeholders, whose trust has enabled us to rise from humble beginnings to our current stature.

Thank you once again. Let's keep achieving our goals, one step at a time, as we leap forward to reach greater heights.

With warm regards,

Sanjay Aggarwal

Chairman and CEO