A-1 Acid Ltd Management Discussions

• INDUSTRY STRUCTURE AND DEVELOPMENTS:

o Global Economy: Financial year 2023-24 witnessed a synchronized growth in both the advanced as well as developing economies across the globe. While the trade activities remained weak overall, some green shoots of recovery had started to emerge towards the end of the year. The ongoing war crisis due to war in different zones in the world has affected the global economy though India being least affected by this, our Industry has seen substantial slowdown .The global economy has started moving up the ladder and is expected to break all the records in the coming financial year.

o Indian Economy: The Indian economy witnessed a cyclical slowdown owing to weak private consumption, sluggish manufacturing activities, muted investments and the constantly rising domestic competiton. The Government of India announced various measures to revive the economy, with the Reserve Bank of India (RBI) complementing with an accommodative policy stance for most parts of the year.

The Government also took significant steps and easing of credit, particularly for the stressed real estate and financial sector. At the same time, measures taken to boost investment, particularly under the National Infrastructure Pipeline, presented green shoots for growth. The world now has more expectations from the Indian economy and we are proving our mettle in every sector. Increasing imports have affected the economy of the industry. Indian manufacturers are facing the impact of imports by providing stiff competition. Moreover in coming times, India has a very good scope for chemical manufacturing Industries.

CHEMICAL INDUSTRY OVERVIEW: The world landscape of the chemical industry is rapidly changing. The western countries are losing their share due to high energy prices, labour cost, and currency appreciation. Though India has trimmed the imports from China, their dumping policy has affected the development in the industry. Thus, emerging countries like India is capitalizing on this, pushing the industry to the next stage through development in technology, innovation and trade. This trend is expected to continue in the future. Though the Chinese Chemical Industry started well during the financial year 2023-24. The Indian Chemical Industry took the first move and performed extraordinarily well. The Apt response and support from the Government in Exports as well as Domestic Business has helped the Chemical Business achieve new Milestones. Meanwhile cheaper imports from Asian/Arabian countries have increased domestic volatility & average costs have come down.

SEGMENTWISE/ PRODUCTWISE PERFORMANCE: Our company deals in following products:

o NITRIC ACID (HNO3) ALL GRADES (18-40%, 61%, 68%, 72%, 98%)

It is also referred to as fuming nitric acid. Depending on the amount of nitrogen dioxide present, fuming nitric acid is further characterized as white fuming nitric acid or red fuming nitric acid, at concentrations above 95%. Nitric acid is the building block chemical for the production of many other chemical compounds. It is used in manufacturing several types of polymers like polyamides and polyurethane. Nitric acid is also commonly used as rocket propellants in the aerospace industry. It is also used for manufacturing nitrogen-based compounds like nylon as well as most of the explosives like trinitrotoluene (T.N.T.), nitroglycerin, amongst others. Other uses include, production of nitrate salts, making dyes, coal tar products and drugs. It is also used mostly for the purification of precious metals like platinum, gold, and silver. In fertilizer production, Nitric acid is used for manufacturing different types of nitrogenous fertilizers like calcium nitrate, ammonium nitrate, etc. Nitric acid is a key component which is also a by-product of Ammonia. Nitric acid is widely used in Steel Industry as well.

o HYDROCHLORIC ACID: Hydrochloric acid is used in the production of organic compounds like vinyl chloride and dichloromethane for plastics or PVC (Polyvinyl Chloride), bisphenol A, and many others. This acid is used to prepare compounds that are used as water treatment chemicals. Some examples include polyaluminium chloride (PAC), iron(III) chloride, ferric acid, an aluminum carbohydrate which are used in treating the water. It is also used in the regeneration of ion exchange resins and it is specifically used to rinse the cations from the resins.This acid is used to purify table salts. Further, HCl is used mostly for regulating the acidity (pH) of solutions and it is used

in controlling the pH of pharmaceutical products, foods, and water.Hydrochloric acid is used in the production of oil production. Generally, HCl acid is injected into a rock where due to the reaction the rock forms large-pore structures. Now, this significantly assists in oil production. HCL is widely used in Fertilizer industry as well.

o SULPHURIC ACID: Sulphuric acid is a mineral acid with molecular formula H2SO4. It is a colorless, odorless, and syrupy liquid that is soluble in water, in a reaction that is highly exothermic. Its corrosiveness can be mainly ascribed to its strong acidic nature, and if concentrated its dehydrating and oxidizing properties. It is also hygroscopic, readily absorbing water vapour from the air. Sulphuric acid at even moderate concentrations is very dangerous upon contact with skin. The most common use of sulphuric acid (60% of total) is for fertilizer manufacture. It is used in different industries such as - wastewater processing, production of cleaning agents, processing of minerals, producing explosives, detergents and paper industry for the manufacture of aluminium sulfate Used to damage the cancerous cell DNA by the manufacture of chemotherapy drugs. It is used in ointments to treat various skin infections. It is the basic ingredient of topical ointment named Debacterol in the treatment of canker sores.

o METHANOL: Methanol is colorless, volatile, flammable, and poisonous. It is made from the destructive distillation of wood and is chiefly synthesized from carbon monoxide and hydrogen. Methanol is a polar liquid at room temperature. It is used as antifreeze, solvent, fuel, and as a denaturant for ethanol. Methanol can be used as a fuel in several internal combustion engines. The chemical equation for the burning of methanol is given by: 2CH3OH + 3O2 ^ 4H2O + 2CO2

However, the primary disadvantage of methanol as a fuel is that it has a tendency to corrode aluminum and some other metals. Another shortcoming of methanol as a fuel is that its energy density is approximately half of the energy density offered by gasoline. An advantage of methanol as a fuel is that it is relatively easy to store. The storage of liquid methanol is much easier than the storage of hydrogen gas or natural gas. Other merits of this compound include its biodegradability and its short half-life in groundwater. Methanol is widely used in the production of acetic acid and formaldehyde. It is also used in sewage treatment plants since it serves as a carbon-based food source for denitrifying bacteria. A mixture of water and methanol is used in high- performance engines in order to increase power. Methanol is used in the production of hydrocarbons, olefins, and some aromatic compounds. It is also used in the production of methyl esters and methylamines.

o ETHYL ACETATE: This colorless liquid has a characteristic of sweet smell (similar to pear drops) and is used in glues, nail polish remover, decaffeinating tea and coffee, and cigarettes. Ethyl acetate is the ester of ethanol and acetic acid; it is manufactured on a large scale for use as a solvent. Ethyl acetate is used primarily as a solvent and diluent, being favored because of its low cost, low toxicity, and agreeable odor. For example, it is commonly used to clean circuit boards and in some nail varnish removers (acetone is also used). Coffee beans and tea leaves are decaffeinated with this solvent (when supercritical CO2 extraction is not possible). It is also used in paints as an activator or hardener. Ethyl acetate is present in confectionery, perfumes, and fruits. In perfumes it evaporates quickly, leaving the scent of the perfume on the skin. Ethyl acetate is the most common ester in wine, being the product of the most common volatile organic acid - acetic acid, and the ethyl alcohol generated during the fermentation. The aroma of ethyl acetate is most vivid in younger wines and contributes towards the general perception of "fruitiness" in the wine.

o FORMIC ACID: Used as a coagulant for obtaining rubber from latex. As an auxiliary for declining and pickling of fur, fixing of dyes-in leather industry and in processing in textile industry. As an intermediate in manufacturing of basic drugs, plant protection agents, pesticides, vulcanisation accelerators, antioxidants and cleaning agents. Used in preservation of silage and grams. Used in electroplating and as a solvent as well. A major use of formic acid is as a preservative and antibacterial agent in livestock feed. In Europe, it is applied on silage, including fresh hay, to promote the fermentation of lactic acid. Beekeepers use formic acid as a miticide against the tracheal mite. Formic acid application has been reported to be an effective treatment for warts. Formic acid can be used in a fuel cell (it can be used directly in formic acid fuel cells and indirectly in hydrogen fuel cells).

o CALCIUM CARBONATE: Calcium Carbonate is a white, odourless powder or colourless crystals. Precipitated calcium carbonate (CAS: 471-34-1) is produced industrially by the decomposition of limestone to calcium oxide followed by subsequent recarbonization or as a by-product of the Solvay process (which is used to make sodium carbonate).

o TECHNICAL GRADE UREA(TGU): Technical Grade Urea is an organic compound. Urea serves an important role in the metabolism of nitrogen-containing compounds. Urea is widely used in fertilizers as a source of nitrogen and is an important raw material for the j chemical industry. It is a colorless, odorless solid, highly soluble in water, urea is basically J non-toxic. The human body uses urea in many processes, most notably nitrogen I excretion.one of the most important use of T.G.Urea is manufacturing of Diesel Exhaust Fuel (DEF).

o ACETIC ACID: Acetic Acid is used in textile industries for textile processing and printing. Acetic acid is one of the simplest carboxylic acids. It is an important chemical reagent and industrial chemical that is used in the production of plastic soft drink bottles, photographic film; and polyvinyl acetate forwood glue, as well as many synthetic fibres and fabrics.

o SODIUM HYPOCHLORITE: Sodium hypochlorite is an excellent steriliser, oxidiser and decolouring agent. It is used to make disinfectants and a variety of pharmaceutical drugs. It is also widely used for water treatment. In the process, sodium hypochlorite (NaClO) and sodium chloride (NaCl) are formed when chlorine is passed into a cold dilute sodium hydroxide solution. The solution must be kept below 40 ?C (by cooling coils) to prevent the undesired formation of sodium chlorate.

o OLEUM: Oleum is a cloudy, gray, fuming, oily, corrosive liquid, with a sharp, penetrating odor. Its composition is that of H2SO4 with dissolved SO3.

o FORMALDEHYDE & PARAFORMALDEHYDE: Formaldehyde-based resins are used for making particle boards, medium density fibreboard, plywood, cabinets, laminated countertops and insulation. Throughout the chemical industry and in the production of textile binders and paints.

o CAUSTIC SODA LYE/ FLAKES: Caustic soda is also known as lye or sodium hydroxide and is widely used in alumina refineries and in the manufacture of soaps and detergents, viscose fibre production and zeolite. It is also a raw material for a large number of chemicals used in the paper, textiles, dyes, refinery and other industries.

Considered to be the most common base in chemical laboratories, caustic soda also finds . use in the production of food additives.

o HF-60%: Hydrofluoric (HF) acid is used mainly for industrial purposes (e.g. glass etching metal cleaning, electronics manufacturing). HF acid also may be found in home rus removers. HF solutions are particularly used in the glass industry (frosting, staining), i crystal activities (defrosting) and in ceramics activities. Also, in the metallurgical field, thes grades are used in surface treatment, cast-iron-steel and stainless steel cleaning. HI solutions are also used in other more general applications such as the separation of rare earth, or utilized as a catalyst.

PROVIDING LIQUID CHEMICAL TRANSPORTATION ALL OVER INDIA: Our Company provides transportation facilities to our customers through our owned fleet of tankers. Our products are marketed and sold PAN India. The products are provided to the customer on demand basis and as and when demand arises, the product is procured from the suppliers including companies like Gujarat Narmada Valley Fertilizers Company Limited (GNFC), Gujarat State Fertilizers & Chemicals Limited (GSFC), Hindalco Industries, Nirma Ltd, SRF Ltd, KIRI Industries, GACL, Grasim Industries & many other Industrial Units and is made available to the customer.

• OUTLOOK: Our company is focusing on cost reduction measures as well as to improve processes to enhance customer satisfaction which will have a long term benefit in helping our company to achieve its goals and scale new heights in the growth path. This will not only help us in providing products at better economical & competitive rates but will also give us an overall ace in the Industrial Chemical Sector. With a good order book and customer support and the product variety in hand, we expect good growth in the whole year. With a play towards very high volume/low price materials, we are expecting a very different outcome in terms of sales in the year.

• RISKS AND CONCERNS: Our Company had put a risk management framework in place by the defined statements of purpose, post a comprehensive review of its risk management process. Our Company takes a fresh look at the risk management framework through our Audit Committee at least once in a year. The review involved understanding the existing risk management initiatives and assessment of risks in the businesses as the relative control measures and arriving at the desired counter measures keeping in mind the risk appetite of the organization. The audit Committee has periodically reviewed the risks in the business and recommended appropriate risk mitigating actions.

The business of the Company is likely to be affected by various internal and external risks enumerated as under:

o Our success depends largely upon the services of our Promoter, Directors and other key managerial personnel and our ability to attract and retain them.

o The prices we are able to obtain for the products that we trade depend largely on prevailing market prices.

o We face intense competition in our businesses, which may limit our growth and prospects.

o Global economic, political and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price.

o Global recession and market conditions could cause our business to suffer.

o Natural calamities and changing weather conditions caused as a result of global warming could have a negative impact on the Indian economy and consequently impact our business and profitability.

o Tax rates applicable to Our Company may increase and may have an adverse impact on our business.

o Political instability or changes in the Government could adversely affect economic conditions in India generally and our business in particular. As a responsible employer, to ensure occupational safety and employment standards, your Company maintains strict safety and quality control programs to monitor and control these operational risks.

• INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY: The Company implemented suitable controls to ensure its operational, compliance and reporting objectives are achieved. The Company has adequate policies and procedures in place for its current size as well as the future growth needs. These policies and procedures play a pivotal role in the deployment of the internal controls. They are regularly reviewed to ensure both relevance and comprehensiveness, and compliance is ingrained into the management review process. These policies are regularly followed and updated to bring out the best efficiency out of the resources.

Adequacy of controls of the key processes is also being reviewed by the Internal Audit team. Suggestions to further strengthen the process are shared with the process owners and changes are suitably made. Significant findings, along with management response and status of action plans are also periodically shared with and reviewed by the Audit Committee. It ensures adequate internal financial control exists in design and operation.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

On a standalone basis, the revenue from operations for FY 2023-24 was Rs. 20613.97 Lakhs under the previous years revenue from operations of Rs. 33059.80 Lakhs Net Profit after tax for FY 2023-24 was Rs. 109.64 Lakhs against the previous years Net Profit after tax of Rs. 361.42 Lakhs.

On a consolidated basis, the revenue from operations for FY 2023-24 was Rs. 20613.97 Lakhs over the previous years revenue from operations of Rs.33059.80 Lakhs. Net Profit after tax for FY 2023-24 was Rs. 109.64 Lakhs against the previous years Net Profit after tax of Rs. 361.42 Lakhs.

On standalone and consolidated basis Earnings per Share for FY 2023-24 was Rs. 0.95 against the previous years Earnings per Share of Rs. 3.14.

• MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED: We believe that our employees are key contributors to our business success. We focus on attracting and retaining the best possible talent. Our Company looks for specific skill-sets, interests and backgrounds that would be an asset for our business.

Our HR Department ensures a competent and committed team engaged in building a culture of learning to achieve excellence in performance and employee satisfaction by enhancing their skills through Training & Development Programs for innovation & continual improvement of the employees. At A-1 Acid Limited, we lay a lot of emphasis on transparent and open two-way communication between the management and the employee.

• SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

Reason For Variance above 25% in ratios

1 Return on Equity, , Net Profit Ratio & Return on Capital Employed Ratio: The Return ratios have deteriorated on account of decreased profitability vis a vis last year

2 Net Capital Turnover:The ratio has declined on account of drop in revenue from operations vis a vis last year

3 Inventory Turnover & Receivable Turnover Ratio: The ratios have deteriorated/increased due to dip in turnover and COGS as same is variable to sale.

4 Trade payable Turnover ratio: The ratio has increase due to increase in credit period.

5 Return on Investment has declined due to losses in associate result and increased investment

6 The company has complied with the number of layers prescribed under clause (87)of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

7 Company has no balance outstanding for transactions done with the Companies Struck Off either under section 248 of the Act or under Section 560 of Companies act 1956.

8 No undisclosed Income is voluntarily disclosed under any scheme identified by Income tax authorities under any tax assessments under the Income Tax Act.

9 The Company has neither traded nor invested in crypto currency during the financial year.

10 No Proceedings have been initiated or pending against the company for holding any benami property under the

Benami Transactions (Prohibition) Act, 1988 (45 of 1988).

11 The Company donot have charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

12 The Company is not declared as willful defaulter by any bank or Financial Institution or other lender.

13 Utilisation of Borrowed funds and Share Premium

a) During the year, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

b) During the year, no funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

• DISCLOSURE OF ACCOUNTING TREATMENT: The Company adopted Indian accounting standard ("Ind As") prescribed under section 133 of the companies act, 2013 read with relevant rules issued there under and in terms of Regulation 33 of the SEBI (LODR) Regulations, 2015 and the Companies (Indian accounting Standards) (Amendment) Rules, 2016. Beginning April 1,2020 the company has for the first time adopted IND AS with the transition date of April 1,2019.

• CAUTIONARY STATEMENT: Readers are cautioned that this Management Discussion & Analysis pertaining to A-1 Acid Limited contains forward-looking statements that involve risks and uncertainties. When used in this discussion, the words "anticipate," "believe," "estimate," "intend," "will," and "expected" and other similar expressions as they relate to the Company or its business are intended to identify such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Actual results, performances or achievements, risks and opportunities could differ materially from those expressed or implied in these forwardlooking statements. Readers are cautioned not to place undue reliance on these forward-looking statements as these are relevant at a particular point of time and adequate restraint should be applied in their use for any decision making or formation of an opinion. This document does not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company. This document neither gives any guarantee of return nor any recommendation of investment in the securities of the Company.