Advance Petrochemicals Ltd Management Discussions

Your Directors have pleasure in presenting the management discussion and analysis report for the year ended on March 31, 2025.

GLOBAL ECONOMY

The global economy experienced moderate growth of 3.3% in 2024, signalling a period of relative stability coupled with ongoing constraints to expansion. In FY25, policy adjustments have become necessary as geopolitical tensions and economic pressures intensify. The introduction of new tariff measures by the United States prompted immediate and decisive responses from many countries, culminating in the establishment of near universal tariffs from April 2025 and resulting in tariffs reaching levels not previously witnessed. These actions have imposed considerable pressure on global GDP, with the broader economic impact remaining uncertain. This overhang is likely to persist in the global growth outlook. Such developments have significantly heightened economic uncertainty whilst rendering the short-term outlook highly volatile. The reliability of traditional forecasting models have diminished, as it has become increasingly challenging to base estimates on historical assumptions. Within this environment, global headline inflation is projected to moderate at a slower pace than earlier anticipated, with expectations of a decline to 4.3% in 2025 and further easing to 3.6% in 2026. This revision reflects upward adjustments in inflation projections for advanced economies, partially balanced by smaller downward revisions in emerging markets and developing nations. Although uncertainties remain, many economies have shown remarkable adaptability, confirming that recovery can be achieved through proactive reforms, robust institutions and coordinated policy initiatives. Achieving a more balanced and sustainable global recovery will require a shared commitment to transparent trade practices, timely debt resolution and addressing key structural imbalances. Stronger international collaboration and collective resolve remain pivotal in enabling the global economy to regain momentum and pursue sustained, inclusive growth.

GLOBAL CHEMICAL INDUSTRY:

The global chemical industry entered a recovery phase in FY24 and FY25 following a pronounced downturn in 2023. In that year, sector revenues declined by 8% year-on-year amid widespread destocking and muted end-market demand, leading to the lowest operating margins observed since the 2008—09 recession (Deloitte). Industry-wide cost optimisation initiatives contributed to margin improvements by the first half of 2024, enabling a return to growth. According to the American Chemistry Council, global chemical production rose by 3.4% in 2024 and is forecast to grow by 3.5% in 2025 (Deloitte). In value terms, the globalchemicals market is expected to reach approximately USD 6.324 trillion in 2025, up from USD 6.182 trillion in 2024, reflecting a 2.3% annual increase (MarketsandMarkets).

Sector growth has been propelled by stabilising energy and feedstock prices and a resurgence in demand from key sectors such as automotive and electronics. The operating landscape in FY25 is shaped by efforts towards innovation, sustainability and digitalisation, with significant investments in decarbonisation technologies, efficiency enhancements and advanced digital tools. Notably, there is a greater strategic focus on specialty chemicals and customised solutions, given their higher margins relative to commodity products. However, the outlook remains mixed due to macroeconomic uncertainties, evolving trade policies and ongoing supply chain reconfigurations. The Asia Pacific region, driven by China and India, continues to anchor growth, while Europes recovery remains subdued. Persistent overcapacity, particularly in petrochemicals, alongside soft demand in several value chains, constrains pricing and margin recovery. Fitch Ratings has assigned a neutral sector outlook for 2025, citing these dynamics (Indian Chemical News). In this environment, companies are prioritising cost efficiency, supply chain resilience and innovation in sustainable products to maintain their competitive edge and long-term growth trajectory.

INDIAN ECONOMY:

India remained the worlds fastest-growing major economy in FY25 with GDP increasing by 6.5%. Despite experiencing global headwinds such as trade disruptions, geopolitical developments and volatility in financial markets, the Indian economy demonstrated remarkable resilience. This was underpinned by robust macroeconomic fundamentals, policy continuity and a sound monetary system. Growth was primarily driven by substantial public sector investments and largescale infrastructure development, effectively offsetting muted private consumption. The governments emphasis on capital expenditure across transportation, energy and digital infrastructure provided continued momentum even as household spending faced intermittent pressures from elevated inflation Policy efforts consistently promoted a transparent and rules-based environment, fostering both investment and innovation. Structural reforms targeting manufacturing, improved domestic supply chains, rapid digital adoption and sustainability remained at the forefront. The nations medium- and long-term policy direction is guided by the vision of achieving Viksit Bharat (Developed India) by 2047. Looking ahead, the RBI has projected GDP growth at 6.5% for FY26, with inflation anticipated to remain within its 4% target bandwidth, supported by stable commodity prices and steady demand. While macroeconomic and financial indicators are robust, risks such as global uncertainties and evolving geopolitical dynamics could influence market sentiment and trade. Nevertheless, Indias ongoing reforms and resilient economic foundations establish a strong platform for sustained growth and development.

INDIAN CHEMICAL INDUSTRY

Indias chemical industry stands as a vital pillar in the countrys manufacturing sector, contributing approximately 7% to the national gross domestic product. The industry supplies essential raw materials to key sectors such as agriculture, pharmaceuticals, textiles, automotive and construction, underscoring its strategic importance in the domestic industrial ecosystem. India has firmly positioned itself as the sixth-largest producer of chemicals in the world, and the third-largest in Asia. The domestic chemical market was valued at approximately USD 220 billion in 2023. This robust growth trajectory is expected to continue, with market size projected to reach between USD 400 and 450 billion by 2030 and further rising to USD 850

41 to 1,000 billion by 2040, subject to supportive policy frameworks and infrastructure advancements. Despite an encouraging outlook, Indias global presence remains relatively modest, with a share in global chemicals consumption of just 3 to 3.5% as of 2023. The sector has benefitted from industry-wide policy reforms, including the implementation of Goods and Services Tax, greater liberalisation of foreign direct investment and strategic programmes such as Make in India and Aatmanirbhar Bharat. The extension of Production-Linked Incentive schemes to targeted sub-segments has further fostered manufacturing capabilities. However, critical challenges have constrained growth. Notably, the high reliance on imports for petrochemical intermediates and speciality chemicals has resulted in a significant trade deficit. Limited integration with domestic feedstock sources, combined with a predominant focus on commodity chemicals, has impeded advancement up the value chain. Infrastructure limitations, such as inadequate feedstock supply, insufficient shared industrial facilities and logistics inefficiencies, continue to elevate operational costs. Looking ahead, Indias chemical industry is poised for substantial expansion. The domestic market exhibits strength, supported by increasing population, higher disposable incomes and accelerated urbanisation. Demand from end-use sectors including consumer goods, automotive, healthcare and agriinputs continues to offer significant opportunities for growth. Favorable government policy, investment in integrated petrochemical clusters, and improvements in logistics and port infrastructure are expected to address structural constraints progressively. Enhanced focus on energy security and domestic feedstock availability will aid in reducing import dependence. Furthermore, the promotion of green chemistry practices and adoption of circular economy principles are set to underpin sustainable and long-term industry competitiveness.

FINANCIAL RESULTS:

During the year under review, your company managed to achieve consolidated revenue of Rs.50.34 Crores as against Rs. 35.24 Crores which is increased by 42.85 % as compared to last year. Net profit after tax increased by 40 % to Rs.30.22 Lacs as compared to Rs. 21.60 Lacs during the last year.

The entire net profit after tax of Rs. 30.22 lacs is proposed to be transferred to the Statement of Profit & Loss in the form of Surplus of the Company.

The final product of the Company is used as raw material in many manufacturing industries like automobile industries, paints, refineries and has evergreen demand. The Company has continued its effort to tap the export market beside improving the market for its product domestically also and popularizing its use.

PRODUCTS:

Advance Petrochemicals Limited is one of the leading manufacturers of Glycols, Ethylene Oxide Derivatives, Amines, Anti Cooling Agents and Brake fluids. APL have also started the range of surfactant for which it has increase manufacturing capacity of 780 Metric ton Per Annual. The Ethylene Oxide Derivatives produced by the Company are used by diverse industries like Textile, Agrochemicals, Detergents, Pharmaceuticals & Personal Care, Oil Field and Automotive industry, paint & coating industry etc. Glycol Ether is used in Paints, Pharma and Aviation fuel. Brake fluid and Anti-Freeze Coolant is used in passenger and commercial vehicles. Amines are used in refineries.

Sr.no	Products	2024-2025 ( In Quantity )	2023-2024 ( In Quantity )
01	Brake Fluid	289149	315875.85
02	Methyl Cellosolve	831782	698309
03	Methyl Carbitol	172957	204210
04	Butyl Cellosolve	393688	207744
05	P.E.G. 4000	329170	249000

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Glycol Ether

Increasing demand from the automotive industry

Automotive parts are coated with paints and coatings to protect them from moisture, abrasion, chemicals, and high temperature. Glycol ether-based solvents are used in paints and coatings to improve their blush resistance, evaporation rate, solvent release, solubility, and flow out and leveling properties. The demand for automotive paints and coatings will grow among consumers who invest in maintaining their vehicles utmost appearance.

The high growth of the automotive industry especially in APAC will fuel the demand of automotive paints and coatings and consequently drive the growth of the glycol ethers marketat a CAGR of almost 5% during the forecast period. Rising demand for cosmetics products

Glycol ethers are increasingly being used as a low-cost replacement of fatty acid isopropyl esters and as a solvent for ingredients in cosmetics. The demand for cosmetic skin care products is increasing because of factors such as rapid urbanization, the growing popularity of social networks, growth of the upper middle class, and increasing online beauty spending.

With the rising demand for cosmetics products, the demand for glycol ethers is also expected to grow in the forthcoming years. Glycol ethers has also increase demand in agro industries. It has jump it demand to double and it will be upward trend in future. Looking to the same, APL after plan to expand its capacity.

Market Dynamics

The report looks at factors such as the rising demand from the construction industry, growing demand from emerging economies, and increasing demand from the automotive industry. However, fluctuation in raw material cost, stringent regulations and policies, and safe handling and transportation of glycol ethers may hamper the growth of the glycol ethers industry over the forecast period.

Awards / Recognition:

Company has accredited ISO 9001-2001 in year 2001 & other certifications are in progress. Advance Petrochemicals Ltd. products are committed to create premium product that offer superior performance without disturbing environment. Our fundamental aim is to satisfy our customer with the best possible product & service to enjoy our work.

Internal Financial Controls and their Adequacy, Risk Management

The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. The Company periodically discusses and reviews at its Audit Committee and with its auditors the effectiveness of the internal financial control measures implemented by the Company including with reference to the Financial Statements of the Company.

The Company has a proper and adequate system of internal financial controls which includes the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

The systems, procedures, checks and controls are routinely tested and certified by our Statutory as well as Internal Auditors. Moreover, Company continuously upgrades these systems in line with best practices and standards on internal control systems and procedures.

The Company has constituted a Risk Management Committee consisting of Directors and the senior management personnel of the Company to monitor the Risk Management Plan, to identify and mitigate the risk attached to the business of the Company.

Your Companys objective of risk management is to have a meaningful identification, measurement, prioritization of risks or exposures to potential losses on a continual basis through active participation of all members of the Company and accordingly establish controls and procedures to build a visible & structured enterprise-wide risk management framework; reduce the risk levels and mitigate their effects in the likelihood of a risk event with an aim to protect our Company from harm; and have a contingency plan to manage risks having high probability and high impact.

HUMAN RESOURCE/INDUSTRIAL RELATIONS

Company continues to focus on training its employees on a continuous basis both on the job and through training program to face challenges in the business/industry. During the year, industrial relations have been cordial. Total Number of Employees on Companys role has been around 56 as on 31 st March, 2025.

CAUTIONARY STATEMENT

The statement made in this report describing the Companys expectations and estimations may be a forward looking statement within the meaning of applicable securities laws and regulations. Actual results may differ from those expressed or implied in this report due to the influence of external and internal factors which are beyond the control of the Company.

Annexure E

NOMINATION AND REMUNERATION POLICY

1. PREAMBLE

Pursuant to the Section 178 of the Companies Act, 2013 (hereinafter refer as the Act) read with the rule 6 of the Companies (Meeting of the Board and its powers)Rules, 2014 and Regulation 19 of the SEBI(listing Obligations and Disclosures Requirements) Regulations,2015 signed by the Company with the Stock Exchanges, The Nomination and Remuneration committee of the Board of the Company has formulated a remuneration policy to decide the criteria for the appointment and for the remuneration to the Directors, key managerial personnel and other employees.

2. OBJECTIVE

i. To guide the Board in relation to appointment and removal of Directors, Key Managerial Personnel and Senior Management

ii. To evaluate the performance of the members of the Board and provide necessary report to the Board for further evaluation of the Board

iii. To recommend to the Board on Remuneration payable to the Directors, Key Managerial Personnel and Senior Management.

iv. To provide to Key Managerial Personnel and Senior Management reward linked directly to their effort, performance, dedication and achievement relating to the Companys operations

v. To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.

vi. To devise a policy on Board diversity.

vii. To develop a succession plan for the Board and to regularly review the plan

3. CONSTITUTION OF NOMINATION AND REMUNERATION COMMITTEE:

The Board has constituted the Nomination and Remuneration Committee of the Board which is in line with the requirement under the Companies Act, 2013.

The Board has authority to reconstitute this Committee from time to time.

The Committee shall, while formulating the policy ensure that:

• the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate the Whole time Directors, Key Managerial personnel and Senior executives of the quality required to run the Company efficiently;

• relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

• Remuneration to Whole time Directors, Key Managerial Personnel and senior management involves a balance between fixed and variables pay reflecting short and

long term performance objectives appropriate to the working of the company and its goals.

The meeting of the Committee shall be held at such regular intervals as may be required.

Necessary disclosures of this policy shall be made in the Annual Report of the Company in terms of Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

4. CRITERIA FOR BOARD MEMBERSHIP AND BOARD DIVERSITY

a) The Director must have relevant experience in Finance /Law /Management/ Sales/ Marketing/ Administration/ Corporate Governance/ Human Resources or the other disciplines related to Companys business.

b) The Director should possess the highest personal and professional ethics, integrity and values

c) The Director shall not have any material interest with the Company or any of its officers, other than as a director or shareholder of the Company. Wherever required the Director should disclose the nature of his interest, if there are reasons to believe there is or a likely hood of potential conflict of interest.

5. REMUNERATION CRITERIA:

The Policy is largely based on industry benchmarks, the Companys performance visa-vis the industry, peer group comparison, factors like inflation rate in the country and performance of the employees.

a) For the Whole Time Directors/ Executive Directors:

• Nomination and Remuneration Committee shall recommend to the Board, the remuneration, within the maximum limits as set under the Companies Act, 2013, and Rules made there under and subject to the approval of the shareholders as and where applicable.

• Remuneration to whole time director/Executive Director would also depend on the performance and profitability of the company during the year as decided by Nomination and Remuneration committee from time to time. However, no remuneration or any other payments are made to any directors of the company and hence company does not require to have criteria for the same.

b) For the Key Managerial Personnel and Other Employees:

• The remuneration of other KMP and other employees largely consists of basic salary, perquisites, and allowances (both fixed and variable). Perquisites are paid according to the Company policy.

• The components of the total remuneration vary for different grades and are governed by the industry pattern, qualification & experience/merits, performance of each employee. The Company while deciding the remuneration package takes into consideration current employment scenario.

6. POLICY REVIEW & FUTURE AMENDMENT

This policy shall remain in force unless modified by the Remuneration committee.