AMS Polymers Ltd Management Discussions

INDUSTRY AND ECONOMY OVERVIEW

Chemical Industry is one of the oldest industries in India, which contributes significantly towards industrial and economic growth of the nation. Since this industry has numerous forward and backward linkages, it is called the backbone of the industrial and agricultural development of the country and provides building blocks for many downstream industries.

Covering more than 80,000 commercial products, Indias chemical industry is extremely diversified and can be broadly classified into bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers, and fertilisers. India is the 6th largest producer of chemicals in the world and 3rd in Asia, contributing 7% to Indias GDP. Indias chemical sector, which was estimated to be worth around Rs. 21,50,750 crore (US$ 250 billion) in 2024, is anticipated to grow to US$ 300 billion by 2025 and Rs. 86,03,000 (US$ 1 trillion) by 2040.

Globally, India is the fourth-largest producer of agrochemicals after the United States, Japan and China. India accounts for 16-18% of the worlds production of dyestuffs and dye intermediates. Indian colourants industry has emerged as a key player with a global market share of ~15%. The countrys chemicals industry is de-licensed, except for a few hazardous chemicals. India has traditionally been a world leader in generics and biosimilars and a major Indian vaccine manufacturer, contributing more than 50% of the global vaccine supply. India holds a strong position in exports and imports of chemicals at a global level and ranks 14th in exports and 8th in imports at the global level (excluding pharmaceuticals). From (April-February) FY25, Indias dye exports (Dyes and Dye Intermediates) totaled Rs. Rs. 20,088 crore (US$ 2.3 billion).

In March 2025, production levels of various chemicals were as follows: a. Soda Ash: 299.27 (‘000 MT) b. Caustic Soda: 320.43 (‘000 MT) c. Liquid Chlorine: 223.72 (‘000 MT) d. Formaldehyde: 31.03 (‘000 MT) e. Pesticides and Insecticides: 19.18 (‘000 MT)

Indias proximity to the Middle East, the worlds source of petrochemicals feedstock, enables it to benefit on economies of scale

High potential for growth in chemical industry

The global chemical industry grew modestly in 2024, driven by demand for energy transition materials and sustained demand from sectors like construction and electronics, though the housing market was a challenge. Indias chemical sector saw strong growth, with its market size projected to grow from $220 billion to $300 billion by 2025, fueled by rising domestic consumption and government efforts to increase self-sufficiency. Key growth drivers for the Indian market included increased domestic demand from agriculture, pharmaceuticals, automotive, electronics, and construction sectors

India is the sixth largest chemical producing countries in the world and third largest producer in Asia. It is also among the top 3 basic chemical producing countries globally. The Chemicals and Petrochemicals market in the country is worth US$ 178 billion and is expected to reach US$ 300 billion by 2025. The industry employs around 2 million people in India. The Country ranks 14^th in the global export of chemicals (excluding pharmaceutical products) with 2.5% contribution to global chemicals sales. Chemical manufacturing in India is mainly concentrated in Maharashtra and Gujarat. The Other major producing states are West Bengal and Tamil Nadu.

Markert Size

The global chemical industry grew modestly in 2024, driven by demand for energy transition materials and sustained demand from sectors like construction and electronics, though the housing market was a challenge. Indias chemical sector saw strong growth, with its market size projected to grow from $220 billion to $300 billion by 2025, fueled by rising domestic consumption and government efforts to increase self-sufficiency. Key growth drivers for the Indian market included increased domestic demand from agriculture, pharmaceuticals, automotive, electronics, and construction sectors.

An investment of Rs. 8 lakh crore (US$ 107.38 billion) is estimated in the Indian chemicals and petrochemicals sector by 2025. Specialty chemicals account for 20% of the global chemicals industrys US$ 4 trillion, with Indias market expected to increase at a CAGR of 12% to US$ 64 billion by 2025.

This gain would be driven by a healthy demand growth (CAGR of 10-20%) in the export/end-user industries. The Department of Chemicals & Petrochemicals intends to bring PLI in the chemical & petrochemical sector and will redraft the Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) guidelines.

The global chemical industry grew modestly in 2024, driven by demand for energy transition materials and sustained demand from sectors like construction and electronics, though the housing market was a challenge. Indias chemical sector saw strong growth, with its market size projected to grow from $220 billion to $300 billion by 2025, fueled by rising domestic consumption and government efforts to increase self-sufficiency. Key growth drivers for the Indian market included increased domestic demand from agriculture, pharmaceuticals, automotive, electronics, and construction sectors.

Growth of Chemical Industry

• Rise in demand from end-user industries such as food processing, personal care and home care is driving development of different segments in Indias specialty chemicals market.

• Exports of Chemicals and allied Products reached Rs. 9,28,119 crore (US$ 108.59 billion) during FY25.

• Chemicals and petrochemicals demand in India is expected to nearly triple and reach US$ 1 trillion by 2040.

• India is the 6th largest producer of chemicals in the world and 3rd in Asia, contributing 7% to Indias GDP.

The Indian chemical industry is experiencing robust growth and is projected to reach US$300 billion by 2025 and US$1 trillion by 2040, according to IBEF. This growth is driven by increased domestic consumption, rising exports, and investments in infrastructure like Petroleum, Chemical, and Petrochemical Investment Regions (PCPIRs). The industry is also benefiting from government initiatives and a focus on specialty chemicals and agrochemicals.

Investment and recent Developments

A few recent developments/investments in the Indian chemical sector are as follows:

? In FY25 exports of organic chemicals stood at Rs. 67,162 crore (US$ 7.8 billion) & inorganic stood at Rs. 19,426 crore (US$ 2.27 billion). ? Imports of organic chemicals were Rs. 1,28,470 crore (US$ 15.03 billion) and inorganic chemicals Rs. 51,034 crore (US$ 5.97 billion) from FY25 (April February).

? In FY25 (April February), Imports of castor oil, essential oil, and cosmetics and toiletries stood at Rs. 21,981 crore (US$ 2.57 billion). ? In FY25 (April February), the export of agrochemicals was Rs. 32838 crore (US$ 3.8 billion), dyes were Rs. 18,778 crore (US$ 2.2 billion) and the other dye intermediates were Rs. 1,179 crore (US$ 138 million). ? The import of agrochemicals was Rs. 12,624 crore (US$ 1.48 billion), dyes were Rs. 2,526 crore (US$ 295.5 million) and the other dye intermediates were Rs. 10,498 crore (US$ 1.23 million) during FY25 (April February). ? After three years of discussions, the UK and India have finalized a landmark Free Trade Agreement (FTA). The agreement removes tariffs on 99% of Indian exports and reduces duties on 90% of UK exports to India, with the chemical industry standing out as one of the major winners. ? FDI inflows in the chemicals sector (other than fertilizers) reached Rs. 1,42,647 crore (US$ 23.2 billion) in FY25. ? An investment of Rs. 8 lakh crore (US$ 107.38 billion) is estimated in the Indian chemicals and petrochemicals sector by 2025.

Government Initiatives

The government has started various initiatives such as mandating BIS-like certification for imported chemicals to prevent dumping of cheap and substandard chemicals into the country.

The Indian government recognizes the chemical industry as a key growth element and is forecast to increase share of the chemical sector to ~25% of the GDP in the manufacturing sector by 2025.

• Under the Union Budget 2025-26 the government allocated Rs. 1,61,965 crore (US$ 18.7 billion) to the Ministry of Chemicals and Fertilizers.

• In February 2025, the government has implemented enhanced quality compliance requirements via Quality Control Orders (QCOs) for more than 150 products across various sectors, including household appliances and industrial materials. This initiative, overseen by the Bureau of Indian Standards (BIS), aims to enforce stricter safety and performance standards.

• In April 2023, the Cabinet approved the National Medical Devices Policy, 2023.

• The Department of Chemicals & Petrochemicals intends to bring PLI in the chemical & petrochemical sector and will redraft the Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) guidelines.

• PLI schemes have been introduced to promote Bulk Drug Parks, with a budget of Rs. 1,629 crore (US$ 213.81 million).

• The Government of India is considering launching a production-linked incentive (PLI) scheme in the chemical sector to boost domestic manufacturing and exports.

• A 2034 vision for the chemicals and petrochemicals sector has been set up by the government to explore opportunities to improve domestic production, reduce imports and attract investments in the sector. The government plans to implement a production-link incentive system with 10-20% output incentives for the agrochemical sector; to create an end-to-end manufacturing ecosystem through the growth of clusters.

• 00% FDI is allowed under the automatic route in the chemicals sector with a few exceptions that include hazardous chemicals. FDI inflows in the chemicals sector (other than fertilizers) reached Rs. 1,39,776 crore (US$ 22.8 billion) between April 2000-September 2024.

• The government has proposed several incentives for setting up a sourcing or manufacturing platform within an Indian SEZ:

• Effective April 1, 2020, 100% Income Tax exemption on export income for SEZ units for the first five years, 50% for the next five years thereafter and 50% of the ploughed back export profit for the next five years.

• Single window clearance for central and state-level approvals.

• Duty-free import/domestic procurement of goods for development, operation and maintenance of SEZ units.

Road Ahead

Despite the pandemic situation, the Indian chemical industry has numerous opportunities considering the supply chain disruption in China and the trade conflict between the US, Europe and China. Anti-pollution measures in China will also create opportunities for the Indian chemical industry in specific segments.

Additional support, in terms of fiscal incentives, such as tax breaks and special incentives through PCPIRs or SEZs to encourage downstream units will enhance production and development of the industry. The dedicated integrated manufacturing hubs under the Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) policy to attract an investment of Rs. 20 lakh crore (US$ 276.46 billion) by 2035.

To bring about structural changes in the working of the domestic chemical industry, future investments should not only focus on the transportation of fuels such as petrol and diesel but also on crude-to-chemicals complexes or refineries set up to cater to the production of chemicals.

SWOT ANALYSIS

Strength/Potentials Weakness/Problems

Investment Incentive Policy	Less used of technical niche
Educational Supply	Inability of Production diversification
Industrial development strength	Improper productivity improvement tools implementation
Strong Local Market potential	Relatively small scale by international standards
Guiding national policies and strategies	Insufficient hazardous waste processing facilities
Young and talented workforce upcoming	Insufficiency of awareness on R&D
Availability of precious raw materials	Insufficiency of chemical consuming industrial sectors
Opportunities/promises	Threats/Pressures
Human Resource availability	High Chemical Producing companies competition
Government focus on investment policies	Insufficiency of raw matter inputs
Innovation and Collaboration	Environmental impact- analysis
Increasing Demand for New Products	Insufficiency of financial aids and corpus

RISK & CONCERNS

The Companys success largely depends upon the quality and competence of its management team and key personnel.

Attracting and retaining talented professionals is therefore a key element of the companys strategy. The resignation or loss of key management personnel may have an adverse impact on the Companys business, its future financial performance and the result of its operations.

The risks and concerns for Indias chemical industry include environmental pollution (air, water, soil, and greenhouse gases), safety hazards leading to accidents, regulatory complexities and enforcement gaps, dependency on imported raw materials and resulting supply chain disruptions, an infrastructure deficit hindering logistics and operations, a shortage of skilled labor, intense market competition, and increasing pressure to adopt sustainable practices and ESG standards.

INTERNAL CONTROL SYSTEM

The Company has adequate internal audit and control systems. Internal auditors comprising of professional firm of Chartered Accountants has been entrusted with the job to regular conduct the internal audit and report to the management the lapses, if any. Both internal auditors and statutory auditors independently evaluate the adequacy of internal control system. Based on the audit observations and suggestions, follow up, remedial measures are being taken including review thereof. The Audit Committee of Directors in its periodical meetings, review the adequacy of internal control systems and procedures and suggests areas of improvements.

The organization is well structured and the policy guidelines are well documented with pre-defined authority. The Company has also implemented suitable controls to ensure that all resources are utilized optimally, financial transactions are reported with accuracy and there is strict adherence to applicable laws and regulations. The Company has put in place adequate systems to ensure that assets are safeguarded against loss from unauthorized use or disposition and that transactions are authorized, recorded and reported.

The Audit Committee of Directors in its periodical meetings reviews the adequacy of internal control systems and procedures and suggests areas of improvements. Needless to mention, that ensuring maintenance of proper accounting records, safeguarding assets against loss and misappropriation, compliance of applicable laws, rules and regulations and providing reasonable assurance against fraud and errors will continue to remain central point of the entire control system.

HUMAN RESOURCES

Human resource is considered as key to the future growth strategy of the Company and looks upon to focus its efforts to further align human resource policies and processes to meet its business needs. The Company aims to develop the potential of every individual associated with the Company as a part of its business goal. Respecting the experienced and mentoring the young talent has been the bedrock for the Companys growth.

Human resources are the principal drivers of change. They push the levers that take futuristic businesses to the next level of excellence and achievement.

CAUTIONARY STATEMENT

Investors are cautioned that this discussion contains statements that involve risks and uncertainties. Words like anticipate, believe, estimate intend, will, expect and other similar expressions are intended to identify "Forward Looking Statements".

The company assumes no responsibility to amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events. Actual results could differ materially from those expressed or implied. Important factors that could make the difference to the Companys operations include cyclical demand and pricing in the

Companys principal markets, changes in Government Regulations, tax regimes, economic developments within India and other incidental factors.

	For and on Behalf of the Board of
	AMS Polymers Limited
	(Formerly, Sai Moh Auto Links Limited)
	Sd/-
	(Anand Kumar)
Date: 01st September, 2025	Managing Director
Place: New Delhi	DIN: 01381489