Arrow Greentech Ltd Management Discussions

Global economy overview:

The global economy displayed resilience in 2024 after navigating an extended phase of unprecedented shocks. However, the recovery continues to face challenges arising from escalating trade tensions, policy realignments, and increased uncertainty. According to the International Monetary Fund (IMF), global GDP expanded by 3.3% in 2024, though growth trends varied significantly across regions. Advanced economies posted modest growth of 1.8%, while emerging markets and developing economies (EMDEs) expanded at a faster pace of 4.3%, highlighting persistent regional imbalances. Inflationary pressures showed signs of easing, with global headline inflation projected to moderate to 4.3% in 2025 and further decline to 3.6% in 2026. Tight monetary policies implemented by major central banks have been effective in containing inflation, though long-term stability will depend on sustained fiscal discipline.

Looking ahead, global growth is expected to slow from 3.3% in 2024 to 2.9% in 2025. Rising trade barriers, spillover effects on global supply chains, and heightened uncertainty may weigh on business sentiment and recovery momentum. Moreover, volatility in financial markets has amplified risks, particularly for economies facing persistent inflationary pressures and signs of weakening growth.

Indian economy overview:

During FY 2024-25, the economy demonstrated resilience despite external challenges, driven by strong macroeconomic fundamentals, policy support, and a focus on sustainability and innovation. As per the Ministry of Statistics and Programme Implementation (MoSPI), real GDP is projected to grow by 6.5% in FY 2024-25. India has firmly established itself as a dynamic force in the global economy, supported by consistent growth, favourable demographics, and increasing international influence. Recently, India overtook Japan to become the worlds fourth-largest economy at current price levels, reflecting its rising global stature. Inflation, however, remained a key concern, influenced by global supply chain disruptions and volatile commodity prices. In order to control inflation and support growth, the Reserve Bank of India (RBI) reduced the repo rate by a cumulative 50 basis points to 6.0% by May 2025, with the intent of improving liquidity and stimulating demand. Looking ahead, the RBI projects GDP growth at 6.5% for FY 2025-26, underpinned by initiatives such as Make in India, continued infrastructure development, digital transformation, and structural reforms aimed at boosting competitiveness and ensuring long-term sustainable growth.

Company Overview:

A. Security Products

AGTL has invested in a state-of-the-art facility for manufacturing high-security products used for controlling counterfeits, such as anti-counterfeit threads, Security Fibers, and Security films. This plant features advanced capabilities in metalizing, demetallizing, holography, nano printing, and functional coatings, including embedding machine-readable features and lamination. Our products are designed for integration into security papers, tax stamps, and high-value brand protection across sectors such as bank notes, passports, certificates, perfumes, cosmetics, and pharmaceuticals, including track-and-trace management. We anticipate that these innovations will drive significant revenue growth moving forward.

i. High-Level Security Protection

Our company specializes in advanced security solutions for paper-based identification systems designed to combat counterfeiting security documents, including bank notes, passports, birth certificates, etc.

This industry is highly confidential. Due to the confidentiality requirements stipulated in our contracts, we are unable to provide detailed information about this business segment.

ii. Level 2 Security Elements·Medium Level Security Protection

Our company is well-equipped with the technology, expertise, and infrastructure to adapt our solutions for high-value brand protection and counterfeiting control across various sectors, including pharmaceuticals, branded products, and more. This business segment is poised for substantial revenue growth in the future.

During the year, the Company has actively expanded its intellectual property portfolio by filing multiple patent applications in both domestic and international markets, supplementing its existing base of Indian and foreign patents in the security products segment. The Companys strategic focus remains on securing robust patent protection to safeguard innovations, mitigate litigation risks and strengthen long-term competitiveness. Looking ahead, efforts will be directed towards global commercialization of patented products, as well as exploring opportunities for out-licensing intellectual property to enhance revenue streams. The Intellectual Property team remains confident about the prospects of the recently filed applications, which are expected to further augment the Companys value proposition and reinforce client confidence. Patents, once granted, provide protection for a period of up to 20 years, ensuring sustained benefits from innovation.

We are committed to strengthening our presence in the Indian security market and, once established, expanding into global markets where there are few credible competitors. We are also exploring strategic partnerships with established market players to leverage our cost advantages and integrate their technologies, fostering a collaborative ecosystem for mutual benefit.

Inspired by the Prime Ministers Atma Nirbhar initiative, our company is energized to advance our goals and contribute to the vision of promoting high quality, Indian made products globally.

B. Water Soluble Films (Watersol?)

Arrow Greentech Ltd (AGTL) stands out as a global leader in the production of cast water-soluble films, with our flagship product, Watersol?, setting the standard in the industry. Our manufacturing facility is in Ankleshwar, Gujarat, and we are actively pursuing new business opportunities through innovative applications across diverse sectors. This strategic focus is designed to build and reinforce our growth trajectory.

Watersol? films offer versatile applications in a wide range of industries, including agrochemicals, construction chemicals, dyes and pigments, embroidery, health and hygiene, industrial engineering, water transfer printing, and FMCG, among others.

The agrochemical and home care sectors represent approximately 60-70% of the global market for water-soluble films, and AGTL is engaged with major prospects and clients within these niches. In addition to our focus on this segment, we are also targeting the mass market for Embroidery Film, where we aim to compete directly with lower-tech, Chinese-made products using our advanced, indigenous technology.

The global market for polyvinyl alcohol (PVA) films was valued at around $550 million in 2024 and is expected to grow at a compound annual growth rate (CAGR) of 5-6% through 2030. This growth is driven by increasing demand for eco-friendly packaging solutions in developed regions such as North America and Europe. In response, we have filed patents in the Green Packaging sector and will commence field trials in the last quarter of this year. This will further strengthen our position in the Green Sector, as evidenced by numerous inquiries from various packaging industries.

Our PVA films are characterised by their water solubility, biodegradability, and customisation capabilities, making them suitable for innovative applications in packaging for water treatment chemicals, swimming pool chemicals, concrete fibres, construction chemicals, and various industrial and consumer repellents and inhibitors.

To capitalise on these opportunities, AGTL plans to expand its capacity and diversify its product offerings through significant capital expenditures (CAPEX). Recently, AGTL has purchased ~3 acres of land in the Dahej Industrial area in Gujarat, a region known for its industrial development and strategic location. This expansion will create new business opportunities across various locations and sectors, particularly in the agrochemical and home care industries, where we already have a strong presence.

With a strong emphasis on research and innovation, AGTL is committed to establishing itself as a leading global supplier of PVA films and related value-added products in the near future.

C. Sustainable Solutions

The ongoing efforts to ban single-use plastics (SUP) have gained momentum over recent years, although their effectiveness remains to be fully realised. While the government has introduced guidelines and explored alternatives such as bio-compostable products and bio-based alternatives, there remains a need to raise awareness about their proper implementation. Our team is actively involved in promoting this cause within the industry and through associations, contributing valuable insights and support for the transition to sustainable practices.

AGTL is dedicated to investing more in this growing sector. We believe that bio-based solutions in flexible films offer a sustainable, eco-friendly alternative to single-use plastics and other traditional options, addressing the growing concerns about plastic pollution. Unlike petrochemical-based plastics that dont break down naturally, biocompostable films are designed to decompose through natural processes. Our work in this area has the potential to transform packaging solutions by offering sustainable alternatives to conventional polyester and polypropylene materials.

Our New Products Development and R&D teams are innovating by integrating soluble and sustainable technologies to develop advanced packaging solutions. We adhere to a policy of invention, patenting, and production based on end-user specifications, while prioritizing environmental sustainability.

D. Pharma Delivery Systems "Mouth Dissolving Strips”

AGTL has made a strategic investment in its wholly owned subsidiary, Avery Pharmaceuticals Private Limited (“Avery Pharma”), to advance the production of Mouth Dissolving Strips (MDS) and Transdermal Patches. Avery Pharma is a specialized pharmaceutical entity with esteemed certifications including WhO-GMP, GMP & GLP, FSSAI, hAlAL (GCC Countries), ISO 9001:2015, and ISO 22000:2018. The facility is equipped with state-of-the-art German-designed machinery dedicated to the patented technology for manufacturing Mouth Dissolving Strips and Transdermal Patches.

MDS are innovative, fast-dissolving films that deliver active pharmaceutical ingredients (APIs) more rapidly compared to traditional dosage forms such as tablets, capsules, and liquids. These films dissolve upon contact with saliva, eliminating the need for additional fluids, and offer rapid drug absorption and bioavailability. MDS are particularly advantageous for populations such as geriatrics, paediatrics, those with swallowing difficulties, and veterinary use. They provide benefits including ease of selfadministration, water-free usability, quick onset of action, non-invasive dosing, and overall patient convenience.

Transdermal Patches are an innovative drug delivery system developed by Avery Pharma, designed to deliver active pharmaceutical ingredients (APIs) through the skin directly into the bloodstream. This non-invasive method ensures sustained and controlled release of medication over an extended period, improving therapeutic outcomes and enhancing patient compliance.

Avery Pharma has embarked on a long-term collaboration with a leading multinational corporation to produce a unique, patentable combination product for the Brazilian market, with plans to introduce additional products in other regions. The company is currently pursuing product registrations in various countries like Russia, Yemen, Vietnam, and is engaged in Contract Development and Manufacturing Organization (CDMO) projects. Avery Pharma has completed two CDMO projects for mouth-dissolving films and is also working on CDMO project of Transdermal Patch, generating revenue and leveraging its expertise in edible water-soluble films and MDS formulations. These CDMO projects contribute to our bottom line and foster client relationships, positioning us well for future commercial production opportunities.

Currently, Avery Pharma has over 54 products approved under FSSAI and more than 10 products under prescription (Rx) approval. Avery Pharma currently has three products approved under WHO-GMP certification, with several more in the pipeline for application in the coming years. These approved products are directly introduced into ROW (Rest of the World) markets without the need for additional regulatory approvals. The company has applied for test licenses for over 20 Rx products, with development nearing completion. Additionally, Avery Pharma has filed patents for two innovative products and is in the process of filing for several more. The research lab has also achieved a significant milestone by developing a combination API in MDS technology, capable of delivering doses above 100 mg, exceeding previous limitations. Ongoing research includes advancements in sublingual and buccal MDS technologies and the development of transdermal patches.

E. IP Protection

At Arrow Greentech Limited (AGTL), we prioritize the strategic protection of our markets through robust patent filings both domestically and internationally, including via the Patent Cooperation Treaty (PCT) route. To support these initiatives, dedicated Intellectual Property Cells have been established across AGTL India and our subsidiaries.

Our focus is on Hi-tech products and technologies, with regards to IP, its new creation and looking for opportunities to generate revenues, our company will also focus on generating new IP in Green Products and Technologies, in Arrow as well as its subsidiaries, going forward.

In an innovation-driven global economy, the protection of intellectual property is essential to our long-term success. Equally important is our commitment to respecting the rights of other IP holders. Our growth is underpinned by the continuous development of innovative and commercially viable products, supported by the safeguarding of our proprietary processes, know-how, tools, techniques, and other critical intellectual assets.

We actively collaborate with inventors, academic institutions, and scientific communities both within India and globally to generate valuable IP that serves the interests of our company and stakeholders. Over the years, these efforts have resulted in the successful filing and grant of numerous patents and trademarks at both national and international levels, enabling us to effectively enforce and protect our intellectual property rights.

Patents are a cornerstone of our IP strategy, providing protection against infringement and offering significant commercial value through monetization and, where necessary, litigation. Currently, AGTL is pursuing injunctions and is engaged in legal proceedings with Nu-Therapeutics and Shilpa Pharmaceuticals. While the legal process can be time-consuming, our legal team remains confident in our position.

To strengthen our research and development capabilities, we have established a specialized centre focused on proof of concept (POC) creation and pilot projects. Validated concepts may be further developed internally or licensed to external partners, aligning with our strategic objectives.

Our Company also plays an active role in shaping IP policy through its participation in the “Select Committee on IP” organized by the Confederation of Indian Industry (CII) and the Department for Promotion of Industry and Internal Trade (DPIIT), Government of India. Our engagement aligns with the Atmanirbhar Bharat initiative championed by the Honble Prime Minister and Honble Finance Minister. We remain committed to accelerating IP-related legal processes and contributing to Indias ambition to rank among the top 25 nations in the Global Innovation Index (GII).

Our efforts in innovation and IP protection have been consistently recognized. AGTL has received the National Intellectual Property Award from CII and DPIIT in 2019, 2021,2022, 2023, and 2024, with 2020 being an exception due to the COVID-19 pandemic.

During the 4th quarter, we were granted a US patent (No. 12194771) for “Dual-Color Shift Security Film,” an innovative solution that enhances document security through color-shifting features and improved counterfeit resistance. This development further strengthens our intellectual property portfolio and underlines our commitment to innovation-driven growth.

At present, the Company holds 27 granted patents worldwide, spanning key jurisdictions such as India, the United Kingdom, the United States, South Africa, Europe, and Eurasia. In addition, 30 patent applications in India and 13 applications in international markets are under examination, primarily focused on innovations in water-soluble films and security solutions. The Company also maintains a strong brand protection framework with 40 active registered trademarks, complemented by 8 trademark applications currently in process.

At AGTL, intellectual property is a vital asset. We remain steadfast in our commitment to its creation, protection, and strategic management.

F. Trading and Revenue Streams from Foreign Subsidiaries:

Arrow UK, a wholly owned subsidiary of AGTL India, is actively pursuing multiple income-generating opportunities. The Board and team at Arrow UK are focused on the commercialization of patents and technology. Leveraging the logistical advantages and favorable business environment of the Western world, we are committed to maximizing the potential of this subsidiary.

In addition to monetizing our patents and trading in water-soluble films, Arrow UK is expanding its trade into high-tech products. The subsidiary, along with its wholly owned counterpart in Europe, is generating substantial revenues. We are optimistic about the future prospects for both entities and anticipate continued growth and success.

2. Opportunities:

Our Company is well-positioned to leverage multiple opportunities across its core businesses. The increasing global focus on sustainability and the move towards eco-friendly packaging solutions are expected to drive strong demand for its water-soluble films, biodegradable polymers, and other environmentally responsible products. Regulatory actions aimed at curbing single-use plastics, coupled with rising consumer awareness, further strengthen the long-term growth outlook. Additionally, the pharmaceutical, agrochemical, and healthcare industries are experiencing a growing need for safe, hygienic, and precise delivery mechanisms, creating new avenues for the Companys specialty film solutions. With growing dialogue among scientists and policymakers on climate change and the strain on natural resources, the adoption of green industrial practices has accelerated. Such practices not only help in lowering environmental impact but also create avenues for cost efficiency, supported by favorable government incentives and improved business returns.

Beyond sustainability, the Companys high-tech security business also presents significant opportunities. With counterfeiting and document fraud emerging as major concerns globally, demand for advanced security features is increasing rapidly. Arrows Security division has invested significantly in advanced manufacturing technologies and plans to extend its market reach globally, beginning with exports to the EU and EEA regions. Additionally, Arrows wholly owned subsidiaries, Avery Pharmaceuticals Pvt. Ltd. and Watersol divisions, are targeting expansion into Europe, South America, and Africa. Our in-house R&D labs are dedicated to developing innovative products tailored to new markets.

3. Threats:

Our business operations may experience fluctuations due to several factors, including geopolitical developments, technological obsolescence, rising input costs, project execution delays, patent expirations, and tender outcomes. Additionally, threats such as the importation of non-standard materials, such as extruded films from China, may pressure us to maintain competitive pricing. We have identified key risks across our business functions and will implement various measures needed to address and mitigate these risks effectively and consistently.

4. Internal control system and their adequacy:

The companys internal audit system is designed to ensure robust internal controls that align with the size, complexity, and requirements of our business. This system aims to safeguard assets against misuse or loss and ensure that transactions are properly authorized, recorded, and reported.

Operating parameters are clearly defined and monitored on a regular basis. The Audit Committee continually assesses the adequacy and effectiveness of our internal controls. These controls are implemented to enhance operational efficiency, financial management, and compliance with relevant regulations and laws.

In accordance with Section 138 of the Companies Act, 2013, the company has engaged a firm of Chartered Accountants to perform internal audits of our functions and activities. They provide quarterly reports on their findings, which are reviewed by both the Audit Committee and the Statutory Auditors.

5. Material developments in human resources/industrial relations front, including number of people employed:

Throughout the year, industrial relations have remained amicable and uninterrupted, with no disruptions to manufacturing activities. The company has conducted various programs focused on enhancing motivation, as well as technical and soft skills. We have implemented comprehensive safety measures to protect our employees and have adopted a work-from-home policy for nonfactory staff, providing the necessary technological support and tools to ensure smooth operations.

Human capital is regarded as a vital asset and a key factor for the companys success, particularly given the niche nature of our products, patents, and applications. We are committed to building a dedicated team to support the companys growth. As of March 31,2025, our workforce consisted of 127 employees.

6. Cautionary statement:

This report may contain forward-looking statements. AGTL may also include forward-looking statements in periodic reports to the Stock Exchanges, as well as in its annual reports to shareholders, proxy statements, offering circulars, prospectuses, press releases, and other written communications. Additionally, forward-looking statements may be made orally by our officers, directors, or employees to third parties.

AGTL does not undertake any obligation to update or revise these forward-looking statements, whether in this report or elsewhere. Forward-looking statements, which reflect our beliefs and expectations, are inherently subject to risks and uncertainties. Various factors could cause actual outcomes to differ materially from those projected in forward-looking statements.

	For and on behalf of the Board of Directors
	Shilpan P Patel
Place: Mumbai	Chairman & Managing Director
Date: 17th May 2025	DIN:00341068