Baheti Recycling Industries Ltd Management Discussions

1. Economic Overview

The global economy demonstrated resilience during the year despite persistent geopolitical tensions, elevated interest rates across major economies, supply chain realignments and commodity market volatility. While inflationary pres -sures moderated across several developed economies, growth remained uneven as central banks continued to balance economic expansion with price stability. Industrial production, infrastructure investments, renewable energy deployment and automotive manufacturing remained key contributors to demand for industrial metals.

India continued to distinguish itself as one of the fastest-growing major economies globally, supported by robust domestic consumption, rising capital expenditure, manufacturing expansion and sustained government investments in infrastructure. Initiatives such as the National Infrastructure Pipeline (NIP), PM Gati Shakti, Make in India, Production Linked Incentive (PLI) schemes and increasing emphasis on circular economy practices are expected to support long-term industrial growth. The Governments focus on sustainability, resource efficiency and waste management is creating a favourable ecosystem for recycling industries, particularly those involved in strategic materials such as aluminium.

As India continues its transition towards becoming a global manufacturing hub, demand for cost-efficient and environmentally sustainable raw ma -terials is expected to increase significantly. This trend presents a strong opportunity for organised recycling companies that can provide quality-assured secondary metals to industrial consumers.

2. Global and Indian Scrap Recycling Market

The global recycling industry has emerged as a critical pillar of sustainable industrial development. Governments and industries worldwide are increasingly adopting circular economy models that emphasize reuse, recycling and resource optimisation. Recycling not only reduces dependence on virgin raw materials but also significant -ly lowers energy consumption, carbon emissions and environmental impact.

Metal recycling has become particularly important as industries seek to reduce production costs and comply with increasingly stringent environmental regulations. Recycled metals retain most of their original properties, making them suitable for repeated industrial use without significant quality degradation.

Indias metal recycling industry is witnessing rapid transformation, supported by increasing indus-trialisation, urbanisation, infrastructure development and rising awareness regarding sustainable manufacturing practices. The countrys growing consumption of automobiles, consumer durables, construction materials and electrical equipment is generating larger volumes of recyclable scrap while simultaneously creating demand for recycled metals.

Historically, the Indian recycling ecosystem has been dominated by fragmented and unorgan-ised participants. However, regulatory reforms, increasing customer quality requirements and growing emphasis on environmental compliance are gradually driving a shift towards organised recycling businesses. Large industrial consumers increasingly prefer suppliers that offer traceability, quality consistency and adherence to environmental standards, creating -ties for organised players.

Over the next decade, Indias recycling sector is expected to play a vital role in reducing import dependence, improving resource efficiencyand supporting the countrys sustainability objectives.

3. Global and Indian Secondary Aluminium Market

Aluminium is among the most recyclable industrial metals globally and can be recycled repeatedly without losing its essential mechanical and chemical properties. This unique characteristic has made secondary aluminium one of the fastest-growing segments within the global metals industry.

Secondary aluminium production requires only a fraction of the energy required to produce primary aluminium from bauxite ore. As a result, recycled aluminium has become an increasingly preferred raw material for manufacturers seeking both economic and environmental benefits. The lower carbon footprint associated with recycled aluminium aligns closely with global decarbonisation goals and corporate sustainability initiatives.

Demand for secondary aluminium is being driven by a wide range of industries including automotive, transportation, construction, electrical transmission, renewable energy, consumer durables and packaging. The increasing adoption of lightweight materials in automobiles and electric vehicles has further strengthened aluminiums long-term demand outlook.

India is witnessing a gradual increase in secondary aluminium consumption due to rising industrial demand and growing awareness regarding sustainable manufacturing. The countrys expanding automotive sector, infrastructure investments and power transmission projects continue to generate strong demand for aluminium-based products. Additionally, increasing environmental awareness and resource conservation initiatives are expected to accelerate the adoption of recycled aluminium across industries.

As recycling rates improve and organised players expand their processing capabilities, the Indi-an secondary aluminium industry is expected to emerge as a significant contributor to the countrys broader circular economy objectives.

4. Global Aluminium Production and Price Overview

Global primary aluminium production remains concentrated across China, Asia, Europe, the Gulf region and other major industrial economies. Asopportuni per the International Aluminium Institute, global primary aluminium production for April 2026 stood at 5.922 million tonnes.

Aluminium prices remained sensitive to energy costs, global demand, Chinas production trends, inventory levels, trade policies and geopolitical developments. LME aluminium cash prices were around USD 3,405.50 per tonne on 17 June 2026, reflecting continued volatility in the global aluminium market. 5. Indian Aluminium Scrap Market Size The India aluminium scrap market was valued at approximately USD 3.8 billion in 2024 and is projected to reach USD 11.2 billion by 2034, registering a CAGR of 10.8%.

6. Growth Drivers and Key Opportunities

Several structural trends are expected to support long-term growth in the aluminium recycling industry.

Rising Aluminium Consumption Across Industries

Aluminium has become an indispensable material across modern industries due to its lightweight nature, durability, corrosion resistance, conductivity and recyclability. Growing demand from automotive, construction, electrical transmission, renewable energy and packaging sectors is expected to support sustained aluminium consumption over the coming years.

Global Push Towards Sustainability

Governments, corporations and consumers are increasingly prioritising sustainability and environmental responsibility. Recycled aluminium offers significant energy savings and lower carbon emissions compared to primary aluminium production, making it an attractive solution for industries seeking to reduce their environmental footprint.

Growth of Electric Vehicles

The global transition towards electric mobility is creating substantial opportunities for aluminium consumption. Electric vehicles require lightweight materials to improve battery efficiencyand vehicle range, positioning aluminium as a preferred material for multiple vehicle components.

Formalisation of the Recycling Industry

The Indian recycling sector continues to transition from a fragmented structure towards a more organised ecosystem. Customers increasingly demand quality consistency, traceability and regulatory compliance, creating significant competitive advantages for organised recycling companies with established manufacturing processes.

Infrastructure and Manufacturing Expansion

Indias continued investments in transportation, power transmission, renewable energy and urban infrastructure are expected to generate substantial demand for aluminium products. Simultaneously, the countrys manufacturing expansion under various government initiatives is expected to create long-term opportunities for secondary aluminium producers.

7. End-use / Industrial Applications of Recycled Aluminium

Recycled aluminium has wide industrial relevance across:

End-use Industry	Application
Automobile	Components, castings, alloy parts
Steel Industry	Aluminium de-ox products used as deoxidisers
Electrical Transmission	Conductors, cables, wire rods
Construction	Profiles, fittings, structural applications
Packaging	Cans, foils and other pack- aging products
Consumer Durables	Appliances and household products
Industrial Manufacturing	Machinery parts and engi- neered components

8. Fragmented Market vs Organised Market

The Indian aluminium recycling industry remains highly fragmented, with a significant portion of processing activities conducted by small-scale and unorganised operators. These entities often face limitations relating to technology adoption, quality assurance, environmental compliance and product standardisation.

While the unorganised sector primarily competes on pricing, organised recyclers differentiate themselves through process efficiency, product consistency, testing capabilities, compliance standards and customer reliability. Large industrial customers increasingly prioritise suppliers capable of meeting stringent quality specifications and maintaining uninterrupted supply chains.

The gradual implementation of environmental regulations, increasing customer awareness and growing focus on sustainability are expected to accelerate industry consolidation over the coming years. Organised recyclers are likely to benefit disproportionately from this transition as customers increasingly shift towards reliable and compliant suppliers.

For companies such as Baheti Recycling Industries Limited, this evolving industry structure presents an opportunity to strengthen market position, expand customer relationships and participate in the formalisation of Indias recycling ecosystem.

Opportunities and Threats Opportunities:

Rising aluminium consumption, growing sustainability awareness, higher demand from automobiles and infrastructure, increased recycling penetration and for-malisation of scrap supply chains provide strong long-term opportunities.

Threats:

The Company remains exposed to volatility in aluminium prices, scrap availability, foreign exchange movement, energy costs, and regulatory changes.

Risks and Concerns

Key risks include raw material price volatility, working capital intensity, dependence on scrap procurement, fluctuations in end-user demand, quality requirements, environmental compliance and commodity-linked margin pressure. The Company continues to focus on operational efficiency, prudent procurement, customer diversification and quality control to mitigate these risks.

Internal Control Systems and Adequacy

The Company has internal control systems commensurate with the size and nature of its business. These systems are designed to ensure operational efficiency, safeguarding of assets, accuracy of accounting records, regulatory compliance and timely reporting. The management periodically reviews internal processes and strengthens systems wherever required.

Human Resources and Industrial Relations

The Company recognises its employees as an important part of its growth journey. It continues to focus on skill development, workplace safety, process discipline and productivity improvement. Industrial relations remained cordial during the year.

Financial Performance

The financial performance of the Company should be read together with the audited financial statements, notes to accounts and Directors Report forming part of the Annual Report. The Companys performance is primarily influenced by aluminium prices, scrap pro -curement cost, product mix, capacity utilisation, demand from end-user industries and working capital efficiency.

Key Financial Ratios

The key financial ratios, including debtor turnover, inventory turnover, interest coverage ratio, current ratio, debt-equity ratio, operating profit margin, net profit margin and return on net worth, should be presented in accordance with the audited financial statements. Any material change of 25% or more, compared to the previous year, should be explained separately as required under SEBI Listing Regulations.

Outlook

The outlook for the aluminium recycling industry remains highly favourable, supported by a combination of structural demand drivers, sustainability-focused policies and increasing industrial adoption of recycled metals. As global economies move towards resource efficiency and carbon footprint reduction, recycled aluminium is expected to play an increasingly important role in the metals value chain. Unlike many commodities that face cyclical demand fluctuations, aluminium benefits from its widespread application across diverse industries including automobiles, infrastructure, electrical transmission, renewable energy, consumer durables, construction and packaging, providing a broad and resilient demand base.

India is currently at an inflection point in its industrial growth journey. Large-scale infrastructure development, expansion of the manufacturing sector, rapid urbanisation and increasing investments in transportation and energy networks are expected to drive substantial growth in aluminium consumption over the coming decade. Simultaneously, increasing environmental awareness and government emphasis on circular economy practices are encouraging greater utilisation of recycled metals as industries seek sus-alternatives to primary raw tainableandcost-efficient materials.

The aluminium recycling industry is particularly well positioned to benefit from these trends. Recycled aluminium requires significantly lower energy consumption compared to primary aluminium production, resulting in substantial cost advantages and lower carbon emissions. As environmental regulations become more stringent and corporate sustainability commitments gain importance, demand for secondary aluminium is expected to witness accelerated growth globally as well as in India.

The Indian aluminium recycling ecosystem also continues to present a significant opportunity due to its frag -mented structure. A considerable portion of the market remains serviced by small and unorganised participants, creating a favourable environment for organised players with established manufacturing processes, quality controls, compliance standards and long-term customer relationships. As industrial customers increasingly prioritise consistency, traceability and reliable supply, organised recyclers are expected to gain market share over time.

Against this backdrop, Baheti Recycling Industries Limited is strategically positioned to capitalise on the growing opportunities within the aluminium recycling value chain. The Company has established itself as a specialised processor of aluminium scrap into value-added aluminium alloys and aluminium de-ox products catering to diverse industrial applications. Its business model is directly aligned with long-term industry trends centred around sustainability, resource optimisation and circular manufacturing.

The Companys products serve multiple end-user industries including automobiles, steel manufacturing, electrical transmission, construction and industrial applications. This diversified customer base not only broadens revenue opportunities but also reduces dependence on any single sector, providing greater business resilience. As these industries continue to expand in line with Indias economic growth, demand for the Companys products is expected to remain robust. Baheti Recycling Industries Limited also stands to benefit from increasing acceptance of recycled aluminium among industrial consumers. Recycled aluminium is no longer viewed merely as a substitute for primary metal; rather, it is increasingly recognised as a strategic raw material that combines cost efficiency with environmental responsibility. This evolving customer preference is expected to create long-term demand tailwinds for organised recycling companies capable of delivering quality-assured products at scale.

The Companys focus on operational efficiency, quality assurance and customer-centric manufacturing positions it favourably to capture emerging opportunities within the sector. Its ability to convert aluminium scrap into value-added products allows it to participate in multiple stages of the recycling value chain while contributing to the broader sustainability goals of its customers and the economy.

Looking ahead, the management remains optimistic about the medium and long-term prospects of the business. Strong industry fundamentals, growing demand for recycled metals, increasing formalisation of the recycling ecosystem, rising sustainability requirements and expanding industrial consumption collectively provide a robust platform for future growth. With its established market presence, industry expertise and alignment with long-term structural trends, Ba-heti Recycling Industries Limited is well positioned to participate in the next phase of growth of Indias recycling and secondary aluminium industry while creating sustainable value for all stakeholders.

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations and future outlook may be forward-looking in nature. Actual results may differ materially from those expressed or implied due to economic conditions, commodity price movements, regulatory changes, demand fluctuations, competitive intensity and other external factors beyond the Companys control.

	For & on behalf of the Board of Directors
	Baheti Recycling Industries Limited
	Sd/-	Sd/-
	Balkishan S. Shah	Yash Shankerlal Shah
Date : September 03, 2026	Managing Director	Joint Managing Director
Place : Ahmedabad	DIN: 03006486	DIN: 09527701