Chemplast Sanmar Ltd Management Discussions

EXHIBIT A

ECONOMIC OVERVIEW

Global Economy

The global economy entered a phase of recalibration in calendar years 2024 and 2025, shaped by stabilising inflation, measured policy responses, and continued adaptation to post-pandemic realities. The IMF estimates global growth at 3.30% in 2024, with projected growth of 2.80% in 2025 and 3.00% in 2026. These figures remain below the pre-pandemic average of 3.70% recorded between 2000 and 2019, reflecting persistent structural headwinds.

Global growth is expected to soften across regions and sectors. In advanced economies, growth is projected to moderate from 1.80% in 2024 to 1.40% in 2025. Emerging Markets and Developing Economies (EMDEs) are also anticipated to experience a deceleration, with growth easing from 4.30% to 3.70% over the same period. Amid this broad- based moderation, India retains a strong position, with the IMF projecting it to remain the fastest-growing major economy over the next two years. The nations GDP is expected to grow at 6.20% in 2025, supported by resilient domestic demand, continued structural reforms, and sustained expansion in manufacturing and services.

Global trade is evolving amid growing protectionist measures. In 2024 and early 2025, trade tensions escalated. This was exemplified by new tariffs imposed by the US, including a 10% baseline US duty on all imports announced in April 2025. This further triggered retaliatory countermeasures from Canada, the EU, and China through targeted tariffs on US goods. While the U.S. tariffs on Indian exports have intensified sectoral pressures, India has prioritised diplomatic negotiations and strategic realignment - diversifying trade partners and deepening regional agreements such as the Quad and Indo-Pacific alliances, enhancing supply chain endurance.

Central banks have largely pursued cautious and differentiated monetary policies. While headline inflation is expected to decline steadily from 6.80% in 2023 to 4.50% in 2025 globally, core inflation is projected to decline more gradually, reflecting persistent price pressures particularly in the services sector and in emerging markets and developing economies (EMDEs). The IMF highlights that inflation in advanced economies is moderating faster than in EMDEs, where core inflation remains elevated due to factors such as wage pressures and supply constraints in services.

Labour markets are gradually easing but remain tight enough to support wage growth. Despite geopolitical tensions, commodity volatility, and policy uncertainty, the global economy has remained strong. Moreover, structural reforms, digitalisation, and selective monetary easing are driving gradual recovery.

Outlook

The global economy is expected to grow steadily, though at a moderate pace. Despite lingering risks, adaptive policies, supply chain diversification, and emerging trade frameworks provide grounds for cautious optimism over continued global expansion and transformation. Global GDP growth is projected at 2.80% in 2025 and 3% in 2026. Region-wise, the European areas growth is expected to be modest, at just 1.2% in 2026, while the US economy is likely to experience further slowdown, with expansion decelerating to 1.70% by 2026. Inflationary pressures will remain, though a gradual easing is anticipated. For instance, inflation in G20 economies is forecasted to decline from 3.80% in 2025 to 3.20% in 2026.

https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025 https://pib.gov.in/PressReleasePage.aspx?PRID=2123826

https://www.oecd.org/en/publications/oecd-economic-outlook-interim-report-march-2025_89af4857-en.html

https://www.businesstoday.in/world/us/story/april-5-trumps-first-round-of-global-tariffs-kicks-in-next-round-set-for-april-9-470828-2025-04-05)

Indian Economy

Indias macroeconomic strength remains noteworthy, even as the global economy contends with divergent growth patterns, geopolitical tensions, and tight financial conditions. As per IMFs projections, Indias GDP grew by 6.20% in 2024-25, fuelled by strong domestic demand and a significant surge in government expenditure on infrastructure and social welfare, especially in the second half of the fiscal year. This momentum helped offset a moderation in private consumption and provided crucial support to overall economic activity.

Agriculture continues to be a key pillar of economic strength. In 2024-25, foodgrain production reached an estimated 330.90 Million tonnes, driven by favourable monsoons and strong kharif and rabi harvests. This performance helped sustain rural incomes and supported consumption in nonurban areas, ensuring a buffer against slower growth in manufacturing and construction sectors.

The services sector upheld its position as the primary growth driver, led by IT, financial services, real estate, and trade. Concurrently, manufacturing exports in high- value segments like electronics and pharmaceuticals demonstrated endurance. This affirmed Indias rising position in global value chains, even amid prolonged trade headwinds.

On the inflation front, headline CPI inflation eased to 3.61% in February 2025, marking a seven-month low. This decline stemmed mainly from falling food prices with the arrival of winter crops. For the full fiscal year, inflation averaged 4.80%, staying within the Reserve Bank of Indias target range. It is expected to average around 4.20% in the near term.

Responding to the easing trend, the RBI cut the repo rate to 6.25% in February 2025, marking its first rate cut in nearly five years, followed by a further 25 bps cut in April, bringing it down to 6%. These measures aim to spur investment and economic activity, while maintaining price stability. Despite the reduction, the central bank continues to maintain a prudent and data-dependent stance, aiming to balance growth with price stability. Government measures, including higher buffer stocks and key subsidies, also supported price stability and a favourable macroeconomic outlook.

Indias external accounts remained stable, with the current account deficit contained at 1.10% of GDP in 2024-25. This marked a slight rise from 0.70% in the previous fiscal year. Strong financial inflows and a steady services trade surplus helped offset risks from foreign portfolio outflows and currency fluctuations. Furthermore, steady domestic investment, easing inflation, and timely policy measures enhanced Indias ability to sustain economic momentum in a turbulent global scenario.

Outlook

Indias economic outlook for the remainder of 2025 remains cautiously optimistic. Despite ongoing global trade tensions, protectionist trends, and geopolitical uncertainties, GDP expansion is projected to range between 6.50% and 6.80%. Strong domestic demand, steady public investment, and resilience in services and export-driven manufacturing support this trajectory.

External challenges such as tariff barriers and supply chain disruptions may affect exports. Nonetheless, Indias strategic trade diversification and its focus on manufacturing and digital transformation enhance adaptability.

With inflation moderating and supportive monetary and fiscal measures in place, India is well-prepared for external headwinds. Additionally, ongoing structural reforms and deeper global integration continue to reinforce the countrys economic base, enabling sustainable and broad-based growth amid evolving global trade dynamics.

(Sources:

https://www.goldmansachs.com/insights/articles/indias-economy-is-likely-to-stand-firm-in-an-uncertain-world

https://pib.gov.in/PressReleasePage.aspx?PRID=2110779

https://www2.deloitte.com/us/en/insights/economy/asia-pacific/india-economic-outlook.html

https://www.domain-b.com/economy/agriculture/india-s-2024-25-foodgrain-production-estimated-at-330-9-million-tonnes)

INDUSTRY OVERVIEW

Speciality Chemicals

The Indian chemical industry plays a vital role in driving the countrys economy, contributing about 7% to the GDP It is projected to grow from USD 178 Billion in 2021 to USD 304 Billion by 2025. This growth is closely tied to rising demand from a broad range of end-use sectors, including automotive, electronics, construction, medical, packaging, personal care, textiles, oil & gas, and agriculture. Enabling this momentum are supportive government policies, global market shifts such as supply chain diversification from China, and tax reforms promoting R&D and exports, further enhancing the sectors overall appeal.

Speciality Paste PVC Resin

Polyvinyl Chloride (PVC) resin is synthesised by polymerising Vinyl Chloride Monomer (VCM). It is primarily classified into two types:

(a) Suspension resin

(b) Speciality Paste resin also referred to as emulsion, dispersion, or micro-suspension resin

Speciality Paste PVC resin is specifically used for manufacturing flexible products like artificial leather, gloves, tarpaulins, conveyor belts, and coated fabrics. Unlike Suspension PVC resin, it serves a specialised market segment.

2024-25 REVIEW

Market and Regulatory Environment

Indias paste PVC market experienced significant expansion in 2024-25, driven by increasing demand across manufacturing and processing applications. The domestic demand for Speciality Paste PVC Resin registered a healthy growth of 9%, reaching 178 kt compared to 161 kt in 202324. For the year the apparent consumption rose from 161kt in 2023-24 to 173 kt, marking a growth of 11%. Growth was largely fuelled by expanding applications in industries such as artificial leather, automotive upholstery, and vinyl products, supported by broader economic expansion and rising consumer spending

To regulate imports and protect domestic manufacturers, the Government of India introduced an anti-dumping duty (ADD) of up to USD 707 per tonne on paste PVC imports from China and several other Asian countries (excluding Korea) in March 2025. The duty has been initially imposed for five years, unless revoked earlier. However, since supplies from the European Union (EU) were not covered by the ADD, imports (at low prices) from the EU surged, limiting the effectiveness of the duty in supporting price recovery. EU suppliers increased their shipments to India at competitive rates, gaining market share and largely offsetting the intended impact of the ADD. On an application by Chemplast Sanmar an ADD investigation was initiated in the last quarter of 2024-25 on EU, and investigations are in progress. A decision is expected in the second quarter of 2025-26.

Additionally, the introduction of a Quality Control Order (QCO) in June 2024 mandated BIS certification for all manufacturing plants intending to export PVC to India. This is expected to curb low quality PVC imports to India. The QCO initially provided a six-month window for compliance, which has since been extended until June 2025.

Chemplast Sanmars Take

Amid these developments, Chemplast Sanmar expanded its speciality Paste PVC capacity at Cuddalore in February 2024, increasing annual production to 1,07,000 tonnes and strengthening its ability to meet growing domestic demand. The expansion also aims to substitute imports, enhancing local supply capabilities. Capacity utilisation of the new plant has been steadily ramped up and is expected to consistently operate at close to 100% in 2025-26. In parallel, the Company recorded its highest-ever production and sales of Speciality Paste PVC Resin at its Mettur facility during 2024-25, registering a 26% growth in sales volumes and increasing its market share to 55%, up from 44% in the previous year.

Outlook

Indias paste PVC market is on a steady growth path, with an anticipated compound annual growth rate (CAGR) of approximately 7.80% from 2013-14 to 2024-25. In 202425, rising paste PVC consumption highlights strong market momentum, driven by increasing applications in synthetic leather, automotive upholstery, and vinyl products. Economic expansion and higher consumer spending further drive this growth, with the trend expected to sustain through 202526. Indias focus on strengthening domestic production capabilities could play a crucial role in maintaining market stability and reducing dependency on imports.

Custom-Manufactured Chemicals (CMCs)

The pharmaceutical and agrochemical industries often prefer to outsource manufacturing of key chemicals working with key suppliers who are into custom manufacturing.

Both patented and generic products often require the expertise of chemical manufacturers for essential components such as active ingredients, APIs, intermediates, and advanced intermediates. To meet these needs, companies collaborate with outsourcing partners who offer specialised capabilities and production infrastructure.

Custom manufacturing involves the development of exclusive, specialised molecules tailored to specific customer requirements. These molecules, are produced with defined properties and processes.

Key drivers for choosing to outsource include the lack of inhouse facilities for complex synthesis and the availability of cost-efficient production alternatives in regions with lower manufacturing expenses.

2024-25 REVIEW

The Custom Manufacturing for Chemical Products market was valued at USD 40.50 Billion in 2024 and is projected to reach USD 62.30 Billion by 2033, expanding at a CAGR of 5.50% between 2026 and 2033. This growth is driven by demand from pharmaceuticals, agrochemicals, speciality chemicals, food and beverages, automotive, electronics and textiles. A strong focus on sustainability and ecofriendly solutions is also driving progress with innovations such as green chemistry, solvent-free manufacturing, and biodegradable pesticides being widely adopted. These trends are fuelling significant investment and innovation in custom manufacturing, amidst evolving market and regulatory expectations, while enabling companies to maintain productivity and profitability.

Focus on Agrochemicals and Pharmaceuticals

The custom manufacturing chemicals (CMC) industry is set for robust growth in 2025 and beyond. This trajectory will be driven by shifting global priorities and technological advancements in the agrochemical and pharmaceutical sectors - core areas served by Chemplast Sanmar. Following a recovery in 2024, global chemical production is expected to grow at approximately 3.50% in 2025, led by a rising demand for speciality and high-value intermediates.

Strong Sectoral Tailwinds

Agrochemicals continue to drive demand, supported by global concerns around food security, climate change, and the need for sustainable farming. As agriculture modernises, there is a growing requirement for advanced crop protection agents, bio-based intermediates, and customised formulations. Furthermore, stricter environmental regulations compel consumer preference for eco-friendly products compel manufacturers to create low- toxicity, biodegradable, and high-performance molecules. This shift presents opportunities for custom manufacturers to innovate and stand out.

In the pharmaceutical segment, momentum is driven by the advancing fields of personalised medicine, complex biologics, and small-molecule therapies. As molecular complexity increases and regulatory standards tighten, innovators increasingly depend on custom manufacturing partners to develop and scale APIs and intermediates. Simultaneously, the growing emphasis on green chemistry and continuous processing is encouraging manufacturers to enhance their capabilities and adopt more sustainable, flexible production models.

Challenges and Considerations

While growth prospects remain strong, the industry faces a range of challenges. These include raw material price volatility, rising energy costs, complex global regulatory space, and capital-intensive transitions to sustainable practices. Ensuring compliance while maintaining agility and cost competitiveness will remain key to lasting success.

Key Industry Trends

Several structural and technological trends are reshaping the CMC environment:

• Sustainability and Green Chemistry: The industry is increasingly focussing on decarbonisation, biobased raw materials, energy efficiency, and circular economy models. Custom manufacturers are also actively investing in carbon footprint reduction, waste minimisation, and eco-friendly process innovations to meet regulatory and customer expectations.

Chemplast Sanmar is capitalising on these industry trends, with its CMC division achieving reduction in the carbon footprint of a key agrochemical intermediate year on year. This was accomplished through energy conservation, enhanced fuel efficiency, and process optimisation, even as production capacity tripled. In recognition of this achievement, Chemplast received a Sustainability Award from its key customer.

• Collaborative Innovation: The growing demand for highly customised solutions is fostering deeper collaboration between CDMOs and innovators. End- to-end support, from early-stage development to scale-up and commercialisation, is emerging as a key differentiator, also enabling faster product development cycles.

Chemplast Sanmars CMC Division serves as a strategic partner to global pharmaceutical and agrochemical innovators, following a one product, one customer approach and delivering comprehensive support from process development through to commercial-scale manufacturing. Its enduring partnerships with leading global clients are founded on stewardship of Safety, Health and Environmental aspects, strong advanced chemistry expertise, robust process engineering, and the ability to swiftly scale up new intermediates and active ingredients.

Chemplast Sanmars Performance

The CMC division of Chemplast Sanmar experienced a year of strong growth. Despite challenges from a global slowdown in the agrochemicals sector and margin pressures due to pricing and oversupply, the division strengthened its relationships with global innovators and enhanced its operational capabilities.

In 2024-25, the division successfully commercialised several new products, while others progressed through precommercial and development stages. This demonstrates a strong and diversified product pipeline. The Phase II expansion of the CMC division was completed as planned, establishing a stronger foundation for enhanced capacity and capability to meet future market demands. Commercial production commenced in December 2024. Simultaneously, Phase III expansion of the existing production block is expected to be completed by late 2025-26. In addition, civil construction of another new multipurpose block is also underway.

Operationally, the division improved production efficiencies, by focussing on ramping of capacity and other cost reduction opportunities. The Company reinforced its commitment to global standards through multiple site visits and audits by international customers, leading to deeper collaborations and new project opportunities.

Engagements continued with other key multinational customers, including submission of proposals for additional high-value intermediates. These developments strengthened the business pipeline and reinforced the Companys position as a trusted partner in custom manufacturing.

Strategically, the CMC segment continues to focus on high- growth sectors such as agrochemicals and life sciences. Accelerating the conversion of the various products in its pipeline into commercial-scale business remains a key priority for this business.

Outlook

These industry dynamics provide a strong and sustained growth runway for Chemplast Sanmar. A focus on early- stage molecule development, advanced chemistry capabilities, and regulatory-compliant infrastructure, positions it as a preferred partner for global innovators. By aligning closely with evolving sectoral needs, particularly in agrochemicals and pharmaceuticals the Company is well-equipped to deliver high-quality, customised chemical solutions.

VALUE-ADDED CHEMICALS Chloromethanes

Chloromethanes are essential chemicals with wide applications across pharmaceuticals, refrigerant gases, and agrochemicals. This group consists of four key compounds: Methyl Chloride, Methylene Dichloride (MDC), Chloroform, and Carbon Tetrachloride (CTC). Among these, Methyl Chloride is primarily used in the production of the other three products.

MDC primarily serves as a solvent in bulk drug manufacturing and also finds applications in foam blowing, aerosols, and adhesives. Additionally, it acts as a crucial raw material for HFC-32, a refrigerant widely adopted in air conditioning systems. CTC plays a significant role as a feedstock for agrochemical intermediates. Chloroform holds significance in the production of tetrafluoroethylene, the building block for polymers such as PTFE. Moreover, chloroform is extensively used in manufacturing refrigerant gas R22 and in adhesive formulations, further highlighting its industrial significance.

2024-25 REVIEW

The Indian chloromethane market recorded a volume of approximately 342.32 thousand metric tonnes in 2024 and is projected to grow to around 428.23 thousand metric tonnes by 2030, with an expected CAGR of 3.8% from 2024 to 2030. The market is witnessing steady expansion with rising demand from pharmaceuticals, agrochemicals and refrigerant gas industries.

Market Dynamics and Industry Trends

The Indian Chloromethanes industry faced intense pricing pressure in 2024-25 primarily due to a surge in domestic production capacity. This surplus persisted throughout the year, weighing heavily on prices across all three product lines.

Offtake from the pharmaceutical sector, especially for MDC, remained steady. Even so, demand from other sectors stayed uneven. The foam sector showed intermittent recovery, supporting MDC sales at times. The transition from HCFC to HFC in refrigerant gas demand is expected to drive an increase in the demand for MDC in the coming years. Overall, the demand for Methylene dichloride was stable during the year from both Pharma and Polyurethane foam, growing by 6% to reach 425 KT. Meanwhile, Chloroform continued to face pressure due to excess availability of material in the domestic market, despite near-normal demand from key sectors like Pharma, Footwear, Polymer and Adhesives. The demand for CTC remains stable.

Price Trends and Inventory Management

Price volatility was a defining feature of the year, with chloroform prices mirroring a similar pattern of fluctuations, due to increased domestic availability and opportunistic imports. CTC prices saw a steep decline in Q3, led by excess inventory and heightened competition. However, prices improved in Q4 as stock levels normalised and demand picked up. Meanwhile, high inventory levels, particularly for CTC, added to pricing pressures and intensified competition among domestic producers. As a result, managing inventory became critical to maintaining margin stability and optimising sales volumes across quarters.

Outlook

The key challenge throughout 2024-25 was aligning supply with actual demand, as capacity additions outpaced consumption growth. This imbalance triggered price volatility, particularly in CTC. The industry also faced global uncertainties, high freight costs, and fluctuating feedstock prices. Although delayed import shipments occasionally supported domestic prices, the overall trend remained downward.

Looking ahead, restoring pricing stability will require improved export traction with improved demand from core sectors like pharma and agrochemicals. Chemplast Sanmar remains focussed on optimising its operational efficiency and market responsiveness to navigate the evolving competitive scenario.

The outlook for chloromethanes in 2025 points to a sustained increase in demand, supported by the expansion of end-use industries. With the Indian chemical industry projected to reach approximately USD 304 Billion by 2025, the chloromethanes segment is likely to benefit from this trend, particularly as companies prioritise sustainability and innovation in production methods.

Caustic Soda and Chlorine

Caustic Soda and Chlorine are essential chemicals produced through the electrolysis of brine, with hydrogen as a byproduct. Caustic Soda, or sodium hydroxide, is a fundamental alkali with widespread industrial applications. It plays a vital role in sectors such as alumina refineries, textiles, chemicals, paper manufacturing, and the soap and detergent industry. Chlorine is used in the manufacture of PVC, as well as in various other chlorine derivatives like chloromethanes and chlorinated paraffin wax.

2024-25 REVIEW

The Indian caustic soda market reached 4.20 Million metric tonnes in 2024. It is further anticipated to grow to 4.92 Million metric tonnes by 2027 and cross 7 Million metric tonnes by 2034, with an expected CAGR of 5.50% between 2025 and 2034. Rising demand from the pulp and paper, textiles, soap and detergents, and alumina industries drives this growth. The alumina sector, where caustic soda plays a crucial role in extracting alumina from bauxite, remains a key contributor.

Market Dynamics and Demand Trends

Domestic demand remained significant, supported by strong offtake from Pulp & Paper, Soaps & Detergents, ETP and Alumina sectors. The textile sector also gained traction during the year, further boosted by redirected orders from Bangladesh in mid 2024-25 amid social unrest there, which benefitted Indian textile processing units.

Domestic Caustic Soda prices fluctuated in line with market dynamics, influenced by domestic supply factors and global trends, particularly within Asia. In Q1, prices softened as oversupply and subdued demand in China exerted downward pressure. Shutdowns in China and maintenance activities in Northeast Asia (NEA) triggered a rally in Q2 and Q3, with prices peaking in November 2024. A seasonal dip followed in December, linked to a slowdown during the Lunar New Year period. In Q4, improved availability from the Middle East and Indonesia helped stabilise the regional supply-demand balance.

Chemplast Sanmars Performance

The year 2024-25 was a milestone year for Chemplast Sanmars Caustic Soda segment, driven by record sales volumes and strategic capacity expansion. We achieved our highest-ever caustic soda sales of 1,09,479 MT in 13 years, surpassing the previous record of 1,05,034 MT set in 2011-12 Chemplast adapted to evolving domestic and global market conditions while broadening its market presence. The manufacturing facilities at Mettur and Karaikal currently offer a total annual capacity of 119 kt, ensuring reliable supply to meet industry needs. The additional 40 TPD capacity added during the year was fully absorbed by the market, supported by improved demand and reduced imports in 2024-25.

Outlook

Looking ahead in 2025, the caustic soda market is expected to grow with rising demand from sectors like Alumina production and water treatment. Increasing investments in infrastructure and the expanding chemical manufacturing sector are also expected to further boost caustic soda consumption in India throughout 2025. The global chlor- alkali capacity is likely to rise in step with GDP until 2029, placing India in a strong global position.

The year underscored the importance of capacity-led growth, strategic customer engagement, and market diversification. The Company capitalised on strong domestic demand and export opportunities while navigating pricing volatility and rising competition. These challenges are likely to persist as the domestic supply base continues to expand. Sustained performance will depend on maintaining operational efficiency, managing input costs, and continuing to build resilient customer relationships across sectors and geographies. To navigate this environment, the Company remains focussed on using its integrated value chain and supply reliability to reinforce its competitive position in the caustic soda market.

Hydrogen Peroxide

Hydrogen Peroxide is widely used as an organic bleaching agent in the pulp & paper industry, as well as in the textile sector. It also plays a key role in the de-inking process for recycled paper production. Beyond these uses, it is utilised in the electronics, food and beverage, and healthcare industries. When combined with Peroxyacetic Acid, it becomes essential in formulating peroxide-based disinfectants. Its versatility extends further to various municipal and industrial applications, reinforcing its importance across multiple sectors.

2024-25 REVIEW

The Indian hydrogen peroxide market achieved a total market volume of 141.32 thousand metric tonnes in 2024. It is further expected to grow to around 246.15 thousand metric tonnes by 2030, with a CAGR of around 2.77% from 2025 to 2030. This expansion will be driven by its rising use as a disinfectant in the food processing industry and as a bleaching agent in the pulp & paper sector. Moreover, government regulations promoting eco-friendly chemicals have accelerated its adoption in water treatment and pollution control, further fuelling market expansion.

Industry Trends and Strategic Challenges

The Hydrogen Peroxide industry underwent structural changes during the year, with capacity additions and price-led competition, which altered the supply-demand dynamics. The new capacities, operating at higher utilisation rates, placed continuous pressure on pricing in Chemplast Sanmars key markets.

Although demand, particularly from paper & pulp and textiles, remained stable or showed improvement, profit margins were squeezed due to continued price erosion. Geopolitical shifts in the region, such as unrest in Bangladesh, temporarily shifted demand to India. But, this also led to an influx of lower-priced imports, further impacting the domestic market.

Chemplast Sanmars Performance

Chemplast Sanmars Hydrogen Peroxide business recorded its highest-ever annual sales volume in 2024-25, reaching 28,390 MT, surpassing the previous record of 25,316 MT in 2022-23. This achievement reflects Chemplast Sanmars operational agility and market responsiveness, despite an increasingly competitive and price-sensitive environment.

Outlook

The outlook for hydrogen peroxide in 2025 appears positive, with growth anticipated from rising demand in healthcare and paper & pulp. A focus on sustainability and ecofriendly products is set to strengthen its market position as industries seek greener alternatives.

While Chemplast delivered record volumes in 2024-25, the evolving competitive scenario presents a more challenging outlook. To counter this, Chemplast Sanmar will maintain its focus on cost leadership, customer alignment, and operational efficiency to protect profitability in a softening pricing environment. Looking ahead, market dynamics in the coming year will depend on how quickly new entrants stabilise their capacities and how demand from key sectors develops.

Suspension PVC

Suspension PVC is a highly adaptable polymer used across both rigid and flexible applications. Its rigid forms are commonly found in pipes, profiles, and roofing sheets, while its flexible variants are used in hoses, tubing, wires and cables, calendered sheets, and films. The global demand for Suspension PVC is largely driven by the construction industry and overall economic growth.

In recent years, consumption has surged in key Asian markets, particularly China, India, Vietnam, and Indonesia. China continues to be the largest consumer, while India is rapidly emerging as a significant market.

2024-25 REVIEW

The Suspension PVC industry saw strong growth, particularly in the housing, construction, irrigation, and drinking water sectors. Domestic demand in 2024-25 reached 4.32 Million tonnes, reflecting a robust year-on- year growth of nearly 7.50%. Meanwhile, weak economic conditions in many global markets have slowed demand elsewhere, leading to large-scale dumping of Suspension PVC into India. Notably, China continues to supply PVC at exceptionally low prices, driven by ongoing weakness in its property sector.

Market Performance and Chemplast Sanmars Volumes

The overall domestic demand for Suspension PVC grew significantly during the year, reflecting structural momentum in end-use sectors. However, Chemplast Sanmars sales volumes for Suspension PVC were lower compared to the previous year only because of inventory movement and minor production loss due to unfavourable weather conditions.

Although demand recovered after the seasonal slowdown in Q2, especially in Q3, Chemplast Sanmars full-year performance remained affected by intensified price competition, driven largely by imported material and deferred procurement from domestic buyers awaiting clarity on trade regulations.

Imports and Pricing Pressures

Imports remained a defining feature of the market throughout the year, with full-year volumes rising significantly over the previous year. This increase was driven by excess global capacity and weakened demand in major exporting regions such as China, Europe, and the US. Notably, Chinese exports exceeded previous annual averages, intensifying competitive pressure on domestic producers.

Exports to India reached a new high of 2.91 Million tonnes, up by approximately 3,00,000 tonnes from the previous year. Global demand faltered due to rising mortgage rates and inflation in the US, recessionary conditions and high energy prices in Europe, and continued weakness in China despite stimulus packages. This global slowdown led to a surge of low-priced PVC exports to India, shifting market sentiment towards maintaining low inventory in anticipation of further price declines.

The influx of low-cost imports triggered significant corrections in domestic prices over the year. Although there was a brief uptick in prices in Q1, driven by a temporary spike in ocean freight rates, the improvement proved short-lived as freight costs normalised and Chinese suppliers returned with aggressive pricing strategies. This environment compressed margins and weakened the competitiveness of local players.

Despite these challenges, the Indian Suspension PVC market experienced robust expansion in 2024-25, fuelled by infrastructure-led demand, including clean water supply projects, irrigation initiatives, and the growing adoption of UPVC profiles in the construction sector.

Outlook

The Suspension PVC segment is poised for strong growth, with demand projected to reach 5 Million tonnes per year by 2027. This expansion is driven by rising infrastructure projects and increasing consumption across multiple sectors. The governments push for ISI-marked pipes, which reduces filler usage and boosts PVC consumption, is a key factor in this growth. Additionally, the focus on expanding irrigation coverage through schemes like the Pradhan Mantri Krishi Sinchayee Yojana is further driving demand for PVC in the country. The recent extension of the Jal Jeevan Mission until 2028, announced in the Union Budget, is expected to provide additional momentum by supporting nationwide water supply initiatives.

While the demand for PVC remains robust and is expected to stay strong, the industry is currently facing significant challenges from the large scale dumping of PVC resin, which is impacting local market dynamics. The dumping at unfairly low prices is sought to be addressed through trade measures, which are expected to be in place by the second quarter of 2025-26.

(Sources:

https://themachinemaker.com/news/chemplast-sanmar-reduces-losses-in-q3-with-improved-prices-and-margins

https://nexizo.ai/daily-report/india-s-paste-pvc-demand-rises-19-eu-exports-challenge-pricing

https://assets.kpmg.com/content/dam/kpmg/in/ pdf/2022/1 1/Speciality-Chemicals-industry-India.pdf

https://www.kenresearch.com/industry-reports/india-pvc-emulsion-market

https://www.polymerupdate.com/News/Details/1351655

https://www.techsciresearch.com/report/india-hydrogen-peroxide-market/20745.html

https://www.cognitivemarketresearch.com/custom-manufacturing-market-report

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https://www.thebusinessresearchcompany.com/report/speciality-chemicals-global-market-report)

COMPANY OVERVIEW

Chemplast Sanmar Limited (also referred to as Chemplast or The Company) is a leading Indian manufacturer in the speciality chemicals space. It possesses exceptional expertise in the production of Speciality Paste PVC resins and in the custom manufacturing of starting materials and intermediates for critical sectors such as pharmaceuticals, agrochemicals, and fine chemicals. The largest producer of Speciality Paste PVC in India, the Company also ranks as the fourth-largest manufacturer of Caustic Soda and the leading supplier of Hydrogen Peroxide in South India. The Company was also among the earliest manufacturers of chloromethanes and refrigerant gases in India.

The Companys wholly-owned subsidiary, Chemplast Cuddalore Vinyls Limited (CCVL), is the second-largest Suspension PVC manufacturer in India and a market leader in South India. It significantly contributes to the Companys overall portfolio.

The Company faced significant pricing challenges during the year due to dumping of products at low prices into India. However, preparing for the future, the Company continued to focus on improving competitiveness, scaling operations, and expanding its product portfolio across key segments. Investments were directed towards increasing capacity in the CMC business, enhancing infrastructure, and fostering innovation partnerships with global customers. By collaborating with innovators and offering distinct products, the Company is poised for sustained long-term growth. The Company also continued to optimise its operations in Suspension PVC and Value-Added Chemicals in line with domestic demand and global supply shifts.

The financial performance for the year showed revenue growth and improved operating efficiency, supported by higher capacity utilisation and increased contribution from new business lines. While profitability remained under pressure due to external market challenges, proactive cost management and structural improvements supported the overall recovery momentum.

Sustainability and safety remain core components for Chemplast. All manufacturing facilities hold ISO 9001:2015 (Quality Management) and ISO 45001:2018 (Occupational Health and Safety) certifications. Coastal plants at Karaikal and Cuddalore operate on desalinated seawater, eliminating dependence on groundwater. The Company has also implemented zero liquid discharge across all sites. Detailing its sustainability activities, the Company has published Sustainability Reports, verified by a Big Four audit firm, aligned with GRI standards for over 15 years.

The Company has also been recognised for its commitment to operational excellence and safety, with many of its facilities receiving the prestigious Five Star rating from the British Safety Council. Most facilities have also earned the Sword of Honour, one of the highest global awards for health and safety performance.

Human Resources

Chemplasts success is built on its people, and the Company remains deeply invested in their growth and development. As the Company continues to expand and execute key projects, it actively builds its talent pool with skilled professionals across various levels. The Company also places strong emphasis on employee engagement, fostering a dynamic and inclusive workplace where individuals feel empowered to thrive.

Dedicated to creating a diverse and future-ready workforce, the Company offers extensive training and development programmes to strengthen skills and expertise. By continuously nurturing talent, Chemplast drives innovation and excellence across its operations.

Permanent Employees as of March 31,2025

Financial Performance

The Companys financial performance is tabulated here:

(in Rs. Crores)

Particulars	Standalone		Consolidated
	2024-25	2023-24	2024-25	2023-24
Sales and Other Income	2,408.74	1,697.29	4,393.12	4,003.45
Profit before Interest, Depreciation and Taxes	123.07	(16.74)	265.72	106.31
Profit/(Loss) before Tax	(111.90)	(156.17)	(169.07)	(225.57)
Tax Expenses	46.33	52.30	58.71	67.14
Profit/(Loss) after Tax	(65.57)	(103.87)	(110.36)	(158.43)

Key Financial Ratios

Major variations in Chemplasts key financial ratios, along with explanations for changes of 25% or more from the previous year, are detailed below.

Analytical Ratios	Numerator	Denominator	March 31, 2025	March 31, 2024	% Variance	Remarks
Trade Receivables Turnover Ratio	Net Sales	Avg. Trade Receivable	14.63	7.55	93.77	Higher net sales together with lower average trade receivables in 2024-25 has resulted in higher trade receivable turnover ratio.
Interest Coverage Ratio	EBIT	Interest & Lease Payment	(0.29)	(3.27)	91.27	Loss after Tax incurred in 2024-25 was lower than that of 2023-24 resulting in lower negative interest coverage ratio.
Current Ratio	Current Assets	Current Liabilities	0.96	1.15	(16.52)
Debt-to-Equity Ratio	Total Debt	Stakeholders Equity	0.24	0.17	41.18	The Company has taken additional debt during the current year for the purpose of project financing. Accordingly debt-equity ratio has increased.
Net Profit Margin	Net Profit after Taxes	Revenue from Operations	(2.75)%	(6.27)%	(56.14)	Loss after Tax incurred in 2024-25 was lower than that of 2023-24 resulting in lower negative net profit ratio.
Return on Net Worth	Net Profit after Taxes	Net Worth	(1.56)%	(2.70)%	42.23	Loss after Tax incurred in 2024-25 was lower than that of 2023-24 resulting in lower negative return on net worth ratio.

Financial Performance - Standalone

On a standalone basis, revenue from operations and other income for 2024-25 stood at Rs. 2,408.74 Crores, marking a 42% growth from Rs. 1,697.29 Crores in 2023-24. The Companys revenue recorded a 42% growth, driven by increase in PPVC sales (Paste Cuddalore) and also on account of increase in prices across all products. Finance cost rose from 33 to Rs. 87 Crores primarily due post capitalisation impact of project loans. Loss after tax for 2024-25 stood at Rs. 65.57 Crores, compared to Rs. 103.87 Crores in 2023-24.

Financial Performance - Consolidated

On a consolidated basis, the Companys revenue from operations and other income for 2024-25 stood at Rs. 4,393.12 Crores, reflecting a growth of 10% from Rs. 4,003.45 Crores in 2023-24. The Companys revenue saw a 10% growth driven by increase in PPVC sales (Paste Cuddalore) and also on account of increase in prices across all products partly offset by volume drop in CCVL. The finance cost increased from Rs. 180.52 Crores to Rs. 235.88 Crores, primarily due to post-capitalisation impact of project loans. Loss after tax for 2024-25 stood at Rs. 110.36 Crores, compared to Rs. 158.43 Crores in 2023-24.

RISK MANAGEMENT

The Company employs a well-structured risk management framework, supervised by a dedicated Risk Management Committee to ensure effective governance. Biannual risk assessments are conducted to identify and evaluate key areas such as finance, operations, sectoral trends, sustainability, and cybersecurity, allowing for swift and effective mitigation.

The Risk Management Policy outlines a structured approach to managing strategic, financial, and regulatory risks. Aligned with the Companies Act 2013 and SEBI regulations, the policy applies across all divisions, departments, subsidiaries, and acquired entities. Furthermore, regular reviews and proactive measures help Chemplast safeguard operations and uphold its reputation.

Risk Prioritisation

Based on the likelihood of occurrence and potential impact, risks are further segmented into:

Critical Risks: High-priority risks requiring immediate and proactive management.

Significant Risks: Key risks that need continuous monitoring and mitigation.

Moderate Risks: Risks that are managed through established controls and periodic reviews.

Low Risks: Minimal impact risks that are monitored to prevent escalation.

Risk Mitigation & Monitoring

Each risk category has tailored mitigation strategies, which undergo regular reviews. The Company actively tracks the implementation of these strategies, with periodic assessments of the Enterprise Risk Management (ERM) framework. This approach ensures the timely identification and resolution of emerging risks arising from changes in business strategy, market dynamics, or regulations.

Key Risks and Mitigation Strategies

Risk Category	Risk Description	Mitigation Strategy
Environmental Risk	Chemplasts operations involve factors such as energy use, waste management and water consumption, contributing to its overall environmental footprint.	The Company mitigates its impact through zero-liquid discharge systems, desalination plants, and eco-friendly initiatives. Investments in advanced pollution control technology and adherence to environmental regulations reinforce its commitment to sustainability.
Health & Safety Risk	Handling hazardous chemicals presents potential risks to employees and surrounding communities.	Chemplast prioritises safety by implementing stringent protocols, conducting regular training, and providing personal protective equipment (PPE). Routine health checks and third- party safety audits, including those by the British Safety Council, further strengthen workplace safety. These efforts have earned the Company accolades like the Five Star rating and the Sword of Honour for its most of its plants.
Supply Chain Risk	Reliance on suppliers for raw materials, R&D, and distribution makes the Company vulnerable to disruptions caused by external factors such as geopolitical issues and natural disasters.	To enhance supply chain strength, Chemplast diversifies sourcing, monitors supplier performance, and collaborates with industry partners. Alongside these, it also invests in technology to ensure transparency and operational efficiency.
Financial Risk	Market uncertainties, including currency fluctuations, commodity price swings, and shifting tax policies, pose financial risks.	The Company adopts hedging mechanisms, prudent financial strategies, and revenue diversification. Additionally, expanding into global markets and maintaining active engagement with stakeholders help navigate economic fluctuations.
Regulatory Risk	Operating in a highly regulated industry requires strict adherence to evolving laws and standards to avoid penalties and reputational damage.	Chemplast has a proactive compliance framework with regular audits and monitoring systems. Staying ahead of regulatory changes ensures smooth adaptation and minimises compliance risks.

Internal Controls

The Company upholds a solid framework of internal controls and monitoring systems, designed to meet operational needs. Financial governance is strengthened through meticulous budget oversight and well-defined standard operating procedures. During 2024-25, R.G.N. Price & Co., Chartered Accountants, carried out thorough internal audits across key operational areas. Their findings, along with proposed corrective measures, are presented to the Audit Committee for review. Additionally, internal auditors play a crucial role in assessing compliance and control efficiency, enabling management to take timely action on necessary improvements.

Cautionary Statement

The Management Discussion and Analysis may include statements regarding the Companys objectives, projections, estimates, expectations, or forecasts that qualify as forward-looking statements under applicable securities laws and regulations. Actual outcomes may vary from those anticipated. Key factors influencing the Companys performance include raw material availability and pricing, cyclical demand and pricing in core markets, foreign exchange fluctuations, regulatory and tax policy changes, economic conditions in India and other operating regions, and various external influences.