Clean Science & Technology Ltd Management Discussions

GLOBAL ECONOMIC REVIEW

In 2024, the global economy recorded 3.2% growth, marking a phase of steady expansion. This momentum is likely to continue, with GDP growth projected at 3.3% in both 2025 and 2026. Moderating inflation, resilient labour markets and sustained consumer spending are expected to support this trend. Additionally, a gradual shift towards accommodative monetary policies has encouraged investment flows. This, in turn, has strengthened economic activity across regions, despite ongoing geopolitical tensions and policy-related uncertainties.

Growth projections remained uneven across advanced economies. In the US, economic activity is finding support from strong consumer demand, improved financial conditions, and a softer monetary stance. A solid labour market and rising investment are expected to drive growth to 2.7% in 2025. In Canada and the United Kingdom, GDP growth is expected to be registered at 2.0% and 1.6% respectively. While rising real incomes are likely to aid a recovery in consumer spending, trade uncertainty and policy shifts are expected to weigh on investment.

In the Euro area, growth is anticipated to improve at a measured pace, with geopolitical tensions still affecting sentiment. The slowdown at the end of 2024, particularly in manufacturing, along with political and policy uncertainties, has resulted in a 1.0% growth projection for 2025. By 2026, growth is predicted to rise to 1.4%, supported by stronger domestic demand, looser financial conditions, improved confidence, and reduced uncertainty.

Growth in emerging markets and developing economies is expected to align closely with 2024 levels through 2025 and 2026. In India, GDP growth is projected to hold steady at 6.5% in both 2025 and 2026. Chinas GDP growth, which stood at 4.8% in 2024, is expected to moderate slightly to 4.6% in 2025 and 4.5% in 2026. Strong domestic consumption, policy support, and continued investments are likely to drive this stable economic trajectory.

The Middle East and Central Asia are projected to record 3.6% growth in 2025 and 3.9% growth in 2026. The region is expected to benefit from a mix of economic diversification efforts and continued investment in key sectors. Despite a slowdown in the US, Latin America and the Caribbean are projected to see overall growth edge up to 2.5% in 2025. This highlights the endurance in smaller economies and sectoral diversification.

Global inflation is anticipated to decline to 4.2% in 2025 and 3.5% in 2026. Advanced economies are likely to meet inflation targets ahead of emerging markets and developing economies. A stronger US dollar has put pressure on emerging markets by increasing the cost of dollar-denominated debt, widening trade deficits, and triggering capital outflows as investors seek safer assets. This dynamic has been intensified by the US Federal Reserves interest rate hikes, which have bolstered the dollars value and raised borrowing costs for emerging economies with substantial foreign currency liabilities. Compounding these structural headwinds is the recent escalation of global trade tensions driven by the USs sweeping tariff regime. Starting April 2025, the US imposed a baseline 10% tariff on all imports, with higher rates targeting countries with which it has the largest trade deficits. This move threatens to erode global trade cohesion and exacerbate supply chain disruptions. The resulting uncertainty has dampened business sentiment and disrupted capital expenditure cycles, with early signs already indicating a slowdown in investment activity. Although the International Monetary Fund (IMF), in its January 2025 update, retained a stable global growth projection, it cautioned that such developments could present significant downside risks to future forecasts. However, many of these economies, supported by robust foreign exchange reserves, proactive monetary policies, and strong domestic demand, are well-equipped to mitigate these challenges. At the same time, central banks facing . persistent inflation are proceeding cautiously with policy easing, while closely monitoring economic activity, labour markets, and exchange rate movements.

(Source: https://www.imf.org/en/Publications/WEO/

Issues/2025/01/17/world-economic-outlook-update-january-2025)

Real GDP Growth (in %)

	Global Economy
2024E	2025P	2026P
3.2	3.3	3.3
	Advanced Economies
2024E	2025P	2026P
1.7	1.9	1.8
Emerging Markets and Developing Economies
2024E	2025P	2026P
4.2	4.2	4.3

E - Estimated P - Projected

(Source: https://www.imf.org/en/Publications/WEO/

Issues/2025/01/17/world-economic-outlook-update-january-2025)

INDIAN ECONOMIC REVIEW

Indias economy continues to rise, with the First Advance Estimates (FAE) projecting real GDP growth at 6.4% for 2024-25.

(Source: https://rbidocs.rbi.org.in/rdocs/Bulletin/ PDFs/0BULLETIN17012025618F210 33FC94574912BFCF428F88A50.PDF)

In contrast to the slowing growth in many global economies, India maintained steady momentum through solid macroeconomic fundamentals and reform-led governance. Continued efforts to improve ease of doing business and attract investment have strengthened the nations global economic positioning.

Indias economic momentum is further supported by a strong agricultural performance. In addition, the services sector continues to be a key growth driver, providing a stable foundation for overall economic activity.

Manufacturing exports are witnessing a steady rise, especially in high-value-added areas like electronics, semiconductors, and pharmaceuticals. This growth reinforces Indias rising position in global value chains. Although the secondary sectors like manufacturing, construction, and utilities have faced temporary disruptions, primarily due to monsoon-related challenges, their recoveries are expected as conditions normalise.

The Union Budget for 2025-26 focusses on sustaining economic growth through strategic initiatives. Key areas include promoting agricultural development, supporting the manufacturing sector under the ‘Make in India initiative, and implementing skill development programmes to generate employment. These efforts aim to ensure a sustainable and inclusive growth trajectory.

On the external front, India recorded export growth of 5.9% in 2024-25, led by continued strength in services. A modest 1.3% decline in imports further improved the trade balance.

Export growth has been broad-based, backed by policy initiatives like the National Logistics Policy, Production-Linked Incentive (PLI) schemes, and improved trade infrastructure, among others. Parallelly, net exports have contributed positively to overall growth. High-value sectors such as electronics, pharmaceuticals, engineering goods, and agriculture, alongside innovations in digital commerce, have fuelled this momentum. With continued emphasis on increasing competitiveness and diversifying the countrys export markets, Indias external sector is expected to sustain its growth.

(Source: https://rbidocs.rbi.org.in/rdocs/Bulletin/ PDFs/0BULLETIN17012025618F21033FC94574912BFC F428F88A50.PDF)

GLOBAL CHEMICAL MARKET REVIEW

The chemicals market has witnessed significant expansion in recent years and is anticipated to uphold this momentum. Valued at US$ 3.08 trillion in 2023, the Global Chemical Market is projected to reach US$ 4.95 trillion by 2031, registering a compound annual growth rate (CAGR) of 6.1% during the forecast period from 2024 to 2031. This upward trajectory stems from factors like stricter environmental regulations, evolving consumer preferences, increased adoption of renewable and bio-based materials. geopolitical influences, and a greater emphasis on health and safety. Heightened attention to health and safety standards is fuelling demand for high-performance specialty chemicals. These chemicals are now extensively used in pharmaceuticals, personal care products, and food safety solutions. Simultaneously, sectors such as construction and manufacturing are increasingly adopting advanced coatings, adhesives, and protective materials. By contributing to workplace safety and supporting regulatory compliance, such innovations are further accelerating market growth.

Furthermore, the rising demand for inorganic chemicals within the fertiliser industry is expected to support market growth. At the same time, the increased adoption of organic chemicals in pharmaceuticals, agrochemicals, and personal care products are further driving the markets expansion.

(Source: https://www.snsinsider.com/reports/global-chemical-market-4043#:~:text=The%20Global%20Chemical%20 Market%20was,period%20from%202023%20to%202030.)

Asia serves as the global hub for the chemical industry, supported by its strong manufacturing base, abundant raw materials, and cost advantages. Asia represents the largest chemical markets, benefitting from rapid industrialisation, government-led infrastructure investments, and a growing middle class. This widening consumer base is increasing demand across key sectors like automotive, construction, and electronics, firmly establishing Asia as a key player in the global chemical supply chain.

Meanwhile, Europe has emerged as the second-largest market, supported by advancements in specialty chemicals, increasing shale gas-based production. Strong demand from high-tech industries such as aerospace, pharmaceuticals, and advanced materials have also contributed to this development.

The industry is well-positioned for transformation, driven by a set of emerging and evolving trends. These include a stronger focus on sustainability and green chemistry, digital transformation, the circular economy, and advancements in materials and nanotechnology.

GLOBAL CHEMICAL MARKET SIZE FORECAST

(Source: https://www.snsinsider.com/reports/global-chemical-market-4043#:~:text=The%20Global%20Chemical%20 Market%20was,period%20from%202023%20to%202030.)

GLOBAL SPECIALTY CHEMICALS MARKET

The global specialty chemicals market is projected to reach US$ 912.49 billion by 2030 from US$ 641.50 billion in 2023, clocking in a CAGR of 5.2% during the forecast period.

US$ 271 billion

Incremental Growth between 2023 and 2030

Asia-Pacific

Largest Region in the Specialty Chemicals Market in 2024

Asia-Pacific

Fastest Growing Market from 2023 to 2030

(Source: https://www.grandviewresearch.com/industry-analysis/ specialty-chemicals-market)

SEGMENT SHARE IN 2024 (in %)

*Note APAC value has been rounded up

(Source: Technavo · Global Specialty Chemical Market Report - 1st Feb, 2025)

Specialty chemicals are high-value chemical products developed for specific applications across diverse industries. Unlike commodity chemicals, which serve general purposes and are produced in bulk, specialty chemicals deliver tailored performance. They offer distinct properties such as high purity, enhanced stability, or specific reactivity. These chemicals help enhance efficiency, durability, and safety in end-user applications.

Specialty chemicals find application across a wide range of industries, including:

Agriculture: Pesticides and fertilisers

Construction: Paints, coatings and adhesives

Electronics: Semiconductors and circuit boards

Automotive & Aerospace: Lubricants and composites

Personal Care & Cosmetics: UV filters and active ingredients

Pharmaceuticals: APIs and excipients

Textiles: Dyes and coatings

Driven by evolving industrial needs and technological advances, the global specialty chemicals market is set to expand significantly from 2023 to 2030. Improving living standards in Asian countries such as India and Bangladesh, alongside surging demand for electronics and improved process technology, are expected to support this growth. In addition, increasing urbanisation and industrialisation in countries like China, India, and Japan are set to drive demand for paints and coatings, thereby boosting the need for construction chemicals.

One key trend shaping the market is the surging personal care and cosmetic product demand. Consumers now prefer high-quality, specialised ingredients in beauty and skincare, thereby increasing the requirement for specialty chemicals in this sector. With continuous research and development (R&D), alongside innovation, specialty chemicals are expected to play a crucial role in shaping the future of various industries worldwide.

Looking ahead, the specialty chemicals market is set for steady expansion as industries continue to seek innovative and sustainable solutions. Advancements in chemical formulations and the adoption of advanced technologies will define the sectors future, ensuring continued growth and evolution in the years to come.

GLOBALSPECIALTYCHEMICALMARKETSIZEFORECAST

(Source: https://www.grandviewresearch.com/industry-analysis/ specialty-chemicals-market)

INDIAN SPECIALTY CHEMICALS MARKET

The specialty chemicals sector in India serves several key segments, including:

Flavours and fragrances

Colourants

Polymer additives

Personal care ingredients

Paints and coatings

Agrochemicals

Water treatment chemicals

Construction chemicals

Surfactants

Government initiatives such as ‘Make in India and ‘Atmanirbhar Bharat Abhiyaan are further driving this momentum. These policies encourage domestic production, reduce import dependency, and support sectoral innovation. Additionally, export incentives and trade agreements are helping Indian manufacturers expand their global footprint, strengthening the countrys position in international markets.

The rapid expansion of end-use industries continues to fuel demand for specialty chemicals. The pharmaceutical sector relies on specialty chemicals for drug formulations, active pharmaceutical ingredients (APIs), and excipients. As the sector expands, demand for these critical inputs continues to rise. The rise of biopharmaceuticals and personalised medicine is driving the need for high-quality specialty chemicals in drug development. Also, the increasing adoption of contract manufacturing in the pharmaceutical industry is accelerating demand for specific chemical intermediates and customised formulations. Furthermore, in agriculture, increasing focus on high-quality agrochemicals, including pesticides and fertilisers, is helping improve crop yields and pest control strategies.

Beyond these sectors, rising disposable incomes and evolving consumer preferences are fuelling demand for cosmetics, detergents, and personal care products. These products depend heavily on specialty chemicals for formulation, performance, and safety. As industries continue to innovate, the need for advanced and sustainable specialty chemical solutions is expected to rise.

Sustainability and green chemistry are emerging as major growth drivers in the global and Indian specialty chemicals industry. With environmental regulations becoming stricter and consumer awareness increasing, businesses worldwide are shifting to eco-friendly, non-toxic, and biodegradable solutions. Companies are increasingly adopting green chemistry principles to minimise waste, reduce carbon emissions, and improve energy efficiency in production processes. These sustainable measures are not only ensuring regulatory compliance but also strengthening long-term industry growth.

Another important trend influencing the market is the rising demand for customised chemical solutions across pharmaceuticals, agriculture, and electronics. With such tailored formulations, businesses are delivering high-performance, application-specific products that enhance operational efficiency.

INDIAN SPECIALTY CHEMICALS MARKET TRENDS

Exports and the China+1 Strategy

Indias specialty chemicals exports continue to gain traction as global companies seek alternatives to China under the China+1 strategy. In addition, heightened geopolitical tensions and supply chain disruptions from China have pushed multinational corporations to diversify their supplier base. This shift has opened strong export opportunities for Indias chemical industry.

Subsequently, Indian manufacturers are increasingly exporting pharmaceutical intermediates, agrochemicals, and high-performance industrial chemicals to markets in Europe, North America, and Southeast Asia. Favourable trade agreements, competitive manufacturing costs, and a strong R&D ecosystem have further positioned India as a key player in the global specialty chemicals supply chain.

Increasing Shift towards Sustainable and Green Chemistry

The Indian specialty chemicals market is shifting towards green and sustainable chemical solutions. Leading companies are investing in eco-friendly methods to develop chemicals with lower toxicity and higher biodegradability. This approach aligns with global environmental standards and evolving consumer preferences. Regulatory pressure and rising environmental awareness among manufacturers and end-users are driving this change.

The adoption of green chemistry helps reduce environmental impact and creates opportunities in sectors where the demand for sustainable products is rising. Some of these sectors are pharmaceuticals, personal care, and agriculture.

Indian manufacturers are responding to this trend by increasing investments in bio-based polymers, renewable solvents, and biodegradable surfactants. Moreover, the Governments push for zero-liquid discharge policies and stricter emission norms is accelerating this transformation even further.

Rising Demand in End-Use Sectors

There is a notable increase in product demand across various end-use sectors, including pharmaceuticals, construction, and automotive.

In pharmaceuticals, the surge in biologics, personalised medicine, and stringent quality standards is accelerating demand for high-purity excipients, drug delivery polymers, and specialty solvents. The sectors emphasis on innovation and compliance with global regulations is further boosting specialty chemical consumption.

The construction sector is also witnessing increased adoption of specialty adhesives, waterproofing solutions, and eco-friendly concrete additives, driven by infrastructure development and sustainable building practices.

In the automotive industry, the push for electric vehicles and fuel-efficient designs is raising demand for advanced lubricants and lightweight composites. High-performance coatings are also gaining traction for their ability to improve durability and energy efficiency.

Increasing Emphasis on Research and Development

Greater focus on R&D plays a significant role in driving market growth. Leading companies are investing heavily to develop and innovate new products that meet specific consumer needs, complying with strict quality norms. These efforts expand product range and help businesses stand out in a competitive market.

Collaborations with academic or research institutions are also fostering innovation. Such partnerships are enabling the creation of advanced chemical solutions aligned with shifting market needs and regulatory requirements. Recent investments in AI-driven chemical discovery and high-throughput screening techniques are further expediting new product development cycles.

Rising Popularity of Personal Care and Cosmetic

Ingredients

Indias personal care and cosmetics industry is shifting significantly towards natural, organic, and dermatologically safe ingredients. Growing awareness of health risks linked to synthetic chemicals among consumers is driving this change.

In response, multinational cosmetic brands are sourcing more raw materials from India, increasing the demand for specialty chemicals in emulsifiers, UV filters, anti-aging compounds and moisturising agents.

As consumers seek customised and functional beauty solutions, the personal care specialty chemicals segment is expected to see continuous growth.

Increasing Role of Specialty Chemicals in EVs and Electronics

The rapid adoption of Electric Vehicles (EVs) and the expansion of electronics manufacturing in India are driving demand for high-performance specialty chemicals. Government initiatives, including the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme and the PLI scheme for (Advanced Chemistry Cell) ACC batteries, are accelerating this shift. These programmes are driving the need for specialty chemicals in battery manufacturing, thermal regulation, and lightweight component production.

COMPANY OVERVIEW

Incorporated in 2003, Clean Science and Technology Limited (also referred to as ‘CSTL or ‘The Company) manufactures fine and specialty chemicals. The Company is among the few global organisations focussed on developing innovative technologies through sustainable, cost-effective, and catalytic manufacturing processes. Globally, CSTL is one of the largest manufacturers of certain chemicals developed in-house.

The Company serves three primary industry segments: performance chemicals, pharmaceutical & agro intermediates, and FMCG chemicals. With a global presence spanning over 35 countries, CSTL continues expanding its reach and impact across international markets. By harnessing a strong new product development (NPD) engine, CSTL has developed its highest-ever number of products in a single financial year. These included the entire Hindered Amine Light Stabilizers (HALS) series and DHDT, a vital pharmaceutical intermediate, along with two new products in the performance chemicals segment slated for commercialisation in 2025 26.

Clean Fino-Chem Limited (CFCL), a wholly-owned subsidiary of the Company, focusses on manufacturing Hindered Amine Light Stabilisers (HALS), a critical product used in polymer stabilisation. CFCL houses Indias largest HALS manufacturing facility, producing multiple grades including HALS 770, HALS 622, HALS 944, HALS 119, and HALS 783. These are marketed under the ‘Cleanlight Stab series and serve critical applications across the polymers, agriculture, and pharmaceuticals industries. Aligned with the Companys sustainability and innovation goals, CFCL uses eco-friendly manufacturing and runs Zero Liquid Discharge (ZLD) facilities. This commitment to sustainable practices supports the Companys environmental goals, while enhancing its product portfolio and meeting the demands of global markets. The diversification of the HALS product offering has led to increased revenue contributions from multiple grades, including HALS 770, 622, 944, 119, and 783. Additionally, two new products, DHDT and BHT, were successfully commercialised during 2024-25, further expanding the product portfolio. Underscoring this leadership, CSTL is the first Indian company and the fifth globally to be fully backward integrated for HALS production, establishing a new industry benchmark.

CSTL operates four standalone functional units in the Kurkumbh Industrial Area, Maharashtra. Each unit features dedicated production lines tailored to specific products. Every unit also houses an independent R&D centre and functions as a Zero Liquid Discharge (ZLD) facility, ensuring low environmental impact.

The Companys deep expertise in atom economy and process optimisation has enabled it to excel in complex chemistries. These processes include triphasic catalytic ring formation, hydrogenation, esterification, polymerisation, halogenation, alkylation, and various others.

To support rapid commercialisation of new processes, the Company also operates a pilot facility, enabling accelerated product development and reducing time-to-market. Additionally, the newly established application lab, the first of its kind in the history of the Company, has been set up to evaluate the performance of HALS products. This initiative enhances customer confidence by allowing clients to rigorously test and validate product quality and performance, strengthening trust and enabling deeper collaboration.

With sustainability as a core business driver, CSTL integrates health, safety, and environmental concerns into its operations. This approach safeguards stakeholder well-being and ensures compliance with global regulatory standards. Furthermore, an efficient cost structure, enabled by reduced effluents and optimised capex, provides the Company with a distinct industry advantage.

PRODUCT PORTFOLIO AND SEGMENT REVIEW

Product Portfolio	Revenue Contribution	Contribution to Revenues (in %)
Performance Chemicals	6,134 million	69
Pharma-Agro Intermediaries	1,689 million	19
FMCG Chemicals	1,084 million	12

PERFORMANCE CHEMICALS

Performance chemicals play a vital role in strengthening product stability, longevity, and efficiency across polymers, coatings, food, and pharmaceuticals. These chemicals also enhance durability, resist oxidation, and offer UV protection, ensuring superior performance in across a wide range of applications.

The industry continues to expand, supported by rising demand for high-performance materials in automotive and construction. Meanwhile, as end-users seek longer product lifespan and regulatory compliance, innovations in coatings and stabilisers are shaping the industrys future.

As the largest, fastest-growing, and most margin-accretive segment for the Company, performance chemicals contributed 69% to revenues in 2024-25. During the year, the Company also recorded its highest-ever sales volumes for key products including MEHQ, BHA, TBHQ, and AP.

Key products within the segment include:

Chemicals	Application	Rank
MEHQ (Monomethyl Ether of Hydroquinone)	Polymerisation inhibitor in acrylic acids and esters	No. 1 globally
	Precursor for agrochemical industry
BHA (Butylated Hydroxy Anisole)	Antioxidant in food and feed industries	No. 1 globally
AP (Ascorbyl Palmitate)	Used in infant food formulations, breakfast cereals, and cosmetics	No. 1 globally
TBHQ (Tertiary Butyl	Oil stabiliser	No. 2 globally
Hydroquinone)		Leader in India
HALS (Hindered Amine Light Stabilisers)	HALS 701: Used in water treatment	No. 1 in India
	HALS 770, 622, 944, 119, 783: UV stabilisation for polymers
BHT (Butylated Hydroxytoluene )	Feed antioxidants market Petrochemical application	Commercialised only in 2024-25

PHARMA & AGRO INTERMEDIATES

The pharma and agro intermediates segment plays a pivotal role in advancing healthcare and agriculture. It supplies high-quality chemical intermediates used in the synthesis of active pharmaceutical ingredients (APIs) and agrochemicals. These intermediates help develop lifesaving medicines and efficient crop protection solutions, ensuring both health security and food sustainability. Additionally, the segment serves global pharmaceutical companies, agrochemical manufacturers, and specialty chemical firms, reinforcing its importance in critical value chains.

Demand for generics, specialty drugs, and biologics is rising, driving the pharmaceutical sectors growth. At the same time, the agrochemicals sector is expanding as farmers are adopting high-efficiency crop protection to meet growing food needs.

In 2024-25, the pharma & agro intermediates segment contributed 19% to revenues, reflecting solid demand for high-purity, value-added intermediates. During the year, the Company also recorded its highest-ever sales volumes for Guaiacol and Veratrole. Parallelly, backward integration, stringent quality standards, and process innovations enable the Company to deliver sustainable and cost-effective solutions to its customers.

Key products in this segment include:

Chemicals	Application	Rank
Guaiacol*	Precursor for APIs in cough syrups	No. 2 globally
	Key raw material for Vanillin production	No. 1 in India
DCC (Dicyclohexyl Carbodiimide)	Reagent in anti-retroviral production	No. 2 globally
		No. 1 in India
Veratrole	Intermediate in agrochemical industry	Amongst the largest in India
DHDT	Reagent in anti-retroviral production	No. 1 in India

* Considering only Pharma Market

FMCG CHEMICALS

The FMCG chemicals segment plays a critical role in supplying high-performance specialty chemicals that improve product quality, efficacy, and safety across industries like cosmetics, personal care, pharmaceuticals, and fragrances. These chemicals are key ingredients in everyday consumer products like sunscreens, skincare formulations, perfumes and medicinal products.

FMCG chemicals market is evolving rapidly, driven by increasing consumer preference for high-performance, sustainable, and eco-friendly ingredients. In 2024 25, the FMCG Chemicals segment accounted for 12% of revenues, underscoring its growing strategic value within the Companys portfolio. During the year, the Company also recorded its highest-ever sales volumes for 4 MAP and Anisole. The segment benefits from strong in-house R&D capabilities, backward integration, and stringent quality control, ensuring superior product performance and sustainability.

Key products in this segment include:

Chemicals	Application	Rank
4-MAP (4-Methoxy Acetophenone)	Used in UV blocker in sunscreens (cosmetics industry)	No. 1 globally
Anisole	Precursor to perfumes, insect pheromones, and pharmaceuticals	No. 1 globally
	Majority of anisole produced is used for captive consumption

FINANCIAL OVERVIEW

Financial Performance (All Figures in million unless mentioned)

Particulars	2024-25	2023-24
Export Revenue	5,868	4,972
Domestic Revenue	3,194	2,807
Other Operating Income	161	116
Total Revenue	9,223	7,894
Cost of Material Consumed	3,258	2,755
Employee Cost	496	463
Power and Fuel Costs	781	643
Other Expenses	698	661
Total Expenses, Excluding Depreciation and Interest	5,232	4,522
EBITDA	3,991	3,372
EBITDA (%)	44	43.4
Depreciation Costs	444	438
Interest Costs	3	8
Other Income	362	384
PBT	3,906	3,310
PBT % to Sale of Goods	43.1	42.6
Tax Expenses	982	833
PAT	2,923	2,477
PAT (%)	32.3	31.8

Financial Ratios

	2024-25	2023-24	Reason for Change
Inventory Turnover (Cost of Goods sold/Average Inventories)	3.0	2.5	Increase due to higher sales achieved from same level of inventory
Current Ratio (Current Assets/Current Liabilities)	5.7	4.9	Mainly due to increase in trade receivables and investments and decrease in trade payables
Debtors Turnover (Net sales/Average Trade Receivable)	5.2	5.0	Mainly due to increase in sales
Operating Profit Margin (%) (Profit Before Interest 39.1 and Taxes/Net Sales)		37.7	Mainly due to increase in sales
Net Profit Margin (%) (Net Profit after Tax/Net 32.3 Sales)		31.8	Mainly due to increase in sales
Return on Net Worth (%) (Net Profit after Tax/ Average Net Worth)	21.9	22.2	ROI has been steady
Interest Coverage Ratio (Earnings Before Interest and Taxes/Interest Expenses)	-	-	Not applicable as there are no borrowing
Debt Equity Ratio (Net Debt/Net Worth)	-	-	Not applicable as there are no borrowing

HUMAN RESOURCES

CSTL believes that a thriving workforce and responsible corporate ethos are fundamental to long-term success. The Company is committed to fostering a safe, inclusive, and growth-oriented work environment, while actively contributing to social and environmental well-being. By investing in employee development, upholding ethics, and engaging communities, the Company aligns its business growth with sustainability and social responsibility.

Employee Well-Being and Safety

CSTL places a strong emphasis on maintaining high safety standards to ensure the well-being of employees across all its operations. Staff undergo thorough training on safe work practices, appropriate workplace behaviour, and the correct use of Personal Protective Equipment (PPE).

The Companys Occupational Health Centre (OHC), staffed with qualified doctors and nursing professionals, is readily available for employees in need of medical assistance. Additionally, CSTL has partnered with local hospitals to provide prompt medical support and conduct regular health check-ups for its workforce.

Frequent training sessions and refresher courses reinforce the importance of strict adherence to safety protocols at all levels. The Company also offers medical insurance to its employees and has maintained a record of zero fatalities across its plants and offices.

Training and Development

CSTL remains focussed on enhancing employee capabilities through structured training programmes conducted by internal and external experts. These programmes cover technical knowledge, alongside managerial and behavioural aspects. To deliver the trainings effectively, the Company uses classroom instruction, live project assignments, and practical simulations.

These efforts boost productivity, improve product quality, and reduce workplace incidents. Moreover, regular compliance training ensures employees remain aligned with regulatory requirements.

The Company has also introduced digitalisation across most HR processes, improving accuracy, efficiency, and transparency. Furthermore, to stay aligned with industry best practices, CSTL regularly updates its policies to reflect the latest standards.

Clean Connect Annual Day

The Company fosters employee engagement through initiatives that help create a dynamic and inclusive workplace culture. One such event is the Annual Day celebration, where employees are given a platform to showcase their talents. The occasion also recognises long-serving employees who have completed five or ten years with the organisation.

To strengthen team spirit and employee well-being, CSTL organises recreational activities, including cricket tournaments. The Company also celebrates key festivals, including Republic Day, Independence Day, Diwali, and Womens Day. These events foster collaboration and build a strong sense of belonging and cultural appreciation within the workplace. By embedding social and recreational activities into the work environment, CSTL ensures employees feel valued and engaged.

Smooth Onboarding

The Company places significant importance on hiring the right individuals and ensuring a seamless onboarding process. It familiarises new employees with the workplace and offers dedicated support during their induction. CSTL also organises communication sessions to offer guidance and assistance to new hires, ensuring a smooth transition into their respective roles.

Talent Acquisition

CSTLs recruitment strategy includes campus hiring from well-regarded institutions, allowing the Company to attract emerging talent from both local and renowned engineering colleges. To build a strong leadership pipeline, the Company runs specialised programmes aimed at developing internal talent and preparing individuals for future leadership roles.

In tandem, high-performing employees are provided with opportunities for rapid career progression across various departments. The Company also prioritises skill enhancement by facilitating internal job rotations, enabling employees to broaden their expertise and contribute to the organisations overall growth.

Inclusive Workforce

The Company promotes diversity and equal opportunities, creating a work environment that supports professional growth for all employees. In addition, CSTL actively encourages female representation in leadership roles and across different departments.

Corporate Social Responsibility (CSR)

CSTLs CSR approach aligns closely with its commitment to sustainability. On this front, the Company actively contributes to the social and economic development of the communities where it operates, ensuring a meaningful and lasting impact. Since establishment, CSTL has backed several initiatives in key areas such as education, environmental conservation, healthcare, sanitation, skill development, and community welfare. The Company recognises wider societal needs and has undertaken projects aimed at environmental preservation and empowering individuals with disabilities to become self-sufficient.

CSTLs long-term objective is to build a sustainable future for coming generations by driving initiatives that uplift and support the society as a whole. Employees play an active role in these CSR activities, improving the impact of the Companys community outreach efforts.

RISK MITIGATION

Risk	Description	Mitigation Strategy
Macro	CSTLs extensive global sales presence makes it vulnerable to macroeconomic disruptions. Factors such as geopolitical tensions, trade restrictions, and supply chain challenges can significantly impact business operations. Furthermore, economic slowdowns in key markets may reduce demand, affecting revenue and profitability.	Diversification of markets and customers to minimise dependence on any single region
		Continuous monitoring of global economic trends to anticipate and prepare for potential disruptions
		Strengthening local sourcing strategies and maintaining alternative supplier networks to ensure business continuity
		Adopting cost optimisation measures to mitigate the financial impact of macroeconomic fluctuations
Regulatory	A broad geographical presence results in exposure to various local regulations. Failure to comply with new or amended policies could disrupt normal business operations.	Maintaining a compliance checklist with scheduled renewal dates for various licences and approvals
		Conducting regular internal audits to ensure adherence to local and international regulatory requirements
		Deploying a dedicated compliance team that monitors regulatory changes and implements necessary updates to policies and processes
		Ensuring all manufacturing facilities comply with global environmental, safety, and operational standards

Risk	Description	Mitigation Strategy
Forex	With business operations spanning over 35 countries, CSTL is exposed to fluctuations in foreign exchange rates. As a result, adverse currency movements can impact earnings and profitability.	Hedging net forex exposure actively to minimise volatility-related risks
		Maintaining a balanced mix of local and foreign currency transactions to reduce dependence on one currency
		Monitoring forex markets continuously to support informed financial decisions
		Diversifying revenue streams to offset potential losses from currency fluctuations
Raw Material Price Fluctuation	Volatility in raw material prices can affect production costs and impact profit margins. Sudden spikes in input costs may lead to pricing pressures and affect competitiveness.	Entering shorter-term contracts for both raw material procurement and product sales to reduce exposure to long-term price volatility
		Maintaining low inventory levels to optimise working capital
		Developing strong supplier relationships and identifying alternative sources to ensure stable supply
		Implementing cost optimisation and pricing strategies continuously to offset raw material cost fluctuations
Supply Chain	Global supply chain disruptions due to geopolitical events, logistical constraints, or raw material shortages could impact	Reducing dependency on specific suppliers by using raw materials that are widely available in the global market
	CSTLs production and delivery timelines.	Increasing supply chain endurance with multi-sourcing strategies and diversified procurement channels
		Maintaining adequate buffer stock of critical raw materials to mitigate short-term supply disruptions
		Enhancing logistics planning and working closely with key suppliers and logistics partners to ensure smooth operations
Concentration in End Industries	Relying heavily on a specific industry or few sectors may pose financial risks during downturns or demand shifts.	Expanding the end-use applications of CSTLs products to reduce dependence on specific industries
		Introducing new products to diversify the business portfolio and cater to a broader customer base Conducting continuous R&D to explore emerging industry trends and capitalise on new market opportunities Strengthening relationships with customers across multiple sectors to enhance revenue stability
Technology	CSTL operates in a highly competitive industry, where adopting new technologies and developing innovative products is essential. Consequently, risks may arise from technological obsolescence, unsuccessful product launches, or delays in adopting process advancements.	Implementing rigorous testing and validation processes before introducing new technologies or products
		Collaborating with academic institutions and industry experts to enhance technological capabilities
		Upgrading manufacturing processes regularly to improve efficiency and maintain a competitive edge

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Board of Directors at CSTL oversees the establishment, implementation, and evaluation of effective internal financial controls. To achieve this, the Company has developed a holistic framework of policies, procedures, and management systems that ensure regulatory compliance, financial accuracy, and operational efficiency.

Internal control mechanisms are implemented at both the entity and process levels to ensure adherence to established procedures and ethical standards. The Senior Management team certifies the effectiveness of these controls, while ensuring compliance with financial and commercial transactions, as well as declaring any conflict of interest.

To further strengthen the internal control framework, CSTL maintains an independent internal audit function. The Companys Audit Committee reviews and approves the audit plan. It also conducts regular meetings to assess audit reports and compliance issues and evaluates significant audit findings and follow-up actions for corrective measures.

CAUTIONARY STATEMENT

This annual report, including the Directors Report and Management Discussion and Analysis, may contain forward-looking statements regarding CSTLs strategic initiatives, future business developments, and financial performance. While these statements reflect the Companys current expectations and outlook, actual results may vary due to a range of risks and uncertainties.

Factors such as market fluctuations, macroeconomic conditions, regulatory changes, exchange rate movements, competitive dynamics, technological advancements, financial conditions of third-party stakeholders, and legislative amendments could influence CSTLs performance.

The Company assumes no obligation to update or revise any forward-looking statements to reflect future developments or events.