Divyadhan Recycling Industries Ltd Management Discussions

The Management Discussion and Analysis ("MD&A") contains forward-looking statements that reflect the Companys INTRODUCTION and expectations of future events and are subject to risks and uncertainties. Actual results may differ materially from thosecurrent views with respect to future events and financial performance. These statements are based on certain assumptions expressed or implied hereindynamics, and other external and internal factors. due to changes in global and domestic economic conditions, government policies, market cyclical demand patterns, price volatility, changes in government regulations and tax regimes, economic developments inImportant external factors that may affect the Companys operations include the availability and cost of raw materials, of a skilled and unskilled workforce. Readers are advised to read this in conjunction with the Companys audited financial India and the countries in which the Company operates, Indias trade agreements, currency exchange rates, and availability statements.

TheOVERALL globalREVIEW polyethylene terephthalate (PET) recycling industry has been experiencing robust growth, supported by adoption of sustainable packaging solutions by the FMCG, textile, and beverage industries.The textile industry continues torising environmental consciousness, stringent government regulations on plastic waste management, and the increasing employment generators, providing direct and indirect employment to over 35 million people. The sector has experiencedplay a vital role in the Indian economy, contributing to more than 15% of the countrys total exports. It is one of the largest development. It is also a critical component of the "Make in India" campaign, with immense potential for further growthsustained growth due to rising domestic and international demand, government support initiatives, and infrastructure and foreign exchange earnings. recycled product. During the year under review, the Company continued its core textile operations focused on full production potential of A. Industry Structure and Developments

The Indian textile industry has shown consistent growth, supported by multiple government initiatives such as the100% Foreign Direct Investment (FDI). The Ministry of Textiles continues to play an active role by engaging with industryScheme for Integrated Textile Parks (SITP), Production Linked Incentives (PLI), and the automatic approval route for stakeholders and promoting development and modernization.

The global polyethylene terephthalate (PET) recycling industry has been experiencing robust growth, supported byrising environmental consciousness, stringent government regulations on plastic waste management, and the increasing increasingly being used as a substitute for virgin PET in multiple applications including packaging, textiles, fibers, sheets, adoption of sustainable packaging solutions by the FMCG, textile, and beverage industries. Recycled PET (rPET) flakes are ban on single-use plastics, and increased investments in recycling infrastructure are expected to further accelerate thefilms, and industrial strapping. In India, the implementation of Extended Producer Responsibility (EPR) guidelines, the demand for rPET.

B. Rising Opportunities and demand from Threats FMCG,- Opportunities: textile, and beverage– companies for recycled PET products. - Growing emphasis on Government incentives and policies encouraging recycling and circular economy initiatives. sustainability and ESG compliance across industries. - Export opportunities for high-quality, food-grade rPET flakes. -

Threats: –

Price volatility of virgin PET affecting the competitiveness of rPET. - Dependence on the availability and quality of post- consumer PET bottle waste. - Competition from both organized and unorganized recycling players. - Quality control challenges due to inconsistent raw material supply.

C. TheOutlook:- Company remains optimistic about Indias long-term growth prospects and is committed to contributing meaningfully toin the coming year, with demand expected to rebound steadily. the textile of the most essential human needs. We anticipate stronger performance in the textile business D. Risk is RISKS inherent to business growth. Successful companies strike a balance between taking calculated risks and deliveringAND CONCERNS :management practices. risk-adjusted returns. The Company identifies, assesses, and mitigates internal and external risks through robust risk

Geopolitical and tariff-related risks, which may indirectly impact the Companys customers and their supply chains. Key concerns include:

- Currency volatility and raw material price fluctuations.

- Interest rate changes and credit availability in the real estate sector.

The Company continues to monitor all risk factors and remains proactive in adjusting its business strategies to mitigatepotential impacts

E. Internal Control System:

The Board has adopted system of internal control to ensuring the orderly and efficient conduct of its business, including accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. The adherence to the Companys Policies, the safeguarding of its assets, the prevention and detection of fraud and errors, the systems are commensurate to the size and operations of the company. management reviews the control systems and procedures periodically to upgrade them. Presently the internal control

F. FINANCIAL & OPERATIONAL PERFORMANCE:

During the financial year 2024-25, the Company continued its core activities of production of Rpet Flakes within the the previous year. textile sector. The Company reported a Profit After Tax (PAT) of Rs. 153.62 lakh in 2024-25 as against Rs. 306.72 lakh in

The turnover for the year stood at Rs. 5,948.23 lakh, as compared to Rs. 5,612.99 lakh in the previous year .

H. HUMAN RESOURCE MANAGEMENT AND INDUSTRIAL RELATIONS:

The Company continued to enjoy harmonious and cordial relations amongst its entire employee. The key to the successposition. It is the peoples commitment, technical know-how, innovative ability and performance driven mindset thatof the Company lies in its people whose skills, expertise, and talent help the Company to achieve and sustain its market enable to react swiftly and creatively to the evolving customer and market needs.

Human resources continue to be an invaluable and intangible asset and key success factor for the Company to grow andsustain its market position in a highly competitive and challenging environment. Your Company firmly believes that skills and building talent for the future and the process of improving organizational and human capability throughpeople are the pivotal force behind the growth and excellence in business operations. Focus on developing leadership competencymappingof managerial positions in all areas of the Companys operations, continued asamajorinitiative.The and pride.

I. CAUTIONARY STATEMENT:

Statements in this Report on Management Discussion and Analysis describing the Companys objectives, projections,results could differ materially from those expressed or implied. Investors are cautioned that this discussion containsestimates, expectations or predictions are based on certain assumptions and expectations of future events. Actual similar expressions are intended to identify such forward looking statements. The Company assumes no responsibilitystatements that involve risks and uncertainties. Words like anticipate, believe, estimate, intend, will, expect and other events. to amend, modify or revise any forward looking statements, on the basis of subsequent developments, information or