Eco Recycling Ltd Management Discussions

Industry Overview

Electrical and electronic equipment (EEE) continues to expand its footprint in modern life, accelerating demand in IT, telecom, consumer durables, and medical equipment. This consumption surge, while fueling socio-economic progress, is also creating unprecedented volumes of electronic waste (e-waste).

According to Allied Market Research, the global e-waste management market is projected to reach USD 244.6 billion by 2032, growing at a CAGR of 15.7%. In India, the sector is projected to expand at an even faster pace of 25% CAGR, supported by the Production Linked Incentive (PLI) scheme, digitization, and telecom growth.

For organized recyclers, this trajectory represents not just an environmental responsibility but a multi-dimensional business opportunity spanning precious metal recovery, data destruction, IT Asset Disposition (ITAD), and extended producer responsibility (EPR) compliance services.

Policy & Regulatory Environment

The Union Budget 2025 26 emphasized strategic resource securitization with the launch of the Critical Mineral Mission. Its provisions including customs duty exemptions on 25 critical minerals, domestic recycling support, and international acquisitions create a strong policy tailwind for companies engaged in precious metal and rare earth recovery.

Additionally, the E-Waste Management Rules 2022 mandate stricter EPR compliance, directly driving demand for scientific recycling solutions provided by players like Ecoreco.

Financial Linkage:

• The Critical Mineral Mission aligns with Ecorecos precious metal recovery facility, enabling new revenue streams from gold, silver, palladium, and rare earths extracted from PCBs and batteries.

• The strengthening of the EPR regime ensures recurring service revenue from brand owners, producers, and multinational corporations seeking compliance partners.

Market Dynamics and Growth Drivers

Revenue Mix Expansion:

• ITAD & Data Destruction: High-margin service segment driven by ESG and cyber security mandates.

• Precious Metal Recovery: Expected to deliver double-digit growth as industrial demand for rare earths and precious metals rises.

• Battery Recycling: Lithium-ion recovery aligned with EV adoption trends, unlocking medium- to long-term growth.

• EPR Compliance & Reverse Logistics: Annuitized revenue through long-term contracts with OEMs and brands.

Margin Impact:

Precious metal recovery offers higher EBITDA margins compared to traditional recycling.

• ITAD and refurbishment activities provide steady margins with lower capital intensity.

• EPR compliance generates stable fee-based income, supporting operating leverage.

Capital Investments (CapEx):

During FY 2025 26, Ecoreco strategically invested in:

• Capacity expansion for rare earth and precious metal recovery.

SmartER Recycling on Wheels to deepen collection reach and secure feedstock.

• Digital platforms (barcoding, traceability) for compliance and client transparency.

These investments strengthen the Companys asset base, enabling both topline growth and margin expansion in subsequent years.

Company Performance & Positioning

Eco Recycling Ltd. (Ecoreco) remains pioneer & fully integrated e-waste recycler and ITAD provider in India, with:

Certifications & Membership: R2v3, ISO, NAID, TERRA,MRAI.

• A wide service portfolio: IT asset disposal, data destruction, e-waste recycling, lithium-ion battery recycling, and EPR compliance.

• Partnerships with multinational corporations and government agencies for ESG-aligned solutions.

FY 2025-26 Highlights

• Revenue growth supported by new client acquisitions under EPR contracts.

• Commissioning of precious metal recovery lines, aligned with Critical Mineral Mission.

fleet ExpansionofSmartERmobilerecycling

• Training and integration of informal sector workers via Ecoreco Enviro Education Pvt Ltd.

Financial Linkage:

Revenue diversification reduced dependence on single streams and enhanced resilience.

• Investments in recovery technologies positioned Ecoreco for export-linked revenues, tied to rising global demand for critical metals.

ESG-driven service offerings improved Ecoreco s standing with impact investors, creating favorable conditions for future capital raising.

Opportunities and Threats

Opportunities:

• Precious metal and rare earth recovery to strengthen margin profile and contribute significantly to revenue.

• EPR enforcement ensures steady annuity revenues.

• Expansion into Li-ion battery recycling supports long-term growth.

Access to green financing, impact investors, and carbon-credit monetization.

Threats:

• Informal sector competition impacting collection efficiency.

• All categories of e-waste generators prefer to sale their e-waste to the informal sector for higher monetary value as against the recyclers for higher environmental compliances.

OUTLOOK

Globally, only 17% of e-waste is currently recycled through formal channels, yet e-waste remains the fastest-growing solid waste stream. This structural gap ensures continued growth for formal recyclers.

For India, the confluence of policy support (Critical Mineral

Mission, EPR 2022), ESG imperatives, and rising awareness will drive a formalization wave in the industry.

Financial Outlook:

• Ecoreco anticipates rapid organic revenue growth over the next three years, supported by:

Scaling of precious metal recovery and rare earth metal recovery out of black mass facilities.

o Increased demand for ITAD & cyber security-led data destruction services.

o Long-term EPR contracts with global and domestic brands.

• EBITDA margins are expected to improve with higher contribution from precious metal recovery and fee-based compliance services.

Continued CapEx in FY 2025 26 will focus on lithium-ion battery recycling and advanced collection infrastructure.

INDUSTRIAL RELATIONS

The industrial relations scenario continued to be largely positive across all the facilities. Long Term Wage and Bonus settlements were closed amicably for all the facilities. The sustained efforts towards building a transformational work culture resulted in zero production loss in the FY 2025-26 and helped create a collaborative, healthy and productive work environment.

Productive and employee centric practices, a focus on transparent communication of business goals, an effective concern resolution mechanism and a firm belief that employees are the most valuable assets of the Company, are the cornerstone of our Companys employee relations approach.

Ecoreco Skill Excellence

Skill excellence is an internal platform that aims at industrial skill enhancement program for the shop floor associates.

A Healthy Work Environment

Various awareness sessions on driving employees towards healthy and better lifestyle were touched upon by experts during the exclusive sessions for employees. Health and wellness always remained priority of the Companys philosophy.

The Company had a total of 55 permanent employees in its rolls as on March 31, 2026.

INTERNAL CONTROL SYSTEMS

Your Company maintains adequate internal control systems commensurate with the nature of its business and size and complexity of its operations. These are regularly tested for their effectiveness by Statutory as well as Internal Auditors.

The framework is a combination of entry level controls, including enterprise risk management, legal compliance framework, internal audit and anti-fraud mechanisms such as ethics framework, code of conduct, whistle-blower policy, etc, process level controls, information technology-based controls, period end financial reporting and closing controls.

Further, the Internal Control Systems have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information. In the highly data privacy IT deficiencies/material environment of the Company, weaknesses thatvalidation of IT Security receives focused attention from IT specialists and Statutory Auditors.

The Internal Auditor reports administratively to the Chairman of the Board and functionally to the Audit Committee. The Internal Audit function develops an audit plan for the Company, which covers, inter alia, corporate, core business operations, as well as support functions. The Audit Committee reviews observationsthe annual internal audit plan. Significant are presented to the Audit Committee, together with the status of the management actions and the progress of the implementation of the recommendations.

The Audit Committee reviews the adequacy and effectiveness of the Companys internal control environment and monitors the implementation of audit recommendations. During the year, the Company has taken steps to review and document the adequacy and operating effectiveness of internal controls.

Nonetheless, your Company recognizes that any internal control framework, no matter how well designed, has inherent limitations and accordingly, regular audits and review processes ensure that such systems are reinforced on an ongoing basis.

Your Companys Management has carried out the evaluation of design and operative effectiveness of these controls and noted no significant impact financial statements as at the Balance Sheet date.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Overview

The financial statements have been prepared in accordance with Ind AS as per the Companies (Indian Accounting

Standards) Rules, 2015 as amended and notified under section 133 of the Companies Act, 2013 (Act) and other relevant provisions of the Act.

The Group s consolidated financial statements have been prepared in compliance with Ind AS 110 on Consolidation of Accounts and presented in a separate section.

FINANCIAL PERFORMANCE STANDALONE

Property, Plant and Equipment and Intangible Assets

As at March 31, 2026, the Property, Plant and Equipment and Intangible Assets stood at Rs. 5,697 lakhs as compared to Rs. 5,883 lakhs as at March 31, 2025.

Results of Operations

Income

( in lakhs)

Particulars		FY 2026		FY 2025	Change
	Amount	% of revenue from operations	Amount	% of revenue from operations	%
Sale of Finished Goods	3,495	73	2,547	58	37
Sale of Services	258	5	238	5	8
Other Operating revenue	1,065	22	1,609	37	(34)
Income from Operations	4,818	100	4,394	100	10
Other income	489	10	259	6	89

Other Income

During the year ended March 31, 2026 at Rs.489 lakhs is higher than Rs.259 lakhs earned in previous year mainly on account of proceedings from sale of current investment in the current year as compared to previous year.

The total expenditure during the year as a percentage of revenue is 39.10% as compared to 33.32% in the previous year. The reason of the changes in each cost heads is mention below the table:

Expenditure

( in lakhs)

Particulars		FY 2026		FY 2025	Change
	Amount	% to income from operations	Amount	% to income from operations	%
Material cost	998	21	694	16	44
Employee benefit expenses	337	7	382	9	(12)
Finance cost	61	1	65	1	(6)
Depreciation, amortization and impairment cost	157	3	100	2	57
Other expenses	331	7	255	6	30
Total expenses	1,884	39	1,465	33	26

Material Cost

Material cost as a percentage of revenue has increased from 16.46 to 20.71% in current year mainly on account of elevated levels of input costs and supply side challenges witnessed during FY 2026.

Employee Benefit Expenses

The personnel cost as a percentage of revenue from operations has decreased from 8.69% in the previous year to 6.98% in the current year Mainly due to the efficient performance management system and use of artificial intelligence.

Other Expenses

Other expenses as a percentage of revenue from operations have increased from 5.80% in the previous year to 6.87% in the current year on account of changes in the in internal rate of return (IRR).

Finance Cost

The interest expense as a percentage of revenue has decreased from 1.47% in the previous year to 1.26% in the current year on account of changes in the in internal rate of return (IRR).

CONSOLIDATED FINANCIAL POSITION

As on March 31, 2026, for the purpose of consolidation as per Ind AS, the group comprised of the flagship holding company Eco Recycling Limited and 2 subsidiaries.

The Consolidated Revenue from operations is Rs. 4,818 lakhs in the current year as compared to Rs. 4,396 lakhs in the previous year, registering a increase of 9.61%.

The consolidated profit before exceptional items, share of profit of associates and joint ventures and tax for the year is Rs. 3,107 lakhs as against Rs. 3,167 lakhs in the previous year, registering a decrease of 1.89%. The consolidated profit after tax after non-controlling interests and exceptional items for the year is Rs. 2,288 lakhs as against profit of Rs. 2,295 lakhs in the previous year.

Ecoreco Enviro Education Private Limited, wholly owned subsidiary in the business of imparting environment preservation and protection related education and skill Development training, registered an operating revenue of Rs. 9 lakhs as compared to Rs. 19 lakhs in the previous year, registering an decrease of 52.69%. The profit after tax after non-controlling interests for the year is Rs. 11.89 lakhs as compared to Rs. 23.74 lakhs in the previous year, registering a decrease of 49.90%.

Ecoreco Park Private Limited, a subsidiary in the investment business, reported an operating revenue of Rs. (30) lakhs as compared to Rs. (31) lakhs in the previous year. The loss after tax after non-controlling interests for the year is Rs. 98.92 lakhs as compared to a loss Rs. 19.56 lakhs in the previous year.

DISCLAIMER

Certain statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable laws and regulations