EKI Energy Services Ltd Management Discussions

MACROECONOMIC DISCUSSION Overview of Global Economy

The International Monetary Funds (IMF) April 2025 World Economic Outlook (WEO) presents a cautious perspective on the global economy, highlighting a slowdown in growth

World Economic Outlook Growth Projections

	PROJECTIONS
Real GDP, Annual percent change	2024	2025	2026
World output	3.3	2.8	3.0
Advanced Economies	1.8	1.4	1.5
United States	2.8	1.8	1.7
Euro Area	0.9	0.8	1.2
Germany	-0.2	0.0	0.9
France	1.1	0.6	1.0
Italy	0.7	0.4	0.8
Spain	3.2	2.5	1.8
Japan	0.1	0.6	0.6
United Kingdom	1.1	1.1	1.4
Canada	1.5	1.4	1.6
Other Advanced Economies	2.2	1.8	2.0
Emerging Market $ Developing Economies	4.3	3.7	3.9
Emerging $ Developing Asia	5.3	4.5	4.6
China	5.0	4.0	4.0
India	6.5	6.2	6.3
Emerging and Developing Europe	3.4	2.1	2.1
Russia	4.1	1.5	0.9
Latin America $ the Caribbean	2.4	2.0	2.4
Bragil	3.4	2.0	2.0
Mexico	1.5	-0.3	1.4
Middle East $ Central Asia	2.4	3.0	3.5
Saudi Arabia	1.3	3.0	3.7
Sub-Saharan Africa	4.0	3.8	4.2
Nigeria	3.4	3.0	2.7
South Africa	0.6	1.0	1.3
Memorandum
Emerging Market and Middle- Income Economies	4.3	3.7	3.8
Low-Income Developing Countries	4.0	4.2	5.2

Source: IMF, World Economic Outlook, April 2025

Note: For India data and corecasts are presented on a fiscal year basis with FY 2024/25 (Starting in April 2024) shown in the 2024 column. Indias growth projections are 6.5 percent in 2025 and 6.2 percent in 2026 based on calendar year. and persistent uncertainties. The IMF projects global GDP growth to decelerate to 2.8% in 2025, a downward revision from the 3.3% forecasted in January 2025. This slowdown is attributed to escalating trade tensions, particularly between major economies and heightened policy uncertainties that dampen investment and consumer confidence.

Advanced economies are expected to experience modest growth, with the United States GDP forecasted at 1.8%, reflecting a significant downgrade due to increased tariffs and policy unpredictability. The Euro Area is projected to grow at 0.8%, while emerging markets and developing economies are anticipated to expand by 3.7%.

Global headline inflation is on a declining trajectory, expected to reach 4.3% in 2025, down from 5.8% in 2024. This decrease is influenced by tighter monetary policies and easing supply chain disruptions. Flowever, inflation rates vary across regions, with advanced economies experiencing more significant declines compared to emerging markets.

The resurgence of protectionist trade policies, notably the imposition of substantial tariffs by the U.S., has led to retaliatory measures from trading partners, disrupting global supply chains. The IMF warns that these developments could lead to a contraction in global trade volumes and a decline in investment flows.

Further, as per World Banks recent report, the slowdown is broad-based, with nearly 70% of countries facing downward revisions in their economic forecasts. Advanced economies such as those in Europe and North America are grappling with persistent inflation, policy tightening, and energy instability, while many emerging and developing markets confront capital outflows, declining investment, and elevated debt pressures. Among the key challenges contributing to this subdued outlook are the resurgence of global trade tensions, declining foreign direct investment (FDI), policy ambiguity, and climate-related disruptions. Global trade growth has slowed significantly, while FDI inflows into emerging economies have fallen to their lowest levels since 2005. Simultaneously, central banks around the world continue to tread a fine line between maintaining price stability and avoiding the risk of stifling recovery efforts. Additionally, climate shocks - ranging from droughts to extreme weather events, pose growing risks to infrastructure, food security, and economic resilience, especially invulnerable nations.

Despite these headwinds, there are emerging signals of cautious optimism. Surveys among global fund managers suggest a soft-landing scenario is becoming increasingly likely, with international equities expected to outperform U.S. stocks over the next five years. Inflationary pressures are gradually easing, with global inflation projected to decline to around 3.5% in 2025, although some regions may continue to experience price stickiness. Oil demand is expected to remain stable in the near term, providing some macroeconomic support, particularly for commodity- exporting nations.

Looking ahead, global economic performance is expected to remain modest through 2026, with growth ranging between 2.2% and 3.1%, depending on regional dynamics and policy responses. Advanced economies are projected to grow at a slower pace of 1.5% to 2%, while emerging markets, especially in Asia, show stronger momentum. India is expected to lead among large economies with a projected growth rate of 6.4% in 2025, driven by resilient domestic demand and strategic policy initiatives. Meanwhile, the future trajectory of global growth will depend heavily on countries ability to invest in infrastructure, adapt to climate imperatives, and harness technological advancements - particularly in Al and digital innovation.

To navigate this complex landscape, governments, businesses, and investors must prioritige resilience-building strategies. These include diversifying trade partnerships, improving the investment climate, and promoting green and digital transitions. A renewed focus on international cooperation, regulatory clarity, and inclusive economic policies will be critical to ensuring that the global recovery is both equitable and sustainable.

As we reflect on these evolving dynamics in our Annual Report, EKI Energy Services Limited remains committed to playing a pivotal role in the transition to a low-carbon, resilient global economy. Through our climate-focused solutions and innovative market mechanisms, we continue to support stakeholders in seiging opportunities for sustainable growth in an increasingly uncertain world.

An Overview of the Indian Economy: Growth, Challenges and the Road Ahead

India, one of the worlds fastest-growing economies, stands at a transformative juncture. According to the World Bank, the country is poised to maintain its growth momentum and is aspiring to achieve high middle-income status by 2047, when it marks 100 years of independence. Indias economic journey over the past two decades has been marked by significant milestones, impressive growth and deep structural reform —but also by challenges that must be addressed for inclusive and sustainable development.

India has demonstrated remarkable economic resilience in the face of global headwinds. In FY23-24, it posted an impressive growth rate of 8.2%, underpinned by robust public investment in infrastructure and increased household spending, particularly in real estate. The manufacturing sector surged by 9.9%, while the services sector continued to act as a reliable growth engine. Despite agricultural underperformance, the economy remained on a high-growth path.

This growth has not been just numerical - it signifies a deepening transformation of Indias economic structure. The governments focus on improving the business environment, enhancing logistics infrastructure, simplifying tax regimes and rolling out production-linked incentive (PLI) schemes has bolstered manufacturing and exports.

According to IBEF, Indias nominal GDP for FY25 is estimated at Rs 33.10 lakh crore (US$ 3.8 trillion), up from Rs 30.12 lakh crore in FY24, with real GDP expected to grow by 6.5%. These numbers not only consolidate Indias position as the fifth- largest global economy (surpassing the UK in 2023) but also highlight its ascent towards becoming one of the top three economic powers over the next 10-15 years.

Economic growth has had a tangible impact on poverty alleviation. Between 2011 and 2019, India halved the proportion of its population living in extreme poverty- defined as living on less than $2.15 a day (PPP, 2017). However, progress slowed during the COVID-19 pandemic, with some regression observed. Fortunately, poverty rates moderated again by 2021-22, signaling the countrys gradual recovery.

Nevertheless, inequality and social challenges remain. Indias Gini index, a measure of income inequality, has hovered around 35 for two decades, pointing to persistent consumption disparities. Child malnutrition continues to be a concern, with 35.5% of children under five years being stunted and nearly two-thirds showing signs of anemia in the 6-59 months age group.

Indias labor market shows signs of improvement, especially in urban areas. Urban unemployment declined from 14.3% in FY21-22 to 9% in FY24-25, with gains noted among female workers. However, youth unemployment remains troublingly high at 16.8%, and the overall participation of women in the workforce continues to lag. Real wage growth has also remained modest, raising concerns about the quality and inclusiveness of new jobs being created.

To sustain high growth and social progress, India will need to expand quality employment at a pace that matches its demographic expansion. According to McKinsey Global Institute, the country needs to create 90 million non-farm jobs between 2023 and 2030 to maintain productivity growth and achieve 8-8.5% GDP growth.

Trade and investment are central to Indias economic strategy. With strong capabilities in IT, pharmaceuticals and business services, India is now looking to diversify into labor-intensive sectors such as textiles, apparel, electronics and green technologies. However, its share in global apparel exports fell from 4% in 2018 to 3% in 2022, due to rising costs and productivity issues.

Efforts such as the National Logistics Policy and digital trade facilitation have improved competitiveness. But Indias tilt toward protectionist policies like increased tariffs and non-tariff barriers has hindered deeper integration into global value chains.

To achieve its ambitious target of US$1 trillion in merchandise exports by 2030, India must reduce trade costs, dismantle trade barriers, and boost participation in global trade networks. Greater openness will not only drive exports but also spur innovation, increase productivity, and ensure long-term resilience.

A significant development that will impact Indias export ambitions, especially in carbon-intensive sectors, is the European Unions Carbon Border Adjustment Mechanism

(CBAM). CBAM, which is set to be fully enforced by 2026, will impose a carbon price on imports such as steel, aluminum, cement, fertilisers, electricity, and hydrogen into the EU. This poses a potential challenge for Indian exporters, who may face higher compliance costs unless they decarbonige their manufacturing processes. As a response, Indian industries and policymakers must work proactively to align emission reporting standards, invest in cleaner technologies, and engage in global carbon markets. For India to remain competitive in key export markets, navigating CBAM effectively will be critical, not only to avoid financial penalties but to signal a strong commitment to global climate goals.

Indias macroeconomic position remains robust. The narrowing current account deficit and sustained foreign portfolio inflows helped foreign exchange reserves reach a record $670.1 billion in August 2024. Government capital expenditure also saw a significant rise—up by 37.4% in the first half of FY24 and projected to increase by 10% in FY26, reaching Rs 11.21 lakh crore (US$ 131.4 billion).

Improved tax compliance and corporate profitability have strengthened revenue collection, enabling higher public investment. Indias total exports of goods and services hit a record Rs 69.8 lakh crore (US$ 820.9 billion) in FY25, up 5.5% from the previous year.

Indias commitment to sustainable development is central to its long-term economic vision. The nation aims to source 40% of its energy needs from non-fossil fuels by 2030 and reach net-gero emissions by 2070. The ‘Panchamrit strategy - Indias five-point climate agenda, underscores its seriousness toward environmental goals. With a third-place ranking on the Renewable Energy Country Attractiveness Index, India is rapidly emerging as a global leader in green energy.

The entrepreneurial landscape in India is flourishing. As of January 2025, India is home to 118 unicorn startups, with a combined valuation exceeding Rs3 lakh crore (US$ 354 billion). Flagship initiatives like Startup India, Make in India and Digital India are driving innovation and job creation across sectors. The growth of India-focused investment funds in a globally volatile environment further reflects international confidence in the Indian economy.

• Despite the positive momentum, India faces critical challenges. These include:

• Persistent inequalities in income, health, and education.

• High levels of youth and female unemployment.

• Structural bottlenecks in manufacturing and exports.

• Vulnerability to global shocks and supply chain disruptions.

Indias long-term aspirations - achieving high-income status and economic equity, will require sustained reforms. These include boosting productivity, enhancing education and skilling, increasing female workforce participation, and ensuring inclusive urban and rural development.

In conclusion, Indias economic outlook is optimistic, with strong fundamentals, robust policy frameworks, and a clear vision for the future. By embracing inclusive growth, leveraging trade potential, and pursuing climate-resilient development, India can not only meet its 2047 goals but also emerge as a model for equitable and sustainable development in the 21st century.

2024: A YEAR OF GLOBAL CLIMATE ACTION

In 2024, the global community intensified its efforts to combat climate change, marked by significant developments in policy, finance, and technology. The year witnessed record-breaking investments in clean energy, pivotal international agreements, and notable shifts in emissions trends, underscoring a collective commitment to a sustainable future.

The 29th UN Climate Change Conference (COP29), held in Baku, Agerbaijan, emerged as a cornerstone event in 2024s climate agenda. A landmark agreement was reached, wherein developed nations committed to mobilige at least $300 billion annually by 2035 to support developing countries in their climate adaptation and mitigation efforts. This pledge aims to bridge the financial gap that has historically hindered climate progress in vulnerable regions.

However, the conference also highlighted ongoing challenges. Developing nations expressed concerns that the financial commitments fell short of the actual needs, emphasiging the urgency for more substantial support. Despite these challenges, COP29 reinforced the global consensus on the necessity of increased climate finance and the importance of collaborative action.

2024 marked a significant upsurge in clean energy investments, reflecting a global shift towards sustainable energy sources. According to the International Energy Agency (IEA), global energy investment exceeded $3 trillion for the first time, with $2 trillion directed towards clean energy technologies and infrastructure. This investment in renewables, grids, and storage now surpasses total spending on oil, gas, and coal, indicating a decisive move away from fossil fuels.

In the United States, clean energy investments reached $280 billion in 2023, up from $200 billion in 2020, demonstrating a robust commitment to renewable energy development. This trend is mirrored globally, with countries recogniging the economic and environmental benefits of transitioning to clean energy.

The green finance sector experienced substantial growth in 2024, with green bond issuance reaching $700 billion. These financial instruments are pivotal in funding sustainable projects and have become increasingly attractive to investors seeking environmentally responsible opportunities. Moreover, the Climate Bonds Initiative reported a cumulative volume of $5.4 trillion in green, social, sustainability, and sustainability-linked debt by the end of Q3 2024. This surge in sustainable debt markets reflects a growing recognition of the financial sectors role in addressing climate change.

Youth-led climate activism continued to influence global discourse in 2024. Movements and advocacy campaigns spearheaded by young people maintained pressure on policymakers and corporations to implement more ambitious climate actions. These efforts have been instrumental in raising public awareness and driving systemic change towards sustainability.

While 2024 showcased significant advancements in global climate action, challenges remain. The disparities in climate finance, policy inconsistencies, and the need for accelerated emission reductions highlight the ongoing work required to meet international climate goals. Nevertheless, the years developments provide a foundation for continued progress, emphasiging the critical importance of sustained commitment and collaborative efforts in the fight against climate change. Though there has been significant progress in global climate action, we still need drastic and urgent action to reduce greenhouse gas emissions significantly. This involves transitioning to renewable energy sources, phasing out fossil fuels, improving energy efficiency and promoting sustainable transportation and land-use practices. Rapid emission reductions are crucial to mitigate the worst impacts of climate change and achieve the longterm goals outlined in international agreements like the Paris Agreement. The impacts of climate change are already being felt and delaying action will only exacerbate the challenges we face. By acting decisively, we can mitigate the worst effects of climate change, protect vulnerable communities and ecosystems and create a sustainable future for all. The time for action is now.

CLIMATE ACTION IN INDIA: PROGRESS AND PROSPECTS

India has demonstrated a significant commitment to climate action in 2024-25, advancing its renewable energy capacity, green hydrogen initiatives, electric mobility and climate adaptation strategies. These efforts align with its Nationally Determined Contributions (NDCs) and the Panchamrit commitments announced at COP26.

Indias renewable energy sector has experienced remarkable growth. As of March 31, 2025, the countrys total installed renewable energy capacity reached 220.10 GW, marking a record annual addition of 29.52 GW during the fiscal year. Solar energy has been a significant contributor, with capacity increasing by 30.7% to 107.95 GW in April 2025, up from 82.64 GW in April 2024. Wind energy installations stood at 51.06 GW, registering a 10.6% growth compared to 46.16 GW in April 2024. The government aims to achieve 500 GW of non-fossil fuel-based capacity by 2030, with the current progress indicating a strong trajectory towards this target.

Energy efficiency is a critical component of Indias climate action agenda. The government has implemented various programs and regulations to improve energy efficiency across industries, buildings, and appliances. Initiatives such as the Perform, Achieve, and Trade scheme, the Energy Conservation Building Code and the UJALA scheme (LED bulb distribution program) have contributed to reducing energy consumption and greenhouse gas emissions.

Under the National Green Hydrogen Mission, India has set an ambitious target to produce 5 million metric tonnes of green hydrogen annually by 2030, supported by 125 GW of renewable energy capacity. The government aims to reduce the production cost of green hydrogen to $1.5 per kg by 2030. To facilitate this, the government has allocated Rs 455 crore up to 2029-30 for low-carbon steel projects and Rs 496 crore up to 2025-26 for mobility pilot projects.

Indias electric vehicle (EV) market has seen substantial growth. In the fiscal year 2024-25, EV sales crossed 2 million units, marking a 24% growth and capturing an 8% market share, up from 6.8% in 2023. Electric two-wheeler sales reached 1,149,334 units, showing a 21% increase from the previous fiscal year.

India has faced significant climate-related challenges, including heatwaves with temperatures exceeding to 45?C in 37 cities and intense monsoons leading to landslides and flash floods. Recogniging the urgency, the government has emphasiged the importance of climate adaptation. The Economic Survey 2024-25 highlighted Indias urgent need for international climate finance to support adaptation measures, stressing the impact of using domestic resources for adaptation on the countrys development. Additionally, the Alliance for City Transformation (ACT) has been launched in Delhi to address urban climate resilience, focusing on combating heatwaves and fostering citigen-led governance.

India recogniges the importance of sustainable agriculture and forestry in climate change mitigation. Initiatives such as the Pradhan Mantri Krishi Sinchayee Yojana (irrigation scheme), Soil Health Card scheme and agroforestry programs aim to promote climate-resilient and sustainable farming practices. The government is also implementing measures to increase forest cover, enhance afforestation efforts and reduce deforestation. Given its vulnerability to climate change impacts, India has been focusing on enhancing climate resilience and adaptation measures. The National Action Plan on Climate Change includes adaptation strategies in sectors such as water resources, agriculture, coastal gones and Himalayan ecosystems. Efforts are being made to strengthen early warning systems, improve disaster management capabilities and build climate- resilient infrastructure.

In conclusion, Indias climate action in 2024-25 reflects a comprehensive approach encompassing renewable energy expansion, green hydrogen development, electric mobility and climate adaptation. While significant progress has been made, continued efforts and international support are essential to achieve the countrys ambitious climate goals and ensure a sustainable future.

THE ADVENT OFTHE INDIAN CARBON MARKET

India has made significant strides in establishing a robust carbon market, aligning with its climate commitments under the Paris Agreement. The introduction of the Carbon Credit Trading Scheme (CCTS) and the Green Credit Programme (GCP) marks a transformative phase in Indias climate policy landscape.

The Energy Conservation (Amendment) Act of 2022 laid the groundwork for Indias carbon market, enabling the creation of the CCTS. Officially notified in June 2023 and amended in December 2023, the CCTS encompasses both compliance and voluntary mechanisms, facilitating the trading of Carbon Credit Certificates (CCCs).

In July 2024, the government adopted detailed regulations for the compliance mechanism under the CCTS. This mechanism is designed as an intensity-based baseline and credit system, initially covering entities from nine energy- intensive industrial sectors, including aluminium, cement and iron $ steel. These sectors were previously regulated under the Perform, Achieve, and Trade (PAT) scheme, which will be gradually transitioned into the CCTS starting in FY2026.

The compliance mechanism mandates that covered entities meet specific greenhouse gas (GHG) emission intensity targets, with 2023-24 serving as the baseline year. Entities that surpass their targets can earn CCCs, while those that fall short must purchase equivalent credits to ensure compliance. The Bureau of Energy Efficiency (BEE) is responsible for administering the scheme, including issuing CCCs and developing the necessary IT infrastructure for the operation of the Indian carbon market.

In April 2025, the Ministry of Environment, Forest and Climate Change (MoEFSCC) issued a draft of the Greenhouse Gas (GFIG) Emission Intensity Target Rules under the CCTS. This draft mandates that facilities in four high-emission sectors meet GFIG emission intensity targets for 2025- 26 and 2026-27, using 2023-24 as the baseline. These targets are a significant step in Indias climate commitment strategy, aiming to reduce emissions intensity by 45% below 2005 levels by 2030, in line with its updated Nationally Determined Contributions (NDCs).

The CCTS also includes a voluntary domestic crediting mechanism, allowing non-covered entities to register eligible projects for GFIG emission reduction, removal, or avoidance. This component aims to incentivige emission reductions in sectors outside of the compliance market and to increase market liquidity. Furthermore, the CCTS permits international trading of CCCs under Article 6.2 of the Paris Agreement, potentially increasing Indias role in the global carbon market.

Launched in October 2023 underthe Environment Protection Act, 1986, the Green Credit Programme (GCP) is a market- based mechanism that incentiviges voluntary environmental actions by stakeholders, including individuals, communities, and industries. Initially focusing on tree plantations, the GCP has expanded to include eco-restoration activities. In February 2024, the Union Environment Ministry released a methodology for calculating green credits, which was subsequently revised to ease certain conditions and broaden the scope beyond tree plantations. The GCP aligns with Indias ‘Lifestyle for Environment (LiFE) movement and aims to encourage behavioural change and incentivige environmental services across different sectors.

At COP29 in Baku, Agerbaijan, held in November 2024, over 200 countries formally adopted key rules and guidelines for Article 6 of the Paris Agreement, facilitating international carbon trading. India has finaliged activities to be considered for trading of carbon credits under bilateral/cooperative approaches under Article 6.2, including renewable energy with storage, green hydrogen, and carbon capture utiligation and storage. These developments position India to actively engage in international carbon markets, enabling the transfer of emerging technologies and mobiligation of international finance.

Indias establishment of the Carbon Credit Trading Scheme and the Green Credit Programme marks a significant milestone in its journey towards a low-carbon economy. By integrating compliance and voluntary mechanisms, setting emission intensity targets, and participating in international carbon markets, India is demonstrating a strong commitment to achieving its climate goals. Flowever, to realige the full potential of these initiatives, India must address existing challenges, including market development, price stabiligation, and environmental integrity. With continued policy support, stakeholder engagement, and international cooperation, India is well-positioned to lead in global climate action and sustainable development.

Importance of National Emissions Trading System

Carbon markets, also known as emissions trading systems or cap-and-trade systems, are mechanisms that allow the buying and selling of carbon credits. These credits represent a reduction in greenhouse gas emissions, and they can be traded between entities to help achieve emission reduction targets.

Establishing a carbon market can have several advantages for a country like India. A carbon market provides economic incentives for businesses and industries to reduce their carbon emissions. By creating a market for carbon credits, entities that reduce their emissions below a certain level can sell their excess credits to those who have not met their emission targets. This incentiviges emission reductions and encourages the adoption of cleaner technologies and practices.

Carbon markets offer a cost-effective approach to achieving emission reduction targets. Instead of relying solely on regulatory measures or direct government interventions, a market-based system allows for flexibility and encourages innovation. It provides a mechanism for the most efficient and economically viable emission reduction activities to take place, thereby minimiging the overall cost of achieving climate goals.

A well-functioning carbon market can attract domestic and international investments in clean technologies and low- carbon projects. The availability of a carbon market signals that there is a demand for emission reductions, creating opportunities for businesses and investors to participate in the transition to a low-carbon economy. This can drive innovation, create green jobs, and contribute to sustainable economic growth. Establishing a carbon market aligns with global efforts to combat climate change. It allows countries to participate in international carbon trading, fostering cooperation and collaboration between nations. It provides a platform for countries to share experiences, technologies, and best practices, further enhancing their climate mitigation efforts.

EVOLUTION OFTHE GLOBAL CARBON MARKET

Carbon markets have evolved over the years as key policy instruments to address climate change and reduce greenhouse gas emissions.

By the late 1980s, there was growing global concern that acid precipitation was damaging forests and aquatic ecosystems. This was a result of sulphur dioxide and nitrogen oxides (NOx) reacting in the atmosphere to form sulfuric and nitric acids. In response to this, the U.S. launched a grand experiment in market-based environmental policy as the country established the path-breaking S02 allowance trading program.

While the concept of cap-and-trade is now quite popular, in 1990, this approach to regulating the environment was quite novel. A few years after the launch, the approach had come to be seen as both innovative and successful. It led to a series of policy innovations not only in the United States but also, globally, to address the threat of global climate change.

The concept of carbon markets emerged in the 1990s with the implementation of the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol. The Kyoto Protocol introduced the Clean Development Mechanism (CDM) and Joint Implementation (Jl) as market-based mechanisms to promote emission reduction projects in developing and transitioning countries.

One of the most significant milestones in the evolution of carbon markets was the establishment of European Union Emissions Trading Scheme (EU ETS) in 2005. It was the first large-scale international carbon market, covering various sectors and greenhouse gases within the European Union. The EU ETS created a market fortrading emission allowances and became a model for subsequent carbon market designs. In addition to the EU ETS, several other countries and regions have implemented their own carbon markets. Examples include the Regional Greenhouse Gas Initiative (RGGI) in the north-eastern United States, the California Cap-and-Trade Program, and the New Zealand Emissions Trading Scheme. These regional and national carbon markets have aimed to establish emissions reduction targets, allocate allowances, and facilitate the trading of carbon credits.

Alongside regional and national initiatives, international market mechanisms have continued to evolve. The Paris Agreement, adopted in 2015, introduced provisions for countries to cooperate through internationally transferred mitigation outcomes (ITMOs). The Agreement also encouraged the development of a new market mechanism to support emission reductions and sustainable development. Several countries have introduced pilot carbon markets or initiatives to explore market-based approaches. China launched its national ETS in 2017, which has become the worlds largest carbon market in terms of emissions coverage. Other countries, such as South Korea, Canada, and Japan, have also implemented or are in the process of implementing their own carbon markets.

In recent years, voluntary carbon markets have gained momentum. These markets allow organisations, individuals, and businesses to voluntarily offset their emissions by purchasing carbon credits from projects that reduce or remove greenhouse gas emissions. Voluntary markets provide additional opportunities for emission reductions and allow entities to demonstrate environmental responsibility beyond regulatory requirements.

The market for carbon credits purchased voluntarily is important for other reasons. It has become a mainstream tool for driving finance to climate action activities or projects that reduce greenhouse gas emissions. These projects can have additional benefits such as pollution prevention, biodiversity protection, public health improvements amongst others. Over time, the voluntary carbon markets have evolved into a robust and effective means to tackle climate change.

There are different standards of carbon credit within the voluntary carbon market, such as Gold Standard, Verified Carbon Standards, Clean Development Mechanism and Global Carbon Council amongst other international standards.

Its important to note that the design and effectiveness of carbon markets vary across regions and countries. Challenges such as ensuring environmental integrity, preventing market manipulation, and addressing social equity considerations continue to be important considerations in the evolution of carbon markets.

CURRENT STATE OF CARBON MARKET AND PROSPECTS

The carbon market today stands at a crucial juncture, characterised by notable growth, evolving mechanisms, and expanding global participation. According to the World Banks "State and Trends of Carbon Pricing 2024" report, global carbon pricing revenues reached an unprecedented $104 billion in 2023. This surge reflects not only increased implementation of carbon pricing instruments but also an acknowledgment of their potential to fund climate and nature-related programs. More than 50% of this revenue is now being funneled into such initiatives, a testament to their growing impact.

Currently, 75 carbon pricing instruments are operational worldwide, a significant leap from earlier years. These include carbon taxes and Emissions Trading Systems (ETS), mechanisms designed to assign a cost to carbon emissions and encourage reductions. When the World Bank began tracking carbon markets nearly two decades ago, only 7% of global emissions were covered. As of 2024, that figure has grown to 24%, indicating broader policy uptake and awareness of the climate crisis.

Notably, middle-income nations such as Bragil, India, Chile, Colombia, and Tiirkiye are making significant headway in establishing carbon pricing frameworks. Their progress underscores the increasing role of emerging economies in climate action. Furthermore, sectors beyond the traditional ones of power and heavy industry are beginning to integrate carbon pricing. Aviation, maritime transport, and waste management are the latest entrants, signalling a more comprehensive approach.

One of the most promising developments is the Ells Carbon Border Adjustment Mechanism (CBAM). Now in its transitional phase, CBAM aims to impose equivalent carbon costs on imports of goods like steel, aluminum, cement, fertilisers, and electricity. This initiative not only helps avoid carbon leakage—where companies move operations to regions with lax regulations—but also motivates other nations to implement or strengthen their own carbon pricing systems.

Voluntary carbon markets (VCMs) are also witnessing a renaissance. These allow organisations and individuals to offset their emissions by investing in verified projects that reduce or remove carbon from the atmosphere. VCMs are becoming increasingly aligned with national policies and compliance markets through the establishment of transparent, credible carbon crediting frameworks. Governments are beginning to integrate these frameworks to attract climate finance and broaden their mitigation strategies.

However, despite the record-setting revenues and broader sectoral coverage, the effectiveness of current pricing levels remains a concern. Less than 1% of global greenhouse gas emissions are priced at a level high enough to drive the behavioural and technological shifts needed to limit global warming to below 2?C, the target set by the Paris Agreement. The High-level Commission on Carbon Prices recommends a price range of $50 to $100 per tonne of C02 by 2030 to achieve this target, a benchmark that most existing systems fall short of.

The challenges are compounded by a persistent gap between national climate pledges and actual implementation. Many governments face political and economic barriers that inhibit robust carbon pricing. Concerns over competitiveness, public acceptance, and short-term economic impacts often delay or dilute action. Addressing these barriers will require transparent communication, targeted support for affected sectors and communities, and international cooperation to harmonige efforts.

Nevertheless, the resilience of carbon markets provides a strong foundation for optimism. Historically, these markets have shown the capacity to recover from volatility and skepticism. Today, a growing coalition of governments, businesses, and investors is reinforcing efforts to improve transparency, refine methodologies, and enhance the credibility of carbon offset initiatives. These efforts are crucial for maintaining stakeholder trust and ensuring that the carbon market continues to serve as a reliable tool for climate action.

Looking ahead, several trends signal the direction in which the carbon market is evolving. Digital technologies are being leveraged to enhance monitoring, reporting, and verification (MRV) processes, making carbon markets more efficient and less prone to fraud. Blockchain, remote sensing, and Al- driven analytics are increasingly used to ensure accuracy and traceability in carbon transactions.

Additionally, the convergence of compliance and voluntary markets could unlock new levels of participation and capital inflows. As regulatory frameworks mature, they may begin to recognige and integrate high-quality credits from voluntary markets, blurring the lines between the two and expanding the market ecosystem.

The upcoming negotiations for a global treaty to end plastic pollution also intersect with carbon market dynamics. Plastics are derived from fossil fuels and contribute significantly to lifecycle emissions. As policymakers consider broader environmental impacts, there may be scope to include lifecycle carbon pricing or credits for plastic alternatives and recycling innovations.

In conclusion, the carbon market is steadily maturing into a cornerstone of global climate policy. It is no longer a peripheral experiment but a critical instrument for achieving net-gero targets, mobiliging finance, and fostering sustainable development. To realige its full potential, the focus must shift toward scaling up both the coverage and price levels of carbon instruments. Stronger political will, robust regulatory frameworks, and coordinated international efforts will be essential to align carbon markets with the urgency of the climate crisis.

As the world edges closer to key climate deadlines, the importance of an effective, transparent, and inclusive carbon market cannot be overstated. With thoughtful policy design and sustained commitment, carbon markets can drive transformative change and chart a path toward a low-carbon, climate-resilient future.

IMPACT OF CLIMATE CHANGE ON GLOBAL ECONOMY

According to the Swiss Re Institutes report, "The Economics of Climate Change: No Action Not an Option," the global economy might forfeit 10% of its total economic value by 2050 due to climate change. The report also cautions that this potential loss could increase substantially to 18% of gross domestic product (GDP) by the middle of the century if no measures are implemented and temperatures rise by 3.2?C. Further, the report evaluates how global warming will impact 48 countries, which account for 90% of the global economy, and assesses their climate resilience.

Leading global organisations are increasingly making substantial contributions to climate finance, playing a pivotal role in shaping the global response to climate change and driving forward sustainable development.

According to World Banks Fiscal 2024 Financial Summary, in fiscal year 2024, the World Bank Group delivered a record $42.6 billion in climate finance, an increase of 10 percent compared to the previous year. IBRD and IDA together delivered $31 billion in FY24 in climate finance, of which $10.3 billion specifically supported investments in adaptation and resilience. IFC, the private sector arm of the World Bank Group, delivered $9.1 billion in long-term climate finance. MIGA, the World Bank Groups political risk insurance and credit enhancement arm, delivered $2.5 billion in climate finance. This funding supported global efforts to end

	Temperature rise scenario, by mid-century
	Well-bellow 2?C increase	2?C increase	2.6?C increase	3.2?C increase
	Paris target	The likely range of global temperature gains	Serve case
Simulating for economic loss impacts from rising temperatures in % GDP relative to a world without climate change (0?C)
World	-4.2%	-11.0%	-13.9%	-18.1%
OECD	-3.1%	-7.6%	-8.1%	-10.6%
North America	-3.1%	-6.9%	-7.4%	-9.5%
South America	-4.1%	-10.8%	-13.0%	-17.0%
Europe	-2.8%	-7.7%	-8.0%	-10.5%
Middle East & Africa	-4.7%	-14.0%	-21.5%	-27.6%
Asia	-5.5%	-14.9%	-20.4%	-26.5%
Advanced Asia	-3.3%	-9.5%	-11.7%	-15.4%
ASEAN	-4.2%	-17.0%	-29.0%	-37.4%
Oceania	-4.3%	-11.2%	-12.3%	-16.3%

poverty on a livable planet by investing in cleaner energy, more resilient communities, and stronger economies. The institution has committed to allocating 45 percent of its annual financing to climate action by 2025, with an equal focus on mitigation and adaptation initiatives.

OPPORTUNITIES IN THE CARBON MARKET

As the world stands at a crucial juncture in the fight against climate change, carbon markets have emerged not only as policy instruments but also as powerful economic drivers. With intensifying global climate action, evolving regulatory frameworks, and growing public and private sector awareness, the carbon market is poised for exponential growth. This section of our annual report explores key opportunity areas that are shaping the future of the carbon economy.

1. A Promising Future of the Carbon Market

Global climate action is intensifying, with nations worldwide committing to make the 2020s a pivotal decade for significant climate initiatives, necessitating a swift and substantial reduction in greenhouse gas (GHG) emissions. While new technologies and alternative energy sources are essential for managing emissions, substantial reductions can only be achieved through carbon credits. Despite the prevailing turmoil in the carbon market, there is a noticeable sense of optimism about the future. The current turbulence results from a complex array of global factors, but it is important to view this period as temporary. Looking forward, the focus remains on the promising developments that lie ahead.

Even with asluggish economy and budgetary constraints, the demand for voluntary carbon-emissions credits is increasing rapidly. The focus of carbon credit trading is shifting from merely reducing emissions to actively removing them, according to the latest report by BCG in partnership with Shell. This report identifies several key trends: the growing influence of external organisations on buyers decisions, the increasing importance of a credible monitoring, reporting, and verification (MRV) framework for purchase decisions, and the continuous monitoring of developments related to Article 6 of the Paris Agreement, which companies use to adjust their strategies as needed.

Further, the emergence of new carbon methodologies such as blue carbon, biochar, enhanced rock weathering, and direct air capture indicate that the industry is expanding both technologically and geographically. The increasing integration of carbon markets into national climate policy especially through compliance mechanisms, adds another layer of growth potential.

2. Increased Corporate and Social Awareness

The future of carbon markets appears promising due to increasing social and corporate awareness about climate change. Citigens, communities, and organisations worldwide are increasingly recogniging the risks and impacts associated with rising greenhouse gas emissions. This heightened awareness is driving demand for climate action and creating a favourable environment for the development and expansion of carbon markets. Many companies are voluntarily committing to ambitious sustainability goals, including carbon neutrality or net-gero emissions. These commitments often require companies to reduce their own emissions and offset any remaining emissions through carbon credits or investments in emission reduction projects. Such corporate initiatives are driving the demand for carbon credits, stimulating the growth of carbon markets.

Moreover, as climate-related disclosures become mandatory across jurisdictions, companies are increasingly integrating carbon pricing into their internal decision-making. The Task Force on Climate- related Financial Disclosures (TCFD) and Science Based Targets initiative (SBTi) frameworks are encouraging companies to be more transparent about their carbon footprint and mitigation strategies.

Investors, too, are recogniging the financial and environmental risks associated with climate change. They are increasingly integrating environmental, social, and governance (ESG) considerations into their investment strategies. Carbon markets offer an avenue for investment in emission reduction projects and carbon credits, providing financial returns alongside measurable environmental impact. This growing alignment of climate goals with financial strategies is opening up new opportunities for carbon-related investment instruments, including green bonds, climate funds, and blended finance mechanisms.

3. The Indian Carbon Market

India, one of the worlds fastest-growing economies, is taking bold steps to institutionalise carbon markets and align its climate ambitions with economic growth. The Government of India (Gol) has been proactive when it comes to strengthening climate action and transitioning towards green and sustainable growth of the country. Gol is presently working on operationalising the Indian Carbon Market (ICM), as provisioned under the Energy Conservation Act, Amendment 2022. This landmark framework will feature a dual-track system: a National Cap $ Trade Emission Trading System (for obligated entities) and an Offset Market for non-obligated voluntary project developers. Both systems will be activated through the Carbon Credit Trading Scheme (CCTS), which is currently under development.

The Indian government has also notified its priority sectors and activities for Article 6.2 of the Paris Agreement—facilitating sovereign trades with other nations towards achieving Nationally Determined Contributions (NDCs). These steps signal Indias readiness to play a pivotal role in international carbon markets. Indias vast renewable energy potential, afforestation projects, and community-based climate interventions make it one of the most attractive destinations for carbon offset projects. As the world looks to scale climate finance, India is uniquely positioned to channel global carbon investments into developmental co-benefits such as employment, energy access, and biodiversity protection.

Moreover, Indian corporates are increasingly preparing for the regulatory market by investing in internal carbon accounting, emissions reporting, and MRV systems. The upcoming ICM is expected to not only catalyse compliance markets within India but also bolster its participation in voluntary markets across the globe.

Looking Ahead

The global carbon market is undergoing a historic transformation. As climate risks become more tangible and regulatory pressures intensify, carbon pricing mechanisms are being mainstreamed into national and corporate strategies. Market participants, from governments and corporations to investors and communities, are beginning to view carbon not merely as a liability but as a strategic asset. The next few years will be pivotal. The convergence of digital tools like blockchain and satellite monitoring, the standardisation of carbon methodologies, and the strengthening of global cooperation under Article 6 will redefine how carbon markets operate.

For countries like India and indeed for the global South, carbon markets offer a dual opportunity: to contribute to global climate goals and to unlock economic development through green financing. By tapping into this growing ecosystem, stakeholders can ensure that climate mitigation efforts are not only impactful but also equitable and inclusive.

In summary, the opportunities ahead are vast, and the momentum is building. From innovation in carbon removal technologies to increased market participation, and from robust policy interventions to a more informed investor class - the carbon market stands on the cusp of a transformational era.

CHALLENGES

Since the carbon market is an evolving market, the challenges are typical for any developing initiative. The companys operations and financial conditions can be affected by the following business risks and uncertainties:

• Change in regulations of carbon markets and trading rules

• Change in carbon credit market dynamics

• Dependency on the carbon credits trading business

• Trading in carbon credits exposure to counter parties

• Inability to maintain regular carbon credit order flow

• Adverse fluctuations in foreign exchange rates

• Dependence on promoter and key managerial personnel

• Ensuring credibility and quality of carbon credits to investors

• Regular changes in quality management standards, environmental laws and regulations related to GHG emission

• Adverse financial condition of EKIESLs clients or global economy

• Developments in macroeconomic factors

• Changes in laws and regulations in end customer industries

Over the past few years, we have diligently enhanced our business operations, bolstering our resilience against potential challenges. Our proactive efforts have significantly reduced vulnerability, reinforcing our capacity to thrive in a dynamic environment. However, its important to acknowledge that, while we have made substantial progress, certain challenges may still exert a limited impact on our performance. Embracing these realities, our forward-looking strategy empowers us to address any obstacles proactively, ensuring that we maintain our trajectory of growth and innovation while upholding our commitment to excellence.

EKI IN 2024-25

The financial year 2024-25 was a significant chapter in EKI Energy Services Ltd.s journey as it continued to evolve as a pioneering force in global climate action and carbon market leadership. With a steadfast commitment to sustainability and innovation, the company navigated a dynamic business landscape, expanding its footprint across carbon asset management, renewable energy consulting, power trading, and climate investments.

During this period, EKI undertook a strategic review of its operations and made key decisions to streamline its focus. The company divested its stakes in subsidiaries Galaxy Certification Services Pvt. Ltd. and EKI Sustainability Services Pvt. Ltd., reflecting a conscious shift towards strengthening its core competencies in carbon markets and sustainability services. At the same time, EKI made a strategic investment in Tvasta Manufacturing Solutions Pvt. Ltd. by subscribing to preference shares, reinforcing its commitment to scalable climate technologies and innovative sustainability solutions.

Recognition and accolades continued to follow EKIs efforts. The company was featured once again in Fortune Indias Next 500 List, reaffirming its place among Indias most promising mid-siged enterprises. It also welcomed the approval of carbon crediting methodologies by the Integrity Council for the Voluntary Carbon Market (ICVCM), a development that further validated its approach to high- integrity carbon offsets and boosted confidence in voluntary markets. EKI contributed to policy dialogue by publishing a comprehensive whitepaper analysing the implications of COP29, emphasising its role as a thought leader in the global climate conversation.

On the ground, EKIs social impact initiatives continued to drive positive change. The company manufactured and distributed improved cookstoves in India and African countries such as Ghana, Kenya, and Malawi, fostering clean cooking solutions that enhance health and reduce emissions. The biomass briquette plant in Dindori, Nashik, remained a standout project. By purchasing agricultural waste from farmers and converting it into briquettes, the company not only provided an eco-friendly alternative to coal but also boosted rural incomes and reduced cropburning-related emissions.

Despite ongoing uncertainties in the international carbon markets and negotiations under Article 6 of the Paris Agreement, EKI remained optimistic and forward-looking. The company believes in the critical role of transparent, well-managed, and globally integrated carbon markets in achieving net-gero targets. This conviction is guiding its efforts to scale up the supply of high-quality carbon credits and to drive the next wave of climate investments through innovative projects and cross-border collaborations.

During this turbulent global period, EKI proactively prioritiged business consolidation and liquidity management to strengthen its long-term foundation. The company took measures such as cost optimisation, manpower retention, and restructuring efforts, all of which contribute to ensuring sustainable business continuity. There was a renewed focus on scaling GHG mitigation projects through diversified funding sources, enabling EKI to expand its impact and project portfolio. Simultaneously, the company advanced new verticals such as sustainability consulting and strengthened its alignment with emerging regulatory frameworks, including mandatory BRSR (Business

Responsibility and Sustainability Reporting) compliance. A key strategic move during the year was the demerger planning exercise - aimed at unlocking shareholder value and realigning business units for sharper strategic focus.

EKI stands on a strong foundation, ready to capitalige on emerging opportunities. Its expanding service portfolio, strategic investments, and collaborative mindset position it to lead in the decarbonigation movement while continuing to deliver measurable climate, social, and economic impact. The year was marked by thoughtful transformation and decisive actions that laid the groundwork for a sustainable, resilient, and globally impactful future.

OUTLOOK

1. Strategic Interventions for a Sustainable Future

In a rapidly maturing carbon market ecosystem, our company remains committed to catalysing global climate action through forward-looking business strategies. During FY 2024-25, we reinforced our commitment to high-integrity carbon finance by implementing enhanced screening protocols for carbon offset projects. With growing global scrutiny and increasing buyer expectations, we are integrating rigorous due diligence frameworks and quality assurance standards, helping restore trust, transparency, and accountability to the voluntary carbon market. Simultaneously, our diversification into power trading, renewable energy solutions, and clean technology innovations is reducing our reliance on carbon credit revenue. Ventures in briquette manufacturing, biochar, clean cooking technologies, and biomass-to-energy initiatives are steadily contributing to a broader impact footprint, paving the way for sustainable, resilient growth through backward and forward integration.

2. Advancing Carbon Offset Development Methodologies

Our strategic focus on methodological integrity and innovation has become even more pronounced this year. As digital technologies continue to transform MRV (Monitoring, Reporting, and Verification), we are actively integrating Digital MRV (DMRV) systems into our operations to ensure real-time, tamper-proof tracking of emissions reductions. These digital mechanisms are revolutionising how offsets are verified and reported, enhancing confidence among regulators, financiers, and buyers. EKI continues to be an early mover in adopting and shaping these digital methodologies, helping standardise practices across borders and aligning with emerging international frameworks.

3. Strengthening Climate Finance Mechanisms

With the increasing global consensus around the urgency of climate financing, we see a pivotal role for voluntary and compliance markets in driving capital into scalable decarbonigation projects. FY 2024-25 saw us make strategic investments, including into climate-tech startups like Tvasta Manufacturing Solutions, which align with our commitment to facilitating an inclusive and tech-enabled low-carbon transition. Our outlook is guided by the understanding that bridging the climate finance gap requires innovative instruments, robust project pipelines, and market mechanisms that are trusted and verifiable. EKI is uniquely positioned at this intersection, combining on-ground execution capability with deep domain expertise.

4. Championing the ESG and Carbon Valuation Convergence

As carbon costs are increasingly factored into ESG disclosures and impact assessments, we see this convergence as a structural opportunity. The normaligation of carbon pricing within mainstream investment frameworks signals a paradigm shift where sustainability is no longer an externality but a core business metric. EKIs strategic alignment with ESG- linked climate outcomes enables us to assist corporates and institutions in internaliging carbon footprints into risk and valuation models. We foresee a continued rise in demand for our advisory and offsetting solutions as stakeholders seek to meet emerging regulatory and voluntary ESG standards across geographies.

5. Driving Standardisation and Readiness for Market Expansion

FY 2024-25 has been a transitional year for global carbon markets with evolving Article 6 negotiations, ICVCM Core Carbon Principles coming into play, and increasing interoperability between registries. While the sector focuses on alignment and standardisation in the short term, we anticipate an inflection point in the coming years that will unlock exponential market growth. Our strategy is designed to anticipate and adapt to these shifts whether through refining our project development pipeline, enhancing transparency measures, or building regionally diversified operations across Africa, South and Southeast Asia. EKI is ready to lead in this new era where credibility, innovation, and inclusivity define success in the climate economy.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company is into climate change $ sustainability advisory and carbon offsetting, along with business excellence services which includes ISO certification, management training on JIT / Kaigen etc., and electrical safety audits. The Board of Directors of the Company have identified the Managing Directos as being the chief operating decision maker (CODM), evaluates the Company performance, allocate resources based on the analysis of the various performance indicators of the Company. As per the requirements of IndAS 108 - "Operating Segments", the company has two reportable segments as under:

(i) Trading $ Other Business Segment: where the carbon credits are purchased from various vendors and are sold to customers among other ancilliary activities.

(ii) Generation Segment: where the carbon credits are issued from the projects implemented, developed and owned by the Company.

The revenue of both these segments are earned majorly from sale of carbon credits, however the decision of CODM is derived separately in both these segments considering the variable outcomes of the respective segments.

Details of the reportable Operating Segments of the company and the identifiable items of Generation Segment is as under:

Particulars	Trading Segment	Generation Segment	Trading Segment	Generation Segment	Total	Total
	31 March 2025	31 March 2025	31 March 2024	31 March 2024	31 March 2025	31 March 2024
Segment Assets	-	9,336.31	57,442.81	8,810.04	9,336.31	66,252.85
- Intangible Assets	-	710.90	-	314.58	-	-
- Intangible Assets Under Development	-	8,625.41	-	8,494.62	-	-
- Inventories	-	-	-	0.05	-	-
- Trade Receivables	-	-	-	0.79
- Other Current Assets			-	-	-	-
Segment Liabilities	-	-	24,419.42	438.96	-	24,858.38
- Trade Payables			-	438.96
Segment Revenue	-	-	22,838.09	3,047.08	-	25,885.17
- Sale of products - Carbon credits		-	-	3,047.08	-	-
Segment Expenses	-	46.73	39,266.08	168.92	46.73	39,435.00
Depreciation	-	46.73	-	98.27	-	-
Project Registration, Verification, Validation, Issuance and DOE expenses	-	-	-	70.65	-	-

The above details are segregated basis identifiable items of generation segment. Other items of assets, liabilities, income and expenses are either for trading segment or are unallocable.

(i) Analysis of Companys revenues (excluding other income) based on the geography

Particulars	For the year ended
	31 March 2025	31 March 2024
- Domestic	8,891.32	2,197.68
- Exports	7,570.15	23,687.49
Total	16,461.47	25,885.17

(ii) Analysis of Companys non-current assets (other than financial instruments and deferred tax assets) based on geography

Particulars	As at
	31 March 2025	31 March 2024
- In India	-	35.024.32
- Outside India	-	-
Total	-	35,024.32

RISK AND CONCERN

The global carbon credit market is undergoing rapid transformation amid intensifying climate action, regulatory reform, and growing scrutiny over environmental integrity.

While the market offers significant potential for financing decarbonigation and nature-based solutions, it also faces evolving risks that may impact its credibility, functionality, and long-term stability.

Risk Category	Discription	Mitigation Measure
Regulatory Uncertainty	Delayed or uneven implementation of Article 6, lack of harmonigation between voluntary and compliance markets.	Active monitoring of global policy; engagement with regulators; flexible project design aligned with evolving rules and recogniged standards.
Market Oversupply & Price Volatility	Oversupply of low-quality credits leading to suppressed prices; high demand for premium credits creating pricing disparity.	Diversification across project types, geographies, and registries; prioritigation of high-integrity credits with strong co-benefits.
Credit Integrity & Greenwashing Risk	Public and stakeholder concern over questionable methodologies, outdated credits, or exaggerated climate impact.	Enhanced due diligence; use of verified standards (Verra, Gold Standard, ART); alignment with ICVCM Core Carbon Principles and VCMI Claims Code.
Reputational & ESG Exposure	Increased scrutiny from investors and civil society regarding the legitimacy of offsetting versus actual emissions reductions.	Transparent ESG reporting; third-party audits; integration of credits into broader net-gero strategy emphasiging real emission cuts.
Technological $ MRV Limitations	Lack of standardigation in digital MRV tools; potential errors in remote data collection or blockchain-based credit issuance.	Investment in vetted digital MRV platforms; partnerships with tech providers; adherence to credible, peer-reviewed measurement methodologies.
Geopolitical & Legal Risk	Political instability, unclear land tenure, sovereign claims over credits, and cross- border enforceability concerns in project host countries.	Legal risk assessments; clear contractual terms; inclusion of delivery guarantees; engagement with local authorities and communities for project legitimacy.

INTERNAL CONTROL SYSTEM

The Company has implemented a robust internal control framework designed to ensure the accuracy and reliability of financial reporting, promote operational efficiency, ensure compliance with applicable policies and procedures, safeguard assets, and support the effective utilisation of resources.

These controls are subject to continuous monitoring and periodic review to ensure their ongoing effectiveness and adequacy. Our accounting policies are in full compliance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015.

To evaluate the efficiency and adequacy of our internal control mechanisms, we engage reputed external audit firms to conduct internal audits at regular intervals. The observations and recommendations arising from these audits are carefully reviewed by the Audit Committee, and necessary corrective measures are implemented promptly. The Board of Directors also periodically reviews Internal Audit Reports to ensure alignment with corporate governance objectives.

During the year, no significant weaknesses were identified in the design or operation of the Companys internal control systems.

Furthermore, both the Standalone and Consolidated

Financial Statements are subjected to quarterly reviews by our Statutory Auditors, reinforcing our commitment to transparency, accountability, and regulatory compliance.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES/ INDUSTRIAL RELATION FRONT

At EKI, our employees are regarded as our most valuable asset and a cornerstone of our continued success. Guided by an employee-centric philosophy, we are committed to fostering a safe, inclusive, and motivating work environment that promotes both individual productivity and collective performance.

To support the professional growth of our workforce, EKI actively invests in skill development, capability enhancement, and leadership training through customised learning and development programs. We recognise the importance of diversity and are dedicated to building a team that reflects a broad spectrum of backgrounds and perspectives—strengthening our organisational capabilities in the process.

Teamwork, self-motivation, and continuous learning are strongly encouraged across all levels of the organisation. Our human resource policies are thoughtfully designed to attract, retain, and reward top talent while nurturing a positive and empowering workplace culture.

As of March 31, 2025, EKI employed 101 permanent staff members.

KEY FINANCIAL RATIOS S DETAILS OF SIGNIFICANT CHANGES

Ratio	2025	2024	% change (increase/ decrease)	Explanation in case change is more than 25% as compared to previous year
Debtors Turnover (In times)	4.56	7.20	-36.71%	Volatility in the carbon market is significantly impacting the companys profitability and ratios, particularly, categoriged in the following domains:
Inventory Turnover (In times)	1.58	1.20	31.99%
				1. Cost Uncertainty
				1. Carbon Compliance Costs: Companies that are required to purchase carbon credits to meet regulatory obligations face uncertainty in their compliance costs. If carbon credit prices are volatile, predicting and budgeting for these costs becomes challenging, potentially impacting financial planning and profitability.
Interest Coverage Ratio (In times)	0.03	(0.02)	250%
Current Ratio (In times)	9.21	6.75	36.40%
Debt Equity Ratio (In times)	0.00	0.00	0%
				2. Hedging and Risk Management Costs: Companies might need to engage in hedging strategies to manage price risks, which can involve additional costs. These costs can affect profitability if they are not effectively managed.
Operating Profit Margin (%)	44.71%	(15.44%)	274.16%
Net Profit Margin (%)	9.29%	(48.21%)	119.27%
				2. Operational Costs
				1. Pass-Through Costs: If carbon credit costs increase due to market volatility, companies might pass these costs onto consumers. However, if the market is highly volatile, pricing adjustments may not keep pace with cost changes, squeeging margins and affecting profitability.
Return on Capital Employed (%)	4.05%	(29.37%)	113.80%
Return on Net Worth (%)	3.58%	(30.15%)	111.87%
				2 Investments in Reductions: Companies may need to invest in emissions reduction technologies or processes to lower their demand for carbon credits. While this can reduce long-term costs, the initial investment can be substantial and may impact short-term profitability.
				3. Revenue Impact
				1. Pricing Strategy: Companies involved in carbon trading can experience fluctuating revenues due to price changes in carbon credits. Volatile prices can lead to uncertainty in revenue streams if carbon credits are a significant part of their business model.
				2. Market Position: Companies that are more efficient in managing their carbon footprint may benefit from lower credit costs during times of high volatility, potentially enhancing their competitive position and profitability compared to less efficient rivals.
				4. Investor Sentiment and Stock Performance 1. Market Perception: Volatility in carbon prices can affect investor sentiment and stock performance, especially for companies heavily involved in the carbon market. Uncertainty about future carbon costs or regulatory changes can lead to fluctuations in stock prices, impacting the companys market valuation and access to capital.
				5. Strategic Decisions
				1. Long-Term Planning: Volatility can complicate longterm strategic planning. Companies might delay or alter their investments in carbon reduction projects or new technologies due to uncertainty in future carbon costs and market conditions.
				2. Regulatory Risk: Companies that do not anticipate or adapt to regulatory changes may face higher costs or penalties. Volatility can reflect underlying regulatory risks, affecting strategic decisions and overall profitability.
				Owing to the above prepositions, the carbon markets are extremely volatile and accordingly the profits, ratios and the overall trends of the financial position of the company is effected by more than 25%.