Elgi Rubber Company Ltd Management Discussions

The rubber industry in India experienced moderate growth during the financial year 2024-25, navigating through various global and domestic challenges. As a leading manufacturer of rubber products with specialization in retreading materials, Elgi Rubber Company Limited continued to adapt to evolving market dynamics.

Global rubber markets showed signs of stabilization after the volatility witnessed in previous years. Natural rubber prices demonstrated greater stability, with key producing nations implementing strategic production controls. Synthetic rubber markets benefited from relatively stable crude oil prices, though geopolitical tensions in certain regions created occasional supply disruptions.

The automotive sector, a major consumer of rubber products, showed resilience with commercial vehicle sales demonstrating steady growth. The retreading industry, our primary operational segment, gained further traction as commercial fleet operators increasingly prioritized cost efficiency and sustainability. The preference for quality retreading over new tire purchases continued to strengthen, particularly in the commercial vehicle segment, as operators looked to optimize operational costs amidst inflation pressures.

Emerging markets in Africa, Southeast Asia, and Latin America present significant export potential, particularly as these regions witness growth in transportation and industrial sectors. The gradual shift towards electric commercial vehicles creates opportunities for specialized rubber components tailored to the unique requirements of these vehicles. Additionally, the growing emphasis on circular economy principles presents promising opportunities for the retreading business, as it supports product lifecycle extension and waste reduction.

However, despite relative stability, rubber prices remain susceptible to fluctuations driven by global supply-demand dynamics and environmental factors affecting major producing countries. Ongoing vulnerabilities in global supply chains may impact the availability of raw materials and disrupt export logistics.

The company has only one business segment, that is, manufacture of Reclaimed rubber and allied activities, hence segment wise reporting is not required.

Looking ahead, the company is positive outlook for FY 2025-26, supported by favorable industry trends and strategic initiatives. The Indian economy is projected to maintain its growth trajectory, creating a conducive environment for sectors that drive demand for our products.

The retreading industry is expected to strengthen further as sustainability and cost efficiency become increasingly important for fleet operators. The commercial vehicle segment, a key driver for our retreading business, is projected to grow steadily, supported by infrastructure development and expansion of logistics networks.

The Companys comprehensive risk management framework enabled the company to mitigate potential threats effectively. Key risks identified include fluctuations in raw material prices, supply chain disruptions, and regulatory changes. The company implemented strategic sourcing and supplier diversification to ensure stability and continuity.

The Company has implemented comprehensive internal control systems to ensure operational efficiency, accuracy in financial reporting, and compliance with regulatory requirements. These systems are regularly reviewed and updated to address emerging risks and ensure adequacy. The internal audit team conducts periodic assessments to identify areas for improvement and enhance control mechanisms.

The financial performance of the company during the financial year 2024-25 has been discussed in the Directors Report and the audited financial statements, which has been prepared in accordance with the requirement of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, discloses a true and fair view of the performance of the company during the said period.

The Company places significant emphasis on human capital development, recognizing it as a critical driver of growth. During the year, the company implemented several training and development programs to enhance employee skills and competencies. As of March 31,2025, The Company employed approximately 451 individuals. Industrial relations remained harmonious, with ongoing dialogue and engagement between management and the workforce to address concerns and foster a collaborative environment.

* The Change in value is attributed due to lower profit.

Management Discussion and Analysis forming part of the Directors Report is prepared in compliance with Schedule V(B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and such statements may be "forward looking" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could influence the companys business operations includes economic conditions affecting demand /supply and price conditions prevailing in the domestic and overseas markets in which the company operates, changes in the Government regulations, policies, fiscal laws and other statutes and other incidental factors.