Gem Enviro Management Ltd Management Discussions

Your Directors has pleasure in presenting the management discussion and analysis report for the financial year ended on March 31, 2026.

GLOBAL ECONOMY OVERVIEW

The global economy remained resilient during the year despite geopolitical conflicts, evolving trade policies and persistent macroeconomic uncertainties. According to International Monetary Fund (IMF), global economic growth is projected at 3.1% in 2026 and 3.2% in 2027, reflecting a moderate but stable growth trajectory. Global inflation is expected to rise to 4.4% in 2026 before moderating to 3.7% in 2027, supported by easing price pressures across several economies, although risks from geopolitical developments, commodity price volatility and trade fragmentation continue to pose challenges to the global outlook.

The global sustainability agenda has become an important driver of economic activity. Governments, regulators and businesses are increasingly prioritizing circular economy practices, resource efficiency and responsible waste management. Growing corporate commitments towards Environmental, Social and Governance (ESG) principles, Extended Producer Responsibility (EPR), resource recovery and recycling have accelerated investments in sustainable infrastructure and environmental services. Technological advancements are further transforming the waste management industry into a key enabler of sustainable economic development.

While geopolitical uncertainties, commodity price volatility and changing trade policies remain potential risks, the long-term outlook for the environmental services sector remains positive as governments and businesses continue to strengthen sustainability commitments in line with global climate objectives and circular economy initiatives.

Source: https://www.imf.org/-/media/files/publications/weo/2026/april/english/execsum.pdf

INDIAN ECONOMY OVERVIEW

India continued to remain one of the fastest-growing major economies, supported by strong domestic demand, sustained public investment and resilient economic fundamentals. According to IMF, Indias real GDP is projected to grow by 6.5% in 2026, significantly outpacing the global growth rate and reaffirming its position among the worlds fastest-growing large economies. Despite persistent geopolitical tensions, ongoing regional conflicts and global trade uncertainties, India demonstrated remarkable economic resilience. Inflation is projected at 4.7% in 2026, remaining within a manageable range despite global commodity price volatility and geopolitical uncertainties.

The Reserve Bank of India continued to adopt a balanced monetary policy approach to maintain price stability while supporting economic growth. The countrys prudent fiscal management, stable financial system and continued emphasis on infrastructure development, manufacturing and digital transformation are expected to support sustained economic growth while maintaining macroeconomic stability.

The favourable macroeconomic environment has also enabled the Government to accelerate reforms aimed at promoting sustainable development and strengthening the circular economy. As part of these ongoing regulatory reforms, the Central Pollution Control Board (CPCB) strengthened the EPR ecosystem introduced the Extended Producer Responsibility Electronic Trading and Settlement Platform (EPRETP) during the year. The platform enables transparent trading and settlement of EPR certificates, enhances traceability and streamlines compliance for stakeholders.

Source: International Monetary Fund (IMF), World Economic Outlook Database, April 2026

INDUSTRY STRUCTURE AND DEVELOPMENT

India is one of the fastest-growing economies in the world, driven by rapid industrialisation, urbanisation, rising consumption and increasing population which led to significant increase in the generation of municipal, consumer, industrial, electronic, plastic, battery and other waste streams.

India has traditionally relied on imports for several critical raw materials and industrial inputs. Rising global supply chain uncertainties and increasing commodity prices have highlighted the strategic importance of recovering valuable resources from waste through recycling and circular economy practices. Recycling of waste not only reduces dependence on virgin raw materials but also conserves natural resources, lowers energy consumption and supports sustainable industrial development. Consequently, waste is increasingly being recognised as a valuable economic resource.

This transition has been further supported by the introduction of comprehensive waste management regulations covering plastic waste, electronic waste, batteries, waste tyres, used oil and end-of-life vehicles. The implementation of EPR across multiple waste streams has fundamentally transformed the industrys structure by assigning responsibility to Producers, Importers and Brand Owners (PIBOs) for the collection, recycling and environmentally sound disposal of post-consumer waste.

The regulatory framework has also emphasised the use of recycled materials in manufacturing. Under the Plastic Waste Management Rules, 2016, as amended, PIBOs are required to meet prescribed minimum levels of recycled plastic content in specified categories of plastic packaging. Such measures are expected to increase demand for recycled materials and strengthen domestic recycling capacity.

The industry is increasingly adopting technology-enabled compliance systems, organised collection and channelisation networks, transparent recycling mechanisms and sustainability-focused infrastructure. These developments are driving the formalisation of the sector and creating long-term opportunities for integrated environmental solutions, sustainability advisory and circular economy services.

According to Ministry of Environment, Forest and Climate Change, Indias circular economy has the potential to generate over $2 trillion in economic value and nearly 10 million jobs by 2050, highlighting its significance as a key pillar of sustainable economic growth.

Source: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2108165

DIGITALISATION OF EPR COMPLIANCE

The CPCB introduced the EPRETP to facilitate transparent price discovery, trading and settlement of EPR certificates generated under various waste management regulations. The platform is expected to improve price transparency, enhance traceability of transactions, reduce information asymmetry among market participants and strengthen regulatory oversight. The trading and financial settlement are undertaken through the EPRETP, marking a significant shift in Indias EPR ecosystem.

The implementation of EPRETP has fundamentally altered the operating environment for businesses engaged in EPR certificate facilitation. The transition to an exchange-based mechanism has reduced the role of intermediary-driven transactions, resulting in increased pricing transparency and intensified competition across the industry.

The Companys core business, which was predominantly centred on EPR certificate facilitation, has been materially impacted by this regulatory transition, leading to a decline in revenue and profitability during the year. The evolving regulatory framework has significantly affected the Companys traditional business model, necessitating a strategic shift towards diversified sustainability-led services. Accordingly, the Company is strengthening its focus on waste channelisation, sustainability compliance, ESG advisory, digital sustainability solutions and other environmental services to build a more resilient and diversified business model.

EVOLVING WASTE MANAGEMENT PRACTICES

With a rapidly growing population and increasing urbanization, waste management has become a critical challenge for India. Improper waste disposal leads to environmental pollution, health hazards, and an overburdened landfill system. To tackle this issue, the Indian government has launched several initiatives to promote sustainable waste disposal, recycling and efficient use of waste management machines. Programs like the Swachh Bharat Mission, Waste-to-Energy projects, etc. are making a significant impact by reducing landfill dependency and promoting waste recycling solutions.

The waste management industry has progressively evolved from conventional collection and disposal services to integrated resource recovery solutions.

Collection and Channelisation: Efficient collection and channelisation form the backbone of an organised waste management ecosystem. Formal collection networks, aggregators, collection centres, and digital tracking systems help channel waste from generators to authorised recyclers and processors.

Recycling and Waste processing: Recycling has emerged as one of the most important pillars of sustainable waste management. Advanced recycling technologies enable the recovery of valuable raw materials from waste. Resource recovery not only conserves natural resources but also reduces energy consumption, lowers GHG emissions and supports domestic manufacturing through the availability of recycled materials.

Government initiatives driving Waste Management: The Government of India continues to strengthen the waste management ecosystem through progressive regulations, digital compliance systems and infrastructure development. Key initiatives include:

a. Deposit Refund System (DRS): It encourages consumers to return used beverage containers and packaging by offering refundable deposits, thereby improving collection rates and reducing littering.

b. Reverse Vending Machines (RVMs): Automated collection systems that incentivise consumers to deposit used plastic bottles and beverage containers for recycling, supporting higher recovery and recycling efficiency.

c. QR Code-Based Traceability: The adoption of QR code-enabled tracking mechanisms enhances transparency across the waste value chain by facilitating real-time monitoring, traceability, authentication and regulatory compliance.

d. Digital Compliance Platforms: Online monitoring systems and EPR portals improve reporting accuracy, strengthen regulatory oversight and promote organised participation by all stakeholders.

Development of Sustainable Utility Infrastructure: The growth of Indias waste management sector is supported by the continuous development of sustainable utility infrastructure across the value chain. Investments in integrated waste management facilities are strengthening collection, processing, recycling and resource recovery capabilities.

Key infrastructure developments include:

a. Material Recovery Facilities for sorting and segregation of recyclable waste.

b. Collection Centres and aggregation hubs to improve organised waste channelisation.

c. Recycling and resource recovery facilities for processing multiple waste streams.

d. Development of industrial parks and circular economy clusters to promote resource sharing, common waste management infrastructure and industrial symbiosis among businesses.

e. Digital logistics and traceability systems enabling efficient movement and monitoring of waste materials.

f. Authorised dismantling, refurbishing and treatment facilities for specialised waste streams such as e-waste, batteries, tyres and end-of-life vehicles.

The continued expansion of regulatory frameworks, technological advancements, organised recycling infrastructure and increasing environmental awareness is expected to drive sustained growth in Indias waste management industry.

HOW GEM POSITIONS ITSELF FOR FUTURE GROWTH

As Indias waste management industry continues to evolve, GEM is strategically expanding its service portfolio to strengthen its position as an integrated environmental solutions provider. Building on its expertise in EPR compliances, the Company is diversifying into waste channelization by facilitating the collection and movement of waste to authorized recyclers. The Company is also focused on the implementation of practical ESG-driven infrastructure solutions that enable organizations to enhance their ESG performance. In addition, GEM is expanding its advisory services to assist organizations in meeting evolving regulatory requirements, improving ESG performance and embedding sustainability into their business operations.

To support the increasing digitalization of environmental compliance, the Company continues to invest in technology-enabled sustainability solutions for waste management, compliance monitoring and sustainability reporting. By integrating digital platforms with its environmental and advisory services, GEM aims to provide end-to-end solutions that enhance operational efficiency, improve regulatory compliance and create long-term value for its stakeholders while contributing to Indias transition towards a circular economy.

OUTLOOK

Indias waste management industry is expected to witness sustained growth, supported by increasing environmental awareness, strengthening regulatory frameworks, expanding EPR obligations and the Governments continued focus on promoting a circular economy. The growing emphasis on scientific waste management, ESG practices, resource recovery, recycling and enhanced sustainability disclosure requirements is expected to create significant opportunities for businesses operating across the environmental services value chain.

Investments in waste collection infrastructure, recycling facilities and digital compliance platforms are likely to strengthen the formal waste management ecosystem while improving traceability and operational efficiency. The demand for recycled raw materials is also expected to increase as industries seek to reduce carbon emissions, optimise resource utilisation and meet their sustainability commitments.

Sustainability has evolved from a regulatory requirement to a strategic business priority. Going forward, digital platforms, data analytics and automation are expected to play an increasingly important role in waste tracking, compliance management and sustainability reporting, enabling businesses to achieve higher levels of regulatory compliance and operational excellence.

SWOT ANALYSIS

STRENGTHS:

• Deep Regulatory & Domain Expertise: GEM possesses strong expertise in the EPR ecosystem and a deep understanding of evolving regulatory frameworks which enables the Company to provide consultancy in the EPR and adapt to emerging EPR-regulated sectors.
• Diversified Service Portfolio: GEM offers integrated solutions across EPR compliance, sustainability compliance, advisory, waste channelisation and digital sustainability solutions.
• Established Industry Network: GEM has well developed relationships with authorised recyclers, collection partners and industry stakeholders which enhances its operational efficiency and reach.

WEAKNESS:

• High Business Concentration Risk: GEMs business is heavily concentrated in the domestic EPR sector, with no other established business verticals contributing significantly to its operations.

• Regulatory Dependence: Business performance is majorly influenced by changes in environmental regulations and EPR compliance frameworks. The launch of CPCBs centralized EPRETP portal for trading EPR certificates shifts the market from bilateral negotiations to an exchange-based model, potentially disrupting GEMs existing business volumes and adverse pressure on profit margins.

OPPORTUNITIES:

• Evolving Waste Management Sector: The waste management industry is undergoing rapid transformation driven by regulatory reforms, technological advancements and circular economy initiatives. Leveraging its domain expertise and industry experience, the Company is well positioned to capitalise on emerging opportunities across the environmental and sustainability ecosystem.
• Emerging Waste Tech Industry: The rapidly evolving waste management sector presents significant growth opportunities driven by advancements in waste technologies and digital compliance solutions. The development of Eco-Industrial Parks and other sustainability-focused infrastructure is expected to further strengthen this sector and creates opportunity for the Company to expand its presence across emerging sustainability-led business segments.

THREAT:

• Introduction of EPRETP: The frequent updates and changes in compliance norms by the CPCB can impact operational stability and increase the cost of compliance. Additionally, the CPCBs introduction of an EPRETP is transforming the EPR Ecosystem and potentially disrupting the GEMs business which led to potential loss in business volumes and adverse pressure on profit margins.
• Regulatory and Policy Uncertainty: Frequent amendments to environmental regulations, compliance mechanisms and implementation timelines may require continuous adaptation of the Companys service offerings and operational processes.
• Technology and Digital Disruption: Rapid advancements in digital compliance platforms and automation require continuous investment in technology and innovation to remain competitive and meet evolving client expectations.

RISK & CONCERNS

The Company operates in an industry that is significantly influenced by regulatory developments and policy changes. One of the significant risks to the business of the Company is the implementation of the EPRETP by the CPCB for trading of EPR certificates. As the Companys core business is EPR compliance and certificate facilitation, this regulatory shift has materially impacted on the business of the Company. Further, the Company presently does not have any other established business verticals contributing significantly to its operations, resulting in a higher dependence on the EPR segment.

The above developments have led to a decline in the Companys revenue and have adversely impacted on profitability during the year. While revenues have been affected by the changing market dynamics, the Companys fixed operating costs continue to remain largely unchanged in the short term, thereby exerting additional pressure on margins and overall financial performance. Further, the waste management and circular economy sector continues to evolve rapidly through changing regulations, technological advancements and emerging compliance frameworks, making the pace and direction of future industry developments difficult to predict.

The Company continues to closely monitor these developments and is actively evaluating opportunities to diversify its business within the broader sustainability sector. It is strengthening its capabilities in waste channelization, sustainability compliance, ESG infrastructure, advisory services and digital sustainability solutions with the objective of reducing business concentration risk and building a more resilient and diversified business model.

The Companys risk management framework is periodically reviewed by the Audit Committee and the Board to ensure timely identification, assessment and mitigation of emerging business risks.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has established and maintains adequate Internal Financial Controls (IFC) that operate effectively throughout the year. IFC refer to the policies and procedures adopted by the Company to ensure orderly and efficient conduct of its business operations, including adherence to Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial statements.

Your Company follows a structured assessment process to ensure the presence of adequate controls. The IFC framework involves comprehensive scoping and planning to identify significant accounts and processes based on materiality thresholds. Risks associated with these processes are then mapped, and appropriate controls are designed or updated accordingly. In cases where gaps are identified, remedial actions are promptly implemented.

All key controls are subject to regular testing to evaluate their effectiveness. Additionally, the Companys auditors independently test these controls and report on whether the Company has adequate IFC system in place and such controls are operating effectively.

Your Companys Internal Control System is robust and well established. These include codified rules and guidelines for all business activities, which are periodically reviewed and updated in response to evolving business needs and regulatory requirements.

The controls are periodically monitored through procedures/processes set by the management, covering critical and important areas. This proactive approach ensures the IFC framework remains responsive and aligned with both internal operational changes and the external business environment.

FINANCIAL PERFORMANCE

The Companys consolidated revenue from operations were Rs. 10,181.12 Lakhs during the financial year 2025-26. The Earnings before Interest, Taxes, Depreciation & Amortization ("EBITDA") stood at Rs. 669.92 Lakhs and Profit After Tax is Rs. 473.05 Lakhs.

On standalone basis, your Companys revenue from operations were Rs. 9,554.89 Lakhs during the financial year 2025-26 as against Rs. 5,920.05 Lakhs during financial year 2024-25. The EBITDA stood at Rs. 659.12 Lakhs as against Rs. 817.85 Lakhs of the previous financial year. The Company has earned Net Profit of Rs. 464.98 Lakhs as compared to Rs. 608.66 Lakhs of the previous year.

The growth in revenue during the period reflects the continued scaling of the Companys core operations and increasing business volumes. However, the pressure on margins has primarily been driven by a rise in EPR procurement costs as well as increased competition following the entry of smaller market participants, which has impacted overall pricing power.

With the implementation of EPRETP by CPCB, it is expected to have a significant impact on the Companys core business operations, including potential effects on revenue visibility and EPR inventory levels. The management has proactively assessed this shift and is addressing it through diversification into sustainability-led business verticals to mitigate risks and capture emerging opportunities.

ACCOUNTING POLICIES

The accounting policies have been consistently applied by the Company and are consistent with those applied in the previous year. The financial statements have been prepared under the historical cost convention on an accrual basis.

The management accepts responsibility for the integrity and objectivity of the financial statements, as well as for the various estimates and judgment used therein.

DISCLOSURE OF ACCOUNTING TREATMENT IN PREPARATION OF FINANCIAL STATEMENT

The Company has followed all relevant Accounting Standards laid down by the Institute of Chartered Accountants of India (ICAI) while preparing Financial Statements.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of significant changes i.e., change of 25% or more as compared to the immediately previous financial year in key financial ratios and any change in the Return on Net worth of the Company including explanations thereof are given below:

S. No. Ratios	As on March 31, 2025	As on March 31, 2026	Change	Reason for change
1 Debtors Turnover Ratio	2.22	2.91	30.93%	The increase is due to higher sales and lower average trade receivables.
2 Current Ratio	5.89	4.63	-21.47%	Not Applicable
3 Inventory Turnover Ratio	17.72	24.55	38.53%	The increase is primarily attributable to the increase in sales during the year.
4 Debt Equity Ratio	0.00	0.00	-	Not Applicable
5 EBITDA Margin (%)	13.62%	6.81%	-50%	The decrease is primarily due to higher procurement costs, which have resulted in lower earnings.
6 Net Profit Margin (%)	10.28%	4.87%	-52.67%	The decrease is due to the decline in profit for the year.
7 Return on Net worth	17%	12%	-26.30%	The decrease is due to higher procurement costs, which significantly reduced the PBT.

CAUTIONARY STATEMENT

The statement in this report on Management Discussion and Analysis describes the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable SEBI laws and regulations. While these forward-looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations.

For and on behalf of the Board of Directors GEM Enviro Management Limited

Sd/- Dinesh Pareekh DIN:00629464 Chairman and Director

Sd/- Anil Kumar Behl DIN:00697588 Managing Director

Date: August 25, 2026 Place: Noida