GMM Pfaudler Ltd Management Discussions

FY25

A. Global Economy

2024 was a year marked by uncertainty. More than 70 countries, including major players like India, the United States, and the United Kingdom, held elections that significantly influenced the global geopolitical landscape. Against this backdrop, the global economy entered a phase of cautious recovery, shaped by the complex interplay of easing inflation, resilient labour markets, and persistent geopolitical and financial headwinds. Although growth remained modest by historical standards, the global economy displayed notable resilience amid tightening monetary policies, ongoing supply chain adjustments, and climate- related disruptions.

For 2025, the International Monetary Fund (IMF) has released its latest economic outlook, presenting a cautiously optimistic view of the global economy amid easing inflationary pressures and a steady, albeit uneven, path to recovery. While global growth remains modest, emerging markets, particularly India, continue to stand out with strong economic fundamentals and robust domestic demand. ^[1]

Global GDP growth is projected to expand at around 2.8% for 2025 and 3% for 2026 (3.2% in 2024), marginally higher than the previous year, reflecting resilience in labour markets, easing inflation, and improved financial conditions. Emerging economies growth at 4.2% is expected to outpace advanced economies growth at 1.7%. ^[2]

Inflation (projected to decline to 4.5% in 2025 from 5.9% in 2024) is forecasted to continue its downward trajectory in most advanced economies, thanks to tighter monetary policies and stabilized commodity prices. However, some developing economies may still face inflationary pressures due to currency fluctuations and geopolitical tensions. Advanced economies like the US and Eurozone are expected to see slower growth, around 1.5-2%, as high interest rates weigh on investment and consumption.

[1]

Emerging markets are poised to drive global expansion, supported by rising consumer demand, infrastructure investments, and improved export performance.

Indias economic performance in 2024 solidified its status as the fastest-growing major economy in the world. Amid global uncertainties, India demonstrated remarkable resilience, underpinned by robust domestic demand, strong public investment, moderating inflation, and a sustained reform momentum. While external challenges persisted, the country managed to maintain macroeconomic stability and accelerate structural transformation. ^[2]

For 2025 and 2026, India remains one of the fastest- growing major economies, with the IMF projecting a strong GDP growth rate of 6.2% in 2025 and 6.3% in 2026, slightly moderating from 2024 due to base effects but still reflecting resilient economic activity.^[1]

Domestic demand continues to be the primary growth engine, supported by rising incomes, urban consumption, and a rebound in private sector investment. Inflation is expected to stabilize within the Reserve Bank of Indias (RBI) target range of 4-6%, aided by food price normalization and proactive monetary policy.

Fiscal consolidation efforts are underway, with the central government aiming to narrow the fiscal deficit while continuing capital expenditure on infrastructure and welfare schemes. Reform momentum remains strong, particularly in areas such as labour laws, digital governance, and green energy transitions. External sector performance is improving, with a narrowing current account deficit and steady foreign exchange reserves, although global trade uncertainties pose a potential risk.

One such risk stems from the evolving political landscape in the United States. The return of Donald Trump to the presidency has introduced uncertainty around trade and tariff policies. Any shifts in U.S. tariff regimes or broader economic measures could have significant downstream effects on global supply chains, particularly for Indias Pharmaceutical and Chemical industries, which are heavily reliant on cross-border trade for imports and exports.

India is expected to remain one of the fastest-growing major economies in 2025 and 2026, even as other large economies face slower growth. Backed by strong fundamentals and government-led reforms in infrastructure, innovation, and financial inclusion, India is strengthening its position as a key force in global economic activity.^[2]

C. Industry Development

1. Pharmaceuticals Industry

The global pharmaceutical market size was estimated at $1,645.75 billion in 2024 and is expected to grow at a CAGR of 6.12% from 2025 to 2030.

The global pharmaceutical manufacturing market size was valued at $589.06 billion in 2024 and is projected to reach $632.71 billion in 2025 to $1203.95 billion by 2033, growing at a CAGR of 7.41%. One of the elements of the pharmaceutical manufacturing market is the growing need for effective and safe medications worldwide. As chronic diseases, infectious diseases, and other health conditions continue to rise, there is an increasing demand for pharmaceutical drugs to address these healthcare challenges. ^[4]

North America leads the global pharmaceutical manufacturing market, driven by a strong presence of major pharmaceutical companies, advanced healthcare infrastructure, high R&D investment, and a favourable regulatory environment. With a projected CAGR of 11.69%, the region is set to maintain its dominant position. Europe, with a projected CAGR of 9.80%, also holds a significant share of the market, supported by increasing healthcare expenditure, a growing ageing population, and a robust pharmaceutical industry. Stringent regulatory standards and a focus on quality control contribute to Europes steady growth and innovation in the sector. ^[4]

Indian Market: Indias pharmaceutical industry ranks 3^rd globally in pharmaceutical production by volume and 14^th by value, supported by a well- established domestic sector comprising approximately 3,000 drug companies and over 10,000 custom manufacturing units. India is the worlds largest provider of generic medicines, with a 20% global supply share by volume. ^[7]

Indias pharmaceutical industry, valued at around $58 billion, is projected to reach $120-130 billion by 2030 and $400-450 billion by 2047. Growth is driven by rising lifestyle diseases, an ageing population, increased focus on holistic health, and the growing consumerization of healthcare. ^[7]

According to reports, revenues of the Indian pharmaceutical market is expected to grow 8-9% in FY26. ^[6] Pharma industry revenue growth is driven by strong performance in the US, Europe, and emerging markets, aided by new product launches and increased chronic therapy share. Expansion in domestic reach, focus on complex generics, and strategic acquisitions further support growth. ^[8]

Key Growth Drivers:

• Improved Access to Medicine in Emerging

Markets: Rising incomes, better healthcare infrastructure, and expanded insurance in countries like India and China are driving higher medicine consumption. In India, access to advanced medicines and strong public-private support are boosting pharmaceutical demand.

• Rising Prevalence of Chronic Diseases:

Chronic conditions like cardiovascular diseases, cancer, diabetes, and respiratory illnesses are rising globally, accounting for 70% of all deaths. With 41 million annual deaths linked to these diseases, demand for effective pharmaceutical treatments continues to grow rapidly.

• Ageing Global Population:

The global elderly population (65+) is expected to more than double from 761 million in 2021 to 1.6 billion by 2050. This surge, along with a higher burden of chronic conditions among seniors, is driving sustained growth in pharmaceutical demand.

Indian CDMO Industry: Indias Contract Development and Manufacturing Organization (CDMO) market is poised for rapid expansion, projected to nearly triple from $15.63 billion in 2023 to $44.63 billion by 2029. This explosive growth is being driven by a global shift among biopharma companies seeking more cost-effective and high- quality outsourcing options.

As geopolitical uncertainties, supply chain disruptions, and rising costs strain traditional Western CDMO markets, India has emerged as a preferred alternative thanks to its competitive pricing, technical expertise, and untapped capacity. ^[8]

A key catalyst in Indias CDMO evolution is its growing foothold in biologics, a domain historically led by Western players. Government- backed initiatives such as the Biotechnology Industry

Research Assistance Council (BIRAC) have played a pivotal role in nurturing innovation, supporting biotech startups, and building production infrastructure. Alongside regulatory reforms, fast-track approval processes, and increased foreign investment, these efforts have significantly strengthened Indias CDMO landscape, evident in a reported 50% year-on-year surge in RFPs received by some Indian

CDMOs. ^[8]

Key Growth Drivers:

• Cost Advantage: India provides a significant cost edge, with manufacturing expenses 20-30% lower than in China and substantially lower than in Western markets. This is driven by lower operational costs, economically skilled labour, and streamlined production practices— making India an attractive destination for global pharma companies seeking supply chain optimization. ^[8]

• Skilled Workforce: India has one of the worlds largest pools of technically trained professionals, with a steady influx of graduates in biotechnology, chemistry, and pharmaceutical sciences. This deep talent pool supports innovation, process development, and efficient scaling of both biologics and small- molecule production. ^[8]

• Infrastructure &

Investment: The country is witnessing rapid upgrades in manufacturing infrastructure, including AI-enabled quality systems and biotech-focused industrial clusters. Growth in biotech parks, special economic zones, and sustained foreign direct investment is equipping India with the capability and capacity to manage complex and large- scale pharmaceutical manufacturing. ^[8]

2. Specialty Chemicals Industry

The global Specialty Chemicals market size was valued at $904.58 billion in 2024 and is projected to reach around $1,293.23 billion by 2034, growing at a compound annual growth rate (CAGR) of 3.66% from 2025 to

2034. ^[10]

The global specialty chemicals market is witnessing robust regional growth, with Asia-Pacific emerging as the fastest- growing region, driven by rapid industrialization and urbanization in China, India, and Japan. The Asia-Pacific market is projected to grow from $416.11 billion in 2024 to $594.89 billion by 2034. North America and Europe are also expected to experience steady growth, reaching $271.58 billion and $323.31 billion, respectively, by 2034. The LAMEA region is forecasted to expand from $72.37 billion in 2024 to $103.46 billion by 2034. ^[10]

Indian Market: Specialty chemicals make up 20% of the global $4 trillion chemicals industry. Indias specialty chemicals market is projected to grow at a 12% CAGR, reaching $64 billion by 2025, driven by strong export and end-user demand growing at 10-20% CAGR. ^[11]

[3]https://www.icra.in/CommonService/OpenMediaS3RsKey=091f92f3-3a7c-41b2-884f-dd41cdbf4207#:~:text=The%20debt%20metrics%20of%20 ICRAs%20sample%20set,by%20the%20generation%20of%20healthy%20internal%20accruals.

[4] https://www.globenewswire.com/news-release/2025/01/21/3012818/0/en/Pharmaceutical-Manufacturing-Market-Size-to-Worth-USD-1203-95- Billion-by-2033-Straits-Research.html

[5] https://www.spglobal.com/ratings/en/research/articles/250203-pharmaceutical-industry-2025-credit-outlook-is-stable-as-healthy-revenue- growth-mitigates-pressures-13394024

[6] https://in.investing.com/news/stock-market-news/indian-pharma-market-to-grow-89-per-cent-in-fy26-report-4711463

[7] https://www.financialexpress.com/business/healthcare-whats-in-store-for-pharmaceutical-sector-in-2025-3706432/

[8] https://www.thepharmanavigator.com/news/india-the-next-frontier-in-global-cdmo-services

[9] https://www.investindia.gov.in/team-india-blogs/chemical-industry-growth-drivers-and-investment-opportunities-india

[10] https://www.cervicornconsulting.com/specialty-chemicals-market

[11] https://www.ibef.org/download/1744101748_Chemicals-February-2025.pdf

Key Growth Drivers:

• Rising Domestic Consumption: Indias chemical production is foundational to various end-user industries, such as agriculture, pharmaceuticals, automotive, electronics, and construction. About 70% of Indias chemical production is consumed domestically, and the country is expected to account for 20% of the incremental global chemical consumption over the next two decades. Domestic demand is projected to reach $8501,000 billion by 2040. ^[9]

• Emerging Export Powerhouse: India is poised to strengthen its position as a global agrochemical hub, building on its status as the 4^th largest net exporter of agrochemicals and the 13^th largest exporter of pesticides and disinfectants. Going forward, exports are expected to rise further, driven by the countrys low-cost manufacturing capabilities, a growing pool of technically skilled manpower, seasonal domestic demand patterns, overcapacity in production, competitive pricing, and a strong foothold in generic pesticide manufacturing. ^[11]

• Evolving Supply Chains:

Several geopolitical factors affect the global supply chain for chemicals and petrochemical products. Manufacturers are seeking new markets to strengthen their supply chains.

Here, India, with its value proposition, can emerge as a trusted partner ^[9]

3. Agrochemicals Industry

The global agrochemicals market was valued at $223.03 billion in 2024 and is expected to grow at a CAGR of 3.4% between 2025 and 2033, reaching $301.34 billion by

2033. ^[12]

The growth of the global agrochemicals market is being driven by increased usage in emerging nations due to rising pest threats from global trade and evolving farming practices. Urbanization is reducing arable land, pushing farmers to rely more on agrochemicals to enhance productivity. Additionally, rising food demand, especially in Asia, and government support through subsidies and tax incentives are further fuelling market expansion. The cultivation of high-value cash crops also contributes to the sectors continued growth. ^[13]

Indian Market: The India agrochemicals market size is estimated at $8.53 billion in 2025 and is expected to reach $10.38 billion by 2030, at a CAGR of 4% during the forecast period. ^[15]

Indias agrochemical industry is witnessing steady growth, driven by stable domestic demand, increased awareness among farmers, improved access to modern agri-inputs, and a gradual recovery in export markets. Rising adoption of high- efficiency products and expanding usage across noncrop applications are also contributing to this positive outlook.

However, the industry continues to face several challenges, including intense competition from low-cost chinese suppliers, regulatory delays in product approvals, and evolving global procurement trends that are impacting export momentum. Additionally, pressure on pricing and margins remains a concern for industry players.

[14]

[12] https://www.ibef.org/industry/chemical-industry-india

[13] https://straitsresearch.com/report/agrochemical-market#:~:text=Agrochemicals%20Market%20Size%20and%20Trends,period%20 (2025%E2%80%932033).

[14] https://economictimes.indiatimes.com/industry/indl-goods/svs/chem-/-fertilisers/agrochemicals-sector-revenue-expected-to-grow-at-7-9-pc- in-fy26-crisil/articleshow/116292342.cmsRsfrom=mdr

[15] https://www.mordorintelligence.com/industry-reports/india-agrochemicals-market

4. Oil & Gas Industry

The oil refining market is projected to grow from $1,740.34 billion in 2025 to $2,401.36 billion by 2034, at a CAGR of 3.64%, up from $1,679.18 billion in 2024.

The oil refining market is driven by rising demand for gasoline and diesel due to population growth and urbanization, along with the shift toward cleaner fuels. Key opportunities include expanding downstream operations, adopting advanced refining technologies, and integrating renewable energy to boost efficiency and sustainability. Recent trends show a move toward complex refinery setups using hydrocracking and coking, along with increased digitalization to enhance operations and competitiveness.

The Oil and Gas capex market is driven by rising global energy demand due to population growth, economic development, and urbanization, especially in emerging regions. To meet this demand, companies are ramping up investments in exploration, extraction, and production. Governments are also pushing for energy diversification and security, leading to infrastructure upgrades and the adoption of advanced technologies. These efforts aim to boost efficiency, production capacity, and sustainability.

As countries strive for energy independence, the market is set to grow through continued capital investments. ^[18]

Indian Market: India is poised for a major refining boom, with capacity expected to grow over 20% in the next three years. Refining capacity is set to rise from 256 million mt to 309 million mt by 2028, driven by surging domestic and overseas demand for oil products. Refineries are currently operating at over 100% capacity, with recent utilization hitting 103%. According to S&P Global

Commodity Insights, the capacity increase will be led by brownfield expansions (58%) and greenfield projects adding 18 million mt/year.

This strategic growth not only meets rising domestic demand but also boosts Indias export potential. The expansion is aimed at building an energy-secure and opportunity-rich future for the country. ^[16]

[16] https://www.spglobal.com/commodity-insights/en/news-research/latest-news/crude-oil/010725-indias-refining-capacity-to-expand-20-by- 2028-on-robust-run-rates-demand-growth

[17] https://www.mordorintelligence.com/industry-reports/oil-refining-market

[18] https://www.marketresearchfuture.com/reports/oil-gas-capex-market-36757#:~:text=Global%200il%20and%20Gas%20CAPEX,adjust%20 their%20capital%20expenditures%20accordingly.

5. Other Industry Segments

Paints Industry: The global paints and coatings market is projected to grow from $193.91 billion in 2025 to approximately $282.45 billion by 2034, with a CAGR of 4.27% over the forecast period. The global paints and coatings market is growing rapidly due to the expansion of the construction and automotive industries, driven by increased urbanization and infrastructure development. Rising demand for durable, aesthetic, and protective coatings is fuelling market growth across residential, commercial, and industrial sectors. Asia-Pacific is the dominant region in the market and is likely to maintain its position. This is due to the growing construction and construction activity as well as the automobile industry in China, India and Japan. ^[22]

Fertilizer Industry: The India fertilizers market size is estimated at $45.89 billion in 2025 and is expected to reach $62.83 billion by 2030, growing at a CAGR of 6.49%. Government subsidies play a key role in driving growth in the Indian fertilizer market by making fertilizers like urea, DAP, and NPK more affordable for farmers, ensuring consistent usage and improved crop yields. Rising agricultural demand, fuelled by population growth and changing dietary habits, also boosts fertilizer usage. ^[23]

Metals, Minerals & Mining Industry: The metals and mining sector in India is poised for significant growth, backed by robust demand, favorable policy initiatives, and the expansion of end- user industries. A major driver is the sustained focus on infrastructure development, which has led to a consistent rise in demand for core materials like steel, aluminium, and coal. Indias goal to reach 500 million tonnes of steel production by FY50—up from around 111 million tonnes currently—reflects its ambition to fuel infrastructure and industrial growth. Government projects related to national highways, railways, ports, and housing have made construction the largest consumer of steel, accounting for 60-65% of its use. ^[24]

CBG Industry: Compressed Biogas (CBG) is emerging as a pivotal element in Indias energy transition, offering a sustainable alternative to imported liquefied natural gas (LNG). Through the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative, the government has received 2,227 active Letters of Intent (LOIs) and, in 2024-25, 94 CBG plants collectively sold 31,422 tons of CBG. To bolster this sector, the government has allocated C564.75 crore for biomass aggregation machinery (FY 2023-24 to FY 2026-27) and C994.50 crore for developing pipeline infrastructure to integrate CBG into City Gas Distribution networks. Additionally, a CBG blending obligation aims for a 1% blend by FY 2025-26, scaling up to 10% in subsequent years, underscoring CBGs role in enhancing energy security and reducing carbon emissions.

Renewable Energy Expansion:

India aims to add a record 35 GW of solar and wind energy to the grid by March 2025, supported by a $386 billion financial commitment. This initiative is part of the countrys goal to reach 500 GW of non-fossil power by 2030, with major companies like Reliance Industries and Adani Green Energy pledging significant renewable capacity expansions. ^[21]

Battery Recycling Initiatives:

The lithium-ion battery recycling market in India is projected to grow at a robust CAGR of 41.1% from 2025 to 2032. This growth is driven by increasing electric vehicle adoption, favourable government policies, and rising demand for lithium- ion batteries. Key players in this sector include Exigo Recycling, RecycleKaro,

Lohum Cleantech, and Attero Recycling. ^[20]

Fermentation Technology

Growth: Indias fermentation chemicals market is expected to reach a projected revenue of $8,653.5 million by 2030, growing at a CAGR of 8.3% from 2024 to 2030. This growth is fueled by increasing demand in pharmaceuticals, food and beverages, and industrial applications. ^[19]

[19] https://www.grandviewresearch.com/horizon/outlook/fermentation-chemicals-market/indiaRsutm_source=chatgptcom

[20] https://www.gmiresearch.com/report/india-lithium-ion-battery-recycling-market/Rsutm_source=chatgpt.com

[21] https://www.reuters.com/business/energy/india-gets-386-bln-financial-commitment-expand-renewable-capacity-2024-09-16/Rsutm_ source=chatgpt.com

[22] https://www.precedenceresearch.com/paints-and-coatings-market

[23] https://www.globenewswire.com/news-release/2025/01/16/3010961/28124/en/India-Fertilizer-Market-Analysis-Volume-Forecasts-and- Company-Analysis-Report-2025-2033.html

[24] https://www.ibef.org/download/1744102277_Metals-and-Mining-February-2025.pdf

D. Company Overview

GMM Pfaudler is the leading provider of technologies, systems, and services for the chemical, pharmaceutical, and other allied industries.

We design, manufacture, install, and service corrosion- resistant equipment and complete chemical process systems according to our customers requirements.

With the integration of the Groups technologies into complete process solutions for a myriad of applications - such as reaction, evaporation, acid recovery, distillation, filtration, and drying, amongst many others - the global team of process engineers and project managers provides turnkey-designed and built systems.

The exceptional portfolio of systems and technologies requires global support for installation, maintenance, and optimization. To better serve the Groups clients, we provide extensive worldwide services with the largest field service organization in the industry.

GMM Pfaudler is driven by 2000+ individuals across 4 continents and 19 global manufacturing facilities around the world.

With the growing shift towards conducting business responsibly, GMM Pfaudler has integrated an ESG-led approach to generate holistic value for all its stakeholders. The Company has taken concerted efforts in the areas of environment conservation, social well-being, and ensuring sound corporate governance in the organization. To this end, GMM Pfaudler has undertaken various mindful initiatives during the reporting year, the details of which have been covered in the ESG section.

Following are the Key Strategic and Financial Highlights for FY25:

1. Key Strategic Highlights	• Appointed a Chief Transformation Officer for GMM Pfaudler Group who will lead our transformation journey - enhancing efficiency, integration, and innovation across all our operations and locations.
• Global Manufacturing Footprint optimization continues:
? Established a low-cost manufacturing facility in Poland for the production of stainless-steel non glass-lined equipment.	• Successfully participated in ACHEMA 2024, the worlds leading process industry trade fair, with over 2,800 exhibitors and 100,000+ participants.
? Closure of Leven, UK will be completed by Q2 FY26	• Maintained ICRA ratings at AA-/Stable/ A1+. CRISIL credit ratings at AA-/Positive/ A1+ (Outlook revised from Stable; Rating reaffirmed).
? Completed the closure of the Hyderabad facility and consolidated glass-lined operations at Karamsad to enhance capacity utilization and reduce company-wide costs.	• Achieved an ESG rating of "Adequate" from CRISIL, with a Governance score of 76/100, and a "Medium" rating from SES, reflecting a stronger Governance score of 84/100.
• Successfully concluded Project Shikhar, an ongoing EBITDA transformation initiative, with benefits expected to extend into FY26.	• Named a finalist in the 2025 Manufacturing Leadership Awards for its AI-driven business process improvement project using the Infor Velocity Suite.
• Continued to evolve product mix in alignment with the Groups diversification strategy.
• Successfully running the Global Engineering Centre in India, which powers our global operations with agile, high- impact engineering solutions

2. Financial Performance

GMM Pfaudler showed resilience in its financial performance during FY25 despite the general weakness in the chemical industry impacting capex cycles and new investments and global geopolitical uncertainties.

The Company continued to remain committed to enhancing shareholder value, reflected in its increasing market capitalisation of over 14 times in the last seven years. GMM Pfaudler is one of the top 1000 listed companies in terms of market capitalisation (its rank on The BSE Limited (BSE) was 778, while on the National Stock Exchange of India Limited (NSE) it was 770. In FY25, GMM Pfaudler recorded standalone revenues of C921 crore, down 11% from the previous years C1,031 crore, and consolidated revenues of C3,199 crore, down 7% from the previous years C3,446 crore. Standalone Earnings Before

Interest, Tax, Depreciation and Amortisation (EBITDA)* is down by 6% at C130 crore as compared to C139 crore in FY24, and consolidated EBITDA* decreased 20% to C381 crore, before exceptional items as compared to C476 crore in FY24.

Profit Before Tax (PBT)* increased by 9% to C76 crore as compared to C70 crore in FY24 on a standalone basis and reduced by 35% to C164 crore (before exceptional items) compared to C251 crore in FY24 on a consolidated basis.

The Company continued to strengthen its internal systems and processes to improve efficiencies and minimise costs. In the current year, the Company has been able to reap the benefits from these efforts and will continue to do so in the coming years as well.

The year FY26 started with a strong order book, especially for India Business and with the onset of resurgence in the Pharma & Chemical sectors, the Management remains confident that GMM Pfaudler will continue to dominate the corrosion-resistant technologies, systems, and services space.

* EBITDA & PBT for standalone and consolidated results are before considering one-time costs for the India EBITDA transformation program and Hyderabad, India site closure amounting to C19.59 crores and before one-time exceptional costs pertaining to Leven, UK site closure consisting of severance pay, inventory write-offs, asset impairment and other closure costs amounting to C47.66 crores.

E. Key Financial Ratios

Details of change of 25% or more in the key financial ratios in comparison to the previous financial year along with explanation thereof are as under:

Particulars	Consolidated
	FY25	FY24	% Change
1. Debtors Days	47	46	-2%
2. Inventory Days	67	74	9%
3. Interest Coverage Ratio	3.69	5.02	-26%
4. Current Ratio	1.67	1.59	5%
5. Debt Equity Ratio	0.83	0.93	11%
6. Operating Profit Margin (%)	11.90%	13.81%	-14%
7. Net Profit Margin (%)	3.11%	4.95%	-37%
8. Return on average net worth (%)	9.95%	19.15%	-48%
9. EPS (INR)	22.99	39.03	-41%

*i. EBITDA is before considering one-time costs for the India EBITDA transformation program and Hyderabad, India site closure amounting to C19.59 crore.

ii. PAT is before one-time costs as explained in note i. above and before one-time exceptional costs pertaining to Leven, UK site closure consisting of severance pay, inventory write-offs, asset impairment and other closure costs amounting to gross value of C47.66 crores (Total net of tax C50.40 crores).

iii. EPS is calculated considering the PAT as explained in note ii. above.

Notes:

Interest Coverage Ratio:

Interest coverage ratio in FY25 decreased as compared to FY24 due to lower operating profits in FY25 and higher finance cost comprising of one-time refinancing charges in International Business.

Net Profit Margin:

Net Profit Margin in FY25 decreased as compared to FY24, primarily due to lower net profit in FY25 as compared to FY24.

Return on average net worth

(%): Return on average net worth in FY25 decreased as compared to FY24, primarily due to lower business profits in FY25 as compared to FY24.

EPS: EPS in FY25 decreased as compared to FY24, mainly due to lower business profits in FY25 as compared to FY24.

Definitions:

1) Debtor Turnover: Average of trade receivables (current year and previous year) by revenue from operations for the year.

2) Inventory Turnover:

Average inventory (current year and previous year) by revenue from operations for the year.

3) Interest Coverage Ratio:

Total EBITDA* before exceptional items by finance cost for the year.

4) Current Ratio: Current assets by current liabilities including working capital borrowings.

5) Debt Equity Ratio: Total debt including working capital borrowings and lease liabilities by total equity at the end of the year.

6) Operating Profit Margin:

EBITDA* before exceptional items by operating revenue for the year.

7) Net Profit Margin: Profit after tax* for the year by revenue from operations for the year.

8) Return on average net worth: Profit after tax* for the year by average net worth for the year.

9) Earnings Per Share (EPS):

Profit for the year* by number of equity shares.

The calculation of above ratios (including restatement of prior year ratios, wherever necessary) is in accordance with formula prescribed by Guidance note on Schedule III issued by the Institute of Chartered Accountants of India.

F. Business Segments & Operational Highlights

1. Business Overview

GMM Pfaudler is present across Americas, Europe, and Asia through its offerings in technologies, systems, and services. Through its product portfolio, the company has sustained its business relations with a marquee customer base and continues to strengthen its position as the market leader. GMM Pfaudler is at the forefront of innovation, focused on developing new technologies that will become a benchmark for tomorrow.

Technologies:

Since the very beginning, GMM Pfaudler has continually revolutionised the industry to meet its clients highly specific, ever-changing chemical processing needs. Year after year, with proven reliability, we have designed and manufactured the technologies required to create chemicals that are sought after worldwide.

Our Group boasts over a century-long expertise in the use of many types of corrosion-resistant materials, like glass-lined, borosilicate glass 3.3, fluoropolymers, high nickel alloys, zirconium, and tantalum, just to name a few.

By leveraging our vast portfolio and truly global operational footprint, GMM Pfaudler can serve its clients with single source solutions for all their most complex needs.

The Technologies business accounted for a revenue of C1,839 crore with an order intake of C1,696 crore in FY25.

Glass-Lined Technologies

Pfaudler has been at the forefront of developing new technologies to meet the highly specialized chemical processing needs of its clients for more than a century.

One of the primary reasons why Pfaudlers glass-lined equipment is trusted by over 90% of the worlds top chemical companies is due to its exceptional reliability in reaction technologies and the comprehensiveness of its glass-lined accessories. These advanced technologies are crucial for the safe containment of corrosive contents, maintaining vessel pressure, and ensuring the final batch quality.

Business Highlights:

• Formed a partnership with Gravner Winery: GMM Pfaudler engineered tanks using premium-grade steel and advanced construction techniques, exemplifying strength, durability, and a strong commitment to preserving the integrity of the wine.

• Pharma sector inquiries remained steady, while the outlook for the chemicals sector continued to be sluggish.

• Successfully completed the consolidation of manufacturing facilities to support footprint rationalization and operational efficiency.

Non Glass-Lined Technologies:

GMM Pfaudlers non glass- lined technologies that include Mavag (Filtration & Drying), Mixion, Mixel and Mixpro (Mixing Technology), Interseal (Sealing Technology), Equilloy (Alloy Process Equipment), Edlon (Fluoropolymers) and Normag (Lab & Process Glass) showcase our strength as a group, our capabilities, and our constant pursuit of innovation. The objective has always been to diversify from our core business by entering adjacent industries to sustain growth and capture customer wallet share through portfolio expansion. With our non glass-lined technologies, we leverage the full breadth of our capabilities to provide our customers an end to end solution.

The focus remains on strengthening the non-glass- lined portfolio to create a basket of brands that are complementary and can increase customer spend in the core industries that we serve.

Business Highlights:

• Mixion expanded into new industries, including Water, Flue Gas Desulfurization (FGD), Compressed Biogas (CBG), and Oil & Gas.

• Equilloy secured breakthrough orders in

ACHE across top-tier customers.

• Successfully completed the revamp of the cleanroom facility in India to enable the manufacturing of Titanium and other exotic alloy equipment.

• Product innovation focus at Mavag yielded results, with trial orders successfully booked.

• Cross-selling of multiple products across the US, Europe, and Asia led to increased customer spend and deeper market penetration.

Systems:

GMM Pfaudlers capabilities are not limited to the individual technologies themselves. Utilizing vast chemical processing expertise, our skilled engineers combine technologies and services into complete, fully integrated, and efficiently operating process systems.

GMM Pfaudler supplies turnkey systems from lab through full industrial scale plants, for all chemical processes. Our expertise allows us to design process systems with Pfaudler technologies meeting the complex requirements of reaction, evaporation, distillation, acid recovery, absorption, filtration, and drying processes. A complete system includes the design of all the unit operations surrounding and supporting the core technology. Systems are designed specifically for each clients process. Each system layout is custom designed to ensure proper system functionality and to ensure all equipment, instruments and valves are arranged for ease of operation and maintenance. Our technicians assist with field installation and our engineers work with our clients team to commission the system.

As a single-source provider, we ensure that the design of every component is perfectly integrated into the system for optimum performance. Our skilled engineering and manufacturing ensure high quality while our project management expertise provides for fast-track schedules and reduced costs. Our focus is to provide our customers with innovative solutions and comprehensive service offerings across the world.

The Systems business accounted for a revenue of C428 crore with an order intake of C480 crore in FY25.

Business Highlights:

• Successfully commissioned a modular short path distillation plant that converts cashew nutshell liquid (CNSL) into high- purity cardanol—a biobased phenolic compound used in friction materials, coatings, adhesives, and more.

• Commissioned a 250 TPD Sulfuric Acid Concentration Plant powered by our proprietary MoSA process— marking a key milestone in delivering sustainable solutions for the chemical industry.

• US systems outperformed budget expectations, driven by strong order intake.

• Secured major orders for Solid-Liquid Separation systems in the Indian market.

• Received the first order for a Bromine plant column system, expanding our presence in the halogen- based chemical sector.

Services:

Not only do the worlds top chemical companies trust on GMM Pfaudlers Technologies and Systems to manufacture their products, but they also rely on our engineering, technical services, and aftermarket parts to keep their plants operating efficiently.

We provide parts and maintenance services for our technologies to our global network of customers throughout their plants, as well as the same services for those of others.

However, our services also extend far beyond that of standard maintenance. Every project is unique, and our highly experienced team of engineers and technicians will work together with you to deliver the most effective and complete process solution, from conception to design and installation.

The Services business accounted for a revenue of C932 crore with an order intake of C926 crore in FY25.

Business Highlights:

• Supported global acid recovery projects through installation and commissioning services delivered by expert technicians from India.

• Booked the first-ever Annual Maintenance Contract (AMC) order for NGL, marking a significant milestone.

• Achieved successful market entry for Interseal in India, reinforcing our commitment to expanding product reach.

2. Operational Highlights

• Established a low-cost manufacturing facility in Poland for the production of stainless-steel non glass-lined equipment.

• Closure of Leven, UK will be completed by Q2 FY26

• Completed the closure of the Hyderabad facility and consolidated glass-lined operations at Karamsad to enhance capacity utilization and reduce company-wide costs.

• Achieved cost reductions across multiple parameters under Project Shikhar, driving operational efficiency and improved financial performance.

G. Innovation and Technology

• Inaugurated state- of-the-art test centre in Karamsad, Gujarat, equipped to conduct pilot trials for molecular distillation and acid concentration technologies.

• Launched GL Heat Exchangers for the Indian market.

• Successfully commercialized a patented new filtration and drying technology for the chemical and pharma Industry, which significantly reduces filtration and drying time as well as costs.

• Developed new features for glass-lined reactors, especially for GMP requirements.

• Invested in flow chemistry through collaborations with CPI (UK) and NCL (India) to advance continuous processing.

H. Opportunities and Threats

Opportunities:

• The Indian government continues to focus on enhancing the countrys global competitiveness. Initiatives such as "Make in India" aim to simplify regulations, reduce bureaucracy, and lower operational costs, thereby promoting entrepreneurship and attracting foreign investment.

• The "China+1" strategy has led to a significant shift in global manufacturing, with many companies relocating production from China to India. This trend is particularly evident in the chemical and pharmaceutical sectors, where India is gaining traction due to its cost- effectiveness and robust infrastructure.

• The Indian government has expanded the PLI scheme to include sectors like semiconductors and display manufacturing, in addition to pharmaceuticals. This expansion aims to boost domestic manufacturing, reduce import dependence, and improve supply chain resilience.

• GMM Pfaudler is actively developing green and ESG-friendly glass-lined equipment materials, replacing heavy metals with more sustainable alternatives. The company is also exploring technologies to serve emerging industries such as bioplastics, bio-proteins, mock meats, and the rapidly growing electric vehicle (EV) sector.

Threats:

• GMM Pfaudlers business is dependent on the performance of its end-user industries like pharmaceuticals and chemicals. Poor business outlook in these end industries and a consequent cut in capex may impact business prospects. However, the company is de-risking itself from the traditional pharma and chemical industries and foraying into newer industries with the strategy for non-GLE and systems business to grow via crossselling opportunities and exploring new application areas.

• Any significant uptick in the prices of commodities can potentially impact margins. Raw material inflation in end-user industries, as witnessed post-COVID or during the Russia-Ukraine war, can adversely impact the business of clients, leading to a deferment of capex, which in turn impacts the companys order book. To mitigate the impact, the company is undertaking cost reduction measures and passing on the price increase to end customers.

• Threat from geopolitical risks may impact the delivery approvals from the government. GMM Pfaudler was not able to ship out a vessel from the UK to China to a European player operating in China owing to government regulations.

https://www.insightsonindia.com/2024/12/09/editorial-analysis-indias-joumey-to-becoming-a-global-manufacturing-hub/Rsutm_source=chatgpt com

https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/china1-opens-larger-share-for-india-in-global-pharma-manufacturing-beyond-generics-bcg-report/articleshow/117600435.cmsRsutm_source=chatgpt.com

https://www.pb.gov.in/PressReleaseIframePage.aspxRsPRID=2043773&utm_source=chatgpt.com

I. Risks and Concerns

In todays dynamic environment, businesses encounter a wide spectrum of risks—ranging from strategic and regulatory to operational and financial challenges.

Our Risk Management Policy is developed to embed risk awareness into the organisations day-to-day operations. It emphasizes foresight, accountability, and resilience by promoting early identification and mitigation of potential threats. This comprehensive framework ensures that risk considerations are seamlessly integrated into strategic and operational decision-making, supporting long-term stability and growth.

Risk Management Framework

The Companys risk framework is structured to safeguard its business interests and growth ambitions while creating long-term value for both internal and external stakeholders. It supports effective decision-making by identifying and prioritising potential disruptions, enabling the business to strike a balance between risks and opportunities.

This framework promotes a culture of risk awareness across all levels of the organisation, ensuring consistent and proactive risk management practices. It also provides Management with clear visibility into key risk areas, empowering them to take timely and informed actions to protect business objectives.

To strengthen this approach, the Company follows an Enterprise Risk Management (ERM) system that addresses risks across the organisation in a cohesive and structured manner. The methodology aligns with globally recognised risk management principles, particularly those outlined by the Committee of Sponsoring Organizations (COSO), ensuring a robust and best-practice- driven risk governance model.

Risk Management Organization Structure

Risk Management Committee

(RMC) of the Board plays a key role in overseeing the effective implementation of the Companys Risk Management Policy and Framework. It ensures that emerging risks are regularly reviewed and brings critical developments in the risk landscape to the attention of the Board, along with suggested actions for mitigation.

At the executive level, the Executive Risk Management Council (ERMC) is responsible for closely monitoring shifts in the business environment and assessing threats that could affect the Companys overall risk profile. The ERMC regularly evaluates progress on mitigation strategies and reports its findings to the RMC, which subsequently updates the Board.

The ERMC is comprised of senior leadership, including the Chief Executive Officer, Chief Financial Officer, Chief Risk Officer (CRO), and Heads of various enabling functions. The CRO, in collaboration with designated Risk Owners, facilitates the identification of key risks and the formulation of corresponding mitigation plans.

Risk Identification and Mitigation

The Company maintains a comprehensive risk register, systematically categorized into key risk areas: Strategic, Reputational, Technological, Financial, Governance, and Operational. Throughout the year, risk scores were updated based on the assessed probability and impact of each identified risk, as well as the progress made in implementing mitigation measures. This ongoing, dynamic process enables continuous improvement in managing both current and emerging risks across the organization.

Some of the major risks identified by the company, and its mitigation plans, are given below.

Risk Item	Mitigation measures
Integration Risk	The Company has acquired full ownership of Pfaudler International business, strengthening its global presence, product portfolio, and process capabilities. It continues to advance "Project Apollo," focused on leveraging synergies within the Group to become a leading provider of corrosion-resistant technologies, systems, and services. Progress remains strong across key areas including Value Sourcing, Operational Excellence, Portfolio Expansion, and Branding.
	A robust global Mixing Technology platform has also been established, enabling the Company to serve a diverse range of industries with advanced, integrated solutions.
	In addition, the Company has undertaken a detailed evaluation of all mergers and acquisitions completed since 2020, extracting valuable insights to shape future growth strategies and informed decisionmaking.
Geopolitical Risk	The Company acknowledges that geopolitical events such as wars, political unrest, and international conflicts can pose significant risks to its financial and operational stability. To mitigate these risks, the Management team regularly reviews global geopolitical developments and implements strategic responses. A comprehensive Business Continuity Plan is in place to address potential disruptions arising from geopolitical tensions. Export restrictions and trade policy impacts are regularly evaluated, with appropriate measures implemented to ensure compliance and maintain business continuity.
Human Capital	The Company recognises that effective human capital management is vital to achieving its strategic and operational objectives. Efforts during the year focused on talent retention, capability building, and leadership development.
	Long-Term Incentives and ESOPs, introduced in earlier years, continue to support retention and performance alignment for senior executives and key personnel. A structured succession planning process, previously established, has been further strengthened this year with periodic reviews, identification of critical role gaps, and implementation of targeted development actions.
	Learning and development remained a key priority. A focused year-long program was launched for the high-potential employees, alongside the introduction of an online training portal for self-paced learning. Functional, behavioural, and leadership trainings continued under the "NEEV" calendar, delivered by subject matter experts. An enhanced Reward & Recognition system further reinforced a culture of appreciation.
Digitalization and Innovation	Digitization is now a strategic enabler of business transformation, and the Company has laid out a robust roadmap to embed digital technologies across both operational and support functions. With a clear focus on agility, efficiency, and innovation, the Company is leveraging digital tools to accelerate decision-making, enhance customer value, and deliver tech- driven products and services.
	Several proprietary digital solutions have been successfully deployed, including Legal AI, Talent Evaluator, HOT Desk, and integrated platforms for e-auctions, sourcing, and supplier engagement. These initiatives not only streamline internal processes but also strengthen the Companys competitive edge in a rapidly evolving digital landscape.
Intellectual property	Protecting intellectual property is critical to preserving the Companys competitive edge, market leadership, and revenue streams. Any loss or infringement of proprietary designs could significantly erode market share and weaken customer confidence in GMM Pfaudlers products. To counter this risk, the Company has fortified its IP protection strategy by enhancing documentation protocols and deploying a strong, action- oriented framework to swiftly identify and respond to infringement threats. This ensures that the Companys innovation and design leadership remain uncompromised.
IT Security	The Company has established a robust and evolving Information Security Management System, aligned with globally recognised standards, to protect its digital infrastructure and data assets.
	Key measures undertaken include strengthening network security, enhancing endpoint protection, implementing advanced monitoring systems, and conducting regular vulnerability assessments. Awareness sessions and cyber hygiene initiatives have been rolled out to build a strong security culture across the organisation.
	Ongoing upgrades to IT infrastructure and proactive risk mitigation strategies ensure the Company remains resilient against emerging cyber threats and continues to safeguard stakeholder interests.
Supply Chain Disruption	The Company has strengthened its supply chain by identifying vulnerabilities in critical areas. Alternate vendors have been onboarded to de-risk operations, and supplier meets are organised annually to reinforce engagement.
	Ongoing efforts include closer collaboration with key suppliers, standardising e-auction and operational procedures across Indian factories, and evaluating suppliers on ESG criteria.
Compliance	The Company has implemented a strong compliance framework supported by SOPs, checklists, and regular monitoring to ensure timely adherence to all applicable laws. Compliance issues are tracked, addressed, and reported to the Board with necessary corrective actions. The Compliance team undergoes continuous training to stay updated with evolving regulations. Governance training programs covering Code of Conduct, POSH, Anti-Corruption, PIT, and UPSI are delivered through the LMS, reinforcing a culture of accountability and regulatory readiness across the organisation.
	The Company has commenced CBAM reporting for applicable products and is actively aligning with DPDPA requirements through data mapping, draft documentation, and security measures.

J. Human Resources

As the organization continues its growth journey, the Human Resources function continues to strategically position itself as a key enabler of business transformation. Through the execution of future-focused initiatives, we aim to build a workforce that is agile, resilient, and aligned with the long-term objectives of the organization.

Our systematic approach is anchored in three core pillars: Talent Acquisition, Talent Development and Talent Engagement—which collectively ensure clarity of purpose and alignment with business strategy.

Our behavioural competency framework—DNA for Success—continues to serve as the foundation of our culture. It is deeply embedded across all strategic HR initiatives and acts as a guiding beacon for desired behaviours and outcomes.

To attract high calibre, culturally aligned talent, we enhanced our talent acquisition strategy with the launch of a robust Employee Referral Program. Additionally, we strengthened our campus hiring initiatives by onboarding Management and Engineer Trainees from premier institutions, ensuring a pipeline of fresh talent.

To reinforce leadership readiness, we implemented a forward-looking talent strategy that prioritizes continuous learning and personalized development, the Talent League—a blended learning initiative designed to accelerate leadership development, enabling them to be future-ready. This program integrates coaching, strategic projects, experiential learning, and masterclasses led by industry experts, ensuring the comprehensive growth of our potential talent.

To further strengthen our learning and development agenda, we introduced e-NEEV, our comprehensive e-learning platform. It offers a wide array of online programs across behavioural skills, productivity enhancement, and compliance, accessible anytime, from anywhere, offering flexibility and promoting a culture of self-driven learning. Complementing this digital platform is our traditional learning calendar, which includes expert-led classroom sessions and internal masterclasses aimed at building strategic and functional capabilities across critical areas. The Neev program was strategically expanded to address the targeted training needs of our blue-collar workforce, enhancing their skills and fostering long-term capability growth.

Leveraging insights from

Parivartan, our employee engagement survey, we continuously refine our peoples agenda to stay attuned to evolving workforce expectations and strategic priorities. This data- driven approach enables us to enhance employee experience and ensure alignment with organizational goals.

Our strong Rewards and Recognition culture is exemplified by iAppreciate, a one-stop platform that empowers managers and peers to recognize and reward exceptional contributions, thereby reinforcing a high- performance culture.

In line with our strategic focus on operational efficiency and long-term sustainability, the Board of Directors of GMM Pfaudler Limited, in their meeting held on December 13, 2024, approved the consolidation of our glass-lined manufacturing operations. As part of this decision, the Hyderabad facility was closed, with operations being seamlessly integrated into our Karamsad plant. This transition was executed smoothly, with no grievances or legal disputes, reflecting our commitment to responsible change management and operational excellence.

K. Internal Control Systems and their Adequacy

At GMM Pfaudler, a sound internal control environment is a cornerstone of strong corporate governance. The Company has instituted a well-structured and documented internal control framework that is commensurate with the size, complexity, and nature of its operations. These controls are embedded at both the entity and process levels, ensuring transparency, operational efficiency, regulatory compliance, and integrity in financial reporting.

The Companys financial statements are prepared in accordance with significant accounting policies selected by the Management and reviewed and approved by the Audit Committee and the Board. These policies are periodically reviewed and updated to reflect evolving business needs and regulatory requirements.

As a business enabler, the Company uses the LN ERP system for maintaining its Books of Account. The ERP system integrates various business processes and includes embedded transactional controls to ensure appropriate segregation of duties, automated approval workflows, and detailed documentation. This digital infrastructure enhances operational discipline and supports real-time data integrity.

The internal control framework is further strengthened by the Companys Information Management Policy and its robust Information Security Management System, aligned with global standards. The Company uses advanced IT tools to minimise errors, detect anomalies, and ensure real-time tracking of critical compliances. Data analytics are actively used to identify trends and flag exceptions.

To address growing cybersecurity threats, the Company has implemented sophisticated threat detection and response technologies, including Extended Detection and Response (XDR), which consolidates data across multiple security layers such as email, endpoint, server, cloud, and network. Additionally, a Data Loss Prevention (DLP) solution has been deployed, significantly improving the Companys ability to safeguard sensitive data and prevent breaches.

As part of its ongoing commitment to IT security, the Company has conducted multiple assessments, including Vulnerability Assessments, Penetration Testing, and Red Team Exercises. A comprehensive GAP Assessment is currently underway to evaluate the effectiveness of existing cybersecurity and data privacy practices and identify high-risk areas that require remediation or reinforcement.

Internal audit is a key component of the Companys assurance mechanism.

The Internal Auditors present observations, implementation status, and key recommendations to the Management and the Audit Committee on a regular basis. The Management ensures timely corrective actions, and a quarterly follow-up is conducted by the Internal Auditors to track the implementation of the Audit Committees directives. The Audit Committee plays an active oversight role by periodically reviewing the adequacy and effectiveness of the internal control systems, benchmarking them against industry best practices, and guiding continuous improvement.

In line with the requirements of Section 143(3)(i) of the Companies Act, 2013, the Statutory Auditors have confirmed the adequacy and operational effectiveness of the Companys internal financial control systems over financial reporting, thereby reinforcing confidence in the Companys financial governance and risk management framework.