Hi-Green Carbon Ltd Management Discussions

Global Economic Outlook

Global economic growth is projected to remain steady at 3.0 percent in 2026 and 3.4 percent in 2026, slightly down from the 3.5 percent observed in 2024-25. The outlook is underpinned by continued investment in artificial intelligence and other technologies, accommodative financial conditions, and fiscal and monetary support across major economies. Global headline inflation is expected to continue easing, from an estimated 4.1% in 2025 to 3.8% in 2026, with advanced economies converging toward target levels faster than emerging and developing economies, where disinflation is expected to be more gradual.

Growth continues to be uneven across geographies. Advanced economies are projected to expand by 1.8% in 2026, while emerging market and developing economies are expected to sustain growth above 4% through 2026 and 2027. The US economy is projected to grow 2.4% in 2026, an upward revision reflecting a rebound in activity following the Q4 2025 government shutdown. Chinas growth is estimated at 4.5% in 2026, supported by lower US effective tariff rates under a yearlong trade truce agreed in late 2025 and assumed domestic stimulus measures. India continues to be recognised by the IMF as a key engine of global growth, with momentum well ahead of most major economies.

Financial conditions have remained broadly supportive through the year, aided by a weaker US dollar and improved global liquidity, though emerging markets remain exposed to episodes of capital flow volatility. The IMF continues to flag downside risks from the uncertain trajectory of AI-linked investment — whether it delivers durable productivity gains or unwinds into a valuation correction — alongside the continuing risk of renewed trade tensions. Upside potential exists from further trade agreements, easing tariff regimes, and structural reforms. Effective global policy coordination remains essential to sustain the current balance between growth and price stability.

(Source: IMF – World Economic Outlook Update, January 2025)

Indian Economy Outlook

Indias economy expanded by a robust 7.7% in real GDP terms in FY 2025-26 (provisional estimates), up from 7.1% the previous year, driven by strong manufacturing, services (especially trade, transport and financial/real estate segments), healthy private consumption and investment (GFCF growth of 8.2%). Inflation remained exceptionally low (CPI around 2.1% average), supporting real incomes, while the central governments fiscal deficit moderated to 4.4% of GDP amid continued emphasis on capital expenditure; the external sector stayed resilient with a manageable current account deficit.

For FY 2026-27, growth is projected to moderate to around 6.5–6.9% (RBIs latest forecast is 6.7%), keeping India the fastest-growing major economy, supported by resilient domestic demand, public investment, structural reforms and healthy corporate/bank balance sheets. Key risks include elevated energy prices and supply disruptions from West Asia tensions, potential weather shocks to agriculture, and higher inflation (RBI projects CPI at 5.0%, peaking near 5.9% in Q3), though strong fundamentals provide a buffer against global uncertainties.

(Source: RBI, MoSPI)

Industry Outlook

Global Tyre Recycling Industry

The global tyre recycling industry continues its structural transformation, driven by environmental awareness, tightening regulatory mandates, and the ongoing shift toward a circular economy. With over 1 billion end-of-life tyres (ELTs) generated annually, the industry continues to be projected to grow at a mid-to-high single-digit CAGR over the medium term, with developed markets such as Europe and

North America continuing to lead the transition through landfill bans, carbon reduction targets, and sustainable-manufacturing policies.

Pyrolysis remains the most commercially scalable recycling technology, yielding high-value products such as recovered carbon black (rCB), tyre pyrolysis oil (TPO), and recovered steel, which continue to gain adoption across automotive, plastics, paints, and construction industries as cost-effective, lower-emission substitutes for virgin materials. Demand for traceable, certified sustainable inputs continues to drive adoption of global certifications such as REACH, ISCC+, and carbon-footprint disclosures. Pricing trends remain broadly supportive of rCB, which continues to command healthy demand and pricing in Europe and Asia as a viable substitute for virgin carbon black, while TPO — though linked to crude and gas price benchmarks — continues to gain traction as an alternative fuel and, increasingly, as a biogenic feedstock for blending by refineries and carbon black manufacturers seeking sustainable inputs.

Sources: Research And Markets, Tyre Recycling Market Global Forecast; Markets and Markets, Recovered Carbon Black Market; WBCSD TIP Report; European Commission, Circular Economy Action Plan; US EPA, Sustainable Materials Management Program

Indian Tyre Recycling Industry

Indias tyre recycling industry is undergoing a structural shift, driven by rising end-of-life tyre (ELT) volumes and tightening regulation. India generates over 1.5 million tonnes of waste tyres a year, a figure climbing as the vehicle population crosses 350 million. The India Tire Recycling Market is projected to reach USD 3.05 billion by 2033, expanding at a CAGR of 3.51% from 2024, though other estimates place 2024 revenue closer to USD 590.9 million, reaching USD 743.8 million by 2030 at a 4.1% CAGR. The 2022 Tyre Waste Management Rules under Extended Producer Responsibility (EPR) legally obligate tyre producers to recycle a fixed share of what they sell, creating guaranteed demand for processed scrap and reshaping business economics since 2023. Illegal imports of scrap tyres remain a challenge, often ending up in unregulated recycling facilities, prompting government action on registration of producers, importers, and recyclers. The sector is characterised by numerous small-scale pyrolysis operators alongside fewer organised, technology-driven crumb rubber players. Growth constraints include high recycling costs, skilled-labour shortages, and low recycling awareness. Overall, formalisation and EPR enforcement are expected to professionalise the industry over the next few years.

Carbon Black Sector Analysis

The Recovered Carbon Black (rCB) sector in India is emerging as an important segment of the circular economy, driven by increasing end-of-life tyre volumes, growing tyre recycling activities and the need to reduce dependence on virgin carbon black. rCB is produced by refining the carbon-rich char generated during tyre pyrolysis and can partially substitute virgin carbon black in rubber and polymer applications. NITI Aayog estimates that Indias pyrolysis-based end-of-life tyre recycling generated around 0.80 million tonnes of carbon char, of which approximately 0.05 million tonnes was processed into rCB, indicating substantial potential for further value addition.

Demand for rCB is expanding across non-tyre rubber products, tyres, plastics, masterbatches, coatings and inks. Higher-quality rCB can be used as a reinforcing filler in tyre manufacturing, particularly in sidewalls and other non-critical applications, while lower grades find applications in moulded rubber products, floor mats and footwear.

The sector is expected to benefit from EPR initiatives, sustainability commitments, carbon-footprint reduction and increasing acceptance of recycled materials. Recent industry research also indicates strong growth potential for the Indian rCB market. However, challenges remain in achieving consistent quality, purity, particle characteristics and performance comparable with virgin carbon black. Continued investment in char purification, activation, pelletisation and quality standardisation will therefore be critical. Overall, rCB represents a high-value growth opportunity within tyre recycling, with increasing potential for import substitution, resource efficiency and integration into sustainable manufacturing supply chains.

TPO (Tyre Pyrolysis Oil) Market in India

The Tyre Pyrolysis Oil (TPO) market in India is emerging as an important segment of the waste tyre recycling and circular economy ecosystem. TPO is produced through the thermal decomposition of end-of-life tyres in the absence of oxygen and is one of the principal outputs of tyre pyrolysis, along with recovered carbonaceous material and steel. According to NITI Aayogs 2026 assessment, Indias tyre recycling ecosystem processed an estimated 2.68 million tonnes of end-of-life tyres through pyrolysis, generating approximately 1.10 million tonnes of tyre pyrolysis oil.

TPO is primarily used as an industrial fuel and can serve as an alternative to conventional fossil-fuel-based products in selected industrial applications, subject to applicable specifications and regulatory requirements. Its relatively high energy content and availability from waste tyres provide an opportunity for industries seeking cost-effective and circular fuel alternatives. Demand is particularly relevant across industries such as ceramics, textiles, chemicals, engineering and other thermal-process industries.

The market is supported by the increasing availability of end-of-life tyres and the formalisation of tyre recycling under Indias Extended Producer Responsibility (EPR) framework. As of March 2026, the Government reported 579 registered tyre recyclers and 12.229 million tonnes of tyre waste recycled under the EPR framework. The CPCB framework also recognises pyrolysis oil or char as products of waste tyre recycling.

Going forward, the TPO market is expected to benefit from greater adoption of continuous and advanced pyrolysis technologies, improved product quality, environmental compliance and increasing emphasis on resource recovery. However, market growth will depend on regulatory compliance, feedstock availability, consistent TPO quality, pricing relative to conventional fuels and development of higher-value applications. The increasing focus on formal, technology-driven recycling is likely to favour organised recyclers with efficient plants, reliable feedstock supply and strong environmental controls.

Financial Review:

During the year under review, the Company delivered strong topline growth on a standalone basis Key metrics are set out below:

? Revenue from operations surged by an impressive 29.83% from Rs. 8834.68 Lakhs in FY 24-25 to Rs. 11469.82 Lakhs in FY 25-26 ? EBITDA expanded with improved scale, self-sustaining energy process, and better cost management. ? Profit After Tax (PAT) stood at Rs. 835.27 lakhs, down from Rs. 1057.24 Lakhs in FY 24-25 ? During FY25-26, the Company reported steady growth across its product portfolio. o Tyre processing increased to 36010 MT as compared to 24055 MT in FY24-25. o TPO again registered a healthy growth during the year, rising to 15,501 MT in FY25-26 against 10,324 in FY24, supported by higher offtake from industrial users. o Sodium Silicate remained stable with volumes of 11126 MT in FY25-26 as compared to 12089 MT in FY24-25. o Maharashtra Plant operated through the year and processed 19650 MT of waste tyres, utilising 82% of the installed capacity in its very first full year of commencement, showcasing its robust operational efficiency.

Key Financial Ratios

Particulars	2025-26	2024-25	Explanation for Change in Ratio
Inventory Turnover	5.96	6.31
Debtors Turnover	15.58	11.70	Due to an increase in revenue/credit sales while the average debtors remained broadly constant during the yea
Interest Coverage Ratio	6.91	5.39
Current Ratio	1.37	2.06	The growth in current liabilities was comparatively higher, resulting in a decline in the Current Ratio.
Debt Equity Ratio	0.30	0.25
Operating Profit Margin	12.61%	16.30%	--
Net Profit Margin	7.28%	11.97%	Due to decline in Net Profit.
Return on Net Worth	8.84%	12.28%	Due to decline in Profit.

Business Highlights

? The Company continued executing its capacity-expansion strategy through FY2025-26. The Rajasthan (100 TPD) and Maharashtra (100 TPD) facilities operated through the year, while the Madhya Pradesh (100 TPD) facility — delayed from its earlier targeted commissioning window of November-December 2025 — commenced its operations in May 2026, taking Groups total installed capacity to 300 TPD. ? Revenue is diversified across fuel oil (~53.56%), recovered carbon black (~18.60%), and Sodium Silicate Glass (~18.00%) and Renewable Technology Solution (~8.44%) for the FY 2025-26. ? The Company has been consistently focusing on process optimization, energy efficiency, byproduct utilization, and value addition. ? In Rajasthan, 50% Syngas after consumption in TPO and rCB, is being utilized to produce sodium silicate, effectively reducing the plants energy cost for sodium silicate production to bottom level. ? At the Maharashtra plant, the company is exploring captive power generation by adapting syngas for use in DG sets, thereby enabling captive power generation at zero fuel cost, reducing reliance on grid electricity, and strengthening sustainability goals. ? Looking ahead, the Company had initially planned to undertake the bottling of syngas generated at its Madhya Pradesh Plant for sale to industrial consumers as an alternative to LPG. However, considering the government approvals involved and the evolving regulatory framework associated with syngas bottling, the Management has decided to explore alternative avenues for the utilisation of the available syngas. Leveraging the Companys extensive experience in the Sodium Silicate business and its existing operations at Rajasthan plant, the Management is now exploring the establishment of a Sodium Silicate Glass Plant at its Madhya Pradesh facility. The proposed plant is envisaged to utilise the excess syngas generated from the pyrolysis process as a fuel source, thereby enabling efficient utilisation of available resources, reducing dependence on conventional fuels and creating additional value from the Companys existing operations.

Subsidiaries:

1. Shantol Recycling Private Limited (Dhar, Madhya Pradesh): The subsidiary was incorporated in 2023 with the objective of establishing and operating a tyre pyrolysis facility. The Company successfully commenced operations of its 100 TPD tyre pyrolysis plant located in Madhya Pradesh in May 2026, marking a significant milestone in its business operations.

2. Samsara Recycling Private Limited: This Company is engaged in the manufacturing of crumb rubber from waste tyres. The intent is for this company to handle raw material procurement as part of a backward integration strategy. During the year under review, a fire incident occurred at premises of the Samsara Recycling Private Limited, resulting in disruption to its operations. The Company took prompt remedial and safety measures to address the aftermath of the incident. We are pleased to report that the subsidiary has resumed its operations with effect from May 2026.

? In FY26-27, the Company expects full-year contributions from Rajasthan and Maharashtra plants, along with initial revenues from the Madhya Pradesh facility.

Strengths and Competitive Advantages:

Hi Green operates one of the worlds largest continuous pyrolysis plants, delivering higher efficiency, consistent quality, and lower emissions than batch systems. The process is highly energy-efficient, using ~50% of generated syngas internally, achieving zero external energy use for operations and enabling lower energy cost for sodium silicate production at Rajasthan. Lower capex per capacity further strengthens its cost advantage.

With over 15-20 years of promoter experience in waste recycling, carbon products, and renewable energy, Hi Green combines operational expertise with a diversified product portfolio—rCB, TPO, recycled steel, syngas, sodium silicate, renewable technology solutions—serving varied industrial applications.

The Company holds global-grade certifications (ISO 14001, ISO 9001, ISO 45001, REACH, ISCC Plus, ISCC EU, GMP), supporting market acceptance, especially for sustainable products. A geographical diversification strategy is underway, with plants in Rajasthan Maharashtra, Madhya Pradesh and Gujarat reducing concentration risk and improving market access.

Market Opportunities and Tailwinds:

Rising industrial demand for rCB and TPO, driven by global and national carbon reduction goals, is boosting adoption of sustainable, cost-efficient alternatives to virgin carbon black. Supportive policies like EPR mandates are formalising ELT recycling and reducing illegal disposal. New plants benefit from substantial state subsidies—80% in Maharashtra and 40% in Madhya Pradesh—along with interest and duty exemptions, enhancing profitability.

Threats

Hi Green continues to operate in a dynamic market where movements in crude prices affect virgin carbon black rates and, in turn, pressure rCB realisations, given that Indian rCB demand remains value-driven and sensitive to conventional price swings. Output from newer plants — primarily TPO and raw carbon in the early stabilisation phase — continues to carry thinner margins, as reflected in this years compression in EBITDA and PAT margins, while currency movements and shipping costs continue to add to raw material expenses.

Operationally, new projects continue to face stabilisation risk, with rCB sales ramp-up typically taking 9-12 months due to customer qualification cycles — a factor relevant to the newly commissioned Madhya Pradesh facility. Geographic concentration, previously skewed toward Rajasthan, continues to reduce with the Maharashtra and now Madhya Pradesh facilities operational. The sector remains subject to strict CPCB/SPCB compliance, and EPR policy ambiguities persist, with Hi Green continuing to rely on indirect benefits via vendors. Tyre burning for fuel remains a competitive risk when coal prices fluctuate.

On the product side, adoption by 4-wheeler tyre manufacturers remains gradual, and industry-wide quality standardisation remains a hurdle. The withdrawal of the J&K project removes one source of execution and geopolitical risk from the portfolio, though the Company continues to face one-time commissioning costs per plant and rising working capital requirements as it scales, with inventory build-up capable of impacting short-term cash flows, as seen in the FY2025-26 results.

Strategic Outlook:

The Companys strategic outlook remains focused on sustainable growth through capacity expansion, technological advancement, operational efficiency and product diversification. During FY 2025–26, the Company operated its Rajasthan and Maharashtra facilities with a combined capacity of 200 TPD and commenced commercial operations at its Madhya Pradesh facility in May 2026, taking the aggregate installed tyre pyrolysis capacity of the Company and its subsidiary to 300 TPD. Going forward, the Company intends to pursue further capacity expansion through a greenfield projects, with a broad objective of adding one new plant annually over the next 7–10 years, subject to market conditions and project feasibility. The Company continues to leverage its proprietary continuous pyrolysis technology, focusing on process optimisation, scalability, energy efficiency and consistent product quality. It is also pursuing value-addition initiatives, including the proposed establishment of a Sodium Silicate Glass plant at Madhya Pradesh to utilise excess syngas generated from the pyrolysis process, along with exploring captive power generation. Following withdrawal of the Jammu & Kashmir project, the Companys expansion focus remains on existing and adjoining geographies, supported by applicable government incentives and a balanced debt-equity approach. Growing demand for sustainable alternatives such as rCB and TPO, coupled with supportive government policies and EPR requirements, is expected to provide a favourable environment for the Companys future growth.

Risk Management

Hi-Green Carbon Limited operates in a rapidly evolving and highly regulated tyre recycling industry, where effective risk management is essential for sustaining business continuity, operational efficiency and long-term stakeholder value. The Company has established processes to identify, assess and monitor key risks across its operations and takes appropriate measures to mitigate their potential impact.

The commissioning of the Maharashtra facility has significantly reduced project implementation risk and strengthened the Companys geographical diversification. However, stabilization and ramp-up of operations may present operational challenges. The project also experienced cost and time overruns, which are being addressed through close monitoring and operational discipline. The development of the recovered Carbon Black (rCB) market involves customer trials, product validation and approval processes, which may extend the time required for commercial adoption. The Company is actively engaging with potential customers and strengthening its quality systems to facilitate wider market acceptance.

The Company remains exposed to market risks arising from fluctuations in crude oil, virgin carbon black and other commodity prices, which may influence product realizations and margins. Historically, revenues have been concentrated around the Rajasthan facility; however, the commissioning of additional capacity is expected to progressively diversify the revenue base. The Company also operates within stringent environmental and regulatory requirements prescribed by CPCB, State Pollution Control Boards and MoEFCC. Robust monitoring systems, process controls and technology-driven operations are deployed to ensure continued compliance.

The Extended Producer Responsibility (EPR) framework for tyre recycling continues to evolve and may involve regulatory and implementation uncertainties. Although the direct financial benefit from EPR remains limited at present, the framework is expected to encourage formal recycling and support growth in organised tyre recycling volumes over the long term.

External and geopolitical factors may also affect specific projects. Progress on the J&K project under Green Valley Hydrocarbon Private Limited is presently on hold due to local geopolitical considerations and uncertainty regarding subsidy support. The Company continues to evaluate the project in accordance with prevailing government directions and will adopt a prudent approach towards future capital allocation.

Supply chain and raw material availability remain important operational considerations. The Company presently relies on established suppliers to maintain continuity of raw material supply while selectively evaluating opportunities for deeper backward integration. From a technology and competitive perspective, maintaining consistent rCB quality is critical due to variations in input material. The Company leverages proprietary technology, stringent quality control systems and controlled access to process know-how to ensure product consistency, protect intellectual property and maintain its competitive position.