Hitech Corporation Ltd Management Discussions

Macroeconomic scenario Global economy¹

The global economy demonstrated steady resilience, achieving a growth rate of 3.3% in CY 2024, despite ongoing geopolitical tensions, elevated interest rates and subdued trade activity. Developing and emerging economies grew at a faster rate of 4.3%, while developed nations grew slowly at 1.8%. This strong performance was driven by robust domestic demand and increased manufacturing activity, which significantly accelerated global growth.

Outlook

The global economic outlook remains cautiously optimistic. Global GDP is anticipated to expand steadily at a rate of about 2.8% in CY 2025 and 3.0% in CY 2026. Strong consumer demand and additional easing of price pressures are anticipated to support the global economic growth in the coming years. Further, this is likely to relieve input costs, support consumer spending and provide space for central banks to gradually lower interest rates, aiding overall economic recovery

Indias economy

India remained one of the best-performing large economies in FY 2024-25, with an estimated GDP growth of 6.5%. This expansion was mainly driven by strong export performance and robust private consumption.

A key sign was Indias ability to maintain investor confidence despite global economic uncertainties. The economy remained stable due to the Government of Indias continuous investments in digital services, logistics and infrastructure. Indian economy saw a modest slowdown in economic activity relative to the robust growth delivered in the previous year. Bulk of this slowdown was on account of weak urban consumption on the back of tepid wage growth and consistent inflation impacting their disposable incomes. Rural consumption, on the other hand, exhibited pick-up with support from above-normal overall monsoon and higher agriculture output and prices

The new tariffs imposed by the US can potentially push inflation, as increased input costs can be passed on to consumers. As a result, India is closely monitoring the global trade developments and crafting a balanced strategy to address them. It is anticipated that the RBIs recent rate cut will boost liquidity, lower borrowing costs and assist the economy in mitigating the effects of tariff pressures.

Outlook

Indias economy is expected to maintain its strong growth momentum, with GDP projected to grow by 6.5% in both FY 2025-26. Additionally, despite persistent trade protectionism and trade wars and a challenging global economic landscape, the Indian economy is expected to grow supported by the rising consumption levels. This will be supported by a fall in the interest rate, a rebound in public capex by the Government, resulting in a trickle-down impact on rural and urban wages. Moreover, the growth of the Indian economy would be backed by the strong manufacturing and digital infrastructure sectors in the coming years.

Industry overview Rigid plastic industry²

Rigid plastic industry includes products and packaging made from plastic resins. is the rigid plastic industry predominantly used for moulded items such as food containers, tubes, pails, bottles, drums, caps and closures. Further to this, the primary materials used in rigid plastics are PET (Polyethylene terephthalate), PP (Polypropylene) and HDE (High-Density Polyethylene).

The Indian plastic industry has emerged as a significant contributor to the national economy, with roots tracing back to 1957. Over the decades, it has transformed into a rapidly growing sector encompassing more than 30,000 processing units, predominantly small and medium enterprises, which accounts for 85-90% of the total. The Government of India aims to elevate the industrys economic contribution from C3 lakh crore (US$ 37.8 billion) to Rs10 lakh crore (US$ 126 billion) within the next four to five years, supported by initiatives such as the establishment of 10 plastic parks across key states.

As the best alternatives for recyclability and reusability, rigid packaging material is rapidly replacing traditional packaging materials. It is expected that the rigid plastic industry will register a CAGR of 9.36% between 2024 and 2029. Further to this, the growth in the industry is anticipated to be driven by lower-cost packaging, technological innovation, increasing demand of packaged products, especially by middle-class consumers and modern retail formats and a growing desire for higher-quality products. In addition to this, the growing customers requirement for product safety and extended shelf life, the growing need for sustainable packaging solutions, and various breakthroughs in manufacturing technology will also drive the rapid plastic industry in the coming years.

• Government support: Policies such as the development of dedicated plastic parks and Free Trade Agreements (FTAs) with countries like UAE and Australia are aimed at expanding the sectors global reach and competitiveness.

• Rising global demand: Indias plastic exports, including flexible and rigid packaging, are witnessing significant year-on-year growth due to increasing international consumption.

• Technological adoption: The industry is being encouraged to adhere to international standards and modernise manufacturing processes to improve quality and enhance its global footprint.

Allied industries

Paint industry

The Indian paints and coatings industry has emerged as a key indicator of economic and infrastructural development, closely linked to growth in construction, real estate and consumer spending. Backed by strong fundamentals, the market stood at USD 11 billion in 2023 and is projected to expand at a CAGR of 8.7%, reaching USD 18.1 billion by 2029. Growth in this sector is fuelled by rising urbanisation, steady demand for housing and increasing renovation activities. The industry is majorly segmented into decorative paints, comprising approximately 75% of the total market and industrial paints, which constitute the remaining 25%.³

The industry is highly competitive, with organised players gaining ground through branding, robust distribution networks and continuous product innovation. Companies are increasingly focusing on the development of eco-friendly formulations, value-for-money packaging and differentiated offerings tailored to diverse regional and end-use requirements. In a landscape marked by shifting consumer preferences and evolving industrial requirements, strategic investments in Research and Development (R&D) and geographic expansion are critical to maintaining sustained leadership.

FMCG sector

The Indian Fast-Moving Consumer Goods (FMCG) sector recorded a double-digit growth of 10.6% , marking its best quarterly performance in a year. This marks a strong rebound compared to 6.5% growth in the same period the previous⁴. The recovery was driven by festival demand, rising prices of staples such as edible oil and packaged atta and a sequential revival in rural consumption.

According to the latest India FMCG statistics, the industry is projected to reach a market size of $240 billion by 2025⁵, fuelled by rising disposable incomes, expanding middle- class aspirations and the proliferation of digital commerce. Urban demand is expected to remain strong, driven by premiumisation and the rising influence of modern trade and e-commerce. Meanwhile, rural demand is poised to recover in the latter half of the year, supported by increased government spending and easing food inflation.

However, the sector still faces notable headwinds. An erratic monsoon, potential inflationary pressures and global geopolitical uncertainties could impact input costs and consumer sentiment, particularly in rural areas. Additionally, intense price competition may exert pressure on margins. In this evolving landscape, FMCG companies must stay agile, striking the right balance between innovation, affordability and digital reach to sustain momentum and meet shifting consumer expectations.

• Food and beverages, accounting for over 60% of the FMCG basket, will continue to be the growth engine, driven by staples, packaged foods and ready-to-eat products.

• Home and personal care categories are expected to benefit from lifestyle shifts, increased hygiene awareness and innovations in premium segments.

Key growth drivers

• Rapid expansion of organised retail and e-commerce platforms in Tier II and III cities is fuelling market accessibility and consumption.

• Companies are focusing on innovative, premium and region-specific Stock Keeping Units (SKUs) to meet evolving consumer demands.

• The integration of digital tools and targeted rural distribution initiatives are improving last- mile connectivity.

• Growing consumer preference for health-oriented, easy-to-use and eco-friendly products is shaping brand strategies and product development.

Agrochemicals⁶

The Indian agrochemicals market is evolving rapidly, driven by rising food demand, adoption of sustainable agricultural practices and integration of advanced technologies. The industry has seen steady growth and is projected to expand significantly at a CAGR of 11.8%.

• As Indias population grows and dietary preferences change, the need for processed foods increases. This increases demand for plastic packaging solutions, resulting in positive impacts on the plastic packaging sector.

• Support through subsidies, crop insurance schemes and soil health cards is encouraging adoption of modern agrochemicals.

Lubricants⁷

The Indian industrial lubricants market is projected to register a compound annual growth rate (CAGR) of 3.8% during this period. This growth is driven by the expansion of the automotive and industrial sectors. Increasing focus on sustainability is also driving demand for bio-based and synthetic lubricants. Additionally, the integration of advanced manufacturing technologies and the implementation of predictive maintenance systems are contributing to the increased consumption of high-performance lubricants.

Key growth drivers

• Robust growth in steel, cement and automotive industries is driving demand for industrial inputs, lubricants and machinery components.

• Government initiatives like Make in India and large- scale infrastructure projects are boosting domestic manufacturing and industrial consumption.

• The adoption of predictive maintenance, IoT and smart automation is transforming industrial operations, reducing costs and improving reliability.

Food and beverage industry⁸

The Indian Food and Beverage (F&B) industry continues its growth trajectory in 2024-25, with the market valued at USD 334 billion in 2023 and poised for further expansion. The emergence of Tier II and III cities as key consumption hubs, supported by the expansion of organised retail and digital distribution channels, has further accelerated growth. Maharashtra and the broader western region remain the largest contributors to the sector, benefiting from proximity to export markets and a well-established food processing infrastructure. Major industry players such as ITC, Nestle India, HUL, Britannia and Amul continue to strengthen their market positions through innovation, brand equity and expansive supply chains.

• With the Indian wellness food sector rising awareness of preventive health has significantly boosted demand for functional, low-calorie plant-based foods.

• The expansion of modern trade, particularly supermarkets and hypermarkets, has improved access and convenience, spurring consumption

• Government of Indias support through schemes like the Pradhan Mantri Kisan SAMPADA Yojana and the Rs1 lakh crore Agri-Infrastructure Fund has strengthened cold storage and processing facilities, reducing post-harvest losses and enabling supply chain resilience.

• Digital and D2C growth are reshaping the consumption landscape and these models offer personalised experiences and convenience to the consumers.

Personal care⁹

Indias Beauty and Personal Care (BPC) market, valued at USD 28 billion, is witnessing rapid growth driven by rising incomes, urbanisation and growing awareness of grooming and hygiene. The expansion of digital platforms has enabled greater product accessibility, especially in Tier 2 and Tier 3 cities. Consumer preferences are shifting toward organic and ayurvedic formulations, a trend further supported by evolving regulatory reforms. Despite regulatory hurdles and intense competition, the sector remains on a strong growth trajectory fuelled by innovation and digital engagement.

Key growth drivers

• Shift towards natural and organic product; With 71% of consumers preferring natural alternatives, the Federation of Indian Chambers of Commerce and Industry (FICCI), has instructed clean-label formulations that are free from harmful chemicals.

• Expansion of mens grooming segment: Changing social norms and increased male participation in beauty routines are fuelling demand for malecentric skincare and haircare products.

• Digital discovery and influencer marketing:

80% of shoppers discover beauty brands on social media, primarily through platforms like Instagram and YouTube. Influencer-led product education and reviews have heightened consumer awareness and accelerated product adoption.

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Market segmentation

• Skincare (largest share): Driven by rising skin health awareness and social media influence.

• Other categories: Includes haircare, makeup and Deodorants/Fragrances.

• Inorganic products: Continue to dominate due to affordability and wide availability.

• Organic and vegan products: Growing rapidly as consumers seek sustainable and chemical- free alternatives.

Chemical industry¹⁰

Indias chemical sector remains a key component of the nations industrial framework, the industry spans a wide spectrum, including bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers and fertilisers.

India ranks among the top global importers and exporters of chemicals (excluding pharmaceuticals)

As India aspires to become the worlds third-largest economy by 2030, the chemical industry is expected to play an instrumental role in achieving this vision, driven by sustainability, localisation and global competitiveness.

Market segmentation

• Specialty chemicals (fastest growing segment): Driven by strong export demand, innovation and applications in industries like pharmaceuticals, agrochemicals and personal care.

• Other segments: Includes bulk chemicals, petrochemicals, agrochemicals, polymers and fertilisers.

• Agriculture and pharmaceuticals: Key drivers for demand, backed by need of food security and rising healthcare demand.

• Petrochemical-derived products: Continue to lead due to established supply chains and cost-efficiencies.

• Green and bio-based chemicals: Gaining traction amid rising sustainability goals and ESG compliance.

• Additional end-user sectors: Textiles, construction, automotive, FMCG and water treatment.

• Rising domestic consumption: Expanding needs in agriculture, pharmaceuticals, FMCG and infrastructure are driving robust demand for chemicals and allied products.

• R&D and Digitisation: Increased focus on innovation, process automation and digital transformation is boosting operational agility and product differentiation.

• Green chemistry transition: ESG priorities and regulatory compliance are accelerating the shift toward sustainable, eco-friendly and circular chemical.

Company overview

Founded in 1991, Hitech Corporation Limited has steadily emerged as a leading conglomerate in Indias rigid plastic packaging sector. The Company operates with a deep-rooted commitment to fostering innovation, precision and customer satisfaction. Its wide-ranging product solutions serve critical industries including paints and coatings, lubricants, construction and specialty chemicals, agrochemicals, food and beverage and personal care.

Backed by a robust network of 13 advanced manufacturing units and a workforce of over 1,000 skilled professionals, Hitech delivers to more than 2,000 clients nationwide.

Technology Centre with DSIR recognition is expected to serve as a launchpad for next-generation packaging solutions and customised innovations providing services to end customers in terms of designing packaging suitable for their end products

During the current year there has been lower sales price realization due to increased use of recycled materials in our products, introduction of lighter-weight containers and muted demand in key sectors also contributed to lower volumes and revenues.

Company continued to prioritise customer-centric product enhancements, launching new formats and design upgrades tailored to evolving end-use requirements.

The Company entered the bulk packaging (drum) sector in Dahej, a chemical industrial area, and later moved into dairy markets. The strategic acquisition of Thriarr Polymers Private Limited, which manufactures thermoset moulded components for the electrical, automotive, and energy industries, has been completed successfully. Further to this, the Company has also created Hitech Global Inc. in the United States this year to help the marketing initiatives in the international markets.

Backed by strong fundamentals, a reputation for consistent quality and a proactive approach to emerging market dynamics, Hitech remains well-positioned to capitalise on future opportunities in both domestic and global packaging sectors.

Capital expenditure and expansion plans

Process and efficiency improvements: The Company installed all-electric injection moulding machines, which led to a marked improvement in plant-level Key Performance Indicators (KPIs), including energy efficiency, cycle time reduction and overall equipment effectiveness. Stringent quality monitoring protocols were implemented to lower internal rejections, while the achievement of Green Channel Certification across all manufacturing units reflects the Companys commitment to ensuring quality assurance and lean manufacturing practices.

Shift to renewable energy: In a strong push towards energy sustainability, solar power systems were successfully commissioned at the Mysore, Rohtak and Vizag plants. Implementation at other units is underway, to transition all facilities to partial renewable energy reliance in the near term. Concurrently, the Company is actively developing environmentally conscious solutions such as light-weight packaging, use of recycled materials, smart packaging innovations and sandwich moulding technologies, all of which contribute to its carbon reduction objectives.

Commissioning of Dahej facility: The Company launched a modern, large-scale manufacturing unit at Dahej, strategically located to serve the growing needs of the chemical industry in the region. Spanning over one lakh sq. ft., this facility houses cutting-edge production infrastructure, integrated warehousing and R&D capabilities. It specialises in the production of large plastic barrels ranging from 50 to 250 litres, enabling the Company to address high-volume industrial packaging requirements.

Investments in design and development: The newly established Technology Centre at Kuruli, Pune, is a cornerstone of Hitechs product innovation strategy. This centre facilitates end-to-end packaging research and development, starting from concept design and digital rendering to 3D prototyping and simulation testing. With in-house mould development and material optimisation, the centre enables the delivery of precise, customer-focused solutions for the food and beverage and personal care sectors, both identified as key growth verticals.

Opportunities and threats

Opportunities

• Sustainability and circular economy:

The growing global focus on sustainable practices presents an opportunity for Hitech to lead in the development of eco-friendly packaging solutions.

• Collaborative innovation:

Hitech actively partners with academic institutions and industry experts to co-develop cost-effective and sustainable alternatives enhancing Hitechs innovation pipeline.

• Customised, high-performance offerings:

Hitech is positioning itself as a preferred partner for marquee clients by offering tailored, performance- driven and sustainable packaging solutions.

• Diversification strategy:

Ongoing efforts to expand the customer base and diversify end-market exposure are enhancing long-term business resilience and unlocking new growth avenues.

Threats

• Polymer price volatility:

Fluctuations in raw material (polymer) prices can significantly affect margins and profitability, particularly during periods of sharp commodity price corrections.

• Economic dependency:

The Companys performance remains partially tied to the Indian macroeconomic environment, with a strong correlation to trends in private consumption.

Human resources

At Hitech, the workforce is recognised as a cornerstone of the Companys growth and success. The Company is committed to fostering a supportive and inclusive work environment that prioritises employee well-being while providing avenues for professional growth and skill development.

To nurture talent and drive continuous improvement, Hitech runs a range of ongoing training and capability-building programmes across its manufacturing units. These initiatives are designed not only to upskill employees but also to create a culture that values diverse perspectives, experiences and backgrounds, encouraging collaboration and innovation.

A key initiative in this direction is the establishment of Gurukuls at all manufacturing facilities. These dedicated learning hubs conduct structured training sessions on critical operational processes. Training modules encompass end- to-end process mapping, defect identification, material and product knowledge, customer expectations and system improvements, ensuring a strong foundation for excellent performance. Also, in the reported year, the Company arranged skill development activities to enhance the capabilities of the sales force.

The Six Sigma principles form the backbone of Hitechs quality and process optimisation approach. The Company has embedded Six Sigma deeply into its operational culture, delivering structured training to employees and aligning projects with strategic objectives. By adopting the Define, Measure, Analyse, Improve and Control( DMAIC) methodology, Hitech systematically identifies inefficiencies, implements targeted improvements and ensures long-term process control. Regular monitoring and a strong emphasis on continuous improvement help sustain these gains and enhance value delivery.

Additionally, there are award programs, such as the Extra Mile Award, Quality Champion Award, Safety Champion Award, and Best Zone of the Month Award, to reward and honour the workforces efforts and achievements. This also contributes to promoting an encouraging working environment across the business.

Environment, health and safety

At Hitech, the health, safety and well-being of employees remain a top priority. The Company has adopted a comprehensive and proactive approach to safeguard its workforce, assets and the surrounding environment. This commitment is reflected through well-defined policies, structured procedures and rigorous employee training programmes that promote a culture of safety and preparedness.

Regular fire and safety audits are conducted at all manufacturing locations to assess compliance, identify potential risks and implement corrective measures. Hitech has established robust systems to monitor safety performance and proactively mitigate hazards, ensuring that all facilities operate within safe and secure environments.

To enhance emergency readiness, the Company organises periodic First Aid and Fire Safety training sessions. These programmes are designed to empower employees with practical skills in cardiopulmonary resuscitation (CPR), injury management, fire prevention, safe use of extinguishers and evacuation procedures. Additionally, cancer awareness initiatives are conducted to educate employees on early detection and preventative care, reinforcing the Companys commitment to fostering holistic employee well-being.

Beyond safety, Hitech believes in building a vibrant and inclusive workplace culture. Employee engagement initiatives, such as Cricket Tournament, Rangoli, Painting and Dance competitions, are hosted across locations to encourage creativity, strengthen interpersonal bonds and cultivate a sense of community. These activities contribute to a positive work environment where employees feel valued, connected and inspired.

Research and development

Hitechs Technology Centre, based in Kuruli, Maharashtra, is accredited by the Department of Scientific and Industrial Research (DSIR) under the Government of India. The focus of the R&D initiatives involves consistently evolving itself such that it is prepared to meet the market demand at any given time. While mould design and development have been fundamental to Hitechs technological growth, the Company has also embraced a wide array of innovations, from cost- efficient automation to process optimisation, all to enhance customer satisfaction. Hitech has remained at the forefront of innovation, driving the creation of high-performance materials, maximising material efficiency and exploring more sustainable alternatives.

Risk management Raw material risk

Inability to purchase raw materials on schedule or a rapid surge in raw material prices, can damage the Companys operational and financial efficiency.

Mitigation Strategy

The Company has implemented an alternate vendor development strategy, which entails diversifying its raw material suppliers and lowering dependency on a single source supplier. This enables the company to maintain its production and operational efficiency.

Technology Risk

The inability to integrate advanced technologies can impede the Companys operating efficiency, hurting its position in the business.

Mitigation Strategy

The company makes significant technology investments to facilitate the integration of innovative technology. Such activities allow it to integrate advanced packaging solutions and preserve its competitiveness in the business.

IT Risk

Failure to protect data security and privacy of information would not only affect operational efficiencies but also undermine consumer trust and confidence.

Mitigation Strategy

To secure data security and privacy throughout the organisation, as well as uninterrupted operations, the company has improved and invested in its IT infrastructure.

Financial risk

Fluctuations in foreign exchange rates, changes in interest rates, or restricted access to working capital financing could affect the Companys ability to manage raw material costs and maintain stable profit margins in a price-sensitive packaging market.

Mitigation strategy

The Companys working capital is managed at the receivables and inventory level management. This enables timely collection and prevents accumulation of non-moving inventory. Also, to mitigate the risk of foreign exchange swings, use hedging practices based on tenure and currency.

Regulatory changes

With increasing environmental awareness, regulatory bodies are likely to implement strict sustainability policies. These changes could impose strict controls on manufacturing processes or restrict the use of certain plastic materials, potentially leading to high operational costs, compliance burdens, or limitations in product offerings.

Mitigation strategy

The company has expedited its efforts to develop sustainable products in light of the risk associated with regulatory changes. This has helped the Company improve its resilience against any regulatory or procurement-related challenges.

Supply chain disruptions

Disruptions in the supply of raw materials can lead to delays in production and delivery schedules, which may result in customer dissatisfaction, potential breach of service level agreements and financial penalties.

Mitigation strategy

Implementing logistics redundancy planning enabled the Company to successfully manage the risk posed by potential supply chain disruptions while maintaining consistent operations.

Quality control failure

Maintaining high-quality standards is imperative for the Company. Any lapses in quality could result in product recalls or returns, potentially damaging the Companys reputation, eroding customer trust and leading to financial losses.

Mitigation strategy

Adherence to quality standards remains a crucial aspect for the Company, and it has allowed the Company maintain ZERO Defects across its operations. The workforce, including HODs, for conducting self-assessments for Green Channel Certification Audit periodically.

Raw material cost

The Company relies heavily on polymer-based raw materials for manufacturing. Fluctuations in the prices of these materials, driven by global crude oil trends and supply- demand dynamics, could adversely impact profit margins if the increased costs cannot be passed on to customers through pricing adjustments.

Mitigation strategy

The Companys pricing strategy includes modifying the product price in response to shifts in the price of polymers. This assists the Company in minimising the negative affects of fluctuations in the polymer price on the operational efficiencies of the organisation.

Internal control systems

Hitech has implemented an internal control framework that is suitable for the nature, scale and complexity of its operations, in line with the provisions of the Companies Act, 2013. The management has conducted an assessment of the effectiveness of the Companys internal controls over financial reporting, as required by Section 143 of the Companies Act, 2013, with the Statutory Auditors providing an attestation report. Furthermore, an extensive internal audit plan is formulated annually, covering all manufacturing units and key business functions such as accounting, finance, procurement and IT processes. The Company continuously evaluates its risk management systems across various business operations to improve profitability, efficiency and overall performance.

Financial performance Revenues and profitability

(Rs in lakhs)

(Amount in US $)

Particulars	FY2025	FY2024	YOY%
Operating revenue	54,942.93	56,179	-2%
EBITDA	6,239.77	7,399	(-16)%
Net profit after tax	798.10	2,200	(-64)%

Financial ratios

(Amount in US $)

Particulars	FY2025	FY2024
Debtors turnover ratio (in days)	29	26
Inventory turnover ratio (on cost of goods sold and in days)	49	43
Interest coverage ratio	3.9	5.2
Current ratio	1.0	1.1
Debt equity ratio	0.4	0.3
Operating margin	8.4%	10.6%
Net profit margin	1.5%	3.9%
Return on Net Worth (RONW)	2.7%	8.7%
Return on Capital Employed (ROCE)	7.1%	13.8%

Cautionary statement

The Management Discussion and Analysis contains forward-looking statements that are subject to the applicable provisions of relevant securities laws and regulations. These statements are based on certain assumptions and expectations of future events and actual outcomes may differ materially from those anticipated or implied. The Companys performance is influenced by a range of key factors, including overall economic conditions that impact market demand, supply dynamics and pricing trends, as well as changes in government regulations, tax legislation and other unpredictable or unforeseen developments.