HLE Glascoat Ltd Management Discussions

Global Economy

During 2024, the global economy demonstrated stability despite various economic, international relations, and governmental challenges. Data from the World Economic Outlook (IMF) report indicated a consistent global Gross Domestic Product (GDP) growth rate of 3.3%. Economic expansion rates varied significantly across regions. Growth in developed nations experienced a decline, whereas developing economies, particularly those in Asia, maintained steady growth.

The 2024 global economic landscape was marked by persistent difficulties, including geopolitical tensions and Red Sea disruptions. Additionally, international supply chain complications and trade disputes between major economies continued to pose challenges. Policy adjustments related to climate change also influenced investment patterns across multiple sectors.

Global inflation showed an improving trend, with the rate of 5.7% for 2024, a decrease from 6.7% in the previous year. Developed economies are anticipated to achieve their inflation targets sooner, averaging 2.6% in 2024. Emerging markets are expected to experience a slower reduction in price increases.

In response to prevailing economic conditions, leading central banks implemented notable interest rate reductions to stimulate economic activity. December 2024 saw the most significant coordinated series of interest rate cuts among G10 central banks since the pandemic, with total reductions for the year amounting to 825 basis points. This period marked a substantial easing of monetary policy not observed since 2009.

(Source: World Economic Outlook, IMF, Reuters)

Real GDP Growth	2024	2025 (P)	2026 (P)
World Output	3.3	2.8	3.0
Advanced Economies	1.8	1.4	1.5
United States	2.8	1.8	1.7
Emerging Markets and Developing Economies	4.3	3.7	3.9
China	5.0	4.0	4.0

Outlook

The global economy is currently predicted to sustain a steady expansion path, with projected growth rates of 2.8% for 2025 and 3.0% for 2026. This positive outlook is underpinned by robust economic performance observed in the United States and significant progress within key emerging markets.

In the United States, growth is forecast at 1.8% in 2025 and 1.7% in 2026. This projection accounts for anticipated adjustments in the labour market and a potential moderation in consumer expenditure. For the Eurozone, a recovery is predicted, with growth projected to reach 0.8% in 2025 and improve to 1.2% in 2026. This expected improvement is primarily linked to an increase in consumer spending and a continued reduction in inflation rates.

While the general trend indicates a deceleration in global price increases, certain regions continue to experience stagnant conditions due to persistently high inflation levels. Global inflation is projected to decline to 4.3% in 2025 and further to 3.6% in 2026. Developed economies are anticipated to achieve their respective inflation targets more rapidly than other regions. Monetary policies are expected to diverge across different geographies, reflecting the varied economic circumstances prevalent in each.

(Source: World Economic Outlook, IMF)

Indian Economy

Indias economy demonstrated a consistent pattern of expansion and stability throughout FY 2024-25, confirming its position as a major global economy showing strong growth. As per the Second Advanced Estimate (SAE), Indias real GDP expanded by 6.5% in FY 2024-25, moderating from the 9.2% growth reported in the First Revised Estimates for FY 2023-24. This sustained upward trend highlights the nations solid economic foundation, effective government policies, a dynamic services sector, and considerable domestic spending, all contributing to a favourable view of Indias potential for long-term economic progress.

FY	FY	FY	FY	FY
2021-22	2022-23	2023-24	2024-25 (E)	2025-26 (P)
9.7%	7.6%	9.2%	6.5%	6.2%

Indias economic stature continues its upward climb, with the nation now holding the position of the worlds fourth-largest economy by nominal Gross Domestic Product (GDP) and the third-largest when assessed by purchasing power parity (PPP). Ambitious national targets have been set to achieve a $5 trillion economy by FY 2027-28 and a $30 trillion economy by 2047. These aims are to be accomplished through substantial infrastructure investments, ongoing governmental reforms, and the widespread adoption of technological advancements.

Reflecting this commitment, the capital Expenditure budget for the upcoming FY 2025-26 has increased to 11.21 lakhs crores, representing 3.1% of GDP.

Integral to this accelerated growth trajectory and increasing governmental economic self-sufficiency have been reforms and considerable capital allocated towards both physical and digital infrastructure. Government initiatives such as Make in India and the Production-Linked Incentive (PLI) scheme have also played a crucial role.

Outlook

Indias economy is expected to grow at a rate of 6.2% in FY 2025-26. Projections indicate that by 2030, India will likely become the worlds third-largest economy, driven by investment in infrastructure, greater private sector capital expenditure, and the expansion of financial services. Ongoing reforms to support this long-term economic advancement.

Several factors underpin this positive outlook, including Indias favourable demographics, increasing capital investment, proactive government schemes, and strong consumer demand.

Improved spending in rural areas, helped by moderating inflation, further reinforces this growth trajectory. The governments focus on capital expenditure, prudent fiscal management, and are creating measurestoboostbusinessandconsumer a supportive environment for both investment and consumption.

Programmes such as Make in India 2.0, reforms designed to improve the ease of doing business, and the Production-Linked Incentive (PLI) scheme are intended to strengthen infrastructure, manufacturing, and exports, positioning India as a significant player in global manufacturing. With inflation expected to be on target by the end of this year (2025), a more accommodating monetary policy is likely. Infrastructure development and supportive government policies will facilitate capital formation, while rural demand will receive a boost from initiatives like the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

The Union Budget 2025-26 presents a growth-oriented financial strategy that addresses immediate and long-term economic needs. By increasing disposable income, prioritising infrastructure, and promoting domestic manufacturing, the budget aims to foster sustained economic growth while ensuring fiscal responsibility.

A key feature is the increased income tax exemption limit of 12.75 lakhs per annum, which will enhance disposable income for middle-class households, stimulating consumer spending.

Significant investments in infrastructure, including roads and railways, will improve connectivity and create jobs. Additionally, the budget strengthens the Production Linked Incentive (PLI) scheme for sectors like electronics and textiles, while supporting the "Make in India" initiative to establish India as a global manufacturing hub. The transformation of India Post into a catalyst for the rural economy will further enhance logistics and financial inclusion.

(Source: Press Information Bureau, World Economic Outlook, IMF)

Industrial Overview

Engineering Sector - Glass lining, Filtration & Drying, Heat Exchanger Equipment

The Indian engineering sector continues to be a vital engine of national growth, supported by strong exports, domestic demand, and technology-driven services. The sector performed well in FY 2024-25, with exports reaching a new high of $116.67 Billion. This was an increase of 6.74% compared to the previous year, and it went past the earlier record of $112.10 Billion from FY 2021-22. In fact, engineering goods exports grew faster than Indias overall merchandise exports, which only saw a small rise of 0.08%. As a result, engineering exports made up a larger part of Indias total areanticipated merchandise exports, increasing to 26.67% in FY 2024-25 from 25.01% in the year before.

The United States remained the main buyer of Indian engineering goods, with exports to the US growing by 8.7% to $19.15 Billion in FY 2024-25. Other countries like the UAE, Singapore, Nepal,

Japan, and France also bought significantly more. Looking at regions, North America received 20.5% of these exports, followed by the European Union at 17.1%, and West Asia and North Africa at 16.7%. Most regions showed growth, though exports to Oceania went down by 10.4% and to the EU by 1.9% during the financial year ending March 2025.

Out of 34 different types of engineering products, 28 saw increased exports. However, six categories experienced a decline. These included iron and steel, copper and aluminium products, office equipment, other construction machinery, and mica products.

Despite the yearly record, Indian engineering exports fell each month in March 2025. Exports for that month were $10.82 Billion, which was 3.92% less than in March 2024. The sector faces ongoing challenges from global uncertainties, including international tensions and slower economies. New import duties (US tariffs) announced by the US have also caused reactions and concerns about global economic stability. The World Trade Organisation (WTO) has warned that global trade could shrink in 2025, potentially by up to 1.5% if more trade disagreements happen. These new tariffs add to existing challenges like global conflicts and countries focusing more on their industries.

(Source: Economic Diplomacy Division [Ministry of External Affairs], Economic Times)

The glass-lined equipment market is valued at approximately $4.86 Billion in 2024, with projections to reach around $6.92 Billion by 2033, growing at a CAGR of 4.7% from 2025 to 2033. This steady growth is driven by increasing demand from industries such as pharmaceuticals, chemicals, and food processing. Glass-lined equipment, also known as glass-enamel equipment, combines the corrosion resistance of glass with the strength of metal, making it ideal for handling aggressive chemicals and maintaining product purity. This unique combination makes it essential where contamination must be avoided and chemical resistance is vital.

The market includes a wide range of products, such as reactors,

. These storagetanks,columns,pipes, are used in chemical synthesis, Active Pharmaceutical Ingredient (API) manufacturing, speciality chemical production, and food processing. Recently, there has been a trend towards more sophisticated and focusing on better heat transfer, stronger mechanical properties, and longer equipment lifespan. Technological advancements, including innovations in glass formulations and lining techniques, have improved chemical resistance, thermal shock resistance, and created smoother surfaces for easier cleaning. Integrating advanced monitoring and control systems has also enhanced operational efficiency and safety, making the equipment more appealing to users.

The market features a mix of established global companies offering broad product lines and specialised manufacturers focusing on niche areas or new technologies. Competition is strong, with companies aiming to stand out through innovation, product quality, and after-sales support. As industries adopt stricter quality and safety standards, the demand for high-performance glass-lined equipment is expected to rise. The pharmaceutical industry is a major growth driver, particularly due to its focus on high-purity APIs and speciality chemicals, and its stringent regulatory needs for contamination-free environments. The chemical industry also fuels market growth through increased speciality chemical production and the need for corrosion-resistant processing equipment. Geographically, emergingeconomies,especiallyinAsia-Pacific,showsignificant growth due to rapid industrialisation and increased investment in chemical and pharmaceutical manufacturing facilities. Developed regions like North America and Europe remain important markets, driven by the need for equipment upgrades and more efficient, environmentally friendly manufacturing processes.

(Source: Data Horizon Research)

The filtration and drying equipment market has shown strong growth, increasing from $1.94 Billion in 2024 to $2.09 Billion in 2025, with a CAGR of 7.7%. This historical growth was driven by environmental regulations, industrial expansion, evolving quality and safety standards, the globalisation of industries, health and safety concerns, and efforts towards cost efficiency.

The market is expected to continue its robust growth, reaching $2.85 Billion by 2029 at a CAGR of 8.1%. Future growth will be attributed to increasing industrialisation, evolving environmental standards, rising demand in emerging markets, a focus on sustainable practices, and advancements in the pharmaceutical and biotechnology sectors. Key trends for this period include technological improvements, a greater emphasis on sustainability, stricter regulatory standards, customised filtration solutions, the globalisation of supply chains, and the development of hybrid drying technologies.

Increased pharmaceutical expenditure on research and development is a significant driver for this market. Filtration and drying equipment are essential in R&D for testing and refining products or processes before commercial use, and for assessing material properties. The surge in chemical production also supports market expansion. Within chemical manufacturing, this equipment is vital for separating and purifying substances, ensuring product quality, and meeting industry standards.

(Source: Research and Markets)

The Indian Heat Exchanger market is expected to grow at a Compound Annual Growth Rate of over 10.47% from 2025 to 2030. Several regional economic and environmental factors support this growth. Indias expanding industrial base creates consistent demand from both public and private infrastructure projects. This is especially true in refineries, cement plants, and metallurgical units. Rising electricity consumption in urban and rural areas has required an increase in thermal power capacity. This capacity heavily relies on heat exchangers for turbine and boiler operations.

At the same time, stricter pollution control norms from the Central Pollution Control Board (CPCB) and a greater focus on clean technologies encourage industries to upgrade existing systems.

They are adopting energy-efficient heat transfer solutions.

Indias long-term strategy for reducing carbon emissions, under its Nationally Determined Contributions (NDCs), has also led to the use of heat recovery systems in facilities that consume a lot of energy. Investment corridors, such as the Delhi-Mumbai Industrial Corridor, and more special economic zones are creating areas for new process equipment installations, including heat exchangers. Additionally, the increasing cost of imported fossil fuels is prompting Indian industries to explore more efficient thermal processes. This pushes them towards adopting modular and compact exchanger designs that reduce energy losses.

(Source: Research and Markets)

Pharmaceutical Sector

Indiaspharmaceuticalsectorisundergoingahugetransformation, establishing itself as a global leader in healthcare. The industry saw a 7.8% growth in April 2025, driven by strong demand and new product introductions. India ranks as the worlds third-largest pharmaceutical industry by volume and fourteenth by value. It is the leading global supplier of generic medicines, providing 20% of the worlds supply, and plays a crucial role in delivering affordable vaccines worldwide.

In the FY 2023-24, the sectors turnover reached 4,17,345 crore, maintaining a steady annual growth of over 10% for the past five years. This expansion translates into increased availability of medicines at lower prices, improved healthcare access, and job creation across manufacturing facilities and laboratories throughout the country.

Government initiatives are central to this success. The Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) operates 15,479 Jan Aushadhi Kendras, making generic medicines available at prices up to 80% lower than branded alternatives. The Production Linked Incentive (PLI) Scheme for Pharmaceuticals, with a budget of 15,000 crore, supports 55 projects focused on domestic production of high-end drugs for conditions like cancer and diabetes. Another PLI scheme, allocated 6,940 crore, aims to reduce import reliance by boosting local manufacturing of raw materials such as Penicillin G. Furthermore, the PLI for Medical Devices, backed by 3,420 crore, is enhancing the production of essential tools like MRI machines and heart implants. The Promotion of Bulk Drug Parks scheme, with 3,000 crore, is developing large manufacturing hubs in Gujarat, Himachal Pradesh, and Andhra Pradesh to ensure cheaper and faster medicine production. Additionally, the Strengthening of Pharmaceuticals Industry (SPI) Scheme, with 500 crore, funds research and laboratory upgrades, helping Indian companies compete globally. These efforts ensure medicines are produced in India for both domestic and international markets, maintaining low costs and high quality.

Indias pharmaceutical sector is a vital contributor to global health. It supplies between 55% and 60% of UNICEFs vaccine requirements. It also meets 99% of the World Health Organisations demand for DPT vaccines, 52% for BCG, and 45% for measles vaccines. Indian vaccines save Million of lives globally. Domestically, these schemes create employment opportunities for young Indians, from factory workers to scientists. Foreign investors recognise Indias potential, investing 12,822 Crores in 2023-24 alone. The government permits 100% foreign investment in medical devices and new pharmaceutical projects, making India an attractive destination for global companies. The Indian pharmaceutical sector is more than an industry; it is a critical lifeline, ensuring access to affordable medicines and vaccines for a healthier, self-reliant future.

(Source: Press Information Bureau)

Chemical Industry

The Indian chemical industry is a highly diverse and significant sector, encompassing over 80,000 commercial products and employing more than two Million people. Globally, India is the third-largest consumer of polymers, the fourth-largest producer of agrochemicals, and the sixth-largest producer of chemicals overall, contributing 3.4% to the global chemical industry and 7% to Indias GDP. This sector benefits from a strong foundation for innovation, supported by a network of 200 national laboratories and 1,300 research and development centres. Valued at approximately $220 Billion in 2022, the Indian chemical sector is anticipated to reach $300 Billion by 2025 and a substantial $1 trillion by 2040, driven by increasing demand from end-user segments, particularly for specialty chemicals and petrochemicals.

The specialty chemicals segment, for instance, is projected to grow at a CAGR of 12.4% from $32 Billion in 2019 to an estimated $64 Billion by 2025, with companies actively pursuing import substitution and export opportunities. India is also the fourth-largest global producer and a net exporter of agrochemicals, with the market valued at $5.5 Billion and expected to grow to approximately $7.4 Billion between 2021 and 2026, potentially accounting for almost 40% of Indias total chemical exports by 2040. As the third-largest polymer consumer worldwide, Indias consumption is expected to reach 60 Million tonnes by 2040. Furthermore, India leads globally in dye manufacturing, contributing 16-18% of global dyestuff exports, which totalled 14,712 Crores ($1.70 Billion) from April to November 2024. In the bulk chemicals segment, Alkali chemicals represented 71.7% of total chemical production from April to December 2024, with government initiatives set to further boost demand for products like soda ash.

The sector has attracted significant investment, with Foreign Direct Investment (FDI) inflows in chemicals (excluding fertilisers) reaching 1,39,776 Crores ($22.8 Billion) between April 2000 and September 2024, and an estimated 8 lakhs Crores ($107.38 Billion) projected by 2025. Government support is evident through the Union Budget 2025-26 allocation of 1,61,965 Crores ($18.7 Billion) to the Ministry of Chemicals and Fertilisers, along with Production Linked Incentive (PLI) schemes for Advanced Chemistry Cell Battery Storage and Bulk Drug Parks, and the development of Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs) like Dahej, which has attracted significant investment.

In terms of trade, Indias chemical exports stood at $13.92 Billion and imports at $19.52 Billion from April to November 2024, positioning India as 9^th in global exports and 6^th in imports (excluding pharmaceuticals). Opportunities are further enhanced by global companies diversifying supply chains away from China, and the governments implementation of enhanced Quality Control Orders (QCOs) for over 150 products in February 2025 to enforce stricter safety and performance standards.

(Source: IBEF (Report May, 2025))

Company Overview

HLE Glascoat Limited (hereafter referred to as ‘the Company or ‘HGL) is a leading Indian manufacturer of specialised process equipment for the chemical and pharmaceutical industries. Established in 1991 as Shri Glassteel Equipments Limited and later becoming Swiss Glasscoat Equipment Limited, the Company consolidated its core businesses through a Demerger Scheme in 2019, officially adopting the name HLE Glascoat Limited. It is a part of the esteemed Patel Group of Companies, which was founded in 1951 by the late Dr. Khushalbhai H. Patel and has a long history in chemical manufacturing and process equipment.

HGL operates across key segments: Filtration, Drying, Glass-Lined Equipment, and Heat Transfer Equipment, along with Exotic Metal Fabrication. The Company is recognised as a market leader in filtration and drying technology and a prominent global manufacturer of glass-lined equipment. Its product range is extensive, including reactors, receivers/storage tanks, dryers, filters, columns, agitators, valves, pipes and fittings. These products are crucial for processes involving storage, reaction, heat transfer, distillation, and solid-liquid separation. HGL offers both standard and custom-built equipment to meet specific client requirements, catering predominantly to Active Pharmaceutical Ingredient (API) manufacturers.

HGLs operations are supported by three integrated plants, located at Maroli, Anand, and Silvassa. The Company has strategically expanded its capabilities through key acquisitions. In December 2021, HGL acquired the global business of Thaletec GmbH, a leading German glass-lining company, enhancing its international presence and product portfolio. This was followed by the acquisition of a majority stake in Kinam Engineering Industries in August 2023, a renowned manufacturer of various heat exchanger equipment. The Company also augmented its manufacturing capacity for filtration and drying equipment by commissioning a Greenfield plant in Silvassa in 2022. In FY 2024,

HGL launched SS Reactors, Pharmaskid & Chem-skid systems, and Thaletec products, further diversifying its offerings.

Financial Overview

Financial Performance FY 2024-25

Particulars	Consolidated		Standalone
	FY 2024-25#	FY 2023-24*	FY 2024-25#	FY 2023-24*
Total Income	1,03,494.51	97,673.64	56,290.54	60,585.19
Profit Before Finance Tax, Depreciation and Amortisation costs,	14,412.22	12,126.10	6,336.04	7,695.58
(after adjusting Other Comprehensive Income)
Profit Before Tax (after adjusting Other Comprehensive Income)	7,825.60	5,906.10	1,990.11	3,103.52
Profit After Tax (after adjusting Other Comprehensive Income)	6,495.60	4,127.25	1,575.91	2,631.41
Total Assets	1,29,336.32	1,20,195.69	87,410.75	85,319.33
Equity Share Capital	1,365.31	1,365.31	1,365.31	1,365.31
Other Equity	44,565.41	40,314.83	34,232.67	33,407.68
Non-controlling interest	9,497.75	7,990.21	-	0
Total Equity	55,428.47	49,670.35	35,597.98	34,772.99
Bank Borrowings	33,377.94	34,488.97	31,094.74	33,160.93
Debt: Equity Ratio (including long-term and short-term borrowings)	0.63	0.73	0.87	0.98
Book Value per Equity Share of 2 each – In	81.20	72.76	52.15	50.94
Earnings per Equity Share - Basic and Diluted – In
Earnings per Share - From Continuing Operations	9.05	6.52	2.40	4.43
Earnings per Share - From Discontinuing operations	-	-0.53	-	-0.53
Dividend Per Share – In (FY 2023-24 – proposed)	-	1.1	-	1.1

* Previous years figures are restated, regrouped, rearranged and recast, wherever considered necessary.

#The financial information includes the performance of 1) Thaletec GmbH and its wholly owned subsidiary Thaletec Inc., USA, 2) Kinam Group of companies, viz.

Kinam Engineering Industries Private Limited (KEIPL) - Subsidiary, Kinam Enterprise Private Limited (KEPL) – Subsidiary and Kinam Process Equipments Private Limited (KPEPL)- step-down subsidiary (subsidiary of KEPL) and 3) Thaletec LLP (formerly known as H L Equipments/Thaletec), Subsidiary.

Key Financial Ratios:

Particulars	FY 2024-25	FY 2023-24	Explanations
Debtors Turnover (times)	5.05	3.88	Driven by higher and effective collection during the year.
Inventory Turnover (times)	2.53	3.04
Interest Coverage Ratio (times)	1.71	2.18	Due decrease in Earning and increase in debt service.
Current Ratio	0.91	1.10
Debt Equity Ratio (considering long-term &	0.87	0.98
short-term debt)
Operating Profit Margin (%)	8.94%	9.82%
Net Profit Margin (%)	2.97%	4.51%	On account of decrease in sales, higher raw material costs, interest and depreciation caused by additional capex incurred and put to use.
Return on Net Worth (PAT/Net Worth) - Standalone	4.66%	7.87%	On account of increased net worth due to higher retained earnings in previous year as well as the PAT for the year being lower due to decrease in sales, higher raw material costs, interest and depreciation caused by additional capex incurred and put to use.

Note: Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof

Strategical Outlook

Opportunities and Threats

The Company consistently aims to provide its customers with high-quality products at competitive prices. This is supported by ongoing process innovation, the adoption of the latest technology, and product diversification. The Company has proactively invested in enhancing its product development capabilities, advancing technology, improving infrastructure, and optimising supply chain management. These efforts enable the Company to scale its capacities and improve both operational and cost efficiencies. They also facilitate expanded reach across domestic and international markets.

These factors position the Company well for sustainable growth in the foreseeable future. There is consistent demand from the downstream engineering service, pharmaceutical, and chemical sectors. The Companys standing as a frontrunner in its sector allows it to capitalise on favourable industry trends. A strong brand recognition is associated with the Company.

This brand recall is being reinforced by intensified marketing efforts and an expanded service network. This is evident in the Companys strong presence in both domestic and international markets. Management expresses confidence in overcoming internal challenges and ensuring the Companys continued growth this year.

Threats to the Company are typically linked to cyclical industry trends, rising inflation, and increasing material costs, often influenced by the global geopolitical landscape. Other challenges include the availability of adequately skilled manpower, continuous increases in electricity and fuel costs, rising wages and salaries, and higher financing costs. On a positive note, a stronger boost from pent-up demand in various economies or a quicker reduction in inflation remains possible. However, financial markets could also experience sudden repricing in response to adverse inflation news. Further geopolitical fragmentation might also hinder economic progress.

Risk and Concerns

The Company has navigated a complex risk landscape over the past few years. Its resilience in facing such challenges has been notable. Plans developed and executed during and after the pandemic are now considerably more robust. However, FY 2024-25 presented additional risks. These required extensive preparation and both proactive and reactive threat management.

Geopolitical instability, stemming from ongoing conflicts between

Russia and Ukraine, and Israel and Palestine, also caused supply chain issues due to the Red Sea crisis.

Environmental, Social, and Governance (ESG) reporting is currently developing. Future requirements are expected to be more extensive and all-encompassing. A lack of preparedness in this area could therefore pose a threat. Organisations should establish governance structures to provide reliable information on ESG risks and opportunities. The Company has focused on specific ESG disclosures and metrics. It has also identified the necessary data to capture and manage, ensuring timely compliance with local ESG regulations.

Identifying risks is only one aspect of risk management. Mitigating them is more critical for ensuring business continuity and sustenance. The Company concentrates on systemic risks that create vulnerabilities. It ensures its risk management framework oversees such risks. Systemic risk is a type of risk that, at a company or industry level, could trigger a widespread collapse.

This type of risk is difficult to quantify and predict. Managements risk appetite should be regularly updated to provide clear guidance for decision-making. The Company is also focused on understanding ESG risks. It supports the design and development of strong governance frameworks and control environments.

Risk Management

The Company understands the crucial role of risk management. This ensures long-term business growth and stability. In accordance with specific provisions of the SEBI Listing

Regulations and the Companies Act 2013, the Companys Board of Directors has approved and established a ‘Risk Management Policy. This policy is accessible on the Companys website at the provided URL.

(https://hleglascoat.com/wp-content/uploads/2021/09/HGL_ RISK-MANAGEMENT-POLICY.pdf)

The Companys Risk Management Policy includes a detailed procedure for identifying, assessing, and mitigating all risks it faces. This policy establishes a structured and disciplined approach to risk management. Its purpose is to guide the Board on risk-related decisions. It also aims to mitigate various risks. These include economic risk, geopolitical risk, production risk, and price risk. Inventory management risk, technology risk, and competition risk are also covered. Further risks are financial risk, raw material price fluctuation risk, and pandemic risk. Human resource risk, reputation risk, legal risk, regulatory risk, and cyber risk are also addressed.

The main objective of this Policy is to ensure sustainable business growth with stability. It also promotes a proactive approach. This involves reporting, evaluating, and resolving risks linked to the Companys business and processes. The Company has also formed a Risk Management Committee. This committee comprises certain Directors. This committee is tasked with identifying and mitigating risks. The Board of Directors further supervises its work.

Environmental, Social and Governance

HLE Glascoat is nurtures sustainable growth through a comprehensive framework of Environmental, Social, and Governance (ESG) principles. The Company actively engages with its stakeholders to address concerns and contribute positively to the communities in which it operates.

• Social Initiatives and Community Engagement: In response to stakeholder feedback, the Company has undertaken several community-focused initiatives to support vulnerable and marginalised groups. These efforts are a core part of its corporate social responsibility (CSR) and are detailed below:

• Livelihood Enhancement Programmes: The Company has initiated vocational and skill development training for unemployed youth and women in economically disadvantaged areas. These programmes are designed to improve employability and foster entrepreneurial skills, thereby promoting sustainable livelihoods.

• Promotion of Inclusive Education: HLE Glascoat has committed to enhancing access to quality education. The company provides scholarships, upgrades school infrastructure, and facilitates access to digital learning tools for students from economically weaker sections, particularly in rural and tribal regions. These initiatives aim to improve academic outcomes and build self-confidence among underprivileged youth.

• Healthcare Access and Support: The Company has undertaken initiatives to improve healthcare access in underserved communities. This includes providing subsidised medical aid and operating a low-cost clinic that offers essential medical consultations, subsidised tests, and medicines, which reduces the financial burden on low-income families and supports preventive care.

• Infrastructure Development: In support of vulnerable communities, the company has contributed to infrastructure development by constructing and renovating residential spaces to provide safer and more secure living conditions.

The Companys CSR projects have directly benefited thousands within these communities. The Scholarship Scheme has provided support to 2,500 students, the TB Mukt Bharat initiative has assisted 120 patients, and the Rahat Dar nu Dawakhanu low-cost clinic has provided healthcare services to 1,500 individuals.

Additionally, financial aid for permanent homes has been offered to 10 families under the Pradhan Mantri Awas Yojana. In each of these cases, the beneficiaries are entirely from vulnerable and marginalised groups.

Human Resources

The Company operates in the manufacturing sector. It understands the importance of human capital. Employees form the backbone of its success. Comprehensive human resources policies are in place. These promote transparency, ethics, and inclusive employee growth. The Company constantly strives to strengthen its human resources processes. This helps it to remain competitive. The strength of these processes is evident. It attracts and recruits top industry talent. It ensures strong learning and development. Equal emphasis is placed on safety training. Proactive employee engagement and strong employee retention are also key outcomes.

These processes have increased employee efficiency. They have also helped employees grow with the Company. The Company focuses on developing its existing staff and workers. It provides continuous training. This equips them for better and senior positions. Training is provided internally. Programmes are also organised with external instructors. Continuous training programmes emphasise increasing productivity. They also foster commitment and integrity in employee attitudes and behaviour.

The Companys social responsibility initiatives extend to nurturing its workforce. In FY 2024-25, HLE Glascoat focused on strengthening its employees capabilities and building a resilient, people-centric culture. This year, the Company onboarded 141 new employees and conducted 101 training sessions, totalling

1,785 training man-hours. This included a significant focus on safety, with 263 safety training sessions and 4,095.91 safety training man-hours.

To strengthen the workplace environment, a number of employee engagement initiatives were implemented. These included cultural celebrations, festive gatherings, inter-department sports tournaments, and creative workshops. The company also prioritised employee well-being by offering alternate-day meditation sessions and introduced personalised birthday greetings to reinforce a culture of care and recognition.

Learning and development were key focus areas, with workshops on Leadership & Organisational Development, as well as skill-building sessions on topics such as The Art of Giving Feedback and QCD. Outbound programmes were also organised for the Design, R&D, and Operations teams to encourage teamwork and experiential learning. Finally, a performance-driven culture was reinforced through the Reward & Recognition programme and regular employee engagement surveys, ensuring that achievements are celebrated and employee voices are heard.

The Company has well-documented and updated policies. These prevent all forms of discrimination and harassment, including sexual harassment. The Whistle Blower Policy serves as an important safeguard. The total employee strength as on March 31, 2025 was 687.

Internal Control System

The Company is committed to ensuring an effective internal control environment that provides reasonable assurance regarding the effectiveness and efficiency of operations, adequacy of safeguarding of assets, reliability of financial controls and compliance with applicable laws and regulations. Towards this end, HGL has laid down standard operating procedures and policies to guide the various business operations. To further strengthen the internal control systems, independent external professional agencies have been appointed to conduct an internal audit of the systems and processes of its manufacturing locations (Maroli, Anand and Silvassa). The internal auditors ensure that internal controls are reviewed through the periodical internal audit process in consultation with the Audit Committee. Internal auditors cover every operational unit and all major corporate functions under the guidance of the Audit Committee of the Board.

The Boards Audit Committee oversees the adequacy of the internal control environment through periodic reviews of audit findings and monitoring implementations of internal audit recommendations through compliance reports. The statutory auditors have opined in their report that there are adequate internal controls over financial reporting at the Company. The Certification by the Managing Director and the Chief Financial Officer of the Company has been provided elsewhere in this

Annual Report and discusses the adequacy of the internal control systems and procedures.

Cautionary Statement

The narrative within this Management Discussion and Analysis includes ‘forward-looking statements relating to, among other things, the execution of strategic plans, future business developments, and economic performance. While these statements reflect the Companys assessment and expectations for the future direction of its business, numerous risks, uncertainties, and other unforeseen factors could cause actual outcomes to differ significantly from these expectations.

These factors include, but are not limited to, general market, macroeconomic, governmental, and regulatory trends, fluctuations in currency exchange and interest rates, competitive pressures, technological advancements, changes in the financial standing of third parties engaged with the Company, legislative changes, and other significant factors that could influence the Companys business and financial results.