HP Adhesives Ltd Management Discussions

Global Economy

In 2024, the global economy expanded by 3.3%, demonstrating a measure of resilience despite enduring headwinds. However, the overall momentum remained tepid, weighed down by uncertainty surrounding policy direction. This ambiguity largely arose from escalating geopolitical tensions, trade disputes, and the proliferation of protectionist measures, all of which undermined business confidence and dampened investment activity.

Exacerbating these challenges, central banks maintained elevated interest rates in an effort to contain inflation, a strategy that further curtailed borrowing and moderated economic expansion. Structural impediments such as subdued investment levels, sluggish productivity gains, and elevated debt burdens, particularly in low-income economies, continued to obstruct a broad-based recovery. Additional pressures emerged from labour market mismatches and a slowdown in key emerging economies, notably China, which collectively intensified concerns over global growth prospects.

As we move through 2025, the global economic landscape is undergoing a recalibration. Countries are recalibrating their policy agendas in response to intensifying geopolitical strains and rising economic pressures, potentially paving the way for significant shifts in direction.

One of the major disruptions in 2024 came from the introduction of sweeping tariff measures by the United States, followed by retaliatory moves from key trading partners. This escalation triggered a sharp increase in global tariff levels, disrupting international trade flows and exerting further downward pressure on growth. The swift and unpredictable evolution of these policy changes has exacerbated economic uncertainty, rendering accurate forecasting increasingly challenging.

Against this backdrop, global headline inflation is now expected to decline more gradually than anticipated in January 2025, easing to 4.3% in 2025 and 3.6% in 2026. While inflation projections have been revised upward for advanced economies, these increases are partially counterbalanced by downward adjustments across several emerging markets, offering . a nuanced yet cautiously stabilising < outlook.

Outlook

The IMFs World Economic Outlook, released in April 2025, projects global economic growth of 2.8% for 2025, increasing slightly to 3.0% in 2026. This marks a modest revision from earlier projections and reflects a tone of cautious optimism. Growth is being underpinned by moderating inflation, improving financial market conditions, and sustained demand, although the pace of recovery continues to vary across regions.

Advanced economies, especially the US, continue to demonstrate strong resilience. In contrast, tighter financial conditions are presenting headwinds for certain emerging markets. Inflation has declined appreciably in several regions, resulting in higher real incomes and a boost in consumer sentiment, although the degree of improvement remains uneven across economies. Despite lingering uncertainties and divergent national trajectories, the global economy is maintaining a stable growth path. This measured progress is being fuelled by resilience, adaptability, and a continuation of forward momentum.

(Source: https://www.imf.org/en/Publications/ WEO/Issues/2025/04/22/world-economic- outlook-april-2025 )

Indian Economy

India continues to follow a strong growth trajectory, with GDP expected to grow at 6.5% in FY 2024-25, positioning it ahead of many global counterparts.

This sustained momentum highlights the resilience of the Indian economy amid a complex global environment.

On the inflation front, FY 2024-25 witnessed a phase of steady and encouraging moderation. Following successive supply-side shocks in the post-pandemic period-ranging from the conflict in Ukraine to tightening global monetary conditions; Indias headline Consumer Price Index (CPI) inflation averaged 5.4% in FY 202425, a significant decline from 6.7% in FY 2023-24. This downward trend can be attributed to a combination of prudent domestic policy measures and stabilising global commodity prices.

Key government interventions, such as the timely release of food grain buffers, export restrictions on sensitive commodities, and efforts to maintain stable energy prices, were instrumental in containing inflationary pressures. Simultaneously, core inflation also eased, indicating declining input costs and a rebalancing of demand and supply across multiple sectors.

Structural reforms, technological innovation, and sustained infrastructure investments are collectively fuelling broad-based economic expansion.

In parallel, targeted government programmes are helping to build a foundation for long-term sustainability. Labour market improvements, robust domestic consumption, and strong performance in agriculture and services are further reinforcing macroeconomic stability and enhancing investor confidence in Indias growth outlook.

However, external and cyclical challenges remain. Weak global demand has weighed on manufacturing exports, while aggressive trade policies by major partners have added to external pressures. On the domestic front, an above-average monsoon, while beneficial for agriculture, temporarily disrupted activity in sectors such as mining, construction, and select manufacturing segments. Additionally, variations in the timing of major festivals between years have contributed to short-term fluctuations in production cycles and growth momentum.

Despite these challenges, the manufacturing sector continues to demonstrate resilience and sustained momentum. Indias manufacturing Purchasing Managers Index (PMI) stood at 56.3 in February 2025, down from 57.7 in January 2025, marking the slowest rate of expansion since October 2023. Nevertheless, the PMI remains well above the 50-mark, signalling continued growth within the sector. Expansion continues to be driven by robust domestic and international demand, rising employment levels, and improving supply chain dynamics, even as inflationary pressures persist. Investor sentiment towards manufacturing stocks remains optimistic, as reflected in the Nifty India Manufacturing Index, which posted a modest growth of 0.47% in March 2025, closing at 13,890.75 points. This positive trend was driven by improved corporate earnings, increased foreign investment, and technological advancements that helped manufacturers sustain profitability despite rising costs.

Outlook

As India looks ahead to FY 2025-26, its economic outlook remains cautiously optimistic amid ongoing geopolitical uncertainties, trade disruptions, and the persistent risk of volatile commodity prices. On the home front, sustaining GDP growth will largely hinge on maintaining momentum in private sector investment, strengthening consumer confidence, and accelerating wage growth across the corporate sector. At the same time, rural demand is expected to strengthen as agriculture recovers, food inflation stabilises, and overall macroeconomic conditions remain favourable.

To reinforce economic resilience over the medium term, India will need to enhance its global competitiveness by advancing structural reforms and streamlining regulatory processes at the grassroots level. Fostering a business-conducive environment will be critical, not only to shield the economy from external shocks but also to underpin long-term economic sustainability.

(Source: https://www.indiabudget.gov.in/economicsurvey/doc/Infographics%20English.pdf

https://www.india-briefing.com/news/india- manufacturing-tracker-2024-25-33968.html/ )

Global Adhesives Market

The adhesives market size has witnessed robust growth in recent years. It will expand from USD 68.88 bn in 2024 at a CAGR of 6.03% to USD 87.04 bn in 2028. Growth during the forecast period is expected to be driven by sustained demand from the automotive sector, rising consumption in the building and construction industry, rapid urbanisation, and increasing requirements across the packaging segment. Key trends shaping the market include the adoption of automation and advanced instrumentation technologies, integration of 3D vision systems, developments in rapid adhesive curing

Indian Adhesives Market

The Indian adhesives market is projected to grow from USD 2.87 bn in 2024 to approximately USD 3.76 bn by 2028, reflecting a robust CAGR of 6.98% over the forecast period. The market for Indian Adhesives is primarily being driven by accelerating industrialisation, large- scale infrastructure development, expansion in the automotive and packaging sectors, rising demand for eco-friendly adhesive solutions, increasing construction activity, continuous technological advancements, and supportive government initiatives aimed at promoting domestic manufacturing and sustainability.

In 2024, the packaging segment accounted for the largest share of the Indian adhesives market, commanding approximately 22-25% of the total market. This dominance is driven by the rapid expansion of the e-commerce, fast-moving consumer goods (FMCG), and food & beverage sectors. As consumer preferences shift towards ready-to-eat, processed, and conveniently packaged products, demand for high-performance adhesive technologies in flexible packaging and labelling applications has seen a marked increase. techniques, implementation of ebeam technology, a heightened emphasis on product innovation, and the gradual incorporation of IoT-enabled solutions.

The adhesives market will continue to benefit from shifting industry preferences, such as the replacement of mechanical fasteners, greater usage in lightweight and electric vehicles, evolving packaging needs, and expansion of renewable energy and healthcare sectors. Continued innovation in adhesive formulations and increased automation in application methods will further support market growth.

The automotive industry is rapidly becoming a key catalyst for growth in the adhesives market, as manufacturers shift from conventional mechanical fasteners to advanced adhesive-based bonding technologies. This shift is particularly evident in the expanding passenger vehicle segment, where demand is rising for high-performance adhesives used in structural components, interiors, and vehicle assembly processes.

Adhesive consumption is witnessing strong momentum in the construction and furniture sectors, fuelled by rapid urbanisation and a surge in residential development. The furniture industry, which is projected to reach USD 5.47 bn by 2026, is emerging as a key contributor to the growing demand for wood adhesives, particularly in the production of modular furniture and interior applications. Government-led initiatives such as Housing for All and the Smart Cities Mission are further accelerating the adoption of construction adhesives across infrastructure and real estate developments.

Simultaneously, the market is undergoing a notable transition towards eco-friendly adhesive solutions. Manufacturers are increasingly focusing on formulations with reduced volatile organic compound (VOC) emissions, aligning with evolving environmental standards. Water-based adhesives are gaining popularity in woodworking and packaging applications due to their cost-effectiveness and improved sustainability profile.

Indian solvent cement market is directly linked to the dynamics of the Indian pipes and fittings market. While 2024-25 proved challenging for pipes industry due to PVC price volatility and a slowdown in government capital expenditure, especially in the pre-election period. Despite these headwinds, volume growth stayed positive, supported by ongoing initiatives such as the Jal Jeevan Mission, Smart Cities Mission, and AMRUT. Over the medium term, rising government spending, real estate development, and infrastructure upgrades are expected to fuel demand for PVC, CPVC, and UPVC pipes, and in turn, solvent cement.

Opportunities

Strong Growth Outlook for Indias Plastic Pipes Market

Indias plastic pipes market is witnessing robust expansion, driven by rapid urbanisation, infrastructure development, and modernisation in agriculture. Valued at USD 7.40 bn in 2025, the market is projected to more than double to USD 16.54 bn by 2031, registering a strong compound annual growth rate of 14.18%. This momentum is further supported by government initiatives such as the Smart Cities Mission, AMRUT, and PMKSY, which are stimulating demand across urban utilities and irrigation systems.

https://www.techsciresearch.com/report/india-plastic-pipes-market/16656.html

Booming Construction and Infrastructure

The Indian construction market is projected to reach Rs 25.31 tn (approximately USD 1.21 tn) in 2025, growing at a steady annual rate of 11.2%. The sector has witnessed strong momentum in recent years, recording a CAGR of 14.2% between 2020 and 2024, and is expected to continue expanding at a CAGR of 8.8% from 2025 to 2029, reaching approximately Rs 39.10 tn by 2029.

This sustained growth is supported by rapid urbanisation, ongoing infrastructure development, and a series of government-backed initiatives, including affordable housing schemes and large-scale urban infrastructure programmes. Indias urban population rose to an estimated 523 mn in 2023, marking a year-on-year growth of 2.27%. According to projections for the 2024 Census, urban dwellers are expected to account for 35—37% of the countrys total population. This expanding urban footprint is driving robust demand for residential housing, commercial real estate, and large-scale infrastructure development across the nation. Adhesives play a critical role in this sector, with wide-ranging applications in building construction, woodworking, flooring, panelling, and insulation. They offer superior bonding strength, faster installation, and enhanced cost efficiency when compared to traditional fastening methods.

(Source: https://www.businesswire.com/news/home/20250506976475/en/India-Construction-Industry-Databook-2025-Forecasted-8.8-CAGR-During-2025-2029-with-Indian-Construction-Market-Set-to-Reach-INR-39.

10-Trillion-by-2029--ResearchAndMarkets.com

https://sbi.co.in/documents/13958/0/24092024-Precursor+to+census+2024+(1).pdf/2dd4a183-9c43-3ed8-5cfd-514853be84b6Rst=1727173401480

Technological Advancements and Product Innovation

Continuous R&D is leading to the development of advanced adhesives with improved bonding strength, faster curing times, and enhanced compatibility with a wide range of substrates and operating environments. Innovations such as smart adhesives, hot-melt technologies, UV-cured systems, and biodegradable formulations are broadening the scope of applications across multiple industries.

(Source: https://www.marketreportanalytics.com/ reports/india-adhesives-market-102122)the development of

Growth in End-User Industries

Besides plastic piping industry, construction, and automotive, sectors such as electronics, aerospace, healthcare, and woodworking are contributing to rising adhesive demand, especially for specialised, high-performance applications.

(Source: https://www.marketreportanalytics.com/ reports/india-adhesives-market-102122)

How Woodworking and Furnishing are Shaping Indias Adhesive Market

Indias furniture market, valued at USD 23.12 bn in 2022, is projected to expand at a CAGR of 10.9% through 2028, driven by increasing consumer interest in home decor and premium furnishing solutions. This growth is significantly fuelling demand for wood adhesives used in joinery, furniture assembly, and interior decor applications. Rapid urban expansion, along with government initiatives such as the Pradhan Mantri Awas Yojana, is accelerating both residential and commercial construction activity, thereby increasing the need for wooden elements such as flooring, cabinetry, and doors, all of which rely on high-performance adhesives for durability and finish. The growing popularity of modular and ready-to- assemble (RTA) furniture has further intensified the use of advanced adhesives to ensure structural integrity and long-term performance.

(Source: https://www.imarcgroup.com/india- wood-adhesives-market)

Automotive and Transportation Growth

Indias automotive market is projected to grow by USD 60.6 bn between 2024 and 2029, registering a strong CAGR of 7.9%. This growth is accompanied by an increasing shift towards high-performance adhesives as manufacturers prioritise lightweight vehicle construction, structural integrity, and enhanced safety features. Adhesive technologies such as structural adhesives, EV battery assembly adhesives, multi-material bonding solutions, and specialised adhesives for noise, vibration, harshness (NVH) control and sealing are witnessing growing adoption. The accelerating transition to EVs is further spurring innovation in next-generation adhesive systems, specifically designed for battery integration and complex multi-component bonding requirements.

(Source: https://www.technavio.com/report/india- automotive-market-industry-analysis)

Home Improvement Boom

The home improvement sector presents another promising avenue. Growing consumer interest in interior renovation, DIY repair, and premium decor is creating steady demand for sealants, epoxy systems, and specialty adhesives. This is particularly evident in the surge of modular kitchens, bathroom upgrades, and ready-to- assemble furniture, where adhesives play a vital role in aesthetics, durability, and ease of application.

Company Overview

HP Adhesives Limited (the Company) has emerged as a prominent manufacturer and distributor of _v adhesives and sealants, catering to a broad spectrum of applications across domestic and international markets.

The Company operates from a state- of-the-art manufacturing facilities located in Khalapur Taluka of Raigad district, Maharashtra, with an annual production capacity of approximately 16,800 metric tonnes. Its extensive distribution network spans 27 Indian states and 5 Union Territories, and it exported to 18 countries in 2024-25, serving a diverse customer base of nearly 1,700+ customers.

With a sharp focus on product quality and operational efficiency and a keen understanding of evolving market dynamics, HP Adhesives is well-positioned for sustained growth. The Company continues to strengthen its market presence while delivering reliable, high-performance solutions to customers across geographies.

Summary of Product Categories During FY 2024-25

Solvent Cement

HP Adhesives is a leading manufacturer and distributor of a comprehensive range of solvent cements (plumbing adhesives)- PVC, CPVC, and uPVC solvent cement. With a robust portfolio of over 200 Stock Keeping Units (SKUs), the Company caters to entire spectrum of plumbing requirements. Its product range includes regular-bodied, mediumbodied, and heavy-duty formulations, available in diverse packaging options, from compact 10 ml tubes to large 5,000-litre (5 KL) cans.

These products are used across multiple sectors:

> PVC solvent cements are widely applied in irrigation, sewage, and drainage systems.

> CPVC variants are designed for hot and cold-water plumbing pipes and fittings.

> uPVC solvent cements are ideal for high-pressure piping systems.

In addition to adhesives, HP Adhesives also offers primers and cleaners tailored for all PVC and CPVC applications, ensuring optimal bonding performance and long-lasting durability.

The Company markets its solvent cement products under two trusted brands, HP and StrongWeld, which are well-recognised across domestic and international markets.

Silicone Sealants

HP Adhesives manufactures and markets silicone sealants under its reputable Strong Seal brand, catering to a wide range of sealing and bonding applications. These high-performance sealants are ideally suited for sealing gaps in doors and windows, automotive uses, and crack-filling in interior spaces.

Widely used across glazing, external weatherproofing, interior fittings, bathroom installations, and various construction projects, Strong Seal products are recognised for their durability, flexibility, and dependable adhesion. Available in 260 ml, 280 ml, and 300 ml cartridges, as well as sausage packs, and offered in a range of colours, the sealants are designed to address diverse requirements across both industry and consumer segments.

With a rapidly expanding product line that includes solutions for advanced and specialised bonding needs, HP Adhesives is well-positioned to establish itself as a leading player in the silicone sealant category, known for its world-class quality, continuous innovation, and comprehensive product range.

Ball Valves and Tapes

HP Adhesives has strategically broadened its product portfolio by introducing ball valves, PTFE tapes, and masking tapes through its established distribution network, targeting its existing customer base. These products act as complementary solutions to the Companys core adhesive offerings, particularly in the PVC and CPVC plumbing segments.

Ball valves and PTFE tapes are essential accessories that support the effective installation and maintenance of pipe fittings, enhancing the functionality and reliability of solvent cement applications. Additionally, masking tapes play a vital role in painting, carpentry, and interior work, protecting delicate surfaces such as glass and laminates from stains, scratches, and other potential damage.

By integrating these value-added complementary products into its portfolio, HP Adhesives continues to fortify its position as a one-stop solutions provider for construction, repair, and finishing needs.

Spray Paints

HP Adhesives offers a range of high-performance, fast-drying spray paints designed for versatile use across both indoor and outdoor applications. Engineered to provide a smooth, premium-quality finish on a wide array of surfaces, these spray paints combine quick application with vibrant colour payoff and long-lasting durability.

Ideal for home decor, automotive refinishing, and creative projects, the product is recognised for its superior coverage, rich pigmentation, and strong resistance to chipping, fading, and peeling. Trusted by professionals and DIY enthusiasts alike,

HP Adhesives spray paints have become a preferred choice for those seeking consistent performance and lasting quality across varied applications.

Epoxy Putty

HP Adhesives, through its StrongTite brand, offers a well-rounded portfolio of epoxy putties designed to address a wide range of repair and maintenance requirements. The General Purpose Epoxy Putty serves as a versatile solution, suitable for multiple everyday repair applications. For plumbing and sanitary installations, the Sanitary Epoxy Putty provides a reliable and tailored formulation. In situations where speed is essential, the Fast Epoxy Putty stands out with its rapid-setting properties, making it the go-to choice for quick and time-sensitive repairs.

Cyanoacrylates

HP Adhesives has launched two variants of Cyanoacrylates — suitable for immediate bonding of materials. Its a fast setting adhesive which can be used for virtually any type of fastening job. Cyanoacrylates are commonly known as super glue, offering several benefits, including rapid curing, strong bonding, versatility, and ease of use. The Companys range of cyanoacrylates are known for their ability to bond a wide range of materials quickly and effectively, making them popular for various applications.

Distribution Channel

HP Adhesives has established a strong and growing distribution network that spans India and extends to over 21 international markets as well, ensuring its high-quality products are readily available to a diverse and geographically dispersed customer base. By strategically onboarding distributors, who play a central role in the resale and promotion of its portfolio, the Company achieves deep market reach both domestically and globally with notable operational efficiency.

A core focus of HP Adhesives is to enhance direct engagement with retailers and end-users through its distributor partners, fostering long-term relationships that build brand loyalty and reinforce market presence. In 2024-25, the Company engaged with a network of over 1,575+ distributors across India, a number that continues to grow steadily and serves as a cornerstone of its distribution-led growth strategy.

Internationally, HP Adhesives has built a formidable presence, with its products reaching customers in several countries. This wide global footprint reflects the Companys commitment to delivering excellence beyond borders. Looking ahead, HP Adhesives is actively exploring opportunities to enter new international markets and remains optimistic about the longterm impact of these global expansion efforts. In the last 12 months, the Company has actively explored developing private label engagements with many reputed organisations in specific geographies. The Companys is highly optimistic about the long term sustainability of the relations with these customers, translating into large business over several years.

Marketing Strategy and Brand Awareness

HP Adhesives has adopted a focused and strategic approach to strengthening its portfolio of brands, Strong Weld, HP, Strong Seal, and Strong Fix, through targeted brandbuilding and promotional initiatives. The Company actively engages with its ecosystem of dealers, distributors, and key influencers such as plumbers, carpenters, and masons, who play a pivotal role in product selection and usage.

To deepen engagement and drive brand recall, HP Adhesives regularly hosts its main applicators like plumbers, carpenters, and masons, among others, for gatherings, serving as platforms to introduce new products and variants. These gatherings often feature live demonstrations and hands- on testing, allowing stakeholders to directly experience product performance and quality.

Recognising the critical role of applicators in influencing purchase decisions, the Company has implemented incentive programs tailored to this segment, encouraging stronger loyalty and advocacy. In addition, HP Adhesives actively participates in international trade exhibitions, amplifying brand visibility and reinforcing its presence in global markets.

These integrated brand engagement efforts form a cornerstone of the Companys growth strategy and will continue to play a key role in expanding market share and enhancing customer connection in the years ahead.

Corporate Social Responsibility (CSR)

During 2024-25, HP Adhesives continued its contributions towards Health, Education and Sports under CSR initiatives.

During the year, one of the major initiatives was providing contributions towards development of state-of-the-art sports infra for the local community of Narangi village. An all-weather cricket turf is being built for use by the local community, as the Company strongly believes in supporting sports initiatives that play a key role in the physical development of individuals while also cultivating camaraderie and a positive culture within the community.

In the area of education, the Company supported young learners enabling their access to education by sponsoring their learning programmes through scholarships.

Health initiatives were also supported particularly by contributing to regional Thalassemia Day Care Center as well as continued to address the critical need for clean drinking water by providing RO purified water to the residents of Narangi Village, promoting better health and hygiene within the community.

Financial Performance on a Consolidated Basis

(Rs in Lakhs)

Particulars	FY 2024-25	FY 2023-24	Change (%)
Revenue from Operations	25,287.16	23,590.60	7.19
Profit Before Tax (Before Exceptional Items)	2,372.84	2,789.26	(14.93)
Profit after Tax	1,824.35	2,056.81	(11.30)
Cost of Materials	15,902.67	14,812.83	7.36
Employee Benefits Expenses	3,403.75	2,854.83	19.23
Depreciation and Amortisation	471.80	429.35	9.89
Tax Expense	548.48	754.84	(27.34)
Other Expenses	3,378.59	2,853.48	18.40

Revenue from Operations for the current period was Rs 25,287.2 Lakhs, compared to Rs 23,601.78 Lakhs in the previous period, reflecting a growth of 7.19%.

Profit Before Tax decreased to Rs 2,372.84 Lakhs, down from Rs 2,789.26 Lakhs, marking a decrease of 14.93%.

Profit After Tax reduced to Rs 1,824.35, compared to Rs 2,056.81 Lakhs in the previous period, an decrease of 11.30%.

The Cost of Materials increased to Rs 15,902.67 Lakhs from Rs 14,812.83 Lakhs, a increase of 7.36%.

Employee Benefits Expenses amounted to Rs 3,403.75 Lakhs, up from Rs 2,854.83 Lakhs, an increase of 19.23%.

Depreciation and Amortisation expenses rose to Rs 471.80 Lakhs from Rs 429.35 Lakhs, a growth of 9.89%.

Tax Expense decreased to Rs 548.48 Lakhs, down from Rs 754.84 Lakhs, reflecting an drop of 27.34%.

Other Expenses were Rs 3,378.59 Lakhs, compared to Rs 2,853.48 Lakhs previously, showing an increase of 18.40%.

Risk and Mitigation

	Description	Mitigation Measures
Economic, Political, and Market Risk	Shifts in the geopolitical and macroeconomic landscape can disrupt regular operations and impact financial stability.	HP Adhesives actively monitors global economic trends and developments. The management remains agile in its decision making and the Companys profitable growth enables it to absorb unforeseen external shocks.
Supply Chain Risk	Dependence on suppliers for raw materials, packaging materials, and capex components makes the Company vulnerable to disruptions in production and delivery.	The Company has diversified its supplier base for key inputs, maintains strong relationships with multiple vendors, and regularly assesses supplier reliability while optimising inventory to minimise disruption impact.
Quality Control Risk	Product quality is critical to the Companys reputation; any lapses may lead to customer dissatisfaction and brand damage.	The Company enforces stringent quality control protocols, regular audits, advanced manufacturing technology, comprehensive training, and prompt issue resolution to maintain product integrity.
Product Concentration Risk	Over dependence on a single product category increases vulnerability to competition or obsolescence.	The Company has broadened its product range across multiple adhesive and sealant categories to reduce dependency and mitigate category-specific demand fluctuations.
Revenue Concentration Risk	Relying heavily on a few key customers poses a risk in case of client attrition or defaults.	With a network of approx. 1,700 customers as on 31st March, 2025, the Company has a significantly diversified revenue base, reducing reliance on any single client and safeguarding against the impact of bad debts.
Competition Risk	Intense competition from domestic and global players may impact the Companys market share and pricing power.	HP Adhesives focusses on innovation, operational efficiency, competitive pricing, strong customer engagement, and continuous market analysis to remain responsive and differentiated.
Compliance and Legal Risk	Non-compliance with applicable laws and regulations could lead to penalties and reputational harm.	The Company maintains a strong governance framework, ensures compliance through regular monitoring, and upholds transparency in all communications with regulatory bodies and stakeholders.

Internal Control Systems and Their Adequacy

HP Adhesives has established a robust internal control framework that is well- aligned with the scale and complexity of its operations. These controls are designed to safeguard the Companys assets, ensure operational efficiency, and maintain strict compliance with all applicable laws and regulations.

The internal control system is supported by well-documented policies and procedures, including clearly defined authorisation and approval hierarchies. These are subject to regular review and updates to reflect evolving business needs and regulatory requirements. The system is actively monitored and assessed by the Internal Auditor, who conducts periodic audits to identify any gaps or risks.

Human Resources

Human resources development remains a core pillar of HP Adhesives growth strategy, fostering a workplace culture rooted in safety, collaboration, fairness, and inclusivity. The Company is deeply committed to career progression and continuous skill enhancement across all functional areas, including R&D, manufacturing, supply chain, sales, administration, and business development.

Employee health and safety, particularly within manufacturing operations, is a top priority. HP Adhesives enforces rigorous safety protocols to ensure a secure and compliant working Findings and recommendations from both internal and statutory audits are thoroughly evaluated, and corrective actions are promptly implemented where necessary. The Audit Committee plays an integral role in this process by reviewing audit plans, tracking audit outcomes, and overseeing the implementation of remedial measures. This continuous improvement approach ensures the adequacy and effectiveness of the internal control environment across the organisation. environment. As of 31^st March, 2025, the Company employed 659 individuals, maintaining harmonious industrial relations throughout the year.

HP Adhesives actively promotes gender diversity and equal opportunity, empowering women across all levels, from factory operations to boardroom decision-making. This commitment underscores the Companys focus on building a supportive, progressive, and inclusive work environment that aligns professional development with individual aspirations.

Outlook

Indias adhesives and sealants market is on a stable growth trajectory, driven by healthy activity in construction, real estate, and home improvement. Government-led infrastructure initiatives, combined with rising demand from the agriculture, automotive and consumer discretionary segments, further accelerating market expansion.

HP Adhesives is well-positioned to harness this momentum through its diversified product portfolio, continuous improvement in operational efficiency and strategic focus on widening its distribution network. With a firm commitment to quality and new product developments, the Company is set to enhance its market presence and unlock longterm growth opportunities.