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I G Petrochemicals Ltd Management Discussions

481.7
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Aug 1, 2025|12:00:00 AM

I G Petrochemicals Ltd Share Price Management Discussions

ECONOMIC SCENARIO

Global growth remained stable yet underwhelming through

2024, with projections for 2025 continuing this trend. However, recent shifts in global trade policies, particularly the US implementing new tariffs and its trading partners retaliating, have introduced nd April, 2025, US tariffs reached levels not seen in a century, creating a major negative shock to growth and complicating economic forecasts. Rising trade tensions and elevated policy uncertainty are likely to dampen global economic growth. However, if the US successfully negotiates with its trading partners, it may reduce the overall tariff impact. This could create opportunities for countries like India to capture a larger share of markets previously dominated by competitors supplying to the US. India is set to lead the global economic charge once again, with the International Monetary Fund (IMF) forecasting it to remain the fastest-growing major economy over the next two years. As per the IMFs World Economic Outlook for April 2025, Indias economy is expected to grow by 6.2% in 2025 and 6.3% in 2026, continuing to outpace both global and regional peers. This steady growth is primarily driven by robust private consumption, especially in rural areas. Amid global uncertainties and slower growth, Indias resilience is becoming increasingly apparent, underscoring its pivotal role in driving global economic momentum.

GLOBAL CHEMICAL INDUSTRY

The global chemical industry plays a crucial role in the world economy, providing essential materials for sectors such as pharmaceuticals, agriculture, construction, and automotive. According to Markets and Markets, the Chemical Industry is valued at ~$ 6,182 billion in 2024 and is expected to grow to $ 6,324 billion by 2025, driven by a compound annual growth rate (CAGR) of 2.3%.

Market growth and key drivers:

Sustainability and green chemistry: The industrys shift towards sustainability is accelerating, with an emphasis on greener production processes, bio-based chemicals, and reduced carbon emissions. Companies are increasingly investing in renewable feedstocks, circular economy models, uncertainty.Asof2 and environmentally friendly formulations to meet stringent global regulations.

Technological advancements: Digitalisation, automation, and artificial intelligence (AI) are transforming chemical manufacturing. With advanced analytics, smart factories, and real-time monitoring systems, companies are improving efficiency, reducing waste, and optimising production processes.

Rising demand from end-use industries: The demand for chemicals remains robust in key sectors such as automotive (coatings and polymers), construction (adhesives and sealants), and healthcare (pharmaceutical ingredients and medical polymers). Urbanisation and a growing global population are further driving this demand.

Shifting geopolitical and trade dynamics: Ongoing supply chain disruptions, trade regulations, and geopolitical tensions are influencing raw material availability and pricing. To mitigate risks, companies are diversifying supply chains and localising production.

Outlook

Looking ahead, the global chemical industry is poised for steady growth, propelled by innovation, sustainability efforts, and the increasing demand for diverse industrial applications. Companies that prioritise bio-based chemicals, green energy, embrace digital transformation, and enhance supply chain resilience will be well-positioned to thrive in this dynamic market.

Strategic investments, technological advancements, and sustainability-focused strategies are crucial for overcoming challenges and capturing emerging opportunities within the chemical sector.

INDIAN CHEMICAL INDUSTRY

The Indian chemicals industry is a key pillar of the nations economy, contributing around 7% to GDP and positioning India as the sixth-largest chemical producer globally and the third-largest in Asia. With a current contribution of ~2.6% to the global chemical industry, the sector is poised for significant expansion, with projections indicating a size of $ 304 billion by 2025, growing at a CAGR of 9.3%.

Aligned with the Central Governments vision to elevate India to the worlds third-largest economy, the chemical manufacturing sector is set to play a pivotal role in the coming years. The sector is expected to triple its global market share by 2040.

The chemical and petrochemical industry plays a critical role in Indias broader manufacturing and economic development, directly impacting key industries such as agriculture, food and beverages, textiles, rubber, and petroleum refining. As a result, the performance of the chemical industry is closely linked with the Manufacturing Sectors Index for Industrial Production (IIP), reflecting its crucial role in enhancing the quality of life and driving industrial progress.

GROWTH DRIVERS

Rising domestic consumption: Domestic demand plays a pivotal role across various industries, including agriculture, pharmaceuticals, automotive, electronics, and construction. With nearly 70% of Indias chemical production consumed domestically, the country is set to account for 20% of global incremental chemical consumption over the next two decades. By 2040, domestic demand is expected to reach $850-1,000 billion.

Changing consumer behaviour: As global demand for eco-friendly and sustainable products surges, India is positioned to capitalize on this trend. The country is one of the leading producers of chemicals essential for manufacturing these products, giving it a competitive edge in the growing sustainability market.

Evolving supply chains: Geopolitical factors continue to influence global supply chains for chemicals and petrochemical products. As manufacturers seek new markets to enhance supply chain resilience, Indias strategic Evolving Supply Chains: advantages make it a key partner in this shift.

Government intervention: Policy reforms, such as theRemission of Duties and Taxes on Exported Products(RoDTEP), Production-Linked Incentive (PLI), and initiatives Petroleum, Chemicals, and Petrochemical Investment Regions (PCPIRs) and Plastic Parks, are driving substantial growth in Indias chemical industry.

Other advantages: Indias low manufacturing costs, skilled workforce, and abundant natural resources, along with its commitment to sustainability across the supply chain, position the country as a formidable player in the global value chain.

Outlook

The chemical sector in India is well-positioned to capitalise on emerging opportunities, advancing the nations vision to meet evolving demands and strengthen its leadership in the global chemical market. Supported by the Petroleum Chemicals and Petrochemical Investment Region (PCPIR) policy, India aims to attract substantial investment by 2035. This policy, designed with a cluster-centric approach, is set to drive significant growth and expansion within the chemical sector. According to the Department of Chemicals & Petrochemicals, the PCPIR policy is expected to create millions of new jobs. Over the next two decades, a large portion of exports is projected to come from agrochemicals, dyes and pigments, and food additive chemicals. The optimistic growth outlook for Indias chemical industry presents a wealth of opportunities, positioning the country for global prominence. With favourable growth trends and key metrics working in its Favor, India is on track to become a leading chemical manufacturing hub in the coming decades.

Phthalic Anhydride (PAN) market

According to Mordor Intelligence, the Phthalic Anhydride Market size is estimated at 4.50 million tons in 2025, and is expected to reach 5.08 million tons by 2030, at a CAGR of 2.46% during the forecast period (2025-2030). This growth is primarily fuelled by its widespread use as a key industrial chemical in the production of plasticizer, alkyd resins, unsaturated polyester resins, PVC and pigment. A major driver is the growing demand for PVC in building and construction applications, including flooring, wiring, and plumbing, where phthalic anhydride plays a critical role in producing plasticizers. Additionally, the surge in automobile production, particularly the rise of electric vehicles, has further bolstered demand for PVC in automotive body parts, contributing to the markets expansion. According to IMARC Group, the India phthalic anhydride market size reached $ 166.88 million in 2024. Looking forward, IMARC Group expects the market to reach $ 264.62 million by 2033, exhibiting a growth rate (CAGR) of 5.26% during 2025-2033. Phthalic anhydride is a white, crystalline solid predominantly used as an intermediate in the manufacturing of various chemicals and materials. It is primarily produced through the oxidation of ortho-xylene with a catalyst like vanadium pentoxide.

The demand for these end use industries such as plasticizers is driven by industries such as construction, automotive, and consumer goods. Additionally, phthalic anhydride is integral to the production of dyes, pigments, and unsaturated polyester resins, which are essential for reinforced plastics and coatings.

The continued growth of the construction and automotive sectors further drives the demand for these products, contributing to the markets expansion.

Maleic anhydride market

According to IMARC Group, the global maleic anhydride market size reached $ 3.5 billion in 2024. Looking forward, IMARC Group expects the market to reach $ 5.2 billion by 2033, exhibiting a growth rate (CAGR) of 4.10% during 2025-2033.

This growth is primarily driven by the increasing applications of maleic anhydride in various end-use industries such as construction, automotive, and agriculture. The rising demand for unsaturated polyester resins, particularly from emerging economies, is also fueling market expansion. In response to this demand, market players are investing in capacity expansions. In India, the maleic anhydride market reached $ 114.40 million in 2024. Looking ahead, the market is expected to grow at a CAGR of 4.10%, reaching $ 164.81 million by 2033. Key factors contributing to this growth include the expanding demand from automotive, construction, and packaging industries, increasing consumption in the production of unsaturated polyester resins, rising infrastructure development, and growing use in agricultural chemicals. Additionally, the growing focus on sustainable and bio-based products is further driving the market in India.

Di-ethyl phthalate market

According to Future Market Insights, the diethyl phthalate (DEP) market is expected to grow modestly from 2025 to 2035, driven by rising demand in plasticizers, cosmetics, personal care, and pharmaceuticals. Valued at $ 146.3 million in 2025, the market is projected to reach $ 181.8 million by 2035, growing at a CAGR of 2.2%.

Key growth factors include increasing DEP use in coatings, adhesives, fragrances, and cellulose-based plastics, as well as the shift toward safer plasticizers and technological advancements in DEP alternatives. However, environmental concerns, stricter phthalate regulations, and the rising demand for bio-based plasticizers may hinder market growth. Over the next decade, trends such as the focus on green plasticizers, DEPs expanding use in niche applications, and advancements in sustainable packaging ingredients will shape the market. Despite challenges, steady growth is anticipated, supported by innovation, partnerships, and regulatory compliance.

Plasticizer market

The Plasticizers Market size is forecast to reach $20.5 Billion by 2030, after growing at a CAGR of 5.6% during 2024-2030. This growth is driven as the notable shift towards non-phthalate alternatives, driven by strong economic growth in emerging markets, increased demand for Phthalate, Non-Phthalate, Dicarbonates, Phosphates, Fatty Acid Esters, Polyesters, Citrates, Bio-based Plasticizers, Others. Non-phthalate options like DOTP and Hexamoll DINCH are gaining traction as safer substitutes, reflecting the industrys transformation towards more sustainable and health-conscious practices. The demand for flexible PVC is a key driver, particularly in packaging, where PVCs safety, lightweight properties, and low carbon footprint make it ideal. Additionally, the construction industrys increasing reliance on plasticizers to improve the workability and durability of concrete further boosts market growth. Eco-friendly plasticizers are also gaining traction, as they offer safer, more sustainable alternatives to harmful phthalates like DOP and DBP. These are especially popular in applications such as film and cable manufacturing. With all these factors, the plasticizer market is well-positioned for continued expansion, driven by innovation in eco-friendly solutions and increasing demand across multiple industries.

COMPANY OVERVIEW

Incorporated in 1988, I G Petrochemicals Limited (IGPL) is Indias leading producer of Phthalic Anhydride (PAN), commanding over 50% of the market share. IGPL is also the sole producer of Maleic Anhydride (MAN) in India and manufactures Benzoic Acid and Di-ethyl Phthalate (DEP).

FINANCIAL REVIEW

( C in crores)

Year

FY 2024-25 FY 2023-24
Revenue 2,234 2,130
EBITDA 248 136
PAT 112 40

Operational performance overview and the significant changes in ratio

Particulars

FY FY Changes

Reason

2024-25 2023-24 (%)
Debtors turnover 7.08 6.33 11.83 -
Inventory turnover 6.91 9.60 (28.01) Increase in closing inventory
Debt service coverage ratio 2.29 2.15 6.48 -
Current ratio 1.59 1.59 0.13 -
Debt Equity ratio 0.17 0.22 (22.56) -
Operating profit margin 8.32% 4.01% 107.36% Increase due to higher margin
Net profit margin 5.11% 1.90% 168.89% Increase due to higher margin
Return on capital employed 0.11 0.15 120.61 Increase due to higher margin
Return on equity 8.76% 3.22% 171.15 Increase due to higher margin

RISK MANAGEMENT

The Companys risk management framework outlines its approach to identifying, assessing, and mitigating potential risks. This proactive strategy aims to minimize the likelihood and impact of risks. The Board of Directors regularly reviews in the Risk Management Committees efforts to ensure effective risk management practices.

Raw material risk: The Company depends on crude derivatives for raw materials, making it vulnerable to price fluctuations. However, rising demand and the absence of alternatives allow the company to pass on increased costs to consumers.

Import risk: The risk of losing market share to cheaper imports is mitigated by the companys low cost of production, high yield, and diverse product offerings, ensuring competitiveness.

Environmental risk: Due to the inherent toxicity of some products, the company faces environmental risks. To mitigate this, we comply with global environmental standards and have implemented a new Effluent Treatment Plant (ETP) to achieve Zero Liquid Discharge, reducing environmental impact.

Interest rate risk: The company is exposed to interest rate fluctuations, which can affect financial stability. We regularly review financial instruments and use alternative banking facilities to minimize risks. Additionally, we hedge debt risks or use natural hedging through profitability, ensuring financial stability.

HUMAN RESOURCES

At IGPL, our human resources strategy is a key pillar of long-term success, aligned closely with our organisational vision. In FY 2024-25, we built on a strong foundation to sharpen people-centric initiatives, enhance operational efficiency, drive innovation, and support workforce development and well-being reflecting our belief that people are the core drivers of strategy execution.

Talent development & performance enhancement

Our focus on talent development remained strong. The Performance Management System revamped in FY 2022-

23—continued to foster a culture of accountability and improvement through clear KPIs, goal setting, and structured performance reviews. Supporting materials and training ensured widespread adoption.

Programs like the Buddy Program and leadership mentoring, continued from previous years, helped transfer knowledge and build leadership continuity. Our structured learning needs analysis ensured role-aligned training, while HR digitalization efforts streamlined processes and improved service delivery.

Employee engagement & culture

We sustained high levels of engagement through ongoing culture-building initiatives. The refreshed Rewards & Recognition framework including Employee of the Year, Spotlight, Take the Bull by the Horn, and Safety Awards continued to inspire motivation and excellence. Events, team outings, games, and cultural celebrations fostered cohesion and inclusivity. Our focus on diversity, meritocracy, challenging assignments, and meaningful growth remained consistent. Programs like 5S and PSM, initiated earlier, were strengthened to unlock potential and enhance productivity. As a result, our attrition rate stayed well below industry benchmarks, and industrial relations remained peaceful and positive.

Recognition & innovation

. Our HR practices have consistently driven performance and earned internal recognition. Initiatives like the IG Accelerator Program and various in-house awards reflect our commitment to valuing ideas and contributions.

Digital transformation & tech adoption

In FY 2024-25, we advanced digital HR solutions and adopted technologies like AI and automation to enhance decision-making, boost efficiency, and support future-ready capabilities positioning IGPL for sustainable growth.

Looking ahead

With a skilled and engaged workforce and a future-focused HR strategy, IGPL is well-positioned to capitalise on growth opportunities across markets. Our sustained investment in people will continue to drive performance and create long-term value for stakeholders.

CORPORATE SOCIAL RESPONSIBILITY

In our commitment to good corporate citizenship, we are dedicated to driving positive social change. Through our Corporate Social Responsibility (CSR) initiatives, we aim to reshape the business landscape by creating meaningful value for underprivileged communities, empowering them with sustainable livelihood opportunities and helping them build a secure future.

School infrastructure and educational support

IGPL continued its long-standing association with the

Saraswati Shishu Mandir Trust for the construction of a school in Vrindavan, named in honour of its Co-founder, Late Shri Shyam Sunder Dhanuka. The school, which began operations in early 2023 for pre-primary and primary levels, is now being expanded to include secondary education.

Key educational infrastructure projects during the year included:

• Renovation of a Zilla Parishad School

• Construction of a modern Anganwadi

These efforts are expected to benefit 345 students, 11 teachers, and 35 children.

IGPL also implemented a Digital School Program across 10 schools, including 7 Ashram schools under Maharashtras Tribal Development Department. Smart interactive TV dashboards with preloaded syllabus content were provided, promoting blended learning both in classrooms and on mobile devices benefiting over 5,500 students.

Skill development and livelihood enhancement

In partnership with the National Institute for Social

Development and Applied Research (NISDAR), IGPL launched a training initiative for 150 underserved women in industrial sewing operations, equipping them with employable skills and fostering financial independence.

Through collaboration with Tata Community Initiatives, a vocational training centre was launched to train 200 youth in NSDC-certified courses. The program aims to boost employability, encourage entrepreneurship, and enhance self-reliance, contributing to the regions socio-economic progress

Environmental sustainability

IGPL supported a lake rejuvenation project in Chindhran village near Taloja, in collaboration with the Grassroot Foundation. This initiative is set to benefit over 6,000 villagers by restoring a critical water source and improving the local ecosystem.

INTERNAL CONTROL

The Company has a comprehensive internal control system that is aligned with its scale of operations in the chemical industry. These controls are designed to provide reasonable assurance regarding the integrity of financial and operational information, the safeguarding of assets, adherence to regulatory requirements, and the efficient conduct of business

Considering the nature of Companys business and stringent environmental and safety regulations, the internal controls are designed to monitor critical areas such as procurement, production planning, inventory management, plant safety, compliance, and financial reporting. The audit plan is laid out for the year by the Internal Auditor on the basis of discussions with the management and Audit Committee.

The internal control framework is supported by well-defined policies, standard operating procedures, and automated systems that facilitate timely and accurate decision-making. A risk-based internal audit plan, approved by the Audit Committee, is executed by an independent internal audit function. This function evaluates the adequacy and effectiveness of internal controls across all key operational and support functions.

The Audit Committee of the Board provides strategic oversight and ensures that audit findings are addressed on a timely basis Periodic reviews, process improvements, and technology integration continue to strengthen the control environment.

No material weaknesses or significant deficiencies were observed during the year under review. The management remains committed to enhancing internal controls in line with industry best practices and evolving business and regulatory requirements, thereby ensuring sustainable and compliant operations.

The Internal Auditor participates in all meetings of and reports directly to the Audit Committee. The Companys internal financial control systems commensurate with its nature of business, size and operations.

CAUTIONARY STATEMENT

This report contains statements that are "forward-looking statements" including, but without limitation, statements relating to the implementation of strategic initiatives and other statements relating to Companys future business developments and economic performance. While these forward-looking statements indicate our assessment and . future expectations concerning the development of our business, several risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include but are not limited to, general market, macroeconomic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance. Company undertakes no obligation to publicly revise any forward-looking statements to reflect future/likely events or circumstances.

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