IVP Ltd Management Discussions

GLOBAL ECONOMY

The global economic environment remains challenging yet stable. Following modest growth of 3.3% in 2024, the IMF expects global GDP to moderate to 2.8% in 2025 before recovering slightly to 3.0% in 2026. Advanced economies are projected to grow at a subdued pace of 1-1.5%, while emerging markets are expected to expand by around 3.7%. Inflationary pressures are gradually easing, with global headline inflation forecast to decline to 4.3% in 2025, though core inflation remains elevated in many regions. As a result, policy rates are expected to remain high in the near term, with gradual easing anticipated as inflation falls further.

Trade and investment activity continues to face headwinds from heightened tariffs, policy uncertainty, and subdued capital flows. Global trade growth is forecast at just 1.7% in 2025, lagging behind overall economic expansion. While risks persist-including geopolitical tensions and climate shocks-most forecasts indicate the global economy will maintain steady, if restrained, growth.

INDIAN ECONOMY

Indias economy demonstrated notable resilience in FY25, maintaining one of the highest growth rates globally. According to the International Monetary Fund (IMF),

India remained the fastest- growing major economy, supported by robust domestic demand and sustained investment. Economic growth was driven by healthy rural and urban consumption, alongside continued capital expenditure, particularly in infrastructure and manufacturing. Prudent macroeconomic management ensured that inflation remained moderate and foreign exchange reserves stayed at comfortable levels, providing stability in a volatile global environment.

Looking ahead, the outlook remains positive. The IMFs April 2025 World Economic Outlook projects Indias GDP growth at approximately 6.2% in 2025 and 6.3% in 2026. The Reserve Bank of India (RBI) similarly anticipates growth of around 6.5% in 2025-26. By 2025, India is expected to surpass Japan to become the worlds fourth largest economy, according to the IMF, and is on course to achieve a $5 trillion economy by 2027. Even with a slight downward revision of about 0.3 percentage points from early-2025 projections, reflecting global trade risks, Indias growth trajectory is expected to remain significantly above that of other major economies.

COMPANY OVERVIEW

IVP Limited, established in 1929, has evolved from its origins in the Foundry Chemicals sector to become a leading player in Indias industrial chemicals landscape. Initially part of the Tata Group and now under the Allana Group, IVP has built a legacy of innovation and diversification. A landmark development was the 1965 collaboration with Ashland Inc., making IVP the first Indian company to manufacture Foundry Chemicals-an achievement that positioned the Company at the forefront of solutions for both ferrous and non-ferrous foundries.

The Companys portfolio expanded further in 2018 with the introduction of Polyurethane (PU) chemicals, catering to the fast-growing footwear and flexible packaging sectors. Today, IVP operates state-of-the- art manufacturing facilities in Tarapur and Bengaluru, with a combined annual capacity of approximately 50,000 metric tonnes, supporting a broad spectrum of industries including foundry, footwear, composites, insulation, and packaging.

IVPs ongoing commitment to operational excellence is reflected in its focus on quality enhancement, process optimisation, and customer-centric innovation. Strategic initiatives in import substitution underscore the Companys dedication to self-reliance and sustainability, ensuring IVP remains well-positioned to anticipate and meet evolving market needs.

INDUSTRY STRUCTURE AND DEVEI OPMENTS

The foundry chemicals market demonstrated resilience during FY25, with stable demand volumes driven by Indias position as the worlds second-largest producer of castings. However, the sector faced heightened competitive intensity due to the entry of regional players and smaller manufacturers, exacerbating price pressures and margin compression across the industry. Rising input costs- particularly for non-coking coal and pig iron further strained profitability for MSME- dominated foundries.

IVP Limited navigated these challenges by leveraging its six-decade legacy in foundry solutions, prioritising product quality and customer service. In response to persistent margin pressures stemming from heightened competition and volatile raw material prices, the Company is actively exploring opportunities in value-added foundry chemicals.

The footwear chemicals business experienced significant innovation during the year, with manufacturers increasingly prioritising lightweight and environmentally conscious designs. IVP responded proactively by commercialising proprietary low-density polyurethane (PU) formulations that reduce sole weights while maintaining essential durability. This strategic focus on advanced, sustainable solutions has positioned IVP as a key partner in the highly competitive Indian footwear market, where performance and sustainability are critical differentiators.

In the adhesives business, the Company concentrated efforts on the development of robust, all- weather PU adhesive systems tailored to the diverse climatic conditions across India and neighbouring markets. The newly developed adhesive grades deliver enhanced bond strength and durability, meeting the stringent requirements of the flexible film packaging industry. IVPs expanded portfolio now includes a comprehensive range of solventless and solvent- based PU adhesives, supporting a variety of substrates and applications-from food packaging to industrial laminates.

FINANCIAL PERFORMANCE

During the financial year 2024-25, the Company continued to focus on capacity utilization and sales growth. Gross Revenues from operations decreased to Rs. 53,899 Lakhs in the current year from Rs. 54,610 Lakhs year in the previous year. EBIDTA decreased to Rs. 2,878 Lakhs as compared to Rs. 3,086 Lakhs in the previous year mainly due to impact of Provision for Doubtful Debt (Net) of Rs. 633 Lakhs in the current year as compared to Rs. 377 Lakhs in previous year. Profit before tax (PBT) was also lower at Rs. 1,526 Lakhs as compared to Rs. 1,663 Lakhs in the previous year.

Profit after tax (PAT) decreased to Rs. 1,131 Lakhs as against Rs. 1,228 Lakhs in the previous year.

STRATEGIES FOR THE FUTURE

IVP remains focused on launching new product grades in response to evolving customer requirements across all sectors served. The current strategic priority is to enhance utilisation rates within the Foundry, Footwear, and Adhesives Chemicals businesses, thereby optimising production efficiency and meeting market demand more effectively. In parallel, the Company is actively exploring adjacent growth opportunities, with particular attention to the flexible packaging business, which offers promising prospects and the potential for higher margins in alignment with IVPs long-term objectives.

A significant milestone during the year was the successful transition to the SAP S/4HANA Public Cloud platform in October 2024. This implementation was completed on schedule through careful planning and cross-functional collaboration. The adoption of this next-generation ERP system is expected to drive operational efficiency, enable real-time, data-driven decision-making, and enhance customer service capabilities. The move to SAP S/4HANA Public Cloud also marks a strategic step towards digital transformation, offering increased agility, scalability, and real-time insights. As a cloud-based solution, it provides a standardised, best-practice-driven environment, rapid deployment, reduced total cost of ownership, and continuous innovation through regular updates from SAP.

OPERATIONS

The manufacturing facilities at Tarapur and Bengaluru remain dedicated to delivering high-quality products and services. Operational excellence tools have been integrated to standardise processes, ensuring both efficiency and effectiveness. These enhancements have enabled IVP to respond to the evolving demands of its customers while maintaining competitiveness in the market. The adoption of new technologies and automation has resulted in improved production efficiencies, reduced turnaround times, and elevated quality standards.

OPPORTUNITIES, THREATS, RISKS AND CONCERNS

INTERNAL FINANCIAL CONTROL SYSTEMS

IVP continues to uphold a robust internal control system designed to ensure accurate financial reporting, operational efficiency, and regulatory compliance. A comprehensive, risk-based internal audit framework, executed in partnership with an external audit firm, Messrs. Aneja Associates, Chartered Accountants, provide regular evaluation of internal control processes across operational, financial, and compliance domains. During the year, the effectiveness of internal financial controls, including those embedded within SAP, was assessed by the external audit firm. Based on their recommendations for continuous improvement, the Company has further strengthened its control environment by optimising SAP functionalities.

KEY FINANCIAL RATIOS AS ON MARCH 31, 2025

In accordance with SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2015 the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector-specific financial ratios. The Company has identified the following ratios as key financial ratios:

RESEARCH AND DEVELOPMENT

Research and development remains integral to IVPs strategic agenda, underpinning the Companys pursuit of sustainable growth in line with evolving market dynamics. The dedicated R&D team is focused on delivering efficient, customer-centric solutions through continuous product innovation and process optimisation. Cost-efficiency initiatives, including targeted import substitution, are actively pursued to enhance competitiveness. In addition, the development of new product grades remains a priority, enabling IVP to maintain its market edge and broaden its portfolio to address changing customer requirements.

HUMAN RESOURCES

IVP is committed to fostering a high-performing, motivated workforce. During FY25, the Company maintained its emphasis on employee development, offering a range of training programmes across technical, functional, and leadership domains. Special attention was given to the successful implementation of SAP S/4HANA, with targeted ERP training sessions facilitating a smooth transition and adoption across the organisation.

Employee engagement initiatives, including monthly wellness seminars, recognition schemes, and opportunities for cross-functional collaboration, were further strengthened to promote morale and a positive organisational culture. Core HR strategies continued to focus on talent retention, succession planning, and performance-driven reward systems.

As at March 31, 2025, IVP had total 205 permanent staff. Industrial relations remained harmonious throughout the year.

HEALTH, SAFETY AND ENVIRONMENT

IVP remains steadfast in its commitment to providing a safe and sustainable working environment. The Companys facilities at Tarapur and Bengaluru continue to operate under an Integrated Management System (IMS) certified for ISO 9001:2015 (Quality), ISO 14001:2015 (Environment), and ISO 45001:2018 (Occupational Health and Safety). All three certifications were successfully maintained following surveillance audits by an external certification agency during FY25.

The year saw further advancements in process automation and digital safety monitoring, resulting in reduced manual intervention and enhanced incident tracking. Regular safety audits, mock drills, and refresher training sessions reinforced IVPs culture of zero harm.

In line with its sustainability objectives, the Company continued to focus on reducing effluent discharge, minimising energy consumption, and promoting water reuse. IVP remains fully compliant with all applicable safety and environmental regulations and is committed to the ongoing improvement of its EHS performance.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, and expectations may be regarded as "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied. Key factors that could influence the Companys operations include economic conditions affecting demand and supply, price trends in domestic and international markets, changes in government regulations, tax laws, and other statutory provisions.