Kingfa Science & Technology India Ltd Management Discussions

(A) INTRODUCTION

This report addresses the Management views and perceptions of the business considering the current scenario based on the market environment and possible growth opportunities with the visible and imminent headwinds and challenges while analyzing the performance for the year under review. The report also presents the summary of control and countermeasures being initiated and also the Development of Human resources. The report should be read in conjunction with the Director s report to the shareholders, the Financial reports and other notes provided as a part of the annual report.

(B) ECONOMIC SCENARIO

The year 2025-26 is one of mixed events leading to a volatile finish. We saw continuation of geopolitical tensions at multiple locations and newer disturbances evolving in. Hence we can say the year 2025-26 started with a mixed feelings for the entire world. The Southwest monsoon, the one that covers the major parts of India was ahead of schedule and brought cheers all except for Air-cooler and Air-conditioner industries!

The Indian economy maintained strong growth momentum during FY 2025-26, driven by resilient domestic consumption, continued public capital expenditure, expanding manufacturing activity and robust growth in the services sector. Infrastructure development, construction, transportation and logistics remained key contributors to economic activity, while improving rural demand supported consumption across several sectors. Indias growing industrial base continued to drive demand for conventional energy sources even as the country made significant progress in expanding renewable energy capacity through increased investments in solar, wind, bio-energy and green hydrogen. The Governments continued emphasis on energy transition, circular economy, resource efficiency and sustainable manufacturing is expected to create new opportunities for industries while accelerating the adoption of environmentally responsible technologies and materials.

The Ukraine-Russia crisis that began towards the end of the FY 2021-22 continued relentlessly even during 2025-26 and the effect of polarizing nations, sanctions and other measures continued in spite of efforts made for cessation of hostilities. The end of Feb 26 brought in another turmoil in the form of hostilities between US-lsrael combine against Iran. This assumed global significance immediately as the Strait of Hormuz the main pathway for all ships to transit in the Gulf region was under siege. The Oil prices which were maintained within a narrow band till then, quickly surged. It is not just the price surge that affected the Globe, it is the very availability of crude that hit all nations. When the hostilities were also directed at all the Gulf countries and their oil facilities, that sparked a deep concern for everyone alike across the Globe

The customs tariff structure which were increased by the new US Govt continued to hog limelight for most of the year under review. Almost all nations had their share of concerns in this regard. The risk related to different raw materials continued to hover on all nations causing disturbances in pricing, logistics and free availability across the Globe. More than the tariffs, it is the frequent changes on the tariff related matter that brought in uncertainty on the minds of the industry players.

On the exchange rate front, the INR depreciated against the US$ and the depreciating trend was seen throughout the FY 2025-26 with marked increases quarter on quarter due to the continuing uncertainty related to US Tariff issues and the US-lran war that broke out towards the end of the year

The exchange rate which was at Rs.84.57 (average) in FY 2023-24 went up to Rs.88.33 (average) in FY 2025-26 with the peak seen in Q4 of FY 2025-26 at Rs.91.45 (average).

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The crude prices declined during the first three quarters of the year. Compared to the peak of US$ 89.94/barrel witnessed in the previous year, the current year the peak till Feb 26 was only US$ 71.44/barrel that too in the beginning of the year in May 25. But with the US-lran war erupting on 28th Feb 26, the oil prices zoomed from US$72.87 witnessed on 27th of Feb 26 to a peak of US$112.19 on the 20th of Mar 26. The average price for Mar 26 ended up at US$103.13 per barrel as the war was still raging on. This sudden increase resulted in all petrochemical manufacturers rushing to safeguard their supplies in order to protect against disruption in their manufacturing. This in turn caused prices of petrochemical based output, especially the polymers, both commodity as well as specialty polymers, to new peak levels within a narrow span of a few weeks. Only the cessation of war in the gulf region can bring the prices of oil down as we entered the financial year 2026-27

Brent Crude Orl Prices 2025-26 (US$/8arrel)

Indias GDP expanded by 7.7% for the financial year 2025-26 (FY 26), outperforming initial market predictions and government estimates. This growth establishes India as the fastest-growing major economy in the world, with its total nominal economy reaching $4.15 trillion.

By the year 2028 itself, we are likely to surpass Germany in terms of GDP as per IMF. It is also a pride for us all to note, the first quarter of FY 2025-26, the Indian economy saw a reduced nominal GDP growth rate of 6.8% but the subsequent quarters showed increases and the Q4 estimate is at 7.8%.

Overall, we can say that Indian Economy continues to be resilient and continued it s robust growth throughout the year in spite of the geo-political tensions in the other parts of the Globe.

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Towards the end of the year, when the war broke out between US-lsrael & Iran, the geo-political situation entered a very volatile phase and the World is waiting for the same to normalize and return to predictable business environment. The sudden shock by way of blockage of Hormuz strait, the main pathway for shipping liners to transport oil, disturbed the entire globe and initiated a major energy crisis. Every nation that depends on oil from the gulf region went through and going through a tough challenge to manage their oil needs to keep running.

(C) INDUSTRY STRUCTURE AND DEVELOPMENTS

During the year under review, the industries in general, especially in the first eight months, did reasonably well in spite of sluggishness witnessed in few segments as a result of continuing geo--political conflicts and the tariff related concerns. Manufacturing growth was robust in the first half of the year but started showing strain the third quarter only to recover in the early part of quarter 4. However as the war broke out between US-lsrael and Iran on 28th Feb 2026, the entire industrial scenario went into a freeze with no clarity on how the geo-political conflict will end. It was indeed a major disturbance to the smooth sailing, recovering industrial sector and experts predict a long lead time for the industrial sector to revive from this disturbance.

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Dec 2025

PMI hit two year htw at Dee 25

Indias manufacturing sector remained resilient during FY2025-26, with the HSBC Manufacturing PMI averaging 57.3, broadly in line with the previous years 57.4. Manufacturing activity stayed in expansion territory throughout the year, reflecting sustained domestic demand and healthy industrial activity. The first half of FY2025-26 recorded particularly robust momentum, with PMI readings consistently above 58 and peaking at 59.3 in August. However, growth moderated during the second half, with the index easing to 53.9 by March 2026, indicating a slowdown in the pace of expansion amid evolving global and domestic economic conditions. Despite this moderation, the PMI remained above the neutral threshold of 50 throughout the year, underscoring the continued resilience of Indias manufacturing sector.

The Index of Industrial Production (IIP) registered cumulative growth of approximately 4.1%, marginally higher than the 4.0% recorded in FY2024-25. Manufacturing remained the principal driver of industrial expansion, supported by robust domestic demand, infrastructure spending and continued investment in capital goods. While growth moderated at times due to softer external demand, commodity price volatility and mining sector weakness, the industrial sector maintained positive momentum throughout the year. Together with the HSBC Manufacturing PMI, which remained firmly above the expansion threshold of 50, the IIP reflects a manufacturing sector that continued to grow on the back of resilient domestic fundamentals, albeit at a measured pace.

Household expenditure on the purchase of vehicles constitutes approximately 3% of Indias Private Final Consumption Expenditure (PFCE). While this represents a relatively small share of total consumer spending, the automobile sector has a disproportionately high economic multiplier owing to its extensive linkages with industries such as plastics, polymers, steel, rubber, electronics and auto components. Consequently, sustained growth in vehicle sales continues to be an important driver of manufacturing activity and industrial demand in India.

Indias automobile industry maintained strong growth momentum during FY 2025-26, with total vehicle production reaching a record 34.71 million units, an increase of 11.8% over the previous year and 53.2% higher than FY 2020-21. Growth was broad-based across all vehicle segments, led by robust performance in passenger vehicles, commercial vehicles and three-wheelers, while two-wheelers continued to account for nearly three-fourths of total production. The passenger vehicles registered a modest growth of 9.4% compared to 3.3% in the previous year. The two wheelers registered a Year-on-Year growth of 11.8% which is just 0.5% higher than that of the previous year.

The sustained increase in automobile manufacturing reflects resilient domestic demand, continued infrastructure development, improved consumer confidence and supportive government policies. These trends are expected to provide a favourable demand outlook for the plastics and polymer industry, given the increasing use of lightweight and high-performance polymer components across modern vehicles.

In FY 2025-26, India further strengthened its position as a global automotive manufacturing hub. The country remained the worlds largest tractor manufacturer, the second-largest producer of two-wheelers and buses, the third-largest manufacturer of heavy trucks, the fourth-largest producer of passenger vehicles, and continued to be among the leading manufacturers of commercial vehicles globally.

Indias automotive industry continues to be a key pillar of the countrys manufacturing growth, supported by government initiatives such as Make in India, Atmanirbhar Bharat, the Production Linked Incentive (PLI) Scheme for Automobiles and Auto Components, the PM E-Drive programme, and the ongoing development of the Automotive Mission Plan (AMP) 2047.

These initiatives aim to strengthen Indias global competitiveness, promote advanced and sustainable mobility, enhance domestic value addition, and position the country as a leading global hub for automotive manufacturing, innovation and exports

AUTOMOTIVE INDUSTRY IN INDIA PRODUCTION TREND

Category	2020-21	2021-22	2022-23	2023-24	2024-25	2025-26
Passenger Vehicles	30,62,280	36,50,698	45,87,116	49,01,840	50,61,164	55,39,115
Commercial Vehicles	6,24,939	8,05,527	10,35,626	10,67,504	10,34,947	11,70,150
Three Wheelers	6,14,613	7,58,669	8,55,696	9,96,159	10,50,020	13,00,805
Two Wheelers	1,83,49,941	1,78,21,111	1,94,59,009	2,14,68,527	2,38,83,857	2,66,91,916
Quadricycles	3,836	4,061	2,897	5,006	6,488	6,998
Grand Total	2,26,55,609	2,30,40,066	2,59,40,344	2,84,39,036	3,10,36,476	3,47,08,984

All Figures in Numbers Source: siam.in

The Indian automobile industry continues to exhibit cyclical characteristics, although the degree of cyclicality varies across vehicle segments. Demand for commercial vehicles remains closely linked to economic activity, infrastructure spending and freight movement, while tractor sales continue to be influenced by agricultural performance, monsoon conditions and rural incomes. Passenger vehicles and two-wheelers are comparatively less cyclical, with demand being driven by rising disposable incomes, urbanization, consumer preferences, financing availability and replacement demand. The industry is also undergoing a structural transformation led by electrification, increasing localization, stricter emission and safety regulations, and rapid technological advancements. While global trade uncertainties, geopolitical developments and supply chain risks continue to pose challenges, Indias strong macroeconomic fundamentals, supportive government policies and growing domestic demand are expected to sustain the long-iterm growth trajectory of the automotive industry.

(D) COMPANY PERFORMANCE

Indian industry demonstrated broad-based resilience during FY 2025-26, supported by robust domestic demand, sustained public infrastructure investment, healthy manufacturing activity and the continued strength of the services sector. Although global trade uncertainties, geopolitical developments and supply chain disruptions affected certain industries, Indias strong macroeconomic fundamentals enabled most sectors to maintain positive growth. Nevertheless, the performance of each industry continued to be shaped by its own demand drivers, cost structures, regulatory environment and competitive dynamics. Your Company was no exception, and its performance reflected the opportunities and challenges prevailing in the polymer and manufacturing sectors during the year.

l) Operations

As we point out every year, our company has always been ahead of the growth curve so that we are in the forefront, be it technology, or service or manufacturing excellence. Our manufacturing facility at Chakan near Pune, continued to be strengthened with addition of capacity with new compounding lines added. As we informed in the previous year, the plant 1 is completed with all necessary lines already erected. The plant 2 was added in the previous year with 2 lines. Further 3 more lines of varying capacity were added during the year. This plant is mainly developed as a production center for Engineering plastics.

As part of Plant 2, a state of the art line for manufacture of long Glass fiber reinforced compounds was commissioned during the year and is now fully operational producing advanced compounds for Auto industry requirements. We now have slots to be filled for 6 more lines, which will happen in the coming financial year.

As in the previous years, your team continued to localize more and more Engineering plastics compounds reducing the lead time for the customers and a premium local choice. The addition of LFT line has further strengthened the capability of your company in offering advanced material solution for the industries in India. It is also imperative to state here that the efficiency of the manufacturing activities to enhance productivity is continued to be given the top priority so that your company sets standards in minimizing cost of conversion and a trend setter in operational efficiency.

We are extremely happy to inform you that your company has inaugurated a new compounding plant at Bhiwadi in Rajasthan which will enhance supply position to all our customers in the northern region. This plant, on commissioning, has a capacity for compounding of 40,000 MTPA to start with. After obtaining all necessary approvals from OEMs, this new plant will further undergo expansion with existing machineries at Manesar plant getting relocated to this plant effectively enhancing the capacity to 60,000 MTPA. The Bhiwadi plant is also equipped with a good testing laboratory to support customers

The relevance of World class testing facilities is crucial to developing compounds for demanding applications in automotive as well as Appliances. Your company s NABL accredited lab at Chakan plant, continued to add new high-end test equipments in this direction to be armed with the best-in class instruments for the benefit of customers. Notable among the new additions are the multi-axial impact tester and Universal Testing Machine (UTM) with provisions for testing at elevated as well as sub-zero temperatures. Such high-end testing of components for their long-term performance as well as safety requirements for which the Indian OEMs depended on foreign test labs can now be carried out within India within short notice at Kingfa lab. Multiple customers have visited your company s lab and expressed satisfaction after witnessing the testing programs

The existing technical center at Pondicherry plant underwent transformation in the laboratory setup with inclusion of latest analytical test instruments and facilities to test UL approved grades.

The nine dedicated lines for laboratory scale and pilot scale production of new compounds to help technical teams in development activities are yielding results for the company by quickening the lead-time of product development to support our customers.

The government of India made BIS Certification approval mandatory for all polymers, for both locally manufactured and for imports a year back. However the mandate was removed during the year due to policy changes. Your company had already obtained BIS approval for ABS, PP, PE and PC compounds. With a view to maintain the standard of the products manufactured, your company decided to continue to keep the license alive and continue all required periodical testing and documentation. This will keep the confidence of our customers alive as the BIS license is in force.

We are proud to intimate you all on your company successfully filing nineteen more patents related to polymeric compounds during the year. Your technical team has now filed a total of 23 patents so for and working towards many more patents in the coming years. The continuous development work carried out by the technical team will make Kingfa India a torch bearer of innovation in polymeric compounds in India

Your company continued to localize specialty compounds which are high value orders through technology transfer from the parent company. Notable among them are the Laser markable compounds in PC and bio-composites using plant origin raw material for auto parts.

In the previous year we saw the raw material prices showing ups and downs throughout the year. The current year saw stability for most of the year and then exploded in the year end due to geo-political conflicts. The very availability of petro based raw materials became a question mark with the closure of Hormuz strait. Your company managed to ensure timely availability of all the raw materials and made sure that customer supplies are maintained without any disturbance. It is to the credit of the entire team members that your company managed the crisis very well and supported customers. The logistics cost remained at manageable level during the year. The geo-political conflict towards the end of the year pushed the logistics cost up.

We continue to take support of our principals in creating multiple and alternate options to have a greater control on key RM prices and availability. The group companies supported us at critical times supplying us the right materials at the right time. The supply base continued to be expanded to minimize the risks and to have better control. This year also key suppliers from India were invited to Kingfa Global supplier meet and given opportunity to learn about global Kingfa policies and initiatives.

Inventory management both at RM and FG level posed challenges in view of the unpredictability seen in customer off-take patterns and the geo-political situation. The internal team managed it well with continuous monitoring, realigning supply route/ transportation, developing alternate vendors and continually engaging in improvement work

Sustainability is the watch word in the industries everywhere these days. As Green initiatives take precedence over other conventional options, the need for conserving energy and directing our focus on sustainable options/solutions is inevitable. Your company is also looking into sustainable solutions as we move forward towards becoming carbon neutral for all Kingfa units by 2050 as stated earlier. Options are being explored for creating an eco-system for use of recycled inputs to support OEMs and their customers in their green initiatives.

1. Marketing Initiatives

Your company actively participated and organized seminars through industry associations like Indian Plastics Institute, Polymer Update, Elite Plus and AIPMA to keep in touch with existing and potential customers as in the past to keep the engagements alive. Technical lectures focusing on newer technologies, newer material solutions and green Initiatives were presented to the industry participants which helps in widening our circle of association in the industry/OEMs and to make the participants from industries aware of our new product launches and tailor made solutions. Your company participated and put up a stall in the RACE 2025 trade fair held at Mumbai to showcase it s process on being a successful material solution provider

With Kingfa India establishing itself as one of the leading manufacturers of engineering plastics in India gaining significant foothold in PA, PBT, PC, ABS, HIPS, SAN and blends & alloys, addition of new applications and new customers in newer segment continue to be the focus area for the Sales & marketing team. As in the previous years, your company continued to take significant share for engineering plastics in the appliances sector especially in the washing machines, coolers and Air-conditioners and continue to add more and more customers in other segments as well. In the Electrical & electronics segments, the focus is on both global and local players with suitable products offered locally for the manufacture of MCBs, connectors and other electrical parts. The newly commenced LFT plant helped in localizing some of the imports with India made compounds. OEMs and customers have now a dependable partner in the form of Kingfa for localizing their engineering plastics need.

The share of Electric Vehicles in the overall Passenger Vehicles is on an increasing trend with basic infra-structure for charging the vehicles getting established country-wide. More and more Auto OEMs have now EV offerings for the benefit of customers. Your company continues to conduct in-house workshops at the campus of the leading Vehicle makers to make them aware of the products and services that Kingfa can offer for them to support them in their innovations and sustainability efforts and show-casing the new offerings for EV segment developed at Kingfa

2. Human Resources & Industrial Relations

Your company is honored to state that the morale of all the employees continues to be high during the year under review. As is the practice followed in earlier years, the technical, marketing, operations, finance, sourcing and other internal teams were strengthened with the addition of a mix of new hands through campus interviews conducted at leading institutions across India. The number of institutions covered for campus interview was enhanced this year in order to get talents from across different cultural background.

The members of the sales, technical and internal teams visited our HQ at China and underwent training on the latest trends in Polymers and how new applications were added to Kingfa basket apart from training related to trade nuances and system requirements. The members of the Sourcing team were given opportunity this year also to be part of the Supplier conference held at China for the suppliers of all Kingfa facilities. The training program also included sessions on imparting the Kingfa Culture with a view to make Kingfa team members feel as one united family in line with our corporate slogan One Team, One Dream .

The Companys overseas business development initiatives continued to gain momentum during the year, with the international team successfully translating business opportunities into commercial supplies, thereby supporting the continued growth of exports from India. Focus remained on building a strong pipeline of prospective projects across key overseas markets, laying the foundation for sustainable long-term growth.

The Companys continued engagement with multinational customers establishing manufacturing operations in India represents a strategic investment in future business. Early involvement with such customers is expected to translate into meaningful commercial opportunities as their manufacturing facilities become operational. To further strengthen its international footprint, the Company deputed members of its Indian sales team to South Africa and Morocco, reinforcing customer relationships and supporting business development initiatives in these important markets.

The permanent employees on the rolls of the company stood at 294 as of 31 st March 2026

3. Business Opportunity

The Companys strategy of consistently growing ahead of industry trends by proactively pursuing emerging business opportunities, while making sustained investments in people, technology, state-of-the-art infrastructure, capabilities and capacity ahead of market demand, has once again proved its effectiveness. This forward-looking approach has enabled Kingfa to achieve benchmark growth and further strengthen its leadership position in the polymer compounding industry. We are supremely confident that this objective would put us in the right place to fully capitalize on the upswing in manufacturing growth in India in the coming years as the concept ofViksit Bharat - Developed India resonates.

Your company s focus on export is yielding results. Exports to South Africa and Thailand were well established and exports to Morocco and Egypt started during the year.

The Company continued to successfully secure homologation approvals from Indian OEMs for polypropylene and engineering plastics grades developed by Kingfa in China and other overseas operations, thereby facilitating the introduction of globally proven materials into the Indian market. During the year, the newly established NABL-accredited laboratory at the Pune facility emerged as a key differentiator, receiving widespread appreciation from customers and OEMs. The state-of-the-art testing and validation facilities demonstrate the Companys strong technical capabilities and its commitment to providing comprehensive product development and application support. Customer visits to the laboratory have further reinforced confidence in the Companys technical expertise, quality standards and ability to partner with customers in developing innovative material solutions.

(E) RISKS AND CONCERNS AND THREATS

The exposure of the Company to various types of risks is detailed below along with the strategy employed to manage / mitigate the same. Your company goes through a formal risk assessment process with the help of HQ in order to identify various risk factors and to mitigate the same. It is also reviewed by the Risk Management Committee

Business risks

The Company operates in an increasingly dynamic and competitive business environment where performance is influenced by macroeconomic conditions, industry cycles, customer investment trends, technological developments and changing market dynamics. Recognising these challenges, the Company has adopted a diversified business strategy focused on expanding its presence across multiple end-use industries, broadening its portfolio of value-added products and strengthening its customer base. This approach has enhanced the Companys resilience by reducing dependence on any single market segment while enabling it to respond effectively to changing customer requirements and emerging growth opportunities. Backed by sustained investments in innovation, technical expertise, manufacturing excellence and market expansion, the Company remains well positioned to manage business risks and create long-term value for all stakeholders.

Financial Risks

The Company operates in an environment where financial risks arising from fluctuations in raw material prices, working capital requirements, interest rates and market conditions are an inherent part of business. These risks are continuously monitored through a well-defined financial risk management framework, enabling timely decision-making and effective mitigation.

The Company maintains a disciplined approach towards working capital management through continuous monitoring of inventory and receivables to optimise cash flows and improve capital efficiency. Lean inventory practices, supported by agile planning and close coordination with customers, enable the Company to respond effectively to changing market conditions while maintaining high service levels. Use of SAP has significantly enhanced real-time visibility of key financial and operational parameters, facilitating informed and timely business decisions.

As the Companys principal raw materials are derivatives of crude oil, input costs are inherently subject to fluctuations in global crude oil prices and foreign exchange movements. To mitigate these risks, the Company adopts a prudent sourcing strategy by leveraging multiple suppliers, diversified procurement channels and robust demand forecasting. Strategic procurement decisions are taken after careful evaluation of market trends and risk factors to optimise procurement costs and ensure continuity of supply.

The Company also continues to optimise its financing costs through efficient treasury management and prudent utilisation of funding support from its global operations. Continuous focus on receivables and payables management, supported by periodic credit reviews and disciplined collection processes, has helped maintain a healthy working capital cycle and minimise credit risk.

Overall, the Companys strong financial discipline, robust internal controls and proactive risk management practices continue to support its operational resilience and long-term sustainable growth.

Commodity Price Risks

The Company is exposed to fluctuations in the prices of polypropylene, engineering plastic resins and other petrochemical-based raw materials, which are influenced by global crude oil prices, supply-demand dynamics and geopolitical developments. As these raw materials constitute a significant component of the Companys input costs, commodity price volatility remains an inherent business risk.

However, as the Company is an indirect consumer of these commodities and primarily operates on a value-added compounding business model, it has historically been able to pass on a substantial portion of raw material price fluctuations to customers, albeit with a time lag. Consequently, while short-term volatility may have an impact on margins and working capital, it has not had a material impact on the Companys profitability over the medium to long term.

To mitigate commodity price risks, the Company follows a prudent procurement strategy based on continuous monitoring of market trends, diversified sourcing, demand forecasting and inventory optimisation. Strategic procurement decisions are taken after careful assessment of prevailing market conditions and anticipated price movements to ensure continuity of supply while minimising the impact of price volatility.

Foreign Exchange Risks

The Company is exposed to foreign exchange risk arising primarily from the import of key raw materials, capital equipment and other foreign currency denominated transactions. Exchange rate fluctuations may have an impact on input costs, working capital requirements and profitability. The Company, therefore, follows a structured foreign exchange risk management framework to minimise the adverse impact of currency volatility.

The Companys foreign exchange management policy is guided by the following objectives:

(i) To minimise the Companys exposure to foreign currency fluctuations through prudent treasury practices, thereby reducing the potential impact on earnings and cash flows.

(ii) To provide a stable planning environment by managing foreign exchange exposures relating to both short-term operational requirements and long-term business commitments through appropriate risk mitigation strategies.

(iii) To progressively create a natural hedge by expanding export markets and increasing foreign currency earnings. The Companys growing export business across Asia, Africa, Europe and other international markets provides a partial offset to import-related foreign exchange exposures, thereby reducing the overall currency risk.

The Company continuously monitors foreign exchange markets and, wherever considered appropriate, seeks professional treasury advice to adopt suitable strategies in line with its risk management policy. The objective is to protect the Companys financial performance while retaining adequate flexibility to respond to changing market conditions.

Credit risk

The Company is exposed to credit risk arising primarily from trade receivables and, to a lesser extent, from deposits with banks, foreign exchange transactions and other financial instruments. Credit risk represents the possibility of financial loss resulting from a customers or counterpartys failure to fulfil its contractual obligations.

The Company has established a robust credit risk management framework comprising customer credit evaluations, defined credit limits, continuous monitoring of receivables and periodic review of customer creditworthiness. Credit exposure is diversified across a broad customer base and industry segments, thereby minimising concentration risk.

Receivables are regularly monitored through a structured review mechanism, and appropriate corrective actions are initiated promptly in respect of overdue accounts. The Company also deals predominantly with reputed customers and maintains banking relationships with well-established financial institutions, thereby reducing counterparty risk.

Supported by disciplined credit management practices and robust internal controls, the Company continues to maintain healthy collection efficiencies while keeping credit risk within acceptable levels.

Asset protection

The Company has established comprehensive measures to safeguard its physical and financial assets against potential risks. All significant assets are adequately insured against insurable risks based on current replacement or reinstatement values, as appropriate. The adequacy of insurance coverage is reviewed periodically in consultation with independent professional advisors to ensure that it remains aligned with the Companys asset base and evolving business requirements.

In addition to physical asset protection, the Company continuously strengthens its internal control systems, preventive maintenance practices and risk management processes to safeguard its assets and ensure operational continuity.

(F) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established a comprehensive internal control framework designed to ensure the orderly and efficient conduct of its business, safeguard its assets, optimise the utilisation of resources, ensure the reliability of financial and operational information, and maintain compliance with applicable laws, regulations and internal policies.

The effectiveness of the internal control systems is periodically evaluated through an independent internal audit conducted by a reputed professional audit firm. The scope of the audit encompasses the adequacy and effectiveness of internal controls, compliance with established policies and procedures, operational efficiency and risk management practices. The audit findings, together with managements responses and corrective action plans, are reviewed on a regular basis to ensure timely implementation and continuous improvement.

The Audit Committee of the Board of Directors provides continuous oversight of the Companys internal control environment. It periodically reviews the internal audit reports, the adequacy of internal financial controls, the implementation of corrective actions and the overall effectiveness of the Companys risk management and governance processes in accordance with the requirements of the Companies Act, 2013, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other applicable statutory requirements.

(G) OUTLOOK

The long-term outlook for the Indian polymer compounding industry continues to remain positive, supported by strong domestic consumption, sustained infrastructure development, increasing manufacturing activity and favourable government policies aimed at strengthening the countrys manufacturing ecosystem. Growth in the automotive, electrical & electronics, consumer appliances, infrastructure, healthcare and other engineering sectors is expected to continue driving demand for high-performance polymer compounds.

The Company expects sustained growth in demand from the automotive industry, particularly from passenger vehicles, commercial vehicles and electric vehicles. The increasing emphasis on lightweighting, enhanced performance, improved safety and sustainability is expected to accelerate the adoption of advanced polypropylene compounds and engineering plastics. The Company is actively engaged with leading automotive OEMs and component manufacturers in developing innovative material solutions for both internal combustion engine (ICE) and electric vehicle (EV) platforms, positioning it well to benefit from these emerging opportunities.

The transition towards electric mobility presents significant long-term growth prospects for specialised polymer compounds used in battery systems, electrical and electronic components, lightweight structural parts and thermal management applications. The Company continues to invest in product development and technical capabilities to strengthen its position as a preferred material solutions provider to the rapidly expanding EV ecosystem.

The capacity expansion currently being undertaken is aligned with the Companys longiterm growth strategy and is expected to enhance its ability to meet increasing customer requirements while supporting future business opportunities. Continued investments in manufacturing excellence, technology and technical capabilities will further strengthen the Companys competitive position.

The Company also remains focused on improving operational efficiency through disciplined working capital management, optimisation of inventory and receivables, enhanced supply chain planning and continuous process improvements. These initiatives are expected to improve asset utilisation, strengthen cash flows and contribute to improved profitability.

While the automotive industry continues to be an important growth driver, the Company remains committed to broadening its presence across diversified end-use industries, including electrical and electronics, consumer appliances, power tools, infrastructure, batteries, pipes, industrial equipment and other engineering applications. Continued expansion of its engineering plastics and specialty materials portfolio is expected to further reduce dependence on any single industry segment while creating new avenues for sustainable growth.

Overall, the Company remains optimistic about its growth prospects. Indias strong macroeconomic fundamentals, rising domestic consumption, expanding manufacturing base, increasing investments in infrastructure and continued policy support under initiatives such as Make in India and Atmanirbhar Bharat provide a favourable environment for long-term industrial growth. With these structural drivers in place, the Company is well positioned to capitalise on emerging opportunities and deliver sustainable value to all stakeholders.

(H) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During FY 2025-26, the Company witnessed growth in its business operations supported by higher business volumes, capacity enhancement, continued demand across automotive and non-automotive applications. These operational factors contributed to the increase in Revenue from Operations from Rs1,744.69 Crores in FY 2024-25 to Rs1,995.55 Crores in FY 2025-26.

The increase in business volumes and expansion of operations resulted in corresponding changes in raw material and other operating costs. The Company continued to focus on efficient sourcing, inventory management, productivity improvement and cost optimisation to manage the impact of input costs.

The Companys continued focus on manufacturing capabilities, product development and operational efficiencies, together with improved business volumes and product mix, supported profitability. Consequently, PBT increased from Rs206.08 Crores to Rs249.91 Crores and PAT increased from Rs152.86 Crores to Rs185.26 Crores.

Overall, the Companys financial performance during FY 2025-26 reflects the positive impact of its operational initiatives, including capacity enhancement, customer development and operational efficiency.

(I) SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS AND RETURN ON NET WORTH

As per the Listing Regulations, details (i.e. change of 25% or more as compared to the immediately preceding financial year) in key financial ratios, along with explanations therefor, are given below:

Particulars	Current Year	Previous Year	Variance (%)
Debtors Turnover	4.07	4.10	(0.79)
Inventory Turnover	4.86	4.96	(2.09)
Interest Coverage Ratio	103.69	33.10	213.26
Current Ratio (1)	4.06	2.02	100.99
Debt-Equity Ratio (2)	0.01	0.06	(81.35)
Operating Profit Margin (%)	9.19	8.71	5.51
Net Profit Margin (%)	9.30	8.72	6.60
Debt Service Coverage Ratio (3)	32.73	85.51	(61.72)
Working Capital Turnover Ratio (4)	1.92	4.04	(52.39)
Return on Capital Employed (5)	17.90%	27.51%	(34.94)
Return on Investment (6)	8.39%	6.35%	32.02

* The increase in the ratio is primarily driven by funds raised during the current year, which led to higher cash and bank balances as well investments in fixed deposits.

* The short-term loans were fully repaid during the current year, and consequently, no borrowings remain outstanding at year-end. This repayment has resulted in a decrease in the current ratio compared to the prior year.

* The ratio was affected by the increase in principal repayments during the year, as borrowings were fully repaid.

* The ratio decreased due to a increase in working capital, as current assets rose mainly from funds raised during the year.

* Capital employed has increased during the current year mainly due to higher cash and bank balances and fixed deposits arising from the fund raise undertaken during the year.

* The increase in returnon investment during the current year is primarily attributable to higher investments in fixed deposits, resulting in increased interest income

For further details relating to the aforesaid ratios, including the basis of computation, comparative figures, changes during the financial year and the reasons for significant changes, if any, stakeholders may refer to Note 40 to the Financial Statements forming part of the Financial Results. The said Note also provides details of other financial ratios, as applicable, and the corresponding explanations for the changes therein.

Cautionary Statement

Statements in the Management s Discussion and Analysis Report describing the Company s projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that would make a difference to the Company s operations include demand-supply conditions, raw material prices, changes in Government regulations, tax regimes, economic developments within the country and other factors such as litigation and labour negotiations.