Lords Chloro Alkali Ltd Management Discussions

Cautionary Statement

The statement made in this report describing the Companys expectations and estimations may be a forward looking statement within the meaning of applicable securities laws and regulations. Actual results may differ from those expressed or implied in this report due to the influence of external and internal factors which are beyond the control of the Company.

1. ALKALI INDUSTRY OVERVIEW

The chlor-alkali sector constitutes a foundational segment of the global chemical industry, producing core components such as caustic soda, chlorine, and soda ash that underpin a vast array of downstream processes. From pulp and paper bleaching to water treatment disinfection, these high-value chemicals enable critical industrial operations while driving significant economic activity.

Asia-Pacific dominates the global chlor-alkali market, capturing the largest revenue share of approximately 36% in 2025, with India expected to grow at one of the fastest CAGRs of 8.5% through 2035. North America maintains the second-largest position in the global chlor-alkali market.

The global chlor-alkali market was valued at approximately USD 59.20 billion in 2025 and is projected to reach USD 85.80 billion by 2033, growing at a CAGR of around 4.75% during the forecast period 2026 2033.

India is witnessing a significant rise in the demand for chlorine and caustic soda, driven primarily by the expansion of PVC and alumina production. PVC is extensively utilized in construction, agriculture, and infrastructure, especially for pipes, cables, and fittings. With government initiatives such as “Housing for All” and infrastructure modernization, domestic PVC manufacturing is growing, consequently increasing chlorine consumption an essential raw material in PVC production. Similarly, alumina refining, vital for the aluminium industry, consumes large quantities of caustic soda. Indias alumina production is expanding to meet rising domestic and export demand for aluminium, particularly in sectors like transportation, packaging, and renewable energy. As a result, caustic soda consumption has surged across major alumina-producing states, such as Odisha and Andhra Pradesh. Furthermore, the growing focus on self-reliance and import substitution in both PVC and aluminium sectors is likely to sustain this trend. Asia-Pacific dominates the global caustic soda market, commanding approximately 53 65% of global volume in 2025 and growing at a CAGR of 5.91% through 2031 (Mordor Intelligence). India is among the fastest-growing markets in the region. North America maintains the second-largest position

globally.

The global caustic soda market was valued at approximately USD 47.99 billion in FY2025 and is forecast to reach approximately USD 50.36 billion in FY2026, reflecting a CAGR of approximately 4.56 4.93% over the forecast period through 2033. Longer-range projections from leading research firms place the market between USD 71 74 billion by 2033 34 (Grand View Research; Precedence Research). Global volume demand stood at approximately 85.92 MMT in 2025 and is projected to grow to 98.90 MMT in 2026, and further to 121.42 MMT by 2031, at a CAGR of approximately 4.19% (Mordor Intelligence, January 2026).

Rapid urbanization, growing population and disposable income in developed and developing economies are considered as the key factors to generate numerous opportunities for the global chlor-alkali market.

Consumption of caustic soda for individual packaging solution is expected to boost the global Chlor-

alkali market in the upcoming forecast.

Present annual capacity of caustic soda in India reached approximately 4.18 million metric tonnes (MMT) in 2025, with the country maintaining its position as one of the top producers globally after China and the US. Indias caustic soda market is expected to grow at a CAGR of 5.50% between 2026 and 2035, reaching a demand volume of 7.14 MMT by 2035. Domestic production capacity continues to grow at approximately 9% CAGR, while domestic demand lags at around 4 5% CAGR, resulting in a capacity utilization range of 70 80% and a growing export surplus. This capacity addition exceeding demand growth has resulted in increased exports of caustic soda, with a trade surplus in the last three years.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS

The alkali industry, primarily the chlor-alkali sector, is a major player in the chemical industry, producing essential chemicals like caustic soda, chlorine, and hydrogen. These chemicals serve as crucial components in various other industries, including textiles, paper, PVC, water treatment, and more. The industrys structure is characterized by a relatively large number of plants, with a significant portion of capacity concentrated in Western India. Growth in the alkali industry is closely linked to the overall economic growth and industrial development of a region.

Structure of the Alkali Industry

Chlor-Alkali Sector:

This is the core of the alkali industry, producing chlorine, caustic soda, hydrogen, and hydrochloric

acid.

Key Products:

Caustic soda is a major product, finding applications in diverse sectors like pulp & paper, alumina,

textiles, and more.

Geographic Concentration:

A significant portion of Indias chlor-alkali capacity is located in Western India, particularly in

Gujarat

Development and Growth:

Dependence on Industrial Growth:

The demand for alkali chemicals is directly tied to the growth of downstream industries like

textiles, paper, and construction.

Impact of Economic Cycles:

The industry experiences cyclical downturns and upturns, often influenced by global and regional

economic conditions.

Technological Advancements:

Membrane cell technology is gaining prominence due to its energy efficiency and reduced

environmental impact compared to older technologies.

Market Drivers:

Factors like infrastructure development, urbanization, and increasing industrial production fuel

the demand for alkali chemicals.

3. OPPORTUNITIES AND THREATS

The Indian alkali industry, primarily focused on caustic soda and soda ash, presents a mix of opportunities and challenges. Following are some of the Opportunities and Threats in Alkali Industries.

OPPORTUNITIES

Growing Demand:

The global chlor-alkali market is experiencing steady growth, driven by increasing demand for its

key products, caustic soda and soda ash, in various industries.

Alumina Industry Growth:

The alumina industry, a major consumer of caustic soda, is predicted to grow significantly, further

boosting demand for chlor-alkali products, according to a market report.

Expanding Applications:

Besides alumina, chlor-alkali products are essential inputs for a wide range of industries,

including chemicals, paper, textiles, and water treatment, offering further avenues for growth.

Focus on Sustainability:

The shift towards membrane cell electrolysis, a more environmentally friendly technology, is

creating opportunities for innovation and investment in sustainable production processes.

Threats:

High Energy Consumption:

The chlor-alkali process is energy-intensive, making it vulnerable to rising energy costs and

impacting profitability, particularly in regions with high electricity prices.

Environmental Regulations:

Stringent environmental regulations, especially those phasing out mercury-based processes, are

pushing the industry towards more sustainable but also more costly technologies.

Volatile Raw Material Prices:

Fluctuations in the prices of sodium chloride and other raw materials, along with supply chain

disruptions, can significantly impact production costs and profit margins.

Competition from Imports:

The chlor-alkali industry faces competition from cheaper imports, requiring it to focus on cost-

efficiency and technological advancements to remain competitive.

Environmental Concerns:

The industrys environmental footprint, including mercury emissions and high energy consumption,

continues to be a major concern that needs to be addressed through sustainable practices

Waste Management:

Disposal and management of byproducts like red mud, which can be environmentally hazardous,

pose a challenge for the industry.

Corrosion and Moisture:

The produced gases, chlorine and hydrogen, can cause corrosion issues during storage and

transportation if not properly managed.

4. SEGMENT WISE OR PRODUCT-WISE PERFORMANCE

The Company is operating in only one segment i.e. Chloro Alkali. The company was able to achieve a production of 84,996.90 M.T (Metric Tons) of Caustic soda during the year. The turnover of the company was Rs. 39013.70 lakh for the year against Rs. 27022.23 lakh for the previous year. The profitability of the Company has taken a significant jump to Rs.2848.67 Lakh from Rs. 618.06 Lakh.

5. OUTLOOK

As we look ahead, the Company is well-positioned to capitalize on its strategic capacity expansions and sustainability initiatives. In FY25, we successfully completed the addition of 90 TPD caustic soda capacity, taking our total installed capacity to 300 TPD, and commissioned a 16 MW solar power plant. Building on this momentum, in FY26, the Board approved an ambitious Rs. 165 crore strategic capex plan.

Global volume demand is forecast to grow from approximately 98.90 MMT in 2026 to 121.42 MMT by 2031 at a CAGR of 4.19%. Alternative forecasts project global market value reaching USD 74 billion by 2034 and as high as USD 105 billion by 2035, reflecting broad consensus on sustained structural demand growth. Key demand catalysts include: alumina and aluminium production in Asia-Pacific; pulp and paper expansion in Southeast Asia and South America (estimated 5.19% end-use CAGR); water and wastewater treatment aligned with Jal Jeevan Mission and global clean water initiatives; and emerging applications in sodium-ion batteries and semiconductor manufacturing. A potential supply-demand imbalance from 2026 2027 onwards if new capacity additions outside India and Asia are not commissioned on schedule, particularly given rising energy costs and environmental regulations constraining expansion in Europe and North America presents a strategic export opportunity for well-positioned Indian producers.

The Companys strategic positioning in Northern India (Alwar, Rajasthan) provides a lasting competitive advantage in serving large caustic soda consumers across the North and Central Indian industrial belt, with pricing and logistics advantages over producers concentrated in Western India. As we execute our FY27 roadmap, key priorities are: ramping Caustic Soda capacity; optimising the

CPW capacity; commissioning the 21 MW solar expansion to achieve a 40 50% renewable power mix. With a strengthened balance sheet, industry-leading renewable energy economics, and a clear product diversification pathway, the Company is confident in its ability to drive sustained, profitable growth and create long-term value for all stakeholders.

6. RISKS AND CONCERNS

The Indian alkali industry, particularly the chlor-alkali sector, faces significant risks and concerns, including high energy consumption, environmental pollution, and challenges related to infrastructure and competitiveness. The industry is also susceptible to market fluctuations and faces pressure from international competition.

High Energy Consumption:

Chlor-alkali production is energy-intensive, leading to high production costs and environmental concerns related to greenhouse gas emissions (even though not directly in our manufacturing process.

Water Consumption:

Indian companies, particularly those using mercury cell technology, consume significantly more

water than global best practices, contributing to water scarcity issues.

Waste Generation:

The industry generates substantial waste water and brine sludge, and very few companies

effectively recycle or reuse these wastes.

Economic and Market-Related Issues:

High Input Costs:

The industry faces challenges related to high input costs, including energy, salt, and other raw

materials.

Lack of Infrastructure:

Inadequate infrastructure, particularly in terms of power supply and transportation, can hinder the

industrys growth.

Weak Chlorine Demand:

Limited demand for chlorine, especially due to the lack of a robust PVC industry, can lead to

oversupply and price fluctuations.

International Competition:

The industry faces competition from cheaper imports, particularly from China and the Gulf region,

which can impact pricing and profitability.

Other Risks and Concerns:

Process Safety:

Like other chemical industries, the chlor-alkali sector is susceptible to accidents due to process

malfunctions, faulty electrical systems, or inadequate safety measures.

Disposal of Chlorine:

Chlorine is not easily stored or disposed of, posing logistical and environmental challenges for the

industry.

7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has well-established and robust internal control systems in place that are commensurate with the nature of its businesses, size & scale and complexity of its operations. Roles and responsibilities are clearly defined and assigned. The Company has also put in place adequate internal financial controls with reference to the financial statements by adopting accounting policies which are in line with the Accounting Standards as prescribed. The Management periodically reviews the financial performance of the Company against the approved plans across various parameters and takes necessary action, wherever necessary.

8. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The total revenue from operations was Rs. 39013.70 Lakhs during the year as compared to total revenue from operations of Rs. 27022.23 Lakhs previous year. Further, the Company has earned profit after tax and exceptional items of Rs. 2848.67 lakhs in the current financial year as against

PAT of Rs. 618.06 lakhs in the previous financial year.

1. Key Financial Ratio Analysis

Particulars	FY 2025-26	FY 2024-25	% Variance	Detailed Explanation of Ratios
Current Ratio	1.70	1.21	40.79%	Improved due to increase in cash & bank balances, inventories and other current assets, resulting in stronger liquidity position and better ability to meet short-term obligations.
Debt-to- Equity Ratio	0.67	0.69	-3.22%	Slight improvement due to increase in shareholders funds from higher profits and conversion of warrants into equity, despite additional borrowings for expansion projects.
Debt Service Coverage Ratio	3.04	1.49	103.69%	Significant improvement due to higher EBITDA and profitability during the year, resulting in stronger debt servicing capacity.
Return on Equity	0.12	0.03	291.54%	Improved substantially due to higher profit after tax generated during FY 2025-26.
Inventory Turnover Ratio	8.75	9.36	-6.55%	Marginal decline due to higher inventory levels maintained for raw materials and expansion activities during the year.
Receivables turnover	8.91	8.64	3.11%	Improved due to better collection efficiency and higher sales volume during the year.
Trade Payable Turnover Ratio	54.78	31.47	74.06%	Improved mainly due to faster payments to suppliers and lower average trade payable balances during the year.
Net Capital Turnover Ratio	10.57	7.91	33.58%	Improved due to higher revenue generation and efficient utilization of working capital.
Net Profit Margin Ratio (%)	7.30%	2.29%	218.85%	Significant improvement due to higher sales realization, improved operational efficiency, solar power savings etc
Return on Capital Employed	0.14	0.05	170.35%	Improved due to higher EBIT and better utilization of capital employed in business operations.
Interest Coverage Ratio	4.43	2.43	82.39%	Improved substantially due to higher profit generated during FY 2025-26.
Operating Profit Margin (%)	12.78	5.13	149.12%	Significant improvement due to higher sales realization, improved operational efficiency, solar power savings etc
Return on Net Worth	0.12	0.03	291.54%	Improved substantially due to higher profit after tax generated during FY 2025-26.
Return on Investment (%)	11.81%	4.35%	171.43%	Improved due to increased profitability and efficient utilization of operating assets during the year.

9. HUMAN RESOURCES

Company continues to focus on training its employees on a continuous basis. The Company is having a very harmonious relationship with its work force and constantly work for their intellectual and financial betterment. As on 31^st March 2026 Company has a strong workforce of 216 employees who supports drives the company.

10. DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the Company are prepared in accordance with Indian Accounting Standards (Ind AS) under historical cost convention on accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act 2013(the Act) and guidelines issued by the Securities & Exchange Board of India (SEBI). The Ind AS are prescribed under section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standard) Rules, 2015 and relevant amendment rules thereafter.