Multibase India Ltd Management Discussions

SEGMENT WISE SALES CONTRIBUTION

BACKGROUND & INDUSTRY OUTLOOK

The global economy demonstrated resilience amidst challenges like geopolitical tensions, climate risks, and economic fragmentation with a GDP growth of 3.2% as per International Monetary Fund (IMF). Meanwhile, India stood out as a beacon of robust growth, maintaining its position as the fastest-growing major economy supported by strong domestic demand and rising working-age population. According to IMF, Indias GDP is projected to grow by 6.5% in FY 2025-26 driven by robust private investment and macroeconomic stability and likely to be the 4^th largest economy globally. During the financial year 2024-25, India also witnessed the continuation of the existing Government for the third term and their continuing focus on economic reforms and infrastructure development. Agricultural sector, the backbone of the Indian economy, is forecasted to grow by 3.8% in FY 2024-25. While the industrial output grew by 2.9% year-on-year falling short of the expected 4%, favourable monsoon conditions are anticipated to boost agricultural output, stabilize food prices, and support economic growth. Advancement of new technologies, increasing productivity and income of farmers are some of the challenges in the agricultural sector.

The Industrial Sector has seen a surge in growth and is expected to grow by 6.2% in FY 2024-25. Joint ventures and partnerships between private and public sectors are growing and diversifying the industrial landscape. More autonomy and integration of modern technologies are main growth levers.

Overall, manufacturing and services industry have been working together to achieve economic growth and development. While challenges such as industrial output slowdown, trade tariffs and imbalances and employment concerns persist, continued focus on infrastructure development, diversification of trade partnerships, and employment generation will be crucial for sustaining growth momentum in the coming years.

Multibase India Limited is engaged in manufacturing and selling of polypropylene compound, thermoplastic elastomer, silicon master batch. The Companys products include Silicon-Based Thermoplastics, TPSiV Multiplex, Thermoplastic-Elastomer (TPE physically blends), Triethyl silane (TES) Multiplex Range of Products.

Multibase India Product portfolio plays a crucial role in enhancing overall vehicle performance and offers design flexibility and contributes to airbag safety systems, vehicle lightweighting, soft-touch and feel for Automotive Interiors. The Company remained focused on driving innovation and offers customer-driven solutions to enhance user experience. Multibase India Limited is committed towards sustainability and offers products which can be over molded, recycled and reused in manufacturing process.

BUSINESS & FINANCIAL REVIEW

The Company is operating in Automotive, Consumer & Industrial and Thermoplastic Additives with its customers largely present in India.

During the year under review, the Company reported gross revenue from operations of 7,074.87 Lacs as against

6,437.67 Lacs during FY 2023-24. The Company reported profit before tax of 1,969.39 Lacs and Profit after Tax of

1,465.49 Lacs as against 1,499.44 Lacs and 1,115.22 Lacs respectively for the previous financial year.

During the current financial year revenue from operations increase by 8.50% as compared to last year and is mainly on account of Silicon Master batch products and shifting of customer base.

During the year, Company successfully on boarded a new international vendor for the procurement of a key raw material. This strategic shift enabled procurement at a significantly lower cost compared to the previous supplier, contributing to improved gross margins of 38% against 30% of last year. The initiative reflects our continued focus on optimizing the supply chain and strengthening vendor partnerships to support long-term profitability.

The Company earned an interest income of 499.80 lakhs from fixed deposits. This was primarily driven by favorable changes in Indias monetary policy environment and improved interest rates negotiated with banking partners. However, the interest income was lower compared to the previous years 623.75 lakhs, owing to a reduction in fixed deposit balances following the disbursement of a significant interim dividend during the year.

KEY FINANCIAL RATIOS AS ON MARCH 31, 2025

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, 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:

The reason for variation in key ratios are as under:

1. Asset Turnover Ratio

• Increase of 33% from 0.46 to 0.61

• This improvement reflects enhanced efficiency in asset utilization, primarily driven by a reduction in cash and cash equivalents by 6,202.69 lakhs, following a one-time special dividend payout of

6,485.32 lakhs.

• The Company declared a special dividend of

6,688.60 lakhs ( 53 per share) in Q2 of the financial year, which significantly impacted the asset base.

2. Current Ratio

• Decrease of 47% from 17.24 to 9.22

• The decline indicates a temporary reduction in short-term liquidity, largely due to the substantial decrease in current assets, particularly cash and cash equivalents, post the special dividend payout.

3. Gross Profit Margin

• Increase of 26% from 30.05% to 37.90%

• This improvement was driven by strategic sourcing initiatives. The Company successfully onboarded a new international vendor for a key raw material, enabling procurement at significantly lower costs compared to the previous supplier, thereby enhancing margins.

OPPORTUNITIES AND THREATS

• Multibase India Limited (MBIL) Daman site on track to expand local production of key MultiflexTM and MultibaseTM SiMB grades by 4^th Quarter 2025.

• Locally produced Multibase products resulting in renewed interest by customers in automotive programs.

• Ongoing key raw materials qualification at the Daman site resulting in better cost position to compete on domestic and export markets.

• Lack of availability of specialty raw materials on the Indian market results in raw materials import to India, which adds cost in logistics and import duty.

RISKS AND CONCERNS

• Influence of cost of logistics on imported raw material procurement for key product grades remains a risk

• Bureau of Indian Standards (BIS) mandatory material registration does apply to certain materials imported to India for production at the Daman site. The registration process is underway with registration pending global supplier compliance.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Industrial relations with workmen during the year were cordial. The Directors place on record their appreciation for the sincere and efficient services rendered by the executives, staff and workmen of the Company and are confident that they will continue to contribute to the Companys prosperity and growth.

INTERNAL CONTROL SYSTEMS

The Company has put in place an adequate system of internal control measures in all risk areas, implemented by the management, towards achieving efficiency in operations, optimum utilization of resources and effective monitoring thereof and compliance with applicable laws.

The directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively.

These measures are in the form of procedures/ processes set by the management covering all critical and important areas. These controls are periodically updated and are subject to review by internal auditors. Internal audit function has been outsourced to independent firm of Chartered Accountants who submit quarterly reports to the Board. The Audit Committee reviews the report of the Internal Auditors and recommends steps to be taken to improve internal controls if any.

CAUTIONARY STATEMENT

This section of the Annual Report has been included in adherence to the spirit enunciated in the Code of Corporate Governance approved by the Securities and Exchange Board of India. Shareholders and Readers are cautioned that in the case of data and information external to the

Company, though the same are based on sources believed to be reliable, no representation is made on its accuracy or comprehensiveness. Further, utmost care has been taken to ensure that the opinion expressed therein contain its perceptions on most of the important trends having a material impact on the Companys operations.

The opinions expressed by the management may contain certain forward-looking statements in the current scenario, which is extremely dynamic and increasingly fraught with risks and uncertainties. The Company undertakes no obligation to publicly update or revise any of the opinions or forward-looking statements expressed in this report, consequent to new information, future events, or otherwise. Estimation and expectation made in the Report may differ from actual performance due to various economic conditions, government policies and other related factors.