OCCL Ltd Management Discussions

Overview

Global economic growth declined marginally from 3.3% in 2023 to an estimated 3.2% in 2024. This was marked by a slowdown in global manufacturing, particularly in Europe and parts of Asia coupled with supply chain disruption and weak consumer sentiment. In contrast, the services sector performed more creditably.

The growth in advanced economies remained steady at 1.7% from 2023 to 2024 as the emerging cum developing economies witnessed a growth decline at 4.2% in 2024 (4.4% in 2023).

On the positive side, global inflation was expected to decline from 6.1% in 2023 to 4.5% in 2024 (projected at 3.5% and 3.2% in 2025 and 2026 respectively). This decline was attributed to the declining impact of erstwhile economic shocks, and labour supply improvements. The monetary policies announced by governments the world over helped keep inflation in check as well.

(Source: IMF, KPMG, Press Information Bureau, BBC, India Today)

Performance of the major economies, 2024

United States: Reported GDP growth of 2.8% in 2024 compared to 2.9% in 2023.

China: GDP growth was 5.0% in 2024 compared to 5.2% in 2023.

Japan: GDP growth was 0.1% in 2024 compared with 1.9% in 2023.

Germany: GDP contracted by 0.2% in 2024 compared to a 0.3% decline in 2023.

(Source: CNBC, China Briefing, ons.gov.uk, Trading Economics, Reuters)

Outlook

The global economy has entered a period of uncertainty following the imposition of tariffs on products imported into the USA and some countries announcing reciprocal tariffs on US exports to their countries. This is likely to stagger global economic growth, the full outcome of which cannot be currently estimated. This risk is supplemented by risks related to conflicts, geopolitical tensions, trade restrictions and climate risks. In view of this, World Bank projected global economic growth at 2.7% for 2025 and 2026, factoring the various economic uncertainties.

(Source: IMF, United Nations)

Indian economic review

Overview

The Indian economy was projected to grow at 6.5% in FY 2024-25, compared to a revised 9.2% in FY 2023-24. This represented a four-year low due to a moderate slowdown within the Indian economy (marked by slower manufacturing growth and a decline in net investments). Despite the slowdown,

India retained its position as the worlds fifth-largest economy.

The Indian rupee weakened 2.12% against the US dollar in FY 2024-25, closing at H85.47 on the last trading day of FY25. In March 2025, the rupee recorded the highest monthly appreciation since November 2018, rising 2.39% (arising out a weakening US dollar).

Inflationary pressures eased, with CPI inflation averaging 4.63% in FY 2024-25, driven by moderating food inflation and stable global commodity prices. Retail inflation at 4.6% in FY 2024-25, was the lowest since the pandemic, catalysing savings creation.

Growth of the Indian economy

	FY22	FY23	FY24	FY25E
Real GDP growth (%)	8.7	7.2	9.2	6.5

E: Estimated; (Source: MoSPI, Financial Express)

Growth of the Indian economy quarter by quarter, FY 2024-25

	Q1 FY25	Q2 FY25	Q3 FY25	Q4 FY25E
Real GDP growth (%)	6.5	5.6	6.2	7.6

E: Estimated; (Source: The Hindu, National Statistics Office)

Indias exports of goods and services are projected to reach USD800 Billion in FY 2024-25, up from USD778 Billion in the previous fiscal year. The Red Sea crisis impacted shipping costs, affecting price-sensitive exports. Merchandise exports were expected to grow 2.2% YoY, reaching USD446.5 Billion.

Indias net GST collections increased 8.6%, totalling H19.56 Lakh Crore in FY 2024-25. Gross GST collections in FY 2024-25 stood at H22.08 Lakh Crore, a 9.4% increase YoY. On the supply side, real gross value added (GVA) was estimated to expand 6.4% in FY 2024-25. The industrial sector was expected to grow 6.2%, supported by growth in construction activities, electricity, gas, water supply and other utility services.

Manufacturing activity was subdued in FY25, with growth projected at 4.3%, which was lower than 12.3% in FY24. Moreover, due to lower public spending in the early part of the year, government final consumption expenditure (GFCE) is anticipated to have slowed to 3.8% in FY25, compared to 8.1% in FY24.

The agriculture sector growth was estimated at 3.8% in 2024-25 (1.4% in 2023-24). Trade, hotel, transport, communication and services related to broadcasting segment were estimated to grow at 6.4% in 2024- 25 (6.3% in 2023-24).

From a demand perspective, private final consumption expenditure at constant prices was forecast to grow 7.3%, indicating a rebound in rural demand and stronger consumer confidence.

Outlook

India is expected to remain the fastest-growing major economy. Initial Reserve Bank of India estimates have forecast Indias GDP growth downwards from 6.7% to 6.5% based on risks arising from US tariff levies on India and other countries. The following are some key growth catalysts for India in FY26.

Tari_-based competitiveness: India identified at least 10 sectors such as apparel and clothing accessories, chemicals, plastics and rubber where the US high tariffs give New Delhi a competitive advantage in the American market over other suppliers. While India faced a 10% tariff after the US suspended the 26% additional duties for 90 days, the levy remained at 145% on China, the biggest exporter to the US. Chinas share of apparel imports into the US was 25%, compared with Indias 3.8%, a large opportunity to address differential (Source: Niti Aayog).

Union Budget FY 2025-26: The Union Budget 2025-26 laid a strong foundation for Indias economic trajectory, emphasizing agriculture, MSMEs, investment, and exports as the four primary growth engines. With a fiscal deficit target of 4.4% of GDP, the government reinforced fiscal prudence while allocating H11.21 Lakh Crore for capital expenditure (3.1% of GDP) to drive infrastructure development. The February 2025 Budget marked a shift in approach, with the government proposing substantial personal tax cuts. Economists estimate that the resulting H1 Lakh Crore in tax savings could boost consumption by H3-3.5 Lakh Crore, potentially increasing the nominal private final consumption Expenditure (PFCE) by 1.5-2% of its current H200 Lakh Crore.

Pay Commission impact: The 8^th Pay Commissions awards could lead to a significant salary revision for nearly ten Million central government employees. Historically, Pay Commissions have granted substantial pay hikes along with generous arrears. For instance, the 7^th Pay Commission more than tripled its monthly salaries, raising the range from 7,000 18,000 90,000 HHHH12.5to to Lakh, triggering a widespread ripple effect.

Monsoons: The India Meteorological

Department predicted an ‘above normal monsoon in 2025. This augurs well for the countrys farm sector and a moderated food inflation outlook.

Easing in_ation: Indias consumer price index-based retail inflation in March 2025 eased to 3.34%, the lowest since August 2019, raising hopes of further repo rate cuts by the Reserve Bank of India. Deeper In its February 2025rate cuts: meeting, the Monetary Policy Committee (MPC) reduced policy rates by 25 basis points, reducing it to 6% in its first meeting of FY 2025-26. Besides, Indias CPI inflation is forecasted at 4% for the fiscal year 2025-26.

Lifting In Novembercredit restrictions:

2023, the RBI increased risk weights on bank loans to retail borrowers and NBFCs, significantly tightening credit availability. This led to a sharp slowdown in retail credit growth from 20-30% to 9-13% between September 2023 and 2024. However, under its new leadership, the RBI has prioritized restoring credit flow. Recent policy shifts have removed restrictions on consumer credit, postponed higher liquidity requirements for banks, and are expected to rejuvenate retail lending.

(Source: CNBC, Press Information Bureau, Business Standard, Economic Times, World Gold Council, Indian Express, Ministry of External Affairs, Times of India, Business Today, Hindustan Times, Statistics Times)

Global insoluble sulphur industry overview

Insoluble sulphur plays a critical role in enhancing the performance and quality of rubber products, particularly in the tyre manufacturing sector. As a non-blooming rubber-strengthening agent, it ensures superior bonding between rubber and reinforcing materials such as steel and fabric, leading to improved durability and structural integrity. Its unique properties make it indispensable in the production of high-performance rubber components, aligning with the industrys ongoing focus on innovation, safety and long-term reliability.

The insoluble sulphur market has experienced moderate growth in recent years and is expected to maintain the same in the coming period. Moderate expansion is anticipated, with the market reaching USD 1.35 Billion by 2028 at a CAGR of 5.6%, and rising to USD 1.41 Billion by 2029 at a CAGR of 5.5%. These projections reflect demand growth across key industries, particularly in tyre manufacturing and high-performance rubber applications.

The asia-pacific led the global insoluble sulphur market in 2024, with the market forecast covering regions such as Western and Eastern Europe, North and South America, the Middle East, Africa and including key countries like the USA, China, India, Germany, Japan and Brazil. The insoluble sulphur market is set for strong growth, driven by rising demand from the tyre industry—its primary consumer. Essential in manufacturing high-performance tires for vehicles ranging from cars to specialty transport, insoluble sulphur enhances rubber durability, heat resistance, and aging performance. This aligns with the industrys focus on long-lasting, resilient tires, underscoring the strategic importance of insoluble sulphur in advancing mobility sector innovation and quality.

Growth drivers

Shift towards sustainable and eco-friendly products

There is a growing emphasis on environmental sustainability, leading to increased demand for eco-friendly and biodegradable specialty chemicals. Indian manufacturers are investing in green chemistry and sustainable production practices to meet both domestic and international environmental standards.

Expansion of export opportunities

Indias specialty chemicals industry is becoming a significant player in the global market, with exports accounting for a substantial share of the countrys chemical trade. Factors such as cost competitiveness, a skilled workforce, and adherence to international quality standards have positioned India as a preferred supplier of specialty chemicals worldwide.

Increased research and development (R&D) investments

To foster innovation and meet the evolving needs of various industries, Indian specialty chemical companies are ramping up investments in R&D. This focus on innovation is leading to the development of new products and processes, enhancing the industrys global competitiveness.

(Source: IMARC)

Global tyre industry overview

The global tyre market has witnessed growth in recent years, fueled by rising vehicle production, increased demand for replacement tyres, and advancements in manufacturing technologies. Key growth drivers include the expanding automotive sector, shifting consumer preferences for performance and safety, evolving regulatory norms and a favorable economic environment. Consumers are increasingly seeking tyres that offer superior traction, durability and fuel efficiency, prompting manufacturers to adopt advanced materials such as silica compounds and synthetic rubber to meet these demands.

Sustainability has also emerged as a critical factor, with a growing emphasis on bio-based rubber and eco-friendly production processes. Simultaneously, digital innovations like tyre pressure monitoring systems (TPMS) and connected technologies are transforming the industry, providing enhanced vehicle control and safety features for end-users. The global tyre market is expected to grow from USD 200.97 Billion in 2024 to USD 211.22 Billion in 2025, at a compound annual growth rate (CAGR) of 5.1%. By 2029, the market is expected to reach USD 250.39 Billion, with a CAGR of 4.3%.

Indian tyre industry overview

The Indian tyre industry is set for significant growth by 2025, fuelled by rising vehicle ownership, infrastructure development and increasing demand for replacement tires. India is benefiting from innovations in tyre technology, including eco-friendly solutions and the rise of electric vehicles. With expanding domestic demand and growing export opportunities, the industry is well-positioned for long-term growth, focusing on quality, safety and sustainability.

Indias tyre market reached a volume of 202.2 Million units in 2024 and is expected to grow at a CAGR of 2.85%, reaching approximately 263.8 Million units by 2033. Tyre manufacturers are gearing up for a second consecutive year of single-digit revenue growth, with estimates indicating a 7-8% increase in FY 2024-25. The industrys growth will be driven by a 3-4% increase in realisations and volumes, driven by gradual price increases and replacement demand.

Amid these headwinds, the credit profiles of major tyre manufacturers remain stable, backed by strong Balance Sheets and prudent capital allocation. The top six players—contributing 87% of industry revenue—planned to invest 5,500 Crore in FY25, slightly lower thanH the previous year, focusing on capacity expansion and operational efficiency. With capacity utilization around 80%, tyre makers adopted a cautious approach to pricing and capital spending to protect profitability and maintain competitiveness.

All India vehicle retail data for FY25

CATEGORY	FY 2024-25	FY 2023-24	YoY %
Two wheelers	1,88,77,812	1,75,27,115	7.71%
Three wheelers	12,20,981	11,67,986	4.54%
E-rickshaw(P)	4,74,635	4,90,662	-3.27%
E-rickshaw with cart (G)td>	65,038	40,785	59.47%
Three-wheeler (GOODS)	1,22,624	1,22,298	0.27%
Three-wheeler (PASSENGER)	5,57,693	5,13,328	8.64%
Three-wheeler (PERSONAL)	991	913	8.54%
Passenger vehicles	41,53,432	39,60,602	4.87%
Tractors	8,83,095	8,92,414	-1.04%
Commercial vehicles	10,08,623	10,10,324	-0.17%
Light commercial vehicles	5,63,189	5,62,026	0.21%
Medium commercial vehicles	77,568	73,142	6.05%
Heavy commercial vehicles	3,12,892	3,26,150	-4.07%
Others	54,974	49,006	12.18%
Total	2,61,43,943	2,45,58,437	6.46%

Source: FADA Research

Tyre industry drivers

Radialisation of commercial vehicle tyres: Consumers are increasingly opting for radial tyres over conventional alternatives due to their superior fuel efficiency and durability.

Rising safety awareness: Growing safety consciousness in India is driving demand for high-quality tyres. As customers become more discerning, manufacturers are being compelled to source materials like insoluble sulphur from reputable suppliers to enhance tyre performance.

Intensi_ed industry competition: The highly competitive tyre market is pushing companies to introduce technologically advanced and high-performance products, improving the overall industry standards.

Growth in tyre exports: The global shift in manufacturing away from China, combined with Indias favourable production environment, is strengthening the countrys position as a key exporter of tyres. Indias tyre exports grew by 11.7% in value to H12,131 Crore at the beginning of FY 2024-25.

Expansion of roads and highways: Indias national highway network expanded by 60% over the past decade, growing from 91,287 km in 2014 to 146,195 km in 2024. The national high-speed corridors have increased from 93 km to 2,474 km over the 10-year time frame. There are 202 national highway projects at various stages of implementation totaling 6,270 kilometers.

(Source: Apollo Tyres, Research and Markets, Economic Times, Press Information Bureau, IBEF)

Government initiatives

Public Procurement Policy: Under the Make in India initiative, specific chemicals are subject to mandatory local content requirements, which have been progressively raised through FY 2024-25 to encourage domestic production.

2034 Vision for the chemicals sector: The governments 2034 vision aims to boost domestic production, moderate imports and attract greater investment into the chemical sector.

(Source: Department of Chemicals and

Petrochemicals, Department of Pharmaceuticals, Ministry of Heavy Industries, IBEF)

Opportunities and threats

Opportunities

The rising demand for eco-friendly and lightweight tyres is likely to drive the consumption of insoluble sulphur per tyre.

The shift toward radial tyres in the commercial vehicle segment is steadily accelerating.

India is positioning itself as a tyre export hub, encouraged by global manufacturers diversifying their supply chains away from China.

Threats

Free Trade Agreements (FTAs) may pose a threat to domestic tyre manufacturers by enabling customs duty concessions on imported finished tyres.

Chinese manufacturers of insoluble sulphur are aggressively expanding exports to offset surplus production capacity, intensifying global competitive pressures.

Elevated commodity prices and increasing freight costs continue to exert pressure on profit margins, posing a significant risk to overall profitability.

Sustainability

In todays global landscape, sustainability is no longer optional—it is a strategic imperative. Responding to increasing global demand for environmentally responsible practices, OCCL has embedded sustainability deeply into its operations, aligning with the United Nations Sustainable Development Goals (SDGs) 2030.

As a proactive player in the Insoluble Sulphur space, the Company launched sustainability-driven initiatives, with a focus on energy and water conservation. The key projects comprised:

Installation of rooftop solar plants at both manufacturing units.

Transition to cleaner fuels like propane and PNG to replace diesel and LDO, cutting down emissions.

Efficiency enhancements in manufacturing processes to reduce energy consumption and waste.

Pond restoration projects to support water rejuvenation efforts.

Use of sustainable raw materials. The company is under the process of obtaining approvals from customers for Insoluble Sulphur produced using sustainable raw material.

To further advance renewable energy use, the company signed an agreement under the Haryana governments captive solar power scheme to procure additional solar power for its Dharuhera facility.

Sustainability practices are also being integrated across the procurement and sales lifecycle, fostering a greener value chain.

The companys efforts were widely recognized:

Ecovadis Gold rating for three consecutive years

Responsible Care logo by the Indian Chemical Council

ISO 20400 accreditation for sustainable supply chain practices

"B" rating under the Climate Change 2022 Report by the Carbon Disclosure Project (CDP) In 2023, OCCL furthered its commitment by joining the Science-Based Targets initiative (SBTi), pledging to reduce Scope 1 and 2 emissions by 42% by 2030 and setting targets for Scope 3 emissions. The companys ambition is to achieve carbon neutrality by 2050.

Financial overview

Upon demerger the chemical business of demerged dompany (Oriental Carbon & Chemicals Ltd) was transferred to the company on 01^st July, 2024. Therefore the financials include the performance of manufacturing activities for nine months period i.e from 01-07-2024 to 31-03-2025. Hence the previous years figures are not comparable.

Analysis of the pro_t and loss statement

Revenues: Revenue from operations during nine months period was H3,06,73.35 Lakh consisting of H24,912.81 Lakh from insoluble sulphur and H5,760.54 Lakh of Sulphuric Acid Division. Export sales was 59% of total insoluble sulphur sales and 48% of total revenue from operations.

Margins: EBITDA during nine months period was H5,501.16 Lakh. EBITDA margin was 18%. The net profit of the Company was H2,141.67 Lakh

Analysis of the Balance Sheet

Upon demerger on July 01, 2024 the company received H56,734.98 Lakh of total assets and H19,240.41 Lakh of Liabilities and H37,494.57 Lakh of reserve and surplus pertaining to chemical business. Out of the transferred Reserve and Surplus H999.01 Lakh was used to issue shares capital. The net worth as on March 31, 2025 was H39,631.31 Lakh increased by the net profit of H2,141.67 Lakh during nine months period. Long-term debt of the Company including current maturities was H3,400.19 Lakh as on March 31, 2025, compared to H4,518.42 Lakh as on 01^st

July 2024. The long-term debt-equity ratio of the company stood at 0.09 as on March 31, 2025.

Fixed assets (gross) of the company increased to H64,062.27 Lakh as on March 31, 2025 from H63,232.48 Lakh as on July 01, 2024.

Working capital management

The working capital borrowings outstanding as on March 31, 2025 was H2,247.67 Lakh reduced from H7,996.19 Lakh as on 01^st July 2024.

Inventories, including raw materials, work-in-progress and finished goods, among others, remained stable at H5,988.93 Lakh on March 31, 2025 from H5,430.03 Lakh as on 01^st July, 2024. Trade receivables as at March 31, 2025 were H6,492.33 Lakh compared to H7,779.13 Lakh as at 01^st July, 2024.

Key ratios and numbers (there were no operations in the Company in the previous year)

Particulars	2024-25
EBITDA/Turnover (%)	17.93
Debtors/Turnover	9.45
Inventory/Turnover	10.24
Interest coverage ratio	6.22
Debt-equity ratio	0.16
Current ratio	1.87
Net profit margin (%)	6.98
Book value per share (H)	79.34
Earnings per share (H)	4.29
Return on net worth (%)	5.40

Risks management framework

The company follows a well-defined, comprehensive risk management process that is seamlessly integrated into its operations. Recognising that risk arising from business uncertainties can impact performance and prospects, the company proactively identifies, categorises and prioritises operational, financial and strategic risks. Significant time, effort and resources are continually invested to effectively manage and mitigate these risks, ensuring business resilience and continuity.

Risk management initiatives

Economy risk: A prolonged economic slowdown could negatively affect the insoluble sulphur demand.

Mitigation: The Indian economy grew by an estimated 6.4% in FY 2024-25. The global sulphur market is anticipated to grow in the coming years, largely driven by its expected robust demand in Asia, especially in India.

Measure: The company has cemented stable relationships with major tyre manufacturers across the globe, improving the predictability of its revenue streams.

Debt service risk: The companys credit rating could be affected by its inability to service debt on schedule.

Mitigation: The company follows a conservative policy related to leverage. Measure: The companys long term gearing stood at 0.09 as on March 31, 2025 Employee risk: Employee retention of the company may get affected by disruptions in industrial harmony. The company faces a risk of underperformance due to potentially insufficient employee training and development.

Mitigation: The company implemented policies to foster internal harmony, covering recruitment, training, empowerment, job satisfaction and remuneration. It ensures that employee skills are continuously updated to align with evolving needs. Training programs were introduced to equip employees with new skills, preparing them for advanced responsibilities and enabling them to adapt to the changing requirements of the Company. The Company was awarded a ‘Great Place to Work certificate. The Company introduced training programs to equip employees with new skills, preparing them for more advanced roles and enabling them to adapt to the Companys changing requirements.

Measure: As of March 31, 2025, the Companys workforce stood at 387 employees, with a retention rate of 90.7%.

Product acceptance risk: A need for improved product quality is being raised on account of the intense competition in market.

Mitigation: The Company achieved approvals from leading tyre manufacturers globally. The Company possesses a state-of-art R&D facility for the continuous improvement of its products as per customer needs.

Internal control systems and their adequacy

The company has adequate internal control systems, which includes internal financial controls, the efficacy of which is continuously monitored and updated when required internally. The companys internal control system ensures that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly. The internal auditors monitor the effectiveness of internal control procedures & compliance on quarterly basis and report to the audit committee of the Board of Directors of the company. The audit committee reviews reports presented by the internal auditors on a routine basis. The committee makes note of the audit observations and takes corrective actions, if necessary. It maintains constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively.

Human resources

As per the scheme of demerger the employees of the company pertaining to chemicals business were transferred to the resulting company OCCL Ltd on the appointed date. The company employed 387 officers and workmen as of March 31, 2025.

By developing individual and team skills, the company has kept up with market changes and demands. The company regularly runs programs to improve employee skills and knowledge. It also encourages knowledge-sharing sessions and supports employees in attending external programs to stay updated on new industry standards. Several employee ideas for improving processes and reducing costs have been implemented, leading to increased productivity, cost savings and better quality.

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be ‘forward looking statements within the meaning of applicable Securities Laws and Regulations. Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual results could differ materially from those expressed in the statements or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent development, information or events.