Palco Metals Ltd Management Discussions

The Aluminum Scrap Recycling Market size was estimated at USD 6.57 billion in 2024 and
expected to reach USD 7.20 billion in 2025, at a CAGR 9.82% to reach USD 11.54 billion
by 2030.

The global aluminium recycling market size was valued at approximately USD 112.03
billion in 2024 and is expected to reach USD 168.26 billion by 2033, growing at a
compound annual growth rate [CAGR] of about 4.62% from 2025 to 2033.

Production of some key minerals in the country witnessed strong growth in FY 2024-25,
after reaching record production levels in FY 2023-24. Iron ore accounts for 70% of the
total MCDR mineral production by value. As per provisional data, production of iron ore at
289 million metric ton [MMT] in FY 2024-25 has broken the production record of 277
MMT achieved in FY 2023-24, with a 4.3% growth. Similarly, production of manganese ore
has also surpassed the production record of 3.4 MMT achieved in FY 2023-24, increasing
by 11.8% to 3.8 MMT in FY 2024-25. Production of bauxite has also risen by 2.9% to 24.7
MMT in FY 2024-25 from 24 MMT in FY 2023-24. During the same period, lead concentrate
production rose from 381 thousand tonne [THT] to 393 THT, with a 3.1% growth.

In the non-ferrous metal sector, primary aluminium production in FY 2024-25 has broken
the production record of FY 2023-24. Primary aluminium production increased from 41.6
lakh ton [LT] in FY 2023-24 to 42 LT during FY 2024-25. Refined copper production saw a
robust growth of 12.6%, increasing from 5.09 LT in FY 2023-24 to 5.73 LT in FY 2024-25.
India is the 2^ndlargest Aluminium producer, among top-10 producer in refined copper and
4^th largest iron ore producer in the world. Continued growth in production of iron ore in
the current financial year reflects the robust demand conditions in the user industry viz.
steel. Coupled with growth in aluminium and copper, these growth trends point towards
continued strong economic activity in user sectors such as energy, infrastructure,
construction, automotive and machinery.

OPPORTUNITIES AND THREATS:

Indias metal recycling industry is in the early stages of development and appears to be
trending in a positive direction, moving towards a more organized and structured
approach. The Indian metal recycling industry market was worth approximately USD 11.40
billion in 2024 and is projected to grow to approximately USD 18.87 billion by 2033, with a
growth rate of 5.32%.

Key Factors Driving Growth:

Electric Vehicles (EVs):

• More than 5.6 million EVs exist across Indian roads. These vehicles require a large
amount of aluminium, copper, and steel for batteries and structural parts, which introduces
a great demand for recyclable metals.

Government Policies: In India:

• Import duties for key minerals are eliminated, i.e., copper and cobalt.

• ^163 billion will be used to strengthen the domestic mineral supply.

• We encourage the recovery of minerals from mining waste (tailings].

Recycling Technology and Innovation:

• Organisations often utilise platforms to facilitate efficient scrap purchasing.

• Groups are developing facilities for battery recycling and end-of-life vehicle
recycling.

Sector and Regional Outlook:

• The construction and automotive sectors are the most active users of recycled
metals.

• Regional leaders include West and North India, with established industrial
structures.

U.S. import tariffs on aluminum have amplified cost pressures and reconfigured trade flows
across the recycling value chain. In mid-2025, the United States doubled its duty on
primary aluminum from 10% to 50% under Section 232, while exempting aluminum scrap
due to its critical role in domestic manufacturing. This policy bifurcation has increased
demand and pricing for scrap, benefiting mid-stream processors but raising input costs for
downstream consumers who compete for limited volumes. U.S. recyclers have expanded
scrap imports from Europe and other regions, intensifying global competition for
recyclables.

Data from the Federal Reserves July Beige Book indicate that tariffs have already begun to
squeeze profit margins and may translate into higher finished goods prices by late summer.
Many firms report absorbing cost increases to maintain market share, while others have
initiated moderate price hikes on downstream aluminum products. Meanwhile, ongoing
uncertainty regarding future tariff adjustments has led companies to diversify feedstock
sources and explore long-term supply contracts with scrap generators. As a result, the U.S.
aluminum recycling market is experiencing both near-term volatility and strategic
realignment, with participants investing in domestic collection infrastructure and forging
cross-border partnerships to secure stable scrap supplies.

In FY 2024-25, the Subsidiary of the company Palco Recycle Industries Limited (PRIL)
operating in Aluminium ingots, wire rods, cubes, delivered a strong performance despite
Forex and raw material price volatility.

The PRIL has achieved sales of worth Rs. 24595.79 Lacs The PRIL is planning to expand the
Operating capacity of the company and has plan to achieve the same in the current fiscal
year.

We remain committed to make an even bigger difference by reimagining and improving
our work, investing in our people and welding a sustainable future. We recognise the value
of a diverse workforce.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

The company is working in single segment further no Operating income was reported
during the year by the company on standalone basis. On Consolidated basis it has
Operating Income of Rs. 24595.79 Lacs..

OUTLOOK:

n the domestic landscape, Indias GDP and GVA growth are projected to moderate to 6.5%
and 6.2% respectively in FY 2025, reflecting subdued rural demand, a slowdown in
government capital expenditure due to the election cycle, and softening benefits from
lower commodity prices. However economic momentum is anticipated to improve in the
second half of the fiscal year, supported by a revival in consumption, infrastructure
development, and easing inflationary pressures. The average CPI inflation is expected to
decline to 4.6% in FY 2025 from 5.3% in FY 2024, driven by expected stability in food
prices subject to a normal monsoon. Monetary policy is likely to remain cautious, with
limited scope for rate cuts as policymakers balance inflation risks with growth imperatives.

RISK AND CONCERNS:

Indias primary aluminium consumption stood at around 4.5 mnt in CY 2024, up by 1.55%
y-o-y. India imported around 2.45 mnt of alumina in 2024. Alumina prices skyrocketed by
over 70% in 2024, driven by disruptions in Australia, Brazil, and Guinea. This put immense
pressure on the raw material supply chain. However, theres light at the end of the tunnel:
with China adding 13 mnt of capacity by 2025 and expansions by Vedanta and EGA, the
market is expected to swing into surplus by next year.

High volatility in LME aluminium prices

The aluminium market experienced significant price volatility on the London Metal
Exchange [LME], causing buyers to adopt a cautious approach. In January 2024, aluminium
prices hovered at around $2,300/tonne (tj, climbing to $2,700/t in May due to Russian
sanctions, before falling back to $2,200/t in July. However, following Chinas recent export
rebate cuts, prices again surged to $2,700/t, but cut back to $2,500/t levels by year-end.
This volatile scenario held back Indian buyers from procuring scrap from overseas.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has adequate internal control system in operation commensurate with the
size and nature of its business for enduring efficiency of operation and protection of
Companys assets. The Audit Committee formed by the company review on periodical basis
the compliance with the companys policies, procedures and prevailing laws. Audit findings
are closely reviewed by audit committee along with management response. The committee

also reviews the effectiveness of companys internal control and their effectiveness on
actual operation and regularly monitors implementation of audit recommendation. The
system ensures effective utilization of company resource and protections of assets from
loss, theft, misappropriation and relevant risks. Further company has approved the
Nomination and Remuneration policy for paying remuneration to Board of Directors and
KMP.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
PERFORMANCE:

The Company has not reported any operational income during the year. The salary and
other administrative expenses were met from the other income generated during the year.
The company is looking for different avenues and opportunity for generating operating
revenue.

HUMAN RESOURCES:

The Companys philosophy is to provide to its employees friendly working environment
and a performance-oriented work culture. The company believes that human resources are
important asset for giving Company a competitive edge in a competitive environment.

Additional Information pursuant to recent Changes in Management Discussion & Analysis
Report:

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED
TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS of
PALCO RECYCLE INDUSTRIES LIMITED, OUR SUBSIDIARY COMPANY ALONG WITH
DETAILED EXPLANATIONS THEREFOR, INCLUDING:

Debtors Turnover	7.34
Inventory Turnover	3.10
Interest Coverage Ratio	4.57
Current Ratio	2.32
Debt Equity Ratio	4.32
Net Profit Margin (%)	2.70%

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE
IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION
THEREOF.

Return on Capital Employed - 26%

For, and on behalf of the Board of Directors,

SD/-	SD/-
Kirankumar Agrawal	Naman Naredi
Managing Director	Director
(DIN: 00395934)	(DIN: 06943536)
Date: 22/08/2025	Place: Ahmedabad