Petro Carbon & Chemicals Ltd Management Discussions

GLOBAL ECONOMIC

Global growth is projected to fall from an estimated 3.3 percent in 2024 to 2.8 percent in 2025, before recovering to 3 percent in 2026. This is lower than the projections in the January 2025 WEO Update, primarily due to direct effects of the new trade measures and their indirect effects. For advanced economies, growth is projected to drop from an estimated 1.8 percent in 2024 to 1.4 percent in 2025 and 1.5 percent in 2026. For emerging market and developing economies, growth is projected to drop to 3.7 percent in 2025 and 3.9 percent in 2026.

Growth in the euro area is expected to decline slightly to 0.8 percent in 2025, before picking up modestly to 1.2 percent in 2026. Rising uncertainty and tariffs are key drivers of the subdued growth in 2025.

The Middle East and Central Asia is projected to come out of several years of subdued growth, with the rate accelerating from an estimated 2.4 percent in 2024 to 3.0 percent in 2025 and to 3.5 percent in 2026 as the effects of disruptions to oil pro duction and shipping dissipate and the impact of ongoing conflicts lessens.

INDIAN ECONOMIC

Strong economic growth in the first quarter of FY23 helped India overcome the UK to become the fifth-largest economy after it recovered from the COVID-19 pandemic shock. Nominal GDP for FY25 is estimated at Rs. 33.10 lakh crore (US$ 3.8 trillion) with growth rate of 9.9%, compared to Rs. 30.12 lakh crore (US$ 3.5 trillion) in FY24. Strong domestic demand for consumption and investment, along with Governments continued emphasis on capital expenditure are seen as among the key driver of the GDP in the second half of FY25. In FY25, Indias exports stood at Rs. 37.31 lakh crore (US$ 433.56 billion), with Engineering Goods (26.88%), Petroleum Products (13.86%) and electronic goods (8.89%) being the top three exported commodity. Rising employment and increasing private consumption, supported by rising consumer sentiment, will support GDP growth in the coming months.

Exports fared remarkably well during the pandemic and aided recovery when all other growth engines were losing steam in terms of their contribution to GDP. Going forward, the contribution of merchandise exports may waver as several of Indias trade partners witness an economic slowdown. According to Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles Mr. Piyush Goyal, Indian exports are expected to reach US$ 1 trillion by 2030.

EMERGING TRENDS THAT WILL IMPACT THE GLOBAL CHEMICAL INDUSTRY

• Sustainability and Green Chemistry: One of the concerns most seriously affecting the global chemical market is sustainability. The current customers and regulators increasingly demand more eco-friendly processes and products.

• The Rise of Speciality Chemicals: Specialty chemicals for industry needs in the electronics, agriculture, and pharmaceutical industries are found to be a relatively fast-growing specialty in the chemical market.

• Regional Shifts and Growth in Asia -Pacific: Asia-Pacific continues to lead the world with growth, primarily due to the increased demands in China and India, among others. The region hosts massive manufacturing houses as well as growth economies that continue to play a significant role in the global market.

INDUSTRY OVERVIEW

Calcinated Petroleum Coke Industry

The Calcined Petroleum Coke Market Size was estimated at 2.97 (USD Billion) in 2024 in India. The Calcined Petroleum Coke Market Industry is expected to grow from 3.08 (USD Billion) in 2025 to 4.24 (USD Billion) by 2034.

Calcined Petroleum Coke commonly known as CPC is produced from Raw Petroleum Coke (RPC) also called the Green Petroleum Coke. The result of the calcining process is converting green coke to hard, dense and almost pure carbon with low hydrogen content, good electrical conductivity and a defined structure. These properties along with low metals and ash contents make calcined petroleum coke the best material currently available for making carbon anodes for smelting of alumina to aluminium in the electrolytic smelting process.

Calcined Petroleum Coke (CPC) holds significant importance in the manufacturing of aluminium, and is also utilised in the production of steel and various other carbon-based products. It is widely used in aluminium industry, titanium dioxide industry, electrode manufacturing industry, foundry industry, glass industry metallurgical and chemical industry, steel industry and Carbon Paste etc. The process entails heating raw petroleum coke to eliminate volatile impurities, resulting in enhanced properties that make it highly suitable for various manufacturing processes.

Petroleum Coke, produced through the delayed coking process of residues obtained from crude oil distillation units in oil refineries, is referred to as Green or Raw Petroleum Coke (RPC). RPC serves as the raw material for the production of Calcined Petroleum Coke (CPC). The RPC received from oil refineries comes in various particle sizes. It is then crushed and processed to achieve the desired particle size. The crushed RPC is subsequently fed into a rotary kiln, where it is subjected to temperatures ranging from 1200?C to 1400?C to produce Calcined Petroleum Coke (CPC).

Market Drivers

> Rising Demand from the Steel and Aluminium Industry.

> Growing Environmental Regulations and Emission Control.

> Technological Advancements and Innovation.

Market Challenges

> The CPC industry is constrained by its reliance on imported green petroleum coke, impacting supply stability and costs.

> Fluctuations in crude oil prices affect both GPC and CPC prices.

> Licensing in calcination units.

There are no commercially viable substitutes for CPC in aluminum smelting. Without calcination, larger volumes of RPC would be burned as a highly emitting fuel for power generation. Additionally, CPC plays a significant role in the production of titanium dioxide, used as the base pigment for construction and automotive paints, as well as in plastics, coatings, cosmetics, toothpaste, and sunscreen. It is also utilized in the production of high strength steel for infrastructure like bridges and skyscrapers.

CPC is available in two primary qualities: anode-grade CPC, essential for the aluminum smelting process, and industrial grade CPC used in manufacturing titanium dioxide and other industrial applications. Also known as Recarburizer, it is used to raise the carbon level in the manufacturing process. Anode-grade CPC represents approximately more than 75% of global CPC production, while industrial-grade CPC represents the remaining. About 0.4 tonnes of CPC are required for every tonne of primary aluminum produced.

China and North America are the dominant producers of CPC, accounting for over 75% of global production. China, in particular, continues to hold a significant share of 55-60%.

COMPANY OVERVIEW

Petro Carbon and Chemicals Limited (“PCCL”) is an ATHA Group (the “Group”) Company engaged in the business of manufacturing and marketing of Calcined Petroleum Coke (“CPC”) in the carbon industry. Our Companys business model is fundamentally a B2B model wherein we majorly supply our end product CPC, to the renowned, aluminum manufacturing government companies, graphite electrodes and titanium dioxide manufacturers as well as other users in the metallurgical, chemical industries and other steel manufacturing companies. In 2018, our company was honored with the prestigious NALCO VIKRETA UTKARSH PURASKAR, recognizing us as the top supplier among all the suppliers of POL (Petroleum, Oil, and Lubricants) by the National Aluminum Company Limited.

We currently operate one (1) manufacturing plant located at PO: Oil Refinery, Haldia, Dist. Purba Medinipur, West-Bengal 721 606 (Haldia Industrial Growth Centre of WBIIDC) which is presently involved in calcination of Petroleum Coke. The Plant has a capacity of approximately 93,744 tons per annum of CPC and the plant comprises an area of around 30 acres with good infrastructure facilities like own railway sliding inside the plant premises itself facilitating unloading / loading of wagons, along with yard / shed to store both Raw Petroleum Coke (RPC) / Calcined Petroleum Coke (CPC).

The following operating and financial reviews are intended to covey the managements perspective on the operating and financial performance of Petro Carbon Chemical Limited for the financial year ended March 31,2025. This should be read in conjunction with the Companys Standalone Financial Statements, the schedules and notes thereto and other information included elsewhere in our Companys Annual Report.

Our Companys Financial Statements have been prepared in compliance with the requirements of the Companies Act, 2013, the guidelines issued by the Securities and Exchange Board of India (SEBI), in accordance with the Generally Accepted Accounting Principles (GAAP).

Manufacturing Unit

PCCL is strategically located within the port perimeter and has access to all the strategic transportation means at its door step. The plant site area is well developed. All necessary infrastructure facilities such as motorable road, nearness to rail head with its own railway siding and having all the necessary utility facilities like continuous service water connection from Haldia Development Authority (HDA) , industrial electric-power connection from West Bengal State Electricity Distribution Company (WBSEDCL).

DISCUSSION ON FINANCIAL PERFORMANCE Revenue & Profit Trends

We have consistently grown in terms of our revenues over the past years. In the recent periods, our revenue from operations was:

The sharp decline in revenue and profit during FY2025 was primarily due to a decrease in the market price of Calcined Petroleum Coke (CPC). Despite this, the company remained profitable through cost management and tax reversals.

FY25 witnessed a drop in sales volumes and pricing pressure, affecting overall segment performance. However, the company remained EBITDA positive, highlighting operating strength.

The net cash flow of the Company during the year ended 31.03.2025 is as follows:

Details of Key Financial Ratios are given below:

OVERALL BUSINESS AND GROWTH STRATEGIES

Our Company is a leading manufacturer of Calcined Petroleum Coke (CPC) in India, catering primarily to the aluminium and steel sectors. The company operates a fully integrated facility at Haldia, West Bengal, strategically located near the Haldia Port and Indian Oil refinery, enabling efficient logistics and access to raw materials.

Despite a challenging macroeconomic environment and a significant decline in CPC prices during FY2025, which led to a 45% drop in revenue and an 89% decline in PAT, PCCL remained profitable. This resilience reflects the companys strong operational discipline, strategic cost control, and commitment to long-term value creation.

? Growth and Expansion Initiatives

To position itself for the next phase of growth, PCCL is exploring several new strategic initiatives in the field of:

1. Captive Power for Energy Independence

In FY2025, PCCL commissioned a 10 MW Waste Heat Recovery-based Captive Power Plant at its Haldia facility, which shall ensure Energy cost optimization, Lower carbon footprint and Improved process stability. It also aligns with the companys broader sustainability goals and supports future capacity expansion.

2. Strategic Partnerships and Subsidiary Growth

The companys subsidiary has entered into a partnership within the carbon chemicals space, expanding group-level capabilities and access to newer markets.

3. Stable Client Base and Market Reputation

PCCL continues to cater to marquee clients such as NALCO and Hindalco, demonstrating consistent quality and longterm reliability.

RISK MANAGEMENT

Foreign Exchange and Interest Rate Risk

The company imports more than 90% of its raw materials from foreign suppliers as a result of which the company faces foreign exchange risk. In order to minimize this risk, the company adopted a forex policy in June, 2023 which ensured 100% hedging. As per hedging policy, initial 50% of the exposure is hedged immediately on LC opening & remaining 50% hedging is done on obtaining SBLC due date. The policy ensures continued 100% hedging for any rollovers. The company also faces interest rate risk due to change of rates by banks.

The interest rate risk is managed by diversification of lenders and maturities of debts. Diversification of lenders introduces competition amongst lenders for business which controls any increase of rate of interest during rising interest scenario. Similarly, during falling interest rates, the same competitive structure due to multiple banks acts as a catalyst for fast reduction of interest rates.

The high reputation and strong relationship with bankers of this group helps the company in securing low interest costs. All interest rates, commissions and bank charges are continuously monitored. There are specialized manpower handling corporate banking, forex and business banking which ensures strict control.

Raw Material Price Volatility Risk

The company supplies aluminum grade CPC to NALCO & HINDALCO for which it requires RPC. In India the supply of RPC is limited. Most of the supplies in India are from four plants of IOCL which is purchased by various MSMEs operating in vicinity of IOCL plants. The company, is therefore, dependent on imports and has to import more than 90% of its raw material from foreign suppliers. Cost of these imported RPCs are dependent on cost of international crude oil, stock of RPCs in various refineries and shipping cost. Hence, the company faces raw material risk due to volatility in any of these factors. The raw material price volatility are managed by our well-developed ordering process, diversified suppliers and quantity management. Also opportunity based RPC purchases are also done from domestic refiners depending upon grades available.

While bidding for any tenders floated by HINDALCO / NALCO, company obtain information about existing & expected raw material prices in international markets. Thereafter, a margin of safety is added to the raw material prices for quote. The margin of safety is sufficient to cater to any price increase over next 2-3 months. Further, company orders from various international vendors. Long term relationships and a diversified portfolio of suppliers ensures competitive prices. Shipping costs are also given adequate importance for our cost matrix. Quantity shipped are based on calculations of most economic quantity based on price, voyage time and shipping costs.

Working Capital Requirements

The company has adequate working capital facilities from a consortium of reputed bankers. Since the company imports most of its requirements from foreign based vendors, it has to use forex LCs. Hence, working capital facilities are usually composed of non-fund based limits (LC, SBLC & BG) and a small fund based limit (CC). Company pays for its imports by opening site LCs. The site LCs are thereafter converted to SBLCs in order to match our operating cycle. Specialized & professional manpower are allocated for handling each of the segments with clearly delineated SOPs. Effective checks and balances are in place for monitoring of banks charges and interest rates. Strong relationship with banks helps the company in getting very competitive rates.

Internal Control System & Their Adequacy

The Company has strong internal control procedures in place that commensurate with its size and operations. The Board of Directors, responsible for the internal control system, sets the guidelines and verifies its adequacy, effectiveness and application. The Companys internal control system is designed to ensure management efficiency, measurability and verifiability, reliability of accounting and management information, compliance with all applicable laws and regulations, and the protection of the Companys assets.

Human Resources and Industrial Relations

The Company had 84 employees as on 31st March, 2025. It continues to invest in employee training, safety, and leadership development. The industrial relations environment remained cordial during the year, with zero man-days lost due to disputes or unrest.

Key initiatives during the year:

• Skill enhancement workshops.

• Occupational health and safety campaigns.

• Digital workforce systems implementation.

Environment, Health and Safety (EHS)

Environmental compliance and safety remain top priorities. The Company has:

• Installed pollution control equipment like bag filters, scrubbers, and continuous emission monitoring systems.

• Adopted water and energy conservation measures across plants.

• Reported zero major reportable incidents in FY 2024-25.

Cautionary Statement

Certain statements in this Report concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of subsequent developments.

To strengthen the Internal Control Processes, the Company has appointed Independent Professional firm as Internal Auditors who are authorized by the Audit Committee to assess the adequacy of Control Processes and report key audit observations and recommendations to the Audit Committee on a periodic interval. Further, during the year the Internal Financial Controls were adequate and operating effectively. The Statutory Auditors have also certified on adequacy of Internal Controls & their operating effectiveness.