Poddar Pigments Ltd Management Discussions

Global Economic Overview

The global economy is currently navigating heightened uncertainty, largely driven by recent policy shifts in major economies, particularly the United States. In April 2025, the U.S. announced near-universal tariffs, intensifying trade tensions and contributing to global policy volatility. These tariffs are viewed as both a negative supply shock and an external demand shock. At the same time, rising uncertainty and tighter financial conditions are dampening overall demand.

According to the IMFs World Economic Outlook (April 2025), global economic growth is projected to slow from an estimated 3.3% in FY2024 to 2.8% in FY2025.This marks a notable cumulative downward revision of 0.5 percentage points. Growth in advanced economies is now expected to reach only 1.4% in FY2025, a reduction of 0.5 percentage points. In particular, the United States is forecasted to decelerate to 1.8%, a reduction of 0.9 percentage points. Meanwhile, emerging and developing economies are anticipated to grow at 3.7%, a decline of 0.5 percentage points, with Chinas forecast revised downward to 4%.

Global headline inflation is now expected to decline more gradually than previously projected, reaching 4.3% in FY2025. Inflation forecasts for advanced economies have been revised upward, primarily due to the persistent supply- side pressures stemming from the recent tariff measures. Overall, downside risks to the global outlook persist notably escalating trade restrictions and prolonged policy uncertainty.

Indian Economic Overview

Despite global headwinds, Indias economic outlook remains resilient. The International Monetary Fund (IMF) projects Indias GDP growth at 6.3% in FY2025, rising marginally to 6.4% in FY2026. This sustained momentum reflects the countrys enduring resilience amid global economic uncertainties. The outlook is supported by robust domestic fundamentals, ongoing structural reforms, technological advancements, and significant infrastructure investments. Government interventions including targeted fiscal measures further bolster this trajectory. Steady consumption trends and improving labor market dynamics continue to strengthen Indias medium-term growth prospects.

The economic resilience is primarily driven by consistent performance across the agricultural and service sectors, underpinned by stable private consumption and macroeconomic equilibrium. Continued investments in infrastructure, digital public goods, and targeted government schemes are expected to support growth further.

Indias manufacturing sector is a vital pillar of the countrys economic growth and is among the fastest- growing sectors. According to Colliers India, the sector has the potential to reach a valuation of USD 1 trillion by FY2026, supported by rapid investment growth and rising FDI inflows (USD 29.79 billion in H1 FY2025, as per DPIIT) and strong participation from key industries such as automotive, engineering, pharmaceuticals and consumer durables, with emerging sectors like semiconductors and Agri-tech gaining traction. Government-led initiatives, including ‘Make in India, the Production Linked Incentive (PLI) scheme, have been crucial in fostering investment and competitiveness, supported by state-level incentives, improved infrastructure, and a skilled, cost- competitive workforce. The sector currently contributes approximately 17% to Indias GDP and is expected to rise to 21% within the next six to seven years, reflecting its growing impact on Indias economic landscape.

Rising exports from India are closely linked to the manufacturing sectors growth and the countrys emergence as a global production hub. The manufacturing sector alone has the potential to export goods

worth USD 1 trillion by 2030. Factors supporting this export growth include favorable government policies, competitive advantages such as skilled labor and low costs, and Indias strategic positioning as an alternative to China amid global supply chain diversification. Increased capital investment and mergers & acquisitions are also contributing to higher manufacturing output and export capacity. However, the ongoing global trade disruptions and projected tariff uncertainties, particularly from the United States, could pose challenges.

Overall, India remains well-positioned to navigate global volatility, propelled by strong fundamentals, a proactive policy framework, investment-led growth, and technological advancement — all of which are translating into rising export volumes that are crucial for sustaining the countrys economic momentum.

(Source: World Economic Situation and Prospects as of mid-2025 Department of Economic and Social Affairs

https://timesofindia. indiatimes.com/blogs/truth- lies-and politics/indian -manufacturing-sector- has- potential-to-reach-1- trillion-by-2025-26- colliers-india/

https://www.livemint.com/economy/india-manufacturing-growth-s-

p-global-india-report-global-investors-india-manufacturing-

alternative-energy-india-11747654232132.html)

Industry Review (Masterbatch and Compounds)

The global masterbatch and compound manufacturing industry continues to witness steady growth, with the market projected to expand at a CAGR of 4% from 2025 to 2030. This growth is driven by increasing demand in sectors such as packaging, agriculture, consumer goods, automotive and construction.

The burgeoning packaging industry, fueled by e-commerce growth and increasing consumer awareness, is a primary catalyst. Masterbatches enhance the aesthetics, functionality, and sustainability of plastic packaging solutions contributing to both branding and product performance. Growing demand for agricultural products like drip irrigation tubing, greenhouse films, and geomembranes contributes to the demand for masterbatches, particularly black masterbatches for UV resistance. Increased demand for aesthetically appealing and colored plastic products in consumer goods also drives the need for color masterbatches.

India remains a promising market, with per capita plastic consumption estimated at 11-13 kg per annum significantly below the global average of 27-30 kg. This indicates strong headroom for growth. Indias increasing population, rising disposable incomes, rapid urbanization and growth in sectors like e-commerce, packaging, automotive, and construction are continuously driving up plastic consumption and, by extension, masterbatches.

As a result, the Indian masterbatch industry is projected to grow at a CAGR of 4.8% from 2024 to 2030, reaching significant value driven by demand for aesthetically appealing and colored plastic products. Industry growth is further supported by government initiatives such as the Production Linked Incentive (PLI) scheme, which saw increased budgetary allocation in FY2025 to boost domestic manufacturing. Sustainability is emerging as a critical focus area for the industry. Companies are increasingly investing in innovations such as recycling of plastic waste into usable compounds, as part of broader ESG and circular economy goals. However, the industry continues to face headwinds including volatility in raw material prices (primarily crude oil derivatives), currency fluctuations, rising regulatory compliance, and intensified competition from both domestic and international players. Managing these risks while leveraging structural growth drivers will be key to maintaining competitive advantage.

The growth of masterbatches in textiles is inevitable, driven by their non-polluting characteristics and significant water savings. As sustainability takes center stage, almost every spinner is allocating increasing capacity to dope-dyed production, directly boosting the demand and consumption of masterbatches.

Fashion thrives on color, and color trends now change faster than ever before. This constant evolution fuels the need for more developments, faster developments, and unique innovations. With human preferences and tastes in perpetual flux, the demand for masterbatches will continue to grow.

Beyond color, there is a rising need for innovative, functional, value- added products, driving substantial investments in research and development. This segment has demonstrated strong potential and is set to remain a powerful growth driver in the years ahead.

Today, fiber-grade masterbatches are not only used in textiles and floor coverings but also in an expanding range of applications such as wipes, shoe uppers, chemical filters, cable covers, and bandages. The list of uses grows with each passing day, keeping demand consistently on the rise.

The industry has demonstrated remarkable resilience withstanding geopolitical disruptions in recent years while adapting swiftly to changing scenarios. Its capacity to innovate and evolve, even in adverse circumstances, is a testament to its strength. The future will belong to those who adapt, innovate, and lead with vision.

Company Business Outlook

Your Company specializes in the production of Color and additive masterbatches, tailored for the dope- dyeing of man-made fibers (MMF) and various polymer applications, as well as engineering plastics and compounds. The true strength of polymers lies in their incredible versatility, allowing their composition to be fine-tuned to perfectly match their intended use. Beyond the broad selection of available polymer types, the real power of polymers comes from the special characteristics that masterbatches add to their applications. With the benefit of highly customizable formulations, additives and color masterbatches help modify the properties of a polymer to suit a users specific needs, whether functional or aesthetic.

In addition to standard formulations, your Company offers a diverse portfolio of ‘smart masterbatches that offer various functional enhancements to both textiles and plastics. This differentiated offering is an exciting and forward-looking product segment, setting us apart from many competitors who do not operate across all these areas. According to a report by Market Research Future, the global masterbatch market is expected to reach a value of $15.81 billion by FY2028, growing at a CAGR of 6.6%. These impressive figures underscore the pivotal role that masterbatch plays in the expanding global plastics and textile industries. With the myriad advantages it offers, masterbatch will continue to be an essential component in the future. This market growth is primarily driven by the rapid expansion of infrastructure and construction activities worldwide. Furthermore, the ongoing trend of replacing metal with plastic across various industries, including automotive, consumer goods, and packaging, is significantly accelerating market growth. This shift towards plastic offers key benefits such as cost-effectiveness, lightweight properties, and extensive customization options, further increasing the demand for masterbatch materials in plastic manufacturing processes. Financial and Operational Performance

The Companys Gross revenue was Rs. 423.85 crores for the FY2025 as compared to Rs.423.56 crores in the previous fiscal. The Company earned a net profit (after tax) of Rs. 22.82 crores during the FY2025 as against Rs. 28.82 crores in the previous fiscal.

Companys total sales volumes of manufactured products, including exports, increased during the year by 9% to 15,220 MT. Capacityutilization for the Company was 82% during the year. Export volumes declined compared to previous year due to subdued demand from Eurozone and high freight costs caused by the Red Sea crisis. With shipping freight rates easing down since last quarter of FY2025, the Company expects exports to improve during the current year. Additionally, in March 2025, the Company reinforced its commitment to sustainable energy solutions by commissioning a 184 KWp rooftop solar plant at its Sitapura Plant.

Capital Expenditure Outlook for FY2025-26 In FY 2025-26, the Company plans to invest approximately Rs. 37 crore towards capacity expansion, which is expected to enhance overall production capacity by around 50%. In addition, the Company is significantly strengthening its product development capabilities, targeting the development of approximately 700-800 samples per month.

Opportunities and Threats Key Opportunity

Indias low per capita consumption of polyester and polymers signals a promising rise in demand for these markets. As a pioneer in the synthetic fiber industry, your Company specializes in producing masterbatches based on Polyesters, Nylons, and Polypropylenes for a wide range of applications, including automotive, carpets, furniture, clothing, non-woven fabrics, technical fibers, and home furnishings. With the growing demands of the MMF textile and plastics industries, your Company is well positioned to experience a significant increase in demand for its products.

Key Threats & Risks

Demand Risk: The demand for the Companys products may be adversely affected by economic downturns in key user industries. Additionally, margin pressures could arise due to shifts in the demand- supply environment, heightened competition from both domestic and international players, volatile raw material prices, and shifts in product preferences. However, your Company remains confident in its ability to navigate these challenges through continuous technological advancements, innovative product development, and strategic cost management.

Foreign Exchange Risk: Fluctuations in foreign exchange rates are a significant factor affecting the profitability of your Company. To manage this risk effectively, the Company employs hedging strategies to balance short-term exposure differences between imports and exports.

Credit Risk: The Company faces credit risk through its extended credit terms to customers, which may result in payment delays or defaults. To mitigate this risk, the Company employs a structured approach that includes, regular monitoring of customer financial health through external tools, maintains strict receivables tracking, and undertakes proactive follow-ups and timely collection measures. Additionally, all export sales are protected by ECGC insurance, providing further security against payment defaults and reducing overall credit exposure.

Competitor Risk: The market is highly competitive, with minimal barriers to entry for new players. To mitigate this risk, your Company implements comprehensive strategies focused on cost efficiency, consistent quality enhancement, superior customer service, and strengthening brand equity.

The industry also faces broader risks, including volatile raw material prices, outdated technology, and competition from international firms, all of which can pressure margins and affect overall performance. Economic slowdowns can further impact sales and profitability. In response, the Company is taking proactive measures, including adopting new technologies, developing innovative masterbatches through investing in R&D, reducing material costs, re-engineering

business and manufacturing processes and more. Additionally, comprehensive insurance policies are in place to provide adequate coverage for the anticipated risks to the Companys assets.

Your Company has well-designed strategies to identify and mitigate risks related to operations, finance, reporting, and legal compliance, ensuring resilience in a dynamic market environment.

Internal Control Systems and Their Adequacy The internal control systems for safeguarding and protecting assets of the Company against loss from unauthorized use or disposition are well in place.

Regular internal audits, documented policies, guidelines and procedures and review by management, supplement the internal control framework. These mechanisms are designed to ensure that financial and other records are accurate and reliable for preparing financial information, other data and for maintaining accountability of assets.

An Audit of Internal Financial Controls (lFC) and Risk Control Matrix (RCM) was carried out by the statutory auditors during the year. The suggestions provided were reviewed and appropriately implemented by the management.

Human Resources / Industrial Relations

The Company continues to foster a workplace culture that prioritizes employee well-being, professional growth, and a positive work environment. Recognizing that employees are the cornerstone of its success, they were encouraged to actively participate in various conferences, seminars, skill-development programmes and training sessions, enabling them to enhance their expertise and contribute more effectively to the organizations long-term success.

Career development opportunities were extended across all levels and functions, ensuring equitable growth pathways for every employee. A strong focus on leadership development and upskilling initiatives has further reinforced a culture of excellence and high performance. The Company has further strengthened its efforts to provide a supportive and inclusive work environment that nurtures talent, encourages innovation and maximizes individual potential.

Key Performance Indicators

The key financial ratios for the financial year are as follows:

Industrial relations remained harmonious and constructive throughout the year, reflecting the Companys commitment to maintaining a collaborative and respectful work environment. The Company remains dedicated to its employees holistic development for ensuring a motivated and high performing team that drives sustained business success.

As of the 2024-25 fiscal year, your company talent base consisted of 360 employees (excluding casual workers). The Board of Directors extends its heartfelt appreciation to all employees for their sincere efforts at every level throughout the year.

Health, Safety and Environment:

The Company places paramount importance on the health and safety of its workforce which remains a part of its core values. All requirements under applicable laws and regulations are fully complied by the Company. Considering the significance of Health, Safety and Environment (HSE) in masterbatch manufacturing, the Company has established robust HSE systems at both of its manufacturing units situated at Jaipur, Rajasthan. These systems are regularly reviewed and updated to align with industry best practices and statutory guidelines. Additionally, the Company continues to maintain its Quality Management System (qMs) in accordance with the ISO 9001:2015 standard.

Awards and Recognition:

Your Company continued its quest for excellence in its chosen area of business to emerge as a truly global brand. Several awards and rankings continue to endorse your Company as a thought leader in the industry.

During the financial year 2024-25, the Company has been recognized with the prestigious "Green Energy Leadership Award". The award ceremony was a momentous occasion, held on May 6, 2024, organized by The Employers Association of Rajasthan in Dubai, UAE.

Further, the Company has been recognized with the Special Jury Trophy 2024 for "Outstanding Contribution in CSR Excellence" under the Large-Scale Industry category. The award ceremony was held on December 1, 2024, also organized by The Employers Association of Rajasthan in Jaipur, India.

Note: Ratios marked as "-" are not applicable for the reporting periods due to the absence of related financial components. Specifically, theCompany remained debt-free during the year, hence the Debt Equity Ratio and Interest Coverage Ratio have not been presented. The Return on Net

Worth for FY2025 stood at 7.73%, as compared to 10.42% in the previous year. The fall is due to reduction in net profit amount during the year.

CAUTIONARY STATEMENT the Government regulations, tax laws/ other statutes, geopolitical

Statements in the Management Discussion and Analysis Report

describing the Companys objectives, estimates, expectations, or For and on behalf of the Board of Directors

projections may constitute "forward-looking statements", within the

meaning of applicable laws and regulations. Actual results may differ

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