Refex Industries Ltd Management Discussions

Global Economy

Throughout the fiscal year 2023-24, the global economy showed signs of recovery amidst diverse regional dynamics and persistent challenges. According to the International Monetary Fund (IMF), global GDP growth stabilized around 4.4%, marking a notable rebound from the setbacks caused by the pandemic. Economies such as those of the United States and of several countries in Europe sustained moderate growth, buoyed by strong consumer spending and substantial fiscal support measures.

Further, geopolitical tensions and trade disputes heightened uncertainty, disrupting global markets and investor confidence in the FY 2023-24. Shifts in trade policies, particularly among major economies, exacerbated challenges in international trade flows.

Additionally, technological advancements in digitalization and renewable energy sectors reshaped industries globally. Investments in AI, cybersecurity, and sustainable technologies surged, bolstering global competitiveness. The digital economy expanded significantly, with projected global IT spending reaching $4.5 trillion by 2024.

Indian Economy

The FY 2023-24 was a period of significant economic dynamism for India, which was also characterized by a robust GDP growth rate of 6.5% coupled with a stable inflation around 4%, which in turn was also underpinned by a resilient domestic demand and the overhauling strategic policy interventions by the Reserve Bank of India (RBI). Indias services sector, which was led by Information Technology and financial services, continued to drive growth, leveraging technological advancements and increasing digital adoption. At the same time, the manufacturing sector also saw a resurgence, which contributed substantially to export growth and economic diversification efforts.

Overall, it is expected that the Indian economy will continue to grow and be favourable to businesses across all sectors.

Industry Overview

a) Refrigerant Gases

Refrigerants are chemicals that have the ability to absorb heat, and hence used to cool products owing to their ability to absorb heat. Refrigerants are essential to modern refrigeration systems, such as refrigerators, air conditioners, chillers, freezers, and in various industrial applications (manufacturing, chemicals, food & beverages, pharmaceuticals etc) The refrigerant market is influenced by various factors including global economic conditions, industrial growth, regulatory changes, technological advancements, and environmental considerations. As of the latest available data, the global market for refrigerants was valued at approximately USD 25 billion in 2024 and is projected to grow at a rate of ~7% in the coming years. The increase in demand for energy-efficient cooling solutions, increase in per-capita income of the developing economies coupled with rising awareness regarding global warming and ozone depletion are the key factors propelling such growth. APAC region has been continually dominating the growth in refrigerant market, primarily due to the growing demand from automotive industry, domestic and industrial refrigeration (HVAC, consumer appliances and cold chain sector).

However, stringent environmental regulations against fluorocarbon refrigerants and the continuous amendments in the Montreal Protocol are likely to restrain the market, but also pave way for awareness and development of innovative, sustainable and green low GWP refrigerants. The new unsaturated fluorochemicals, referred to as hydrofluroolefins (HFOs), particularly R1234yf, R1234ze, and R1233zd whose GWP levels are extremely low, have already begun the commercial production.

As the industry continues to evolve, stakeholders are increasingly focusing on sustainable practices and the adoption of alternative refrigerants with lower environmental impact, driving innovation and investment in the global refrigerants market.

Opportunities and Challenges of the Indian Refrigerant Industry

There is a discernible upsurge in the commercial sector due to the rising infrastructure development activities accounting for the propulsion of the commercial AC market, which in turn positively impacts the growth in demand for refrigerants in HVAC systems. According to the International Energy Agency, the global stock of air conditioners in buildings is anticipated to grow up to 5.6 billion by 2050, up from 1.7 billion in 2023, which amounts to 10 new ACs sold every second for the next 30 years. India recorded a sale of 1.75 million units of air conditioners in April 2023, double as compared to the same period in the year prior. The increasing production of electric vehicles or cars, is expected to play a vital role in the conservation of energy and such a rise in the production of EVs will further boost the refrigerant market. Growing demand for frozen food, medicines, and new therapeutic treatments within the cold chain has augmented the demand for reliable refrigerated transport. The data centers produce excessive heat and cultivate a need for efficient . The increasing development of data centers drive the demand for efficient chillers in HVAC systems and contribute to the markets growth. The refrigerant industry faces numerous challenges concerning environmental issues, regulatory compliance, and technological advancements. Complex chemistry, substantial capital expenditure (capex), intensive research and development efforts, and the necessity to meet stringent regulatory standards all threaten the production of refrigerants. Moreover, the Indian governments imposition of anti-dumping duties on specific refrigerant imports has led to significant price fluctuations, profoundly impacting the entire industry. Recent incidents of illegal blending involving cheaper and unsafe refrigerants have further hindered the development and adoption of authentic and secure refrigerant products within the country. These challenges underscore the need for the industry to navigate a complex landscape, balancing innovation with compliance while ensuring environmental sustainability and product safety.

Future Outlook

Government policies and regulations, both at national and international levels, continue to shape the market dynamics by influencing production, imports, exports, and consumption patterns of refrigerants.

The evolution of the Indian refrigerant industry is driven not only by environmental concerns but also by the imperative for energy-efficient solutions. With government initiatives aimed at promoting sustainable practices and reducing greenhouse gas emissions, there is a growing emphasis on adopting energy-efficient refrigerants.

The refrigerant gas market is increasingly focused on developing safe technologies and processes for cooling systems, leading to the introduction of newer refrigerant options with significantly lower Global Warming Potential (GWP) compared to those currently in use. This shift underscores the industrys commitment to advancing environmentally friendly practices while meeting regulatory standards and enhancing energy efficiency in cooling systems. b) Coal

Coal stands as Indias foremost and abundant fossil fuel, pivotal in augmenting the countrys power capacity through thermal power generation. With Indias population growth, expanding economy, and aspirations for improved living standards, predictions indicate a surge in power consumption. Despite the countrys efforts to shift towards renewable sources of power, coal is poised to retain its crucial role in Indias energy landscape.

Performance of Coal Industry

The coal trading industry in India is witnessing substantial changes due to several factors, including domestic production, import trends, and the nations policies regarding energy transition. India, ranked as the worlds second-largest coal producer, maintains a strong dependence on coal for electricity generation, comprising roughly 75% of its energy mix, despite substantial efforts to adopt renewable energy sources. The demand for coal primarily stems from the power generation sector and heavy industries like steel, aluminium, and cement production. Projections suggest Indias coal consumption will increase at an average annual rate of 3.9%, reaching approximately 1,185 million tonnes by 2024. Despite possessing substantial coal reserves, India imports a considerable volume of coal, especially thermal coal, to satisfy its domestic needs. Government efforts to boost domestic production include initiatives such as commercial mining by private firms, permitting captive miners to sell coal in the open market, and significant investments in coal evacuation infrastructure.

Opportunities and Challenges of the Coal Industry

Coal remains a crucial component of Indias energy mix, providing energy security amidst growing demand. And the industry contributes significantly to economic growth through job creation, infrastructure development, and industrial output. However, it also faces scrutiny due to its environmental impact, particularly concerning air pollution and greenhouse gas emissions. And stringent environmental regulations are brought into place to combat the same along with adoption of cleaner renewable resources of power. The economic viability of coal has been impeded by competition from such sources. Further, fluctuating international coal prices and market demand are heavily impacting the profitability and stability of the coal industry.

Opportunities exist for innovation and adoption of cleaner coal technologies such as supercritical and ultra-supercritical power plants to enhance efficiency and reduce emissions. There are further opportunities for investment in modernizing infrastructure, improving mining practices, and developing sustainable coal technologies (the likes of carbon capture and storage).

Navigating these opportunities and challenges requires strategic planning, technological innovation, regulatory compliance, and a balanced approach towards sustainable development in the coal sector.

Future Outlook

The Ministry of Coal has developed a comprehensive strategy to increase domestic coal production and decrease dependency on imported coal that could be sourced domestically. The outlook for the fiscal year 2024-25, the ministry targets a coal production of 1,080 million metric tonnes (MMT). Although all efforts are being made to produce more coal domestically, India still imports coal because of factors like high demand, specific quality requirements in various industries, logistical hurdles, and the necessity to maintain a . Coal -based capacity is expected to peak around 250 GW by 2030, with coal-based electricity generation slowing down as India advances towards its net-zero targets. However, coal will continue to play a pivotal role in ensuring energy security and supporting economic activities.

Today, there is a lot of focus and investment in this sector as this is the backbone of Indias energy consumption landscape. Advanced mining technologies, leveraging automation and technology and exploring existing coal mines are the areas of focus. It is very evident that coal industry is shaped and influenced by domestic production volume, import impact, regulations while caring for the environment as well. There is considerable effort in striking the right balance of all these influential elements with a sharp focus on sustainable development.

c) Ash

According to the CEA (Central Electricity Authority of India), Fly ash utilisation has increased to 284 MMT in FY 2023-24, and approximately 78% of fly ash was utilised. And there is 1677.3 MMT of legacy ash across the country.

The ash and coal industry are interrelated and has inter dependencies. The collection and management of ash is a very critical aspect of coal-fired thermal power plants in India. Fly ash and bottom ash are the byproducts of coal combustion and they present both challenges and opportunities. Indias coal-based power plants generate a significant amount of ash, with estimates indicating approximately 300 million tonnes of fly ash annually. This large volume necessitates efficient collection, storage, and utilization strategies. Ash is a byproduct of coal burnt in thermal plants and have to be disposed in a responsible manner to ensure no hazardous effect on our environment. It is noteworthy that Ash ponds and disposal sites can lead to air and water pollution if not managed properly. Fly ash particles, if airborne, pose respiratory hazards and contaminate surrounding areas. Water contamination from ash leachate is another significant concern, affecting local water bodies and groundwater quality. To mitigate this, the Central and State Governments have mandated a comprehensive framework to ensure proper disposal of ash from power plants. Fly ash is typically collected using electrostatic precipitators or baghouses and can be stored in dry form or mixed with water to form a slurry for wet disposal in ash ponds. The bottom ash is collected at the bottom of the combustion chamber, it is usually transported in a wet slurry form to disposal sites or ash ponds. Now ash collected from here has to be disposed. Fly ash is utilized in various industries, with applications in cement production, bricks, road construction, and agriculture. The transportation is done through trucks, bulkers, and rail rakes. In wet disposal, ash is transported as a slurry known as "pond ash" through a conduit, and contained at an embankment (dyke) which is further transferred at appropriate disposal site as per the standard norms.

The Ministry of Environment, Forest and Climate Change (MoEFCC) mandates that all thermal power plants achieve 100% fly ash utilization to minimize environmental impact.

The ash collected is transported for industries such as Cement and Construction. There is continued focus on using fly ash in cement and concrete production, given its benefits in enhancing durability and reducing the carbon footprint of construction materials. It is also used for road construction: Government initiatives promoting the use of fly ash in road construction projects are expected to drive higher utilization rates. Research and development in new technologies for ash utilization, such as the production of geopolymers and other advanced materials, is in progress to maximize the use of ash in various industries. According to available statistics, the cement industry uses most of the ash, at 26.53% of the total, followed by the roads and embankments at 20.59%, and then by brick and tile industry at 10.18%. Ash can also be used in for filling low-lying areas and mines. Besides, about 32 abandoned mines and 82 non-coal mines (major and minor minerals) had been identified for the ash disposal requirement in the country. The states of Chhattisgarh, Uttar Pradesh, West Bengal, Madhya Pradesh and Maharashtra account for the highest amount of ash production and disposal in the country. Proper and responsible ash management can result in substantial environmental benefits by reducing pollution and conserving natural resources.

Changes in Policy

Disposal of ash is governed by strict regulations by the Central government. Every Coal or Lignite based thermal power plant (including captive or co-generating stations or both) shall be primarily responsible to as ensure100percentutilizationof(fly , and bottom ash) generated by it in an eco-friendly manner. There is a penalty regime effective from April 2022, for non-compliance based on the polluter pays principle, prohibiting the dumping and disposal of ash discharged from coal or lignite-based thermal power plants on land or into water bodies.

Utilisation Percentages of Thermal Power Plants	First Compliance Cycle to Meet 100 Percent Utilisation	Second Compliance Cycle Onwards, to Meet 100 Percent Utilisation
> 80%	3 years	3 years
60-80%	4 years	3 years
< 60%	5 years	3 years

Further to this, the MOEF guidelines specify that all coal or lignite based thermal power plants within a radius of three hundred kilometers shall bear the entire cost of transportation of ash to the site of road construction projects under Pradhan Mantri Gramin Sadak Yojna and asset creation programmes of the Government involving construction of buildings, road, dams and embankments. This prompts all major NTPC / State run plants hoarding massive quantities of ash in the dyke to supply the same to these road projects.

Opportunities and Challenges of the Ash Industry

It is interesting to note that there are both challenges and opportunities in this industry. We are yet to exploit the resources to the fullest as there are several potential ash usages across industries. Technology has played a crucial part in adapting to more alternative applications of ash. Ash is now employed to strengthen concrete, improve soil fertility, replace traditional bricks, reinforce roads, treat wastewater, support ceramics manufacturing, aid in land reclamation, create synthetic aggregates, establish environmental barriers, and contribute to artificial reef ecosystems.

Moreover, ash is now used for road laying, widening etc. and directly contributes to initiatives like the Bharat Mala Pariyojana by the National Highways Authority of India (NHAI), which aims to improve the sustainability and durability of road construction. It is interesting to note that there are both challenges and opportunities in this industry. We are yet to exploit the resources to the fullest as there are several potential ash usages across industries. Technology has played a crucial part in adapting to more usage of ash. Ash is now employed to strengthen concrete, improve soil fertility, replace traditional bricks, reinforce roads, treat wastewater, support ceramics manufacturing, aid in land reclamation, create synthetic aggregates, establish environmental barriers, and contribute to artificial reef ecosystems. Moreover, ash is now used for road laying, widening etc. and directly contributes to initiatives like the Bharat Mala Pariyojana by the National Highways Authority of India (NHAI), which aims to improve the sustainability and durability of road construction. Renovation and modernization of coal / lignite based Thermal Power Station needs to include the technological advancement required to ensure development of dry fly ash collection, storage and disposal facilities. Fly ash is used in the construction of roads, road embankments and flyovers is well established and is slowly picking up. However, its potential is yet to be fully utilized. Use of fly ash in backfilling / stowing of closed / abandoned / running open cast and underground mines has large potential for utilization of flyash, especially for pit head Thermal Power Stations which otherwise have limitedavenuesforfly significant use of fly ash utilization.Thereis construction ofembankmentsforlayingrailwaylines.Theuseofflyash in Agriculture and waste land development has large potential but the utilization is below expectation.

In the recent times there are new emerging areas such as Light Weight Aggregates and Geo-polymers, Coal Beneficiation- Blending and Washing, etc. needs to focusforhigherutilizationofflyashin the country.

Future Outlook

There is a steady increase in the number of coal-fired power plants and industrial facilities. This means there is more demand to dispose ash in safely within the defined norms. The Indian government emphasizes cleaner energy practices and stricter environmental regulations, that has provided companies opportunities to offer innovative technologies and services for efficient ash disposal and utilization, fostering sustainable growth in the industry. As we can see, there has been a constant evolution in providing more solutions to ash disposal to save the environment. The industry must navigate stringent regulations, foster consumer confidence in ash-based products, and diversify its applications to maintain competitiveness against alternative materials.

d) Power

Power trading is indispensable for maintaining a stable and efficient electricity supply within the energy sector. It serves a crucial role in balancing supply and demand, supporting the integration of renewable energy sources, and bolstering the sustainability and reliability of the power system. Integrated with power generation, transmission, and distribution, power trading encompasses the exchange of electricity among different components of the supply chain through buying and selling activities.

Power Generation

Power generation involves the conversion of diverse energy sources such as coal, natural gas, nuclear, hydro, wind, solar, and others into electrical energy. As per the data obtained from the Central Electricity Authority (CEA), the overall generation (Including generation from grid connected renewable sources) in India increased from 1624.465 BU in FY 2022-23 to 1739.091 BU in FY 2023-24. According to CEA, as on 31st March, 2024, the total installed capacity for power generation stood at 4,41,970 MW (megawatt). As of 31st March, 2024, fossil fuels accounted for nearly 55% of the total power generated, while RES (renewable energy sources) accounted for nearly 36% and nuclear power accounted for approximately 1.85%. The private sector in Indias power industry generated 52% of the nations thermal power, while the States and the Central government generated 24% each, for the same period.

The renewable energy generation stood at 18.91 BU (billion units) as of March 2024, as compared to 16.98 BU in March 2023.

Power Transmission

Power transmission involves transporting electricity over long distances from power generation sites to various destinations across different regions. In recent years, Indias transmission network has steadily expanded to support the shift towards renewable energy. During FY 2023-24, a total of 14,203 circuit kilometres (ckm) of new transmission lines were added to Indias network. India maintains a strong National Grid that ensures reliable and secure power transfer from regions abundant in resources to major consumption centers. This infrastructure plays a crucial role in redistributing electricity from surplus to deficit regions or states. The capacity of the National Grid is continuously being enhanced to accommodate the growing electricity generation and demand.

Power Distribution

Power distribution involves delivering electricity from the national grid to end-users, including households, businesses, and industries. Indias overarching goal in the power sector is to ensure universal and sustainable access to affordable electricity. Over the past few years, the Ministry of Power has focused on establishing a unified national grid, strengthening distribution networks, and achieving universal households. These efforts have been instrumental in transforming India from an energy-deficit to an energy-surplus nation. Furthermore, Indias transmission network has steadily expanded to support the transition to renewable energy sources in recent years.

Opportunities and Challenges of the Power Industry

The evolving energy landscape presents both opportunities and challenges for the power industry. The industry has the opportunity to transition to cleaner energy sources such as renewables (solar, wind, and hydro) and invest in energy efficiency technologies as global awareness of climate change expands. Adoption of these opportunities can reduce greenhouse gas emissions, increase sustainability, and strengthen grid resilience. In addition, technological advancements in smart grids and energy storage provide opportunities to meet improving demand and renewable energy integration. However, the power industry faces challenges such as ageing infrastructure, high capital costs for renewable projects, and the need to guarantee grid stability while integrating variable energy sources. In addition, the complex regulatory environment, geopolitical factors, and energy market fluctuations present additional challenges that necessitate strategic planning and cooperation among stakeholders.

Future Outlook

Under the Prime Ministers Gati Shakti Master Plan, the power transmission network will be expanded from 4,25,500 ckm as of May 31, 2020 to 4,54,200 ckm by FY 2024-25, adding roughly 28,700 ckm. In comparison to the projected addition of 28,700 ckm of transmission lines, the addition of approximately 27,000 ckm of transmission network is anticipated for 2024 2025, with an anticipated cost of 75,000. It is anticipated that the proposed Transmission projects under the PM Gati Shakti National Master Plan will further facilitate the transfer of power from generation projects while increasing the reliability of the countrys Power System Network.

e) Solar Energy

Indian Energy Sector Overview

India is the 3rd largest energy-consuming country and ranks 4th globally in Renewable Energy Installed Capacity (including Large Hydro), 4th in Wind Power capacity, and 5th in Solar Power capacity. The country has set a target at the COP26 of 500 GW of non-fossil fuel-based energy by 2030, the worlds largest expansion plan in renewable energy. Indias installed non-fossil fuel capacity has increased 396% in the last 8.5 years, now standing at more than 201.75GW (including large Hydro and nuclear) about 45.3% of the countrys total capacity (as of May 2024). The installed solar energy capacity has increased by 30 times in the last 9 years and stands at 84.27 GW as of May 2024. Indias solar energy potential is estimated to be 748 GWp as estimated by National Institute of Solar Energy (NISE). The Installed Renewable energy capacity (including large hydro) has increased by around 128% since 2014. As of May 2024, Renewable energy sources, including large hydropower, have a combined installed capacity of 193.57 GW.

The present installed capacity of power generation is around 426,132 MW, with 9,943 MW added in 2023-24, of which 1,674 MW is from fossil fuel sources and 8,269 MW from non-fossil fuel sources. Every village and household in India have been electrified, with power availability increasing from 12 hours in 2015 to 20.6 hours in rural areas and up to 23.8 hours in urban areas. (Source: Invest India and Ministry of power)

Outlook of Renewable Energy

India aims to achieve 500 GW of renewable energy installed capacity and produce 5 million tonnes of green hydrogen by 2030 this will be supported by 125 GW of renewable energy capacity. Additionally, 50 solar parks with an aggregate capacity of 37.49 GW have been approved, and the offshore wind energy target is set at 30 GW by 2030. (Source: Invest India) Key renewable energy activities for trading carbon credits under bilateral/cooperative approaches include:

i) Renewable energy with storage	v) Ocean energy types (Tidal, Thermal, Salt
ii) Solar thermal power	Gradient, Wave, Current)
iii) Offshore wind	vi) High Voltage Direct Current Transmission in conjunction with renewable projects
iv) Green Hydrogen	vii) Green Ammonia

Budget allocation for Renewable Energy and Clean Technologies

Rs 35,000 crore allocated for priority investments in energy transition and Net Zero, with Rs 30,000 crore for capital support to oil marketing companies. Budget for grid-based solar power doubled to Rs 10,000 crore in 2024-25. Wind power outlay remains steady at Rs 930 crore. Rooftop solar program to provide up to 300 units of free electricity monthly to 10 million households. Pradhanmantri Suryodaya Yojana launched for rooftop solar installations. Viability gap funding announced for 1 GW offshore wind energy capacity. Budget for National Green Hydrogen Mission increased to Rs 600 crore. Mandatory blending of CBG in CNG for transport and PNG for domestic use. (Source: Down to Earth)

Challenges in Renewable Energy Projects

a) Inconsistent Policies and Regulations: One of the significant challenges is the lack of clarity and stability in policies and regulations. Inconsistent or constantly changing policies create uncertainty for investors, making it difficult to plan and secure financing. Clear and stable policies aligned with renewable energy targets are crucial for attracting investments. b) Multiple Regulatory Authorities: Renewable energy projects often require approvals from multiple regulatory authorities, such as environmental agencies, grid operators, and local governments. Coordinating among these entities can be challenging, leading to delays and added administrative burden. Streamlined processes and inter-agency coordination mechanisms can improve efficiency. c) Limited Grid Capacity: Integrating renewable energy into existing power grids can be problematic due to limited grid capacity. Sometimes, local grid infrastructure cannot absorb the generated renewable energy. Upgrading and expanding grid infrastructure is crucial to accommodate increased renewable energy generation. d) Lack of Interconnection Infrastructure: Effective grid integration requires interconnecting renewable energy projects with existing transmission and distribution networks. The absence of adequate interconnection infrastructure can impede the transfer of renewable energy to end-users. Collaborative efforts are needed to plan and invest in this infrastructure. e) Dependence on Imports: India relies heavily on imported solar panels and components, primarily from China. This dependence makes the supply chain vulnerable to geopolitical tensions and disruptions. Reducing reliance on imports through domestic production is essential. f) Environmental and Social Concerns: Solar projects may face opposition from local communities due to land use conflicts, insufficient compensation, and lack of involvement in decision-making processes. Addressing these concerns through fair compensation and community engagement is vital. g) Price Fluctuations: The solar market is highly competitive, with frequent fluctuations in solar equipment prices. These fluctuations can affect project costs and returns, making financial planning challenging. Stabilizing prices through long-term contracts and local manufacturing can mitigate this issue. (Source: Enerdatics).

Company Performance

In 2002, Refex Industries Limited (hereafter referred to as Refex or the Company) began its commercial operations. The company has specialized in refilling refrigerant gases in India, emphasizing environmentally-friendly alternatives to CFC and HCFC. These gases are commonly used as aerosol propellants, foam blowing agents, and refrigerants. Additionally, Refex is involved in power trading, ash handling, coal supply, and e-mobility services.

Refex has established a spectacular presence in the nation and achieved 22 years of brand awareness. This presence has been built over the years on a solid basis of integrity, professionalism, diversity, dedication, and competitiveness. Refex has obtained the ISO 9001:2015 and ISO 14001:2015 certifications and is dedicated to being a model participant in the areas of sustainable development, health and environmental protection, and safety. In order to grow its clientele and broaden its range of products, the company is always evaluating the state of the market and its potential. Refex has demonstrated its capacity to provide creative solutions and sound financial sustainability to all of its stakeholders.

Refex Industries Limiteds wholly-owned subsidiary Refex Green Mobility Limited (RGML) started operating in Bengaluru on March 31, 2023. Refex Green Mobility Limited is the company that drives its four-wheeled electric cars. The company provides a full range of services, such as fully electric cars, trained and background-checked drivers, state-of-the-art equipment, and committed support staff.

Operational Performance

1) Refrigerants Gases

Under the "Refex" brand, Refex specializes in filling HFCs, which are alternatives to ozone-depleting CFCs and HCFCs. Thiruporur, 40 kilometers from Chennai, is home to the companys re-filling facility, and it has distribution centers all over India. The HFC gasses are purchased by the company from China and India. These gases are mostly utilized as blowing agents, aerosol propellants, industrial refrigeration, and air conditioning. The company has also set up warehouses in Delhi and Mumbai, essentially are main geographic areas, which serves as both the hub for all of the dealers and distributors of refrigerants and the location of the greatest refrigerant use. The Company has begun supplying refrigerants to renowned OEMS such as Carrier, TVS Mobility, LG, and Voltas from 2023. Over 450 dealers and distributors in India have received products from the company, which has sent over 2411 MT of HFC gases there in a year.

The Company has always placed a strong emphasis on innovation, which is also the reason why its product stands out from competing brands and is more expensive. It was among the first to offer 450 ml refilling cans and to set up refilling stations at the locations of vehicle OEMs. The Company provides a wide range of market segments with a comprehensive assortment of HFC products, such as cans of R134A, R404A, R407C, R410A, R32, and R152A.

The Companys logistics department is well-connected to guarantee prompt delivery to customers. The business complies completely with all laws and rules imposed by the government on the refrigerant sector.

With a 45% increase in gas shipments, reaching 2241 MT, there has been a notable advancement. Almost 100 additional dealers were added as part of the expansion, which took place in secondary and tertiary cities in Assam, West Bengal, Gujarat, Punjab, Uttarakhand, and Nepal. Using our copper tubes, we landed ourselves in the small-scale copper trading arena. R290 cans and HC mixes were among the new product blends that are unveiled. Cars24, LG Electronics, and My TVS Parts are among the newly added OEMs. In addition, metering rainwater collecting equipment and a 50-kW rooftop solar plant are put in place for our own operational function.

2) Ash & Coal Handling Business

The purchasing and selling of coal as a commodity on the international market is referred to as "coal supply." The Company purchases high-quality coal from both domestic and foreign suppliers and provides thermal power plants with it at competitive costs. During the examined period, the Companys increased business engagements resulted in a significant increase in coal trading volumes. The Companys two interrelated business operations, coal handling and trading, are essential to the coal supply chain from coal extraction to coal consumption.

Ash must be disposed of by thermal power plants in an efficient and environmentally responsible manner. The Company has been offering services for the processing and disposal of ash in addition to coal handling. Ash, which is produced when coal is burned, is used to create steam, which powers the turbine. Throughout the signific from NTPC yearunderreview,theCompanyprevailedin and State Run Power plants for the ash disposal requirements. The Companys substantial rise in revenues from its ash and coal businesses is also a result of the inclusion of 15+ more thermal power stations to its ash handling business throughout the year.

Rather than acting as an aggregator, the Company wants to be a full solution partner for the power plants. For its coal ash handling business, the company uses a partnership strategy rather than an outsourcing model. By using its own fleet of vehicles totransport ash from the thermal power plants, Refex executed a wise move that increased profit margins and resulted in significant cost savings. With intentions to develop both its et offle clienteleandits trucks, the company is well-positioned for future growth in the upcoming fiscal year. This will ensure that income is maximized and costs are minimized in FY 2024 2025.

With the help of a fleet of more than 800 vehicles, aroundmore than 5 million tonnes of ash was disposed in the fiscal, an increase of over 30% from the year before. With an emphasis on road projects under the Bharatmala Pariyojana initiative, a sizable number of new clients are included, including NTPC in Chhattisgarh, Bihar, and Karnataka, as well as Adani and MP and other State Power plants.

Refex has beefed up and strengthened the business development team in several states and streamlined the tendering procedure. We completed some of our projects in a mere 25% of the allocated time, which is an amazing accomplishment. We are implementing digital technologies, including fuel sensors, to increase productivity at all of our facilities. On the geographical front, we operate across MP, Karnataka, Chhattisgarh, Bihar, and Maharashtra. With operations in NTPC, their joint ventures, state-owned power plants, and private power plants, the companys expansion has established it as the largest organized ash management service provider in the nation.

3) Power Trading

Refex offers a wide range of power trading solutions, encompassing power exchange, bilateral agreements, power banking & swapping, and group captive models. The Companys expertise extends to both conventional and non-conventional sources of power, catering to diverse entities across India. Refex also held the sixth position among the top power industry players (by volume of electricity traded bilaterally) in the country. The Company has been striving to improve its standing, expand its market share, or differentiate itself through various strategies to stay competitive in the dynamic energy market. Moreover, the Company holds a CERC-approved Category-I licence for inter-state power trading, which allows it to conduct power trading activities with no upper limit on the volume of electricity it is permitted to trade.

4) Green Mobility

Refex Green Mobility Limited (RGML) is a wholly-owned subsidiary of Refex Industries Limited and it had begun its operations in Bengaluru on 31st March 2023. Refex Green Mobility Limited operates its 100% electric 4-wheeled vehicles. The Company offers a comprehensive package that includes 100% electric vehicles, drivers with training and verified backgrounds, a cutting-edge technology platform, and dedicated support teams. The company expanded its operations in Chennai during the fiscal. Overall, in this fiscal, the total deployed vehicle counts, for this business vertical increased from 24 to 475+ cars.

Risk Mitigation

Numerous internal and external business hazards affect the Company. Refex has established an extensive risk management framework (RMF) that is customized to meet the unique requirements of each of the companys several business areas. The RMF helps the Company anticipate risks, both big and little, and put the appropriate remedial actions in place. Senior management of the Company is very important and actively monitors the efficacy of the risk management procedures.

Given that the Company depends on the import of HFC gases from China, any military or commercial disputes between China and India will have an impact on the availability of raw materials, as well as the cost and profitability of the business. Furthermore,the situation is probably going to get worse due to volatility in the foreign exchange market. The Company finds it more difficult to acquire the material on time because of the numerous clearances required by customs, which impose antidumping taxes on HFCs and change the import policy from free to restricted, subject to NOC from the relevant ministries.

The procurement of materials from other nations has become more difficult due to recent government limits on the import of refrigerant, net-zero pledges, and "Made in India" laws. Given the high demand for Indian items both domestically and internationally, the company intends to expand its geographic reach and add trendy products. To support its global expansion, the company has also been enhancing its online presence on an e-commerce portal.

Regarding the regulatory and compliance framework, Refex thinks it is essential and important that the legal function bear the primary responsibility for risk management, instead of sharing it with other internal departments and outside attorneys.

Good risk management can lessen risks effects, strengthen organizational procedures, and get the organization ready to face obstacles. The many inherent business risks are known to the Company. Refex is primarily focused on the prompt detection, assessment, and mitigation of potential risks because it is composed of a management team with extensive experience from a range of industries and excellent leadership.

Future Outlook

The Companys aim is to become the most sought-after business partner by leveraging its creative solutions, cutting-edge technology, and skilled personnel. Refex similarly strives to be the best in the industry by consistently developing its business, personnel, products, and services and replicating its success year after year.

Refex has focused on increasing its vendor network in India and accessing new markets for its refrigerant products. The company intends to exceed client expectations by consistently and continuously providing great products and services. The Company has been intensely focused on seizing huge chances and supporting prospective clients in creating a bright future. In addition, the Companys principal goal is to acquire large contracts with OEMs and the Indian government.

For its refrigerant business, the Company is progressively increasing its refrigerant refilling facilities around the country, which is expected to result in increased income in the future. The company intends to develop refilling facilities in the western and eastern areas of the country.

The Companys ash business is anticipated to grow in the future and become more concentrated. Orders are predicted to continue rolling in. The Company plans to distribute ash not just in Chhattisgarh but also in Madhya Pradesh, Uttar Pradesh, Orissa, Tamil Nadu, Karnataka, Andhra Pradesh, West Bengal, Jharkhand, Rajasthan, and Gujarat. Refex plans to take part in obtaining NTPC tenders for the ash disposal industry. The National Highways Authority of Indias (NHAI) Bharatmala Project would present the Company with numerous chances to expand its ash disposal services throughout the nation. Additionally, Refex plans to help commercialize cutting-edge products that are being researched and developed using ash. Additionally, it intends to integrate both forward and backward with the thermal sectors prospects.

For the foreseeable future, Refex will place a high priority on adopting digital transformation in its operations since it guarantees long-term growth and value generation for its stakeholders. The company has begun using cutting-edge technologies gradually, which will improve the companys commercial operations even more.

Additionally, the Company is dedicated to implementing Environment, Society, and Governance (ESG), and it will place the highest priority on being ESG-compliant throughout all of its businesses. With an eye on developing and revising ESG policies, process setting and enhancement, monitoring methods, and record keeping, the company is assessing every aspect of its operations. The Companys goal is to achieve net carbon neutrality by quickening the shift to renewable energy.

Internal Control System

The Company requires a robust internal control system due to its substantial national presence and high business strength. The internal controls are intended to provide reasonable assurance regarding the recording and transmission of accurate financial and operational data, compliance with applicable laws, protection of assets from unauthorised use or loss, execution of transactions with proper authorisation, and adherence to corporate policies. The Companys stringent internal control systems and procedures are well-defined and proportional to the size and nature of the business. The Company has ensured that it is in compliance with all of the required statutes, as well as its code of conduct and corporate standards. The Internal Audit Division examines the adequacy and efficacy of internal controls. The scope of the Audit activity is determined by the Boards Annual Audit Committee, which examines the Internal Auditors reports.

Cautionary Statement

The above statement is as perceived by the Directors based on the current scenario and the input available. Unforeseen external developments and force majeure conditions may have an impact on the above perception.