Sunlite Recycling Industries Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENT:

a) Robust Demand: The copper rod and wire products sector is witnessing consistent growth, driven by ongoing infrastructure development, electrification, and surging requirements from power, electrical, and electronic industries.

b) Indias copper demand rose from 1,159kT in FY2019 to 1,660kT in FY2025, expected to reach up to 2,560kT by FY2030, reflecting the critical role of copper in modern industrialization, especially electrification and renewable energy deployment.

c) Growth in Recycling: The recycled copper market in India is expanding rapidly, supported by government initiatives for sustainability and circular economy practices. Secondary (recycled) copper is projected to form 55% of total demand by 2030.

d) Electric Vehicle & Renewable Energy Push: Adoption of electric vehicles and renewable energy (solar, wind) is a major driver for copper products, amplifying demand for conductors and wires due to their essential role in power transmission and electronics.

2. OPPORTUNITIES & THREATS:

a) Sustained High Demand: The demand for copper rods, wires, earthing products, and conductors remains robust due to major infrastructure development, renewable energy projects (especially solar and wind), electrification, and rapid growth in the power and electronics sectors. The continued advancement of electric vehicles (EVs) and telecommunications, notably 5G expansion, provides a strong demand tailwind for copper-based products.

b) Strategic Positioning with Recycling: Growing emphasis on sustainability and circular economy policies benefits companies recycling copper scrap. Recycled copper is increasingly preferred for its lower environmental impact, and favorable regulations are encouraging greater use of recycled material in manufacturing.

c) Rising Role in Automotive & Electronics: Increasing use of copper in EVs, battery tech, automotive components, and electronic devices new business avenues for presentssignificant manufacturers able to supply quality recycled copper products.

d) Export Potential: Indias positioning in the global supply chain is improving, with opportunities to export copper-based products due to rising demand and potential supply chain diversification by international buyers.

e) Supply Chain Volatility: 2025 is marked by heightened challenges such as geopolitical instability, disruptions to copper mining in major exporting countries (Chile, Peru, DRC), and associated global supply uncertainty, which impacts raw material prices and availability.

f) Quality Risks from Scrap: An influx of low-quality copper scrap poses both product quality and compliance risks. Without stringent standards and responsible recycling practices, product quality may be compromised, potentially resulting in reputational and financial losses for manufacturers. g) Competitive Market & Cost Pressures: The growing attractiveness of the sector invites new entrants and international competitors, intensifying price-based competition. Additionally, capital and operational costs (CapEx/OpEx) remain high, especially for modernizing recycling and refining technologies.

h) Regulatory Compliance & ESG Demands: Increasing environmental, social, and governance (ESG) scrutiny necessitates investment in advanced, pollution-minimizing technologies and more transparent sourcing practices. Non-compliance or lagging behind sustainability expectations can hurt market access or attract penalties.

i) Price Fluctuations: Copper prices remain volatile due to mismatches between growing demand and constrained global supply, and planning. Disruptions affectingprofitability in primary copper supply further emphasize reliance on scrap, which can also experience price swings.

3. SEGMENT–WISEORPRODUCT-WISEPERFORMANCE

Particulars	FY 2024-25 Sales (Rs. in Lakhs)	% to Total Sales FY 2024- 25	FY 2023-24 Sales (Rs. in Lakhs)	% to Total Sales FY 2023-24
Copper Rod	122,953.92	88.03%	1,04,562.48	89.66%
Copper Wire	10,706.83	7.67%	7,187.97	6.16%
Copper Strips	1,566.19	1.12%	2,266.71	1.94%
Others	4,444.25	3.18%	2,609.92	2.24%
Total	139,671.19	100.00%	1,16,627.09	100%

4. INDUSTRY OUTLOOK:

The industry outlook for copper product manufacturing through recycling of copper scrap is positive, driven by growing demand from renewable energy, electric vehicles, and infrastructure development. Emphasis on environmental sustainability and circular economy practices boosts recycled copper usage. Technological efficiency andadvancements product improve quality, while urbanization in emerging markets expands electrical infrastructure needs. Challenges include raw material price volatility and supply chain risks, but companies investing in innovation and diversification are well-positioned for long-term growth aligned with global sustainability goals.

5. RISKS & CONCERNS

a) Raw Material Price Volatility

The availability and prices of copper scrap, the primary raw material, are subject to market fluctuations influenced by global supply-demand dynamics. Sudden increases in scrap prices can impact production costs and profitability if not managed effectively.

b) Supply Chain Disruptions

Dependence on timely supply of high-quality copper scrap exposes the company to risks from logistical challenges, geopolitical tensions, or regulatory changes that may hinder raw material sourcing or delay deliveries.

c) Regulatory and Environmental Compliance Stringent environmental regulations related to recycling operations, emissions, and waste management require continuous monitoring and investments to ensure compliance. Non-compliance could lead to penalties, operational stoppages, or reputational damage.

d) Technological Risks

Maintaining competitiveness requires ongoing investments in recycling and manufacturing technology. Failure to upgrade processes or adopt innovations may resultinlowerefficiency,higher costs, and compromised product quality.

e) Market Competition and Demand Variability The industry faces competition from both primary copper producers and other recyclers.

Demand fluctuations driven by economic cycles, infrastructure spending, or disruptions in key customer industries can affect sales volumes and margins.

f) Operational Risks

Operational challenges such as equipment breakdowns, process inefficiencies, or safety incidents can disrupt production schedules and affect product delivery commitments, impacting customer satisfaction and financial performance.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

a) The Company has in all material respects, an adequate internal financial control towards achieving orderly and efficient conduct of its business operations, adherence to companys policies, optimum utilization of resources, and effective monitoring thereof in order to prevent and detect frauds and errors in timely manner.

b) The internal control mechanism ensures that, all transactions are authorized, recorded, and reported correctly in a timely manner and compliance with all laws and regulations and policies and procedures laid down by the management from time to time.

7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

In FY 2024–25, the company demonstrated strong financial growth aligned with enhanced operational performance. Revenue from operations increased by 19.76%, reaching Rs.139,671.18 lakhs, reflecting higher production volumes and improved sales of copper rods, wires, earthing products, conductors, and wire bars manufactured through recycling copper scrap. This growth indicates successful market demand capture and operational scalability.

Profit Before Tax surged by 61.12% to Rs.1,919.62 lakhs, and Profit After Tax increased by 59.71% to Rs.1,427.23 lakhs, underscoring improved by operationalprofitability efficiencies and cost optimization in scrap sourcing, energy consumption, and process losses. The substantial despite expenses scaling increase in profitability moderately speaks to better margins from enhanced operational execution.

Overall, the financial performance reflects a strong correlation with operational improvements including higher production capacity utilization, process efficiencies, and effective cost management. These factors collectively strengthened the companys market position profitabilityin the copper and recycling manufacturing segment.

8. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:

The Company considers employees as its vital and most valuable assets. Your Company considers manpower as its assets and understands that people have been driving force for growth and expansion of the Company. Company has always remained an equal opportunity employer and has embedded these values in its employees. Manpower are being mentored to take on larger roles in the organizations. Through our learning and development initiatives, the Company continues to upskill our employees for their jobs. The Company is into process of continuous improvements based on feedback and inputs from multiple stakeholders, past experiences and industrys best practices for giving better employee experiences.

9. KEY FINANCIAL RATIOS:

Particulars	Indicator	FY 2024-25	FY 2023-24	Change (%)	Note
1 Inventory Turnover Ratio	Times	37.13	34.08	8.93%	-
2 Net Profit Ratio	%	1.02	0.76	33.59%	NOTE-1
3 Trade Receivables Turnover Ratio	Times	82.89	90.05	-7.96%	-
4 Current Ratio	Times	2.63	1.25	109.66%	NOTE-2
5 EBIT Interest Coverage Ratio	Times	7.27	3.54	105.38%	NOTE-3
6 Debt Equity Ratio	Times	0.15	1.87	-91.97%	NOTE-4
7 Return on Equity Ratio	%	36.27%	76.30%	-52.47%	NOTE-5
8 Return on Capital Employed	%	32.14%	31.45%	2.20%	-
9 Operating Profit Margin	%	1.59%	1.42%	11.97%	-
10 Return on Net Worth	%	23.78%	47.84%	-50.29%	NOTE-6

Note 1: Net Profit Ratio:- Net profit ratio increased as company is able to effectively control its costs and there is increase in earnings.

Note 2: Current Ratio:- There is change in Current Ratio as inventories has increased drastically as compared to previous year. Further current liabilities has decreased due to repayment of cash credit loan. Note 3: EBIT Interest Coverage Ratio:- The companys earnings have risen considerably, while the interest expense has decreased.

Note 4: Debt Equity Ratio:- Debt equity ratio has reduced drastically since company has raised funds through IPO and repaid majority of cash credit and other loans.

Note 5: Return on Equity Ratio:- Return on Equity has reduced because the company has issued shares through IPO which resulted in the increase in share capital of the company.

Note 6: Return on Net Worth:- The Return on Net Worth has decreased because the company issued equity shares through an Initial Public Offering, resulting in an increase in the companys total share capital.

10. CAUTIONARY STATEMENT

The Management Discussions and Analysis Statement made above are on the basis of available data as well as certain assumptions as to the economic conditions, various factors affecting raw material prices, selling prices, trend and consumer demand and preference, governing and applicable laws and other economic and political factors. The management cannot guarantee the accuracy of the assumptions and projected performance of the Company in future. It is therefore, cautioned that the actual results may differ from those expressed and implied therein.

Prahladrai Ramdayal Heda

DIN : 09696242

Whole-time director & Chairman

Place: Kheda

Date: 02/09/2025