Tanfac Industries Ltd Management Discussions

Global Economy Overview

The global economy grew by 3.3% in 2024, supported by continued recovery across several regions and the gradual stabilization of inflationary pressures. This performance was aided by improvements in global supply chains and a decline in energy and food prices, which helped ease input cost pressures across key sectors. While the overall trajectory of global economic activity remained positive, it was shaped by structural shifts in trade dynamics and ongoing adjustments in monetary and fiscal policy frameworks across major economies. The introduction of new tariffs by the United States, along with responsive trade measures by key partners, contributed to a reconfiguration of the global trade environment. These developments introduced new dimensions to the economic landscape and had material implications for global growth forecasts.

Growth in advanced economies remained moderate, with the United States recording growth of 2.8% in 2024. As a group, advanced economies grew by 1.8%, supported by resilient services sectors and consistent efforts by central banks to contain inflation. This progress occurred despite policy tightening, elevated trade-related uncertainty, and a moderation in demand. Within the region, the euro area registered growth of 0.8%, reflecting similar external and domestic challenges, as well as the continued implementation of restrictive monetary policy.

Emerging markets and developing economies recorded steady growth of 4.3%, supported by underlying domestic demand and relative macroeconomic resilience, despite volatility in commodity markets. India remained one of the most robust performers in this group, benefitting from strong private consumption, favourable demographic trends, and significant advancements in digital infrastructure. In contrast, China experienced a moderation in growth, driven by the impact of prolonged trade tensions and broader shifts in global economic patterns.

Looking ahead, global growth is expected to moderate to 2.8% in 2025, influenced by the persistence of trade tensions, tighter financial conditions, and growing geopolitical risks. These factors are likely to weigh on investment decisions and cross-border activity. A gradual recovery is projected in 2026, with global growth forecast at 3.0%. However, this outlook remains subject to the resolution of existing policy uncertainties and the broader geopolitical landscape, which will play a critical role in shaping the pace and composition of future

The global chemical industry entered 2025 with renewed momentum, following a period of volatility induced by pandemic aftershocks, energy price fluctuations, and geopolitical tensions. The industry was valued at USD 6,182 billion in 2024 and is projected to reach USD 6,324 billion by 2025, representing a year-on-year growth rate of 2.3%. This recovery has been underpinned by stabilized energy prices, robust demand from key sectors such as semiconductors, automotive, and construction, and the resurgence of manufacturing activity in leading markets.

Looking ahead, the global chemical industry is expected to maintain a steady growth trajectory, despite ongoing challenges. Demand for chemical products will continue to be driven by the transition to clean energy and the push for sustainable materials, as well as consistent requirements from sectors such as automotive, construction, and electronics. Digital transformation and enhanced supply chain flexibility will be essential as companies seek to mitigate disruptions caused by geopolitical tensions, policy shifts, and climate risks. The industrys ability to innovate by developing higher-margin specialty products, adopting cutting-edge manufacturing technologies, and investing in sustainability will be key determinants of competitiveness.

Strategic partnerships and digitally enabled supply chain solutions are likely to further support resilience and operational agility in an evolving global landscape. With continued growth in the Asia-Pacific region and stabilizing trends in North America and Europe, the global chemical industry is positioned to pursue new opportunities, provided businesses remain focused on adaptability, compliance, and long-term value creation.

Indias economy is estimated to grow at 6.5% in FY25, moderating from the previous fiscal years robust growth of 9.2%. This deceleration is largely attributed to prevailing global trade uncertainties, including proposed tariffs by the United States on Indian exports, as well as subdued private investment activity. Notwithstanding these external and domestic challenges, the economy exhibited resilience, supported by strong domestic consumption, improved agricultural outlook driven by favourable monsoon predictions, and continued momentum in the services sector.

Inflationary pressures softened significantly, with the headline inflation rate easing to 3.34% in March 2025, marking the lowest level recorded in the past five years. This improvement was primarily driven by a decline in food inflation, which moderated to 2.69%. Additionally, housing and fuel inflation also registered declines, contributing meaningfully to the broader disinflationary trend. In response to improved inflation dynamics, the Reserve Bank of India undertook two successive reductions in the policy repo rate, bringing it to 6.0%. This monetary easing has enhanced the central banks ability to support growth while maintaining price stability and has reinforced the recovery trajectory of the broader economy.

At the sectoral level, signs of positive momentum are evident across several key industries. The manufacturing sector has benefited from improved capacity utilization and a more supportive policy environment. While global headwinds and margin compression continue to weigh on the sector, domestic demand remains a critical driver. Increased logistics efficiency, targeted policy incentives for value-added production, and enhanced infrastructure investment have supported industrial growth, particularly in areas linked to consumer goods and light manufacturing. Government-led infrastructure development and fiscal support have improved business sentiment and driven increased demand, particularly in core industrial segments. The services and infrastructure sectors continue to display a favourable outlook, underpinned by sustained demand conditions and stable pricing. These trends are expected to support the growth outlook in the near term, supported by ongoing rural demand and a gradual recovery in urban consumption.

Indias chemical industry is a key pillar of the countrys manufacturing and economic architecture, contributing approximately 7% to the national gross domestic product. It supplies essential raw materials to several high-impact industries, including agriculture, pharmaceuticals, textiles, automotive, and construction. With its strategic significance well established, India has emerged as the sixth-largest producer of chemicals globally and the third-largest in Asia.

In 2023, the domestic chemicals market was valued at approximately USD 220 billion. The sector is expected to grow significantly, reaching between USD 400 and 450 billion by 2030, and is further projected to reach between USD 850 and 1,000 billion by 2040, subject to continued policy support and infrastructure development. While this future growth outlook is promising, Indias global footprint in the chemicals space remains relatively limited. As of 2023, the countrys share in global chemicals consumption stood at 3 to 3.5%.

Although the sector has benefitted from the Government of Indias broader economic reforms, the need for more industry-specific interventions continues. Key initiatives such as the introduction of the Goods and Services Tax, liberalisation of foreign direct investment, and flagship programmes like ‘Make in India and ‘Aatmanirbhar Bharat have helped improve the investment environment and competitiveness across sectors. The application of Production-Linked Incentive schemes to targeted segments has further supported manufacturing growth. Despite these measures, structural challenges within the chemicals industry persist.

A critical constraint remains the sectors high dependence on imports, particularly for petrochemical intermediates and speciality chemicals. This dependency has contributed to a considerable trade deficit, estimated. The limited backward integration into feedstocks, along with the sectors focus on commodity-grade chemicals, has restricted its ability to move up the value chain.In addition to reliance on imports, infrastructure-related challenges further hinder efficient operations and cost optimisation. Inadequate feedstock availability, shortage of shared industrial infrastructure, and logistical inefficiencies contribute to higher production costs.

Despite these challenges, Indias chemical industry holds significant long-term potential. The domestic market offers scale and resilience, with strong underlying demand driven by demographic growth, rising disposable incomes, and rapid urbanisation. End-use sectors such as consumer goods, automotive, healthcare, and agri-inputs provide a large and growing customer base for chemical producers. With the right policy alignment and investment in enabling infrastructure, the industry is well-positioned to increase its share in global value chains.

Government policy continues to evolve in favour of industrial growth. Plans for integrated petrochemical clusters, improvements in logistics corridors, and enhanced port connectivity are intended to reduce structural bottlenecks over time. Increased focus on energy security and domestic availability of key feedstocks may help reverse some of the current import dependencies. Moreover, support for green chemistry, sustainable manufacturing practices, and circular economy models will also improve long-term sustainability and cost efficiency.

With steady growth and demand across semiconductors, electronics and other sectors like fluorocarbons, inorganic fluorine, etc., globally fluorochemicals market is anticipated to grow at 4% CAGR in the next 10 years to reach USD 36 billion from the current level of USD 25 billion with Asia Pacific Region account for over 40% of the global demand buoyed by increased demand from India due to large investments in infrastructural developments and growth of automotive and aerospace industries.

During the next 10 years, Indian fluorochemicals market is expected to grow over 10% CAGR due to factors mentioned above and also the ‘Make in India initiative. Rapid urbanization, rising middle class and recent announcement of GST rationalization to boost consumption across sectors is expected to fuel further growth in the demand of refrigerant gas. (Source: Global Newswire, MMR, Frost & Sullivan)

The hydrofluoric acid market grows with demand in fluorochemicals, refining, and electronics, driven by industrial use and strict safety regulations. It is expected to grow at CAGR of 5.8% and reach USD 2.3 billion in next 10 years from the current level of USD 1.3 billion. he hydrofluoric acid (HF) market focuses on the production, distribution, and application of this highly reactive inorganic acid, which is a key raw material in various industrial processes. Hydrofluoric acid is primarily used in the production of as refrigerants, fluoropolymers, and It also plays a crucial role in petroleum refining (alkylation processes), metal pickling, glass etching, and semiconductor manufacturing. Asia-Pacific dominates global production due to robust chemical manufacturing infrastructure. HF, a highly corrosive and toxic, require expertise in safe handling, storage, and transportation measures. Stringent environmental and workplace safety regulations influence market operations and technology adoption which act as a barrier for the new player. Innovation in safer handling technologies and sustainable alternatives is influencing future market dynamics. (Source: Polaris Market Share Research.com/ Industry Analysis / Hydrofluoric Acid Market)

Tanfac Industries Limited is a leading entity in the Indian chemical sector, functioning as a joint venture between Anupam Rasayan India Limited and the Tamil Nadu Industrial Development Corporation (TIDCO). Established in 1985, the company has built a distinguished reputation as one of the foremost producers of hydrofluoric acid and its derivatives, including aluminum fluoride and a range of specialty chemicals. The companys manufacturing operations are based within a state-of-the-art facility spanning 60 acres at the SIPCOT Industrial Estate in Cuddalore, Tamil Nadu, providing a strategic logistical advantage in serving both domestic and international markets.

Tanfac maintains a comprehensive product portfolio, which includes anhydrous hydrofluoric acid, sulphuric acid, oleum, potassium fluoride, potassium bifluoride, boron trifluoride complexes and calcium sulphate, , among others. This broad product suite caters to a diverse and evolving customer base, underpinning the companys robust position within the chemical manufacturing industry.

A commitment to quality, sustainability, and operational excellence is fundamental to Tanfacs corporate philosophy. The company adheres to rigorous international standards, being certified under ISO 9001:2015 for quality management, ISO 14001:2015 for environmental management, and ISO 45001:2018 for occupational health and safety. These certifications reflect Tanfacs dedication to maintaining best-in-class processes, ensuring the welfare of its workforce, and minimizing its environmental impact.

Since its inception, Tanfac has placed a strategic emphasis on innovation and continuous improvement across all aspects of its business. The company continually invests in technology, process enhancements, and the professional development of its workforce. Through these initiatives, Tanfac actively seeks to strengthen operational efficiencies and enrich its product offerings to meet the changing needs of its clients.

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Operational Updates .

In June 2025, the Company successfully commissioned a solar-grade Dilute Hydrofluoric Acid (DHF) facility with an installed capacity of 10,000 tonnes per annum. This project represents a notable milestone for the Indian chemical industry, marking the countrys first solar-grade DHF plant. The facility has been established to enhance self-reliance in the solar manufacturing ecosystem by supplying critical raw materials domestically. Following successful quality trials, the product was certified by a leading Indian solar wafer manufacturer, positioning Tanfac as a credible supplier of high-purity chemical solutions to the renewable energy sector. Planning for Phase II of the project is underway, with anticipated commissioning in FY26 that would double the facilitys capacity to 20,000 tonnes per annum. The project also creates a foundation for addressing the requirements of adjacent industries such as semiconductors and advanced electronics, where chemical purity standards are stringent and globally benchmarked.

In a further diversification of its business portfolio, the Company has entered into a long-term framework agreement with a leading American, Japanese, and Indian consortium, marking Tanfacs foray into the refrigerant gas segment. The annual revenue potential from this agreement is approximately INR 750 crore, which equates to about USD 86 million per year. Investment required for the project stands at INR 370 crore and the initial supply is expected to begin in the second half of FY27. Manufacturing will be undertaken at the Companys existing facility in Cuddalore, supported by planned investments in capacity creation and infrastructure. This development demonstrates Tanfacs intent to enter high-growth adjacent chemical segments that promise sustained demand, further consolidating its position in the global specialty chemicals landscape.

Continuing its commitment to capacity enhancement and long-term asset development, Tanfac commissioned a new Hydrofluoric Acid (HF) unit in October 2024. This facility has doubled the Companys HF production capacity from 14,850 tonnes per annum to 29,700 tonnes per annum, making it one of Indias largest HF producers. The brownfield expansion at the Cuddalore site involved a capital investment of approximately INR 100 crore. The commissioning of this facility plays a central role in increasing in-house availability of hydrofluoric acid, thereby supporting the manufacture of high-value-added fluoride derivatives. In addition to improving supply security and operational efficiency, the project enhances vertical integration across the value chain. It enables the business to cater more effectively to industries such as agrochemicals, electronics, and energy storage, all of which continue to demonstrate strong and sustained downstream demand.

In FY25, Tanfac Industries Limited delivered strong revenue growth, with revenue from operations rising to 556.98 crore, compared to 378.15 crore in FY24. This robust top-line performance was supported by higher volumes across key products, expanded capacities, and effective market penetration.

Total income increased to 559.93 crore, up from 385.22 crore in the previous year. The Companys EBITDA for the year rose significantly to 131.82 crore, compared to 77.79 crore in FY24, while EBITDA margins improved to 23.67% in FY25 from 20.57% in the prior year, reflecting improved cost structures and operational leverage. Profit before tax reached 118.76 crore, increasing from 70.06 crore last year. Net profit stood at 88.15 crore, a rise from 52.48 crore in FY24.

For more details please refer note no. 29.10 of financial

Tanfac Industries Limited recognises that its workforce remains integral to the Companys continued success and sustainable growth. Operating within a highly regulated and competitive sector that requires operational precision, innovation, and a strong commitment to quality standards, the contributions of a skilled and motivated employee base are indispensable. As at 31 March 2025, the Company employed 180 individuals, each aligned with the organizational vision and focused on advancing strategic objectives.

During the financial year FY25, the Company remained committed to strengthening its human capital by prioritizing the attraction, retention, and engagement of industry-leading talent. Tanfac continued to foster a workplace culture that supports personal and professional development, ensures employee well-being, and promotes long-term career progression. Regular training initiatives and structured development programmes were implemented across functions to enhance capability, drive performance, and build leadership capacity within the organization.

Tanfac Industries Limited has instituted a comprehensive internal control framework designed to meet the governance, compliance, and operational requirements of its business environment. This framework comprises well-defined policies, procedural guidelines, and systematic controls intended to safeguard assets, ensure the reliability of financial and operational reporting, and maintain adherence to statutory and regulatory standards.

The Companys internal control structure supports timely identification and resolution of discrepancies, facilitates accurate disclosures, and reinforces accountability at various levels. Oversight is maintained through structured evaluations conducted by the internal audit function and continuous monitoring by the Audit Committee. These measures collectively contribute to maintaining the integrity of financial processes, promoting operational discipline, and ensuring long-term business continuity.

Tanfac Industries Limited may, from time to time, make forward-looking statements through various communications, including filings with the BSE and reports issued to shareholders. These statements are intended to reflect management expectations and projections based on currently available information. However, the Company does not undertake any obligation to revise or update such statements retrospectively.

All content presented in this report has been prepared exclusively by Tanfac Industries Limited. The Company accepts no liability for any loss or consequence arising from the use of, reliance on, or interpretation of this Annual Report or its contents.