TGV Sraac Ltd Management Discussions

ANNEXURE E TO THE DIRECTORS REPORT

(Pursuant to Regulation 34 (2) read with Schedule V, Part B (2) of SEBI (LODR) Regulations, 2015

ECONOMY:

Indian economy is presently experiencing robust GDP growth rate at 6.5% in F.Y. 2025. This growth can be attributed to rising employment, improved local consumption, increased exports, surge in digital transformations, reduction in inflation etc. The growth in the economy has been marked by steady rise in its position on the global stage. India has surpassed Japan in June 2025 to become the fourth largest economy in the world. A combination of strong domestic demand and policy reforms is helping the country in its strides in improving its position in global markets further. It is projected to reach a GDP of US$ 5 Trillion by 2027.

Indias ability to attract Foreign Direct Investment (FDI) is also an arm in its economy growth. Country has received FDI amounting to US$ 49.3 Billion in FY 2025. The current account deficit narrowed to Rs.198726 Crores and hardly at 0.06% of GDP in the F.Y. 2025. The Forex reserves stood at US$ 699.74 Billion during July, 2025. RBI has projected a growth rate of 6.5% in F.Y. 2026. With large younger population and with stable and democratic political system, India is poised for Steller growth in years to come.

CHEMICAL INDUSTRY :

The Global Chemical Industry size is estimated a value of USD 6324 billion during 2025 growing at a CAGR of 2.3%. The increase in demand across various sectors such as agriculture, construction, pharmaceuticals, leading to increased consumption across the world. Stringent environmental regulations is a challenge to chemical industry. Sustainability and green chemistry is an opportunity for the industry.

Indian chemical industry is a major contributor to its economy. The industry ranks sixth largest among the world. It is projected to reach a level of USD 300 billion by 2030. Exports of chemicals and allied products reached a level of Rs.928 Billion. To boost chemicals industry Govt. of India has introduced PLI Scheme especially for bulk drugs with a target of Rs.1629 Crores.

PRODUCTS OF THE COMPANY :

The major products of the company are Caustic Soda, Caustic Potash, Chloromethanes and other allied products. The Indian Caustic Soda industry plays a significant part of countrys economy. On all India basis the installed capacity is at 57.84 lakhs MTPA as on 31st March, 2024. Production of the industry was at 46.13 lakh MT for the F.Y. 2023-24 with a capacity utilisation of 82%. Major areas of consumption of Caustic Soda are Aluminium, Inorganics, Textiles, Soaps and detergents, pharmaceuticals, paper etc., etc., areas. The industry is expected to glow at CAGR of 3.28%. Caustic Soda market is divided into Caustic Lye and Flakes. In India, lye market is leading. Caustic Soda industry in the country faces several challenges like global market dynamics, environmental regulations, Imports competition, waste management etc. Though the Indian Caustic Soda has

embraced cleaner Membrane Cell Technology, still the country depends on import of this technology. The high tariff rates in the country is one of the main concern for Caustic Industry and power being the main cost of productions another concern.

Chlorine is a joint product which emerges along with Caustic Soda production. The chlorine market in India is experiencing significant growth with its increase in demand from water treatment, pharmaceuticals and from other chemicals manufacture. The main uses of chlorine includes disinfection of water, bleaching materials, production of plastics, usage in pharma industry, and dyes. Chlorine consumption/commercial disposal will have direct impact on caustic soda production.

Hydrochloric Acid is another product in Caustic Soda Industry and is used in steel pickling, water treatment, manufacture of polyethylene, chloride compounds etc. For the past few years chlorine and Hydrochoric Acid market is undergoing a stress in pricing.

Another key product being Potassium Hydroxide (Caustic Potash) is used in many industries like fertilisers, detergents, food and beverages and in manufacture of other chemicals like potassium carbonate, etc. The market demand for the product stood at 0.13 million MT (FY 2021) and forecasted to reach 0.18 million MT by FY 2023 with growth rate of CAGR of 4.25%. Product is manufactured through electrolysis process using potassium chloride solution. The raw material (potassium chloride) is to be imported in India.

Another important product group of the company is Chloromethanes. It is an organic compound and finds application in refrigerants, automobiles, construction, personal care products, silicon polymers, coating, pharmaceuticals etc. Raw material, chlorine is available within the company as a joint product in Caustic Soda manufacture. It is projected that Chloromethanes Industry is growing at CAGR 6.2%.

Fatty Acids and Castor Oil derivatives, of oil segment of the company areoperated relatively at lower scales as these products are with thin margins.

The Power plant at Bellary continues to be under closure with expiry of power purchase agreement with Karnataka Electricity Authorities. Company is studying measures for disposal or otherwise of the unit.

The Company has achieved a Gross Turnover of Rs. 2026.47 Cr against previous year (2023-24) Turnover of Rs.1792.75 Cr. Further, the company has produced 407894 MTs of Chemicals consisting of Caustic Soda, Potassium Hydroxide and Chloromethanes derivatives in current year (2024-25) against previous year production (2023-24) of 369546 MTs. The net profit before tax for current year stood at Rs. 125.56 Cr compared to that of Rs. 43.76 Cr for previous year.

In order to have better quality of Salt, the raw material for Caustic Soda production the company has resorted to procurement of same from Gujarat belt incurring increased transportation cost. All inputs used in manufacture are mainly sourced locally except Potassium Chloride the raw material for Caustic Potash.

Power being major ingredient of total cost the company is giving main thrust to cost reduction in power plant. During the year the company has installed 15.15 MW (upto previous year 22.75 MW) Solar Power Plant adjacent to the Factory. Plans are in anvil for total increase of the capacity to 100 MW in stages. Considering the importance of solar green power in protecting environment and sustainability, the company has given more thrust in this area. Upto the year 2024-25 the company has generated aggregate solar power of 97814 MWH (2022-23-20048 MWH + 2023-24-34225 MWH + 2024-25 - 43541 MWH) and the same is used internally by the company. Your management is happy to inform that it will put relentless efforts towards solar power in future as it will be only the savior having multiple benefits.

GENERAL-SEGMENT-WISE PERFORMANCE TOGETHER WITH DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Segment-wise performance together with discussion on financial performance with respect to operational performance has been dealt with in the Directors Report which should be treated as forming part of this Management Discussion and Analysis.

CREDIT RATING:

The Company maintained same Credit Rating of CARE A with the "Outlook" of Stable for long term bank facilities and CARE A with the "Outlook" of Stable for Short Term Bank facilities, awarded by M/s. CARE Rating Limited. Company is working in a direction to improve the rating further.

DETAILS OF KEY FINANCIAL RATIOS WITH SIGNIFICANT VARIANCE:

Details of Financial Ratio Increase / Decrease when compared to previous years(2024-25/2023-24). Overall variances in ratios is the result of better performance in main products of the company.

(*) Note : In general the financial performance of the Company for the year 2024-25 is by and large compared to year 2023-24 is better for the reasons explained in Directors Report. Due to this factor, the financial Ratios for the year 2024-25 compared to its previous year are showing favourable variance. With regard to net capital turnover, as net current assets are more compared to previous year the ratio stands negative.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY :

The Company has established an appropriate system of internal control to ensure that there exists a proper control over all the transactions and that all its assets are properly safeguarded and not exposed to risk arising out of unauthorized use or disposal. Internal Audit is conducted at all for all the key areas of business. The Internal Control System is supplemented by a programme of Internal Audits to ensure that the assets are properly accounted for and the business operations are conducted in adherence as laid down in policies and procedures. The Internal Audit is oriented towards review of controls and operational improvements.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED :

Relations with the employees remained cordial in general throughout the year. In order to optimise the contribution of the employees to the Companys business and operations, in-house training is given to the employees to induce contribution to productivity increase and development programmes for all levels of employees have been devised. Occupational Health Safety and Environmental Management are given utmost importance. As at 31st March, 2025 the employee strength (on permanent rolls) of the Company was 1047.

CAUTIONARY STATEMENT:

Statement in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations and such forward-looking statements involve risks and uncertainties. Actual results could differ materially from those expressed or implied important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the Countries in which the Company conducts business and other incidental factors. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new informations, future events, or otherwise. Readers are cautioned not to place undue reliance on these forward looking statements that speaks only as of their dates.