TGV Sraac Ltd Management Discussions

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

As of 2024, India?s economy presents a mixed landscape characterized by several notable trends and challenges. India?s GDP growth remains robust, driven by strong domestic consumption and investment. The country continues to be one of the fastest-growing major economies, with growth rates projected to be around 6-7% for the fiscal year. Inflation remains a concern, particularly with rising food and fuel prices. The Reserve Bank of India (RBI) is taking measures to keep inflation within its target range, though external factors like global commodity prices impact domestic inflation rates. Agriculture remains a significant part of the economy, though it faces challenges such as erratic monsoons and structural inefficiencies. Manufacturing: The manufacturing sector is growing, with initiatives like "Make in India" aimed at boosting domestic production and attracting foreign investment. The services sector, particularly IT and financial services, continues to be a major contributor to the economy. The IT sector, in particular, benefits from global demand for digital services. India is working to enhance its trade relations, with a focus on diversifying export markets and reducing dependency on imports. Foreign Direct Investment (FDI) remains strong. Sustainability and Climate Change: There is increasing emphasis on sustainable development and addressing climate change. Initiatives to promote renewable energy, reduce carbon emissions, and enhance environmental conservation are gaining momentum. Overall, while the Indian economy is on a growth trajectory, it faces challenges such as inflation, unemployment, and the need for structural reforms. The government?s policies and global economic conditions will significantly influence the future trajectory of India?s economic development.

Indian chemical industry, ranks 4^th place in the world. The presence of India in global trade of chemicals is in a laudable position. Chloro-Alkali products are prominent in chemical industry with installed capacity of 48 lakh MTs, the industry is growing at CAGR of 6.4 %.

The Company Operations are divided into three segments. They are: (a) Chemicals Segment (b) Oils and Fats Segment and (c) Power Segment. Segment wise products and their uses are described here under. a. The prime product of the Company, caustic soda market in India is poised for significant growth in the coming years, with an expected compound annual growth rate (CAGR) of around 5% from 2024 to 2030. Overall, the caustic soda market in India is expected to continue its growth trajectory, supported by expanding industrial applications and increasing investments in infrastructure and technology Caustic Soda with its versatile nature finds its consumption in Aluminum, Pulp and Paper, Textile, Pharmaceuticals etc., etc. Industries. Chlorine is used in Water treatment, Pesticides,

Pigments, Pulp & Paper, Textiles etc. Company manufactures Hydrochloric Acid using in house materials that is Chlorine and Hydrogen. Sodium Hypo. Potassium Hydroxide is used in industries like Soaps, Detergents, Batteries, Bio fuel, Dyes, Medical Products, Photovoltaic Cells etc., Chloromethanes products namely Methylene-di-Chloride, Chloroform, are used as solvents, Pharmaceuticals, Drugs, Refringent Gasses, PTFE Pipes, Fluoropolymers, Insecticides etc., applications. b. Hydrogenated Castor Oil is used as Surfactant, Specialty Lubricants, Skin care products, Toiletry Creams etc. With regards Fatty Acids, Company manufactures Stearic Acid of various grades and Soap Noodles. c. The power plant at Bellary (power segment) which is in closed condition due to elapse of power purchase agreement entered with Electricity Authorities, Karnataka. The machinery of this division is now offered for sale.

All products of the company are for industrial use and hence the performance depends on the wellbeing of the respective Sectors.

Chlorine, a Joint Product while manufacturing Caustic Soda is witnessing continuous reduced in demand and being marketed with unremunerative prices. In Indian Market Caustic Soda is Centric unlike European and other Countries where Chlorine is centric. Chloromethanes plant operations are absorbing sizable quantities of Chlorine internally with value addition, which otherwise is to be disposed in the market with unremunerative prices. In order to have flexibility in marketing operations of Chlorine commercial disposal the company has taken steps to further increase its Chloromethane Capacity by another 125 TPD to the existing capacity of 250 TPD.

The Company has scaled down the operations of Oils & Fats Segment consisting of Hydrogenated Castor Oil, 12 Hydroxy Stearic Acid, and Soap Noodles, as the margins have become very thin due to intensive price fluctuations for both inputs and finished goods.

The Company has achieved a Gross Turnover of Rs.1792.75 Cr against previous year (2022-23) Turnover of Rs.2076.41 Cr. Further, the company has produced 369546 MTs of Chemicals consisting of Caustic Soda, Potassium Hydroxide and Chloromethanes derivatives in current year (2023-24) against previous year production (2022-23) of 372453 MTs. The net profit before tax for current year stood at Rs. 60.99 Cr compared to that of Rs. 362.06 Cr for previous year. The end product prices were impacted considerably during the year due to factors like geopolitical disturbances, recessionary conditions in Europe, slowdown in Chinese economy, reduced demand.

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.

Being Caustic Soda / Potash manufacture Power intensive, the company?s drive before it is to ensure proper supply and contain the power cast. Continuous monitoring system is installed in this direction. During the year the company has installed 22.75 MW Solar Power Plant adjacent to the Factory. Plans are in anvil for further increase of the capacity by another 17.25 MW.

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.

The Company maintained same Credit Rating of CARE A with the "Outlook" revised from Positive to Stable for long term bank facilities and CARE A1 with the "Outlook" revised from Positive to Stable for Short Term Bank facilities, awarded by M/s. CARE Rating Limited. Company is working in a direction to improve the rating further. It shows that even though same credit rating is maintained for current year, the outlook has been slightly revised to positive for both long term and short term loans.

Details of Key Financial Ratios with significant variance:

Details of Financial Ratio Increase / Decrease when compared to previous years (2022-23/2023-24). 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 2023-24 is largely affected compared to year 2022-23 for the reasons explained in Directors Report. Due to this factor, the financial Ratios for the year 2023-24 compared to its previous year are affected as explained above.

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.

Relations with the employees remained cordial in general throughout the year. In order to optimise the contribution of the employees to the Company?s 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 31^st March, 2024 the employee strength (on permanent rolls) of the Company was 1058.

Statement in this Management Discussion and Analysis describing the Company?s 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 Company?s operations include raw material availability and prices, cyclical demand and pricing in the Company?s 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.