Transchem Ltd Management Discussions

ECONOMIC AND INDUSTRY OVERVIEW GLOBAL ECONOMY

The global economy entered 2025 facing heightened uncertainty after a relative period of stabilisation in 2024. According to the April 2025 IMF World Economic Outlook, global GDP growth is projected at 2.8% for 2025, down from 3.3% in the January 2025 forecast. This downward revision stems mainly from the sharp escalation of trade tensions, triggered by the United States near-universal tariff announcements in April 2025. While tariff hikes have since been temporarily paused for 90 days for most U.S. trading partners, the lack of clarity on post-pause trade dynamics continues to weigh on global sentiment, investment planning, and supply chain resilience.

Under these looming uncertainties, advanced economies are projected to grow by 1.4% in 2025, with the United States slowing to 1.8% due to trade-driven uncertainty and weakened domestic demand. In contrast, emerging market and developing economies (“EMDEs”) are expected to grow by 3.7%, down from prior estimates, with countries more exposed to global trade disruptions seeing steeper slowdowns.

Global currency markets have experienced increased volatility in 2025, with the U.S. dollar strengthening due to risk aversion and elevated U.S. yields. This has increased depreciation pressure on several emerging market currencies, including the Indian rupee.

Global headline inflation is projected to ease to 4.3% in 2025 and further to 3.6% in 2026, though the pace of disinflation varies across regions. Advanced economies are expected to reach their inflation targets earlier, with price growth moderating to 2.2% by 2026, while EMDEs are likely to see inflation decline to 4.6%. Since January, the 2025 inflation forecast has been revised slightly upward, driven by notable U.S. and UK increases. In the U.S., a 1.0 percentage point upward revision reflects persistent services inflation and recent tariff-induced supply shocks. The UKs 0.7 percentage point revision is attributed to temporary regulated price changes. Inflation expectations in the euro area remain stable. These dynamics are expected to shape monetary policy decisions as central banks across the globe will try to balance inflation control with growth risks

The optimism surrounding post-pandemic trade recovery has been overshadowed by escalating protectionism. The World Trade Organisation (“WTO”) has sharply downgraded its 2025 global merchandise trade forecast from a 3.0% increase to a 0.2% decline, citing the resurgence of U.S. tariffs and broader economic spillovers as key factors. WTO expressed concern about the contraction and its potential impact on global GDP, financial markets, and particularly on developing economies. This shift has weakened global trade momentum. Although headline trade volumes increased in Q4 2024 due to frontloading of imports, underlying indicators particularly in Asia and Europe point to a slowing trajectory. Further, the policy unpredictability has increased market volatility and constrained investment planning across regions.

Despite facing spillover effects from global headwinds, India continues to exhibit remarkable economic resilience. The country is growing at nearly twice the pace of the worldwide economy, reflecting the strength of its domestic demand, policy support, and structural reforms. According to the April 2025 IMF World Economic Outlook, Indias real GDP is projected to grow at 6.2% in FY 2025 and 6.3% in FY 2026, significantly outpacing the global growth forecasts of 2.4% and 3.0% for the same periods, respectively. This robust momentum underscores Indias growing role as a key driver of global growth, even amid heightened global economic uncertainty.

According to government statistics, headline inflation eased to a 67-month low of 3.3% in March 2025, primarily due to a decline in food prices. The Reserve Bank of India (“RBI”) projects CPI inflation to moderate to 4.0% in FY 2026, indicating a continued disinflationary trend. Inflation is expected at 3.6% in Q1, 3.9% in Q2, 3.8% in Q3, and 4.4% in Q4. Meanwhile, the RBI has pegged Indias GDP growth rate at 6.5% for FY 2026, reflecting continued economic momentum amidst easing price pressures. In response to moderating inflation and global economic uncertainties, the RBI implemented two consecutive 25 basis point cuts to the policy repo rate in February, 2025 and April, 2025, bringing it down to 6%. The April, 2025 meeting also marked a shift in the monetary policy stance from neutral to accommodative, signalling the central banks intent to support economic growth amid external challenges such as global trade tensions and subdued private investment.

The India Meteorological Department (“IMD”) has forecasted an above-normal southwest monsoon for 2025, with expected rainfall at 105% of the Long Period Average (“LPA”) of 87 cm, with a model error of ?5%. This prediction is based on neutral El Nino-Southern Oscillation (“ENSO”) conditions and below-normal Eurasian snow cover, both conducive to enhanced monsoon activity. The anticipated robust monsoon is expected to positively impact kharif crop sowing, particularly in central and eastern India, which rely heavily on monsoon rains. However, northwest, northeast, and southern peninsular India regions may experience below-average rainfall, potentially affecting localised sowing patterns. A favourable monsoon will likely boost agricultural output, stabilise food prices, and support rural incomes, contributing to overall economic growth. It also provides an opportunity to enhance exports of farm commodities like rice, onions, and sugar, while reducing dependence on imports of edible oils.

In the Union Budget for FY 2025-2026, the Government of India reaffirmed its commitment to the agricultural sector by allocating substantial funds to enhance farmer welfare and ensure food security.

Fertiliser Subsidy: A total of Rs. 1.67 Lakhs Crores has been earmarked for fertiliser subsidies, encompassing both urea and phosphatic & potassic (“P&K”) fertilisers. This allocation constitutes approximately 3.3% of the total Union Budget expenditure, reflecting the governments focus on making fertilisers affordable for farmers.

PM-KISAN Scheme: The Pradhan Mantri Kisan Samman Nidhi (“PM-KISAN”) scheme continues to provide direct income support of Rs. 6,000 annually to eligible farmer families. As of February, 2025, the 19th installment had been disbursed, benefiting over 9.8 Crores farmers, including 2.41 Crores female farmers, with a total disbursement exceeding Rs. 22,000 Crores through Direct Benefit Transfer (“DBT”) scheme.

Crop Insurance and Credit: The Pradhan Mantri Fasal Bima Yojana (“PMFBY”) has extended crop insurance coverage to 4 Crores farmers to mitigate risks associated with crop failures. Additionally, the agricultural credit target has been increased to Rs. 20 Lakhs Crores, focusing on sectors like dairy, fisheries, and animal husbandry.

In 2025, the soyabean outlook in India suggests a projected production of Rs. 133.60 Lakhs tonnes, with a price range of Rs. 4,350 - 4,600 per quintal at the time of harvesting (September-October 2025). Maharashtra is expected to lead in soyabean production, followed by Madhya Pradesh, Rajasthan, Gujarat, Karnataka, and Telangana whereas the India Mushroom Market is poised for robust growth, projected to expand at a CAGR of 12.50% during 2025-2033, according to UnivDatos.

Indias mushroom and soyabean sectors are poised for growth, driven by increased domestic and export demand. The mushroom industry is expanding due to rising awareness of its health benefits and suitability for vegan diets, while soyabean production is expected to remain strong, with Maharashtra leading production. However, both sectors face challenges, including climate variability impacting soyabean yields and the need for enhanced export strategies for mushrooms.

Indias economic outlook for the year 2025 and 2026 remains one of the brightest among major global economies, as highlighted by the IMF. Despite global uncertainties and downward revisions in growth forecasts for other large economies, India is set to maintain its leadership in global economic growth. Supported by strong fundamentals and strategic government initiatives, the country is well-positioned to navigate the challenges ahead. With reforms in infrastructure, innovation, and financial inclusion, India continues to enhance its role as a key driver of global economic activity. The IMFs projections reaffirm Indias resilience, further solidifying its importance in shaping the global economic future.

Your Company has a sound internal control system commensurate with its size and nature of business which provides a reasonable assurance in respect of financial and operational information, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures.

The Internal Auditors monitors and evaluate the efficiency and adequacy of internal financial control system in the Company, its compliance with operating systems, accounting procedures, application of the Company instructions and policies. The Audit Committee reviews the Internal Audit Report submitted by the Internal Auditors on a quarterly basis.

Revenues: Revenues from operations stood at Rs. 263.04 Lakhs in FY 2024-2025 as compared to Rs. 41 Lakhs in FY 2023-2024, clocking a YoY growth of 542 %. The key drivers for this growth are higher volumes in Soya and Baggase trade compared to last year.

Expenses: Total expenses stood at Rs. 410 Lakhs in FY 2024-2025 against Rs. 215.40 Lakhs in FY 2023-2024. Purchase of stock in trade stood at Rs. 269.93 Lakhs, during the fiscal year. Employee expenses decreased from Rs. 89.98 Lakhs in FY 2023-2024 to Rs. 67 Lakhs in FY 2024-2025. Further, Depreciation and other expenses accounted for Rs. 82.06 Lakhs in FY 2024-2025.

Profits: Total Comprehensive Income decreased to Rs. 366.94 Lakhs in FY 2024-2025 as against Rs. 980.38 Lakhs in FY 2023-2024.

As of March 31,2024, the companys net worth stood at Rs. 75.64 Crores and increased to Rs. 79.32 Crores as of March 31, 2025, reflecting an absolute rise of Rs. 3.67 Crores, or 4.85%. This growth was driven by internal accruals, as the equity share capital remained unchanged at Rs. 12.24 Crores, comprising Rs. 1.22 Crores equity shares of Rs. 10 each.

The financial statements have been prepared to comply in all material aspects with the Indian Accounting Standards notified under Section 133 of Companies Act, 2013 (the “Act”) as per Companies (Indian Accounting Standards (“Ind AS”) Rules, 2015 and other relevant provisions of the Act and rules framed thereunder. The financial statements have been prepared on a historical cost convention and accrual basis, except for certain financial assets and liabilities measured at fair value and plan assets towards defined benefit plans, which are measured at fair value.

The Company consider its employees as its most valuable assets and is committed to provide a safe, inclusive, and conducive work environment. Employee-centricity and growth are prioritized, with equal and fair opportunities provided to all employees. The Company recognizes that the quality of its employees is crucial to its success and therefore invests in their learning and development through various training programs. Moreover, the Company emphasizes strong employee engagement and retention measures. As of March 31,2025, the Company has total of 10 employees.

We constantly strive to improve our service standards for our investors and benchmark our activities against the best practices. We ensure that all critical information about us is available to all investors by uploading such information on our website containing a dedicated section where relevant information is available, including information on the Directors, shareholding pattern, quarterly reports, financial results, annual reports, and various policies. Material events, if any during the quarter that are intimated to the stock exchange and uploaded on the website.

This document contains statements that are forward-looking. By their nature, forward-looking statements require our Company to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that the assumptions, predictions, and other forward-looking statements may not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as several factors could cause assumptions, actual future results, and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the Management Discussion and Analysis section of this Annual Report.