Transpek Industry Ltd Management Discussions

This report includes discussion on the following matters within the limits set by the Companys competitive position:

GLOBAL MACROECONOMIC AND CHEMICAL INDUSTRY ENVIRONMENT:

The global business landscape continues to be shapedbysignificantvolatility and uncertainty, stemming from events initiated by the COVID-19 pandemic and compounded by ongoing geopolitical and economic shifts. Navigating this dynamic environment necessitates organisational agility, proactive adaptation, and strategic foresight, particularly for medium to long-term planning. Maintaining business stability while capitalising on growth opportunities in this complex milieu remains paramount. Consequently, organisational resilience and sustainable business practices are critical differentiators for sustained success.

The chemical industry has not been immune to these global challenges. Key factors influencing recent performance include:

Demand: Overall demand remains subdued across several segments.

Competitive Intensity & Capacity: Increased competition and lower global capacity utilisation rates have exerted pressure on margins and performance over recent quarters.

Segment-Specific Impacts:Companies with significant exposure to agrochemicals and related intermediates have faced particularly strong headwinds. Agrochemicals and Pharmaceuticals companies in India are facing competition from low-cost imports.

Tariff: Imposition of high tariff by the USA and countermeasures by various countries have created significant issues in the global trade mechanism.

Despite these pressures, the industryiswitnessingtheemergenceofsignificantgrowth avenues, notably in chemicals supporting the energy transition (e.g., EV batteries), advanced electronics (e.g., semiconductors) and high-end polymers.

Furthermore, the integration of digital technologies, including ArtificialIntelligence (AI) and Machine Learning (ML), presents opportunities to enhance efficiency, sustainability, process safety, and predictive capabilities within chemical manufacturing.

Transpek Industry Limited actively monitors global and industry developments, adapting its strategies to consolidate its market position and prepare for future growth. Following an approach of balance between volume and profitability, Transpek has also been cautious in new investment considering highly dynamic and uncertain industry situation. Strategic priorities included strengthening existing market positions, developing new customer relationships, exploring new geographical markets, and working on new product opportunities to fuel future growth.

The Company obtained Gold status in EcoVadis assessment putting it in top 5% companies assessed by EcoVadis globally.

The entry of new manufacturers, particularly domestically, has intensified competition in the Acid Chlorides market, leading to volume distribution and margin pressure. However, the Company remains a preferred supplier for many customers due to its established reputation for quality, reliability, service excellence, and customer focus, although more frequent price negotiations (monthly/quarterly) are becoming standard. Also, introduction of new non-Acid chloride products would provide further advantage to the Company.

Successfully maintained or strengthened its position in core markets.

Proactive and efficient logistics operations successfully mitigated major disruptions arising from events such as the Red Sea situation, minimising impacts on delivery timelines and costs.

Continued investment in developing new markets for existing products and working on new product candidates to diversify revenue streams.

While overall chemical industry headwinds impacted volumes in polymers and certain pharma applications, the fundamental long-term potential for the Companys products within these core markets remains intact.

Beyond macroeconomic factors, structural shifts are influencing the chemical industry:

Focus on Efficiency and Technology:

Persistent cost pressures and market uncertainties are driving industry-wide focus on cost reduction and operational efficiency. Adoption of Industry 4.0 technologies (e.g., data analytics, automation, ML, IoT) is accelerating as companies seek process optimization and agility. Transpek has initiated basic implementation of data analytics, ML, and AI models within its operations to enhance efficiency and decision-making.

Polymers, Speciality Plastics, and Performance Materials: Polymers remain integral to numerous end-use applications, with continuousinnovationdrivingnewuses.As significantsupplier of Acid Chlorides for polymer production, the

Company anticipates steady demand growth and continues to focus on capturing opportunities with both existing and developmental products.

Pharmaceuticals: The primary market for the Companys pharma intermediates is domestic. While demand remains relatively stable, the segment is characterised by intense competition due to multiple manufacturers. The Companys strong reputation as a reliable, ESG-focused supplier helps maintain market share. Export opportunities are also pursued.

Product development in this segment is ongoing but subject to long timelines dictated by patent expirations, rigorous testing/validation, shelf-life studies, and potential changes in end-molecule viability.

Other Applications (Organic Peroxides, Photoinitiators, Personal Care): Business in these segments demonstrates steady performance with potential for gradual growth. The Company is actively collaborating with customers on future requirements to capitalise on this potential.

Agrochemicals: The Company currently has limited exposure to the agrochemical segment. This market faces significant pressure from price sensitivity and low-cost imports. However, specificopportunities for longer term potential are being considered.

Opportunities:

New Product Development: Good potential exists to add new Acid Chlorides, derivatives, and other chemistries to the portfolio, catering to evolving customer needs across various geographies and applications.

Customer Collaboration: Continuous engagement with customers remains central to identifying short- and long-term requirements, driving targeted product development.

Tariff: Imposition of higher tariff on some countries by the US may present an opportunity to enhance exports from India.

Competition: Addressed through strong customer relationships, consistent quality, robust sustainability practices and reliable delivery performance.

Raw Material: Potential risks include shortages and price volatility. Mitigation involves strategic sourcing and supplier relationships. Input cost increases are partially mitigated in significant portions of the business through cost-plus pricing models.

Logistics: Potential disruptions and cost escalations require ongoing monitoring and efficient operational management.

Macroeconomic Uncertainty: The unpredictable global economic and political climate poses a systemic risk. A global recession could adversely impact demand across industries, including the Companys markets.

business exists with key customers and products, this risk is Customer/ProductConcentration: Whilesignificant mitigated by the stable demand for end-products, the financial strength and market leadership of these customers, and strong, trust-based relationships. The Company actively seeks diversification by adding new regions, customers, and products.

Tariff: Tariff imposition from the USA is identified as a critical risk and is being monitored with active communication with the customers and experts. At present, we do not see any major issue in managing the tariff situation based on the information available.

Risk Management: The Company employs a robust Risk Management framework designed for proactive identification, assessment, and mitigation of potential threats. Continuous monitoring of macro and micro-environmental factors enables agile adaptation to emerging situations, minimising potential adverseimpacts.Currently,noimmediate,significantthreats related to product life cycles, sudden demand erosion, or unmanageable logistics costs are foreseen.

The long-term outlook for the chemical industry, particularly in India, remains positive, driven by domestic growth and opportunities in emerging sectors like EV batteries and semiconductors, despite near-term uncertainties. The Company anticipates steady demand for its core products with potential for moderate growth in the upcoming period. Strategic initiatives focused on new products are expected to drive the next phase of growth upon successful realisation and commercialisation. The Companys strong focus on sustainability and proven track record of customer satisfaction continue to position it as a preferred partner for global customers in Chlorination chemistry.

The Companys strategy of balancing stable growth with periods of consolidation has built a solid foundation.

Leveraging its financial strength and stable core business,

Transpek is actively pursuing growth initiatives, including opportunities beyond its traditional Acid Chloride focus. While the current manufacturing site offers limited scope for major physical expansion due to environmental permissions, the Company is actively evaluating multiple options to secure adequate manufacturing capacity for future growth. The Company shall release relevant updates asdecisionsarefinalised

The Company operates in a single primary business segment, identified as “Chemicals.” Information pertaining to secondary segments, as required by Indian Accounting Standard (Ind AS 108) on Segment Reporting, is detailed in Note No. 40 of the

Notes forming part of the Consolidated Financial Statements.

The Company maintains an adequate and effective internal control system commensurate with its size and complexity. The internal control systems are supplemented through an extensive internal audit programme and periodic review by management.

The net sale of the Company for the year under review is Rs 64,806.23 Lakhs as compared to Rs 57,878.26 Lakhs in the previous year, an increase of 11.96%. Export sales have increased to Rs 55,705.73 Lakhs from Rs 50,742.52 Lakhs in the previous year i.e. an increase of 9.78%. Domestic sales have increased to Rs 9,100.50 Lakhs from Rs 7,135.74 Lakhs in the previous year i.e. an increase of 27.53%. The Company has achieved a net profit ofRs 4,874.07 Lakhs for the year 2024-2025 as against Rs 3,856.25 Lakhs in the previous year, i.e. an increase of 26.39%.

Human Resource Department plays essential role in managing, assisting and dealing with employee related matters including various functions, such as policy administration and framing, recruitment process, employment and labor laws, learning, training and development.

Performance of the employees in the organisation is monitored through an Online Performance Management System. Employees are regularly given feedback and suggestions which improves their productivity and performance.

For Employees well-being, company also provides various facilities like gymnasium, table tennis, meditation room etc.

A special meeting of all the female employees is conducted every month wherein all female employees share and discuss problems, if any, faced by them during the course of their employment. Issues/grievances, discussed in the meeting are directly presented to the Managing Director and accordingly corrective actions are taken/suggested.

The Company has a support plan for widows of employees. A fund is being maintained from which the widows are given monthly contribution that helps them in managing their family financial equirements.

The Company supports in fulfilling the aspirations of its employees and nurture the aptitude and expertise of its workforce, providing them with various learning opportunities by organising Training and Development Programmes to enable them to upgrade their skills which in turn helps in increasing their knowledge, capability and capacity to achieve theirs and the Companys desired goals and targets. Apart from this, various informative and interactive sessions are arranged by the Company by hiring renowned faculties for enhancing skills and knowledge of the employees.

To develop the skills and instil behavioural and personality development traits in all supervisory staff and managerial cadre, the Company organised a number of training programmes during the year. These training programmesareidentifiedthrough the Performance Management System by synchronising organisational needs with individual aspirations.

In addition, the Company provides extensive safety training to employees every year.

The Company strongly believes that organisations and businesses can play a significant role in creating a sustainable and inclusive future for its stakeholders. It believes in a cohesive, inclusive and integrated society in which all individuals have access to opportunities for personal and economic growth. For several decades, the Company has consistently demonstrated its concern for the community (both internal and external) and a respect for its environment and the local ecology. It has been associated with a scalable, sustainable and integrated development of communities in and around its location at Ekalbara in Vadodara District.

Sustainability concerns are an integral part of the Companys value system. Over the years, the Company has embedded these values into its operations in a variety of ways, such as promoting rural development, undertaking and establishing programmes and processes for greening and conservation and promotion of volunteerism within the organisation.

The Company is a member of Global Sustainability Platform ‘ECOVADIS and has achieved Bronze Rating in EcoVadis Audit. The Company is also recognised as “Responsible Care Company”. We have received certification for Responsible Care for a period of three years.

Industrial peace and harmony based on healthy employee relations have continued throughout the year.

The Management and the Union of employees enjoy a very cordial and mutually respectful relationship. The grievances/issues raised by the employees Union were given due attention. The issues brought up by them were settled through regular meetings and interactions between the Management and the Union and actions as mutually agreed were taken to settle them.

Statements in this report on Management Discussion and Analysis relating to the Companys objectives, projections, estimates, expectations or prediction may be forward looking within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results might differ materially from those expressed or implied depending upon factors such as climatic conditions, global and domestic demand-supply conditions, finished goods prices, raw materials cost and availability, foreign exchange market movements, changes in

Government regulations and tax structure, economic and political developments within India and the countries with which the Company has business and other factors such as litigation and industrial relations. The Company assumes no responsibility in respect of forward-looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.