Kemistar Corporation Ltd Management Discussions

H GLOBAL CHEMICAL INDUSTRY OVERVIEW AND OUTLOOKS

H Global Chemical Industry

Global chemical production (excluding pharmaceuticals) is forecasted to increase by 2.7% in 2024, surpassing the growth rate of the previous year (2023: +1.7%). Advanced economies are expected to see modest production growth following a significant decline in previous year (2024: +0.8%, 2023: -4.9%), while growth in emerging markets is anticipated to grow slightly (2024: +3.5%, 2023: +4.8%). In China, the largest chemical market, lower but still notable growth in chemical production is expected at 4.0%. This growth is primarily driven by the consumer goods and electronics industries. Other emerging markets in Asia, are expected to gradually recover with India being the main growth contributor at 4.5%. United States is anticipated to see a slight recovery in chemical demand (2024: +1.1%, 2023: -1.0%) after a year marked by destocking and weak industrial growth. Growth is expected across most customer industries in the manufacturing sector, with additional growth expected in the automotive industry. However, uncertainties remain due to high interest rates and the risk of recession, particularly in the construction sector. In European Union (EU), despite challenges such as high cost levels and a weak economy, production is expected to stabilize at the current level (2024: +0.8%), factors such as lower gas prices and a slow recovery in demand for goods are expected to support chemical demand in Europe. Global agrochemicals market experienced a decline in 2023 due to channel destocking, price corrections, and volatile weather. This trend is reflected in a 25% decrease in crop protection chemical exports from India and a steeper decline in Chinese exports, emphasizing the industry-wide impact and the need for adaptation. Despite challenges, a gradual recovery is anticipated in 2024.

(Source: Chemical Processing, American Chemistry Council, C&EN Analysis by leading chemical companies, Expert Market Research).

H Global Waste Recycling Market Overview

The global waste recycling market is among the rapidly growing industry segments in 2022. Valued at $55.1 billion in 2020, the global waste recycling market may become a $90 billion industry by 2030.

Increasing awareness regarding the negative impact of waste on the environment and efforts from all stakeholders (Consumer, Industries, Governments, Regulators, etc.) will lead to this considerable growth. However, an increase in waste generation will always be the prime driver. In addition, the Covid-19 pandemic is also leading to a new type of waste i.e., Pandemic waste that includes masks, PPE kits, gloves, etc.

The global waste recycling market is also experiencing various issues that can be addressed with the latest technologies, such as the Internet of Things, artificial intelligence, machine learning, etc. Strict regulations are also being implemented and imposed upon businesses and consumers by the legal authorities for waste recycling and management.

Global Waste Recycling Market C ountry Wise

At present, humans are generating different types of waste such as municipal solid waste, hazardous waste, industrial non-hazardous waste, agricultural and animal waste, medical waste, radioactive waste, construction and demolition debris, extraction and mining waste, oil and gas production waste, fossil fuel combustion waste, E-waste, battery waste, solar panel waste etc. Each and every country generates different amounts of waste which are also recycled at different recycling rates. Waste management is one of the key UN sustainable development goals which almost every country on the planet is making efforts to accomplish. Some countries perform well in waste recycling and management, whereas others perform on average.

South Korea and Slovenia are among the top countries with high waste recycling rates.

In South Korea, Waste recycling and management have been a critical priority for the last three decades. The countiy has one of the most robust waste management and recycling programs around the globe. These programs include legislation and initiatives such as a deposit-refund system, volume-based waste disposal system, extended producer responsibility, etc., to ensure minimum waste with rapid urbanization.

The countrys waste is segmented into recycling, landfill, incineration, and composting for adequately managing the waste.

Similarly, Slovenia is also consistently making efforts to recycle its waste. Fifteen years ago, Slovenian waste went directly to landfills, but Slovenia is currently recycling around 75% of its waste.

From vast landfills in the past to clean cities at present, Slovenia has achieved a lot in the last few years. The Centre for waste management came into existence in 2015 to ensure zero waste. Less than 5% of waste is now going to landfills, and the remaining waste is sent to processing facilities for making solid fuel and recyclable materials.

Germany is also a leading country in recycling and waste management both at the European and global levels. Over the last few decades, the government has accomplished untamed progress in recycling and waste reduction. Germany is the leader in recycling because of the plans and policies such as the circular economy framework, waste hierarchy principles, Polluter pays schemes, subsidiaiy programs, etc.

Australia is another giant in the room in waste management and recycling. The Australian government invests heavily in waste management initiatives to promote recycling and waste reduction through its National Waste Policy. "Waste Less, Recycle More" is one such program by the Australian government with a budget of over $330 million.

The country is further aiming to move from this program to waste and sustainable materials strategy 2041 to reduce and eliminate waste going to landfills.

The UK is also slowly progressing in improving waste management through recycling. Despite producing millions of tons of plastic waste, the country gradually increases its plastic recycling rate through regulations and legislation. The deposit return scheme, packaging produce responsibility system reforms, and environmental act 2021 are some efforts by the UK parliament to ensure a high recycling rate consistently. The country is also experiencing more waste due to import restrictions placed by China on plastic waste. This is another reason behind the UKs adoption of more recycling strategies.

The USA also highly focuses on waste recycling to achieve a high recycling rate through proper regulations and initiatives. The country is working on several strategies like the National Recycling Strategy to achieve a 50% waste recycling rate by 2030.

Five objectives were determined by the US in 2021 for creating a cost-effective and more resilient recycling system. These are as follows:

1. Improving the recyclable commodities market to promote development, increasing manufacturing of recyclable materials, etc.

2. Enhancing the material collection and management infrastructure to increase awareness among people, continuing to fund research, improving trash collection, etc.

3. Preventing the contamination in the recycling materials stream ensures the availability of resources and better quality of recycled material.

4. Implementing proper programs and policies to assist the circular economy by strengthening federal coordination, conducting analysis of recycling challenges, etc.

5. Developing new measurement standards and data collection methods for measuring targets, tracking performance indicators, creating recycling content measures, etc.

The USA and UK are among the most developed and technologically advanced countries of the 21st century. However, both countries do not have such an advanced level of waste recycling. Both USA and UK are among the worst countries when it comes to waste recycling. Their recycling rates are even lower than the recycling rates of smaller countries like Slovenia, South Korea, Latvia, etc. A strong focus on industrialization and production are among the prominent factors due to which these countries focused less on recycling in the past These countries are slowly progressing towards waste recycling in terms of strategies, techniques, and investments.

H GLOBAL LEAD RECYCLING INDUSTRY

The global recycled lead market size is projected to hit around USD 20.4 billion by 2030 with a registered growth rate of 3.5% over 2020-2026. Overall, it seems that the global lead recycling market is growing and expanding, with a particular focus on lead acid battery recycling. Additionally, there is an increasing emphasis on environmental protection norms and regulations, which may be driving the growth of the lead recycling industry and demand for recycled lead has been increasing globally, with Asia-Pacific being a booming market due to its expanding population.

(Source: Precedence Research and GM Insights).

H LITHIUM-ION BATTERY MARKET

As per the analysis by Expert Market Research, the global lithium-ion battery market is expected to grow at a CAGR of 10.8% in the forecast period of 2023-2028, owing to the increasing demand for electric vehicles.

An advanced type of battery, a lithium-ion (Li-ion) battery makes use of lithium ions as a crucial part of its electrochemistry. Many everyday electronic products, including earbuds, laptops, and cell phones, use lithium- ion batteries.

With the spike in demand for electric vehicles, such as electric automobiles and electric motorcycles, the need for lithium-ion batteries has been rising. In addition, the use of consumer electronics products that employ lithium-ion cells, like mobile phones and laptops, has caused a sharp increase in the demand for lithium-ion batteries.

Further, lithium-ion batteries are generally recognised as the industry standard for any product requiring a portable rechargeable battery because of their capacity to be recharged. During the forecast period, these factors will accelerate the expansion of the global lithium-ion battery market.

Due to the demand for inexpensive, secure batteries with a better energy density, the consumer electronics market for lithium-ion batteries is anticipated to rise significantly in the next years. In terms of regional penetration, the lithium-ion battery market is anticipated to be led by Asia Pacific. Some of the biggest markets for electric vehicles are thought to be in China and Japan.

Additionally, the region is expected to see an increase in demand for consumer electronics like smartphones and other gadgets that use lithium-ion batteries. Due to the increased emphasis that governments in the region are placing on greenhouse gas emissions, the market for lithium-ion batteries in North America and Europe is also anticipated to expand at a rapid rate.

Indian Chemical Industry

India is the 6th largest producer of chemicals in the world and 3rd in Asia, contributing 7% to Indias GDP. India holds a strong position in exports and imports of chemicals at a global level and ranks 14th in exports and 8th in imports at the global level (excluding pharmaceuticals). The Indian chemical industry stood at US$ 254 billion in 2023, and is expected to reach US$ 304 billion by 2025, registering a CAGR of 9%. The cumulative FDI equity inflowin the chemical industry reached US$ 21.71 billion from April 2000 to September 2023. India saw notable improvement in its chemical trade balance, with 27% reduction in deHict from 2023 to 2024. India saw notable improvement in its chemical trade balance (Chapters 28 to 38 excl. 37), with deHict dropping from US$15 billion in FY 2022-23 to US$2 billion in FY 2023-24. This is largely driven by 15% decrease in import volumes, falling from US$74 billion in FY 2022-23 to US$63 billion in FY 2023-24. Meanwhile, exports marginally increased from US$60 billion in FY 2022-23 to US$61 billion in FY 2023-24.

India is the 4th largest producer and 2nd largest exporter of Agrochemicals globally. In FY 2024-25, agrochemicals exports from India reached US$ 4.2 billion, dropped by 22% from FY 2022-23. India is fast emerging as major global manufacturing hub for agrochemicals due to low manufacturing cost, low labour cost, technically trained manpower, and high production capacity.

Interim Union Budget 2024-25, focusses on key trends like EV ecosystem adoption, scaling up renewable power installations, promoting chemical manufacturing for import substitution, fostering green chemical production, and encouraging decarbonisation. Tax reforms, PLI initiatives, and government expenditure align with these goals.

(Source: Interim Union Budget 2024-25, IBEF, Ministry of Commerce, Expert Market Research)

India Waste Management Market Analysis

The India Waste Management Market size is estimated at USD 12.90 billion in 2024, and is expected to reach USD 17.30 billion by 2029, growing at a CAGR of 6.10% during the forecast period (2024-2029).

• The Indian waste management market is experiencing healthy growth due to high population density and increased industrial activity, resulting in significant amounts of both hazardous and non-hazardous waste.

• While the circular economy concept is relatively new to India, its gaining prominence rapidly. The Indian waste management industry holds immense potential, with only 30% of the 75% recyclable waste currently being recycled. Inadequate policies for waste collection, disposal, and recycling, coupled with inefficient infrastructure, contribute to the poor state of waste management in the country.

• Numerous startups are emerging with innovative waste management ideas and methods for converting waste into valuable resources. However, effectively addressing the challenges in this industry requires a substantial amount of knowledge.

Source: https://www.mordorintelligence.com/industry-reports/india-waste-management-market India Waste Management Market Trends Increase in amount of waste generated

• Increasing population and rapid urbanization have led to a substantial rise in waste generation, necessitating efficient and sustainable waste management practices. Owing to swift urbanization, economic growth, and heightened urban consumption rates, India ranks among the worlds top 10 countries in generating municipal solid waste (MSW).

• According to a report by the Energy and Resources Institute (TERI), India generates over 62 million tons (MT) of waste annually. Merely 43 MT of the total waste generated is collected, with 12 MT being treated before disposal, leaving the remaining 31 MT discarded in waste yards.

• The Indian Central Pollution Control Board (CPCB) projects that annual waste generation in India will escalate to 165 MT by 2030. Concurrently, hazardous, plastic, e-waste, and bio-medical waste generation are anticipated to increase proportionately.

• Plastic consumption in India has markedly risen over the past five years, consequently elevating its waste output. The country produces 3.4 million tonnes of plastic waste annually, with only 30 percent of it being recycled.

Source: https://www.mordorintelligence.com/industry-reports/india-waste-management-market

B INDIA LEAD RECYCLING INDUSTRY:

India has a growing lead recycling industry, with several facilities dedicated to the recycling of lead-acid batteries. The demand for lead in India is met by primary and secondary sources, with the recycling industry playing a significant role.

The global metal scrap recycling market is worth over USD 500 billion, wherein Indias share is USD 11 billion or 2.2% of the market (Source: Business world).

There are about 500 authorized recyclers of lead wastes in India with a total recycling capacity of around 1 million tonnes per year (Source: Battery News). The recycling industry provides an eco-friendly solution to the disposal of used lead-acid batteries and helps to reduce environmental pollution. However, lack of formal regulations and licensing has led to the operation of unlicensed backyard smelters, which can pose environmental and health risks.

E-waste Recycling Industry

In todays digital era, technology is integral to our daily lives. From smart phones and laptops to televisions and kitchen appliances, electronic devices are essential tools that enhance our productivity, entertainment, and communication. However, the rise in consumption of Electrical &Electronic Equipment (EEE)is a clear indicator of global socio-economic growth, and the concomitant increase in e-waste presents a significant opportunity for the e-waste management industry.

E-waste encompasses discarded IT devices, communication equipment, home appliances, medical equipment, and lighting devices. While e-waste contains valuable materials like gold, silver, copper,and aluminum, it also includes hazardous substances such as lead, cadmium and mercury. Effective management of e-waste is vital to prevent environmental contaminationand health risks.

Stringent regulations and rising consumer awareness about improper e-waste disposal further underscore the business opportunities in this sector.

Resource securitization is crucial for Indias sustained growth. With high demand and limited supply of critical metals, recycling and re-utilization present immense opportunities. Embracing circular economy principles will be essential for managing e-waste effectively and recovering valuable metals from electronic waste, printed circuit boards (PCBs), spent lithium-ion batteries, and autocatalytic converters.

Solar Panel Recycling

Recycling solar panels has a number of benefits in environmental, financial, and social aspects

Estimated global market size of solar panel recycling 360 M USD for year 2023 which will reach up to 1.7 BILLION USD by year 2028

Growth Forecast for 2023-2028 (5 year) is 38.8% CAGR

Changing technology of solar panel will create huge volume of this recycling business.

It will generate aluminum waste, Eva waste, silicon cells waste.

COMPANY OVERVIEW

SEGMENT AND PRODUCT PE RFORMANCE

1. The Company is into the business of Colors, Intermediates, Agro Chemicals and Specialty Chemicals, its its business networks across the globe from African countries Turkey, USA, Mexico, Bangladesh, Columbia etc.

2. K.P International Private Limited is the wholly owned Subsidiary company of Kemistar Corporation Limited, is working into diversified business including dyes chemicals, intermediates, inorganic chemicals, agro chemicals, recycling etc. with two plants in India since 2000. Plants are Located at DAHEJ and AHMEDABAD

3. Company is entering into battery, solar & e-waste recycling business

1 Li-ion Batteries recycling and Lead Acid Batteries

2 Solar Panel Recycling

3 Precious metal recovery from Black Mass by Chemical Process

4 Recycling of E-Waste

DAHEJ CHEMICAL PLANT FOR BLACK MASS RECOVERY

• The company is entering into recycling business of battery and solar panels it has approx. 27000 sq. mt land area at Dahej locations. The unit is into operation since 2019 also set up battery recycling, solar panel & E-waste recycling facilities from this location followed by multi location across the India as well as overseas and looked up for technology tie up with Chinese company.

PROPOSED LI-ION BATTERY RECYCLING PLANT

4. FINANCIAL PERFORMANCE

Revenue of the Company is from 1833.73 Lakhs to 1114.86 Lakhs. Profit After Tax is from 83.86 Lakhs to 53.11 Lakhs during the year. Despite of many challenges, the Companys EBIDTA is from 164.42 Lakhs to 142.01 Lakhs and able to maintain profitability of the Company on consolidated bases.

(In Lakhs)

	Year to date (2023-24)	Year to date (2022-23)	YoY %
Revenue	1114.86	1833.73	(39.20)
EBITDA	142.01	164.42	(13.63)
PAT	53.11	83.86	(36.67)
EPS	0.49	0.78	(37.17)

H Key Financial Ratios

The Key financial ratios for Standalone financials are as per the below table:

Particulars	FY 2023-24	FY 2022-23
Debtors Turnover Ratio	2.55	2.29
Inventory Turnover Ratio	143.55	19.16
Interest Coverage Ratio	0.19	0.16
Current Ratio	4.07	3.28
Debt Equity Ratio	0.10	0.13
Operating Profit Margin (%)	11.91	19.84
Net Profit Margin (%)	5.24	6.08
Return on Net worth (%)	0.02	0.02

H DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:

Net worth of the company as on 31.03.2024 was Rs. 1574.46 lacs whereas on 31.03.2023 figure was Rs. 1563.16 lacs. Increase in net worth is mainly due to profit recorded in profit and loss account.

H Risks and Opportunities

Higher energy costs due to higher coal and fuel costs is a significant risk to the Companys business performance. Other risks include pricing risk on account of capacity additions, higher inflation and recessionary pressure (both global and domestic) leading to demand slowdown, currency devaluation, and changes in the export sector or imports from global markets.

The Company continues to remain focussed on keeping the costs low, including variable costs like fuel through raw material securitisation, and continuous improvement programmes to help mitigate the adverse impact of these risks such as diversifying energy sourcing in addition to current sources to improve sourcing flexibility, working on changing fuel mix, maximising use of alternate energy sources, different contracting strategies and continuing with strategies like commodity hedging / advance fixing of prices. Execution of expansion project, adherence to more stringent environmental norms, packaging and improving safety performance in a sustainable manner are other key areas that the Company continues to focus on during FY 2023-24.

Excessive rains are resulting in dilution of brine, which is affecting captive solar salt availability, leading to rise in cost of production as there is an increased need to purchase salt. Changes in monsoon pattern may also have adverse effect on the agrochemicals demand. Carbon emissions taxation will impact the cost of production. The Company is developing a holistic carbon abatement strategy at a corporate level, which will help in mitigating this risk.

In addition to enhanced ease of doing business, customer partnerships around themes of innovation and sustainability continue to offer opportunities for stronger customer connect. Increasing value-added products and sustainable supply chain practices like bulk material are some steps the Company will continue to focus on. Using technology for digitalisation of the plants, and making processes smoother for customers and internal stakeholders is going to be crucial as the Company heads into a digital age. Multiple projects around plant and supply chain automation, as well as customer relationship management are being implemented.

Kl Opportunities for the growth of the lead recycling industry:

The increasing demand for batteries from electric vehicles and energy storage systems is anticipated to augment market growth.

Lead is the only metal that can be recycled several times without having any diminishing impact on its quality. As a result, the production of secondary (recycled) lead is increasing over primary, which is anticipated to have a positive impact on market growth.

Recycling lead used in batteries improves the utilization of the metal, reduces greenhouse gas emissions, and conserves natural resources.

Recycling lead helps reduce the amount of toxic waste produced while also lowering the demand for new lead materials. This helps preserve natural resources and reduce the impact of lead production on the environment.

K Opportunities for e-waste:

Recycling and recovering: developing efficient recycling process can extract valuable materials from e-waste, reducing the need for raw materials and minimizing environmental impact.

Extended Producer Responsibility(EPR):implementing EPR holds manufacture accountable for the entire lifecycle of the product, from production to disposal which encourages sustainable design and responsible disposal practice.

Circular Economy Models: shifting towards a circular economy promotes product reuse, refurbishment, and recycling- minimizes waste and maximizes lifespan of the electronic devices.

Innovation in material design: research into eco-friendly materials for electronic components can reduce the environmental impact of e-waste.

K Challenges faced by the lead recycling industry:

Labour and supply chain challenges, exacerbated by the pandemic, have made it harder for smaller operators to keep up.

The global metal recycling industry is growing at an unprecedented rate due to factors such as urbanization, the spread of industrialization, concerns over resource depletion, and environmental awareness. However, this growth also brings challenges such as increased competition and the need for digitalization to improve efficiency.

Challenges for Li-ion Batteries

Absence of standardized procedures for collecting, transporting and recycling li-ion batteries, Changing environmental policies & battery waste management rules 2022 of the govt. bodies may affect business and capital cost Due to hazardous nature cross border transportation cost may be high Recovery ratio of precious metals is variable it may affect cost-benefit ratio.

Challenges for e-waste

Still only 17% of the worlds electronic waste is properly managed and recycled. E-waste remains the fastest growing solid waste stream globally and there is no slowdown in sight. Due to number of societal factors, including new and improved technologies being introduced faster than ever, electronics are becoming obsolete at a much faster rate than ever before. This results in approximately 100 billion pounds of e-waste generated each year, a metric which is growing at a staggering rate.

Despite the introduction of E-waste (Management) Rules in 2016, the enforcement and implementation on the ground remain inconsistent. The e-waste sector in India is estimated to be only about 5% organized, with The majority of e-waste still being handled by informal sectors that lackthe necessary health, safety and environmental standards.

Compounding the challenge is the fact that less than10% of e-waste in India is collectedand recycled by formal recyclers.

The existing infrastructure for e-waste management is insufficient to handle thecountrys e-waste output, which is growing at a very high rate.

Challenges and Barriers to Solar Panel Recycling o Diverse materials: Solar panels are highly advanced and are manufactured using various materials like aluminum, steel, glass, silicon, and even rare metals and elements. Each of them may require different recycling methods, and improper recycling may result in losing these valuable components.

• Hazardous components: Many solar panel products contain toxic materials such as lead and cadmium. Improper recycling may result in serious health risks and environmental contamination.

• Lack of awareness: A significant challenge to consider is the fact that many businesses and consumers are still unaware of the importance, financial opportunities, and environmental benefits of recycling solar panels. This can lead to difficulty in securing buy-ins and commitments when attempting to recycle solar panels.

• Technological limitations: Recycling solar panels can be a technical challenge. Efficient separation of various components included in the solar panels, like glass, aluminum frames, silicon wafers, etc., can be challenging and require advanced technology. Not to mention, the recycling process may require specialized knowledge and expertise.

K DEVELOPMENT IN HUMAN RESOURCES:?

The most valuable resources are the employees of the Company hence the Company always believes to have balanced environment. When the Company strategize the different areas, healthy and smooth functioning goes simultaneously. Consistency in quality, efficiency and customer satisfaction are always prioritized above all by the Company.

K INTERNAL CONTROL SYSTEM:

Your Company remains committed to improve the effectiveness of internal control systems for business processes with regard to its operations, financial reporting and compliance with applicable laws and regulations. Your Company has adequate internal controls in place designed and developed to:

a) Safeguard its assets from unauthorised use or losses

b) Conduct its business operations efficiently in line with companys policies

c) Maintain accuracy, completeness & reliability of the Financial and accounting records

d) Compliance on laws and regulations

e) Detect and prevent any fraud the frauds in the accounting & reporting system The Company monitors the efficacy and functioning of its internal financial controls through periodic internal audits and multiple authority levels for expenditures and budgetary controls.

K Cautionary Statement?

Certain statements contained in the Management Discussion and Analysis may be statements of the Companys beliefs, plans and expectations about the future and other forward-looking statements that are based on managements current expectations or beliefs as well as a number of assumptions about the Companys operations and factors beyond the Companys control or third party sources and involve known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. Forward-looking statements contained in the Management Discussion and Analysis regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. There is no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report.

	For and on behalf of the Company
		Sd/-
	Ketankumar Patel	Hrishikesh Rakholia
Place: Ahmedabad	Managing Director	Director
Date: 6th September, 2024	(DIN: 01157786)	(DIN:08699877)
Registered Office:
604, Manas Complex,
Jodhpur Cross Road,
Satellite, Ahmedabad - 380015