Lead Reclaim and Rubber Products Ltd Management Discussions

Our Company is in the business of manufacturing of reclaimed rubber, crumb rubber powder and rubber granules. We believe that we are one of the few companies in our reclaimed rubber industry that can process scrap of Radial tyre, Nylon tyre, Natural tube & butyl inner tube. Our manufacturing facility employs an extensive and stringent quality control mechanism at each stage of the recycling process to ensure that our finished product conforms to the exact requirement of our customers.

Our Company is in the business of manufacturing of reclaimed rubber, crumb rubber powder and rubber granules. Our Company focus on a) saving valuable natural resources by way of recycling; and b) helping our customers fulfil their circularity aspirations through use of our reclaimed rubber products. We believe that we are one of the few companies in our reclaimed rubber industry that can process scrap of Radial tyre , Nylon tyre , Natural tube & butyl inner tube. Our manufacturing facility is situated at 856/4, Sarali Road Village - Pithai, Taluka- Kathalal, Kheda - 387630, Gujarat, which is spread over a total land area of approximately 7790 Sq. mts. with the existing plant occupying approximately 2253 Sq. mts with the total install capacity of 5520 metric tons. Our Company has also purchase land for Manufacturing purpose which is situated at Plot No. B/17, having 1355.54 Sq. Mtr. Total area, Registered No. 2311, Someshwari Industrial Park, Mandali and entering into Lease Agreement of property situated at Agriculture land admeasuring about 12141 Sq. Mtrs. Out of 95911 Sq. Mtrs. bearing Revenue Survey/Block No. 694, Khata No. 632, All situated, lying and being at Mouje: Bordi, Taluka: Thasra, within the registration Sub-District: Thasra and District: Kheda. Our manufacturing facility employs an extensive and stringent quality control mechanism at each stage of the recycling process to ensure that our finished product conforms to the exact requirement of our customers. Our manufacturing facility is accredited with ISO 9001:2015 certifications for quality management system. We are also the member of Rubber Manufacturers Welfare Association.

Our Product Portfolio offers a diversified product range which includes variety of grades, thickness, widths and standards of various grades of whole tyre reclaim rubber, butyl reclaim rubber and natural reclaimed rubber. Currently, we sell our products to companies in the automotive manufacturing sector, distributors and dealers.

At our manufacturing facility, we have an in-house testing laboratory, for testing our raw materials and finished products to match the quality standards as specified and required by our customers. We strive to meet all the environment, health and safety standards in our manufacturing process. Every batch of Reclaimed rubber undergoes various parameters of quality tests.

INDUSTRY OVERVIEW

The Indian Rubber Industry is broadly divided into Natural Rubber and Synthetic Rubber. India is the fifth-largest user of all types of rubber, including synthetic rubber, and the second-largest consumer of natural rubber.

Natural Rubber production in the country during FY24 recorded a positive growth of 2.1% YoY. The growth in production is attributed to several factors such as measures taken by the Rubber Board to increase tapped area, supply of rain guarding materials, continuation of Rubber Production Incentive Scheme (RPIS) scheme, encouraging self-tapping, and other essential agronomic practices to prevent leaf diseases, etc.

Synthetic Rubber production increased 16.9% YoY in FY24. The domestic synthetic rubber production in FY25 (April to October 2024) was at 333,436 tonnes, increasing by 4.8% from 318,053 tonnes produced during the same period last year.

The total rubber area under rubber plantation in the country is estimated to have expanded to 889,000 Hectares (HA) during FY24 from 850,000 HA during FY23. The tappable area under rubber was 753,885 HA during FY24, of which only 577,300 ha (76.6%) has contributed to the natural rubber production during the year, leaving more room for further expansion and growth in production.

Indian rubber cultivation is mostly found in the southern and north-eastern parts of the country, as it has most suitable climatic conditions. The north-eastern region is benefitted with heavy rainfall and humidity, whereas the southern part of India is gifted with widespread coastal area. This climatic combination is very good for the cultivation of rubber trees.

Kerala, Tripura, Karnataka, Assam, Tamil Nadu, Meghalaya, Nagaland, Manipur, Goa, and Andaman & Nicobar Islands are Indias greatest production states. The rubber industry plays a vital role in providing employment opportunities for many farmers ultimately developing rural economy, and supporting various other industries like automobile, healthcare etc.

The volume of rubber exported from the country has increased to 4,199 tonnes in FY24 from 3,700 tonnes in FY23. Export of rubber during the year FY24 is valued at Rs. 55.1 crore (US$ 6.34 million). Of the total rubber exported in FY24 from India, 9.3% was Ribbed Smoked Sheet (RSS), 19.2% latex concentrates and 70.0% Technically Specified Rubber (TSR) in FY24, with Sri Lanka being the biggest importer.

GOVERNMENT INITIATIVES

The Government of India encourages foreign investment in the automobile sector and has allowed 100% FDI under the automatic route.

Some of the recent initiatives taken by the Government of India are -

> The Ministry of Heavy Industries has launched FAME- III Scheme, with a budget of Rs. 10,900 crore (US$ 1.29 billion) to promote electric mobility and reduce reliance on fossil fuels over a two-year period from April 1,2024, to March 31, 2026.

> Under Electric Mobility Promotion Scheme 2024 government aims to support 3,72,215 EVs including e-2W (3,33,387) and e-3W (38,828 including 13,590 rickshaws & e-carts and 25,238 e-3W in L5 category).

> Ministry of Heavy Industries, Government of India with the approval of Department of Expenditure has launched Electric Mobility Promotion Scheme 2024 to further accelerate the adoption of EVs in the country which is a fund limited scheme with a total outlay of Rs. 500 crore for the period of 4 months, from 1 st April 2024 to 31st July 2024.

> In January 2024, the Ministry of Heavy Industries extended the tenure of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by one year. The incentive will now be applicable for a total of five consecutive financial years, until March 31,2028.

> In July 2022, Gujarat government announced a semiconductor policy, where it will set up Dholera Semicon City and offered incentives for investment in this sector.

> In February 2022, Mr. Nitin Gadkari, Minister of Road Transport and Highways, revealed plans to roll out Bharat NCAP, Indias own vehicle safety assessment program.

> In February 2022, 20 carmakers, including Tata Motors Ltd, Suzuki Motor Gujarat, Mahindra and Mahindra, Hyundai, and Kia India Pvt. Ltd was chosen to receive production-linked incentives (PLI) as part of the governments plan to increase local vehicle manufacturing and attract new investment. The

20 automobile companies have proposed a total investment of around US$ 5.95 billion (Rs. 45,000 crore).

> In July 2022, Gujarat government announced a semiconductor policy, where it will set up Dholera Semicon City and offered incentives for investment in this sector.

> As of July 15, 2022, under the FAME India Scheme I & II, a total of 532 EV charging stations have been installed by oil companies under the Ministry of Petroleum and Natural Gas (MoPNG).

> Ministry of Heavy Industries (MHI) officials revealed that India plans to launch a new scheme to incentivise electric vehicle purchases and improve charging infrastructure, aligning with the interim budgets focus on eco-friendly transportation. Also, the allocation of US$ 321.5 million (Rs. 2,671.33 crore) for 2024-25 is expected to be utilized by March 31,2024.

OPPORTUNITIES, THREATS AND CONCERN

Opportunities in areas such as testing, certification and R&D infrastructure for leveraging the potential of the industry. Alternately, research spending for import substitutions is very low and there is an opportunity to increase. Even though there are several schemes floated by the government specifically for the sector, but for a reason mentioned above, the adaptation due to slow to low uptake of changes opportunities provided to the industry further impacts the output and aggravates the challenges. Further, the foundation for success for such integrated players has been laid GOIs introduction of Extended Producer Responsibility (EPR) for Tyres and Plastics, apart from other 9 sectors of the economy. The regulation has prompted brand owners and material manufacturers to invest along with material recovery and recycling companies for improved value addition. India could be a leader in shared mobility by 2030, providing opportunities for electric and autonomous vehicles. Focus is shifting to electric vehicles to reduce emissions. The electric vehicles industry is likely to create five crore jobs by 2030. Government aims to build India into a R&D hub.

Non-availability of raw materials like synthetic rubber in India is one of the major challenges which needs to be addressed by bringing appropriate technology collaboration / Joint ventures to facilitate Make in India.

OUTLOOK

With focus on sustainability at its peak, demand for recycled materials remains robust across the company. We continue to be confident of improve of market share of companies business by increased substitution and new product introductions. The Tyre industry experts in India are expecting an uptick in the market for next 3 years on back of available new capacities, anticipated economic and infrastructure growth and internationally rubber consumption is expected to notably recover driven by expected growth in auto sector and rebound in China.

Risks and Concerns

The business of reclaim rubber is closely linked with the automobile, tyre, and allied industries. While the Company continues to strengthen its operational capabilities, certain risks and concerns may impact its performance:

Raw Material Availability & Price Volatility

Reclaim rubber manufacturing depends largely on the availability of scrap rubber, used tyres, and other rubber waste. Fluctuations in collection, availability, or procurement costs can directly affect production and margins.

Environmental & Regulatory Risks

The sector is highly regulated due to its impact on environment and waste management. Any tightening of environmental norms, pollution control regulations, or restrictions on waste tyre imports could adversely affect operations.

Competition & Substitution Risk

The industry faces competition from natural rubber and synthetic rubber suppliers. Price fluctuations in virgin rubber markets may influence the demand for reclaim rubber. Additionally, entry of new reclaimers or cheaper imports could increase competitive pressure.

Technology & Quality Concerns

Customers, especially tyre manufacturers, demand consistent quality and performance of reclaim rubber. Any compromise in technology, processing, or quality standards could lead to customer dissatisfaction or loss of business.

Operational Risks

As reclaim rubber production involves handling of bulk scrap materials, risks related to logistics, storage, fire safety, and occupational hazards remain areas of concern.

Sustainability & Social Perception

While reclaim rubber is considered eco-friendly, improper handling of waste tyres or emissions during processing could lead to reputational damage and regulatory scrutiny.

INTERNAL CONTROL FRAMEWORK

Your Company conducts its business with integrity and high standards of ethical behaviour, and in compliance with the laws and regulations that govern its business. Your Company has a established framework of internal controls in operation, supported by standard operating procedures, policies and guidelines, including self-assessment exercises. The Company time to time seek evaluating the adequacy of all internal controls and ensuring that operating and business units adhere to internal processes and procedures as well as to regulatory and legal requirements.

PEOPLE AND PRACTICES:

The Board of Directors continues to challenge the management and push for higher targets. The Boards well-rounded experience comprises individuals with experience in tyre industry, Financial Market rubber industry, etc. The Board continues to provide long term direction to the Company and engages actively towards initiatives inputs on the Companys long-term vision.

The Company recognizes the importance and contribution of its human resources for its growth and development and values their talent, integrity and dedication. With the focus to develop leadership talent from within, the Company conduct various programmes. Employee motivation is key to organization success. On these lines, the Company conducts its various social programs and motivate them. As on March 31,2025, the Company has 30 employees.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Your Company has achieved a total income of ? 3126 Lakh during the year under review as against ? 1489 Lakh in the previous financial year. The net profit after tax of the Company for the year under review is ? 146 Lakh as compared to profit of ? 38 Lakh for the previous year. The net profit before tax for the year under review is ? 200 Lakh as compared to profit of ? 77 Lakh for the previous year.

FINANCIAL RATIOS

Particulars	As at 313-2025	As at 31-32024	% Variance	Reasons for Variances
Current Ratio	2.25	1.85	21.81	-
Debt-Equity Ratio	0.24	0.37	-34.85	Significant Increase in Equity
Debt Service Coverage Ratio	5.22	7.80	-33.08	Increase in Earnings
Return on equity ratio	9.36	3.35	179.32	Increase in Earnings
Inventory Turnover Ratio	8.17	3.77	116.61	Significant Increase in Turnover
Trade Receivables Turnover Ratio	8.13	9.67	-15.85	-
Trade payables Turnover Ratio	10.67	5.18	106.13	Significant Increase in Purchases
Net Capital Turnover Ratio	3.53	2.60	35.75	Significant Increase in Turnover
Net Profit Ratio	4.70	2.50	88.38	Increase in Net Profit
Return on Capital Employed	10.60	8.08	31.23	Increase in EBIT
Return on investment	0.52	0.07	609.28	Irrelevant since small investment in Fixed Deposits

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report containing the objectives, expectations or predictions of the company may be forward-looking within the meaning of securities laws and regulations. Actual results may differ materially from those expressed in the statement. The operations of the Company could be influenced by various factors such as domestic and global demand and supply conditions affecting sales volumes and selling prices of finished goods, input availability and cost, tax laws, economic developments within the country and other factors such as litigation and industrial relations.