Tatva Chintan Pharma Chem Ltd

Message from the Chairman and Managing Director Desk

Transforming Challenges into Opportunities

Dear Shareholders,

I am pleased to present the 28th Annual Report for FY 2023-24. During this period, despite the global chemical industry passing through a turbulent phase, Tatva Chintan has demonstrated resilient performance and marginally increasing its EBIDTA earnings. We have expanded our product portfolio across various categories and have incorporated various innovative ideas to optimize performance. These achievements underscore our commitment to excellence and our ability to adapt and grow in a challenging market landscape.

The fiscal year 2023-24 presented numerous challenges for the global chemical and specialty chemical industry. The economic environment was fraught with undercurrents that tested the resilience of businesses across the sector. Geopolitical tensions and a general slowdown in consumption created a ripple effect, impacting operations and market dynamics. Despite these challenges, our determination has not wavered. On the contrary, we have navigated these complexities with a balanced approach, prioritizing our business objectives alongside maintaining the trust and goodwill of our customers. We maintained emphasis on development of greener technologies and innovative processes to align with our long-term vision.

Amid these global challenges, the Indian economy demonstrated robust growth, buoyed by high investment activity and strong private consumption. With a growth rate of 8.2%, India has emerged as the fastest-growing economy, becoming a global hub for foreign investments and reinforcing its status as an emerging power. This rapid growth trajectory is propelled by a conducive business environment and robust government support through initiatives like 'Make in India' and the PLI scheme, which have significantly attracted investments across various industries.

Our Company had a resilient performance during these turbulent times. Agile teamwork coupled with efficient operations and flexibility in the supply chain ensured seamless supplies to the end customers. I am quite happy and proud, to inform you that during the year of reporting, we have successfully commenced commercial

production from the newly expanded facility at Dahej SEZ. With this, the installed reactor capacity increased to 500 KL from 294 KL and assembly lines increased from 27 to 39.

In FY 2023-24, SDA has become the highest contributor to our revenue, contributing 42% to our revenue from 30% in the previous financial year. The segment remains resilient to raw material prices and weak demand in Chinese heavy duty vehicle market. We continue to onboard new customers resulting in growth of ~30% in our revenue as our revenue has grown from ' 1,277 million to ' 1,655 million in FY 2023-24.

On the other hand, demand for other segments remained sluggish as the PTC segment revenue contracted by ~25% reaching ' 1,067 million. This decline was attributed to aggressive pricing competition and a substantial drop in raw material prices leading towards a lower price realization.

Also, the Electrolyte Salts and Pharma and Agro Intermediates and Specialty Chemicals segment remained muted. The Electrolyte Salts segment saw revenue amount to ' 50 million, reflecting a 70% year- over-year decline due to poor offtake in the Chinese market and delayed procurement by a major customer. Similarly, the Pharma and Agro Intermediates and Specialty Chemicals segment posted an annual revenue of ' 1,132 million, a 15% decline from the previous year. Despite these challenges, the company made significant strides in developing and commercializing new products involving continuous flow chemistry and in the area of metal extraction.

Our financial results are a testament to our business resilience. Despite a 7.1% contraction in operative revenue, which stands at ' 3,935 million, our EBITDA remains strong, showcasing a growth of 12.54% to ' 682 million from ' 606 million. This has resulted in an improvement in our EBITDA margins by 3.03%, now standing at 17.3%. However, our Profit After Tax (PAT) experienced a contraction of 33.18%, reducing to ' 304 million from ' 455 million in the previous financial year. This decline was primarily due to higher depreciation expenses, as we significantly increased our fixed assets from ' 1,958 million to ' 4,265.35 million and employee benefit expense, due to operationalization of expanded capacity.

On a positive note, we have made substantial progress in repaying our loans, reducing our current liabilities from ' 2,387 million in 2022-23 to ' 797 million in 2023-24. This has also resulted in lower interest costs, further strengthening our financial position. These results underscore our commitment to maintaining a resilient and efficient business model, even in challenging times.

As we move forward, our focus remains on leveraging the strengths of our diversified product portfolio to navigate the current market challenges. We are optimistic about the growth potential in the coming quarters, driven by the successful commercialization of new products and the strategic expansion of our customer base. The commencement of commercial production at our expanded Dahej SEZ facility will play a pivotal role in enhancing our operational efficiency and in meeting the potential increasing demand.

Looking ahead, we are committed to capitalizing on the opportunities in our key segments, particularly in the SDA and PASC markets, where we expect substantial volume growth. The successful validation and onboarding of new customers, along with the anticipated stabilization of raw material prices, will support this growth trajectory. Additionally, our ongoing investments in capacity expansion and advanced manufacturing technologies will ensure we remain competitive and can meet the evolving needs of our customers.

In summary, while the macroeconomic environment presents its challenges, we are confident in our strategic direction and our ability to achieve sustained growth and value creation for our stakeholders. Our focus will be on operational excellence, innovation, and expanding our market presence, positioning Tatva Chintan for a successful future.

I would like to extend my heartfelt gratitude to all our stakeholders for their unwavering support and trust in Tatva Chintan. Our employees deserve special recognition for their relentless dedication and hard work, which have been instrumental in navigating through challenging times and achieving our goals.

I also want to thank our customers and partners for their continued faith in our capabilities and products. Your collaboration and feedback have been vital to our innovation and growth. Additionally, I extend my appreciation to our shareholders for their confidence in our vision and strategic direction.

Lastly, I am grateful to our board of directors for their guidance and valuable insights, which have been crucial in steering the company forward. Together, we will continue to strive for excellence and drive sustainable growth, ensuring long-term value for all our stakeholders.

Warm regards,

Chairman and Managing Director