Gravita India Ltd

Dear Shareowners

In the recycling industry, a common clich? is "Turning trash into treasure." This phrase encapsulates the idea of converting waste materials into valuable products, highlighting the transformative potential of recycling processes.

The recycling industry is a cornerstone of sustainable waste management, transforming used materials into new, and reusable products. This process significantly reduces the volume of waste sent to landfills, conserves natural resources, and decreases energy consumption, thereby mitigating environmental pollution. Over the years, advancements in technology and growing environmental consciousness have propelled the industry forward, making recycling a fundamental element of the global circular economy. This economy aims to extend the lifecycle of resources, promoting efficient use and reducing waste, thus playing a pivotal role in addressing environmental challenges.

The recycling sector, particularly for materials like lead, aluminium, and plastic, holds promising prospects. Lead recycling remains robust due to its high recyclability and demand in the battery industry, especially with the rise of renewable energy storage systems. Aluminium recycling is equally promising, driven by the material's extensive use in automotive, aerospace, and packaging industries, alongside advancements in recycling technologies that enhance efficiency. Plastic recycling, though challenging, is gaining momentum with innovations in chemical recycling and improved sorting processes, spurred by regulatory pressures and consumer demand for sustainable solutions.

We at Gravita stands to derive substantial benefits from our focus on recycling these materials. Environmentally, the company will contribute to resource conservation and eduction r of greenhouse gas emissions, aligning with global sustainability goals. Economically, recycling operations offer cost advantages over producing new materials, enhancing profit margins and market competitiveness. Strategically, a strong emphasis on sustainability bolsters our Company's brand image, attracting eco-conscious customers and investors. Moreover, investing in advanced recycling technologies positions our Company as an industry innovator, opening avenues for new product development and market expansion. Added, proactive engagement in recycling ensures compliance with environmental regulations, mitigating risks and ensuring operational continuity.

Performance Overview Financial

Our net sales for FY 24 reached an impressive 3,161 Crores, showcasing a notable increase from 2,801 Crores in FY 23. This growth underscores the effectiveness of our market strategies and the strong demand for our recycled products. Domestic sales contributed 62% to the total sales, while our overseas markets accounted for 38%. This balanced approach has enabled us to mitigate risks and leverage opportunities across different geographies.

In terms of profitability, we achieved a Profit after Tax (PAT) of 239 Crores in FY 24, compared to 201 Crores in the previous fiscal year. The PAT contribution from the domestic market stood at 73%, with the overseas market contributing 27%. Our PAT margin improved to 7.57% in FY 24 from 7.18% in FY 23, reflecting our focus on cost efficiency and value addition. The capital employed during the year was 1,408 Crores, up from 959 Crores in the previous year, indicating our investments in expanding capacity and enhancing operational capabilities. Despite this increase, our Return on Capital Employed (ROCE) stood at a robust 25%, though slightly lower than the 29% recorded in FY 23. This slight dip is attributable to our strategic investments aimed at long-term growth and sustainability.

Our diversified portfolio spans four key business verticals: Lead, Aluminium, Plastic, and Rubber recycling. With a global presence, we operate 11 state-of-the-art manufacturing plants spread across 32 countries, demonstrating our commitment to environmental stewardship on an international scale.

Our extensive network includes 31 dedicated yards and 1,700 touch points, enabling us to maintain a robust scrap collection capacity exceeding 250,000 MT. Our production capabilities are equally impressive, with the capacity to recycle over 3,02,859 MT of various products. Over the past year, we delivered approximately 169,000 MT of high-quality recycled products to more than 350 satisfied customers, achieving a capacity utilization rate of 58%.

Our order book stands strong with over 60,000 MT of various products, reflecting the trust and confidence our customers place in us. Notably, 45% of our revenue is derived from the sale of value-added products, underscoring our ability to innovate and meet the evolving needs of the market. These achievements highlight our operational excellence and reinforce our commitment to driving sustainable growth and creating a circular economy.

Throughout the year we continued to execute our strategy, enabling us to strengthen our network of solid globally-spread infrastructure assets, which are key to sustainably aggregating and recycling resources generated across India and the world. This comprises our basic focus on breaking barriers and higher for a sustainable future.

In Tanzania, we expanded our lead recycling capacity to 12,000 MTPA with a capital expenditure of 3.33 Crores. Additionally, we initiated plastic recycling operations with a capacity of 1,800 MTPA, supported by a capex of 2.25 Crores. Furthermore, we ventured into rubber recycling, establishing a capacity of 3,000 MTPA through a capex of 3.86 Crores.

In Togo, we initiated commercial production of lead at our existing recycling plant, boasting a capacity of 6,000 MTPA (Metric Tons Per Annum). This expansion was made possible through a capital expenditure (capex) of 3.61 Crores, which was funded through internal accruals.

In Mundra (India), we increased our lead recycling capacity to 60,000 MTPA. Additionally, we commenced production of value-added Red Lead with a capacity of 4,800 MTPA. We also began recycling plastic, achieving a capacity of 7,500 MTPA.

In Chitoor, India, we expanded our lead recycling capacity to 64,640 MTPA at our existing facility. This was achieved through a capital expenditure of 21 Crores, funded from internal accruals.

We signed a Memorandum of Understanding (MOU) to establish a Battery Recycling Plant through a joint venture. Upon completion of Phase 1 of the project, this plant will have a production capacity of 6,000 MTPA. This will mark our company's first recycling facility in the Middle East.

As part of our commitment to resource diversification and revenue growth outlined in our "Vision 2028," we have expanded our focus beyond traditional lead, aluminium, plastic, and rubber recycling to include lithium, steel, rubber, and paper recycling. Leveraging our proven expertise and capabilities in safe and reliable recycling, we are confident that our entry into these new verticals will be smooth. This strategic move aims to accelerate cash flows and liquidity, ultimately building a strong foundation of growth capital for the Company.

I would like to highlight that our competitive advantage is well-protected due to the significant barriers to entry we have in place. These barriers include specialized industry knowledge, lengthy OEM approvals, established multinational procurement and customer networks, as well as necessary government licenses for imports. As a result, we are not only able to safeguard our market share but also have the potential to expand it.

At Gravita, we not only focus on hiring the best talent, but we also invest in their continued development. Our performance-driven work culture motivates people to improve their skills and overall job performance. Our employees are provided with the opportunity, resources and tools they need to grow and prosper. We remain focused on enhancing personal and professional growth, creating an inspiring environment.

A business is a living organism, and its survival is dependent on contributing to the community. At Gravita, we are actively involved in empowering the communities around us through our CSR initiatives in the areas of education, healthcare and environment preservation in partnership with various NGOs and non-profit organisations.

None of the above could have been achieved without the commitment of each and every employee. On behalf of the entire Board of Directors, I would like to thank all of the stakeholders of Gravita India Limited whose efforts made FY 23-24 a successful year. I would also like to thank all the shareowners for your continued support as shareholders in the Company.