Gujarat Fluorochemicals Ltd

<dhhead>MESSAGE FROM OUR MANAGING DIRECTOR</dhhead>

Dear Stakeholders,

I am delighted to present the Integrated Annual Report of Gujarat Fluorochemicals Limited for the financial year

2022-23. It is with great pride and enthusiasm that I share the remarkable journey of GFL amidst the challenges and opportunities posed by the current macro-environment. The global macro-environment in the year 2022-23 was marked by significant challenges, including geopolitical tensions and high inflation. Despite these obstacles, the world witnessed a positive trajectory following the recovery from the COVID-19 pandemic. In response to inflationary pressures, central banks raised interest rates, which inevitably impacted growth prospects. However, amid these testing circumstances, I am pleased to announce that GFL showcased exceptional performance. Our profit grew by an impressive 71% compared to the previous year, a testament to our resilient spirit and commitment to excellence.

At GFL, we have remained strategically positioned to navigate the complexities of the macro-environment successfully. As a leading global manufacturer of fluoropolymers renowned have carved a niche in the market. Our unwavering vision to produce high-quality grades and secure customer approvals has been the driving force behind our accomplishments.

Furthermore, we have strategically aligned ourselves with industries experiencing significant growth, such as Electric Vehicles (EV), Solar, 5G, Semiconductors and Green Hydrogen. These sunrise sectors heavily rely on fluoropolymers and GFL’s offerings have become indispensable components in their advancements. Additionally, the global shift towards the ‘China+1’ strategy has presented new opportunities for us to expand and fortify our growth prospects in various markets especially in our EV offerings.

The strategic imperative guiding GFL during this period revolves around targeting opportunities in downstream industries. Operating across three key verticals Fluoropolymers, Fluorochemicals and Bulk Chemicals we recognise the immense potential of our fluoropolymers segment. As such, we have dedicated substantial capital expenditures to enhance our capacity in this crucial area. Contributing nearly 50% of our total revenue, our fluoropolymer portfolio includes essential offerings like PTFE, PVDF, FKM, PFA and Micropowders, which are irreplaceable in numerous industries.

The EV industry holds immense growth potential and we remain committed to meet its specific demands with our fluoropolymer and battery chemicals in particular, is becoming integral to the EV sector’s advancements. Furthermore, the growth of FKM has been boosted by increased blending of ethanol and stricter emission regulations in the automotive industry.

Additionally, the fluoropolymer PFA is projected to experience significant growth due to its widespread application in semiconductor manufacturing, an industry witnessing substantial global capital expenditure. With a solid foundation in place, we are poised to capitalise on exponential growth opportunities across all our verticals. Turning to our financial growth in the year 2022-23,

I am pleased to report that it has been remarkable.

Our consolidated revenue reached Rs. 5,685 Crores, representing an impressive YoY growth of 44%. Our consolidated EBITDA stood at Rs. 2,047 Crores, reflecting an extraordinary 71% YoY growth, with EBITDA margins at 36%. Consolidated PAT reached Rs. 1,323 Crores, showing a substantial 71% increase. Furthermore, our Return on Capital Employed (ROCE) improved to 34.07%, and our Return on Equity (ROE) increased to 27.14% in the Financial Year 2022-23, compared to 24.46% and 20.1%, respectively, in the Financial Year 2021-22. These financial achievements validate our progressive strategic approach and commitment to achieving our organisational aspirations.

Another milestone development is our PVDF solar film project, scheduled for commissioning in the upcoming financial year. This integrated PVDF manufacturing facility will effectively cater to both domestic and international markets, further solidifying our position as a global leader in fluoropolymers.

As we continue to evolve, we are proactively developing ‘New-Age Products’ that align with the changing landscape of Hexafluor industriesandtechnologies.OurLithium (LiPF6) project and our battery salt is nearing completion and we anticipate to commission it in the Financial Year 2023-24. Subsequently, we will move on to sample distribution, followed by a validation period of approximately three months before the commercialisation of LiPF6. This project holds immense significance in the growing field position GFL as a key player in this critical sector.

In addition to the LiPF6 project, we are placing significant emphasis on developing Proton Exchange Membrane (PEM) technology used in hydrogen fuel cells and electrolysers. We are excited about the growth prospects this technology presents and our dedicated efforts are focussed on its successful development and integration into the market.

At GFL, sustainability is deeply ingrained in our business philosophy and serves as a driving force for our future growth. We are committed to Enviornmental, Social and Governance (ESG) and place significant importance on stakeholder engagement, commitment and transparency. Our sustainability efforts align with the Sustainable Development Goals (SDGs), and we continuously strive to improve our ESG performance, ensuring we remain at the forefront of sustainable business practices.

As part of our sustainability approach, we embrace technology as an enabler, promoting safety and well-being by minimising human and machine interventions. Our commitment to green chemistry and circular economy principles has driven global growth and provided unique opportunities for transitioning to a sustainable future. We are dedicated to designing and developing products that meet global standards while ensuring the judicious use of natural resources. Our research focusses on low-carbon pathways to reduce product carbon footprints, enabling us to remain competitive and assist our customers in their efforts to reduce greenhouse gas emissions.

We deeply value our ecosystem and stakeholders and our energy storage and will approach to sustainability reflects this. As a responsible corporate entity, we actively support the United Nations Sustainable Development Goals (SDGs). We engage and collaborate with our supply chain partners to reduce emissions, promote human rights practices and contribute to community development, fostering inclusive growth. Our commitment to environmental protection is evident in our efforts to reduce dependencies and produce green products that drive sustainable growth and benefits throughout the supply chain. As we progress in reducing our carbon footprint, we will establish more stringent sustainability targets to support the global agenda in combating climate change.

Our progress thus far motivates and encourages us to foster sustainability as an integral part of our organisational culture. Looking ahead, we envision a promising outlook for GFL in both the near and long term. We have successfully transitioned from sunset industries to burgeoning sunrise industries, positioning ourselves for significant growth in the EV sector. The successful commissioning of our first battery chemicals plant will further fuel our growth prospects, paving the way for further expansion. Additionally, our fluoropolymer offerings will continue to sustain our growth, reinforcing our position in the market.

Our vision extends beyond financial success. We aim to be a global leader in advanced materials while contributing positively to society and the environment. Sustainability will remain a driving force in all our endeavours and we will continue to invest in research and development to create innovative and sustainable solutions. As we embrace technology and innovation, we are committed to maintaining operational efficiency and nurturing a culture of excellence, diversity, and inclusivity.

On behalf of the entire GFL team, I extend my heartfelt gratitude to our stakeholders for their continued trust and support. Our journey towards growth and sustainability would not be possible without your unwavering commitment.