Kabra Extrusion Technik Ltd

<dhhead>Executive Chairman’s Letter</dhhead>

Dear Stakeholders,

I am delighted to connect with you through Kabra Extrusiontechnik Limited's (KET) 41st Annual Report for the financial year 2023-24.

India's economic growth is forecasted to reach an impressive 7.5% in 2024, as reported by the World Bank, signalling a broader upward trend throughout South Asia. This economic momentum is supported by increased government investment in infrastructure and a revitalization of the real estate sector.

According to a Crisil, India is on course to maintain its position as the fastest-growing major economy in the world. Between 2025 and 2031, India is expected to not only cross the $5 trillion GDP mark but also near a $7 trillion valuation, potentially becoming the world's third-largest economy. Currently, the manufacturing sector accounts for 15% of India's GDP. The government has identified key industries that leverage India's unique resources and skills, aiming to tap into domestic market potential while ascending in the global manufacturing hierarchy. Over the past decade, India has diversified its export markets and shifted towards producing higher-value, quality, cost-effective, and complex goods.

At this juncture, India seems to have effectively navigated the global economic downturn through strategic government investments, revitalized domestic consumption, and various economic measures. The solid foundation of the economy, strengthened by the financial health of banks and corporations, prudent fiscal management, controlled external deficit and substantial foreign exchange reserves, all point to a promising economic future.

The Company's revenues stood at 608 crores. The revenue mix between the Extrusion Business and Battery Division was 57:43 in FY24 as against 48:52 in FY23. EBITDA stood at 61 crores, with an EBITDA margin of 10.0% in FY24. KET's profit after tax (PAT) stood at 34 crores, with a PAT margin of 5.6% during FY24. KET’s Board of Directors recommended a dividend of 3.5 per share (70% of the face value of 5) in FY24.

In 2023, the global market for plastic extrusion machinery was valued at USD 6.6 billion. It is expected to grow to USD 9.7 billion by 2032, with a CAGR of 4.1% from 2024 to 2032. The industry is set to expand alongside demographic changes, urbanization, and rising disposable incomes.

The PVC pipe sector in India is also experiencing strong growth. CRISIL estimates that PVC pipe and fitting manufacturers will continue to see a volume increase of 13-15% in the next fiscal year, spurred by government investments in water supply, irrigation, housing, and infrastructure projects. Government initiatives like the Jal Jeevan Mission, AMRUT 2.0 and PM Awas Yojana are expected to significantly support the industry, with demand primarily driven by agriculture, water supply, irrigation and sewerage sectors.

Kabra Extrusiontechnik Limited is enhancing its plants capabilities to meet high-demand applications, requiring significant R&D and investment in centers of excellence. Our R&D aligns with market demands, leading to continuous improvements and new product lines. KET’s extrusion business is well-positioned to capitalize on the growth in industry backed by the government’s thrust on infrastructure coupled with rising capex amongst the industry.

Fortune Business Insights predicts that India's EV market value will jump from USD 3.21 billion in 2022 to USD 113.99 billion by 2029, with a CAGR of 66.52%. This growth indicates the sector's potential to reshape India's automotive industry and achieve a fully electric vehicle nation by 2030. Additionally, a report by GameChanger Law Advisors and Speciale Invest forecasts significant growth in the Indian EV battery market, from USD 16.77 billion in 2023 to USD 27.70 billion by 2028.

The Confederation of Indian Industry (CII) suggests that India should aim for at least 1.32 million EV charging stations by 2030 to support the growing number of electric vehicles. To maintain the ideal ratio of one charging point for every 40 EVs, the country needs to install over 400,000 charging points annually.

EV sales in India exceeded 1.5 million annual sales for the first time in FY24, with a 41.7% YoY increase to 16,70,736 units. However, the growth was tempered by the reduction of FAME II subsidy. The E-2 Wheeler industry experience a sales decline in H1FY24 owing to subsidy revision and experience a gradual sales recovery in H2FY24. E-2 Wheeler sales grew by 29.7% YoY to 944,126 units, while E-3 Wheeler sales surged by 57.4% YoY to 632,485 units.

Government initiatives like the PLI scheme for Advanced Chemistry Cells (ACC) and reduced import duties on EVs are significant. These measures not only attract foreign OEMs but also signal India's readiness for substantial investments and a new EV ecosystem. The Electric Mobility Promotion Scheme 2024, with a budget of INR 500 crore, aims to support the purchase of electric two and three-wheelers until July 2024 to accelerate EV adoption proposition. It is anticipated that the Government is likely extend the aforesaid scheme in the post-election budget continuing the EV adoption momentum in India.

Battrixx, KET's vertical for advanced lithium-ion battery packs and modules for e-vehicles, continues to receive accolades. Battrixx's capacity expansion is expected to complete in Q2FY25, with new cylindrical and prismatic battery pack manufacturing lines. Battrixx is poised to enter other verticals like E-3 Wheelers and LCV in the upcoming financial year. The Battery Energy Storage Systems (BESS) market in India is growing rapidly due to the integration of renewable energy, grid stability concerns, and the need for reliable electricity. The Central Electricity Authority (CEA) projects that by 2030, the BESS market could exceed 208 GWh. The Union Cabinet has sanctioned a plan to support the financial viability of establishing a strong storage infrastructure for surplus wind and solar energy. By the fiscal year 2031, projects for BESS with a combined capacity of 4,000 megawatt hours will be rolled out. The scheme has been allocated an initial budget of INR 9,400 crore, with INR 3,760 crore earmarked as budgetary aid. KET aims to tap into this potential and become a key player in the BESS industry.

I extend my heartfelt thanks to all esteemed stakeholders of the Company. I am grateful to our 'human capital' for their unwavering efforts to achieve the Company's long-term goals and vision. I also thank the Board of Directors for their guidance and inspiration to the KET team to explore new opportunities. I am confident that KET's business model is poised for sustainable growth and value creation for its stakeholders.