The global economy proved resilient through a demanding year. The International Monetary Fund estimates global output grew 3.3% in 2025 and projects the same 3.3% in 2026. Growth held up despite elevated trade tensions and a marked rise in tariffs, with the effective United States tariff rate estimated at about 18.5%. The direct effect was felt in trade rather than output, and world trade volume growth is expected to slow from 4.1% in 2025 to 2.6% in 2026. Inflation continued to ease, with global headline inflation projected to fall from 4.1% in 2025 to 3.8% in 2026.
The tightening of trade policy was the defining feature of the year. Successive increases in tariffs, and the uncertainty surrounding them, weighed on cross-border commerce and on exporter confidence, even where final demand held up. For chemical exporters the effect was felt across the markets subject to tariffs and in third countries that add value to Indian inputs before shipping onward, which broadened the drag on demand through the year. Among the major economies, the United States is projected to grow 2.1% in 2025 and 2.4% in 2026, the euro area 1.4% and 1.3% and China 5.0% and 4.5%. For a company that earns most of its revenue from exports, the combination of slower trade growth, tariff uncertainty and soft demand in parts of Europe shaped the operating environment.
Monetary policy began to loosen in several major economies as inflation moved back towards target, which supports demand over the medium term. Commodity and energy markets were mixed through the year, with periods of volatility linked to conflict and to shipping disruption, and freight rates rose on some routes. For a manufacturer of pigments and pharmaceutical ingredients, the cost of crude-linked inputs and of ocean freight is a direct channel through which the global environment reaches the profit and loss account, and both remained sources of uncertainty during FY26. As tariff levels settle and inflation eases, the conditions for a gradual recovery in trade-linked demand are improving.
Source: International Monetary Fund, World Economic Outlook Update, January 2026.
India remained the fastest-growing major economy. The International Monetary Fund projects Indian growth of 7.3% in 2025 and 6.4% in 2026, supported by domestic demand, public investment and a stable financial system. Robust domestic consumption gives Indian manufacturers a base of demand that is less exposed to the swings of global trade, and it was an important support for the Companys newer businesses, where growth in FY26 was led by the home market.
Domestic demand has been the anchor of Indias growth. Private consumption, a large and young workforce, rising urbanisation and sustained public investment in infrastructure kept activity firm even as external demand softened. For the chemical sector this domestic base is significant, as it provides a market that grows largely independently of the global cycle. The Companys experience in FY26, where the Azo and pharmaceutical businesses grew on the strength of Indian demand while export markets recovered slowly, illustrates the value of this home base.
Manufacturing has been a particular focus of policy. Production-linked incentive schemes, a lower corporate tax rate for new manufacturing, a stable tax regime under the Goods and Services Tax and continued investment in ports, roads and power are intended to raise the share of manufacturing in the economy and to build depth in areas, such as chemicals and pharmaceuticals, where India still imports a significant part of its needs. Inflation remained within a manageable range through the year, and the rupee traded in a relatively narrow band against the dollar. For an exporter that also imports raw materials, a stable currency reduces the volatility of both realisations and input costs.
Source: International Monetary Fund, World Economic Outlook Update, January 2026.
The chemical industry is central to the Indian economy, contributing about 7% of gross domestic product and supplying inputs to agriculture, pharmaceuticals, textiles, automobiles and construction. The sector was valued at about US$250 billion in 2024. India is the sixth-largest producer of chemicals in the world and the third-largest in Asia. Demand is expected to grow strongly over the coming years, with the industry projected to reach about US$300 billion by 2028 and, on longer-term estimates, close to US$1 trillion by 2040. Chemical and allied exports US 18.65 billion in the first eleven months of FY26, within which they contributed about US$1.99 billion.
Two structural forces shape the sectors outlook. The first is the realignment of global supply chains, often described as China Plus One, in which international customers seek to diversify their sourcing away from a single country. India, with its scale in chemistry, is skilled workforce and its cost position, is a natural beneficiary, and the shift is visible in the steady gains Indian producers have made in categories such as phthalocyanine pigments. The second is Indias continuing dependence on imported intermediates and specialty inputs, which sustains a trade deficit in parts of the value chain. That dependence is also an opportunity, as backward-integrated manufacturers who make their own key inputs can capture value that would otherwise be imported. The Company is integrated in both of its pigment lines and in its pharmaceutical intermediates, which places it well against both forces.
Within the sector, specialty chemicals are among the fastest-growing segments, driven by demand from coatings, personal care, agrochemicals and pharmaceuticals, and by the same supply-chain realignment that benefits pigments. Indian producers are investing in capacity, in research and development and in cleaner processes, as customers and regulators place greater weight on the environmental footprint of manufacturing. The Companys own investment in effluent treatment, water recycling and process efficiency is consistent with this direction, and its record of uninterrupted operations reflects the growing importance of compliance as a condition of competing in regulated export markets.
Source: India Brand Equity Foundation, Chemicals Industry in India, 2025.
The Company competes in the organic pigments market, which was valued at about US$703 billion in 2025 and is projected to reach about US$10.37 billion by 2034, a compound annual growth rate of around 4.2%. Azo pigments hold the largest share of the market, while phthalocyanine pigments are expected to grow strongly over the forecast period. Asia Pacific is the largest region, at about US$2.64 billion in 2025 or close to 38% of the global market, with India a significant contributor supported by the availability of raw materials and a competitive cost base.
Within phthalocyanine blue, the competitive landscape has shifted over the past fifteen years. India now supplies more than 70% of global demand for phthalocyanine pigments, having taken share from China, which historically dominated the category. China continues to account for more than half of global pigment production overall, particularly in Azo, which frames the opportunity for Indian producers as global customers diversify their sourcing. Pigments are used across inks, paints, plastics and textiles, and they carry no material risk of substitution or obsolescence, which gives the category a durable demand base through economic cycles. The Company is positioned in both categories, with a leading position in phthalocyanine blue and a growing presence in Azo.
Demand for organic pigments is tied to the paints and coatings, printing ink, plastics and textile industries, which in turn track construction, packaging, consumer goods and automotive activity. The growth of packaging and of premium coatings in developing markets, and the rising use of colour across consumer products, support steady demand over the long term. Within this, phthalocyanine blue benefits from its durability and greater strength, while Azo pigments are valued for their cost-effectiveness and breadth of application. The shift of pigment manufacturing towards India, on the back of cost, quality and supply-chain realignment, is expected to continue over the coming years.
Source: Fortune Business Insights, Organic Pigments Market, 2025, and Q4 and FY26 Investor Presentation, Asahi Songwon Colors Limited.
The Companys third market is active pharmaceutical ingredients, where India is a leading global supplier of generics and their ingredients. The Indian API market was valued at about US$19.83 billion in 2024 and is projected to reach about US$30.90 billion by 2030, a compound annual growth rate of around 7.7%. Growth is driven by the rising incidence of chronic conditions, an ageing population and continued demand for affordable medicines. Synthetic ingredients account for the larger part of the market, and generic ingredients for a majority, both of which describe the Companys area of focus through its subsidiary Atlas Life Sciences.
The wider industry has passed through a period of intense price competition, driven in part by aggressive pricing from China, and the recovery in selling prices seen towards the end of FY26 is an encouraging sign for domestic producers. Government support for domestic manufacturing of ingredients and key starting materials, aimed at reducing dependence on imports, reinforces the long-term opportunity for integrated Indian producers. The Companys backward integration into its own intermediates positions it to benefit from this shift.
Source: Grand View Research, India Active Pharmaceutical Ingredients Market, 2025.
Asahi Songwon Colors Limited operates three business verticals across four manufacturing units in Gujarat. Phthalocyanine blue pigments, made at Padra, are the foundation of the business and is principal source of cash. Azo pigments, made at Dahej through Asahi Tennants Color, and active pharmaceutical ingredients, made through Atlas Life Sciences at Odhav and Chhatral, are the two businesses built over the past decade to broaden the base. The Company is backward integrated in each of its pigment lines and in its pharmaceutical intermediates, which gives it control of key inputs and a cost position that has proved valuable through a volatile period. It serves more than a hundred customers across 19 export markets, with exports contributing 69% of revenue in FY26.
Consolidated revenue from operations for FY26 was 535.48 crore, lower by 4.78% than 562.36 crore in FY25, as global demand stayed soft and pricing in parts of the portfolio remained under pressure. Total income, including other income of 6.70 crore, was 542.18 crore. Despite the lower revenue, profitability improved on most measures, which reflects the quality of the year rather than its scale.
EBITDA, including other income, was 56.53 crore at a margin of 10.43% on total income, close to the 10.63% recorded in FY25. Total operating expenses were 485.65 crore, lower than the previous year and broadly in line with the decline in revenue, reflecting the pass-through of raw material costs and the internal efficiency measures the Company has pursued across its plants. The pattern of the year was one of margin protection through cost discipline and pricing rather than volume growth. Finance costs fell 25.65% to 12.24 crore as the Company continued to reduce borrowings, and depreciation was broadly stable at 18.72 crore. Profit before tax, before exceptional items, rose 2.35% to 25.56 crore, and profit after tax rose 5.48% to 17.78 crore.
The shape of the year was one of gradual improvement, with a soft first half giving way to a stronger second half and a fourth quarter that was the best of the year across revenue, margin and profit. The fourth quarter delivered revenue of 144.05 crore, EBITDA of 23.02 crore at a margin of 15.6%, and profit after tax of 10.82 crore, helped by stronger realisations across the businesses. This progression, alongside the turn in the API price cycle and the steady gains in Azo, underpins managements cautious optimism about the year ahead.
Earnings per share for the year were 15.92, against 16.76 in FY25. The Company generated 43.24 crore of cash from operations, against 57.92 crore in FY25, which funded continued debt reduction, with cash used in financing activities of 38.00 crore during the year. Working capital and cash generation remained a management priority, and this financial discipline is central to the plan to fund future growth largely from internal accruals.
Net worth at the close of the year was 297.88 crore, and total assets stood at 603.01 crore. Borrowings have continued to fall from a peak of about 220 crore reached during the investment cycle, which is the main reason finance costs declined during the year. The current-year net debt and gross debt-to-equity is 0.47.
The Companys financial position strengthened during the year. Net worth rose to 297.88 crore from 282.50 crore, and total assets stood at 603.01 crore. Non-current assets, largely the Companys plants, were 303.51 crore, and current assets rose to 299.50 crore against current liabilities of 239.98 crore. Non-current liabilities reduced to 65.16 crore from 80.89 crore, consistent with the continued repayment of borrowings. Capital expenditure was modest, with cash used in investing activities of 6.78 crore, in keeping with the completion of the heavy investment cycle. The combination of steady operating cash flow, low capital spending and falling debt is the financial foundation for the Companys plan to grow largely from internal accruals.
The Companys financial position strengthened during the year. Net worth rose to 297.88 crore from 282.50 crore, and total assets stood at 603.01 crore. Non-current assets, largely the Companys plants, were 303.51 crore, and current assets rose to 299.50 crore against current liabilities of 239.98 crore. Non-current liabilities reduced to 65.16 crore from 80.89 crore, consistent with the continued repayment of borrowings. Capital expenditure was modest, with cash used in investing activities of 6.78 crore, in keeping with the completion of the heavy investment cycle. The combination of steady operating cash flow, low capital spending and falling debt is the financial foundation for the Companys plan to grow largely from internal accruals.
The table below sets out the Companys key financial ratios. The prior-year figures are carried from the FY25 annual report, and the current-year figures and the variance against FY25 are to be completed from the audited statutory accounts.
| Ratio | FY26 | FY25 | Variance |
| Debtors turnover ratio (times) | 3.73 | 4.14 | -10% |
| Inventory turnover ratio (times) | 5.03 | 6.51 | -23% |
| Current ratio (times) | 1.25 | 1.21 | 3% |
| Debt-equity ratio (times) | 0.47 | 0.58 | -19% |
| Operating profit (PBIT) margin | 7% | 7% | - |
| Net profit margin | 3% | 3% | - |
| Return on net worth | 6% | 6% | - |
The phthalocyanine blue business, the Companys largest, had a strong year. Utilisation stayed high, and the business improved its realisations through disciplined pricing with its long-standing multinational customers and a series of internal efficiency and de-bottlenecking measures that are lowering the cost of production. A meaningful part of the improvement in the second half came from stronger realisations rather than volume, supported by higher raw material prices that the Company was able to pass through. Capacity closures among weaker competitors during the downturn have further strengthened the position of established producers. Managements focus is to make these margins durable across the cycle. The business generates the cash that funds the Companys newer engines and its deleveraging, and it holds a leading position in a category that India now dominates.
The Azo pigments business, operated through Asahi Tennants Color at Dahej, reached an important milestone in FY26, turning EBITDA positive and reaching cash break-even for the full year on revenue of about 78.94 crore, while narrowing its loss before tax to 2.42 crore. Volumes grew steadily, led by the domestic market, where the Company has established itself as a dependable supplier in a short period. Utilisation is rising towards the mid-eighties, the level at which a modest expansion funded from internal accruals would raise capacity further at attractive returns, as much of the groundwork is already in place. Approvals with customers in the United States and Europe, which slowed during the tariff disruption, are reopening, and management expects the business to move towards an operating margin in the low teens as volumes build.
The active pharmaceutical ingredients business, operated through Atlas Life Sciences, recorded revenue of 112.94 crore for the year, with a loss before tax of 3.34 crore. The business has grown volumes at close to 18% a year over the past three years, though a steep fall in selling prices, down 40% to 45% since the acquisition, held back reported revenue for much of that time. That price cycle reversed during FY26, with Pregalabin prices recovering about 15% from their low, and the segment reached EBITDA positivity for the year. The two-site model, with finished ingredients made at the WHO-GMP certified plant at Odhav and intermediates at Chhatral, gives the business both regulatory standing and cost control. Finished-API utilisation remains close to a third of potential, the clearest source of operating leverage, and a research pipeline of ten products under development, including six new molecules, supports longer-term growth. The Company expects its CEP certification by the end of the current financial year, which will open access to more profitable regulated markets and to a higher-margin grade of Pregalabin.
The Company operates four manufacturing units, each aligned to a business. Through FY26 the emphasis across all sites was on operating efficiency, with de-bottlenecking, energy and process-improvement projects that lowered the cost of production and, in the phthalocyanine business, added incremental capacity without major investment. The phthalocyanine plant at Padra ran at high utilisation through the year. The Azo plant at Dahej raised utilisation towards the mid-eighties, and the pharmaceutical sites at Odhav and Chhatral operated at optimum and at rising levels respectively, with finished-API utilisation the main area of headroom. Backward integration, into CPC blue crude at Padra and into intermediates at Chhatral, remained central to the Companys cost position and to the reliability of its supply through a period of raw material volatility. The Company made no major capital investment during the year, in keeping with the completion of its investment cycle, and directed its cash flow towards reducing debt.
The principal opportunities before the Company are the recovery of demand from a cyclical low, the continued shift of global sourcing towards India, the operating leverage available as the Azo and API businesses fill their capacity, and the access to regulated export markets that the CEP certification will bring in the pharmaceutical business. The principal threats are a slower-than-expected recovery in global demand, renewed volatility in raw material prices and freight, aggressive pricing by Chinese competitors, and the effect of tariffs and geopolitical tension on export markets. The Companys diversification across three verticals, its backward integration and its financial discipline are intended to let it withstand the threats while remaining positioned for the opportunities.
The demand environment appears to be bottoming after one of the longest soft periods the chemical industry has seen, though the recovery is unlikely to be a straight line. Raw material and freight markets remain volatile, competition from China is real, and geopolitical uncertainty continues. Against this, the structural position of the Company has improved. The investment cycle is complete, both new businesses are past break-even, and the balance sheet is materially stronger than two years ago.
The Company intends to hold the strong margin profile of the phthalocyanine business, bring the Azo and API businesses to a meaningful contribution, and grow towards 1,000 crore of revenue over the coming years as the businesses reach their potential. Growth is expected to be measured and largely funded from internal accruals, with continued debt reduction. The Company enters FY27 with its three businesses aligned to a single objective, to convert the capacity and integration built over the past decade into sustained profit and cash, and with a balance sheet that gives it the freedom to act as demand recovers.
As a chemical manufacturer, the Company treats environmental responsibility as a condition of its licence to operate. It maintains effluent treatment facilities across its sites, recycles about 80% of its process water, and has recorded no forced pollution shutdowns in the last decade. Green cover is maintained around the plants. The efficiency measures that reduce energy and water use also lower cost, which aligns the Companys environmental and financial interests. As customers and regulators in export markets place greater weight on responsible manufacturing, this record supports the Companys standing as a preferred supplier.
The Company operates in cyclical, globally traded markets and is exposed to a soft demand cycle, volatile raw material prices and supply, aggressive competition from China, currency movement on its export revenue, concentration in a few large customers and in Pregalabin within the API business, and a demanding regulatory and environmental framework. It manages these through diversification across three verticals and many end-uses, backward integration into crude and intermediates, long customer relationships, a clean compliance record, and a disciplined approach to capital and debt. The principal risks and the Companys responses are set out in the risk section of this report.
The Company maintains internal control systems appropriate to the size and nature of its business, designed to safeguard assets, ensure the reliability of financial reporting and support compliance with applicable laws. The systems are reviewed by management and by the Audit Committee, and the internal and statutory auditors report on their adequacy and effectiveness. Observations are reviewed and corrective actions are taken where required. The Company reviews its controls as its operations and regulatory obligations evolve, and strengthens them where needed.
The Company regards its people as central to its performance. It invests in skill development, safety and a working environment that supports innovation across manufacturing, research, quality and customer service. Training programmes and a strong safety culture are integral to its approach, and it continues to build technical and managerial capability across its sites. Employee relations remained cordial through the year.
Statements in this discussion describing the Companys objectives, expectations or projections may be forward-looking within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could affect the Companys operations include economic conditions in the markets it serves, changes in government regulation and tax regimes, movements in raw material prices and exchange rates, and other incidental factors. The Company undertakes no obligation to publicly update any forward-looking statement.
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