Black Rose Industries Ltd Management Discussions

INDUSTRY AND COMPANY OVERVIEW

The Indian chemical industry is a critical pillar of the countrys manufacturing ecosystem, serving a wide range of sectors including agriculture, pharmaceuticals, automotive, construction, textiles, packaging, electronics and renewable energy. India is the sixth largest chemical producer globally and the third largest in Asia, with the sector contributing nearly 7% to the countrys GDP. Supported by a diversified product portfolio of over 80,000 products, the industry has witnessed steady growth driven by rising domestic consumption, expanding industrial activity and increasing integration with global supply chains. The China Plus One strategy has further strengthened Indias position as a preferred manufacturing destination, creating significant opportunities for domestic chemical producers with strong process expertise and quality standards.

Specialty chemicals have emerged as the most promising growth segment within the industry, supported by increasing demand from high-growth sectors such as electric vehicles, batteries, semiconductors, renewable energy, construction, aerospace, defence and advanced manufacturing. At the same time, the industry is investing heavily in digitalisation, automation, AI-driven process optimisation and sustainable manufacturing practices to improve efficiency and competitiveness. Growing emphasis on green chemistry, bio-based feedstocks, circular economy initiatives and environmental compliance is also reshaping the sectors future. With the industry expected to reach approximately US$300 billion by 2028 and potentially US$ 1 trillion by 2040, the long- term outlook remains highly positive, positioning specialty chemicals and advanced materials as key drivers of future growth.

Black Rose Industries Limited (Black Rose or the Company) is a specialty chemicals company with an integrated presence across manufacturing, distribution, and international trade. Through a combination of niche manufacturing capabilities and an established specialty chemicals distribution platform, the Company serves a diversified customer base across pharmaceuticals, agrochemicals, polymers, textiles, rubber, ceramics, water treatment, and other industrial sectors. This balanced business model enables Black Rose to participate across multiple segments of the chemical value chain while maintaining long-standing relationships with customers and global supply partners.

The Company has its headquarters in Mumbai and operates its manufacturing facility at Jhagadia, Gujarat, supported by strategically located warehousing infrastructure and an efficient supply chain network. Through its distribution business, Black Rose imports, exports, and markets a broad portfolio of specialty and performance chemicals, providing

customers with reliable supplies while strengthening its market reach across key industrial segments.

The Companys manufacturing business is anchored by acrylamide and N-Methylol Acrylamide (NMA), a value-added downstream product. Black Rose operates South Asias first bio-catalytic acrylamide manufacturing facility under licensed technology and is the only manufacturer of acrylamide solid outside China. Building on its technical expertise and process capabilities, the Company has developed downstream products such as NMA and acrylamide solid through its in- house research and development efforts. Supported by long- standing relationships with Japanese technology partners, Black Rose has established a differentiated position in the global acrylamide value chain. The Companys access to international markets is further strengthened by key product registrations, including REACH in Europe and KKDIK in Turkey.

Over the years, the Company has sharpened its strategic focus on the upstream acrylamide value chain, leveraging its manufacturing expertise, technical capabilities, and established market presence. It continues to invest in product development, process improvements, and innovation initiatives aimed at expanding its portfolio of niche and value-added specialty chemicals that complement its existing strengths and support sustainable growth.

During FY 2025-26, the Companys manufacturing facility at Jhagadia received closure directions from the Gujarat Pollution Control Board (GPCB) on 5 th December, 2025. Following the implementation of corrective measures and satisfactory compliance, the order was revoked on 26th December, 2025 and operations resumed immediately. The temporary shutdown did not have any material impact on customer commitments, business continuity, or the Companys overall financial performance.

Against the backdrop of rising specialty chemical demand, supply chain diversification, import substitution opportunities, and Indias growing importance in global manufacturing, Black Rose remains well positioned to benefit from long-term industry growth. The Company remains focused on strengthening its manufacturing portfolio, deepening customer relationships, enhancing operational excellence, and creating sustainable long-term value for all stakeholders.

DIVISIONAL REVIEW

During 2025-26, Black Rose Industries delivered a resilient performance despite a challenging operating environment marked by declining chemical prices, geopolitical uncertainties, supply chain disruptions, and evolving global trade dynamics. Through disciplined inventory management, prudent procurement practices, effective cost controls, and

Management Discussion and Analysis

a focus on higher-value products, the Company continued to strengthen its market position across both its distribution and manufacturing businesses.

CHEMICAL DISTRIBUTION

Strengths

? Diversified portfolio of specialty and performance chemicals catering to a broad range of end-use industries, providing resilience across market cycles

? Established stock-and-sale business model that ensures reliable product availability while supporting efficient working capital management

? Long-standing relationships with leading global suppliers, particularly in Japan, Germany, and Thailand, enhancing sourcing capabilities and supply chain reliability

? Strong market presence in specialty and performance chemicals, underpinned by dependable supply arrangements and deep customer relationships

? Agile operating model enabling the Company to respond effectively to changing customer requirements, market conditions, and supply disruptions

Key Highlights

? The distribution business delivered a resilient performance despite lower chemical prices across several product categories and a period of subdued demand in certain export markets

? Increased focus on acrylonitrile contributed positively to both volumes and profitability during the year

? Supply constraints in key products impacted sales during parts of the year; however, the Companys diversified portfolio helped maintain business momentum

? Continued customer acquisition efforts and market development initiatives strengthened the Companys presence across key industrial segments and geographies

? Merchant export activity remained below the previous years levels during much of the year due to tariff-related uncertainties and lower demand from the U.S. oil and gas sector

? Export demand improved towards the end of 2025-26, resulting in a recovery in merchant export volumes and a stronger order pipeline entering the new financial year

? The Companys stock-and-sale model continued to support uninterrupted customer service despite periodic disruptions in global supply chains

Outlook

The outlook for the distribution business remains positive, supported by stable industrial demand, improving export opportunities, and the potential to deepen relationships with existing customers while expanding into new applications

and markets. The Company will continue to strengthen its sourcing network, widen its product portfolio, and enhance its market reach through a customer-centric approach focused on reliability, service, and value creation.

CHEMICAL MANUFACTURING

The manufacturing business continues to be the primary driver of the Companys profitability and long-term value creation strategy. During 2025-26, the segment delivered a strong performance driven by record acrylamide volumes, significant growth in N-Methylol Acrylamide (NMA), improved operating efficiencies, and a continued focus on higher-value applications. The Companys differentiated product portfolio, technology- led manufacturing platform, and strong execution capabilities further strengthened its market position in both domestic and international markets.

ACRYLAMIDE LIQUID AND SOLID

Strengths

? South Asias first bio-catalytic acrylamide manufacturing facility supported by proven technology and an established operating track record

? The only manufacturer of acrylamide solid outside China, providing customers with a credible and reliable alternative source of supply amid increasing supply chain diversification

? International registrations, including REACH and KKDIK, provide access to key global markets while enhancing customer confidence and regulatory acceptance

? Diverse domestic and international customer base supporting sustainable growth while reducing concentration risk

? Strong capabilities in procurement, inventory management, logistics, pricing discipline, and capacity utilisation that support profitability across market conditions

Key Highlights

? The acrylamide business achieved its highest-ever sales volume during 2025-26, supported by robust domestic demand, customer additions, and increasing market penetration

? Acrylamide liquid volumes registered healthy growth driven by strong demand across multiple applications and growing acceptance in export markets

? Despite continued pricing pressure from Chinese imports, the acrylamide solid business recorded volume growth through customer additions and expanding application development

? The Company continued to strengthen its position in higher-value acrylamide applications, supporting both market share gains and margin improvement

? Manufacturing profitability improved through higher capacity utilisation, lower logistics costs, prudent raw material management, and continued operational efficiencies

? Volatility in acrylonitrile prices towards the end of the year was effectively managed through disciplined inventory and commercial strategies

? Participation in international exhibitions, customer engagement programmes, and regulatory initiatives supported the expansion of the Companys export footprint

N-METHYLOL ACRYLAMIDE (NMA)

Strengths

? Only merchant manufacturer of N-Methylol Acrylamide (NMA) in India, providing a leadership position in a niche specialty chemical segment

? Installed manufacturing capacity of 2,000 MTPA supported by proprietary process know-how and established customer relationships

? Strong opportunity to benefit from import substitution and growing domestic demand

? Attractive margin profile supported by limited domestic competition and specialised product positioning

? Consistent product quality, dependable supply, and strong customer engagement driving repeat business and long-term partnerships

Key Highlights

? The NMA business delivered an outstanding performance during 2025-26, with sales volumes nearly doubling over the previous year

? Growth was driven by higher offtakes from key customer, supported by new customer additions and gradual expansion of export sales

? Stable plant operations and efficient capacity utilisation supported healthy profitability throughout the year

? The Company strengthened its leadership position in the domestic market while continuing to expand its presence in international markets

? Strong customer engagement and reliable service levels contributed to sustained business growth and increased customer confidence

Outlook

The manufacturing business is expected to benefit from continued growth in domestic demand, increasing export opportunities, and ongoing global supply chain diversification initiatives. Acrylamide liquid, acrylamide solid, and NMA are expected to remain the principal growth drivers, supported by new customer acquisitions, deeper penetration across

existing applications, and the development of new end-use opportunities

A relatively stable raw material environment, combined with the Companys focus on operational excellence, product quality, innovation, and customer service, is expected to support sustainable growth and healthy profitability over the medium term

R&D AND CAPACITY EXPANSION

Strengths

? Dedicated R&D infrastructure focused on product development, process optimisation, manufacturing innovation, and application development

? Strong technical capabilities in acrylamide chemistry supported by decades of operational experience and long-standing relationships with Japanese technology partners

? Clear focus on portfolio diversification through the development of niche and higher-value specialty chemical products

? Innovation-led strategy aimed at creating new growth opportunities while leveraging existing manufacturing capabilities and customer relationships

Key Highlights

? During 2025-26, the Company inaugurated its new R&D Centre in Navi Mumbai, significantly strengthening its research, product development, and innovation capabilities

? Continued progress was made in developing specialty products and new applications based on acrylamide chemistry

? The Company initiated a feasibility study with Koei Chemical Company Limited, Japan, to evaluate opportunities in the manufacture of specialty amine products in India

? Management continues to assess additional specialty chemical opportunities that can leverage existing infrastructure, technical expertise, and market relationships.

? Product development initiatives remain focused on creating differentiated offerings that can improve margins, broaden the manufacturing portfolio, and strengthen long-term competitiveness

Outlook

The Company remains committed to building a broader specialty chemicals platform through innovation, technology development, and selective investments in attractive niche segments. The new R&D Centre, ongoing product development programmes, and evaluation of specialty amines and other downstream opportunities are expected to support portfolio

diversification and create new avenues for sustainable long- term growth. Black Rose believes that its combination of technical expertise, manufacturing capabilities, and customer relationships provides a strong foundation for future value creation.

FINANCIAL REVIEW

Analysis of the Profit and Loss Statement

Revenue: Black Rose revenue from operations decreased by 4.25%, declining from 337.34 crores in 2024-25 to 323.01 crores in 2025-26. Other income decreased by 68.59% and contributed 0.87% of total revenue, indicating that the Company continued to derive the vast majority of its revenue from its core business operations.

Expenses: Total expenses decreased by 5.24%, from 312.08 crores in 2024-25 to 295.73 crores in 2025-26. The cost of materials consumed increased by 22.33%, rising from

55.57 crores to 67.98 crores. Employee benefit expenses increased by 10.56%, from 6.53 crores in 2024-25 to

7.22 crores in 2025- 26.

Analysis of the Balance Sheet Sources of Funds

The capital employed by Black Rose increased by 3.64%, rising

from 160.65 crores in the previous year to 166.50 crores as of 31 st March, 2026. In line with this, the return on capital employed (ROCE) stood at 18.15% in 2025-26 compared to 21.76% in 2024-25.

At the same time, net worth increased by 10.90%, from

152.65 crores in the previous year to 169.28 crores as of 31 st March, 2026, owing to the retention of profits during the year, which strengthened shareholders equity. The Companys equity share capital, comprising 51,000,000 equity shares of

1 each, remained unchanged during the year under review.

Long-term debt declined from 0.07 crores to Nil as of 31 st March, 2026, owing to the repayment of the outstanding long-term borrowings. Consequently, the long-term debt-

equity ratio stood at Nil in 2025-26 compared to 0.00044 in 2024-25.

The Companys finance costs increased by 48.98%, from

0.98 crores in 2024-25 to 1.46 crores in 2025-26. Consequently, the interest coverage ratio stood at 21.66 times in 2025-26.

Applications of Funds

Fixed assets (gross) increased by 12.67%, from 68.89 crores in the previous year to 77.62 crores as of 31 st March, 2026. Depreciation on tangible assets also increased by 14.44%, from

2.84 crores in 2024-25 to 3.25 crores in 2025- 26.

Working Capital Management

Current assets decreased by 5.94%, from 162.55 crores in the previous year to 152.90 crores as of 31 st March, 2026. Accordingly, the current ratio and quick ratio of the Company stood at 4.65 and 3.03, respectively, in 2025-26 compared with

2.94 and 1.34 in 2024- 25.

Inventories decreased by 32.85%, from 71.47 crores in the previous year to 47.99 crores as of 31 st March, 2026. In line with this movement, the inventory holding period increased from 74.84 days in 2024-25 to 86.32 days in 2025-26.

Trade receivables increased by 4.59%, from 66.55 crores in the previous year to 69.61 crores as of 31 st March, 2026. Notably, more than 99.55% of receivables were considered good. The Company maintained its average collection period at 77.07 days in 2025-26 compared to 71.37 days in 2024-25.

Cash and bank balances increased by 29.38%, from 7.52 crores in the previous year to 9.73 crores as of 31 st March, 2026. In contrast, the loans and advances made by the Company increased from 1.85 crores in the previous year to 3.04 crores as of 31st March, 2026.

Margin

The EBITDA margin decreased by approximately 40 basis points, declining from 11.29% in 2024-25 to 10.97% in 2025-26. Similarly, the net profit margin decreased by approximately 100 basis points, from 7.88% in 2024-25 to 6.98% in 2025-26.

KEY RATIOS

Particulars	2024- 25	2025- 26
EBITDA/Turnover (%)	11.29	10.97
Debt-Equity Ratio	0.06	0.00
Return on Equity (%)	17.58	13.29
Book Value per Share ()	29.93	33.19
Earnings per Share ()	5.21	4.41
Debtors Turnover (Days)	71.37	77.07
Inventory Turnover (Days)	74.84	86.32
Interest Coverage Ratio (X)	35.73	21.66
Current Ratio (X)	2.94	4.65
Operating Profit Margin (%)	10.36	9.77
Net Profit Margin (%)	7.88	6.97

RISK MITIGATION AND STRATEGY

Effective risk management remains an integral part of the Companys governance framework, enabling it to navigate business uncertainties and respond proactively to a dynamic operating environment. To strengthen oversight, the Board of Directors has constituted a dedicated Risk Management Committee responsible for formulating, implementing, and periodically reviewing the Companys risk management policies and practices. The Committee continuously evaluates the effectiveness of the risk management framework, ensuring key risks across business operations and functional areas are identified, assessed, and appropriately mitigated.

Type of Risk	Risk Description	Mitigation Strategy
Strategic Risk \u2013 Key Management Succession	The absence of an effective succession framework for key managerial personnel could impact leadership continuity, strategic execution, and stakeholder confidence.	\uf0b7 Ensure seamless leadership transition and organisational continuity Support internal talent development through structured leadership programmes
Supply Chain Risk \u2013 Supplier Disruption	Dependence on key suppliers or principals may lead to disruptions in procurement and business operations in the event of unexpected supply discontinuation.	\uf0b7 Mitigate supply chain risk through proactive supplier diversification, identification of alternate sourcing channels, and prudent inventory management Enhance supply chain resilience through continuous supplier engagement, strong and transparent relationships with existing suppliers and principals, and a diversified product portfolio to reduce dependency on individual suppliers or products
Compliance Risk	Failure to comply with applicable statutory, environmental, health, safety, and regulatory requirements could result in penalties, operational restrictions, and reputational impact.	Maintain a strong compliance culture supported by periodic monitoring, annual third-party safety audits, engagement of external experts for continuous improvement in EHS practices, and adherence to internationally recognised standards, including ISO 14001:2015 and ISO 45001:2018 certifications
Geopolitical Risk	Trade restrictions, tariffs, sanctions, geopolitical tensions, and ongoing conflicts, including the war and instability in the Middle East, may disrupt global supply chains, increase logistics costs, constrain availability of raw materials, and heighten uncertainty in international markets.	\uf0b7 Monitor geopolitical developments closely while adopting a diversified approach to sourcing and customer engagement Maintain strategic inventory buffers and alternative supply arrangements to minimise the potential impact of geopolitical disruptions on business operations
Natural Calamities Risk	Natural disasters and unforeseen events may result in damage to assets, disruption of operations, and risks to employee safety.	\uf0b7 Maintain comprehensive safety systems, conduct regular emergency preparedness drills, and provide appropriate personal protective equipment to employees Strengthen its risk preparedness framework by providing adequate insurance coverage, including Workmen Compensation and Factory Loss of Profit policies
Foreign Exchange Risk	Volatility in foreign currency markets may adversely affect earnings and cash flows arising from import and export transactions.	\uf0b7 Monitor and evaluate foreign exchange exposures actively with support from internal and external experts Adopt appropriate hedging strategies and pricing measures, wherever feasible, to minimise the impact of currency fluctuations on profitability
Technology Risk	Disruptions in technology infrastructure or system failures may affect access to critical business applications, data, and operational processes.	Implement business continuity measures, including backup internet connectivity across locations and periodic testing of primary and secondary communication networks, to ensure uninterrupted business operations
Cybersecurity Risk	Cyber threats, including ransomware attacks, phishing attempts, and data breaches, may compromise business continuity, data integrity, and stakeholder trust.	Strengthen cyber resilience through regular data backup processes, timely upgrades of antivirus and firewall systems, and continuous monitoring of information security controls

Type of Risk	Risk Description	Mitigation Strategy
Market Risk	Increasing competition from imported and domestic alternatives may exert pressure on market share, pricing, and profitability.	Enhance customer relationships, expand market penetration and export opportunities, and continuously monitor competitive and industry developments to sustain market position and responsiveness to evolving customer requirements
Operational Risk \u2013 Product Liability	Product quality issues or defects in regulated international markets may expose the Company to financial liabilities, legal proceedings, and reputational risks.	\uf0b7 Follow stringent quality assurance protocols under its ISO 9001-certified Quality Management System Minimise product liability exposure and ensure compliance with applicable standards through robust batch traceability, comprehensive inspection records, accredited laboratory testing, and carefully structured contractual safeguards

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Black Rose recognises its people as its most valuable asset and a key driver of sustainable growth. It remains committed to fostering a safe, healthy, and inclusive workplace that promotes employee well-being, engagement, and professional development. To support this commitment, the Company undertakes ongoing training and skill enhancement initiatives, enabling employees to build the capabilities required to meet evolving business needs.

The Company also conducts regular performance assessments to provide meaningful feedback, recognise contributions, and support continuous improvement. In addition, its robust grievance redressal framework enables employees to raise concerns and seek timely resolution in a fair and transparent manner.

The absence of any person-days lost due to strikes or industrial disputes during the year highlights the cordial and harmonious industrial relations maintained across the organisation. As of 31 st March, 2026, the Companys employee strength stood at 79.

INTERNAL CONTROL SYSTEMS

During the year, Black Rose continued to strengthen and evaluate its Internal Financial Control framework to enhance its effectiveness and ensure compliance with the requirements of Section 134(5) of the Companies Act, 2013. The framework enables the orderly and efficient conduct of business operations, ensures adherence to established policies, and protects the Companys assets.

These controls support the prevention and detection of fraud and errors, while ensuring the accuracy and completeness of accounting records and the timely preparation of reliable financial information. They also support compliance with applicable statutory and regulatory requirements, encourage

efficient resource utilisation, and safeguard stakeholder interests.

Based on managements comprehensive assessment and the subsequent review carried out by the Board, the Company concluded that its Internal Financial Controls were adequate and operating effectively as of 31 st March, 2026.

INTERNAL AUDIT

Black Roses internal audit function is managed by a team of professionally qualified accountants and specialists, ensuring a high standard of audit assurance. Internal audit reports are regularly reviewed by the Audit Committee, which monitors significant audit observations and the status of corrective actions undertaken by management. In addition, the Audit Committee reviews the Companys financial statements on a quarterly, half-yearly, and annual basis, reinforcing transparency, accountability, and strong financial governance practices.

CAUTIONARY STATEMENT

The report contains forward-looking statements regarding anticipated future events, financial outcomes, and operational milestones of Black Rose Industries Limited. These statements inherently rely on assumptions and are subject to various risks and uncertainties. There is a significant risk that these assumptions, predictions, and other forward-looking statements may not accurately reflect future outcomes.

Readers are advised to exercise caution and refrain from placing undue reliance on these forward-looking statements, as several factors could cause actual results and events to differ materially from those anticipated. Consequently, this document is subject to this disclaimer and should be read in conjunction with the assumptions, qualifications, and risk factors outlined in Black Rose Industries Limiteds Annual Report 2025-26, including those discussed in the Management Discussion and Analysis section.