Black Rose Industries Ltd Management Discussions

GLOBAL ECONOMY

The global economy continues to demonstrate resilience in 2025 against a challenging economic landscape. According to the April 2025 edition of the World Economic Outlook (WEO) released by the International Monetary Fund (IMF), global GDP growth is projected to be revised downwards to 2.8%, from 3.3% in 2024. This outlook of cautious growth can be attributed to several factors, including escalating global trade tensions, policy uncertainties in major economies, and dipping consumer confidence, particularly across advanced markets. In spite of this, the global economy appears to be gradually adapting to long-term structural changes with a measure of stability.

by ongoing trade disputes and tariff-related disruptions. The buoyant optimism is due to strong domestic demand, with upward consumption trends in rural areas playing a pivotal role as a stabilising force. To add to that, a revitalised agricultural sector has boosted rural incomes and spending, strengthening the foundation for sustained growth.

GDP Growth Projections

(Source: World Economic Outlook, April 2025) P: Projected

Outlook

The international landscape is gradually stabilising, duly combating global economic turbulences. The economic environment is recording a slow recovery through targeted reforms and renewed commitments to multilateral cooperation. Monetary policies too are undergoing a phase of recalibration. As a matter of fact, central banks in advanced economies are increasingly adopting a cautious, data-driven stance on interest rate decisions. At the same time, emerging markets are augmenting macroprudential frameworks to mitigate volatility in capital flow while creating a cushion to resist external shocks. On the trade front, agreements like the Regional Comprehensive Economic Partnership (RCEP) are reinforcing supply chain resilience and promoting deeper regional integration, particularly across the Asia-Pacific. Together, these developments are shaping a more resilient, inclusive, and strategically coordinated global recovery in the medium term.

INDIAN ECONOMY

Indias economy maintained a steady and confident growth trajectory in 2024-25, with real GDP growth estimated at 6.5%, highlighting its position as the fastest-growing major economy in the world. This showcases its inherent resilience and combative stance in facing persistent global challenges marked

(Source: Economic Survey 2024-25) P: Provisional

Outlook

The Viksit Bharat@2047 goals play a decisive role in defining Indias long-term growth pathway. The ambitious plan aspires to achieve the status of a fully developed country by the 100 th year of its independence, i.e., by 2047. A crucial factor in realising this goal is to become a US$ 30 tn economy by 2047. This aspiration is hinged on the pillars of inclusive growth, innovation-led productivity, and infrastructure-driven modernisation. The signs, so far, are promising. The projected real GDP growth of 6.5% for both 2025-26 and 2026-27 reflects not only enduring macroeconomic resilience but also the consistency of Indias policy framework.

CHEMICAL INDUSTRY OVERVIEW

India is rapidly emerging as an integral player in the global chemical manufacturing landscape. This newfound stature is driven by strong domestic demand, shifting global supply chains, and inherent competitive advantages. Valued at around US$ 250 bn in 2024, Indias chemical industry is poised for continued expansion, targeting US$ 300 bn by 2025, US$ 383 bn by 2030, and US$ 1 tn by 2040. This growth reflects a compound annual growth rate (CAGR) of 9.3% between 2024 and 2030, with the industry expected to double its share in the global chemical market to 6% by 2030.

Industry Valuation (US$ bn)

(Source: https://www.ey.com/en_in/insights/chemicals/

catalyzing-growth-ind ia-s-chem icals-and-petrochem icals- drive-growth)

This growing demand is being strongly propelled by rising domestic consumption across both direct consumers and downstream industries. Key sectors such as construction, textiles, automotive, agriculture, pharmaceuticals, and electronics are witnessing accelerated growth, further instigating demand for chemical products. Additionally, the Contract Research and Manufacturing Services (CRAMS) segment is gaining momentum, with Indian firms emerging as significant global players. This sectorial expansion can be attributed to the inherent cost competitiveness, consistent levels of operational excellence, and robust intellectual property protections. Government-led initiatives are also playing a pivotal role in encouraging this trend. While the Production-Linked Incentive (PLI) scheme is set to boost demand from downstream and emerging sectors, policy support for plastic recycling and sustainable manufacturing is restructuring industry priorities. The renewed limelight on the sustainability cause, including emphasis on decarbonisation, green chemistry, and digital transformation, is expected to catalyse innovation and growth in areas such as specialty chemicals and bioplastics.

(Source: https://www.ev.com/enin/insiahts/chemicals/

catalyzing-growth-india-s-chemicals-and-petrochemicals-

drive-growth)

Outlook

Indias chemical sector continues to grapple with significant challenges, including dependence on imported raw materials, high logistics costs, limited R&D infrastructure, intense global competition, and stringent BIS regulations that affect operational efficiency. The recent expansion of BIS standards now requires mandatory certification for more than 100 product categories, increasing compliance costs, creating potential supply chain disruptions, and raising market entry barriers for both domestic and international suppliers. Failure to meet these requirements can lead to penalties or product bans, while the certification process itself is often lengthy and resourceintensive. Addressing these hurdles will require targeted efforts in strengthening domestic capabilities, fostering innovation, and implementing supportive policy reforms.

(Source: httos://www.ev.com/enin/insiahts/chemicals/

catalyzing-growth-india-s-chemicals-and-oetrochemicals-

drive-growth)

COMPANY OVERVIEW

Black Rose Industries Limited (referred to as Black Rose or the Company) is a leading player in the specialty chemicals space, with a strong presence in both manufacturing and distribution. The Companys distribution division is actively involved in the import, export, and supply of a broad portfolio of specialty and performance chemicals, catering to diverse industrial needs.

On the manufacturing front, Black Rose operates South Asias first acrylamide facility along with an integrated plant for downstream value-added products. The Company has built a strong technological edge through in-house innovations and strategic collaborations. It is the only global producer of acrylamide solid outside China, with growing domestic and export traction. The Company is also developing polyacrylamide solids technology internally, with commercial production expected from the next fiscal year and a planned capacity of 10,000 MT. Its proprietary, more stable version of n-methylol acrylamide (NMA) positions it well for export growth, complementing its leadership in the Indian market. With a scalable technology platform and a new R&D centre in Navi Mumbai, the Company is well-placed to drive innovation- led growth.

The Company is headquartered in Mumbai. Its manufacturing unit is located in Jhagadia, Gujarat, and strategically placed warehouses are present in Bhiwandi (Maharashtra) and Morbi (Gujarat). The widespread market presence enables efficient pan-India distribution and robust logistics support.

The Companys subsidiary, B.R. Chemicals Co. Ltd., was established to strengthen relationships with Japanese vendors and customers, and to participate in domestic trade in Japan. Following a comprehensive performance review, the subsidiarys Board of Directors concluded that its primary objective had been successfully achieved. Although the entity continued to contribute to revenue and profits, the Board decided to cease operations effective 30 th January, 2025. This decision has resulted in improved consolidated cash flows and enhanced overall profitability for the Company.

DIVISIONAL OVERVIEW Chemical Distribution

The distribution segment continued to be a key growth engine for Black Rose in 2024-25, contributing approximately 70% of the Companys total revenue. The segment posted a robust 29% year-on-year growth in value and 10% in volume, driven by strong domestic demand. This can be attributed to deepening customer penetration and steady sales of high-demand products such as resorcinol, meta cresol, purified isophthalic acid, and ethanolamines. The Companys top five distributed products collectively contributed a substantial portion of revenue and profitability, reflecting the strength of its market positioning and product strategy. This strong performance underlines the value of maintaining a diversified and balanced portfolio, ensuring resilience in changing market conditions,

enabling the Company to consistently capitalise on growth opportunities across multiple product segments.

The Company accrued significant benefits from strategic inventory management supported by a resilient stock-and-sale model. These advantages were fortified with long-standing global partnerships across Japan, Germany, and Thailand. Together, these factors ensured timely availability of products and helped deepen penetration in both domestic and export markets. On the other hand, the sales team focused on expanding the product mix and customer base. It also played a vital role in laying the foundation for new product introductions to drive long-term value.

The segment, though challenged considerably, remained tenacious. It effectively resisted factors like logistics disruptions, pricing competition from local players, and export market volatility due to policy uncertainties, and managed to maintain stable growth. As we can foresee, domestic demand is expected to remain steady, while export volumes are likely to recover gradually. These optimistic developments are aided by improved clarity on global trade dynamics. Overall, the Company remains committed to strengthening its market position through innovation and operational agility.

70%	Top Five	Resorcinol,	29%
Total	Products	Meta Cresol,	Growth in
Revenue	Accounted for	Isophthalic	Value
Contribution	the Majority of	Acid, and
	Revenue and	Ethanolamines
	Profitability	Core Products

Chemical Manufacturing

Black Rose Industries chemical manufacturing division is renowned for its superior production standards and its capability to cater to a wide range of clients across diverse chemical sectors. A pioneer in advanced specialty chemical manufacturing in South Asia, the Company operates state- of-the-art facilities focused on producing essential specialty chemicals and downstream value-added products, supporting a strong and fully integrated value chain.

Acrylamide Liquid and Solid

In 2024-25, Black Rose Industries Limited enhanced its presence in the acrylamide segment, driven by strong domestic sales and a steadily growing customer base. The Company is the only global manufacturer of acrylamide solid outside of China, with a production capacity of 3,600 MTPA and proprietary in-house technology. It maintained a dominant domestic market share in acrylamide liquid, supported by tactical pricing and customercentric service, while steadily gaining ground in the solid variant despite heavy import competition.

These gains were supported by strategic procurement of raw material, efficient logistics management, and increased capacity utilisation. Acrylonitrile prices remained range-bound between US$ 1,100-1,350 during the year. However, prices

have moderated recently due to new capacity additions in China, which is expected to benefit margins in 2025-26. A combination of factors, such as increased sales volumes, wider market reach, and customer base expansion, led to the margin improvement. Other positive factors coalesced to make the upswing sustainable. Export reach improved as international freight costs declined, making previously unviable markets accessible. Operational efficiencies and the use of renewable agro-based fuels further supported cost-effective scaling. The period also offered key learnings, as the Company continued to refrain from participating in unfair pricing wars, focusing instead on value-driven growth and long-term sustainability.

Polyacrylamide Liquid

In the downstream segment, the Company produces polyacrylamide liquid with an annual production capacity of 40,000 metric tons. This product primarily serves the Morbi tile market for ceramic binder applications, a sector that has faced persistent challenges over the past couple years. The Morbi market remained subdued due to a combination of elevated gas prices, extended holiday periods, and weak tile export demand caused by shipping disruptions and high freight costs.

The Morbi ceramic tile industry faced a temporary slowdown in 2024, driven by surging gas prices and transport strikes that significantly reduced production and sales. This challenging environment affected demand for Black Roses BRILBIND CE01, a specialised polyacrylamide-based ceramic binder, as customers scaled back or postponed orders. Despite these headwinds, the Company sustained its presence in Morbi through a dedicated sales team, warehouse, and infrastructure focused on serving ceramic manufacturers. Building on this foundation, the Company has launched BRILBIND CE03, a strengthened and more robust version of its ceramic binder. The product is already showing promising results, particularly in helping the Company regain market share in the polyacrylamide (PAM) segment.

Demonstrating its commitment to innovation and competitiveness, Black Rose is exploring bulk packaging solutions and expanding its product range with new variants designed for applications beyond ceramics, including textiles.

N-methylol acrylamide (NMA)

In 2024-25, Black Roses n-methylol acrylamide (NMA) business recorded robust growth, driven by consistent orders from established long-term customers and sustained demand across key applications. The Company remains optimistic about the growth trajectory of its NMA business, driven by its domestic market leadership, strong in-house technological capabilities, and focused export strategy. As a niche, import-substitute product, NMA presents a significant opportunity for expansion. With an installed capacity of 2,000 metric tonnes per annum, it takes pride in being the only Indian manufacturer offering NMA for merchant sales. This unique positioning enables it to capitalise on both domestic demand and growing interest from international markets.

The Company has developed a proprietary process that delivers a robust and stable form of NMA, effectively addressing the inherent instability challenges typically associated with this chemical. This advancement enhances its reliability and makes it well-suited for both domestic applications and export markets. Throughout the year, Black Rose maintained a majority share of the Indian NMA market, with strong, sustained demand from key domestic customers. This laid a strong foundation for growth and allowed the Company to expand its export footprint in areas where demand is predictably stronger. The Companys concerted initiatives to expand its export customer base delivered encouraging outcomes, underpinned by its reputation as a reliable global supplier.

NMA also played a pivotal role in driving growth across the manufacturing division, contributing to increases in both volume and value. Given several favourable factors, it is expected to remain a high-priority product. These include good profit margins, stable scheduling from domestic clients, and ongoing additions to the roster of customers. The Company remains focused on expanding reach and improving profitability through increased exports.

Additionally, the Company produces fabrics and made-ups for industrial applications at its manufacturing facility in Kolhapur, Maharashtra, catering to both domestic and international markets. It also operates two windmills in Gujarat and Rajasthan, with the renewable energy generated helping to reduce its overall carbon footprint.

Capital Expenditure and Expansion Plans

Black Rose is actively pursuing a range of ongoing and upcoming projects designed to augment its manufacturing capabilities and enhance its market position.

• The polyacrylamide solids (PAM solids) project is progressing well, with process finalisation and equipment development underway. Commercial production is expected to commence by next year, with an initial planned capacity of 10,000 MTPA at the Jhagadia facility.

• A new R&D centre was inaugurated in Navi Mumbai in May 2025. The centre is already in operation and is focused on driving innovation, encouraging new product development, and striving for technological advancement. The Company is also in the process of securing land near Dahej for strategic land banking, with registration nearing completion. This will help mitigate challenges related to land availability for future manufacturing projects.

• At its Jhagadia site, Black Rose is advancing a brownfield specialty chemical project, with a feasibility study underway for establishing a specialty amines manufacturing facility in collaboration with Koei Chemicals Co. Ltd., Japan. The Company submitted its application for Environmental

Clearance in February 2025, and the approval process has been progressing smoothly. With a proposed capacity of 5,000 MTPA, the project is expected to significantly enhance revenue potential and strengthen profit margins.

Financial Review

Analysis of the Profit and Loss Statement Revenue: Standalone revenue from operations reported an increase of 20% from ? 281.17 crores in 2023-24 to ? 337.34 crores in 2024-25. Other income of the Company increased by 130% and accounted for 2.60% of the Companys revenues, reflecting the Companys dependence on its core business operations.

Expenses: Total expenses of the Company increased by 21.16% from ? 257.58 crores in 2023-24 to ? 312.08 crores in 2024-25. Cost of material consumed increased by 9.73% from ? 50.64 crores in 2023-24 to ? 55.57 crores in 2024-25. Employee benefit expenses decreased by 14.00% from ? 7.59 crores in

2023- 24 to ? 6.53 crores in 2024-25.

Analysis of the Balance Sheet Sources of Funds

The capital employed by the Company increased by 13.27% from ? 141.83 crores as of 31 st March, 2024 to ? 160.65 crores as of 31 st March, 2025. Return on capital employed increased from 20.12% in 2023-24 to 21.76% in 2024-25.

The net worth of the Company increased by 9.36% from ? 139.57 crores as of 31 st March, 2024 to ? 152.65 crores as of 31 st March, 2025, owing to an increase in reserves and surplus. The Companys equity share capital comprising 51,000,000 equity shares of ? 1 each remained unchanged during the year under review. Long-term debt of the Company decreased from ? 0.26 crores as of 31 st March, 2024 to ? 0.07 crores as of 31 st March, 2025 owing to loan drawdown. The long-term debt-equity ratio of the Company stood at 0.00044 in

2024- 25 compared to 0.00184 in 2023-24. Finance costs of the Company reduced by 7.07% from ? 1.05 crores in 2023-24 to ? 0.98 crores in 2024-25. The Companys interest cover stood at 35.73 in 2024-25.

Applications of Funds

Fixed assets (gross) of the Company increased by 0.04% from ? 68.86 crores as of 31 st March, 2024 to ? 68.89 crores as of 31 st March, 2025. Depreciation on tangible assets increased by 4.33% from ? 2.72 crores in 2023-24 to ? 2.84 crores in 2024-25.

Working Capital Management

Current assets of the Company increased by 22.70% from ? 132.47 crores as of 31 st March, 2024 to ? 162.55 crores as of 31 st March, 2025. The current and quick ratios of the Company stood at 2.94 and 1.34, respectively, in 2024-25 compared to 3.43 and 2.28, respectively, in 2023-24.

Inventories increased by 86.08% from ? 38.41 crores as of 31 st March, 2024 to ? 71.47 crores as of 31 st March, 2025. The inventory cycle changed from 57.20 days in 2023-24 to 74.84 days in 2024-25. Trade receivables increased by 2.32% from ? 65.03 crores as of 31 st March, 2024 to ? 66.55 crores as of 31 st March, 2025. More than 99% of receivables were considered good. The Company contained its debtor turnover cycle within 71.37 days in 2024-25 compared to 80.68 days in 2023-24.

Cash and bank balances of the Company decreased by 30.11% from ? 10.76 crores as of 31 st March, 2024 to ? 7.52 crores as of 31 st March, 2025.

Loans and advances made by the Company increased from ? 1.17 crores as of 31 st March, 2024 to ? 1.84 crores as of 31 st March, 2025. Error: Reference source not found

Margin

The EBITDA margin of the Company increased by approximately 15 basis points from 11.22% in 2023-24 to 11.37% in 2024-25, and the net profit margin increased by 111 basis points from 7.29% in 2023-24 to 8.00% in 2024-25.

Key Ratios Particulars	2023-24	2024-25
EBITDA/Turnover (%)	11.22	11.37
Debt-Equity Ratio	0.01	0.06
Return On Equity (%)	14.64	17.58
Book Value per Share (?)	27.36	29.93
Earnings per Share (?)	4.01	5.21
Debtors Turnover (Days)	80.95	71.37
Inventory Turnover (Days)	57.20	74.84
Interest Coverage Ratio (X)	27.10	35.73
Current Ratio (X)	3.43	2.94
Operating Profit Margin (%)	10.15	10.36
Net Profit Margin (%)	7.29	8.0

Risk Mitigation and Strategy

Recognising the varied risks inherent in its business operations and the constantly evolving market environment, the Board of Directors of the Company has established a dedicated risk management committee. This committee is responsible for developing, implementing, and monitoring the Companys risk management framework and conducting regular reviews of its effectiveness. Significant risks identified across different business units and functions are systematically addressed through ongoing mitigation efforts.

Type of Risk	Risk Description	Mitigation Strategy
Strategic Risk - KMP Succession Planning	Operational disruption due to lack of succession planning, leading to loss of strategic direction and investor confidence.	Black Rose maintains updated succession plans for all key managerial positions, focusing on grooming internal talent through structured leadership development initiatives. The Nomination and Remuneration Committee conducts regular reviews to assess readiness and ensure a robust leadership pipeline.
Operational Risk - Product Liability	Financial liability arising from product defects in international markets, especially the USA and Europe.	Black Rose implements ISO 9001 Quality Management Systems, maintaining comprehensive batch records and inspection reports to ensure traceability and compliance. Products are tested at accredited laboratories to meet stringent quality standards. All contracts include liability limitation, indemnity, and jurisdiction clauses to safeguard the Companys interests.

Type of Risk	Risk Description	Mitigation Strategy
Supply Chain Risk - Supplier Discontinuation	Significant business disruption due to sudden discontinuation by key suppliers or principals.	The Company proactively identifies alternate suppliers to ensure business continuity and mitigate procurement risks. Black Rose diversifies its product portfolio to reduce dependence on specific markets or products, while maintaining strong supplier relationships through transparency, consistent communication, and active engagement.
Compliance Risk	Non-compliance to regulatory measures may lead to fines, penalties, or plant shutdown.	Black Rose conducts annual third-party safety audits, appoints EHS compliance experts, carries out regular monthly monitoring, and maintains ISO 14001:2015 and ISO 45001:2018 certifications to ensure the highest standards of environmental, health, and safety compliance.
Market Risk	Market share erosion and pricing pressure due to competition from imported or locally sourced alternatives.	The Company sets prices based on import parity, strengthens its export presence, actively engages with customers, and continuously monitors local market dynamics and competitor trends to remain competitive and responsive.
Foreign Exchange Risk	Forex devaluation may result in financial losses on unhedged exposures.	Black Rose refines its hedging strategy in consultation with internal and external experts, appoints specialised forex consultants to manage currency exposure, and passes on cost impacts to customers wherever feasible to protect margins.
Technology Risk	System downtime causing disruption in access to data, services, and applications.	The Company ensures uninterrupted operations by maintaining backup internet connections at all sites and conducting regular connectivity checks for both primary and backup lines.
Natural Calamities Risk	Physical asset loss or employee injury due to natural calamities.	Black Rose prioritises workplace safety by installing advanced fire safety systems, conducting regular safety and mock drills, and providing employees with appropriate personal protective equipment (PPE). The Company safeguards its assets through comprehensive insurance coverage, maintains Workmen Compensation Insurance, and holds a Factory Loss of Profit (FLOP) policy to protect against operational disruptions.
Geopolitical Risk	Trade restrictions, tariffs, or geopolitical unrest affecting supply chains and costs.	Black Rose closely monitors global political developments to anticipate potential disruptions, diversifies its supplier and customer base to mitigate concentration risks, and maintains buffer inventory for critical imports and exports to ensure uninterrupted operations.
Cybersecurity Risk	Data breach, ransomware, or phishing resulting in data loss, downtime, and financial damage.	Black Rose ensures robust data security by performing regular backups on external devices, upgrading antivirus and firewall systems, and conducting routine vulnerability assessments and penetration testing to identify and address potential threats.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Employees are a vital pillar of the Companys business operations. Recognising this precious resource, the organisation is committed to ensuring a safe, healthy, and inclusive work environment for its workforce. Emphasis is placed on training, skill development, and fostering a positive workplace culture to support employee growth. The Company also conducts periodic reviews of employee performance to provide constructive feedback and encourage improvement. Notably, there were no person-days lost due to strikes or disputes during the year. This points to a culture that supports and facilitates cordial and harmonious industrial relations within the organisation. Not to forget, robust grievance redressal systems are in place to allow employees to voice concerns and have them resolved promptly.

As of 31 st March, 2025, the Company had 89 employees on its payroll.

INTERNAL CONTROL SYSTEMS

During the year, the Company actively reviewed and reinforced its Internal Financial Control systems, working towards a more robust and effective framework in compliance with Section 134(5) of the Companies Act, 2013. These controls are intended to ensure the orderly and efficient conduct of operations, adherence to company policies, and safeguarding of assets. They also help in the prevention and detection of fraud and errors, ensure accuracy and completeness of accounting records, and enable timely preparation of reliable financial information. These controls also support compliance with applicable laws and regulations, promote the optimal utilisation of resources, and safeguard stakeholder interests. Based on a detailed assessment by management and subsequent evaluation, the Board of Directors is of the opinion that, as of 31 st March, 2025, the Companys Internal Financial Controls were adequate and functioning satisfactorily.

INTERNAL AUDIT

The Companys internal auditing is done by professionally qualified accountants and specialists for high-quality audit assurance. Reports prepared by the Internal Auditors are reviewed by the Audit Committee, which is kept regularly informed about key internal audit findings as well as the progress of corrective actions taken in response. Additionally,

the Audit Committee oversees the review of the Companys financial statements on a quarterly, half-yearly, and annual basis to ensure transparency and robust financial governance.

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. We advise readers to exercise caution and refrain from placing undue reliance on forward-looking statements, as several factors could lead to disparities between assumptions and actual future results and events. Therefore, this document is subject to the disclaimer and is qualified in its entirety by the assumptions, qualifications, and risk factors outlined in Black Roses Annual Report for 2024-25, as discussed in the Management Discussion and Analysis.