Chembond Chemicals Ltd Management Discussions

Over the past five decades since its inception, Chembond has strived to earn the reputation of being an ethical and trusted partner to its customers and stakeholders. Today, it is at the forefront of the Indian specialty chemicals industry, offering proven solutions for water treatment, construction chemicals, and industrial cleaning & hygiene. With deep expertise across our businesses, we cater to a wide spectrum of industries across the nation. Our steadfast commitment to innovation and excellence drives us to deliver tailored solutions that support the evolving needs of our customers and contribute meaningfully to Indias industrial growth.

Global Economic Overview

The global economy continues to present a mixed and uncertain outlook, shaped by a combination of persistent geopolitical conflicts, elevated debt levels, extreme weather events, and widespread electoral activities across various regions. Global growth in 2025, estimated earlier at 3.2% (source: www.imf.org) is now likely to slow to 2025. This rate remains subdued compared to historical norms, due to short-term challenges such as high borrowing costs and the withdrawal of fiscal support, as well as long-term impacts stemming from the COVID-19 pandemic, geographical unrest and territorial conflicts, weak productivity growth, and increasing geoeconomic fragmentation. While risks to the global outlook are now considered broadly balanced, inflationary pressures and extended lead times continue to pose challenges to business demand and operational efficiency. On a positive note, renewable energy investments and green technology adoption are accelerating, offering potential avenues for sustainable growth (World Bank, 2025).

Indian Economic Overview

Indias economic outlook for FY 2024-25 and FY 2025-26 reflects a sense of cautious optimism, underpinned by resilient domestic demand and supportive fiscal policies, despite ongoing global uncertainties. The economy is projected to grow at approximately 6.3% to 6.5% in FY 2024-25 & FY 2025-26, as estimated by the Economic Survey, FICCI, and the Reserve Bank of India (RBI). While this marks a slight moderation compared to recent years, it remains one of the highest growth rates among major global economies. With inflationary pressures easing, the RBI is expected to shift toward a more accommodative monetary policy stance, potentially reducing the repo rate to spur consumption and investment. The investment cycle is showing renewed momentum, bolstered by continued government focus on capital expenditure. This has contributed to improved capacity utilisation, increased resource flow to the commercial sector, and strong policy backing through initiatives like the Production Linked Incentive (PLI) scheme and other structural reforms.

Chemical Industry

The global specialty chemicals industry is undergoing rapid transformation, driven by its critical role in serving diverse, high-performance applications across multiple sectors. In 2024, the broader chemical industry has shown moderate progress with year-over-year production surpassing 2023 levels. This momentum is expected to continue into 2025 as global demand rebounds and the destocking cycle eases. To capitalize on this recovery, chemical companies are implementing cost-reduction strategies and focusing on margin improvement, all while maintaining investments in decarbonization and innovation. The American Chemistry Council (ACC) anticipates global chemical production to grow by 3.4% in 2024 and 3.5% in 2025, a marked improvement.

Indias specialty chemicals sector, in particular, is well- positioned for accelerated growth through FY 2024-25 and FY 2025-26, driven by strong domestic demand, expanding export opportunities, and increased focus on import substitution. Key enablers include cost-effective manufacturing, advanced process engineering, and a skilled workforce. Additionally, the sector benefits from a strong emphasis on R&D, adherence to stringent compliance standards, and proactive government initiatives aimed at simplifying regulatory frameworks and promoting local production. With strategic investments and supportive policy measures, Indias specialty chemicals industry is set to play an increasingly significant role in the global supply chain.

Business Overview and Product Portfolio

Water Technologies

We offer a range of chemicals, equipment systems and technical services for Total Water Management and water re-use across the industrial and C&I spectrum in the country and in limited international geographies. New product introductions and acquiring customers in newer segments is a continuing activity at Chembond Water and this year too we maintained momentum on this front. Our solutions are based on customer needs, years of field expertise, extensive customer system surveys, advanced performance monitoring techniques and proactive technical support to meet and exceed our customers expectations. Our capabilities include managing all water treatment applications like raw water, cooling water, boiler feedwater, produced water and waste water to allow recycle and re-use of water while allowing the plant to run efficiently and reliably. Our solutions are positioned to afford higher water-use efficiency in industries through its appropriate treatment.

In FY 2024-25 the revenue from operations grew a modest 4.3% and the profit before tax grew by a little over 12%. Our team actively seeks revenue expansion opportunities from existing product lines as well as from new solutions while maintaining profit margins. We introduced a comprehensive line of Kem Watreat? water testing kits that are portable and reliable for field testing while being complimentary to our line of business. We also upgraded our Chembond FLUX? smart treatment program monitor and controller. Our team is cautiously bullish on the prospects of the business in the immediate future.

Construction Chemicals

Our portfolio of products to the construction industry comprises of admixtures, sealants, various cement-based ready-to-use products, waterproofing solutions, and curing compounds. These products have a significant positive impact on the construction speed and quality. The revenue of the business grew by 20.32% over the prior year and the product margin grew by 18.43% over the prior year.

The outlook for FY 2025-26 continues to remain positive with the continuing investments flowing into the construction segment. Consistent with our long-term approach, we will maintain a sharp focus on profitability and customer credit quality, prioritizing sustainable, value-driven growth over aggressive top-line expansion.

Industrial Hygiene

Our industrial and institutional hygiene chemicals joint venture with Calvatis GmbH, Germany, provides comprehensive cleaning and hygiene solutions to the Food, Beverage, Dairy, Institutional, and Hospitality sectors in India. The Company added new channel partners during the year to expand its customer base and strengthen its distribution network across target segments. We also introduced DAZZO! Professional - a specialized product range covering Laundry, Kitchen, and House-keeping applications for the institutional segment. These initiatives are expected to provide the necessary thrust for the company in FY 2025-26.

Research & Development

R&D and new application development has always been a priority area for our company. To this end, we have upgraded our labs and enhanced our capabilities in the sustainable solutions development area. The year saw us introduce newer solutions in the water treatment, cleaning and hygiene, and construction chemicals businesses. Our water treatment laboratory is NABL certified ensuring high reliability in water analysis and testing. We migrated to a new Laboratory Information Management platform during the year. Our R&D organization also underwent a re-alignment bringing in more thought leadership and strategic direction into the operation.

Manufacturing

Your Company has manufacturing plants in Gujarat, Tamil Nadu and Himachal Pradesh. These plants effectively cater to our customers across India and the few international locations. With capacity not being a constraint in a multiproduct formulations plant, the output and capacity utilization is effortlessly elastic. All the plants continuously improve on our safety, health and environment practices, and conform to various norms and quality standards. Driven by KPIs our teams at the plant are aware of their goals and the importance of customer centricity.

Safety, Health, Environment and Quality

Chembond remains steadfast in its commitment to providing a safe and healthy work environment for its personnel. Protecting the environment and being compliant at all times to statutory requirements is non-negotiable for us. Risk and environmental impact assessments of our plants are undertaken regularly by our in-house as well as 3^rd party experts throughout the year. These practices align with our goal of identifying and eliminating risks to personnel, property and the environment. We continue to maintain our certification under ISO 45001:2018 and ISO 14001:2015.

On the quality front, we understand that delivering consistently high quality and high-performance products adds value to our customers whom we strive to delight and earn their trust as a preferred supplier of solutions and services. We continue to maintain Quality Management Systems certifications as per ISO 9001:2015 & IATF 16949:2016.

During the year we also undertook the implementation of a couple of key sustainability initiatives like, setting up a containerized sewage treatment plant for the treatment and re-use of wastewater, and setting up a rooftop solar plant that awaits final regulatory clearances to come on-line shortly. We are also upgrading our water treatment plant to enhance water recovery and improve our water balance.

Financial Performance

In line with our strategic restructuring initiatives, and pursuant to the order dated April 7, 2025, passed by the Honble National Company Law Tribunal, Mumbai Bench, the Company has demerged its Water Technologies and Construction Chemicals businesses. These have now been vested in the resulting entity, Chembond Chemical Specialties Limited, in accordance with the Composite Scheme of Arrangement and applicable legal and regulatory provisions, including SEBI (LODR) Regulations.

The following discussion is based on the Audited Standalone and Consolidated financial statements of Chembond Chemicals Limited (formerly Chembond Chemical Specialties Limited) and its following subsidiaries and stepdown subsidiaries (together referred to as the Group):

Subsidiaries:

1. Chembond Water Technologies Limited

2. Chembond Distribution Limited

3. Chembond Calvatis Industrial Hygiene Systems Limited Step-down subsidiaries:

1. Chembond Water Technologies (Malaysia) Sdn Bhd

2. Chembond Water Technologies (Thailand) Co. Ltd

Step-down Associate Company:

1. Rewasoft Solutions Private Limited

During the year under review, your Company has achieved revenue from operations of Rs.6,940.04 Lakhs on a standalone basis and Rs.29,227.34 Lakhs on a consolidated basis. The comparative figures are tabulated below. The highlights of the standalone and consolidated performance are as follows:

(Rs. in Lakhs)

Particulars	Standalone		Consolidated
	2024-25	2023-24	2024-25	2023-24
Net Sales	6,940	6,886	29,227	28,324
Product Margin	2,954	3,075	14,882	14,666
Gross Margin	2,702	2,834	13,107	13,119
Selling & Administration	429	396	2,544	2,281
Employee Cost	1,168	1,016	5,187	4,744
EBITDA	1,028	1,238	4,777	4,565
PBT	758	1,100	4,217	4,245

Ratio Analysis

Particulars	Standalone		Consolidated
	2024-25	2023-24	2024-25	2023-24
Product Margin, % of Sales	42.56	44.66	50.92	51.78
Gross Margin, % of Sales	38.93	41.16	44.85	46.32
Selling & Admin Costs, % of Sales	6.18	5.75	8.70	8.05
Employee Costs, % of Sales	16.83	14.75	17.75	16.75
% EBITDA to Sales	14.81	17.98	16.34	16.12
Net Profit Margin (%)	8.69	10.79	10.58	10.60
Return on Net Worth (%)	6.44	8.33	17.69	20.82
EPS (Basic & Diluted)	2.24	2.76	11.54	11.20
Debt/Equity ratio	-	-	-	-
Debtors Turnover	3.91	4.52	3.29	3.67
Inventory Turnover	7.95	7.92	8.06	7.88
Interest Coverage ratio	238.07	181.11	523.68	491.90
Current ratio	4.57	3.99	4.81	4.32

Standalone - Selling & Admn expenses were proportionately higher with top line growth and increase in freight expenses. Employee cost increase was due to increments and performance bonus. Interest coverage ratio improved due to lower utilisation of limits. There is no significant change (i.e. change more than compared to FY2023-24) in other key financial ratios for FY2024-25

Looking ahead, CCL is optimistic about its future growth prospects. The Company has identified promising opportunities for expansion and is actively pursuing strategic initiatives to capitalise on them. Its focus remains on delivering sustainable value to its shareholders while ensuring prudent financial stewardship.

Outlook on Opportunities, Threats, Risks and Concerns

Indias specialty chemicals market continues to demonstrate steady growth, driven by strong domestic demand, expanding industrial applications, and rising export potential. Within the country, increased reliance by industry on the technologies offered by us, combined with a fast-growing indigenous manufacturing base throws open a plethora of opportunities for us. We are well-positioned to capitalize on this momentum on the back of our robust manufacturing infrastructure, pan-India footprint, skilled workforce, technical expertise, and strong capabilities in sales, service, and new product development.

However, the industry must navigate a complex risk landscape. Challenges include geopolitical uncertainties, fluctuating raw material prices, and stringent environmental regulations that elevate operational costs. Additional risks stem from overreliance on select markets or customers, high R&D expenditures with uncertain outcomes, potential cybersecurity threats to intellectual property, and ongoing supply chain disruptions. Furthermore, global economic volatility, increasing ESG compliance pressures, capitalintensive operations, talent shortages, and the risk of commoditization in certain product segments highlight the critical need for strategic agility, resilience, and continued innovation to maintain a competitive edge.

Risks Framework

The Board of our company is fully committed to establishing and overseeing a comprehensive risk management framework that addresses a broad spectrum of potential risks - financial, operational, regulatory, and strategic. This proactive and structured approach is integral to ensuring the Companys long-term sustainable growth and resilience.

The business operates in a dynamic environment where multiple internal and external risks may impact its smooth functioning. Such risks can affect the effectiveness of our strategic initiatives, operational efficiency, financial performance, and overall business stability.

To mitigate these risks, CCL has adopted several strategies. The Company maintains a diversified product portfolio to reduce market dependency and exposure. It complies rigorously with international regulatory standards, thereby effectively managing compliance-related risks. Investments in advanced technology and infrastructure further strengthen safety and regulatory adherence. This disciplined approach supports informed decision-making, reinforces governance practices, and helps us navigate uncertainties and challenges while pursuing its strategic objectives.

Industrial / Human Relations

The Company places the highest priority on maintaining safety standards to ensure the well-being of all personnel across its operations. Our ongoing commitment extends to attracting, nurturing, and retaining talent by providing meaningful opportunities for professional growth and development.

New joiners undergo a structured induction program designed to familiarize them with the Companys culture and operations, enabling them to quickly become valuable contributors to our growth. Our Learning & Development department conducts programs and imparts training on a host of technical, commercial and behavioural topics through the year.

Training programs focused on safe work practices and behaviour are regularly conducted to reinforce workplace safety. The Company promotes an equitable and respectful workplace where all personnel are encouraged to thrive and contribute to our shared success.

Industrial relations have remained harmonious, fostering a collaborative and supportive work environment, with no man-days lost due to industrial or employee actions.

Internal Control Systems and their Adequacy

The Company has aligned its internal control systems, including financial controls, with the requirements of the Companies Act, 2013. These controls are appropriately designed to suit the Companys size and operational complexity, providing reasonable assurance for the accuracy and reliability of financial and operational information. They also ensure compliance with applicable laws, safeguard assets against unauthorized use, enforce proper authorization of transactions, and uphold adherence to corporate policies. To support these controls, the Company employs advanced IT systems that facilitate accurate data recording, consolidation, and seamless information exchange across multiple locations.

Leveraging the sophisticated SAP S/4 HANA platform, the Company integrates automated controls within its processes to minimize deviations and exceptions, aligning with global best practices. This system offers a comprehensive audit trail that logs and monitors all data changes. Additionally, the Company has implemented a robust Internal Financial Control (IFC) framework to strengthen controls over financial reporting.

Our management adopts a proactive stance in addressing identified gaps and areas for improvement, promptly implementing corrective actions based on recommendations from both the internal auditor and the Audit Committee.

Corporate Social Responsibility (CSR)

The Chembond Childrens Centre operates non-formal educational programs across 15 villages in the Tarapur / Boisar region, aiming to supplement the school curriculum with personalized attention to students. A key focus is on empowering girls by enhancing their self-esteem through skillbuilding activities such as martial arts, dance, painting, chess, kho kho, sewing, and other self-development courses. The Centre also organizes health care and life skills camps and workshops and supports students in securing scholarships.

The CSR obligations were applicable to Chembond Water Technologies Limited and Chembond Clean Water Technologies Limited (amalgamated with the Company on May 3, 2025). These companies spent Rs. 47.96 lakhs and Rs. 8.07 lakhs, respectively, on CSR activities during the financial

year 2024-25 through Visan Trust. The Company has identified key focus areas for CSR engagement, which are detailed in the Annual Report on CSR Activities, attached as Annexure D.

Cautionary Statement

Statements made in the Management Discussion and Analysis regarding the Companys objectives, projections, estimates, and expectations may constitute “Forward-Looking Statements” as defined under applicable laws and regulations. Actual results may vary materially from those expressed or implied. Key factors influencing the Companys operations include, but are not limited to, economic conditions affecting demand, supply, and pricing in domestic and international markets, changes in government regulations, tax laws, and other statutory provisions, as well as various other unforeseen factors.

	By Order of the Board of Director of Chembond Chemicals Limited
	(formerly Chembond Chemical Specialties Limited)
	Nirmal Vinod Shah
	Chairman and Managing Director
Navi Mumbai, June 30, 2025	DIN-00083853