Chembond Chemicals Ltd Management Discussions

Chembond manufacturers and operates in the water treatment, construction chemicals, industrial cleaning and hygiene solutions, and chemical distribution businesses. With deep domain expertise and a strong focus on quality, we serve a broad spectrum of industries across the nation, delivering reliable and customer-centric solutions. We are an environmentally conscious organization.

Global Economic Overview

The global economy in FY 2025-26 remained resilient but volatile, with growth moderating amid geopolitical tensions, trade disruptions, and inflationary pressures. The specialty chemicals sector is witnessing steady growth, driven by rising demand for water treatment, sustainability solutions, and increasing focus on resource efficiency, circular economy, and digital technologies in water and environmental management. The water and wastewater treatment chemicals market is witnessing consolidation amid steady growth driven by rising industrial demand, regulatory compliance, and increasing water reuse initiatives. The construction chemicals business has seen significant consolidation led by the leading 3 companies acquiring a host of smaller regional players Industrial cleaning and hygiene solutions are driven by sustainability, stricter regulations, and rising hygiene standards post-COVID, with strong growth in Asia-Pacific. Industries are shifting toward eco-friendly, high-performance, and automated solutions, moving from standalone products to integrated, service-based offerings. The specialty chemicals sector continues to benefit from this trend, with increasing focus on sustainability, and stricter environmental norms driving demand for advanced water management and environmental solutions.

Indian Economic Overview

India remained one of the fastest-growing major economies with a GDP growth rate of 7.7% in FY 2025-26 reflecting the inherent strength of our economy, the success of reforms supported by strong domestic demand, infrastructure investments, and resilient industrial activity. The specialty chemicals sector continued to benefit from expanding end-use demand for most part of the year.

The water solutions segment in India is experiencing consistent growth, with the market expected to grow at ~5-7% CAGR led by urbanisation, industrial expansion, policy initiatives and increasing awareness around sustainability, environmental compliance, and energy efficiency. Construction chemicals continue to gain momentum due to large-scale infrastructure, industrial and real estate development. Industrial cleaning and hygiene solutions are seeing a rising demand driven by growth in factory processed foods, beverages and dairy manufacturing and a sustained post-pandemic emphasis on hygiene and sanitation standards.

Overall, Indias economic trajectory continues to inspire confidence, anchored by stable growth, improving macro indicators, a consistent policy environment, and a broad-based recovery.

The dampener in the momentum is the prolonged West Asia war situation and the pricing and supply chain pressures it is posing on the global economy.

Business Overview and Product Portfolio Water Technologies

We offer a comprehensive range of chemicals, equipment systems, and technical services for total water management and water reuse across industrial, commercial, and institutional sectors, in India and select international markets. Our solutions are designed around specific customer requirements and are backed by over 45 years of field expertise, in-depth system assessments, advanced performance monitoring tools, and proactive technical support. This enables us to consistently meet and exceed customer expectations. We provide end- to-end capabilities across all water treatment applications, including raw water, cooling water, boiler feedwater, produced water, and wastewater.

Our revenue from operations grew by a handsome 15% in FY 2025-26 - a result of active pursuit of revenue and industry penetration activities from existing product lines and new solution offerings. Despite cost pressures from volatile supply chains and rising material costs, we maintained a strong focus on sustaining healthy profit margins. The near-term prospects of the business are encouraging.

Construction Chemicals

Our portfolio comprises of a wide range of products comprising concrete additives, joint sealants, cement-based ready-to-use tile adhesives and repair mortars, waterproofing solutions, and curing compounds. These solutions contribute meaningfully to improved construction quality, enhanced durability, and faster project execution, thereby delivering tangible value to customers. This business recorded a revenue growth of 6% over the previous year, while product margins expanded by 15.19% driven by a favourable product mix, improved operating efficiencies, and continued emphasis on value-added offerings. Overall, the outlook remains positive, supported by sustained investments and structural growth drivers in the construction sector.

Industrial Hygiene

Our JV with Calvatis GmbH focuses on industrial and institutional hygiene solutions, delivering a comprehensive range of cleaning and sanitation products to the Food, Beverage, Dairy, Institutional, and Hospitality sectors in India. During the year, the business strengthened its market reach by onboarding new channel partners, thereby expanding its customer base and enhancing distribution across key target segments. We expanded our institutional hygiene portfolio with DAZZO! Professional, a specialised range product catering to laundry, kitchen, and housekeeping applications, aligned with our focus on delivering comprehensive cleaning and hygiene solutions. These initiatives are expected to accelerate business growth and enhance our presence across target markets.

Research & Development

We inaugurated our new laboratory with enhanced capabilities at Mahape during the year. Application development and testing are continuous activities for us, but during the year we developed a few new products in the water treatment and cleaning and hygiene segments. Our NABL-accredited laboratory continues to ensure high standards of analysis and testing reliability. Manufacturing

The Company operates manufacturing facilities in Gujarat, Tamil Nadu, and Himachal Pradesh, enabling it to effectively serve customers, Given the multi-product nature of our formulation plants, capacity is inherently flexible, allowing for efficient scaling of output in line with demand with smaller investments in manufacturing equipment. All our plants continue to strengthen safety, health, and environmental practices, while adhering to applicable regulatory norms and quality standards. Driven by clearly defined KPIs, plant teams remain aligned with their operational goals and maintain a strong focus on customer centricity.

Environment, Health, Safety and Quality

In line with our sustainability goals, we strengthened initiatives at improving resource efficiency and our environmental performance. We initiated plant scale trials on a groundwater treatment system to pretreat polluted groundwater and enhance recovery in post purification processes. Our sewage treatment and wastewater treatment plants help treat and reuse water thereby leading to energy optimization, and enhanced water management practices. Our rooftop solar plant has started generating power and is racing to achieve its objectives of reduced hydrocarbon consumption and meeting aggressive ROI requirements.

We remain resolute to ensuring a safe, healthy, and secure working environment for our employees, contractors, and stakeholders Upholding environmental stewardship and maintaining full compliance with all statutory and regulatory requirements remain a priority. Comprehensive risk assessments and environmental impact evaluations were carried out across our facilities by internal teams and independent third-party experts. We continue to maintain our certifications under ISO 45001:2018 for Occupational Health & Safety Management Systems and ISO 14001:2015 for Environmental Management Systems.

Quality remains a cornerstone of our business and a key driver in building long-term customer relationships. We are committed to consistently delivering high-quality, high-performance products and solutions that meet evolving customer expectations. Our focus on continuous improvement, process excellence, and customer satisfaction enables us to strengthen trust and reinforce our position as a preferred solutions partner. During the year, we continued to uphold our Quality Management Systems certifications under ISO 9001:2015.

Financial Performance

The financial performance presented herein is based on the audited standalone and consolidated financial statements of Chembond Chemicals Limited (formerly Chembond Chemical Specialties Limited) and its subsidiaries and step-down subsidiaries (collectively 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. Limited

Revenue from operations at Rs32,615 lakhs on a consolidated basis were higher by 11.59% over prior FY, and at Rs7,365 lakhs on a standalone basis were higher by 6.12% over prior FY. The comparative figures and key highlights of the consolidated and standalone financial performance are as follows:

(in Rs lakhs)

Particulars	Standalone		Change %	Consolidated		Change %
	2025 26	2024-25		2025-26	2024-25
Sales	7,365	6,940	6.12	32,615	29,227	11.59
Product Margin	3,402	2,954	15.17	16,433	14,882	10.42
Gross Margin	3,073	2,702	13.73	14,390	13,107	9.79
Selling and Distribution	375	429	(12.59)	2,415	2,544	(5.07)
Employee Cost	1,167	1,168	(0.09)	6,211	5,187	19.74
EBITDA	1,402	1,028	36.38	5,130	4,777	7.39
PBT	1,180	758	55.67	4,526	4,217	7.33

Ratio Analysis

Ratio (% of Sales)	Standalone		Consolidated
	2025-26	2024-25	2025-26	2024-25
Product Margin	46.19	42.56	50.38	50.92
Gross Margin	41.73	38.93	44.12	44.85
Selling & Distribution	5.10	6.18	7.41	8.7
Employee Costs	15.85	16.83	19.04	17.75
EBITDA	19.03	14.81	15.73	16.34
Net Profit Margin	16.02	8.69	13.88	10.58
Return on Net Worth	14.11	6.44	16.80	17.69

 

Ratio	Standalone		Consolidated
	2025-26	2024-25	2025-26	2024-25
EPS (Basic & Diluted)	3.86	2.24	13.00	11.54
Debtors Turnover	3.66	3.91	3.04	3.29
Inventory Turnover	7.05	7.95	7.76	8.06
Current ratio	4.41	4.57	5.10	4.81

EBITDA Margin, and Net Profit Margin improved during FY 2025-26 as compared to prior FY on account of improved operational and financial performance.

The Company remains cautiously optimistic about its growth prospects especially under the current global uncertainties, supported by a healthy opportunity pipeline across its key business segments. We continue to identify and evaluate avenues for expansion and are pursuing strategic initiatives to capitalise on these opportunities. Our focus remains on driving sustainable and profitable growth, underpinned by disciplined execution, prudent capital allocation, and strong financial stewardship. We are committed to creating long-term value for our stakeholders while maintaining resilience in an increasingly dynamic business environment.

Outlook on Opportunities, Threats, Risks and Concerns

The Indian specialty chemicals sector offers stable long-term growth opportunities, supported by favourable structural drivers, including increasing per capita income, broad-based domestic demand, sustained government spending, and rising environmental awareness. The growing emphasis on sustainability and performance-driven solutions, along with new manufacturing capabilities, and rising adoption across end-use industries, present significant opportunities for us. With its established manufacturing base, pan-India footprint, technical expertise, and integrated capabilities across product development, sales, and service, the Company is well positioned to capitalise on these opportunities. Continued focus on innovation, customer-centric solutions, expansion into new applications and segments, and digitalization is expected to support long-term growth.

The operating environment however remains fraught with multiple risks and uncertainties. Extreme volatility in raw material prices, wars and geopolitical tensions, and global uncertainties arising from evolving regulatory and environmental norms has impacted cost structures and unhindered business operations. We also remain exposed to risks related to supply chain disruptions, customer and market concentration, and increasing competition. Further, the industry is characterised by high R&D intensity, rising ESG compliance expectations, cybersecurity risks, and the ongoing need to attract and retain skilled talent. These uncertainties underscore the importance of disciplined execution and prudent financial management.

In response, we are strengthening our resilience through operational excellence, diversification, and maintaining a keen eye on risk management. Emphasis on value-added products, sustainable solutions, and continuous innovation remain central to maintaining competitiveness and delivering consistent, longterm value to stakeholders.

Risks Framework

The Board and its Committees maintain oversight of the Companys risk management processes, covering financial, operational, regulatory, and strategic risks. The senior management is responsible for implementing the risk framework and ensuring that appropriate controls and mitigation strategies are in place across all business functions.

Risks are largely mitigated at Chembond by maintaining a diversified product portfolio and reducing market dependency and exposure. We comply with regulatory standards thereby effectively managing compliance-related risks. Investments in technology and infrastructure further strengthen safety and regulatory adherence. Training and awareness sessions are regularly conducted to embed risk management practices deep into the organization. This approach supports informed decision-making, reinforces governance practices, and enables us to effectively navigate uncertainties while pursuing its strategic objectives.

Industrial / Human Relations

A safe workplace, and the well-being of our personnel are a priority for us. Continuous training sessions reinforcing safe work practices and on safety and responsible behaviour strengthen our safety culture. We remain committed to attracting, developing, and retaining talent through structured onboarding and ongoing learning across technical, commercial, and behavioural areas. The Company fosters an equitable and respectful workplace where individuals are empowered to grow and contribute to shared success. Industrial relations remained cordial during the year.

Internal Control Systems and their Adequacy

The Company has established an internal control framework aligned with the requirements of the Companies Act, 2013 and commensurate with its size and operational complexity. These controls provide reasonable assurance on the reliability of financial and operational information, safeguard assets, ensure compliance with applicable laws, and enforce appropriate authorization of transactions. The Audit Committee engages with the management to evaluate the effectiveness of these controls, drawing insights from both internal and external auditors to ensure system robustness. The control environment is supported by integrated IT systems, enabling accurate data capture, consolidation, and seamless information flow across locations. By leveraging digital platforms, the Company has embedded automated controls within processes thereby strengthening governance, minimizing exceptions, and ensuring a comprehensive audit trail is maintained. Further, the Company has implemented a strong Internal Financial Controls (IFC) framework to enhance the effectiveness of financial reporting processes. The management remains proactive in addressing control gaps, with timely corrective actions driven by recommendations from the internal auditor and oversight from the Audit Committee.

Corporate Social Responsibility (CSR)

On a consolidated basis, the Company contributed Rs75.80 lakhs during the year for various CSR initiatives. Of this amount, Rs13.55 lakhs were contributed by your Company on a standalone basis to PM-CARES. Our subsidiary drove community impact initiatives by contributing a total of Rs62.25 lakhs towards installing a renewable energy project at a school, a water purification and disinfection system at a charitable hospital, and to the PM-CARES fund. All projects were aligned to the priority sectors listed in our CSR Policy. Further details and the governance framework are provided in the Boards Report. The Company remains committed to creating sustainable value for society while aligning its CSR efforts with broader environmental and social objectives.

Cautionary Statement

We wish to emphasise that this report contains ‘forward-looking statements regarding anticipated future events, financial outcomes and operational milestones of the Company. These statements inherently rely on assumptions and are subject to various risks and uncertainties. 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. The Company is not obligated to publicly update or revise these forward-looking statements based on subsequent developments, information, or events.

By order of the Board of Directors of

Chembond Chemicals Limited (formerly Chembond Chemical Specialties Limited)

Nirmal Vinod Shah

Chairman and Managing Director

DIN 00083853

May 16, 2026 Navi Mumbai