Chemcrux Enterprises Ltd Management Discussions

1. ECONOMIC OVERVIEW: GLOBAL:

The global economy has emerged from an enduring trial of resilience but the growth still remains uneven; exhibiting the lasting pandemic effect, compounded by geo-political disturbances and aggravated by recent tariff-related measures. These disruptions in turn led to strained logistics, elevated inflationary pressures and forced governments to adopt stringent fiscal and monetary responses. According to the IMF s World Economic Outlook Update (July 2025), the global growth is projected at 3.3% in both 2025 and 2026, below the long-term average of 3.7%. Inflationary pressures are easing, with headline inflation forecast to decline to 4.2% in 2025 and 3.5% in 2026. Major economies continue to dominate global trade. On the other hand, many developing markets continue to face unpredictability and persistent challenges.

INDIAN:

Indian Economy continues expanding its footprints in industrial and services sectors backed by strong demand. Investor confidence in Indias long-term economic prospects, which is being fueled by reforms, demographic dividends and advancements in technology, can be seen in the record-high stock market. India is on track to become the world s third-largest economy with a projected GDP of $7.3 trillion by 2030. India is projected to be world s fastest growing major economy (6.3% to 6.8% in 2025-26). The IMFs World Economic Outlook Update in July 2025 raised Indias GDP growth forecast to 6.4% for both 2025 and 2026.

2. CHEMICAL INDUSTRY OVERVIEW:

Globally, the chemical industry has witnessed significant volatility, especially in recent years. Global chemical production is projected to rise by 3.5% in 2025, following modest growth of 3.4% in 2024, representing opportunities and challenges as well. The global chemical industry experienced moderate progress in 2024. The activity remained sluggish into 2024, although signs of a rebound were noted.

Manufacturing over 80,000 different varieties of chemical products, Chemical Industry is one of the most-diverse industries in the country. India s chemical industry ranks sixth in production and 14 th in exports with export reach to over 175 countries. Indias chemical sector is anticipated to grow to US$ 300 billion by 2025 and US$ 1 trillion by 2040. It is also the second largest manufacturer and exporter of dyes. The sector is highly diversified, encompassing a broad range of sub-industries.

2.1 SPECIALTY CHEMICALS INDUSTRY:

GLOBAL:

Rising domestic demand, coupled with global shifts toward sustainability and decarbonisation have provided enormous opportunities for growth of Specialty Chemical sector. The main reason behind this growth can be attributed to the high-performance characteristics of specialty chemicals, which enable innovation, functionality and value addition across industries. The specialty chemicals market size is expected to grow from $641.5 billion in 2023 to $914.4 billion in 2030.

INDIAN:

India s specialty chemicals sector is expanding rapidly at 12% 16% CAGR, outpacing many other industrial verticals. The specialty chemical sector accounts for 47% of the nation s domestic chemical market and is projected to increase at a CAGR of nearly 11% over the next five years. India is the second-largest market for specialty & fine chemicals in Asia Pacific. The Indian companies have invested in R&D to develop new products to cater to rising demand from domestic and overseas markets. Overall, the specialty segment is the strongest pillar of the industry.

2.2 ACTIVE PHARMA INGREDIENTS (API) & INTERMEDIATES INDUSTRY:

GLOBAL:

The global active pharmaceutical ingredients market size was estimated at USD 255,007.2 million in 2024 and is projected to reach USD 359,450.1 million by 2030, growing at a CAGR of 5.8% from 2025 to 2030. Favorable government policies for API production are boosting market growth. The Global Chemical Intermediates Market is valued at USD 118.07 billion in 2024 and is projected to climb to USD 259.66 billion by 2035, expanding at a compound annual growth rate (CAGR) of 8.2% from 2025 to 2035.

DOMESTIC:

India has the potential to expand large-scale API manufacturing, supported by advanced chemical infrastructure, skilled workforce, stringent quality standards, and cost advantages. The Indian API market stood at USD 17.77 billion in 2024 and is projected to reach USD 38.60 billion by 2033, growing at a CAGR of 8.10% during 2025 2033. India is the world s 3rd largest API producer with an 8% global share, manufacturing over 500 APIs and contributing 57% to the WHO prequalified list.

COMPANY OVERVIEW:

From a small set up in 1983 at Ankleshwar, Gujarat - Asia s largest chemical hub - your Company has grown into a trusted manufacturer of specialty intermediates for APIs, Dyes and Pigments. Certified with ISO 9001:2015, ISO 14001:2015 and 50001:2018 and rated Committed by EcoVadis your Company continues to strengthen its market presence guided by its philosophy of QUALITY, CONSISTENCY AND RELIABILITY.

The year gone by was marked with several important developments for your company. Although profit margins remained under pressure during the period, the initiatives undertaken were strategic and are expected to yield long-term benefits. The planned capacity expansion was completed successfully. Kalichem Private Limited became fully operational during the year and was subsequently converted into a wholly owned subsidiary. Particular measures to reduce energy costs undertaken during the year delivered efficiencies, while the completion of the planned expansion project positioned the Company for future growth. Further, during the F.Y. 2025-26, as the Company entered into a strategic collaboration with Deepak Nitrite Limited, to enhance supply chain efficiency and ensure sustainable, cost-competitive offerings.

3. STRENGTHS & OPPORTUNITIES:

Your company is key manufacturer of Chloro Nitro Benzoic acids and amide derivatives in India. This offers regular opportunities and helps the company to cater to market needs very effectively. Over the years, the company has developed strong in-house R&D systems that help sustain operations, overcome challenges and maintain its market position. Having its manufacturing facility located in Ankleshwar, one of India s leading chemical manufacturing hubs, your Company is benefitted from close proximity to both customers and suppliers thereby ensuring timesaving operations and promptly servicing the demands.

The derivatives manufactured are the building blocks for many industries & hence your company believes that this fact will continue to offer potential to grow by exploring manufacturing possibilities of derivatives.

4. RISKS, CONCERNS & THREATS:

Being engaged in the manufacturing of specialty chemicals, your Company faces concerns arising from industry specific and commercial challenges, as any adverse development in the global or domestic marketplace has the potential to impact operational and financial performance. Additionally, volatility in raw material prices continues to be a major threat. Furthermore, your Company is operating in a highly regulated industry that exposes the Company to evolving laws, environmental regulations and compliance requirements. Moreover, the increasing occurrences of chemical dumping, particularly from China, present a substantial threat that could have the hostile impact on the future prospects of the Company.

5. SEGMENT WISE PERFORMANCE:

Your Company operates in a single segment of Specialty Chemicals which includes intermediates for Bulk Drugs (APIs), Dyes and Pigment industries. These intermediates serve as critical raw materials for a wide range of applications which place the Company as a valuable link in the supply chain. The Company has also been optimally utilising its capacities to manufacture these intermediates that enable efficient operations and consistent supply to its end-user industries.

6. OUTLOOK:

Chemcrux is building on its 4+ decades of its expertise and in house technical expertise to expand its presence. In the pursuit of this, the planned capacity expansion at the Ankleshwar plant has been completed with required approvals and the Company has commenced commercial production from its enhanced facilities, thereby doubling its reaction capability to 250 KL. This capacity addition is expected to cater to future demand from existing customers as well as developing markets. The Steam Purchase Agreement entered in the previous year has contributed to lowering steam costs. Additionally, overall utility cost per Kg. of production is approximately reduced by 15% as compared to F.Y. 2023-24. During F.Y. 2024-25, Kalichem Private Limited also commenced operations and it has been converted into a wholly owned subsidiary (previously, it was the Joint Venture) which further solidified the Company s overall operations.

As reflected in the financials, the Company s topline declined by 10% over F.Y. 2023 24 and 35% over F.Y. 2022 23 primarily attributable to pricing pressures that affected both revenue and margins. Despite these challenges, the Company continues to maintain healthy collections and liquidity. Favorably, sales volumes were only 4% lower than F.Y. 2023 24 and in fact 21% higher than F.Y. 2022 23, reflecting sustained market demand. Moving forward, the strategic collaboration entered with Deepak Nitrite Limited in F.Y. 2025-26, is expected to support the Company regain its earlier performance levels. The management continues to do its best under the prevailing circumstances and remains committed to performing to the best of its capacity for the benefit of all stakeholders.

7. ENVIRONMENT HEALTH & SAFETY:

Your Company maintains robust systems for air, liquid and solid waste management along with effluent treatment and CETP membership which ensure compliance and safe disposal. Environmental safeguards such as air scrubbers, dust filters and fire protection systems are well integrated into operations. Regular safety drills, workplace improvements and community development initiatives reflect the Company s continued commitment to sustainability.

8. INTERNAL CONTROL SYSTEM:

The Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposal. The internal control systems are supplemented by internal audits and are reviewed by management. Audits by Internal and Statutory Auditors provide a means whereby identification of areas of improvement and corrective measures taken whenever applicable. The Company has an independent internal audit system, covering evaluation of all financial & major operating system controls. The internal audit findings and recommendations are reviewed by the Audit Committee and are then reported to the Board.

9. FINANCIAL & OPERATIONAL PERFORMANCE:

In F.Y. 2024-25, the chemical industry faced various challenges like volatility of raw material prices, dumping from China, disrupted logistics owing to geopolitical tensions, etc. These challenges, coupled with slowdown in key markets, had continued impact on Chemcrux s performance and same was reflected during the whole year in financial results. To overcome this, the Company employed initiatives for increasing its market place, improve its product mix and drive operational excellence. The Financial Highlights of the Company are summarized in table below: (In Lakhs, except EPS)

Particulars	31 st March 2025	31 st March 2024
Revenue from Operations	7025.39	7846.53
Other Income	152.96	133.54
Total Revenue	7178.35	7980.07
Profit Before Tax	582.81	1143.15
Profit after Tax	418.86	844.43
Earnings per Share	2.83	5.70

RATIOS: The reasons for variation are provided where variance is more than 25% compared to previous financial year:

Ratio	Numerator	Denominator	Mar-25 Mar-24		% Variance	Reason for variance
(a) Current ratio	Total Current Assets	Total Current Liabilities	3.18	3.85	-17.37%	Decrease in ratio is due to decrease in Current assets and increase in current liabilities
	Short Term
(b) Debt-equity ratio	Borrowing + Long	Total Equity	0.34	0.35	-3.24%	Decrease in ratio is due to decrease in Long Term Borrowings
	Term Borrowing
(c) Debt service coverage ratio	Profit Before Interest and Tax	Total Debts Service (Interest + Finance Lease Payment + Principal Repayment)	0.31	0.42	-25.69%	The decrease in the ratio is due to an increase in the borrowing upto capitalisation of work in progress cost and deacrease in profit as compared to last year.
(d) Return on equity ratio	Net Profit after Tax Total Equity		5.65%	12.18%	-53.64%	Decrease in ratio is due to decrease in net profit
(e) Inventory turnover ratio	Net Sales	Average Inventory	7.78	6.97	11.56%-
(f) Trade receivables turnover ratio	Net Sales	Average Trade Receivables	5.11	5.46	-6.47%-
(g) Trade payables turnover ratio	Net Purchases	Average Trade Payable	11.56	7.17	61.24%	The ratio has impoved due to decrease in average trade payable and increase in purchase as compare to last year.
(h) Net Working capital turnover ratio	Net Sales	Working Capital	2.08	2.01	3.88%-
(i) Net profit ratio	Net Profit	Sales	5.96%	10.76%	-44.60%	Decrease in ratio is due to decrease in net profit
(j) Return on capital employed	Earning Before Interest and Tax	Capital Employed	7.07%	12.27%	-42.36%	Decrease in ratio is due to decrease in net profit
(k) Return on investment	Profit After Tax	Total Assets	3.73%	7.69%	-51.41%	Decrease in ratio is due to decrease in net profit

For the year ended 31 st March 2025, the Board of Directors have recommended dividend of Re. 1/- per equity share of face value of Rs. 10/- each, which is subject to shareholders approval at the ensuing AGM.

10. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING

NUMBER OF PEOPLE EMPLOYED:

Human capital has always been the Company s greatest strength and central to its success. As on 31 st March 2025, the total team of 102, worked with collaboration and harmony across all levels. Further, the seasoned professionals were added in Production as well as in QA & R&D team, strengthening technical leadership. Moving forward, an ESOP proposal has been placed for shareholders approvals in the accompanying Notice of this Annual Report to retain and attract talents. Regular trainings are imparted to employees to ensure skill upgradation and future-readiness. With continuous emphasis on safety, wellbeing and ethical conduct, the Company is committed to providing a positive workplace that drives long-term progress.

11. CAUTIONARY STATEMENS:

This Management Discussion and Analysis section includes forward-looking statements based on certain assumptions and expectations. Actual results may differ materially and the Company gives no assurance of their accuracy or realization owing to everchanging scenarios. These assumptions and expectations may not materialize and the Directors provide no assurance in this regard.

	For and on behalf of the Board of Directors
	CHEMCRUX ENTERPRISES LIMITED
	Sd/-
Place : Vadodara	GIRISHKUMAR SHAH
Date : 6 th August 2025	CHAIRMAN
	(DIN: 00469291)