Chemcrux Enterprises Ltd Management Discussions

1. ECONOMIC OVERVIEW: GLOBAL:

Global activity continued to be supported by domestic demand, easing financial conditions and investment in technology and artificial intelligence, although the recovery remained uneven across economies. According to the World Bank’s Global Economic Prospects, January 2026, global growth is projected at 2.6% in 2026 and 2.7% in 2027, while global inflation is expected to decline to 2.6% in 2026. The WTO, in its March 2026 Global Trade Outlook and Statistics, projected merchandise trade volume growth of 1.9% in 2026, following 4.6% growth in 2025. While AI-related products and digitally enabled services continue to support global trade, elevated energy prices and shipping disruptions remain key risks.

INDIAN:

India remained the fastest-growing major economy, with real GDP growth accelerating to 7.6% in F.Y. 2025 26 from 7.1% in the previous financial year. Growth was supported by robust domestic demand, resilient private consumption, low inflation, tax measures and more accommodative monetary conditions, with manufacturing and services contributing significantly. Going forward, India’s growth is projected to moderate to 6.6% in F.Y. 2026 27, primarily due to higher energy prices and supply-chain disruptions arising from the ongoing geopolitical situation. Nevertheless, structural reforms, trade agreements, a diversified trade base and an improving business environment are expected to support investment, trade and foreign direct investment inflows and strengthen medium-term growth prospects.

2. CHEMICAL INDUSTRY OVERVIEW:

Globally, the chemical industry remained under pressure during F.Y. 2025 26 amid weak demand, excess capacity, geopolitical tensions, trade policy uncertainties and volatility in energy and raw material prices. Persistent oversupply, particularly in basic chemicals, continued to impact operating rates and profit margins, while changing trade dynamics and supply-chain disruptions increased uncertainty around investments. Companies focused on cost optimisation, cash preservation, portfolio rationalisation, supply-chain resilience, diversified sourcing and disciplined capital expenditure. Despite the challenging environment, innovation, digitalisation and artificial intelligence continued to support operational efficiency and competitiveness, while technology-driven segments offered growth opportunities.

India’s chemical industry remained an important contributor to the country’s manufacturing and export landscape during F.Y. 2025 26, supported by strong domestic demand, a diversified manufacturing base, skilled manpower and increasing integration with global chemical value chains. India has an extensive global market presence, with chemical products exported to more than 175 countries. The specialty chemicals segment continued to offer significant growth opportunities, supported by increasing demand from pharmaceuticals, agrochemicals, automotive, construction, electronics and other high-value end-use industries. Growing emphasis on research and development, product innovation, sustainable manufacturing and supply-chain diversification is expected to further strengthen India’s position as a preferred manufacturing and sourcing destination for chemicals.

2.1 SPECIALTY CHEMICALS INDUSTRY:

GLOBAL:

The global specialty chemicals market was estimated at approximately US$782 billion in 2025 and is projected to reach around US$1,059 billion by 2030, registering a CAGR of approximately 5.2% during 2026 2030.

INDIAN:

The Indian specialty chemicals market was estimated at approximately US$64.5 billion in 2024 and is projected to reach around US$92.6 billion by 2033, registering a CAGR of approximately 3.8% during 2025-2033. The sector is expected to benefit from increasing demand from pharmaceuticals, agrochemicals, personal care and other specialised applications, along with investments in research and development, technological advancement and sustainable manufacturing.

2.2 ACTIVE PHARMA INGREDIENTS (API) & INTERMEDIATES INDUSTRY:

GLOBAL:

The global Active Pharmaceutical Ingredients (API) market continued to witness steady growth, supported by increasing pharmaceutical production, rising demand for generic medicines, growing healthcare expenditure and the increasing outsourcing of API manufacturing. The global API market was valued at approximately US$255.0 billion in 2024 and is projected to reach around US$359.5 billion by 2030, registering a CAGR of approximately 5.8% during 2025 2030. The chemical intermediates market also continued to expand, supported by increasing demand from pharmaceutical, agrochemical and other downstream industries. Government initiatives aimed at strengthening domestic API manufacturing and reducing dependence on concentrated supply chains are expected to further support the sector.

DOMESTIC:

India continues to hold a significant position in the global API manufacturing landscape, supported by its established pharmaceutical industry, strong chemical manufacturing capabilities, skilled workforce, cost competitiveness and improving manufacturing infrastructure. The Indian API market was valued at approximately US$17.77 billion in 2024 and is projected to reach around US$38.60 billion by 2033, registering a CAGR of approximately 8.1% during 2025 2033. India is among the leading global API producers, manufacturing more than 500 APIs and supplying a significant share of the global generic pharmaceutical market. Increasing demand for generic medicines, growing outsourcing of API manufacturing, supply-chain diversification and the need for reliable and cost-effective sources of pharmaceutical ingredients are expected to support continued growth of the Indian API and intermediates industry.

COMPANY OVERVIEW:

Your Companys journey is defined by long-term value creation and a steadfast commitment to global manufacturing benchmarks:

Historical Legacy: Established in 1983 as a small manufacturing unit in Ankleshwar, Gujarat (Asias largest chemical corridor), the Company has matured into a trusted partner for intermediates catering to the API, Dyes and Pigments sectors.

Quality & Sustainability Accreditation: Our operational protocols strictly adhere to international frameworks, evidenced by our ISO 9001:2015, ISO 14001:2015, and ISO 50001:2018 systems, complemented by a recognized ‘Committed’ sustainability rating from EcoVadis.

Core Philosophy: We continue to aggressively strengthen our domestic and international footprint guided by our Core philosophy of Quality, Consistency, and Reliability

Leveraging more than four decades of technical expertise and deep institutional knowledge, Chemcrux continues to systematically scale its industry footprint. Following the successful commissioning of our Ankleshwar facility expansion last year, which doubled our total reaction capacity to 250 KL, the current fiscal period focused on optimizing plant utilization to meet demand from both legacy and newly developed markets. Furthermore, our utility cost structure has fundamentally improved: the long-term Steam Purchase Agreement continue to shield us from volatile energy markets and sustain lower overall utility baselines per kilogram.

To further institutionalize our corporate governance and expand our social footprint, the Company has incorporated Chemcrux Foundation (Section 8 company) as a wholly owned subsidiary; it will serve as our centralized vehicle for driving sustainable community development and executing the groups Corporate Social Responsibility (CSR) initiatives moving forward.

3. STRENGTHS & OPPORTUNITIES:

Driven by our core strength as a key Indian producer of Chloro Nitro Benzoic Acids and amide derivatives, your Company constantly translates market needs into reliable business opportunities. Backed by mature, in-house R&D facility, we consistently mitigate operational risks and protect our competitive edge. Operating out of the established chemical corridor of Ankleshwar, we leverage proximity to key supplier networks and customer clusters to optimize our supply chain and shorten lead times. In line with our stated strategy, your Company continues to actively expand its downstream derivative pipeline, leveraging the universal demand for these essential industrial building blocks to accelerate our growth.

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. While your Company remains highly optimistic about its long-term strategic growth initiatives, our operational landscape faces certain systemic market risks that require continuous mitigation. Adverse developments in the broader chemical sectors, combined with sharp fluctuations in the pricing and availability of key raw materials, can exert sudden pressure on our product realizations and operating margins. Furthermore, your Company operates in a competitive environment, facing competition from both domestic and international manufacturers, in some of the product ranges. The persistent availability of lower-priced or duty-free imports, particularly from China, alongside global excess market supply and potential product substitution, continues to impact domestic market dynamics and pricing elasticity. To protect our market share and safeguard corporate profitability against these external pressures, the management maintains an aggressive focus on continuous in-house R&D, structural utility cost reductions, and advanced downstream product diversification.

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:

Commercial momentum will be driven by the full utilization of our recently completed expansion at Ankleshwar. On the corporate front, Kalichem Private Limited has transitioned smoothly into a wholly owned subsidiary. Moving beyond its organic chemical roots, Kalichem Private Limited has systematically initiated a long-term growth strategy to diversify the broader groups footprint.

Kalichem’s Consent to Establish (CTE) Amendment application to add a variety of inorganic chemical products at its manufacturing facility has been approved by Gujarat Pollution Control Board (GPCB). This critical expansion into inorganic chemicals serves as an additional growth engine, buffering the group against cyclical shifts in the organic intermediates market. Commercial production is likely to commence immediately upon the receipt of the Consolidated Consent and Authorization (CCA). Backed by this imminent operational activation, the company remains hopeful of delivering significantly improved consolidated financial results moving forward.

Alongside these operational expansions, our community development and social welfare initiatives will be deeply institutionalized through the newly incorporated Chemcrux Foundation. Backed by these strategic pillars, management remains highly optimistic that our positive incremental financial trend will continue into the future, and we remain fully committed to doing our absolute best under prevailing circumstances to maximize value for 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:

As reflected in the financial statements, your Company delivered strong financial momentum during the fiscal period under review. The Company’s topline increased by 18.76%, while the bottom line demonstrated a robust expansion of 30.11% compared to the preceding year. This parallel growth in revenue and profitability was primarily driven by an improved pricing environment that enhanced overall product realizations and expanded operating margins. The Financial Highlights of the Company are summarized in table below: (In Lakhs, except EPS)

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

For the year ended 31st March 2026, 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 is central to your Company’s success and operational resilience. As of 31st March 2026, our total headcount stood at 99 employees, executing their mandates with high harmony across all departments. The Company rolled out the Chemcrux Enterprises Employee Stock Option Scheme (ESOP 2025/ Scheme). By granting initial stock options under this scheme to eligible employees who have completed 10 or more years of service, allocating 100 shares for each completed year; the Company successfully aligns talent retention and veteran employee performance with long-term shareholder value creation. We continue to invest in regular workforce training to maximize skill upgradation and future-readiness. Driven by a culture of workplace safety, occupational health, and deep ethical standards, the Company continues to cultivate an environment optimized for long-term productivity.

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.