Crestchem Ltd Management Discussions

1. Industry Structure and Developments

Medium Chain Triglyceride (MCT) Oil is a specialty lipid manufactured primarily from coconut oil and palm kernel oil. It is widely used in nutraceuticals, pharmaceuticals, clinical nutrition, sports nutrition, infant nutrition, functional foods, cosmetics and personal care products.

The global and Indian MCT market continues to witness healthy growth due to increasing consumer awareness regarding preventive healthcare, ketogenic diets, sports nutrition and functional foods. Growing demand from pharmaceutical and medical nutrition applications, coupled with increasing acceptance of clean-label ingredients, is expected to support long-term industry growth. India is also emerging as an important manufacturing hub due to expanding healthcare and food processing industries.

The Company has expanded its strategic focus into the specialty chemicals and nutraceutical ingredients sector through the incorporation of Oleo Biosciences Private Limited, Bengaluru, as a subsidiary. The subsidiary has been established to manufacture Medium Chain Triglyceride (MCT) Oil, a high-value specialty lipid widely used in nutraceuticals, pharmaceuticals, clinical nutrition, functional foods, sports nutrition and personal care products.

The global demand for MCT Oil continues to grow, driven by increasing health consciousness, expanding applications in clinical and functional nutrition, and rising demand for premium specialty ingredients. The Indian market also presents significant opportunities due to the growth of the pharmaceutical, nutraceutical and food processing industries, coupled with increasing export potential.

Project Implementation and Outlook

During the year, the Company incorporated its subsidiary, Oleo Biosciences Private Limited, Bengaluru, to implement the MCT Oil manufacturing project.

The process of procurement, purchase and installation of plant and machinery, utilities and other manufacturing equipment is presently underway. The project is progressing in accordance with the implementation schedule, and the management is making continuous efforts to ensure timely completion.

Subject to timely completion of installation, successful commissioning, statutory approvals and trial production, the Company expects to commence commercial production during the fourth quarter of the Financial Year 2026-27.

Upon commencement of operations, the subsidiary proposes to cater to both domestic and international markets, with emphasis on pharmaceutical, nutraceutical, food and personal care industries. The project is expected to diversify the Companys business portfolio, enhance long-term growth prospects and create sustainable value for stakeholders.

Opportunities and Future Prospects

The proposed MCT Oil manufacturing project is expected to provide several growth opportunities, including:

• Entry into the high-value specialty lipid market.

• Increasing demand from nutraceutical, pharmaceutical and clinical nutrition industries.

• Significant export opportunities in regulated international markets.

• Product diversification and value addition.

• Scope for development of customised and premium-grade MCT products.

• Potential for strategic alliances with domestic and overseas customers.

The management remains confident that, upon successful commissioning of the project, the subsidiary will contribute meaningfully to the Companys long-term revenue growth and profitability.

Risks and Concerns

As the project is currently under implementation, the Company continues to monitor project execution risks, including procurement timelines, installation and commissioning schedules, availability of utilities, regulatory approvals, cost escalations and market conditions. Appropriate project management and internal monitoring mechanisms have been established to minimise these risks and facilitate timely completion of the project.

2. Opportunities and Threats Opportunities

• Rising demand for nutraceutical and functional food ingredients.

• Increasing exports to North America, Europe and Asia-Pacific.

• Growing pharmaceutical and medical nutrition applications.

• Expansion of personal care and cosmetic industries.

• Government initiatives promoting value-added specialty chemicals and food processing.

• Increasing consumer preference for healthier edible oils and specialty ingredients.

Threats

• Volatility in prices of coconut oil and palm kernel oil.

• Supply chain disruptions and freight cost fluctuations.

• Stringent international food safety and pharmaceutical quality standards.

• Exchange rate fluctuations affecting export competitiveness.

• Increasing competition from global manufacturers.

3. Segment-wise Performance

The Company primarily operates in the specialty lipid segment through the manufacture and sale of Medium Chain Triglyceride Oil. Revenue is generated from domestic as well as export markets catering to pharmaceutical, nutraceutical, food processing and personal care industries. The Company continues to focus on value-added products, customer-specific formulations and expansion into international markets.

4. Outlook

The outlook for the MCT Oil industry remains positive. Growing awareness regarding preventive healthcare, clinical nutrition and sports nutrition is expected to drive sustained demand. Expansion in pharmaceutical manufacturing, increasing adoption of ketogenic diets and rising demand for functional ingredients are likely to provide significant growth opportunities.

The Company intends to strengthen its market position by:

• Expanding manufacturing capacity.

• Developing high-purity specialty MCT grades.

• Increasing exports.

• Investing in research & development.

• Strengthening quality systems complying with international standards such as GMP, HACCP, FSSC 22000 and ISO certifications.

5. Risks and Concerns

The Company continuously monitors key business risks, including:

• Raw material price volatility.

• Foreign exchange fluctuations.

• Regulatory compliance in domestic and export markets.

• Customer concentration risk.

• Technological changes.

• Environmental, health and safety compliance.

• Geopolitical uncertainties affecting international trade.

Appropriate risk mitigation measures, including strategic sourcing, inventory planning, quality assurance and financial risk management, are implemented to minimise business risks.

As the project is currently under implementation, the Company continues to monitor project execution risks, including procurement timelines, installation and commissioning schedules, availability of utilities, regulatory approvals, cost escalations and market conditions. Appropriate project management and internal monitoring mechanisms have been established to minimise these risks and facilitate timely completion of the project.

6. Internal Control Systems and Their Adequacy

The Company has established an adequate system of internal controls commensurate with the size and nature of its business. Internal controls ensure:

• Safeguarding of assets.

• Accuracy of accounting records.

• Compliance with applicable laws and regulations.

• Efficient utilisation of resources.

• Prevention and detection of fraud.

Internal audits are conducted periodically, and significant observations are reviewed by the Audit Committee for appropriate corrective actions.

7. Financial Performance

During the year, the Company focused on improving operational efficiency, product quality and customer satisfaction. Cost optimisation initiatives, efficient procurement practices and enhanced production planning contributed towards improved operating performance. The management remains committed to maintaining healthy profitability while pursuing sustainable growth.

8. Human Resources

The Company believes that its employees are its most valuable asset. Continuous training, technical skill development, workplace safety and employee engagement remain key priorities. Industrial relations remained cordial throughout the year.

9. Environment, Health and Safety

The Company is committed to sustainable manufacturing practices. It complies with applicable environmental laws and continuously invests in pollution control, energy conservation, waste minimisation and occupational health & safety measures. The Company promotes responsible manufacturing while maintaining high standards of product quality and environmental stewardship.

10. Cautionary Statement

Statements made in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may constitute "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially due to changes in economic conditions, government policies, market demand, raw material prices, foreign exchange fluctuations, competition and other factors beyond the control of the Company. The Company undertakes no obligation to publicly update or revise any forward-looking statements.