Deepak Chemtex Ltd Management Discussions

OVERVIEW OF BUSINESS:

We are primarily engaged in the business of manufacturing of colorants finding its application in Food, Drug, Cosmetics, Cleaning compounds, Agriculture and other industries. Colorants are formulations of chemical intermediates, pigments or dyes and additives used to add colour to various consumables. We commenced our business in 1997 and have over the years evolved into manufacturing of a complete range of FD&C (Food, Drug and Cosmetic) colours used in the confectionary, bakery, desserts, beverages, dairy products, seasonings, pet foods, pharmaceutical products, cosmetics & personal care products. We also manufacture salt free dyes used in inkjet industry, pond dyes used in in ponds, lakes, swimming pools etc. and other colorants used in car wash products, portable sanitation cleaners, detergent & soap, fuel, oil & lubricants, smoke, seed treatment, crop protection, fertilizer indicators, floral dyes etc.

Our manufacturing facility is situated at Ratnagiri District in Maharashtra and is equipped with glass lined reactors, boilers and stainless-steel equipments and gets audited on a regular basis by our clients. We use various production processes like: Sulphonation, Condensation, Bromination, Oxidation, Reduction, High pressure reactions, Purification etc. which enables us to cater to niche and advanced requirements of a wider range of end-products and applications. We manufacture colorants from unwanted salts and isomers.

We are exporting to countries like: China, France, Kenya, Mexico, Europe, Japan, Australia, United Kingdom, United States of America etc. We have successfully expanded our commercialized product portfolio from around 50 products in Fiscal 2021 to around 100 products in Fiscal 2023. The revenue from top 10 products of the company for the stub period ended on September 30, 2023 and Fiscal 2023, Fiscal 2022 and Fiscal 2021 were Rs 1650.73 lakhs, Rs 3,747.56 lakhs, Rs 4,489.66 lakhs and Rs 2,688.89 lakhs which contributed to 75.92% 80.24% 82.97% and 90.97% of our total revenue from operations. We have a diverse base of Indian and global customers who sometimes secure EN 71(European Standard) certifications for our products.

OVERVIEW OF THE INDUSTRY:

Covering more than 80,000 commercial products, Indias chemical industry is extremely diversified and can be broadly classified into bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers, and fertilizers. India is the 6th largest producer of chemicals in the world and 3rd in Asia, contributing 7% to Indias GDP. Indias chemical sector, which is currently estimated to be worth US$ 220 billion in 2022 and is anticipated to grow to US$ 300 billion by 2025 and US$ 1 trillion by 2040.

OPERATING RESULTS OF THE COMPANY

During the financial year ended on March 31, 2026, the total revenue is Rs. 5,648.61 lakhs as compared to revenue of Rs. 7050.35 lakhs in the previous year. The profit before tax stood at Rs. 893 lakhs as against profit of Rs. 1,376.68 lakhs in the previous year. The net profit for the year 2026 stood at Rs. 659.26 lakhs against profit of Rs. 1,006.95 lakhs reported in the previous year.

STRENGTH

We offer a wide range of products with ability to customize. Long standing relationships with diversified customers across geographies In-house manufacturing facility with equipped machines and processes Focus on Quality, Environment, Health and Safety Stable and consistent financial performance Experienced Promoters and Senior Management with extensive domain knowledge

BUSINESS STRATEGIES

Continue to focus on manufacturing by expanding our product portfolio. Continue to reduce operating costs and improve operational efficiencies Continue to strengthen our presence in India and expand our sales and distribution network in international market Continue to focus on our manufacturing capabilities.

COMPETITION

Our competition varies by market, geographic areas and type of product. As a result, to remain competitive in our markets, we must continuously strive to reduce our costs of production, transportation and distribution and improve our operating efficiencies. There are various large and small manufactures that develop similar products that we sell. These players in the industry may have greater financial resources, technology, greater market penetration and operations in diversified geographies and product portfolios, which may allow them to better respond to market and technological trends.

PROSPECT & OUTLOOK

The management is of the view that the future prospects of your Company are bright and the performance in the current year is expected to be very well. The committed customers of the Company are expected to place more orders, which ultimately affect the top line of the Company, positively.

RISKS AND CONCERNS

The Company has taken adequate preventive and precautionary measures to overcome all negative factors responsible for low trend to ensure steady growth.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company has an effective internal control and risk-mitigation system that is continuously assessed and strengthened through the implementation of new or revised standard operating procedures. The internal control system of the company is aligned with its size, scale, and complexity of operations.

The primary focus of the internal audit is to test and review controls, assess risks, evaluate business processes, and compare controls with industry best practices. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and provides recommendations for improvements. The company utilizes a robust Management Information System, which is an integral part of the control mechanism.

The Audit Committee, along with the Statutory Auditors and Business Heads, is regularly briefed on the findings of the internal audit and the corrective actions taken. The audit function plays a vital role in providing assurance to the Board of Directors. Noteworthy audit observations and the corresponding corrective actions implemented by the management are presented to the Audit Committee.

To maintain objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.

HUMAN RESOURCES

Human Resources Development, in all its aspects like training in safety and social values is under constant focus of the management. Relations between the management & the employees at all levels remained healthy & cordial throughout the year. The Management and the employees are dedicated to achieve the corporate objectives and the targets set before the company.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys objectives, expectations, predictions and assumptions may be FORWARD LOOKING within the meaning of applicable Laws and Regulations. Actual results may differ materially from those expressed herein, important factors that could influence the Companys operations include domestic economic Conditions affecting demand, supply, price conditions, and change in Governments regulations, tax regimes, other statutes and other factors such as industrial relations.

For and on behalf of the Board of Directors of Deepak Chemtex Limited

Saurabh Deepak Arora Managing Director DIN:00404150

Trishla Baid Arora Whole-time Director DIN:07063446

Registered Office: Aawashi, 28/1A, A/P Adgul Aawashi, Lote, Ratnagiri, Maharashtra-415722.

Place: Ratnagiri Date: August 24, 2026