Deepak Nitrite Ltd Management Discussions

GLOBAL ECONOMIC SCENARIO

The global economy is undergoing a significant structural transformation as Governments and businesses adapt to an evolving geopolitical and trade landscape. While easing tensions in West Asia have improved near-term sentiment and moderated concerns over energy markets, the broader global environment is increasingly being shaped by supply-chain realignment, regionalisation of manufacturing, and strategic diversification of trade and investment. These structural shifts have been further reinforced by evolving U.S. trade policies, including differential tariff structure, which is accelerating the reconfiguration of global production networks and sourcing strategies. Although the direct impact is concentrated on economies with greater exposure to the U.S. market, the broader implications include trade diversion, changing competitive dynamics, demand patterns and the emergence of alternative manufacturing hubs. As a result, resilience, manufacturing agility, and supply-chain reliability are becoming increasingly important determinants of global trade and long-term economic growth.

Within this evolving landscape, the International Monetary Funds World Economic Outlook (April 2026) projects that global growth will remain around 3.1% in 2026 and stabilising near 3.2% in 2027. At the same time, headline inflation is expected to rise to about 4.4% in 2026, reflecting renewed price pressures amid slowing momentum. These projections incorporate the economic impact of the ongoing conflict in the Middle East, which has disrupted energy markets and heightened global uncertainty. The conflict is acting as a negative supply shock, elevating energy and commodity prices, increasing production and transportation costs, and feeding into broader inflationary pressures. The IMF cautions that any escalation or prolongation of the conflict could further ects on wages eff constrainenergysupply,amplifysecond-round and prices, and tighten financial conditions. Such developments would pose significant upside risks to inflation while weakening global growth prospects, underscoring the heightened vulnerability of the global economy in an increasingly fragmented geopolitical environment.

Economic performance continues to diverge across regions. The United States has demonstrated relative resilience, supported by consumption and fiscal spending, although labour market trends remain mixed. Europe continues to face constraints from weak industrial activity and structural challenges linked to the energy transition. Chinas growth remains stable but is weighed down by weak domestic demand and ongoing adjustments in the real estate sector. In contrast, emerging markets, particularly India and select Southeast Asian economies, are exhibiting stronger momentum, supported by domestic demand and supply chain diversification.

A defining feature of the current macroeconomic environment is the increasing influence of geopolitical developments on economic outcomes. The recent escalation of conflict in the Middle East has added a new layer of uncertainty, disrupting critical trade routes, affecting global logistics, and contributing to volatility in energy and commodity markets. These developments are also influencing inflation expectations and financial conditions, with risk aversion rising intermittently across global markets.

The global trade dynamics are undergoing a structural transformation. While trade flows remain resilient, the ongoing reconfiguration of supply chains continues, with increased regionalisation and diversification of sourcing. At the same time, geopolitical tensions and evolving trade policies are contributing to a more fragmented global trade environment. Disruptions to key shipping routes and higher transportation costs are adding to supply chain complexities.

Looking ahead, the global economic outlook remains balanced between stabilising macro fundamentals and evolving risks. The trajectory of geopolitical developments, commodity prices, and monetary policy easing will play a critical role in shaping outcomes. In this environment, resilience, efficiency, and adaptability will remain central to sustaining growth across economies and industries.

Sources:

• International Monetary Fund, World Economic Outlook, April 2026 Update, available at: https://www.imf.org/en/publications/weo/ issues/2026/04/14/world-economic-outlook-april-2026

• International Monetary Fund, World Economic Outlook, January 2026 Update, available at: https://www.imf.org/en/publications/ weo/issues/2026/01/19/world-economic-outlook-update-january-2026?utm

• World Bank, Global Economic Prospects, January 2026, available at: https://desapublications.un.org/publications/world-economic-situation-and-prospects-2026?utm

• Organisation for Economic Co-operation and Development (OECD), Economic Outlook, December 2025, available at: https:// www.oecd.org/en/publications/2025/12/oecd-economic-outlook-volume-2025-issue-2_413f7d0a/full-report/general-assessment-of-the-macroeconomic-situation_981ac2bf.html?utm

• McKinsey & Company, From Challenges to Possibilities: Leading

Indias Chemical Industry Through Global Headwinds, March 2026, available at https://www.mckinsey.com/industries/chemicals/our-insights/from-challenges-to-possibilities-leading-indias-chemical-industry-through-global-headwinds#/

Asia:

Asia remains the primary engine of global economic expansion in 2026, although the nature of its growth is becoming more complex and differentiated. The region is expected to grow at around 4.1% to 4.3% in 2026, reflecting both underlying resilience and emerging external headwinds. At a global level, Asia-Pacific continues to account for a significant share of incremental GDP growth, reinforcing its central role in the global economic landscape.

The era of broad-based expansion in Asia has given way to a more divergent economic landscape. China, while remaining a key pillar, is transitioning toward a slower, more consumption-driven growth model, with expansion constrained by ongoing adjustments in the real estate sector and softer domestic demand. At the same time, its strong export orientation continues to influence regional and global trade dynamics. In contrast, India remains one of the fastest-growing major economies, supported by robust domestic demand, infrastructure investments, and policy-led manufacturing expansion. Southeast Asian economies such as Vietnam, Indonesia, and the Philippines are also gaining prominence, benefiting from supply chain diversification and sustained foreign investment inflows.

The reconfiguration of global supply chains is fundamentally reshaping Asias future. As companies diversify production bases beyond China, ASEAN economies are increasingly emerging as alternative manufacturing hubs. This transition is strengthening intra-regional trade linkages and creating a more distributed manufacturing ecosystem. However, China continues to retain a dominant position in scale manufacturing, resulting in a multi-polar production structure across the region rather than a complete shift away from existing supply chains.

Regional integration continues to support growth momentum. Frameworks such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are facilitating trade flows, improving market access, and strengthening economic cooperation. These agreements are helping offset relatively weaker demand from developed markets by deepening intra-Asia trade corridors.

At the same time, the external environment has become more uncertain. Recent geopolitical developments, including ongoing conflicts in the Middle East and rising trade fragmentation, are contributing to disruptions in key shipping routes and increased volatility in energy and commodity markets. These factors are adding to input cost pressures and inflation risks across several Asian economies, particularly those dependent on energy imports. While inflation has generally moderated, central banks across the region remain cautious, balancing the need for monetary easing with external risks and currency stability considerations.

Moving forward, Asias long-term outlook remains constructive, supported by favourable demographics, rising middle-class consumption, and continued investments in infrastructure and technology. However, the region is entering a more nuanced phase of growth, where performance will increasingly depend on productivity improvements, supply chain positioning, and the ability to navigate a more fragmented and uncertain global economic environment.

Sources:

• International Monetary Fund, World Economic Outlook, April 2026 Update, available at: https://www.imf.org/en/publications/weo/ issues/2026/04/14/world-economic-outlook-april-2026

• International Monetary Fund, Regional Economic Outlook: Asia and Pacific, available at: https://www.imf.org/en/publications/reo/apac/ issues/2025/10/24/regional-economic-outlook-for-asia-and-pacific-october-2025

• International Monetary Fund, World Economic Outlook, January 2026 Update, available at: https://www.imf.org/en/publications/weo/ issues/2026/01/19/world-economic-outlook-update-january-2026?utm

• News Articles – Whos Powering Global Economic Growth in 2026?: https://www.visualcapitalist.com/who-is-powering-global-economic-growth-in-2026/

Snapshot of projected global growth trends

	Projections
Particular	2025	2026E	2027E
World Output	3.4	3.1	3.2
Advanced Economies	1.9	1.8	1.7
United States	2.1	2.3	2.1
Euro Area	1.4	1.1	1.2
Japan	1.2	0.7	0.6
United Kingdom	1.3	0.8	1.3
Other Advanced Economies	3.0	2.6	2.2
Emerging Market and Developing	4.4	3.9	4.2
Economies
China	5.0	4.4	4.0
India	7.6	6.5	6.5

IMF Report April 2026

INDIAN ECONOMIC SCENARIO

India continues to be the fastest-growing major economy in FY 2025-26, supported by strong domestic fundamentals and policy continuity. According to the International Monetary Funds World Economic Outlook (April 2026), Indias GDP is projected to grow around 6.5% in 2026 and 6.5% in 2027. While this reflects a normalisation from recent highs, growth remains well above global averages, highlighting the resilience of the Indian economy amid a challenging global environment.

Growth is increasingly driven by domestic demand, with private consumption supported by rising incomes, improving rural sentiment, and a growing middle class. Public capital expenditure continues to play a pivotal role in sustaining the investment cycle, while the services sector remains a key driver of economic activity. Manufacturing is also gaining momentum, supported by policy initiatives and ongoing shifts in

Dissecting GDP Performance

The moderation in Indias growth trajectory reflects a normalisation rather than any structural weakening. In recent years, growth has been supported by strong Government-led capital expenditure and resilient consumption. However, external factors such as softer global demand, trade disruptions, and geopolitical developments have weighed on export performance. Disruptions in key shipping routes and volatility in energy markets have also increased logistics costs and added uncertainty for export-oriented sectors.

At a structural level, Indias growth continues to be anchored in domestic demand. Private consumption remains a key stabilising force, supported by rising incomes, improving rural conditions, and steady urban demand. Rural consumption has benefited from favourable monsoons and stable agricultural output, while urban demand continues to be driven by services-led income growth.

Investment activity remains a critical pillar, driven by sustained public capital expenditure and a gradual recovery in private sector capex. Government spending on infrastructure is helping crowd in private investment, improving capacity utilisation and supporting industrial expansion.

The services sector continues to anchor growth, with strong performance across financial services, IT, and trade. Manufacturing is also gradually strengthening, supported by policy incentives and increasing integration into global value chains, although it remains sensitive to external demand conditions.

Overall, Indias growth composition is becoming more balanced, with domestic demand providing stability, while investment and manufacturing are emerging as incremental drivers of growth.

Budget 2026-27: Policy Direction and Growth Impetus

On February 1, 2026, Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27, outlining the Governments with a continued focus on economic growth, infrastructure development, and structural reforms.

The Budget reinforces the Governments emphasis on public capital expenditure as a key growth lever, alongside measures aimed at supporting consumption and enhancing productivity. Continued investments in infrastructure, logistics, and urban development are expected to strengthen the investment cycle and improve overall economic efficiency.

Policy support for sectors such as electronics, semiconductors, renewable energy, and advanced manufacturing remains a priority, reflecting Indias increasing integration into global value chains. These sectors are also key demand drivers for the chemicals industry, with rising requirements for Speciality materials, intermediates, and performance chemicals across applications such as construction, mobility, and energy transition. .

In parallel, the Governments continued push towards import substitution and domestic manufacturing under initiatives such as Production Linked Incentive schemes is expected to create opportunities for domestic chemical producers to expand capacities and enhance value addition.

At the same time, the Budget maintains a balanced approach to fiscal consolidation, ensuring that growth is supported without compromising macroeconomic stability.

Navigating Volatility through Fiscal and Market Stability

Indias capital markets have demonstrated resilience amid global volatility, supported by rising participation from domestic institutional investors. This has reduced dependence on foreign capital flows and enhanced market stability, contributing to sustained investor confidence.

A deepening financial ecosystem, supported by a well-capitalised banking system and improving credit growth, is enabling efficient capital allocation and supporting investment-led expansion.

On the fiscal front, the Government continues to pursue a calibrated consolidation path, with the fiscal deficit trending downward while maintaining a strong focus on productive capital expenditure. Improved revenue collections and disciplined spending are helping sustain infrastructure investments and economic momentum.

Outlook and Risks

Indias near-term outlook remains stable but subject to a range of external and domestic risks. Global trade fragmentation, geopolitical tensions, and commodity price volatility, particularly in energy markets, could weigh on exports and industrial growth. Disruptions in key global shipping routes have also added to logistics costs and introduced uncertainty in trade flows.

Inflation, although moderating, continues to warrant close monitoring, leading the Reserve Bank of India to maintain a cautious policy stance. Food price volatility and movements in global energy prices remain key upside risks. In addition, evolving global financial conditions and capital flow dynamics could influence currency stability and domestic liquidity.

The pace of private investment recovery and global demand conditions will also play an important role in shaping near-term growth. At the same time, Indias strong domestic demand base, improving financial sector health, and ongoing structural reforms provide resilience against external shocks.

Looking ahead, Indias long-term growth trajectory remains favourable, supported by demographics, policy continuity, and sustained investments in infrastructure and technology. Increasing integration into global value chains, alongside a large and expanding domestic market, is expected to support continued economic expansion. Despite near-term uncertainties, India remains well positioned to sustain its status as one of the fastest-growing major economies globally.

Sources:

• International Monetary Fund, World Economic Outlook, January 2026 Update, available at: https://www.imf.org/en/publications/ weo/issues/2026/04/14/world-economic-outlook-april-2026

• International Monetary Fund, World Economic Outlook, January 2026 Update, available at: https://www.imf.org/en/publications/ weo/issues/2026/01/19/world-economic-outlook-update-january-2026?utm

• Government of India, Union Budget 2026–27, available at: https:// www.indiabudget.gov.in/

• Ministry of Statistics and Programme Implementation (MOSPI), Provisional Estimates of National Income 2024–25 and Quarterly GDP Estimates, available at: https://www.mospi.gov.in/uploads/ latestReleases/latest_release_1767781372753_1380ce82-f5a5-440d-99e6-e6b35af0deb5_GDP_Press_Note_on_FAE_2025-26.pdf

INDUSTRY OUTLOOK AND TRENDS

The global chemical industry is entering a new era defined less by cyclical recovery and more by long-term structural transformation. After a prolonged period of China-led dominance and post-pandemic tailwinds, the industry is now navigating a more complex environment characterised by capacity imbalances, evolving demand patterns, and increasing regional fragmentation.

A defining feature of the current cycle is persistent overcapacity across major petrochemical chains, particularly in ethylene, propylene, and aromatics, driven by continued capacity additions in China. This has led to lower global operating rates and sustained pressure on margins and pricing. At the same time, prolonged inventory destocking and weaker demand across key end-use industries have delayed margin recovery, signalling a departure from earlier periods of broad-based growth.

Despite these headwinds, the industry is showing early signs of stabilisation. Demand is gradually recovering across key sectors, while input cost moderation and supply-side adjustments are supporting a gradual improvement in profitability. However, growth is expected to become increasingly selective, with value creation shifting toward differentiated segments, structurally advantaged regions, and companies with strong cost and technology capabilities.

Shifting Industry Dynamics

The industry is undergoing a transition from volume-led expansion to value-driven growth, with companies increasingly prioritising portfolio optimisation, capital discipline, and operational efficiency. This shift is also driving consolidation, asset rationalisation in high-cost regions such as Europe, and a reallocation of capital toward growth markets in Asia.

At a regional level, divergence is becoming more pronounced. While China continues to influence global pricing dynamics through scale and exports, Southeast Asia and India are emerging as incremental growth hubs, supported by supply chain diversification, favourable cost structures, and rising domestic demand. In parallel, feedstock and energy cost advantages are increasingly shaping global competitiveness, with regions such as the United States and the Middle East benefiting from lower input costs, while Europe faces structural disadvantages due to elevated energy prices. This evolving multi-polar production landscape is reshaping global trade flows and investment decisions.

Key Trends Shaping the Chemical Industry

Supply Chain Reconfiguration and Regionalisation

Geopolitical developments and trade fragmentation are accelerating the shift toward regional supply chains. Companies are diversifying production bases and investing in alternative manufacturing hubs to enhance resilience and reduce dependence on single geographies.

Rise of High-Value and New-Age Chemical Segments

Growth is increasingly concentrated in high-value segments such as Speciality chemicals, advanced polymers, battery chemicals, and sustainable materials among others. These emerging value pools, linked to sectors such as electric mobility, renewable energy, and electronics, are expected to represent a significant share of future industry growth, with market opportunities approaching US$ 1 trillion over the next decade.

Customer-Centric and Application-Led Innovation

The industry is witnessing a shift from product-centric models to solution-oriented approaches, with increasing collaboration between chemical companies and end-use industries. Co-development of customised formulations and materials is enabling faster innovation cycles and stronger integration across sectors such as automotive, electronics, and healthcare.

Sustainability and Energy Transition

Decarbonisation is becoming a strategic priority, with companies investing in low-carbon technologies, circular economy solutions, and alternative feedstocks. Sustainability is evolving into a key driver of portfolio transformation and competitive positioning.

Digitalisation and AI-led Transformation

The adoption of advanced analytics, artificial machine learning and digital technologies is transforming the chemical value chain. Applications across R&D, manufacturing, and supply chains are improving efficiency, accelerating innovation, and enhancing decision-making.

Capital Discipline, Portfolio Realignment and Working Capital Optimisation

In response to margin pressures, companies are focussing on improving returns through disciplined capital allocation, cost optimisation, and strategic portfolio adjustments toward higher-margin businesses. Tighter working capital management, particularly inventory optimisation and demand forecasting, is emerging as an important lever for sustaining profitability.

Ecosystem Partnerships and Business Model Innovation

Companies are increasingly exploring collaborative models involving suppliers, customers, and technology partners to enhance innovation and efficiency. Digital platforms, integrated value chains, and service-led approaches are gaining traction.

Emerging Disruptions & Opportunities

The industry continues to face multiple structural and cyclical challenges. Margin pressure driven by persistent overcapacity remains a key concern, with pricing pressures likely to persist in the near term.

Demand across end-use industries remains uneven and cyclical, with sectors such as agrochemicals, construction, automotive, and electronics experiencing periodic slowdowns. This has resulted in a more fragmented and less predictable demand environment compared to earlier cycles.

Geopolitical developments, evolving global trade policies, and energy price volatility continue to pose significant risks, particularly for energy-intensive operations. The reconfiguration global trade flows and increasing supply-chain diversification are reshaping competitive dynamics across the chemical industry. As multinational customers seek to enhance supply-chain resilience, manufacturers with integrated operations, diversified product portfolios, and reliable execution capabilities are expected to benefit. However, disruptions in key shipping routes, redirected trade flows, and changing regional supply-demand balances are increasing freight costs, extending lead times, and intensifying pricing pressure across several product categories. In addition, Chinas expanding export footprint, supported by surplus capacity, continues to heighten global competition and exert downward pressure on prices, reinforcing the need for operational efficiency, product differentiation, and strong customer relationships to sustain competitiveness.

At the same time, the industry faces increasing capital intensity, driven by the need for investments in decarbonisation, technology upgrades, and capacity modernisation. This, coupled with lower utilisation rates, is putting pressure on returns and increasing the importance of disciplined capital allocation.

Regulatory divergence across regions is adding complexity, with differing environmental standards and compliance requirements increasing operational costs and affecting competitiveness. In addition, the availability of skilled talent, particularly in areas such as digital technologies and sustainability, is emerging as a constraint for industry transformation.

Energy Transition and Sustainable Chemistry: The shift towards low-carbon production is accelerating investments in renewable energy integration, green hydrogen, and circular feedstocks. Companies that move early in sustainable chemistry are likely to gain cost and regulatory advantages over time.

AI-Driven Operations and Innovation: Artificial intelligence, machine learning and advanced analytics are improving process efficiency, enabling predictive maintenance, and accelerating material discovery. These capabilities are reducing costs while shortening product development cycles.

Feedstock and Energy Cost Volatility: Volatility in crude oil, natural gas, and other key inputs continue to influence cost structures across regions. Producers with access to advantaged feedstock sources are better positioned to sustain margins.

Regionalisation of Supply Chains: Companies are increasingly building regional manufacturing and sourcing networks to mitigate geopolitical and logistics risks. This is reshaping trade flows and creating new manufacturing hubs, particularly in Asia.

Shift Towards High-Value Applications: Demand growth is increasingly linked to sectors such as electric mobility, semiconductors, and renewable energy. This is accelerating the transition toward Speciality and performance chemicals with stronger growth visibility.

Macroeconomic and Geopolitical Disruptions: Ongoing geopolitical developments, trade policy shifts, and regional conflicts continue to influence global trade flows and supply chains. Volatility in energy markets and disruptions in key shipping routes are increasing input costs and logistics complexity, requiring companies to enhance supply chain flexibility and risk management.

Outlook

The global chemical industry is moving toward a more disciplined and structurally selective growth phase, where competitive advantage will increasingly depend on differentiation, innovation, and resilience. While near-term volatility may persist due to overcapacity and geopolitical uncertainties, long-term growth drivers remain intact.

Expanding demand from emerging applications such as renewable energy, electric mobility, semiconductors, and advanced materials is expected to create new avenues for value creation. At the same time, India is well positioned to benefit from these shifts, supported by strong domestic demand, policy support, and increasing integration into global value chains.

Going forward, companies that successfully combine cost competitiveness, sustainability, digital capabilities, and supply chain agility will be best positioned to navigate this evolving landscape and capture the next phase of industry growth.

Source:

• McKinsey & Company, From Challenges to Possibilities: Leading

Indias Chemical Industry Through Global Headwinds, March 2026, available at https://www.mckinsey.com/industries/chemicals/our-insights/from-challenges-to-possibilities-leading-indias-chemical-industry-through-global-headwinds#/

• EY-Parthenon, Envisioning the Future of Indias Chemicals and Petrochemicals Industry, January 2026, available at: https://www. ey.com/en_in/insights/energy-resources/envisioning-the-future-of-india-s-chemicals-and-petrochemicals-industry

• International Monetary Fund, World Economic Outlook, January 2026 Update, available at: https://www.imf.org/en/publications/ weo/issues/2026/01/19/world-economic-outlook-update-january-2026?utm

• ICIS, Chemicals Market Data, Pricing and Industry Insights, available at: https://www.icis.com

INDIAN CHEMICAL INDUSTRY

The Indian chemical industry continues to play a critical role in the countrys economic landscape, ranking among the top six globally and third in Asia in terms of production. As a highly diversified sector with over 80,000 commercial products, it serves as a key enabler for industries such as agriculture, textiles, automotive, pharmaceuticals, and construction among others. Indias broad product base, strong domestic market, and growing export presence position the industry as a key pillar of industrial growth.

In the face of macro adversities, India continued to strengthen its position as a preferred manufacturing destination. Robust domestic demand, improving industrial activity, supportive policy initiatives, and the ongoing diversification of global supply chains created favourable conditions for long-term growth. Government initiatives such as ‘Atmanirbhar Bharat and ‘Make in India, together with an increasing emphasis on supply-chain resilience and import substitution, continued to encourage investments in domestic manufacturing capabilities and accelerate the development of integrated value chains across several strategic sectors.

The sectors long-term outlook remains robust, supported by rising domestic consumption, favourable demographics, and increasing industrialisation. The industry is expected to reach approximately US$ 400 billion by 2030 and has the potential to scale up to US$ 1 trillion by 2040. This expansion is supported by increasing demand, policy initiatives, and rising investments across the value chain.

At the same time, the industry is entering a new phase where scale, integration, and value addition will define competitiveness. Indian chemical companies have built strong capabilities over the past two decades, including process expertise, operational reliability, and global customer relationships. The next phase of growth will require moving beyond incremental expansion toward building globally competitive, large-scale platforms.

Market Dynamics and Growth Drivers

While our structural growth thesis remains intact, the industry is currently navigating an increasingly complex global macro-environment. Demand across key end-use segments is recovering at a measured pace; however, persistent global supply-demand imbalances, exacerbated by significant capacity additions in China, continue to exert pricing pressure across several chemical value chains.

Having said that, India is increasingly emerging as a competitive alternative manufacturing hub as global companies diversify supply chains. Strong domestic demand provides a stable base, while export opportunities are expanding as customers seek reliable and diversified sourcing partners.

A critical structural opportunity lies in import substitution and value chain integration. India currently imports a significant share of its base chemical requirements, with imports rising faster than exports and creating a widening trade gap. Key segments such as polymers, intermediates, and Speciality chemicals continue to have substantial import dependence, highlighting gaps in domestic integration and scale.

This creates a clear opportunity for Indian players to build capabilities across missing links in the value chain, moving from fragmented production to more integrated and globally competitive operations.

Segment-wise, Speciality chemicals, agrochemicals, and petrochemicals continue to be key growth drivers. The Speciality chemicals segment is witnessing steady growth, supported by demand from sectors such as agriculture, construction, and automotive, along with increasing focus on high-performance and application-specific products.

Investment and Policy Initiatives

The Government of India continues to play an active role in strengthening the sectors competitiveness through targeted policy support and infrastructure development. Initiatives such as Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs) are attracting significant investments and enabling the development of integrated manufacturing ecosystems.

Policy measures aimed at boosting domestic manufacturing, including Production Linked Incentive schemes and sector-specific incentives, are encouraging capacity expansion and localisation. Continued investments in infrastructure, logistics, and industrial corridors are improving ease of doing business and reducingsupplychaininefficiencies

Additionally, Indias favourable policy environment, 100% FDI allowance in most chemical segments, and increasing focus on sustainability and green manufacturing are further strengthening the investment outlook for the sector.

The Union Budget 2026-27 has provided a significant boost to Indias chemical sector through a new scheme to support states in establishing three dedicated Chemical Parks on a cluster-based, plug-and-play model. This marks the first direct budgetary support for chemical park infrastructure, aimed at strengthening domestic manufacturing, reducing import dependence, improving environmental compliance, and enhancing Indias global competitiveness in bulk and Speciality chemicals.

Evolving Industry Landscape

The Indian chemical industry is increasingly aligning with global trends such as sustainability, digitalisation, and supply chain resilience. Companies are investing in cleaner technologies, improving energy efficiency, and exploring circular economy solutions to meet evolving regulatory and customer expectations.

At the same time, there is a structural shift from commodity-led growth to application-led and solution-oriented models. Companies are moving closer to end-use industries, focussing on customised formulations and higher-value applications to improve margins and reduce cyclicality.

Another emerging theme is the increasing focus on sunrise sectors such as semiconductors, electric mobility, renewable energy, and advanced materials. These sectors require highly specialised chemicals and materials, creating new opportunities for Indian players to participate in global value chains and build long-term capabilities.

Outlook

The outlook for the Indian chemical industry remains robust, underpinned by resilient domestic demand, favourable policy tailwinds, and Indias growing prominence in the global trade architecture. While near-term headwinds including pricing pressure and global supply-demand imbalances may persist, the sector is strategically positioned to capitalise on structural shifts in global supply chains and evolving consumption trends.

Over the medium to long term, Indias combination of cost competitiveness, skilled workforce, and growing market size is expected to drive sustained growth. The next phase of value creation will depend on the industrys ability to scale operations, deepen value chain integration, and move toward higher-value and application-driven segments, reinforcing its position as a key player in the global chemical industry.

Source

• McKinsey & Company, From Challenges to Possibilities: Leading Indias Chemical Industry Through Global Headwinds, March 2026, available at: https://www.mckinsey.com/industries/chemicals/ our-insights/from-challenges-to-possibilities-leading-indias-chemical-industry-through-global-headwinds#/

• EY-Parthenon, Envisioning the Future of Indias Chemicals and Petrochemicals Industry, January 2026, available at: https://www. ey.com/en_in/insights/energy-resources/envisioning-the-future-of-india-s-chemicals-and-petrochemicals-industry

• BCG - Building The Next Indian Chemical Giant - The 10 Point Blueprint to Scale, available at: https://www.bcg.com/ publications/2026/india-building-the-next-indian-chemical-giant

• IBEF – Chemicals, November 2025, available at: https://www.ibef. org/industry/chemical-industry-india

STRATEGIC EMPHASIS: MINIMISING DEPENDENCY ON IMPORTED CHEMICALS

Indias chemical industry is at a critical juncture where reducing import dependence has become a strategic priority. While the sector has developed a strong manufacturing base and global presence, significant reliance on imports persists across key value chains, including bulk chemicals, intermediates, Speciality chemicals, and polymer derivatives. This dependence exposes the industry to supply disruptions, pricing volatility, and external trade risks.

In recent years, these vulnerabilities have become more visible as global supply chains have been reshaped by geopolitical developments, trade realignments, and logistical disruptions. As a result, strengthening domestic capabilities and enhancing self-reliance is emerging as a key focus area for both policymakers and industry participants.

Structural Challenges of Import Dependency

High Import Intensity Across Value Chains: India imports a significant share of its chemical requirements, particularly in polymers, intermediates, and Speciality chemicals. The import bill has grown steadily, with imports outpacing exports in recent years, resulting in a widening trade gap. This reflects structural gaps in domestic manufacturing, particularly in upstream integration and scale.

Fragmented Value Chains and Limited Integration: A key constraint lies in the lack of deep value chain integration. Several intermediate and downstream segments remain underdeveloped, leading to dependence on imports even where domestic demand is strong. Bridging these gaps requires large-scale investments, access to technology, and stronger linkages across the value chain.

Supply Chain Vulnerabilities and Geopolitical Risks:

Dependence on a limited set of global suppliers, particularly China and parts of Europe, increases exposure to geopolitical developments, trade restrictions, and disruptions in global shipping routes. Recent supply chain disruptions and freight volatility have highlighted the risks of concentrated sourcing.

Cost Volatility and Margin Pressures: Fluctuations in global energy prices and feedstock availability directly impact the cost structure of imported chemicals, creating uncertainty for domestic manufacturers and affecting competitiveness.

Sustainability and Energy Security Considerations:

A large portion of imported chemicals is linked to fossil fuel-based production. Reducing import dependence aligns with Indias broader objectives of energy security, decarbonisation, and development of sustainable chemical value chains.

Strategic Response and Policy Direction

Recognising these challenges, India is adopting a multi-pronged approach aimed at building domestic capacity, enhancing self-reliance, and improving supply chain resilience.

Strengthening Domestic Manufacturing and Scale:

There is a growing focus on building world-scale manufacturing capacities across key chemical segments. The emphasis is shifting from incremental expansion to developing integrated value chains, enabling India to move from import substitution to global competitiveness.

Production-Linked Incentives and Policy Support:

The Government is actively evaluating targeted incentive frameworks, including Production Linked Incentive schemes for the chemicals sector. These initiatives aim to encourage capacity creation, attract investments, and support domestic manufacturing across critical value chains.

Tariff Measures and Trade Safeguards: Rationalisation of import duties and selective imposition of anti-dumping measures are being used to support domestic industries and create a level playing field. These interventions are intended to encourage local capacity creation while ensuring supply stability for downstream industries.

Feedstock Diversification and Sustainable Alternatives:

Policy focus is increasingly shifting toward diversification of feedstock sources, including bio-based chemicals, recycling of plastic waste, and development of green hydrogen-based pathways. These initiatives aim to reduce dependence on conventional petrochemical feedstocks while supporting sustainability goals.

Infrastructure and Ecosystem Development: Initiatives such as Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs) are enabling the development of integrated manufacturing ecosystems, improving logistics efficiency and attracting large-scale investments into the sector.

Emerging Opportunity Landscape

The drive toward reducing import dependence is also creating significant opportunities for domestic value creation. Several high-potential segments, including Speciality chemicals, advanced materials, polymer intermediates, and electronics-related chemicals, present substantial headroom for domestic manufacturing.

In particular, sunrise sectors such as semiconductors, electric mobility, and renewable energy are creating new demand for high-purity and performance chemicals. These segments offer an opportunity for Indian companies to build capabilities in high-value, technology-intensive products and strengthen their position in global value chains.

Outlook

Reducing import dependency will remain a central theme in the evolution of Indias chemical industry. While progress will require sustained investments, technology access, and policy support, the direction of change is clear.

As domestic capabilities strengthen and value chains deepen, India is well positioned to transition toward a more self-reliant and globally competitive chemical manufacturing ecosystem. This shift is expected to enhance supply chain resilience while unlocking new growth opportunities across the sector.

Source:

• EY-Parthenon, Envisioning the Future of Indias Chemicals and Petrochemicals Industry, January 2026, available at: https://www. ey.com/en_in/insights/energy-resources/envisioning-the-future-of-india-s-chemicals-and-petrochemicals-industry

• BCG - Building The Next Indian Chemical Giant - The 10 Point Blueprint to Scale, available at: https://www.bcg.com/ publications/2026/india-building-the-next-indian-chemical-giant

• IBEF – Chemicals, November 2025, available at: https://www.ibef. org/industry/chemical-industry-india

• Niti Ayog - Chemical Industry: Powering Indias participation in Global Value Chains – July 2025, available at: https://niti.gov.in/ sites/default/files/2025-07/NITI-Aayog-Chemical-industry-report.pdf

STRUCTURAL GROWTH DRIVERS FOR INDIA

Indias chemical industry is entering a structurally advantaged growth phase, supported by a confluence of domestic demand expansion, policy support, and realignment of global supply chains. As a core pillar of the manufacturing ecosystem, the sector is deeply integrated with multiple end-use industries.

With a market size of approximately $220 billion in 2023 and strong underlying demand drivers, the industry is expected to scale significantly, with estimates indicating growth to $400 450 billion by 2030 and further expansion towards $850 billion to $1 trillion by 2040.

Indias opportunity is not only driven by domestic expansion but also by its ability to increase its participation in global chemical value chains, where its current share remains relatively modest. This creates a dual growth pathway, combining internal demand strength with export-led expansion.

Chemical Parks (Union Budget 2026-27): A new scheme has been announced to establish three dedicated Chemical Parks with an allocation of 600 Crores. These parks will follow a plug-and-play model with shared infrastructure and environmental compliance systems.

Cluster-Based Development Approach: Building on PCPIRs, Plastic Parks, and Bulk Drug Parks, the Government is expanding cluster-led manufacturing to improve scale, cost efficiency, and value chain integration.

Sustainability Focus (CCUS): An allocation of 20,000 Crores has been announced to support Carbon Capture, Utilisation and Storage (CCUS), enabling emissions reduction in energy-intensive sectors such as chemicals.

These initiatives are expected to accelerate capacity creation, reduce import dependence, improve supply chain resilience, and enhance Indias global competitiveness.

DOMESTIC INDUSTRY OUTLOOK: INDIAS CHEMICAL SECTOR A GLOBAL POWERHOUSE

Indias chemical industry is entering a decisive phase of evolution, where the focus is shifting from scale-driven growth to strategic positioning within global value chains. While the sector has built a strong foundation through domestic demand and cost competitiveness, the next phase will be defined by its ability to capture higher value, deepen integration, and enhance global relevance.

With an expected market size of around $400 billion by 2030 and a long-term pathway toward $1 trillion, Indias opportunity is not just to grow, but to reshape its role in the global chemicals ecosystem. The industry is transitioning from being a fragmented, volume-led producer to a more integrated and capability-driven manufacturing base.

Repositioning Within Global Value Chains

Indias current share in global chemicals remains relatively modest,indicating the opportunity lies not merely in increasing volumes, but in strengthening participation across the value chain, particularly in intermediates, Speciality segments, and downstream applications.

This shift requires moving beyond a reliance on imports for critical inputs and building domestic capabilities that enable end-to-end manufacturing. Companies that can bridge gaps across the value chain and achieve scale will be better positioned to capture a larger share of global trade flows.

From Commodity Orientation to Value-Led Growth

A structural transition is underway as the industry gradually moves from commodity chemicals toward more value-added segments. This includes Speciality chemicals, advanced materials, and application-specific solutions that offer stronger margins and greater resilience across cycles.

The change is not just product-driven, but also capability-driven. It involves closer alignment with end-use industries, increased focus on customisation, and greater investment in technology and process innovation. Over time, this shift is expected to reduce cyclicality and improve the quality of growth across the sector.

Execution Will Define Competitive Advantage

While the macro-opportunity is well established, the ability to execute will differentiate industry leaders. Key success factors will include: Scale and Integration: Building world-scale capacities and integrated value chains to improve cost efficiency and reduce external dependence Capital Allocation: Sustained investments in capacity expansion, technology, and downstream capabilities Operational Excellence: Enhancing productivity, improving asset utilisation, and optimising cost structures Market Positioning: Strengthening relationships with global customers and embedding into long-term supply chains

In a more competitive and fragmented global environment, these factors will determine which players are able to translate opportunity into sustainable growth.

Infrastructure and Policy as Enablers, Not Drivers

Policy support and infrastructure development will continue to play an enabling role in this transition. Initiatives such as dedicated Chemical Parks, cluster-based manufacturing ecosystems, and investments in sustainability are improving the operating environment and reducing entry barriers for new capacities.

At the same time, the increasing focus on decarbonisation and environmental compliance is shaping the future structure of the industry. Companies that align early with these requirements will be better positioned to access global markets and maintain competitiveness.

Outlook

Indias chemical sector stands at an inflection point where structural advantages are converging with global opportunities. The shift toward value addition, stronger integration, and improved execution capabilities is expected to define the next phase of growth.

While challenges such as import dependence, infrastructure gaps, and global competition remain, the direction of change is clear. As the industry scales and evolves, India is well positioned to strengthen its role in global chemical manufacturing and emerge as a more significant and competitive player over the coming decade.

Source:

• Niti Ayog - Chemical Industry: Powering Indias participation in Global Value Chains – July 2025, available at: https://niti.gov.in/ sites/default/files/2025-07/NITI-Aayog-Chemical-industry-report.pdf

• PIB Headquarters – Union Budget FY 2026-2027: Chemical Parks - Strengthening Indias Chemical Manufacturing, available at: https://www.pib.gov.in/PressReleasePage. aspx?PRID=2222931&reg=3&lang=1

BUDGET 2026: IMPACT ON THE INDIAN CHEMICAL

SECTOR

The Union Budget 2026-27 reflects a clear policy direction toward strengthening domestic manufacturing capabilities and enhancing the global competitiveness of Indias chemical industry. In an environment shaped by supply chain disruptions, trade realignments, and increasing focus on self-reliance, the budget adopts a more targeted and infrastructure-led approach to industrial development.

The emphasis is on building scale, improving efficiency, and enabling long-term resilience through a combination of capital investments, ecosystem development, and sustainability initiatives. Rather than relying on direct sectoral incentives alone, the policy framework focusses on creating enabling conditions that support capacity expansion, innovation, and integration across value chains.

The budget also aligns industrial growth with future demand drivers by supporting downstream sectors such as electronics, semiconductors, biopharma, and textiles. This integrated approach is expected to create multiplier effects for the chemical industry, strengthening both domestic demand and export competitiveness.

Overall, Budget 2026-27 lays the foundation for a more competitive and self-reliant chemical sector, with a clear focus on infrastructure, manufacturing depth, and sustainability-led growth.

Key Policy Announcements Impacting the Chemical Sector

1. Development of Chemical Parks: The announcement of three dedicated Chemical Parks, with an allocation of 600 Crores, marks a significant step toward building cluster-based manufacturing ecosystems. These parks will follow a plug-and-play model with shared infrastructure and integrated environmental compliance systems, improving capital efficiency and reducing project timelines.

2. Infrastructure and Logistics Enhancement: Increased capital expenditure, development of freight corridors, expansion of national waterways, and revival of industrial clusters are expected to improve supply chain efficiency and reduce logistics costs for chemical manufacturers.

3. Boost to Domestic Manufacturing and Import Substitution: Policy measures aimed at strengthening local manufacturing ecosystems are expected to reduce reliance on imports of critical intermediates and feedstocks, while enhancing value chain integration within the country.

4. Support for MSMEs: Dedicated funding initiatives and liquidity measures for MSMEs are likely to strengthen the supplier ecosystem, improving depth, flexibility, and resilience across the chemical value chain.

5. Push for High-Growth End-Use Sectors: Increased allocations toward electronics manufacturing, semiconductor initiatives, biopharma, and technical textiles are expected to drive demand for Speciality chemicals and advanced materials.

6. Sustainability and Decarbonisation Initiatives: An allocation of 20,000 Crores toward Carbon Capture, Utilisation and Storage (CCUS) highlights the growing focus on reducing emissions in energy-intensive sectors such as chemicals, supporting the transition toward cleaner manufacturing practices.

Source:

• PIB Headquarters – Union Budget FY 2026-2027: Chemical Parks - Strengthening Indias Chemical Manufacturing, available at: https://www.pib.gov.in/PressReleasePage. aspx?PRID=2222931&reg=3&lang=1

• EY – Union Budget 2026-27 - Budget 2026 enables sustainable growth in Chemical sector, available at: https://www.ey.com/ content/dam/ey-unified-site/ey-com/en-in/services/tax/union-budget-2026/ey-chemical-sector-highlights.pdf

PERFORMANCE OF YOUR COMPANY

FY 2025-26 was characterised by a challenging operating environment for the global chemical industry. Persistent oversupply, driven largely by capacity additions in China, continued to exert pressure on realisations across several product categories, while demand recovery remained uneven, particularly in agrochemical value chains where inventory corrections and cautious customer procurement delayed the pace of recovery. During the latter part of the year, the operating environment became more complex as geopolitical tensions, disruptions to global trade routes, and evolving trade policies, including U.S. tariffs, reshaped global trade flows, affected feedstock availability, increased freight costs, and intensified competitive dynamics across international markets.

Against this backdrop, Deepaks direct exposure to these trade policy changes remained limited, supported by its import substitution strategy, diversified product portfolio, balanced geographic presence, and strong domestic franchise. However, the indirect effects were reflected in evolving customer sourcing strategies, trade diversion, demand patterns, and heightened pricing pressure in certain export markets. The Companys integrated manufacturing ecosystem, strong process capabilities, and long-standing customer relationships enabled it to respond with agility, reinforcing its position as a reliable supply partner amid an increasingly fragmented trade environment.

Further, Deepaks performance may be seen amidst discussion made above and its positioning as: I. Leader in diversified Intermediates, II. Strong integration model, III. Preferred supplier globally against Chinese aggression, IV. High entity barrier, V. Diversification into high value products, and VI. Focus on import substitution

Deepaks business model is strategically anchored to Indias structural growth drivers. Over the years, the Company has built a diversified portfolio supported by deep process expertise, integrated manufacturing assets, and strong customer relationships across multiple industries. This has enabled the Company to navigate cyclical market conditions while continuing to invest in future growth opportunities.

Despite challenges, the Company delivered a strong recovery towards the end of the year and momentum continues, driven by stable domestic demand, cost optimisation measures an improved product mix, and enhanced operational agility. Effective capacity reallocation, stronger customer engagement, process improvements, cost optimisation, and increased backward integration further strengthened competitiveness and profitability across business segments.

Against this backdrop, the Company reported consolidated revenue of 7,887 Crores during FY 2025-26, with domestic revenues of 6,703 Crores and exports of 1,184 Crores. EBITDA stood at 1,041 Crores, while Profit Before Tax and Profit After Tax were 770 Crores and 551 Crores, respectively. The domestic market accounted for 85% of total revenues, providing stability amid global market volatility and reinforcing the strength of the Companys franchise across key end-user sectors.

The Phenolics business delivered a steady performance, acting as a reliable contributor to the Companys overall results. Stable domestic demand, efficient plant operations, and ongoing process improvements supported healthy operating performance despite volatility in feedstock prices and increased import competition.

The business also continued to play an important role in reducing Indias dependence on imported Phenol and Acetone, strengthening the domestic manufacturing ecosystem for several downstream industries.

The Advanced Intermediates business operated in a more competitive environment, influenced by excess global supply and slower recovery in agrochemical demand. Nevertheless, the segment-maintained momentum through customer diversification, expansion into new applications, and improved operational flexibility. The ability to optimise production across multiple product chains enabled the Company to respond efficiently to changing market conditions and preserve competitiveness.

During the year, the Company continued to strengthen its manufacturing platform through targeted investments in strategic projects. The commissioning of nitric acid facilities at Nandesari and hydrogenation assets at Dahej enhanced supply security, improved cost competitiveness, and expanded capabilities across key value chains. These investments represent important milestones in Deepaks long-term strategy of creating integrated manufacturing ecosystems with higher value addition.

Progress also continued across several downstream and Speciality chemical projects, including MIBK, MIBC, and fluorination chemistry. These projects are expected to broaden the product portfolio, deepen customer engagement, and expand the Deepaks presence in higher-value applications.

It is also advancing towards the flagshipPolycarbonate project, which represents a significant step towards establishing domestic manufacturing capability in advanced materials. With a planned investment of approximately 11,500 Crores, the project aims to create Indias first integrated Propylene-to-Polycarbonate complex. Beyond reducing import dependence, the project is expected to support the development of downstream industries in automotive, electronics, healthcare, infrastructure, and consumer applications, while strengthening Indias position in the global materials value chain.

Innovation remained an important focus area during FY 2025-26. The commissioning of the Companys new Research & Development Centre at Savli, Vadodara, with an investment of approximately 100 Crores, significantly enhances capabilities in advanced chemistry, process development, and application-focussed innovation. The facility is expected to accelerate the development of differentiated products and support future growth initiatives.

The Company also accelerated its digital transformation programme through the implementation of SAP S/4HANA and deployment of advanced analytics and AI-enabled manufacturing solutions. These initiatives are improving operational visibility, process control, and decision-making capabilities across manufacturing operations.

Sustainability remained integral to the Companys long-term growth strategy and operational excellence during FY 2025-26. The Company continued to strengthen its environmental stewardship by expanding its renewable energy initiatives and remains on track to source around 60% of its energy requirements from renewable sources by FY 2026-27. These initiatives support the Companys decarbonisation roadmap while enhancing long-term operational resilience and cost competitiveness.

The Companys continued progress in sustainability was recognised by leading global ESG assessment platforms during the year. The Company secured a ‘B rating in both the CDP Climate Change and CDP Water Security assessments, reflecting its commitment to climate action and responsible water management. The Company also recorded a significant improvement in its Dow Jones Sustainability Index (DJSI) performance, achieving a score of 67/100 and a 94th percentile ranking, compared with 56/100 and the 91st percentile in the previous year, representing an overall 20% improvement in performance. In recognition of this progress, Deepak Nitrite was included for the first time in the S&P Global Sustainability Yearbook 2026.

Further strengthening its ESG credentials, the Company improved its EcoVadis score to 71/100, earning a Bronze Medal, while advancing its percentile ranking to the 82nd percentile from the 71st percentile in the previous year. These recognitions reflect the Companys continued focus on embedding sustainability across its operations, strengthening governance practices, and creating long-term value for all stakeholders.

Overall, FY 2025-26 reflected the Companys ability to navigate a challenging market environment while continuing to strengthen its manufacturing capabilities, expand its growth platform, and invest in future opportunities. Supported by a diversified portfolio, strong domestic market presence, and a disciplined approach to capital allocation, Deepak Nitrite remains well positioned to benefit from the long-term growth potential of the chemical industry.

PERFORMANCE OF BUSINESS UNITS The Company operates across a broad portfolio of business segments, each contributing strategically to its sustained growth and strengthening its leadership in the chemical industry. These core segments include:

1. Advanced Intermediates (AI)

The Advanced Intermediates (AI) segment continues to serve as a foundational pillar of the Companys business, built on decades of expertise in nitration, hydrogenation, and related chemistries. With a broad and integrated portfolio, the segment caters to diverse end-use industries and plays a critical role in enabling both domestic manufacturing and global supply chains. The Company retains its market leadership in key products such as Sodium Nitrite and Nitrotoluenes, reflecting its scale, process capabilities, and long-standing customer relationships.

The year unfolded against a complex and volatile operating backdrop. Demand from agrochemical-linked applications remained subdued due to global inventory correction and muted consumption trends. At the same time, pricing conditions were impacted by excess global supply, particularly from China, alongside fluctuations in petrochemical-linked input costs driven by refinery throughput dynamics and geopolitical developments.

Despite these headwinds, the AI segment delivered steady volume growth, supported by its diversified demand base. While demand from industries such as textiles, dyes and pigments was sluggish, better demand from infrastructure, construction, and homecare helped offset the weakness in agrochemicals, ensuring stable operational throughput.

The Company responded to external pressures with a measured and adaptive approach, focussing on disciplined pricing methodology, product mix optimisation, and cost control. This enabled the segment to maintain operational stability and margin resilience, even in a challenging pricing environment.

A key strength of the AI segment lies in its diversified product basket, including Nitro Toluidines, Xylidines, Cumidines and other downstream intermediates. These products serve a wide spectrum of industries: Colourants, dyes, pigments, rubber chemicals, and explosives Pharmaceuticals, agrochemicals, refineries, and personal care Paper, detergents, textiles, and allied sectors

This diversity not only reduces dependence on any single end market but also provides flexibility to shift production towards more favourable demand pockets.

The Companys Advanced Intermediates (AI) business delivered a resilient performance in FY 2025-26 despite persistent industry challenges, including dumping, pricing pressure, subdued agrochemical demand, logistics disruptions, and evolving global trade dynamics arising from tariff actions by the U.S. While the direct impact of the tariffs on the product portfolio remained limited to this business, indirect impact caused by factors like shifts in global trade flows, changes in customer sourcing strategies, uneven demand patterns, increased pricing competition from redirected exports was noticeable.

The segment benefited from its diversified product portfolio, strong customer relationships, and operational agility, enabling it to maintain market position and improve sales realisations despite heightened competitive intensity in international markets. As one of the leading global producers of Xylidines, Cumidines, and Oximes, the Company continues to leverage its expertise in niche intermediate chemistries, backed by a reputation for quality and supply reliability.

Focussed investments in automation, process optimisation, debottlenecking, and backward integration enhanced manufacturing efficiency and supply security. Improved self-sufficiency in critical intermediates, together with a favourable product mix and better realisation-to-raw- material cost dynamics, contributed to a sequential improvement in profitability around end of the year. The Company also remained agile in responding to evolving global supply chain and trade patterns, enabling it to mitigate indirect disruptions arising from tariff-driven shifts in international commerce..

For FY 2025-26, the segment reported revenue of 2,553 Crores and EBIT of 107 Crores. Reported profitability was impacted by EBIT-level losses at Deepak Chem Tech Limited (DCTL), primarily due to the initial ramp-up of newly commissioned facilities. As these facilities stabilise, capacity utilisation improves, and integration benefits accrue, ongoing capacity expansion and backward integration are expected to enhance value addition, strengthen margin resilience, and position the business to benefit from supply chain diversification, import substitution, and Indias growing role as a global manufacturing hub.

2. Phenolics

Deepak Phenolics Limited (DPL), a wholly-owned subsidiary of Deepak Nitrite Limited, continues to serve as a cornerstone of the Companys growth and diversification strategy. Since the commissioning of its integrated Phenol and Acetone manufacturing complex at Dahej, Gujarat in 2018, DPL has played a pivotal role in reducing Indias dependence on imports of key petrochemicals. Built on a foundation of world-class infrastructure and strong operational excellence, the business has established a scalable and cost-efficient platform across the Phenolics value chain. Over time, DPL has transitioned from an import substitution platform to a strategically integrated business focussed on enhancing value capture through downstream products.

DPL operates an integrated manufacturing chain from Bensene and Propylene to Cumene, Phenol, Acetone, and Isopropyl Alcohol (IPA), along with a growing portfolio of downstream derivatives. This integration enables cost leadership, operational efficiency, and supply reliability. With an estimated market share of more than 50% in India

Growth in infrastructure, consumer durables, and health and hygiene segments continues to drive demand for phenolics and their derivatives, presenting long-term growth potential.

DPL delivered a resilient performance in FY 2025-26 despite a challenging global environment marked by excess capacity additions, pricing pressure, supply chain disruptions, and subdued demand across key markets. While disproportionate imports from Asian producers impacted domestic realisations, strong domestic demand and the advantages of an integrated value chain supported stable operations and profitability.

For FY 2025-26, the segment reported revenue of 5,401 Crores and EBIT of 695 Crores, with an EBIT margin of 13%.

The business maintained high asset utilisation and reinforced its leadership position in India, with an estimated market share exceeding 50% in both Phenol and Acetone. The business delivered a robust performance despite disruptions in global feedstock supply chains arising from geopolitical developments. Stable plant operations, disciplined procurement strategies, improving product spreads, and recovery in downstream demand from polymer, industrial, and consumer applications supported strong sequential growth in profitability.

Operational excellence remained a key focus area throughout the year. Debottlenecking initiatives, process optimisation, energy-efficiency measures, and the implementation of SAP S/4HANA enhanced productivity, supply chain efficiency, operational flexibility, and cost competitiveness. The Company further strengthened its market leadership by ensuring uninterrupted supplies to domestic customers during a period of heightened supply uncertainty, while ongoing operational improvement programs continued to enhance capacity utilisation and manufacturing flexibility.

Sustainability and value addition remained central to the business strategy. During the year, the Company initiated the use of biofuels to reduce dependence on coal and advanced waste-to-wealth initiatives, including an Acetophenone recovery project.

Looking ahead, planned expansions in Phenol, Acetone, Polycarbonate, and Speciality derivative capacities are expected to strengthen integration, enhance value capture, and improve margin resilience. Supported by its scale, market leadership, operational excellence, and strategic focus on Speciality chemicals, the business is well positioned to benefit from growing demand across infrastructure, consumer durables, automotive, healthcare, and hygiene sectors while creating sustainable long-term value. Ongoing efficiency initiatives are integration,debottlenecking,and expected to further strengthen competitiveness and support growth across market cycles.

3. Deepak Chem Tech Limited

Deepak Chem Tech Limited (DCTL), a wholly-owned subsidiary of Deepak Nitrite Limited, continued to make strong progress in FY 2025-26, reinforcing its position as a key growth engine for the Groups transition into advanced chemicals and materials. Focussed on advanced fluorine chemistry and high-value chemical intermediates, DCTL is central to Deepak Nitrites long-term strategy of moving up the value chain, from bulk chemicals to integrated, technology-led and Speciality-driven offerings.

Aligned with Indias push for import substitution and manufacturing self-reliance, DCTL is building capabilities in high-demand segments with limited domestic supply. Through its emphasis on downstream integration, advanced chemistries, and innovation, DCTL is strengthening the Companys competitiveness across both domestic and global markets.

Deepening Fluorine Capabilities: Following the successful operationalisation and stabilisation of DCTLs advanced fluorination plant at Dahej, Gujarat, in FY 2024-25, the current financial year focussed on production ramp-up, process optimisation, and deep customer integration. This state-of-the-art facility manufactures Benzo Trifluoride (BTF), a critical, high-barrier intermediate widely utilised across advanced chemical and petrochemical value chains. With the asset now seamlessly integrated into our operational portfolio, our presence in the highly specialised fluorine-based chemistry segment stands firmly established.

Embedding Green Chemistry Principles: DCTL continues to integrate sustainability into its operations through investments in green chemistry, energy-efficient processes, and environmentally responsible manufacturing practices. These initiatives contribute to Indias net-zero ambitions, while simultaneously improving operational efficiency and resource utilisation. By aligning growth with sustainability, DCTL is well positioned to meet evolving regulatory expectations and customer demand for responsibly produced chemical solutions, while minimising its environmental footprint.

Execution of Key Manufacturing Assets

As part of its integrated growth strategy, DCTL continues to make significant progress across its key capital projects, reinforcing its commitment to value-chain integration, import substitution, and Speciality chemicals expansion. Most projects have reached advanced stages of commissioning, with engineering, procurement, and construction activities substantially completed. The Companys immediate focus is on commissioning, stabilisation, and capacity ramp-up to unlock the full benefits of these investments.

These projects are expected to be commissioned and ramped up in a phased manner, strengthening DCTLs integrated manufacturing platform, expanding its portfolio of high-value chemistries, and supporting sustainable long-term growth and profitability.

Strengthening Integration Across Value Chains:

Together, these projects form a critical pillar of DCTLs strategy by enabling: Backward integration into key feedstocks Forward integration into downstream, high-value products Enhanced supply chain reliability and cost efficiency

This integrated approach supports expansion across performance chemicals, pharmaceuticals, and coatings, improving margins and reducing dependence on external inputs.

Large-Scale Investment and Advanced Materials Entry

DCTL has embarked on a significant investment of 11,500 Crores to establish a world-class integrated chemical manufacturing complex. This facility will produce Phenol, Acetone, and Polycarbonate (PC) resins, key materials used across industries such as automotive, electronics, construction, and consumer goods among others.

A major strategic step in this journey is the acquisition of the Polycarbonate business and assets of Trinseos Stade facility in Germany, including access to advanced process technology and the globally recognised CALIBRE brand. This acquisition strengthens DCTLs technical capabilities and provides an entry platform into high-performance polymers and global markets.

Building on this, DCTL plans to set up a greenfield Polycarbonate plant with a capacity of 1,65,000 MTPA at Dahej, integrated across upstream and downstream operations. This initiative is expected to: Reduce Indias reliance on imported Polycarbonates Enhance cost efficiencies through integration Enable participation in global advanced materials markets

Outlook and Growth Trajectory

Near-Term Focus on Execution: In the near term, the Companys priorities remain on timely commissioning, stabilisation of new assets, and operational ramp-up. External factors such as global demand conditions, pricing pressures, and competitive intensity may continue to influence performance during this phase

Medium-Term Earnings Inflection: As DCTLs projects become operational, the Company is expected to witness a meaningful inflection in volumes and profitability. Benefits from integration, improved product mix, and scale efficiencies are likely to drive margin expansion and improved returns

Long-Term Structural Opportunity: Over the long term, DCTL is well positioned to benefit from import substitution in Speciality chemicals and polymers, China+1 supply chain diversification and rising domestic demand for advanced materials and performance chemicals

However, the biggest sustainable opportunity for DCTL is in its integration. It is creating a value chain from propylene and benzene as key raw material to: Cumene Polycarbonate, this is expected to make the operations most competitive, to help being nimble during challenging time and to retain reliability amongst its customers.

These structural tailwinds accelerate the Companys evolution into a globally competitive, integrated chemicals and materials major.

DAML: Building a Scalable Advanced Materials Business

Deepak Advanced Materials Limited (DAML) is a wholly-owned subsidiary of Deepak Nitrite Limited and has been established as the Groups dedicated platform for advanced materials and Speciality engineering polymers. DAML marks the Companys strategic expansion beyond its traditional chemicals portfolio into high-value, technology-driven materials that cater to sectors such as automotive, electric vehicles (EVs), electrical and electronics, consumer durables, healthcare, and industrial manufacturing. By entering the advanced materials segment, the Group aims to strengthen its presence in downstream, value-added products that offer higher margins, stronger customer stickiness, and long-term growth opportunities.

DAMLs initial focus is to manufacture Polycarbonate (PC) compounds, which are engineered thermoplastic materials designed to meet specific customer performance requirements. These compounds are customised using additives, reinforcements, and modifiers to achieve properties such as high impact strength, heat resistance, flame retardancy, dimensional stability, and optical clarity. Such specialised materials are increasingly preferred by original equipment manufacturers (OEMs) as they enable lightweighting, enhanced durability, and improved product performance across a range of industrial applications.

The Company is well positioned to benefit from favourable structural trends in the Indian manufacturing ecosystem.

Demand for engineering plastics is expected to grow steadily, driven by increasing domestic production of automobiles and EVs, rapid expansion of the electronics and electrical equipment industry, rising medical device manufacturing, and Government initiatives promoting local manufacturing under the ‘Make in India programme. At present, a significant portion of Indias demand for high-performance engineering compounds is met through imports, creating a substantial import substitution opportunity for technically capable domestic manufacturers such as DAML.

DAMLs growth prospects are further strengthened by the backing of Deepak Nitrite, which provides financial strength, manufacturing expertise, established customer relationships, research and development capabilities, and a strong governance framework. Beyond Polycarbonate compounds, the platform offers significant scope to expand into a broader portfolio of advanced materials, including engineering polymer blends, Speciality compounds, sustainable and recycled materials, and other high-performance polymers catering to next-generation applications. Accordingly, DAML represents a strategically important growth initiative for the Group, with the potential to evolve into a leading domestic player in Indias advanced materials sector as capacity utilisation improves and the product portfolio expands.

Capital Deployment and Growth Visibility

The 11,500 Crores investment marks a pivotal step in scaling DCTLs capabilities. Key polymer and integrated projects are expected towards commissioning by 2029, providing strong visibility for future growth. Beyond business expansion, the investment is expected to generate: Significant employment opportunities Development of local industrial ecosystems Contribution to national initiatives such as "Atmanirbhar Bharat" and "Viksit Bharat"

As of March 31, 2026, DCTL employed over ~2,800 personnel including contract workers across operations, projects, and support functions, forming a strong foundation to support future scale-up.

A Transformational Growth Platform desired DCTL represents a transformational pillar in Deepak Nitrites journey toward higher value creation. By combining technology, scale, integration, and sustainability, it is enabling the Company to move decisively into high-margin, innovation-driven segments. While the near term will remain focussed on execution and capacity ramp-up, DCTLs strategic initiatives position the Company to deliver sustained growth, enhanced profitability, and stronger global competitiveness over the medium to long term.

SHAPING TOMORROW STRATEGIC INVESTMENTS FOR A FUTURE-READY ENTERPRISE

Deepak Nitrite is entering a decisive phase of transformation one that redefines its role within the global chemical landscape. With planned capital investments exceeding 11,500 Crores, the Company is undertaking a bold expansion that goes beyond capacity creation to fundamentally reshape its business model.

This investment cycle is anchored in a clear strategic intent: to build a fully integrated, innovation-led, and globally competitive chemical enterprise. By expanding across the value chain, strengthening technological capabilities, and entering high-value segments, Deepak Nitrite is positioning itself for sustained, long-term growth.

At the same time, these investments reinforce the Companys contribution to Indias self-reliance in critical chemical intermediates and advanced materials, aligning with broader national priorities.

TRANSFORMATIONAL PROJECTS Building Platforms

Deepak Nitrites investment portfolio comprises a series of large-scale and high-impact projects, each contributing to a broader strategic vision.

Polycarbonate Resins A Landmark Entry into Advanced Materials:

Deepak Chem Tech Ltd. (DCTL) has undertaken a pioneering initiative to establish Indias first large-scale Polycarbonate Resins manufacturing facility at Dahej.

Technology partnership signed with Trinseo (Germany). This facility is expected to be commissioned by 2029. This project represents a critical move into engineering plastics, a segment with strong structural demand driven by automotive, electronics, and infrastructure sectors. It also addresses a significant domestic supply gap, reducing reliance on imports while enabling the Company to capture downstream value from its phenol chain.

Phenolics Expansion Reinforcing Core Leadership:

Building on its strong Position in Phenol, Acetone, and sopropyl Alcohol (IPA), the Company is undertaking a major I capacity expansion through a new integrated complex. This initiative will strengthen market leadership in key building block chemicals, enhance scale efficiencies & cost competitiveness, enable further downstream product development. The expansion reinforces Deepak Nitrites role as a leading producer in the Phenolics value chain, with the ability to operate efficiently even in volatile global environments.

Downstream Derivatives as a step towards Integration stage of Deepak Expanding Value Capture:

The Company continues to extend its footprint in downstream Phenol derivatives through projects such as:

A DEFINING CAPEX CYCLE Scaling with Integration, Innovation and Intent

The current capital expenditure program represents one of the most comprehensive growth initiatives in the Companys history, with a total pipeline of ~ 11,500 Crores across multiple platforms. Unlike conventional expansion cycles, this phase is strategically designed to:

Deepen integration across upstream and downstream operations

Expand into high-value and Speciality chemistries Strengthen cost competitiveness and operational resilience Build a diversified and future-ready product portfolio

The Company is transitioning from a volume-driven growth approach to a value-led, integration-focussed strategy, enabling it to capture a larger share of the chemical value chain.

the Next Decade of Growth

MIBK/MIBC plants catering to solvents and industrial applications

Speciality Chemilcals expanding its portfolio of high-value Speciality chemicals to serve diverse end-use industries and enhance product mix

Acetophenone facility targeting the global flavours and fragrances market With engineering and procurement substantially completed and commissioning targeted in FY 2026-27, these projects are expected to strengthen Deepak Nitrites downstream portfolio, increase value addition within existing product chains and support sustainable margin expansion over the medium term.

Strengthening the Integrated Polycarbonate Value Chain

DCTL is undertaking Indias first integrated Polycarbonate manufacturing ecosystem, a project that is expected to contribute meaningfully to import substitution in a high-value engineering plastics segment. This also aligns with the Companys broader strategy of building deeply integrated value chains, enhancing self-reliance in critical raw materials and expanding its presence in advanced materials and Speciality chemical businesses. Once commissioned, the facility is expected to further strengthen DCTLs ability to serve growing demand from automotive, electrical and electronics, construction and consumer sectors while reinforcing

Deepak Nitrites transition towards a more diversified, technology-driven and value-added portfolio.

BUILDING A RESILIENT SUPPLY CHAIN Securing Inputs, Strengthening Continuity

In an environment marked by supply disruptions, pricing volatility, and shifting trade dynamics, Deepak Nitrite is proactively building a robust and resilient supply chain framework.

Long-Term Feedstock Security: The Company has secured a strong foundation for its raw material requirements through a 15-year agreement with Petronet LNG. This arrangement ensures a reliable and continuous supply of 250 KTPA of propylene and 11 KTPA of hydrogen, both critical inputs for downstream production processes. This agreement is further extendable for 5 years. The delivery of these feedstocks via pipeline infrastructure at Dahej significantly reduces transportation risks and costs while improving operational efficiency. Beyond cost advantages, this long-term tie-up enhances supply reliability and contributes to environmental sustainability by minimising logistics-related emissions.

Integrated Manufacturing Ecosystem: The Companys strategy of building an integrated and co-located manufacturing ecosystem provides a significant competitive edge. By situating facilities in close proximity and aligning operations across the value chain, the Company reduces logistics and handling costs while streamlining production processes. This integration enables faster production turnaround times and improves responsiveness to market demand. Additionally, it supports better working capital management by optimising inventory cycles and reducing delays across different stages of manufacturing.

Market-Readiness through Early Engagement: To ensure a smooth market entry for its Polycarbonate products, the Company initiated seeding programs. These programs are designed to engage customers in advance through qualification and validation processes, allowing them to assess product performance and compatibility. By facilitating early-stage testing and feedback, the Company is actively building market familiarity and trust. This proactive approach reduces commercialisation risks and positions the Company for a more seamless transition from project commissioning to full-scale market supply.

Strengthening Intermediate Capabilities: The Company has further strengthened its intermediate manufacturing capabilities through the successful commissioning and stabilisation of key strategic facilities during FY 2025-26. The addition of Photo Halogenation capabilities has expanded the Companys presence in high-value Speciality derivatives, broadening its product portfolio and enhancing value addition opportunities. Furthermore, the commissioning of Nitric Acid plant has deepened backward integration, strengthened raw material security, and improved supply chain control. These investments reinforce the Companys operational resilience, reduce dependence on external sourcing, and position it to capture a greater share of value across the chemical manufacturing chain, supporting long-term growth and margin sustainability.

INNOVATION AS A GROWTH ENGINE Building Capabilities for the Next Phase of Growth

Innovation has long been a defining element of Deepak evolution and remains integral to the Companys strategy of building a diversified, integrated and future-ready chemicals and materials business. As the Company expands into higher-value Speciality chemicals, advanced intermediates, performance materials and engineering plastics, innovation is increasingly becoming a key driver of differentiation, competitiveness and sustainable value creation.

To strengthen its technology and innovation ecosystem, the Company has commissioned a state-of-the-art Research & Development Centre in Savli, Vadodara with an investment of approximately 100 Crores. Serving as a centre of excellence for research, process development, and technology commercialisation, this newly operational facility enhances our ability to develop differentiated products, accelerate innovation cycles, and support the commercialisation of emerging opportunities across existing and new business platforms.

The new R&D centre will focus on:

Developing next-generation chemistries, Speciality products and advanced material solutions Supporting downstream integration through the creation of value-added derivatives and application-specific products Enhancing process efficiency, yield improvement and resource optimisation across manufacturing operations Advancing sustainable manufacturing technologies through green chemistry and energy-efficient processes Strengthening proprietary technology capabilities, intellectual property generation and technology-led differentiation Accelerating the commercialisation of new products through closer integration of research, engineering and manufacturing capabilities

The facility will also play a critical role in supporting the Companys strategic growth initiatives, including its expansion into Speciality chemical platforms, downstream Phenolics derivatives, fluorinated chemistries and advanced materials. aims to deepen customer engagement, address evolving market requirements and unlock new avenues for growth in both domestic and international markets.

As the chemical industry increasingly shifts towards technology intensive, sustainability-focussed and application-driven solutions, the Company believes that innovation will be a key determinant of long-term success. The Companys continued investments in research, technology and product development are therefore aimed not only at strengthening current businesses but also at building future growth platforms that can drive higher value addition, improve earnings resilience and enhance global competitiveness.

By combining scientific excellence, process innovation and deep - manufacturing expertise, Deepak Nitrite is creating the foundation for its next phase of growth one that is driven by technology, differentiated products and sustainable innovation-led value creation.

STRATEGIC DRIVERS OF LONG-TERM GROWTH A Framework for Sustainable Value Creation

Deepak Nitrites growth strategy is guided by a set of clearly-defined pillars:

Integration: Reducing reliance on external suppliers through in-house capabilities and long-term sourcing arrangements to enhance cost stability and operational reliability.

Import Substitution: By building domestic capacities in key chemicals and materials, the Company is playing critical role in reducing Indias import dependence while capturing significant market opportunities.

Portfolio Transformation: Expansion into Speciality chemicals and advanced materials is enabling higher margins, lower cyclicality and diversified customer base

Sustainability and Responsible Manufacturing: All new investments are aligned with global ESG standards, focussing on: Energy efficiency, Emission reduction Resource optimisation. This solidifies Deepak Nitrites position as a progressive, future-ready manufacturer committed to responsible growth.

Global Competitiveness: Through capacity expansion, quality enhancement, and integration, the Company is strengthening its ability to serve international markets and compete globally.

DISCIPLINED GROWTH EXECUTION Balancing Investment with Financial Strength

While the Company is entering a capital-intensive phase, its approach remains anchored in financial discipline. Strong operating cash flows provide a stable funding base. Leverage is expected to remain within manageable levels. Return ratios are expected to improve as new capacities ramp up. As highlighted in industry analysis, increased capital intensity is a natural phase in scaling integrated chemical platforms, with value creation unfolding over the medium term.

A STRATEGIC TRANSFORMATION IN MOTION From Scale to Value, From Cyclicality to Resilience

Deepak Nitrites investment strategy marks a fundamental shift in its business model. The Company is evolving from bulk chemicals to Speciality-led portfolio. From standalone operations to integrated value chains. From cyclical earnings to structurally resilient growth. This transition is supported by proven execution capabilities, strong process & manufacturing expertise, longstanding customer relationships and a culture of continuous improvement.

LOOKING AHEAD Building a Global Chemical Leader

Deepak Nitrite stands at the threshold of a new growth era. Its strategic investments are laying the foundation for: Sustained and diversified revenue growth Enhanced profitability through value addition Leadership in emerging chemical segments Stronger alignment with global demand trends

While the current phase involves significant capital deployment, it represents a deliberate investment in the future one that will unlock long-term value for stakeholders.

With a clear strategic vision, disciplined execution, and a commitment to innovation and sustainability, Deepak Nitrite is well positioned to emerge as a globally competitive chemical powerhouse, shaping the future of the industry while contributing meaningfully to Indias industrial progress.

GEOGRAPHICAL PERFORMANCE

In FY 2025-26, Deepak Nitrite Limited (DNL) continued to demonstrate a balanced and resilient geographical performance, underpinned by robust domestic demand and a calibrated expansion in international markets. With a presence across more than 50 countries spanning six continents, the Company has strengthened its position as a trusted global chemical supplier, serving a diversified customer base across multiple end-use industries.

On a standalone basis, export revenues accounted for 34% of total revenues, compared with 45% in FY 2024-25, reflecting the Companys continued engagement with global customers amid a challenging international operating environment. During the year, global trade remained influenced by evolving geopolitical developments and changes in tariff policies, including the implementation of reciprocal tariff measures by the United States administration. While the direct impact on the Companys export portfolio remained limited due to its diversified product basket, wide geographic footprint, and balanced customer mix, the tariffs indirectly influenced global trade flows, customer sourcing strategies, pricing dynamics, and inventory realignment across chemical value chains. These developments also accelerated efforts by global customers to diversify supply chains and reduce concentration risk, creating selective opportunities for competitive and reliable Indian manufacturers. Against this backdrop, the Companys Domestic-to-Export revenue mix stood at 63:37, reflecting a well-balanced revenue profile anchored by a strong domestic franchise while maintaining a meaningful international presence.

On a consolidated basis, the Company reported revenues of 7,887 Crores during FY 2025-26, of which domestic revenues contributed 6,703 Crores and exports accounted for 1,184 Crores, resulting in a Domestic-to-Export revenue mix of 85:15. The balanced geographical mix underscores the resilience of the Companys diversified business model and its ability to effectively navigate global supply chain disruptions, evolving trade policies, tariff-related developments, and regional demand fluctuations. Leveraging its integrated manufacturing platform, strong customer relationships, and diversified product portfolio, the Company continued to cater to growing demand across key end-user industries, including agrochemicals, pharmaceuticals, polymers, infrastructure, and performance materials. This strategic positioning, coupled with its reputation for quality, reliability, and supply continuity, enabled the Company to reinforce its standing as a preferred partner for customers in both domestic and international markets while remaining well-positioned to capitalise on emerging opportunities arising from the reconfiguration of global supply chains.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS (STANDALONE)

Key Financial Ratios	FY 2025-26	FY 2024-25	Change (%)	Reason
Debtors Turnover Ratio (X)	4.37	4.12	6.18%	Improved collections.
Inventory Turnover Ratio (X)	4.15	3.93	5.60%	Better inventory management.
Current Ratio (X)	2.86	3.29	-12.93%	The trade payable are higher on account of higher Feedstock prices.
Debt Equity Ratio (X) Interest Coverage Ratio (X)	0 468	0.01 407	15.59%	Maintained debt-free position on net basis.
				Decrease in profitability as compared to
Return on Net Worth (%) Operating Profit Margin (%) (EBIT)	5.87 8.68	8.84 12.76	(297) bps (408) bps	previous year due to subdued agrochemical demand, global over supply and pricing pressure.
Net Profit Margin (%) (PBT)	8.54	10.94	(240) bps
(X) represents number of times.

through diversified sourcing strategies, disciplined hedging practices, and agile planning frameworks that allow the business to respond effectively to changing conditions.

Equally important is the Companys focus on human capital as a critical driver of sustained success. Structured leadership development initiatives and robust succession planning processes ensure continuity, build organisational depth, and enhance the Companys ability to adapt in a rapidly evolving environment.

By integrating risk management with strategy and operations, your Company continues to build a resilient and future-ready organisation. This disciplined and holistic approach enables it to manage uncertainties effectively, safeguard stakeholder interests, and consistently deliver operational excellence.

INTERNAL CONTROL FRAMEWORK

The Company has established a comprehensive corporate governance framework designed to promote accountability, transparency, and operational integrity. Its management functions within a structured environment, consistently adhering to defined financial policies, applicable accounting standards, and robust internal systems.

At the core of the Companys internal financial control environment is a strong Risk Management Framework, supported by well-defined planning and review mechanisms. These systems are reinforced by carefully chosen accounting policies, which are approved by the Audit Committee and the Board, and are periodically reviewed to ensure they remain relevant and compliant with evolving requirements.

Senior management regularly monitors and assesses the effectiveness of internal controls, standard operating procedures, and governance practices. In addition, the Internal Audit function conducts independent evaluations, with key observations and recommendations reported to the Audit Committee. The Committee actively oversees the timely implementation of corrective actions and improvements.

Internal financial controls related to the preparation and presentation of financial statements are evaluated on an ongoing basis, with particular emphasis on critical and high-risk areas. Based on a thorough review conducted during the year, senior management concluded that there were no material weaknesses or significant deficiencies requiring disclosure.

The Company continues to strengthen its control environment through ongoing audits, proactive risk management initiatives, and continuous improvement of processes.

HUMAN RESOURCE DEVELOPMENT

As of March 31, 2026, Deepak Nitrite Limited employed 3,858 personnel including contract workers, while the Group employed 7,738 personnel including contract workers, whose expertise and commitment continue to drive its growth and operational resilience. The strength of its workforce remains fundamental to delivering consistent performance and supporting future expansion. erentiated segments. Thisdiff The Companys human capital strategy is anchored in fairness, consistency, and relevance, with a focussed approach toward capability building, leadership development, and fostering a culture of accountability. Targeted initiatives across business functions have led to improved engagement, higher productivity, and stronger retention.

The Human Resources function plays a strategic role in aligning talent priorities with the Companys long-term vision of contributing to the growth of Indias chemical industry while delivering sustainable value to stakeholders. The Company recognises that attracting, nurturing, and retaining high-quality talent is critical to driving innovation and enabling scalable, future-ready operations.

MANAGEMENT OUTLOOK

Indian Chemical Industry: Structural Trends Shaping Future Growth

Despite near-term challenges, the Indian chemical industry continues to be supported by strong structural fundamentals. Stable domestic consumption, favourable demographic trends, and ongoing policy support for manufacturing provide a resilient foundation for long-term growth. In addition, the continued realignment of global supply chains is creating incremental opportunities for Indian manufacturers to expand their presence in international markets, particularly in higher-value segments such as Speciality chemicals and advanced materials.

Import substitution remains a key driver of growth, supported by improving domestic capabilities, increasing investments in capacity and technology, and a broader focus on self-reliance. As a result, companies with integrated operations, strong process expertise, and reliable supply chains are well positioned to capitalise on these emerging opportunities over the medium to long term.

Positioned for Resilience and Long-Term Growth

In this operating environment, Deepak has remained focussed on maintaining operational discipline, optimising cost structures, and ensuring consistent supply reliability. The Companys diversified product portfolio, supported by integrated manufacturing capabilities and deep expertise in process chemistry, has enabled it to navigate market volatility with relative resilience.

At the same time, the Company continues to advance its strategic initiatives aimed at strengthening its presence across value chains and enhancing its capabilities in higher-value and more positions the Company to not only manage near-term challenges effectively but also to build a stronger foundation for sustainable growth and improved value creation over the long term.

BUSINESS TRANSFORMATION ROADMAP

Transition to an Integrated Chemicals Platform: The

Company continues to make steady progress toward its strategic objective of evolving into an integrated chemicals and materials platform. This transformation is being pursued in a calibrated and phased manner, with a clear focus on enhancing value capture and reducing exposure to cyclicality. Backward integration initiatives are aimed at securing critical raw materials and improving cost efficiency, thereby strengthening the Companys control over its supply chain. At the same time, forward integration into downstream products is expected to improve margin stability and enable deeper engagement with end-use applications. This dual approach not only enhances operational resilience but also positions the Company to capture a greater share of value within each value chain.

Portfolio Transformation and Value Chain Deepening: The

Company continues to evaluate opportunities to expand its product portfolio through entry into higher-value derivatives and adjacent segments. This strategy is supported by its established process chemistry capabilities, which enable the development of complex products and efficient manufacturing processes. By increasing product complexity and moving toward applications with higher entry barriers, the Company aims to improve its margin profile and reduce dependence on commoditised segments. The emphasis remains on selective and disciplined expansion, ensuring alignment with the Companys core strengths and long-term strategic objectives.

Capital Allocation Discipline: Capital allocation continues to be guided by a structured and prudent framework, with a focus on long-term value creation. Investments are aligned with strategic priorities and are phased in line with execution-readiness and market conditions. The Company remains committed to maintaining financial discipline, with careful consideration of return metrics, balance sheet strength, and liquidity. This approach ensures that growth investments are undertaken in a sustainable manner, without compromising financial stability.

BUSINESS SEGMENT REVIEW ADVANCED INTERMEDIATES (AI) Core Operations Driving Scale and Stability

Performance Overview: The Advanced Intermediates segment operated in a challenging environment during the year, impacted by subdued demand conditions and pricing pressure across several product categories. Inventory correction in the agrochemical value chain, coupled with cautious demand from end-user industries, led to lower volumes and realisations. Despite these headwinds, the segment demonstrated resilience, supported by its diversified customer base, established market position, and operational efficiencies.

Operational Focus and Response: During the year, this segment focussed on optimising production efficiencies, improving cost structures, and maintaining supply reliability. Continuous toward process optimisation and resource efficiency enabled the segment to mitigate the impact of external pressures to some extent. The Company also maintained close engagement with customers to ensure alignment with evolving demand patterns and to strengthen long-term relationships.

Outlook: Looking ahead, demand conditions are expected to improve gradually as inventory levels normalise and end-user industries stabilise. However, the pace of recovery remains uncertain and is likely to be gradual. The Company will continue to focus on improving product mix, enhancing operational efficiency, and strengthening cost competitiveness. Over the medium term, a gradual shift toward more value-added products is expected to support margin improvement and reduce exposure to commoditised segments.

DEEPAK PHENOLICS LIMITED (DPL) Driving integration, scale efficiency and downstream value creation

Operating Environment and Performance: The Phenolics business experienced a volatile operating environment during the year, with fluctuations in global phenol-acetone spreads and demand conditions impacting realisations. Pricing pressure persisted across key product categories, driven by global supply dynamics and competitive intensity. Despite these challenges, the Companys integrated manufacturing setup and cost-efficient operations provided a degree of resilience, enabling it to maintain stable operations and manage cost pressures effectively.

Outlook: While near-term performance is expected to remain influenced by global market conditions, the Companys integrated operations and downstream expansion initiatives are expected to support improved profitability over the medium term. The focus will remain on operational efficiency, cost management, and disciplined execution of strategic projects.

DEEPAK CHEM TECH LIMITED (DCTL) Emerging Growth Platform

Strategic Role and Business Rationale: Deepak Chem Tech Limited represents a key pillar of the Companys long-term growth strategy, focussed on building capabilities in advanced materials, Speciality chemicals, and engineering polymers. These segments are characterised by higher value addition, stronger entry barriers, and favourable long-term demand trends. The establishment of this platform reflects the Companys intent to transition toward a more differentiated and value-added business model.

Key Projects and Capital Investments:

The Company is undertaking a series of strategic projects under DCTL, with a focus on building an integrated and future-ready portfolio. The most significant of these is the Phenol to Polycarbonate (PC) resin project at Dahej, Gujarat, with an estimated capital outlay of approximately 11,500 Crores. This project represents a major import substitution opportunity and marks the Companys entry into high-performance engineering plastics.

In addition, the Company is: about to commission its MIBK and MIBC project These products finds applications in rubber chemicals, paints, and mining industries

investing about 600 Crores for manufacturing Speciality Chemicals and Performance Products aligned with global demand trends

strengthening forward integration through investments in products to use inhouse Nitric Acid

These initiatives are supported by integrated infrastructure, technology collaborations, and in-house process capabilities

Outlook: These investments are expected to significantly enhance the Companys product portfolio, revenue mix, and margin profile over the medium to long term. While these projects involve longer gestation periods, they provide a strong foundation for sustainable growth and improved return ratios.

INNOVATION AND TECHNOLOGY ENABLEMENT Strengthening processes, productivity and scalability

Process Chemistry and Operational Excellence: The Company continues to leverage its core strength in process chemistry to drive operational excellence and cost efficiency across its manufacturing operations. Deep technical expertise enables continuous refinement of production processes, ensuring improved consistency, reliability, and scalability. Ongoing initiatives such as debottlenecking, process optimisation, and yield enhancement have contributed to higher capacity utilisation and improved throughput. These efforts are embedded within a broader culture of continuous improvement, focussed on enhancing productivity and strengthening operational performance.

Research and Development Focus: Investments in research and development remain central to the Companys long-term growth strategy. The R&D focus is directed toward developing complex chemistries, improving existing processes, and enabling entry into higher-value applications. By strengthening its technical capabilities and innovation ecosystem, the Company aims to support portfolio upgradation and expand its presence in more specialised and differentiated segments. These initiatives are expected to enhance value addition and support sustainable margin improvement over time.

Digital Integration and Data-Driven Operations: In parallel, the Company is advancing the adoption of digital technologies across its operations to improve visibility, efficiency, and responsiveness. Digital tools and data analytics are being leveraged to strengthen supply chain management, enhance planning capabilities, and enable more informed decision-making. This transition toward data-driven operations is expected to improve agility, reduce inefficiencies, and support better alignment with evolving market requirements.

Sustained Competitive Advantage: Collectively, these initiatives reinforce the Companys ability to enhance operational efficiency, strengthen cost competitiveness, and build long-term resilience. By integrating process excellence with innovation and digital capabilities, the Company is well positioned to sustain its competitive advantage and drive consistent performance in a dynamic industry environment.

RESPONSIBLE BUSINESS FRAMEWORK Balancing environmental impact, social commitment and governance integrity

The Company remains firmly committed to conducting its operations in a sustainable and responsible manner, with a continued emphasis on minimising environmental impact and optimising the use of natural resources. Efforts are consistently directed toward improving energy efficiency, reducing emissions, and strengthening waste management practices across manufacturing locations. These initiatives are supported by ongoing investments in cleaner technologies, process improvements, and resource conservation measures, enabling the Company to enhance environmental performance while maintaining operational efficiency.

Employee safety and well-being remain integral to the Companys operating philosophy. Robust safety systems, structured training programs, and a proactive safety culture are embedded across all levels of the organisation, with a strong focus on prevention, awareness, and continuous improvement. The Company also recognises its broader responsibility toward society and continues to engage constructively with local communities through initiatives aimed at supporting social development, education, and overall community well-being.

Governance remains a cornerstone of the Companys operations, guided by principles of transparency, accountability, and ethical conduct. Strong internal control systems, well-defined compliance frameworks, and a culture of integrity ensure adherence to regulatory requirements and reinforce stakeholder confidence. Through these combined efforts, the Company continues to strengthen its commitment to responsible business practices and long-term sustainable value creation.

VALUE-LED CAPITAL DEPLOYMENT Investment Pipeline and Return-Oriented Growth

The Company continues to adopt a disciplined and strategic approach to capital allocation, with a clear focus on investments that strengthen integration, enhance value addition, and support sustainable long-term returns. The current phase represents a significant investment cycle, with a multi-year capital expenditure program estimated in the range of 8,000 Crores to 10,000 Crores, aligned with the Companys strategic transformation agenda.

A key component of this investment program is the expansion and downstream integration within the phenolics value chain, with an estimated outlay of 2,000 to 2,500 Crores. This includes the development of value-added derivatives such as Bisphenol-A (BPA), aimed at improving margin stability and reducing exposure to commodity cycles. In parallel, a substantial portion of the capital is being deployed toward the Polycarbonate project under Deepak Chem Tech Limited, with an estimated investment of approximately 5,000 Crores. This project represents a significant strategic step toward entering advanced materials and addressing import substitution opportunities.

The Company remains committed to maintaining financial discipline throughout this investment cycle. Capital deployment is being managed through a balanced mix of internal accruals and prudent leverage, with continued emphasis on preserving balance sheet strength, maintaining adequate liquidity, and ensuring that return metrics remain aligned with long-term value creation objectives.

STRATEGIC ROADMAP ENABLING THE NEXT PHASE OF GROWTH

Near-Term Priorities: In the near term, the Company will continue to focus on operational efficiency, cost management, and execution of ongoing projects, while navigating the prevailing market environment.

Medium-Term Growth Drivers: Over the medium term, growth is expected to be driven by the commissioning of downstream phenolics projects, scaling up of DCTL initiatives, and increasing contribution from Speciality and advanced materials.

Long-Term Vision: The Company aims to evolve into a globally competitive, innovation-driven chemicals and materials enterprise, with strong capabilities across the value chain and a erentiated product portfolio. The execution of capex worthdiff 11,500 Crores on integrated project of Cumene-Phenol-Acetone to Polycarbonate and its compounds, will accelerate the transformation. This transformation is expected to drive structural improvement in margins, return ratios, and overall business quality.

VISION FOR SUSTAINABLE GROWTH

Though the chemical industry continues to operate in a challenging environment, characterised by subdued demand conditions and persistent pricing pressures across segments, the Company has remained focussed on maintaining operational discipline, optimising cost structures, and ensuring steady execution of its strategic priorities. The current phase reflects cyclical adjustments across global markets, with gradual signs of stabilisation emerging, albeit with limited near-term visibility.

Against this backdrop, Deepak Nitrite Limited believes that its integrated business model, diversified product portfolio, and ongoing investments across value chains provide a strong and resilient foundation for sustainable long-term growth. The Companys emphasis on integration, value addition, and capability building is expected to enhance its competitive positioning over time. Going forward, the Company will continue to pursue growth opportunities in a measured and disciplined manner, with a clear focus on strengthening core operations, improving value capture, and delivering consistent and enduring value to its stakeholders.