Fine Organic Industries Ltd Management Discussions

1. ECONOMIC OVERVIEW

1.1 Global Economy

In CY 2024, the global economy navigated a transitional phase marked by resilience and uncertainty due to geopolitical shifts, trade policy changes, and monetary adjustments. While inflationary pressures eased and economic activity held steady in most regions, disruptions caused by global conflicts, election cycles, and trade realignments created uneven momentum. However, as it progressed through 2025, the landscape is undergoing significant shifts due to escalating geopolitical tensions and evolving economic challenges. The Russia-Ukraine war, the Israel-Gaza conflict, and ongoing US-China tensions continued to weigh on global sentiment and supply chains. A pivotal development has been the introduction of near-universal tariffs by the United States on April 2025, prompting swift retaliatory measures from major trading partners. This escalation has led to effective tariff rates reaching levels not seen in over a century, delivering a sharp shock to global trade and growth. The unpredictability of these policy changes has heightened economic uncertainty, complicating investment decisions and undermining the reliability of traditional forecasting models.

(Source: IMF Report on World Economic Outlook, April 2025)

The global GDP is expected to moderate to 2.8% in CY 2025 before recovering slightly to 3.0% in CY 2026. This trajectory reflects the growing impact of geopolitical tensions, trade disruptions, and tighter financial conditions in several major economies.

Advanced economies are expected to grow by 1.4% in CY 2025, with the US projected at 1.8%. The Euro Area is set to grow at 0.8%, and the UK at 1.1%, helped by lower energy prices and improved sentiment. Emerging markets are projected to grow 4.2%, led by India and Asia on the back of tech investments, capital expenditure, and strong exports. e,financ and professional

(Source: IMF Report on World Economic Outlook, April 2025)

Global inflation eased to 5.7% in 2024 and is projected to fall further to 4.3% in CY 2025, and 3.6% in 2026. This disinflation is due to the fading of pandemic-era supply shocks, stable labour markets supported by immigration, and effective monetary policies.

Energy prices are expected to decline by 2.6%, while nonfuel commodities may rise by 2.5%. However, risks like climate disruptions, geopolitical tensions, and protectionism could trigger price volatility.

Looking ahead, advanced economies are expected to begin monetary easing, while the Federal Reserve holds interest rates steady at 4.5% as of March 2025.

Meanwhile, emerging markets may adopt a more cautious approach, balancing inflation management with growth support.

(Source: IMF Report on World Economic Outlook, April 2025)

Outlook

The global economy is navigating a complex recovery, supported by coordinated policy efforts, structural reforms, and renewed international cooperation. Emerging markets will lead momentum, while advanced economies expand gradually amid policy changes. Geopolitical changes, supply chain shifts, and sustainability efforts will impact long-term resilience, demanding agile and inclusive strategies for sustained progress.

1.2 Indian Economy: Steady Progress, Balanced Outlook

India remains one of the fastest-growing major economies, with the IMF projecting 6.5% GDP growth for FY 2024-25 and FY 2025-26. Growth is driven by strong private investment, robust domestic consumption, a young workforce, and rising incomes, reinforcing the country?s economic resilience.

(Source: Economic Survey 2024-25, IMF Report January 2025)

India?s agriculture sector grew at an average of 5% annually from FY 2016-17 to FY 2022-23, with 3.5% growth in Q2 FY 2024-25, driven by policies supporting productivity, crop diversification, and farmer incomes.

The services sector leads with strong growth in IT,

. Manufacturing is also gaining momentum, supported by domestic demand and investments, with 78% of manufacturers expecting stable or higher output in early FY 2024-25. The PMI rose to 58.1 in March 2025, indicating strong expansion. The MSME sector remains vital, with the FY 2025-26 Union Budget offering key reforms and financial support.

Additionally, India remained resilient amid global uncertainties, with CPI inflation falling to a seven-month low of 3.6% in February 2025 and the merchandise trade deficitnarrowing to a three-year low of US$ 14.05 billion. Strong macroeconomic fundamentals such as robust agricultural output, rising consumption, stable inflation. and a rate cut by the RBI has bolstered growth momentum.

(Source: https://www.frost.com/uncategorized/2025-26-budget-analysis-manufacturing-sector/ https://pib.gov.in/PressReleaseIframePage. aspx?PRID=2098048 https://manufacturing.economictimes.indiatimes. com/news/industry/growth-momentum-of-indias-manufacturing-sector- continues-says-ficci-survey/118118334)

Indian Economy Outlook

India?s economic outlook remains strong, fuelled by domestic demand, infrastructure growth, and industrial revival. With stabilising agriculture, expanding manufacturing, and export-led services, India is deepening its role in global value chains. Urbanisation, a young workforce, and rising incomes boost momentum, while automation, green tech, fiscal discipline, and investments enhance resilience. Structural reforms and modernisation position India for sustained high growth and global economic leadership.

A major risk continues to arise from the US tariff levies on exports from India and other countries. These measures could reduce trade and investment flows, potentially creating volatility in the domestic financial market.

In this scenario, the Government must implement systematic deregulation, increase ease of doing business, and pursue strategic policy interventions to address global challenges and achieve higher growth rates for long-term ambitions.

(Source: https://www.business-standard.com/economy/ news/adb-revises-india-s-fy26-gdp-growth-to-6-7-amid-trade-uncertainty-125040900317_1.html)

2. INDUSTRY OVERVIEW

2.1 Specialty Chemicals

The specialty chemicals market is poised for robust growth, driven by factors such as Industry 4.0 adoption, rising demand for high-performance and function-specific chemicals, global market expansion, and a shift towards eco-friendly solutions. Key segments fuelling this growth include electronic chemicals, specialty polymers, industrial cleaners, surfactants, flavours and fragrances, among others.

The demand is particularly strong across end-use industries like personal care, plastics, packaging and food ingredients. Sustainability and decarbonisation have become central themes, prompting companies to adopt green chemistry and circular economy practices. At the same time, the chemical industry operates within a complex global regulatory landscape, where regional standards may vary but are unified by a shared focus on safety, sustainability, and innovation. To stay competitive in this evolving environment, leading players are expanding their portfolios with eco-friendly variants and increasing R&D investments to deliver innovative, customised solutions that comply with regulatory frameworks and cater to shifting customer needs.

(Source:https://www.thebusinessresearchcompany. com/report/specialty-chemicals-global-market-report#:~:text=Specialty%20Chemicals%20 Market%20Size%202025,(CAGR)%20of%204.4%25)

Indian specialty Chemicals Market

In recent years, the Indian specialty chemicals industry has seen transformative growth, driven by rising exports, strong domestic demand, and supportive government initiatives like ‘Make in India? and ‘Atmanirbhar Bharat?. The sector has evolved from a low-cost basic chemical producer to a key global player, showcasing its adaptability and resilience. Rapid industrialisation, technological progress, and the global "China+1" strategy have further positioned India as a preferred manufacturing hub, with 8–10% of global specialty chemical production shifting to the country. The industry is set for significant growth in CY 2025.

(Source:https://smecommunities.com/top-4-trends-in-indian-specialty-chemicals-industry-in-2025/)

Key Trends Reshaping the Specialty Chemicals Industry in 2025

India?s specialty chemicals industry is undergoing dynamic transformation, driven by strategic investment in high-growth sectors like semiconductors, battery storage, and green hydrogen. Rising domestic demand, fuelled by urbanisation and infrastructure growth, is boosting segments like construction chemicals and personal care ingredients. Besides these developments, there is a strong industry-wide shift towards sustainability, with increased adoption of green chemistry, including bio-based feedstocks and solvent-free synthesis.

Exports have grown at nearly 20% annually from FY 2021-2024, supported by global supply chain shifts, further solidifying India?s global position. Together, these trends reflect a sector driven by innovation, market expansion, sustainability, and evolving global trade dynamics.

(Source:https://smecommunities.com/top-4-trends-in-indian-specialty-chemicals-industry-in-2025/)

2.2 Oleochemicals

The oleochemicals industry is witnessing strong growth, driven by rising demand for sustainable, bio-based alternatives to petrochemicals. In 2024, manufacturers advanced innovative oleochemicals with specialised properties, expanding their use in sectors like soaps, personal care, food processing, rubber and textiles, lubricants, among others. While also improving production efficiency and sustainability.

Oleochemicals, derived from renewable sources like vegetable oils and fats, offer superior biodegradability and performance, aligning with global efforts to reduce fossil fuel dependence. This momentum is expected to continue into 2025, with new opportunities in sustainable packaging and clean energy. However, raw material volatility and supply chain stability remain key challenges. The Asia-Pacific region leads production due to abundant resources and favourable trade conditions, positioning the industry for sustained, innovation-led growth.

2.3 Food Additives

Food additives are vital in enhancing taste, texture, appearance, and shelf life, while also serving as and nutritional enhancers.preservatives, emulsifiers

Their application has expanded across categories such as processed foods, bakery, dairy, chocolates, and confectionery, in response to the rising demand for healthier and more functional food options. Changing lifestyle patterns, particularly the increase in working professionals and a growing number of working women have led to a higher dependence on packaged and ready-to-consume foods. This shift has further reinforced the importance of food additives in ensuring product stability, safety, and quality across diverse consumption needs.

A key trend is the growing use of bio-based additives from microbial or plant sources, supporting the move toward natural and sustainable ingredients. However, concerns over long-term health effects persist, prompting ongoing research and stricter regulations. The evolution of food additives continues to balance innovation, consumer demand, and global safety standards.

Global Outlook

The global food additives market is projected to reach US$ 169.46 billion by 2025, and further grow to US$ 249.04 billion by 2033, reflecting a CAGR of

4.93% over the forecast period. This growth is largely driven by rising demand for clean-label and natural ingredients, coupled with increasing consumption of convenience and processed foods. The growing preference for packaged food and beverages continues to create new opportunities for food additive manufacturers worldwide. The Asia-Pacific expected to lead the market, with a projected growth rate of 5.81%, driven by rapid urbanisation, shifting consumer preferences, and steady expansion of the food processing industry across the region.

(Source:https://straitsresearch.com/report/food-additives-market)

India Outlook

In India, demand for food additives is growing due to shifting consumer preferences, advances in food production, and the fast-expanding food processing industry, which contributes about 13% to the GDP. Rising consumption of processed foods has increased the need for additives to improve taste, texture, nutrition, and shelf life. Consumers are also moving towards natural additives like stevia, monk fruit, and plant-based emulsifiers, highlighting a preference for clean-label, health-focussed ingredients.

(Source: https://www.mordorintelligence.com/industry-reports/india-food-additives-market)

Factors Driving the Food Additives Industry

• Changing Consumer Preferences: Growing demand for processed and convenience foods is driving the need for additives to enhance taste, texture, and shelf life.

• Food Processing Industry Growth: India?s expanding food sector is increasing the demand for additives to ensure quality and safety.

• Technological Advancements: Innovations in processed food production are enabling the development of more stable and appealing food products.

• Health Awareness & Natural Additives: Consumers are shifting towards natural alternatives like stevia and plant-based emulsifiers due to health concerns.

• Regulatory Changes: FSSAI amendments are encouraging innovation and expanding food additive applications.

• Beverage & Dairy Expansion: Rising consumption of soft drinks, dairy, and frozen foods is boosting the need for stabilisers and texture enhancers.

• Urbanisation & Disposable Income: Higher purchasing power and changing lifestyles are driving greater consumption of processed foods.

• R&D Investments: Companies are focussing on innovation to develop health-oriented additives that meet evolving consumer and regulatory demands.

(Source:https://www.mordorintelligence.com/ industry-reports/india-food-additives-market)

2.4 Plastics & Packaging

Plastic additives are key compounds added to polymers to enhance durability, functionality, and resistance to weather, UV, and water. They also offer safety features like flame retardancy. Common additives include stabilisers, plasticisers, colourants, fillers, and flame retardants. These enable manufacturers to tailor plastics for use across industries such as packaging, construction, automotive, and electronics.

Global Outlook

The plastic additives market is growing rapidly, driven by rising demand for sustainable, high-performance plastics. These additives enhance durability, UV resistance, and flame retardancy while addressing environmental concerns. Growth is supported by advancements in additive technology and increasing use of various types of polymers across packaging, construction, electronics, automotive, and aerospace industries.

Regulatory pressure and consumer awareness are accelerating the shift to eco-friendly solutions, with additives that boost recyclability and biodegradability gaining popularity. Despite challenges like raw material cost fluctuations and strict regulations, the market is set for steady growth, especially in emerging economies.

Indian Outlook

India?s plastic additives consumption is rising, driven by growing demand in packaging, automotive, construction, and electronics for lightweight and durable materials. This growth is supported by the shift towards eco-friendly additives that boost recyclability and reduce environmental impact. The push for lightweight vehicles, evolving consumer preferences, and stricter packaging regulations are accelerating innovation. Advances in additive technology and bio-based solutions are also reshaping the industry, making plastic additives key to future material innovation and sustainability.

Factors Driving the Plastic Additives Industry

• Advancements in Additive Technologies:

Innovations are enhancing plastic durability, UV resistance, recyclability, and biodegradability for next-generation materials.

• Shift Towards Sustainability: Environmental concerns and regulations are fuelling demand for bio-based, recyclable, and biodegradable plastic additives.

• Stringent Regulatory Compliance: Stricter safety, environmental, and performance standards are pushing industries to adopt specialised additives.

• Consumer Demand for Aesthetic & Functional Plastics: The need for visually appealing, lightweight, and versatile plastic products is driving advanced additive development.

• Growing R&D Investments: Companies are focussing on innovation to develop additives that improve plastic properties while supporting sustainability goals.

(Source: https://www.imarcgroup.com/india-plastic-additives-market)

2.5 Additives for Personal Care

Cosmetic additives include ingredients that improve the texture, stability, effectiveness, and appearance of products, serving roles like preservation, emulsification, moisturisers and fragrance enhancement. In CY

2024, thesignificantly due to rising market grew global demand, a shift toward natural and sustainable ingredients, and formulation innovations. This growth is expected to continue into CY 2025, driven by demand for high-performance, eco-friendly solutions.

Global Outlook

The global cosmetic ingredients market is steadily growing, driven by rising skincare awareness, demand for natural ingredients, and higher disposable incomes in developing regions. Key factors include the shift to organic formulations, scientific innovation, regulatory changes, and evolving beauty trends. Millennials are influencing green manufacturing and refillable packaging. As brands focus on sustainable, high-performance ingredients, the market is set for continued growth, balancing innovation, compliance, and affordability.

Indian Outlook

India?s cosmetic ingredients market is growing rapidly, driven by rising demand for premium skincare and high-quality ingredients like botanical extracts and advanced formulations. Higher disposable incomes are boosting interest in effective skincare, supporting the rise of innovative, high-end brands. Demand for personal care ingredients such as emollients, surfactants, and with the shift toward natural emulsifiers cosmetics. Digital beauty retail and changing lifestyles are also promoting holistic beauty solutions, shaping the industry?s future.

Factors Driving the Personal Care Additives Industry

• Rising Demand for Natural Ingredients: Consumers prefer organic, plant-based, and eco-friendly additives due to concerns over synthetic chemicals and sustainability.

• Growth of Clean Beauty: The shift toward non-toxic formulations is driving demand for preservative-free, sulfate-free, and fragrance-free cosmetic additives.

• Advancements in Skincare & Haircare: Innovations in anti-aging, UV protection, hydration, and scalp health are increasing the need for specialised personal care additives.

• Expansion of Male Grooming: Growing adoption of personal care products by men is fuelling demand for performance-enhancing and texture-improving additives.

• Regulatory Compliance & Safety: Stricter global regulations are pushing manufacturers toward high-quality, dermatologically tested, and eco-compliant ingredients.

• E-commerce & Digital Influence: Online beauty platforms and influencer marketing are driving demand for innovative cosmetic formulations requiring unique additives.

• Technological Innovations in Cosmetics: Advancements in bioengineering, nanotechnology, and active delivery systems enabling high-performance cosmetic additives.

• Consumer Demand for Multi-functional Products: The rise of hybrid skincare-makeup products is increasing the need for additives that offer both aesthetic and functional benefits.

• Urbanisation and Product Awareness: Urbanisation, pollution, and rising beauty consciousness, especially among younger consumers are driving demand for protective, nourishing, and easy-to-use personal care additives.

Business Overview

Established in 1971, Fine Organics (also referred to as ‘The Company?) is India?s largest manufacturer of specialty performance additives and a leading global player in the sector. The Company produces a wide range of plant-derived specialty additives used in foods, polymers, cosmetics, coatings, and other industrial applications. Since its first export in 2001, Fine Organics has expanded its presence to over 80 countries, offering sustainable, high-performance solutions that enhance everyday products.

The Company utilises the versatility of oleochemistry to build a diverse portfolio of specialty additives for multiple industries. From being a pioneer in food the Company has expanded its emulsifiers offerings to include a wide range of specialty emulsifiers.

Its polymer additives are used in a wide range polymers, and rubbers and elastomers. Under the CosPha range, Fine Organics offers essential base ingredients for skincare formulations such as creams, lotions, and ointments. The Company?s expertise also extends to functional additives for feed nutrition and coatings, further strengthening its industrial presence.

Fine Organics serves a diversified global base of over

890 direct customers, who rely on its products as performance-critical ingredients. These ingredients often require rigorous and costly approval processes, making it difficult for customers to switch suppliers. As a result, clients prefer to work with a limited number of trusted, long-established partners. This dynamic reinforces Fine Organics? position as a preferred supplier and fosters long-term loyalty based on consistent quality and reliability.

Driven by innovation and sustainability, the Company has earned recognition for replacing harmful chemicals with eco-friendly solutions across industries. Its customer-centric approach, supported by advanced R&D and state-of-the-art automated manufacturing facilities, ensures top-tier product quality and adherence to global standards. The Company?s in-house capabilities for plant design and engineering further strengthen its operational edge by minimising capital expenditure and enabling quicker commissioning of new projects. A dedicated team of 35 scientists and technicians support ongoing innovation and proprietary technology development.

To strengthen its global presence, Fine Organics has set up a wholly owned subsidiary — Fine Organic Industries (SEZ) Private Limited — focussed on exports. The Company has secured a 60-year lease for approximately 30 acres plot in Jawaharlal Nehru Port Authority (JNPA) SEZ, Raigad, Maharashtra, India to build a new manufacturing facility. Funded through debt and internal accruals. This unit is expected to begin commercial production by late year 2027, further expanding the Company?s international footprint.

Operational Performance Food Additives

With decades of experience emulsifiersmanufacturing and marketing, our Company has been a trusted partner to the food industry for over 50 years. Our wide range ofemulsifiers additives enhances food quality, texture and shelf life. The portfolio includes specialised food additives that help to prevent spoilage, improve texture and ensure product stability and quality. These solutions support food manufacturers to maintain consistency, boost efficiency and meet consumer demands across sectors such as bakery, dairy, chocolate, confectionery, ice cream, chewing gum, among others.

Polymer Additives

In the plastics and polymeric materials sector, our Company provides advanced polymer additives that enhance performance, sustainability, and efficiency.

The product range includes specialty additives for friction reduction, antiblocking additives, anti-static agents for safer handling, filler and pigment dispersants and anti-fog additives for clear agricultural and food packaging films. These solutions are widely used across packaging, automotive, consumer goods, and industrial applications.

With the growing global shift toward environmentally responsible materials, there is increasing demand for biodegradable plastics and a strong preference for green, sustainable additives. In response, our Company is actively developing and offering eco-friendly additive solutions that support biodegradability, reduce environmental impact, and align with global sustainability goals. Through continuous innovation and a focus on regulatory compliance, we deliver next-generation solutions that enhance product durability, manufacturing efficiency, and environmental performance. In addition, the Company provides a wide range of specialised additives designed to improve the recycling of plastics, optimising processability and the quality of recycled materials.

Specialty Additives for Personal Care

The Company offers a specialised range of cosmetic and pharmaceutical (CosPha) additives that support high-quality skincare and haircare formulations. Its portfolio includes emulsifiers for smooth textures, emollients for hydration and softness, and green surfactants for gentle cleansing. These additives are essential in products like creams, lotions, gels, and ointments, helping brands meet consumer and regulatory standards. With a focus on innovation and sustainability, the Company enables manufacturers to create superior, eco-friendly personal care and home care products.

Feed Nutrition Additives

The Company addresses the growing demand for safe, performance-centric green solutions and efficient animal nutrition through its advanced range of feed additives. These include natural alternatives to antibiotics, anti-fungal agents that prevent feed spoilage, and nutritional supplements that enhance digestion and energy utilisation. Widely used in poultry, cattle, and aquaculture, these solutions support improved growth, health, fertility and feed efficiency.

As global regulations on antibiotics and synthetic additives become increasingly stringent, the demand for environmentally friendly, compliant additives continues to rise. In response, the Company is dedicated to sustainability and the development of natural, high-performance feed additives that align with international safety standards. Through ongoing innovation, we contribute to a healthier feed industry and a more sustainable food supply chain.

Financial Performance Review

In FY 2024–25, the Company recorded revenue from operations of 2,20,519.45 Lakhs, showing a 13.02% increase from 1,95,114.29 Lakhs in FY 2023 24.

This growth was mainly due to higher demand and a significant rise in exports.

The Company?s EBITDA for FY 2024 25 was 48,108.51 Lakhs, slightly higher than 48,073.64 Lakhs in the previous year an increase of 0.07%. This growth came from a better product mix and improved efficiency. The

EBITDA margin was 24.66%, compared to 24.64% in FY 2023–24, showing a stable margin with a minor 0.02% improvement, reflecting the Company?s strong focus on managing costs and maintaining profitability.

Profit After Tax (PAT) stood at 38,966.25 FY 2024 25, up 6.02% from 36,755.14 Lakhs in FY

2023–24. The PAT margin dipped slightly to 17.67% from 18.49%, a decline of 0.82%. Still, the Company maintained strong profitability, supported by steady demand, effective cost control, and ongoing strategic investments for long-term growth and efficiency.

Key Ratios

Pursuant to the requirements under Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the

Company has evaluated the key financial ratios for the financial year ended same with the previous year. Wherever there is a change of 25% or more, the Company has provided relevant explanations.

In FY 2024–25, the inventory turnover ratio improved to 9.38 from 7.90 in FY 2023–24, an 18.73% increase. This was mainly due to better inventory management and quicker movement of products. The interest coverage ratio rose to 284.63 from 207.20, a 37.34% increase, reflecting stable earnings and the Company?s continued low-debt position.

The current ratio was 8.26, slightly down from 8.67 last year, indicating the Company still maintained strong liquidity, with only a small change in working capital use.

The debt-equity ratio remained at 0.00, confirming the

Company?s debt-free status.

The debtors? turnover ratio improved to 6.18 from 4.73, a 30.66% rise, due to tighter credit controls and better collections. The operating profit margin stood at

19.41%, down from 21.62% the previous year, mainly due to changes in pricing, product mix, and operational performance.

The net profit margin also dipped slightly to 17.67% from 18.84%, reflecting changes in cost and margin factors. Return on net worth was 19.10%, compared to

21.73% last year, as profit growth was lower relative to the rise in shareholders? equity.

Risk Management

We recognise that proactive risk management is fundamental to strong corporate governance and plays a crucial role in leveraging strategic opportunities. To address this, we have developed a comprehensive in risk management framework designed to identify and mitigate risks related to our business operations. This structured approach enables us to assess potential risks and their impact on our objectives, allowing us to make well-informed decisions. By embedding risk management into our decision-making processes, we enhance our ability to navigate uncertainties while capitalising on opportunities to achieve our goals effectively.

Economic and Market Risk – Global economic conditions impact our operations. Economic downturns, financial disruptions, inflation, and political uncertainties can lead to credit risks, fluctuating commodity prices, and exchange rate volatility.

Company?s Approach – The Company actively monitors macroeconomic trends, maintains a diversified product portfolio, expands its global footprint, and serves a broad customer base to minimise potential risks and enhance business resilience.

Increase in Freight Costs – Geopolitical tensions, such as the Red Sea crisis, have led to longer transit times, unanticipated route changes, congestion, and container shortages, impacting global supply chains.

Company?s Approach – The Company optimises its logistics operations by leveraging diversified transportation modes, optimising shipping routes, enhancing supply chain visibility, collaborating with key stakeholders, and continuously assessing market conditions to ensure seamless operations.

Policy Risk – The absence of adequate policy support leaves Indian specialty chemicals producers vulnerable to cheaper imports, which can undermine their competitiveness.

Company?s Approach – The Company actively engages with government bodies to advocate for protective policies, such as tariffs or incentives, to support domestic manufacturers.

Competition Risk – Intense competition from established players may impact customer preferences, market share, and profitability.

Company?s Approach – The Company remains committed to innovation by developing environmentally friendly high-performance specialty additives, making continuous developments and upgradation in R&D, and adopting advanced technologies to drive sustainable growth and industry leadership

Commodity Price Risk – The surge in raw material prices, driven by rising vegetable oil costs, has significantly increased cost of our products.

Company?s Approach – The Company employs a proactive pricing strategy through internal price monitoring, long-term, medium-term and short-term vendor and customer contracts, and strategic sourcing to effectively manage cost fluctuations and ensure stability.

Foreign Exchange Risk – With approximately 56.71% of revenue derived from exports and 32.50% of raw material procurement denominated in foreign currencies, the Company is exposed to fluctuations in foreign exchange rates. Such volatility can have a impact on the Company?s margins and overall financial performance.

Company?s Approach – To manage this risk, the Company adopts a prudent hedging strategy by selectively entering into forward contracts to cover its foreign currency exposures. This approach helps ensure financial stability and protects the Company from undue market volatility, while maintaining flexibility in treasury operations.

Human Resources

The Company firmly believes that its employees are the driving force behind its success, making human capital its most valuable asset. To build a sustainable future, it has established HR policies centred on attracting, developing, and retaining skilled professionals. Understanding that the loss of key talent could impact operations, the Company proactively invests in upskilling initiatives that empower employees to tackle challenges, boost morale, and foster a collaborative work culture. As of March 31, 2025, the Company?s workforce stood at 869 committed individuals, each playing a vital role in its seamless functioning. By prioritising talent development and employee well-being, the Company continues to cultivate a workplace that nurtures growth, innovation, and long-term success.

Internal Control Systems

In parallel to the risk management system, the Company has implemented a robust and structured system of internal controls over financial reporting (IFC), ensuring the accuracy, completeness, and reliability of its accounting and financial disclosures. These controls are operating supported by well-defined procedures, and governance mechanisms aligned with Company?s business processes, compliance requirements, and industry best practices. The system ensures adherence to statutory norms, efficient and ethical conduct of operations, safeguarding of assets, proactive detection and prevention of frauds and errors, and the timely preparation of dependable financial information. Automated checks, control reviews, and audit trails are embedded across key processes, with internal auditors periodically validating control design and effectiveness. Review by senior management and the Audit Committee ensures transparency and reinforces governance accountability. Company?s IFC framework, anchored in applicable regulatory standards and global benchmarks, is continuously reviewed and refined to respond to emerging business needs, technological advancements, and evolving risk landscapes, thereby supporting long-term sustainability and performance integrity.

Cautionary Statements

Statement made in the Management Discussion and Analysis describing the Company?s objectives, projections, estimates, expectations may be ‘forward looking statements? within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Company?s operations include economic conditions affecting demand supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the government regulations, tax laws, other statutes and other incidental factors.