Fineotex Chemical Ltd Management Discussions

Economic Environment Global Economy

The global economy remained resilient through 2025 despite elevated trade-policy uncertainty, geopolitical tensions and continuing supply- chain realignment. Growth remained moderate, while inflation generally eased from earlier peaks. Technology investment, adaptive private-sector responses and supportive financial conditions helped offset some of the pressure from trade fragmentation. The external environment nevertheless remained characterized by uncertainty, reinforcing the importance of supply-chain resilience, customer diversification and disciplined cost management for globally connected manufacturers.

For Fineotex, these conditions underscore the strategic value of a diversified portfolio and a multi-geography operating presence across India, Malaysia and the United States.

Indian Economy

India continued to rank among the fastest-growing major economies. According to the Ministry ofStatistics and Programme Implementation?s provisional estimates released in June 2026, real GDP growth for FY 2025-26 was 7.7%, with Q4 growth estimated at 7.8%. Strong domestic demand, investment activity and services momentum provided resilience against an uncertain external environment.

India?s expanding manufacturing base, infrastructure investment, rising domestic consumption and increasing integration into global value chains continue to provide a supportive backdrop for specialty chemicals.

Trade Agreements and Market Access

India?s trade architecture strengthened during and after the year under review. The India-UK Comprehensive Economic and Trade Agreement, signed in July 2025 and effective from 15 July 2026, provides zero-duty access for approximately 99% of India?s exports to the UK, covering nearly the entire trade value and including sectors such as textiles and chemicals. India and the European Union also announced the conclusion of FTA negotiations in January 2026; the announced framework provides preferential access across 97% of tariff lines, covering 99.5% of India?s export trade value, including significant immediate duty elimination for textiles and other labourintensive sectors.

These developments can improve market access for Indian manufacturers and downstream customers. Their actual impact will depend on implementation, product-specific rules of origin, tariff schedules and customer supply-chain decisions.

Specialty Chemicals Industry

Specialty chemicals are performance-led products designed for specific applications and are differentiated by formulation expertise, technical service, customization, regulatory compliance and innovation. Demand is increasingly shaped by sustainability requirements, process efficiency, water and energy conservation, product performance and the need for reliable regional supply chains.

India is well placed to participate in this opportunity through its manufacturing capabilities, technical talent and growing domestic market. NITI Aayog?s 2025 chemicals-sector roadmap highlighted the opportunity to increase India?s share of the global chemicals value chain from approximately 3-3.5% in 2023 to 5-6% by 2030 and 10-12% by 2040, supported by policy priorities spanning chemical clusters, ports, R&D, ease of doing business, talent and international cooperation.

Key End-Market Opportunities

Textile Specialty Chemicals

Textile specialty chemicals remain a core market for Fineotex. Demand is increasingly moving toward functional finishes, resource-efficient processing, lower-impact chemistry and formulations that help textile processors meet stringent global brand and regulatory requirements. India?s textile and apparel sector is targeted to grow to approximately US$350 billion by 2030, providing a supportive long-term demand environment for differentiated textile auxiliaries and performance solutions.

Oilfield Specialty Chemicals

Fineotex?s entry into oilfield specialty chemicals materially expands its addressable market. Oilfield chemistry is used across drilling, hydraulic fracturing, coiled tubing, completion, production, water treatment and enhanced oil recovery, where product performance and field-level technical support can directly influence operating efficiency and asset productivity.

The United States remains a strategically important market. The U.S. Energy Information Administration?s July 2026 outlook forecast U.S. crude oil production at approximately 13.8 million barrels per day in 2026 and 14.0 million barrels per day in 2027. The same outlook highlighted continued volatility in crude prices and global supply conditions. For specialty chemical suppliers, this environment reinforces the value of customer intimacy, formulation performance, cost competitiveness and the ability to support operators across changing activity levels.

Water Treatment and Performance Chemicals

Water treatment is becoming increasingly important across industrial processing, textiles and oilfield operations. Requirements around water reuse, process efficiency, scale and corrosion control, microbial management and environmental compliance create opportunities for specialized chemistry. Fineotex views water treatment not only as an independent growth vertical but also as a capability that can connect its textile, industrial and oilfield platforms.

Cleaning and Hygiene

Cleaning and hygiene remains a relevant application area supported by urbanization, institutional hygiene requirements and demand for effective, environmentally responsible formulations. Fineotex continues to leverage its formulation capabilities and established product portfolio to serve this market.

Fineotex: Strategic Growth and Global Expansion

Fineotex Chemical Limited has evolved from a focused textile-chemicals company into a diversified, innovation-led specialty performance chemicals platform. Its portfolio now spans textile specialty chemicals, cleaning and hygiene, water treatment, performance chemicals and oilfield specialty chemicals.

The acquisition of CrudeChem Technologies Group in December 2025 was a transformative milestone. CrudeChem is a U.S.-based specialty oilfield solutions provider with capabilities across hydraulic fracturing, coiled tubing, drilling and production chemicals, friction reducers, scale and corrosion inhibitors, biocides, water treatment and enhanced oil recovery. Its operating presence in Texas provides Fineotex with direct access to the North American oilfield market together with product- development, blending, logistics and field-support capabilities.

The combination of Fineotex?s Indian manufacturing base, Biotex Malaysia?s product-development capabilities and CrudeChem?s U.S. oilfield platform creates a broader international operating and innovation network. This structure provides opportunities for technology exchange, cross-market product development, supply- chain optimization and deeper engagement with global customers.

Fineotex?s fungible manufacturing infrastructure at Ambernath, its portfolio of more than 470 specialty products, exports to over 70 countries, global collaborations and expanding U.S. capabilities provide a platform for the Company?s next phase of growth. Management remains focused on disciplined integration, innovation, customer penetration and the pursuit of organic and inorganic opportunities that strengthen technology, market access or product capability.

SWOT Analysis

Strengths

• Broad and increasingly diversified specialty-chemicals portfolio across textile, oilfield, water treatment, cleaning & hygiene and performance applications.

• International operating and R&D footprint spanning India, Malaysia and the United States.

• Established customer relationships, export presence and application-led product development capabilities.

• Fungible manufacturing infrastructure and a broad portfolio that support customized, multi-category production.

• Strong balance-sheet orientation and a track record of investing in capacity, technology and strategic growth.

Weaknesses / Areas Requiring Continued Focus

• Specialty chemicals require continuous R&D investment and rapid adaptation to evolving customer, regulatory and sustainability requirements.

• Exposure to volatility in raw-material prices, freight and foreign exchange can affect costs and margins.

• The enlarged international platform increases integration, governance and execution requirements across geographies.

Opportunities

• Scaling the CrudeChem platform and expanding participation in high-value oilfield applications.

• Growing water-treatment and performance-chemicals offerings across industrial and oilfield customers.

• Deeper wallet share with existing textile and specialty-chemical customers through value-added formulations.

• Cross-geography technology transfer and manufacturing optimization across India, Malaysia and the United States.

• Selective inorganic growth and partnerships that add technology, customers or geographic reach.

Threats

• Geopolitical disruptions, trade barriers and supply-chain volatility.

• Crude-oil-price and upstream-activity volatility affecting oilfield demand.

• Intense competition from global and domestic specialty-chemical producers.

• Changing environmental, product-safety and customer- compliance requirements that may require additional investment.

• Raw-material, currency and logistics volatility.

Production and Sales

During FY 2025-26, consolidated production and sales volumes increased following the consolidation of CrudeChem Technologies.

Production volume stood at 81,731 MT compared with 60,692.40

MT in the previous year, while sales volume increased to 80,356.72

MT from 60,194.47 MT. Income from operations increased to Rs. 77,222.56 lakh from Rs. 53,333.28 lakh.

Particulars	2025-2026	2024-2025
Production MT	81,731	60,692.40
Sales MT	80,356.73	60,194.47
Income from Operation (Rs. In Lakhs)	77,222.56	53,333.28

The enlarged operating base enhances the Company?s ability to serve customers across a wider range of applications, including textile processing, hydraulic fracturing, coiled tubing, production chemicals, water treatment, cleaning and hygiene. Management continues to focus on capacity utilization, operating efficiency, product mix and customer service across the consolidated platform.

Discussion on Financial Performance with Respect to Operations

On a consolidated basis, income from operations increased to Rs. 77,222.56 lakh in FY 2025-26 from Rs. 53,333.28 lakh in FY 2024-25. EBITDA amounted to Rs. 16,781.93 lakh. Profit before tax increased to Rs. 15,303.27 lakh from Rs. 14,124.32 lakh, while profit after tax increased to Rs. 12,501.51 lakh from Rs. 10,920.82 lakh. The year reflects both organic business performance and the impact of consolidation following the CrudeChem acquisition.

Standalone Performance

		(Rs. In Lakhs)
Particulars	2025-2026	2024-2025
Income from Operations	39,687.83	43,922.21
Profit before Tax	11,344.99	12,541.53
Profit after Tax	9,188.96	9,722.67
EPS (FV Rs. 1/Share) (Rs)	0.80	0.86

Standalone Cash / Fund Management

		(Rs. In Lakhs)
Particulars	2025-2026	2024-2025
Cash from Operating activities	(7,310.91)	5,810.02
Cash from Investing activities	6,307.84	(25,703.87)
Cash from Financing activities	3,201.16	17,335.52
Net Cash Flow for the Year	2,198.09	(2,558.33)

Consolidated Revenue by Entity

The following table presents the entity-wise income from operations on the basis disclosed in the source MDA:

r>

		(Rs. In Lakhs)
Company	2025-2026	2024-2025
Fineotex Chemical Limited	39,687.83	43,922.21
FSPL Specialities Private Limited	6,638.88	4,139.47
Manya Manufacturing India Private Limited	-	-
Finoclean Specialities Private Limited	7.35	9.96
Fineotex Malaysia Limited	9,837.68	6,596.97
Fineotex Biotex HealthGuard FZE	23,986.10	99.10
Elimination and adjustments	(2,935.28)	(1,434.41)
Total Group Turnover	77,222.56	53,333.28

Consolidated Performance

		(Rs. In Lakhs)
Particulars	2025-2026	2024-2025
Income from Operations	77,222.56	53,333.28
Profit before Tax	15,303.27	14,124.32
Profit after Tax	12,501.51	10,920.82
EPS (FV Rs. 1/Share) (Rs)	1.09	0.96

Consolidated Cash / Fund Management

		(Rs. In Lakhs)
Particulars	2025-2026	2024-2025
Cash from Operating activities	(2,380.88)	6,933.35
Cash from Investing activities	10,517.59	(27,250.76)
Cash from Financing activities	(6,251.58)	17,649.10
Effect of Foreign Exchange differences	835.31	(45.10)
Net Cash Flow for the Year	2,720.44	(2,713.41)

Financial Ratios and Analysis

The Company?s financial ratios should be read together with the audited financial statements and notes thereto.

Working Capital Ratios

	2025-2026	2024-2025
Current Ratio	4.58	3.40
Inventory Turnover Ratio	6.61	9.66
Debtors Turnover Ratio	4.00	4.27
Creditors Turnover Ratio	6.02	6.43

The current ratio improved to 4.58 from 3.40. Inventory and debtor turnover ratios moderated during the year, which should be viewed in the context of the enlarged consolidated operating base, business mix and working-capital requirements.

Profitability Performance - Standalone

	2025-2026	2024-2025
Return on Networth	13.28%	19.69%
Net Profit Ratio	23.15%	22.14%
Return on Capital Employed	14.98%	19.84%
Operating Profit Margin	37.72%	38.24%
Net Profit Margin	23.15%	22.14%

Standalone Return on Equity and Return on Capital Employed were 13.28% and 14.98%, respectively. The movement in these ratios reflects, among other factors, the enlarged capital base and funds raised by the Company.

Long-Term Financing

Long Term Financing	2025-2026	2024-2025
Debt Equity Ratio	0	0
Debt Service Coverage Ratio	190.39	178.63

Significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including:

Sr. No. Particulars	Reason for Change
i. Debtors Turnover	NA
ii. Inventory Turnover	The inventory ratio decreased by 31.55% during the year, primarily attributable to improved inventory management and better control over material availability. The Company deliberately maintained higher inventory levels to ensure timely availability of raw materials and support uninterrupted production operations.
iii. Interest Coverage Ratio	NA
iv. Current Ratio	The ratio increased by 34.72%, primarily due to prevailing general market conditions. The Company maintained an appropriate level of inventory and other current assets to support business operations and ensure adequate availability of resources. The increase in these current assets contributed to the overall improvement in the ratio during the year.
v. Debt Equity Ratio	NA
vi. Operating Profit Margin (%)	NA
vii. Net Profit Margin (%)	NA

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

The Return on Equity (ROE) decreased by 32.55% during the year, primarily due to the expansion of the Company?s equity base. The increase in shareholders? equity, resulting in a larger capital base, led to a corresponding moderation in the Return on Equity.

Research, Development and Innovation

R&D is central to Fineotex?s strategy because specialty chemicals compete on performance, customization and technical service rather than volume alone. Biotex Malaysia continues to contribute to product development and customized solutions, while Fineotex?s collaborations with EuroDye CTC, HealthGuard and SASMIRA strengthen its technical ecosystem.

The addition of CrudeChem broadens this innovation platform with oilfield application expertise and field-level technical capabilities in the United States. Fineotex intends to leverage this combined knowledge base to accelerate development of high-performance formulations across textile, water-treatment, oilfield and other specialty applications.

Sustainability is embedded in Fineotex?s approach to product development and operations. The Company continues to focus on renewable energy, responsible water and waste management, safe chemical handling and formulations aligned with evolving customer and environmental expectations.

The Company?s initiatives and credentials include renewable-energy adoption at Ambernath, ZDHC certification, NABL and India?s pharmaceutical FDA accreditations, GreenPro certification for the cleaning and hygiene segment, the EcoVadis Commitment Badge and relevant U.S. EPA approvals. These initiatives support Fineotex?s objective of combining performance chemistry with responsible growth.

Internal Control Systems and Their Adequacy

Fineotex Chemical Limited maintains a well-defined internal-control framework commensurate with the size, scale and complexity of its operations across textile, oil & gas, water treatment, cleaning & hygiene and other specialty-chemical segments. Policies and procedures cover critical functions including manufacturing, project execution, finance, supply chain and human resources and are periodically reviewed in light of evolving regulatory and business requirements.

The internal-control environment is designed to support orderly and efficient conduct of business, safeguarding of assets, prevention and detection of fraud and error, and accuracy and completeness of accounting records. Documented standard operating procedures and internal checks support authorized use and protection of physical and intangible assets.

The Board and Audit Committee provide oversight of the Company?s internal-control and risk-management framework. The internal audit function, supported by independent auditors, conducts periodic reviews of operational and financial controls, with findings and recommendations presented to the Audit Committee. The framework is continuously refined as the Group?s processes, regulatory requirements and geographic footprint evolve.

The Company has established internal financial controls intended to provide reasonable assurance regarding financial reporting, maintenance of accounting records, efficient utilization of resources and compliance with applicable laws and regulations. During the year under review, the systems were assessed and no material weaknesses were identified, as stated in the source MDA.

Human Resources

Fineotex?s people remain central to its ability to innovate, serve customers and scale across markets. As at 31 March 2026, the Company had a total workforce of 300 employees, comprising 214 permanent employees and 86 contract workers. Women constituted over 20.56% of the permanent workforce.

The Company continues to invest in talent acquisition, capability building, leadership development, performance management, employee engagement, succession planning and well-being. Its fourth consecutive Great Place to Work recognition reflects the emphasis placed on a collaborative, inclusive and performance-oriented culture.

Health, safety and environmental stewardship remain integral to the Company?s operational philosophy. Fineotex has established systems and preventive controls across manufacturing operations to identify and mitigate workplace hazards, maintain safety equipment and support compliance with applicable statutory requirements.

Safety awareness is reinforced through training, induction programmes, toolbox talks, emergency preparedness and the use of appropriate personal protective equipment. During the year, initiatives included maintenance of eye-wash stations and emergency body showers, mock emergency drills, earth-pit testing, spill-response training, thermal monitoring of electrical installations and periodic medical health check-up camps.

The Company also focuses on environmentally responsible manufacturing, treatment and disposal of effluents in accordance with applicable requirements, and continuous improvement of its HSE framework.

Outlook

Fineotex enters the next phase of its growth with a broader portfolio, an expanded international footprint and access to multiple specialty- chemical end markets. The Company?s established textile business provides a strong base, while oilfield specialty chemicals, water treatment, cleaning & hygiene and other performance applications create additional avenues for growth.

Management?s priorities are to integrate and scale the U.S. oilfield platform, deepen customer relationships, improve capacity utilization, accelerate application-led R&D, expand value-added products and maintain financial discipline. The India-Malaysia-USA operating network provides opportunities to combine manufacturing flexibility, formulation expertise, field application knowledge and global market access.

Fineotex will continue to emphasize diversification, supply-chain resilience, disciplined capital allocation and responsible growth.

Risk and concerns

The risk associated with Fineotex are majorly with regards to global supply chain disturbance due to geopolitical concerns. However, Fineotex has constituted a Risk Management Committee, which is responsible for overseeing and discharging the following functions:

i. To review the Risk Management Policy of the Company and scope of the Company?s operations

ii. To review significant reports from various departments of the Company relating to risk management and compliance issues and responses thereof

iii. To evaluate various risks or threats of the business and to draw out a Risk Management Plan for the Company on an annual basis

iv. To take steps to identify and mitigate information technology and cyber security risks that the company is or may be exposed to on a regular basis

v. To review and evaluate the Company?s practices with respect to Risk Management Plan.

Disclosure of Accounting Treatment

In the preparation of financial statements there?s no treatment different from that prescribed in an Accounting Standard has been followed.