Fineotex Chemical Ltd Management Discussions

Indian Economy:

The Indian economy continues to show strong resilience and remains well-positioned to achieve sustained growth. For FY 2025-26, real GDP growth is expected to be in the range of 6.3 to 6.8 percent, maintaining Indias status as the fastest-growing major economy in the world. This momentum is driven by a combination of steady rural consumption, increased private spending, and continued strength in public capital expenditure. The Reserve Bank of India and rating agencies such as ICRA have highlighted a positive macroeconomic outlook, attributing stability to tax relief measures, favourable agricultural output, and rising household incomes. While global uncertainty and tight financial conditions persist, Indias robust domestic fundamentals provide a solid cushion against external shocks.

Private consumption continues to be the key driver of growth, with household spending remaining strong in both urban and rural areas. The governments decision to increase the tax rebate limit to ?12.75 lakh has boosted disposable income for the middle class. In rural India, strong farm income, higher minimum support prices, and easing inflation have contributed to improved purchasing power. Urban demand is also seeing a gradual revival, aided by stable interest rates, lower equated monthly instalments, and a growing preference for discretionary spending. The expansion of digital infrastructure and e-commerce penetration further supports this consumption trend, particularly among younger demographics.

Public sector capital expenditure continues to be a major growth engine. The central government is expected to exceed ?10 lakh crore in capital outlay by the end of FY 2025-26, building on the momentum of previous years. This increase in infrastructure investment is expected to crowd in private investment, strengthen core sector growth, and improve long-term productivity. Key sectors including roads, railways, ports, and energy are receiving sustained government attention. Additionally, state-level spending is expected to pick up with the release of tied grants and allocations under centrally sponsored schemes.

Indias external sector shows a mixed performance. While services exports continue to perform strongly, merchandise exports have witnessed only modest growth. In FY 2024-25, Indias total exports touched $821 billion, largely driven by engineering goods, pharmaceuticals, and electronics. However, global trade disruptions, freight volatility, and weakening demand in Europe and China have tempered further growth. Imports, particularly of crude oil and electronics, remain elevated, which has put pressure on the trade balance. The government continues to promote export diversification and incentives through various schemes to maintain export competitiveness.

The Indian chemicals industry remains a vital part of the countrys industrial framework and is on a firm upward trajectory. The sector is projected to grow from an estimated to USD 350 to 360 billion in FY 2025-26. India ranks as the sixth-largest chemical producer globally and accounts for approximately 7 percent of the countrys

GDP. With a portfolio of over 80,000 products and a workforce of more than 2 million people, the industry contributes significantly to employment, innovation, and exports. The sector benefits from Indias cost competitiveness, expanding end-use industries, and increasing investments in infrastructure and technology.

Specialty chemicals continue to be a high-growth segment within the Indian manufacturing landscape. This segment is expected to grow from USD 64.5 billion in 2024 to USD 67 to 69 billion by the end of FY 2025-26. The growth is supported by rising demand from sectors such as agrochemicals, pharmaceuticals, personal care, and paints and coatings. Additionally, global companies seeking to diversify supply chains away from China are increasingly looking at India as a reliable partner. The rising emphasis on quality, sustainability, and product innovation is helping Indian specialty chemical manufacturers expand their global footprint.

The government also continues to support the ‘Make in India initiative by promoting domestic manufacturing, simplifying compliance procedures, and easing the regulatory environment. 100 percent foreign direct investment (FDI) under the automatic route, barring a few hazardous chemicals, remains a key driver of capital inflows.

In addition, the government is considering launching a dedicated PLI scheme specifically for the chemical sector, aimed at improving domestic production capacity and increasing export competitiveness. The sector is also expected to benefit from reductions in basic customs duty on select inputs and components. Continued investment in plastics parks and industrial clusters will help foster innovation, reduce import dependency, and improve supply chain integration.

Overall, the Indian chemicals industry is set to achieve another year of significant growth, driven by favourable demand dynamics, strong policy support, and emerging global opportunities. As companies continue to invest in capacity expansion, R&D, and sustainability, the sector is expected to play a pivotal role in Indias industrial and export growth agenda. The strategic alignment between government initiatives, private enterprise, and global market trends will be critical to unlocking the next phase of growth in FY 2025-26.

Indias Specialty Chemicals Boom: Drivers, Opportunities, and the

Road Ahead

Indias specialty chemicals sector is scaling new heights. As of 2024, the industry is estimated to be worth around USD 64.5 billion, contributing approximately 22 percent of Indias total chemicals and petrochemicals output. The broader specialty and fine chemicals subset is valued at USD 22.3 billion and is projected to grow to over USD 35 billion by 2033, at a compound annual growth rate (CAGR) of 5.2 percent. Some estimates suggest that the overall specialty chemicals market could reach between USD 92 to 114 billion by 2032-33, with a CAGR of 6-8 percent.

This strong growth is driven by demand from end-use industries such as agrochemicals, pharmaceuticals, personal care, construction,

and water treatment. Agrochemical exports have shown double-digit growth, and the domestic market is expected to touch USD 4.7 billion, expanding at a CAGR of 8 percent over the next few years. The countrys Active Pharmaceutical Ingredient (API) industry, valued at close to USD 18 billion in 2024, is forecast to grow at a CAGR of 7.78.1 percent, reaching USD 22-23 billion by 2030. India holds about 8 percent of the global API market, with over 500APIs produced locally, and remains a critical hub within the approximately USD 240 billion global API space. Together, these segments reinforce strong upstream demand for specialty intermediates and high-performance chemicals.

India maintains a structural cost advantage in specialty chemical manufacturing, supported by affordable labour, reliable utility costs, and advanced process engineering capabilities. The country has built a skilled workforce of chemical engineers and technical experts who are accelerating innovation in green chemistry, biodegradable materials, and safety-compliant formulations. These strengths have enabled India to capture a 15 percent share in global colorant exports and become a leading supplier of polymer additives, textile chemicals, and surfactants.

The Indian textile specialty chemicals market is also experiencing substantial growth, driven by increasing textile production, rising demand for technical textiles, and a stronger focus on sustainable and eco-friendly products. Complementing this, the Indian textile finishing chemicals market is witnessing significant expansion, driven by growing demand for textiles and heightened awareness of sustainable manufacturing practices. The market is expected to reach USD 3.59 billion by 2030, with a CAGR of 3.63 percent. This growth will be fuelled by -

• Demand for functional finishes like repellent, release, and antimicrobial/anti-inflammatory treatments which enhance specific textile properties.

• Softening finishes, which enhances the feel and comfort of fabrics, making them more appealing to consumers.

• New and innovative chemicals that offer enhanced performance, meeting specific industry needs while focusing on eco-friendly and sustainability

Similarly, the cleaning and hygiene chemicals market in India is experiencing robust growth, driven by rising hygiene awareness, increasing urbanization, and a growing healthcare sector. The market is projected to reach USD 16,436.0 million by 2030, with a CAGR of 8.8 percent from 2025 to 2030. This expansion is further supported by the hospitality and food services sectors — hotels, restaurants, and catering services are placing greater emphasis on hygiene to meet global standards and rebuild customer trust post-pandemic. The food processing industry, which must adhere to stringent cleanliness norms, is also driving demand for food-grade cleaning chemicals. Additionally, with India becoming a global healthcare hub, hospitals, clinics, and laboratories require stringent infection control measures, further strengthening market growth.

Indias oil and gas sector, encompassing drilling, extraction, and specialty chemicals, is also experiencing significant momentum, driven by increasing energy demand and intensified exploration activities. The

countrys exports of petroleum products have seen substantial growth, with exports of crude oil and petroleum products reaching USD 44.41 billion in FY24. India is also a notable exporter of drilling chemicals, ranking third globally.

Policy support continues to reinforce sectoral growth. Government- led initiatives such as the Production-Linked Incentive (PLI) scheme and the Petroleum, Chemicals, and Petrochemicals Investment Region (PCPIR) policy are attracting significant investment. Clusters like Dahej, Paradip, and Cuddalore have become magnets for mega chemical projects, with each region attracting between INR 70,000 crore to 1 lakh crore in investments. Additionally, India is targeting over USD 87 billion in new petrochemical investments over the next decade to boost downstream value chains.

Indias strategic importance in global supply chains continues to rise as companies adopt a "China plus one" strategy to reduce dependence on a single source. This has led to increased interest in India for contract manufacturing, joint ventures, and greenfield investments in specialty chemicals. As India expands its capacity in segments like battery chemicals, performance coatings, and advanced polymers, the country is poised to evolve from a low-cost exporter to a high-value global manufacturing hub for specialty chemical

Fineotex Chemicals Limited: Strategic Growth and Global Expansion

Fineotex Chemicals Limited has emerged as a dynamic, innovation- led specialty chemical company with a steadily diversifying portfolio across high-growth sectors. Originally focused on textile chemicals, the company has successfully expanded into adjacent verticals such as cleaning and hygiene, oil and gas, water treatment, and performance chemicals. These segments are gaining traction due to stricter environmental norms, growing global hygiene awareness, and the revival of oilfield activity. Fineotexs fungible manufacturing infrastructure, allows agile production across categories, with capacity of 1,04,000 MT annually.

Innovation is at the core of Fineotexs strategy. Its subsidiary, Biotex Malaysia, plays a pivotal role in product development, driving high- performance, and customized solutions across applications. In second half of FY25 alone, the company launched 45 new products, including AquaStrike Premium, a biotech-based mosquito control agent that highlights Fineotexs commitment to sustainability and water conservation. With a product portfolio now exceeding 470 specialty chemicals, the company continues to deliver differentiated offerings, including silicone functional finishes such as hydrophilic, epoxy, and color-enhancing formulations.

Fineotex boasts a robust global presence, exporting to over 70 countries and maintaining strong relationships with leading international textile brands. Despite temporary headwinds from regional instability in export destinations like Bangladesh, the company added 45 new textile customers in H2FY25, showing continued domestic growth. Partnerships with EuroDye CTC (Belgium), HealthGuard (Australia), and SASMIRA (India) further extend Fineotexs reach, technological capabilities, and brand strength in both legacy and emerging markets.

Sustainability and quality remain central to Fineotexs operational philosophy. The company has adopted renewable energy at its Ambernath unit, earned Zero Discharge of Hazardous Chemicals (ZDHC) certification, received accreditations from NABL and Indias pharmaceutical FDA for third consecutive year. Moreover, its cleaning & Hygiene segment received the GreenPro certification and the EcoVadis Commitment Badge highlights Companys pro-activeness towards achieving sustainability. Additional certifications—such as US EPA approval and ESG recognition from Dun & Bradstreet— underscore Fineotexs adherence to global environmental and governance standards. Its fourth consecutive "Great Place to Work" recognition reflects a progressive and collaborative internal culture.

With over INR 350 crore as cash and cash equivalents, Fineotex is actively pursuing both organic and inorganic growth. The companys expansion into high-barrier, innovation-driven markets like home care, drilling specialties, and hygiene chemicals reflects its ability to leverage core competencies for diversification. Aided by strong financials, strategic partnerships, and a growing dealer network of over 110, Fineotex is well-positioned to evolve into a global leader in sustainable specialty chemical solutions.

The SWOT Analysis

Strengths

Fineotex Chemicals Limited holds a leadership position in Indias specialty chemicals landscape, supported by a robust and diversified product portfolio that spans textile chemicals, polymers, enzymes, and performance chemicals. This diversification allows the company to serve multiple industries, reducing sector-specific risks. Fineotex benefits from a well-established global distribution network, exporting to over 70 countries, and maintains strong relationships with marquee international clients. The companys consistent financial performance, stable cash flows, and prudent capital allocation reflect its sound management and long-term vision. Strategic alliances with global leaders and a strong in-house R&D infrastructure through Biotex Malaysia further reinforce its innovation-led growth trajectory.

Weaknesses

The specialty chemicals industry evolves rapidly due to changing customer needs, regulatory demands, and technological advancements. Fineotex must continuously invest in R&D to stay ahead of innovation cycles and avoid product obsolescence. While partnerships and collaborations have strengthened its development capabilities, maintaining innovation velocity remains resource-intensive. In addition, the company is exposed to fluctuations in global raw material prices, particularly for solvents, surfactants, and intermediates, which may impact cost structures and operating margins. Currency volatility in export markets may also pose occasional challenges.

Opportunities

Fineotex is strategically positioned to leverage the global shift toward environmentally sustainable and high-performance specialty chemicals. Increasing regulatory compliance across industries, coupled with customer demand for green alternatives, creates a strong opportunity to scale the companys eco-friendly product lines. Expansion into high-growth verticals such as home care, hygiene, water treatment, and oilfield chemicals offers diversified revenue streams. Continued capacity expansion at the Ambernath facility and the upcoming new plant further enable the company to capture demand from both domestic and global customers. Additionally, deeper penetration into emerging markets and the launch of biotechnology-based products present longterm growth potential.

Threats

The company operates in a global environment exposed to several macroeconomic and geopolitical risks. Fluctuations in crude prices, regulatory changes, and currency movements can disrupt both procurement and export activities. Trade barriers, shifting global tax policies, and supply chain disruptions in key regions—such as the Middle East, Europe, and Southeast Asia—can create volatility in operations. Additionally, evolving environmental norms and stricter compliance in major export destinations may require higher capital outlays. Competitive pressure from both global MNCs and domestic players further underscores the need for constant product differentiation and operational efficiency.

Outlook

Indias economy is set to maintain strong growth momentum in FY 2025-26, fuelled by resilient domestic demand, elevated capital investment, and sustained private consumption. The IMF forecasts real GDP growth at 6.5 percent for both FY 2024-25 and FY 202526—keeping India as the fastest-growing major economy globally. Nominal GDP is projected to expand by 10.1 percent, underpinned by continuous fiscal thrust and muted inflationary pressures

The Indian Home Care and household cleaners market continues to offer significant growth potential. In 2024, the household cleaners segment alone was valued at approximately USD 10.36 billion (~ INR 86,000 crore) and is expected to grow at a CAGR of 14.9 percent through 2033. This expansion is driven by rising urbanization, expanding disposable incomes, changing lifestyles, and greater awareness of hygiene—trends that are projected to persist over the medium term.

The Indian textile chemical industry is experiencing robust growth, driven by increasing textile production, rising domestic consumption, and expanding export markets. This growth is further fuelled by advancements in sustainable and eco-friendly textile manufacturing practices. The market is projected to reach USD 23.49 billion by 2030, with a CAGR of 6.2%

Fineotex is well-positioned to capture this rising tide by realigning its product portfolio and enhancing manufacturing capabilities. The companys core competencies in textile and performance chemicals align directly with the evolving needs of home care and hygiene markets. With ongoing investments in its Ambernath facility and automation, Fineotex ensures operational rigor and scale—critical to servicing both domestic channels and international markets.

Overall, FY 2025-26 presents strong tailwinds for Fineotex. Backed by supportive macroeconomic trends, a rising household consumption story, and its strategic focus on capacity, quality, and product innovation, the company is poised to accelerate stakeholder value while reinforcing its leadership in specialty and fine chemicals.

Risks and Concerns

The Company has a policy on Risk Assessment and Management to identify various kinds of risks in the business of the Company. The Board review the Policy from time to time and take adequate steps to minimize the risk in business. There are no such risks, which, in the opinion of the Board, threaten the existence of your Company. The policy is available at the website of the Company at https://fineotex. com/wp-content/uploads/2023/04/Policy-for-Risk-Management.pdf.

Production

During the FY 2024-25, the company witnessed stabilization in both production and sales. The production volume stood at 60,692.40 MT during the year, reflecting a steady performance compared to the previous years production of 67,565 MT. Similarly, the sales volume remained stable at 60,194.47 MT, maintaining a consistent level against the previous years sales of 67,620 MT.

The above mentioned Production and Sales details are pertaining to the consolidated performance of the Company.

This performance translated into healthy financial results, as evidenced by the income from operations, which amounted to Rs. 53,333.28 Lakhs. This represents a notable decrease of (6.26%) compared to the previous years income of Rs.56897.04 Lakhs Our state-of-the- art facility has significantly enhanced our production capabilities and enables us to cater to the increasing market demand. The strategic location of Ambernath provides logistical advantages and allows us to efficiently serve our customers. With the operationalization of this facility, we have strengthened our ability to manufacture a wide range of products, including disinfectant/antimicrobial hygiene and cleaning products. This positions us to capitalize on the opportunities in the market and deliver high-quality solutions to our valued customers.

The remarkable performance in FY 2025 reaffirms our commitment to driving growth, capturing market opportunities, and delivering value to our stakeholders. Our continuous focus on innovation, diversification, and operational excellence positions us for sustained success in the future.

DISCUSSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONS

The consolidated Profit After Tax (PAT) for FY 2025 stood at Rs. 10,920.82 lakhs from Rs.12,102.53 lakhs, highlighting a stabilized year. Income from Operations reached Rs. 53,333.28 lakhs, and EBITDA amounted to Rs. 15,153 lakhs, with EBITDA margins coming at 23.85%

The company accomplished exceptional results and achieved healthy growth in the Textile, Oil & Gas and Water Treatment segment. The salient indicators are as under: -

2. Consolidated

The Income from Operations constitutes as under on Individual Standalone Results as under:

Operations:

Financial Ratios and Analysis

Most of the parameter indicators of financial performance show the improvement in this area:

Working Capital Management

The working capital ratios are given below:

The above shows an improved working capital management with faster collections matched by faster settlement of dues to suppliers.

Profitability performance

The Interest Coverage Ratio is 178.63 and 143.00 for the year 20242025 and 2023-2024 respectively.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Fineotex lays great emphasis and strict compliance on the policies related to critical functions like production, project, finance, supply chain, human resources, etc. These policies are periodically reviewed

to ensure the same are aligned to prevailing policies of the government and regulatory authorities. The internal checks and balances help the Fineotex to assure the safety and security of all the infrastructure and assets and its authorized use through control documents. Fineotex has tight Internal Control Systems which are monitored on a regular basis by the management. On the external front, the Company monitors the conformity to all environmental regulations prevailing as on date. The Audit Committee is empowered to evaluate policy adequacy and to initiate measures to strengthen them.

The internal control and risk management system are structured and implemented in accordance to the principles and criteria established in the guidance of the Audit Committee of the Board of Directors of the company. It is an integral part of the general organizational structure of the Company and involves a range of personnel who act in a coordinated manner while executing their respective responsibilities. The Board of Directors offers its guidance and strategic supervision to the Executive Directors and management, monitoring and support committees. The control and risk committee and the head of the audit department work under the supervision of the Board-appointed Statutory Auditors.

The Internal Control System is reviewed on a continuous basis in light of changed circumstances and way of conducting business due to changing systems and procedures. Based on the recommender and statutory directions of the Government, the Company had to revisit the controls repeatedly as a business necessity. As result of the amendment to the Schedule III of the Companies Act, 2013 and reporting requirements of CARO 2020 the Board has looked into the controls and brought in line to comply with the Act. The management is also in touch with stakeholders, experts and auditors. Necessary provision has been made based on such interaction.

Fineotex has laid down adequate internal financial controls and checks which are effective and operational. These systems are designed in a manner which provides assurance about maintenance of strict accounting control, optimum efficiency in operations and utilization of resources as well as financial reporting, protection of Companys tangible and intangible assets and compliance with policies, applicable laws, rules and regulations. The Audit Committee regularly interacts with the Internal Auditors, the Statutory Auditors and Senior Executives of the Company responsible for financial management and other relevant areas. The Audit Committee evaluates the internal control systems and checks and balances for continuous updating and improvements therein. The Audit Committee also regularly reviews and monitors the budgetary control system of the Company as well as the system for cost control, financial and accounting controls, physical verification and other related areas. The Audit Committee regularly ensures that proper internal financial controls are in place, including with reference to financial statements. During the year, such controls were reviewed, and no reportable material weakness was observed.

HUMAN RESOURCE

Fineotex has total 284 employees out of which 210 are permanent employees and 74 are contract worker at the year end. From the total permanent employees over 18.57% are women.

We consider the employees as our most valuable asset and help them realize their full potential through our strong HR policy. Fineotexs

robust performance and goals management system is crafted to ensure our employees performance is assessed and appraised annually based on agreed upon goals aligned with the Companys overall business targets. The performance driven culture and Risk & Reward HR policy will help to inculcate a sense of ownership and accountability amongst our employees.

The HR function is tightly integrated and takes care of recruitment, training, performance management, compensation and the overall well-being of all our employees. Fineotexs strong belief in employee empowerment and thus the efforts are focused on creating an employee- friendly environment. The testimony to this is our recent certification of ‘Great Place to Work.

Fineotex believe in expanding by attracting, retaining, and cultivating new people. Given that the Companys main values include innovation, the business prioritizes employee empowerment and retention. To maintain the Companys relevance in the crowded market, it has implemented a number of measures to improve teamwork and skills, such as keep improving the companys talent pipeline.

SAFETY AND HEALTH

Fineotex is firmly committed to the policy of utmost safety in workplaces. The Company has all the required safety systems in place at all our facilities to ensure a high standard of safety and health of employees as well as the factory infrastructure. We have established all possible measures to remove/reduce risks to the health, safety and welfare of all the personnel at our facilities. The Company ensures all

the safety equipment are in working condition, installed at appropriate locations and along with its user manual. All the employees are also periodically trained on health and safety initiatives. Our workplace culture promotes the use of personal protection equipment and apparel, as well as strict adherence to managements health and safety directives.

We at Fineotex believe in developing our processes and products in a manner such that no harm is caused to life and nature. We believe in being ecologically conscious and providing our customers with not only the best but also the most eco-friendly products and we consider this a serious social responsibility. All the effluents created during various processes are disposed of carefully without causing any harm to the surroundings.

Workplace safety promotes the wellness of employees and employers alike. Improved safety translates to better health. Healthier employees perform tasks more efficiently and are generally happier. In a safe working environment, the incidence of accidents become zero. A safe and healthy workplace safeguards workers from injuries and illnesses. Additionally, it can lower costs associated with injuries/illnesses, reduce absenteeism and turnover, increase productivity and quality, and boost employee morale. In other words, safety is good for business. Health and Safety initiatives include: the installation of Eye Washers & Body Showers in the Factory; conducting Mock Drills; Tool Box Talks; Earth Pit Testing; Safety Induction Training; Spillage Kit Training; Mobile Hazard Due to Radiation Training; Thermal Monitoring of Electrical Appliances; and Medical Check-up Camps approved by the Directorate of Industrial Safety and Health (DISH).