Hindustan Organic Chemicals Ltd Management Discussions

The Management of Hindustan Organic Chemicals Ltd (HOCL) presents its Analysis Report covering the Performance and Outlook of the Company. The Report contains business prospects and perspectives based on the current environment and strategic options to steer the Company through unforeseen and uncontrollable external factors.

HOCL Kochi Unit is having Integrated Management System Certification comprising ISO 9001:2015 (Quality Management system), ISO 14001:2015 (Environment Management System), ISO 45001:2018 (Occupational Health and Safety Management system) and ISO 50001:2018. All the products of HOCL are certified by BIS.

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

Indias chemical industry is a cornerstone of the manufacturing ecosystem, supplying critical inputs to key sectors such as agriculture, pharmaceuticals, textiles, automobiles, and construction, while contributing about 7 percent to national GDP. The chemical industry also plays a key role in ensuring food security, health and improving quality of life. It includes basic chemicals and its products, petrochemicals, pharmaceuticals etc. India ranks as the worlds sixth-largest chemical producer. It holds significant potential to further strengthen its presence in global chemical value chains, particularly in higher-value and specialty segments.

In this context, the Government has proposed in the Union Budget 2026-27 to establish dedicated Chemical Parks represents a forward-looking, infrastructure-led, and supply-side initiative.

2. KEY OPPORTUNITIES

Over decades, HOCL has established a strong presence across the country through its manufacturing facilities, contributing significantly to Indias journey towards self-reliance in the chemical sector. The strategic location of the Companys manufacturing facilities in proximity to the refinery ensures reliable access to key raw materials, providing a distinct operational advantage.

Aligned with the Government of Indias Atmanirbhar Bharat initiative, HOCL supports the nations objective of achieving self-reliance in the chemical sector through the indigenous production of critical chemicals such as Phenol, Acetone, and Hydrogen Peroxide. These products serve as essential raw materials for a wide range of downstream industries, including pharmaceuticals, paints, resins, laminates, textiles, agrochemicals, and plywood.

The increasing emphasis on domestic manufacturing, import substitution, and the growth of end-user industries presents significant opportunities for the Company to strengthen its market position, expand its product portfolio, and enhance long-term value creation.

3. KEY THREATS

HOCL currently operates its manufacturing facility at Ambalamugal, Ernakulam District, Kerala, which produces Phenol, Acetone, and Hydrogen Peroxide. The Company continues to operate in a challenging business environment characterized by intense competition, market volatility, and operational constraints. The domestic market for the Companys principal products is highly influenced by competition, resulting in significant pricing pressure and volatility. Historically, working capital constraints have limited the Companys ability to operate at optimal capacity, adversely affecting economies of scale. The key operational challenges faced by the

company include:

• • Lack of product diversification, limiting the revenue

opportunities.

• Reduced market competitiveness compared with larger and technologically advanced manufacturers.

• Financial constraints, including limited availability of working capital, which may impact operational flexibility, modernization initiatives, and future growth prospects.

• Raw material price fluctuation due to geopolitical situation

The Company also anticipates increased competition from new Phenol plants being commissioned across India, along with capacity expansions by the existing manufacturers. To address these challenges, the Company is evaluating various strategic initiatives aimed at enhancing production capacity, improving process efficiency, optimizing costs, and strengthening its competitive position in the market.

3. SEGMENTWISE PERFORMANCE

The Company is primarily in the business of manufacture and sale of chemicals.

Product Segment	Year ended 31/03/2026			Year ended 31/03/2025
	Target MT	Actual MT	Percentage Achieved	Target MT	Actual MT	Percentag Achieved
Chemical	i 75090	74564	99.29	75090	66815	88.98

4. PRODUCT WISE PERFORMANCE (Main Products)

Sr. No. Name of Product	F.Y. 2025-26		F.Y. 2024-25
	Installed Capacity	Actual	Actual
1 Phenol	40000	39645	34874
2 Acetone	24640	24724	21790
3 Hydrogen Peroxide	10450	10195	10151
TOTAL	75090	74564	66815

5. OUTLOOK TOWARDS FUTURE

? Explore the opportunities for diversification into value added products to maximum extent possible so as to gain some level of protection against swings in the market prices.

? Your Company will continue to be vigilant and will capitalize on the opportunities that arise as a result of swift transformation in the industry landscape.

6. SOME RISKS & CONCERNS.

? Limited product diversification or inadequate downstream value addition

? Intense competition from Imports of the main product Phenol and Acetone.

? Volatility in raw material feed stock prices based on fluctuations in global crude oil prices.

? Significant capital investment requirements for the revamping, replacement, and modernization of the existing plant.

7. INTERNAL CONTROL SYSTEMS & THE ADEQUACY

Internal controls are supported by Internal Audit and Management Reviews. With the objective of improving the systems and removing bottlenecks, systems review is carried out and policies and procedure manuals are amended on need-based manner. HOCL

Kochi unit is having ISO 9001:2015 (Quality Management System) and ISO 14001:2015 (Environmental Management System) certification. Your Company has Corporate Governance structure that govern its operations and the management team follows sound financial policies as well as processes and systems.

8. REVIEW OF FINANCIAL & OPERATIONAL PERFORMANCE:

As per accounts of FY 2025-26, your Company has incurred a net loss of Rs.12.89/- Cr. as against net profit during the previous FY 2024-25 of Rs.391.54 Cr. due to waiver of Govt. of India loan.

The Phenol plant and Hydrogen Peroxide plant at Kochi achieved 99% and 98% capacity utilization during year ended 31st March 2026 as against 87% and 97% during the corresponding previous year ended 31st March 2025.

9. INFORMATION TECHNOLOGY

Company has effective information systems for core business areas. However, company has envisaged a plan to meet changing demands keeping in view the technological changes and the way information & communication technology offering innovative services suiting to every business need. The core business functions are performed using Tally Prime ERP system. The integration of different modules of the ERP system resulted in better functioning, timely and smooth completion of our business process and transactions. Management ensures continual effort in the ever-changing technological environment, for improving and meeting with requirement like data security, information availability, transparency and accuracy. The IT infrastructure of the company is audited by CERT-In empaneled

audit authority to ensure the compliance with IT policies & standards. Company is using open tendering/e-Tendering solution being provided by National Informatics Centre (NIC). Company has also registered with GeM Government platforms for procurement and TREDs for payment to MSMEs. Company is also following various guidelines of procurement through MSMEs.

10. OTHER INFORMATIONS:

The details regarding Human Resources, Industry relations, CSR activities, Environment protection, technology absorption, energy conservation etc. are provided in the Directors Report.

11. CAUTIONARY STATEMENT

The statement contained in this Management Discussion and Analysis regarding the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied.

	For and on behalf of the Board of Hindustan Organic Chemicals Ltd.
	Sd/- Sangram Kumar Mishra
Hatp- 07 Oft 909fi	Chairman and Managing Director
L/CUC. Ur .UU.?U?U Place: Ernakulam, Kerala