Indian Emulsifiers Ltd Management Discussions

FY 2025-26 Business Overview

Indian Emulsifiers Limited, incorporated in 2020, is a specialty chemicals manufacturer producing esters, amphoterics, phosphate esters, imidazolines, wax emulsions, SMO and PIBSA emulsifiers, and related intermediates, serving the food, cosmetics, pharmaceuticals, home care, industrial cleaning, textiles, mining, oilfield, agriculture and paints sectors. The Company operates from its manufacturing facility at MIDC Lote Parshuram, Ratnagiri, Maharashtra, and focuses on customised formulations and contract manufacturing in close partnership with institutional clients.

As of the FY26 year-end call, the Companys installed capacity stood at approximately 1,000 metric tonnes per month (approximately 12,000 metric tonnes per annum theoretical capacity, varying with product mix). Management estimated that this capacity base is equivalent to a revenue potential of approximately ^230-260 crore, depending on the product basket and volume mix. The Companys new Greenfield facility on plot C3 is expected to add a theoretical capacity of 400-500 metric tonnes per month, expected to become operational by the end of FY27, with further expansion headroom of 300-500 tonnes identified on the same site should future demand require it. A separate adjoining plot, acquired in February 2026, is being developed for tripled QC/R&D space and certified food-grade production infrastructure, expected to add approximately 200-250 tonnes per month of sellable capacity once operational and certified, likely in late FY27 or early FY28.

The Companys wholly owned Australian subsidiary, Southern Emulsifiers Solutions Pty Ltd, shipped its first commercial orders during FY26, comprising three containers in the final quarter following the activation of one target customer; this contribution is already reflected in FY26 sales. Two further targeted customers are expected to come online during FY27. Australian floods in January 2026 and a subsequent fuel shortage affecting mining sites in March 2026 caused a temporary slowdown in customer offtake; management has indicated that supply conditions normalised from April 2026. The subsidiarys medium-term target, first communicated in June 2025, remains a cumulative revenue contribution of approximately Rs. 75 crore across the three-year period from FY26 to FY28.

The Companys wholly owned US subsidiary, Polaris Specialty Chemicals Inc., was established during FY26 to access high-value markets in Oil & Gas, Food, Technical Textile Auxiliaries and Water Treatment, importing product manufactured by IEML in India and distributing it to US end customers. The Board has approved a working capital infusion into Polaris to reduce its reliance on extended shipment credit from the parent as it scales. Subsequent to the FY26 year-end, in July 2026, the Company secured two direct export orders totalling USD 700,621 (approximately Rs. 6.75 crore) from a leading American customer, confirmed by the Company as non-related-party transactions and set for immediate execution. On the FY26 earnings call, management indicated contribution from the US subsidiary was already beginning within FY26 and is expected to scale through FY27, with more specific projections to follow once customer allocations for the then-current quarter were finalised.

On May 16, 2026, the Board approved a proposal to raise funds through a rights issue of equity shares aggregating up to Rs. 51 crore, in conjunction with a proposed investment of Rs. 600 lakh (Rs. 6 crore) to acquire 3,70,370 fresh equity shares, representing a 10.99% stake, in Chemical Brothers Enterprises Private Limited. The subscription price of Rs. 162 per share was determined based on a valuation report prepared by an independent, IBBI-registered valuer. Mr. Yash Sunil Tikekar, Managing Director and promoter of Indian Emulsifiers Limited, holds a 75.83% stake in Chemical Brothers Enterprises Private Limited and is accordingly a related party to this transaction.

As of the FY26 year-end earnings call, this fundraise and investment remained at the in-principle and exchange- approval stage; the Company had applied to the stock exchange for in-principle approval, and the full terms, structure, and timeline of the proposed rights issue were not yet finalised. Management has stated that the rationale for the proposed investment is to consolidate export revenues and customer relationships historically routed through Chemical Brothers into Indian Emulsifiers over time, and has indicated that no funds from Indian Emulsifiers had been transferred to Chemical Brothers as of the date of the call. On the earnings call, several shareholders raised concerns regarding the pricing, timing and rationale of the proposed second rights issue in light of the Companys share price decline since its IPO and since the first rights issue, and regarding promoter shareholding dilution from approximately 48% to approximately 32.64% following the first rights issue; management responded that the proposed fundraise objects are distinct from those of the first rights issue, that the Companys access to conventional debt financing is constrained by its scale and collateral position as an SME issuer, and that it intends to continue evaluating fundraising decisions with reference to the Companys three-to-five year value creation plan.

*FY25 figures for Revenue, EBITDA, EBITDA Margin, PAT Margin and Operating Profit before Working Capital Changes are derived from FY26 YoY growth percentages disclosed by the Company and are approximate.

Revenue from operations grew 57% to Rs. 159.87 crore. EBITDA grew 24.22% to Rs. 26.15 crore, though EBITDA margin moderated to approximately 16.4% from an implied approximately 20.7% in FY25, reflecting deliberate volume-led growth, geographic expansion, and customer-base broadening during the year. Profit After Tax grew 21.83% to Rs. 16.20 crore. Working capital deployment increased 39.72% to Rs. 50.73 crore, with debtor days rising from approximately 11 0 to 1 31 as the Companys customer mix shifted toward larger accounts with longer standard credit

cycles; management has stated that improved creditor terms, driven by strengthened procurement leverage, kept the overall cash conversion cycle broadly stable despite this shift.

This full-year performance builds on a strong first half, in which the Company reported HI FY26 revenue growth of 55%, PBT growth of 58% and PAT growth of 63% over H2 FY25, which management attributed to operational efficiency, disciplined execution and continued focus on high-margin specialty segments.

The Company completed a rights issue of 61,11,111 equity shares at Rs. 80 per share (entitlement ratio 1:2), raising Rs. 48.88 crore, with the issue open from October 24, 2025 to November 21, 2025 and listing on or around November 25, 2025. As of the Companys quarterly disclosure for the period ended March 31, 2026, Rs. 46.01 crore of the Rs. 48.88 crore raised had been utilised across the stated objects, with an unutilised balance of Rs. 2.87 crore pending deployment for operational reasons; management has stated its intention to deploy the balance before December 2026.

On the FY26 earnings call, management addressed what it described as unsubstantiated claims and misleading narratives circulating on social media and other platforms regarding the Company, stating that such content had not been sourced from or verified hy the Company. Management stated that the Company had engaged legal counsel to explore available remedies and urged stakeholders to rely solely on official, regulated disclosure channels for information about the Company.

• Company has strong experience with sales and distribution in domestic and international market.

• Companys promoters and key executives have joint experience in chemical industry of more than 30 years.

•The Company has a Diversified Product Portfolio and industry base.

• The Company will have certain price volatility dependent on crude oil prices but the same will be minimized as both input and output prices will be impacted.

• As exports grow sudden change of Rupee depreciation / appreciation will have a short term impact on realization.

• With expected success in current industries, company will be able to maximize capacity utilizations resulting in increased profitability.

• Very large market both globally and domestically leading to diverse range of opportunities.

• Competition from new technologies from large global multinationals

• Regulatory challenges / Government policies and tax procedures can have an impact on the margins. Future Outlook

Managements near-term priorities include commissioning the Greenfield C3 facility by the end of FY27, scaling Australian subsidiary revenue toward its three-year, Rs. 75 crore cumulative target, building contribution from Polaris Specialty Chemicals Inc. in the US following its first direct export orders, and completing certification and commissioning of new food-grade production infrastructure. Management has indicated that, assuming stable macroeconomic and raw material price conditions, it expects gradual, quarter-on-quarter improvement in EBITDA margin as procurement scale benefits and stronger supplier terms materialise, though it has not provided a specific margin target for FY27 pending finalisation of the proposed rights issue and related capital allocation.