J.G.Chemicals Ltd Management Discussions

GLOBAL ECONOMY

When Supply Chains Broke,Ours Held

CY25 was characterised by heightened trade uncertainty, geopolitical disruptions and continued volatility across freight, energy and commodity markets. These developments reshaped global supply chains, prompting manufacturers to diversify sourcing networks and prioritise supply reliability, procurement agility and operational resilience.

For JG Chemicals, this changing environment reinforced the value of its recycling-led sourcing model, diversified raw material procurement network and long- standing supplier relationships. Together, these capabilities enabled the Company to secure raw material supplies despite disruptions to global zinc dross flows, maintain uninterrupted deliveries to customers, and continue serving the market even as several smaller players faced sourcing challenges.

The global operating environment is expected to remain uncertain as trade policies, geopolitical developments and commodity markets continue to evolve. While these conditions may sustain volatility across supply chains, they also reinforce the importance of resilient sourcing, procurement discipline and reliable customer fulfilment - areas in which JG Chemicals believes it is well positioned to compete.

INDIAN ECONOMY

More Factories, More Zinc.

India remained one of the fastest- growing major economies in FY26, supported by resilient domestic demand, sustained infrastructure investment and continued manufacturing expansion. This broad-based industrial momentum strengthened activity across sectors that consume zinc chemicals

— corrosion protection, rubber compounding, speciality chemicals and micronutrient applications

— creating a favourable long- term demand environment for JG Chemicals zinc oxide and zinc sulphate portfolio.

Government initiatives focused on infrastructure development, manufacturing expansion and industrial competitiveness continued to strengthen Indias production ecosystem. Increasing investments in logistics, industrial corridors and manufacturing capacity are expected to support long-term growth across downstream industries that rely on zinc-based materials. Expanding trade partnerships and improving export competitiveness are expected to further reinforce Indias position within global manufacturing value chains.

Indias next phase of growth is expected to be driven by continued infrastructure creation, rising industrial consumption and increasing diversification across downstream sectors. For organised manufacturers with technical capability, reliable supply and diversified product portfolios, this trajectory creates a durable long- term opportunity.

ZINC: THE STARTING POINT

From Scrap to Speciality

Zinc matters not for what it builds, but for what it protects. Its corrosion-resistant properties extend the life of steel, improve asset durability and reduce lifecycle costs across infrastructure, transportation and manufacturing. As economies continue investing in long-life assets, zinc remains essential to industrial development.

For JG Chemicals, zinc is the starting point of a circular value chain. During the galvanising process, recyclable by-products — zinc dross and zinc ash — are generated and recovered as secondary feedstocks. The Company transforms these materials into specialised zinc oxide and zinc sulphate products, combining resource efficiency with technical capability to deliver a reliable supply across diverse end-use industries. As Indias largest recycling-based zinc oxide manufacturer, this model strengthens raw material security while reducing dependence on primary inputs.

Understanding this value chain provides the foundation for understanding JG Chemicals business. The following sections examine the Companys two core product platforms and the end-use industries that drive long- term demand.

ZINC OXIDE: THE CORE PLATFORM

One Product,

Many Industries

Zinc oxide is JG Chemicals principal product and the foundation of its business. Its functional properties — vulcanisation efficiency, thermal stability, UV resistance, antimicrobial performance and catalytic activity — make it essential across diverse industrial and speciality applications, enabling the Company to serve a broad customer base while creating opportunities for long-term growth.

As customer requirements evolve beyond conventional grades, zinc oxide is increasingly engineered for higher- value applications that require greater purity, consistency and technical performance. This transition is expanding its role from commodity input to specialised performance material, creating opportunities for manufacturers with strong process capabilities and application expertise.

For JG Chemicals, zinc oxide is not only its largest product platform but the primary engine through which it creates value across multiple industrial value chains.

THE INDIA OPPORTUNITY

When the Market Rewards Discipline

Indias zinc oxide market is evolving alongside the countrys expanding manufacturing ecosystem, with customers increasingly seeking higher-purity, application-specific and technically consistent products. As quality expectations, regulatory standards and performance require- ments continue to rise, demand is expected to shift progressively towards organised manufacturers capable of delivering specialised zinc oxide solutions.

This transition is reshaping the industry from a fragmented, price-driven market towards one increasingly defined by product quality, consistency, traceability and regulatory compliance. Customers in high-specification industries are placing greater emphasis on reliable supply, process capability and tech- nical collaboration — a shift expect- ed to favour manufacturers capable of delivering specialised grades and supporting customers through application development and long- term partnerships.

On the procurement side, JG Chemicals operates a pass-through pricing framework under which both raw material and finished product pricing are linked to LME zinc bench- marks. This structural alignment helps mitigate commodity price volatility while supporting stable margins across changing zinc price cycles. The Companys recycling-led sourcing model, disciplined procure- ment practices and efficient invento- ry management further strengthen raw material security and operation- al resilience.

The global zinc oxide market is expected to maintain steady long-term growth, supported by expanding industrial production and increasing demand for higher-performance materials. Asia-Pacific remains the largest manufacturing and consumption hub, providing a favourable backdrop for the industrys continued expansion.

ZINC SULPHATE-THE EMERGING GROWTH PLATFORM

The Adjacent Opportunity

Zinc sulphate represents JG Chemicals adjacent growth platform, complementing its zinc oxide leadership while expanding participation across agriculture and specialised industrial applications. As demand for balanced crop nutrition, micronutrient management and sustainable farming practices continues to rise, zinc sulphate is becoming an increasingly important contributor to long-term growth.

India offers one of the most attractive markets for this product, given its extensive agricultural base and widespread prevalence of zinc-deficient soils. Government initiatives promoting soil health, higher farm productivity and balanced fertilisation continue to reinforce the structural demand outlook for zinc- based micronutrients, creating favourable conditions for organised manufacturers.

Beyond agriculture, zinc sulphate is steadily gaining acceptance across pharmaceuticals, animal nutrition, water treatment and specialised industrial processes - broadening the addressable market while reducing dependence on any single application. As customers increasingly prioritise product quality, regulatory compliance and consistent technical performance, the Companys existing manufacturing expertise, customer relationships and diversified product portfolio position it well to capture these emerging opportunities.

End-Use Industries —

The Structural Demand Engines

The long-term demand outlook for JG Chemicals products is supported by a diversified portfolio of end-use industries benefiting from structural trends such as mobility, urbanisation, infrastructure development and agricultural productivity. This broad application base not only provides resilience across economic cycles but also creates multiple avenues for sustained demand across both zinc oxide and zinc sulphate.

Demand Engine 1

More Tyres, More Zinc

The tyre and rubber industry remains the largest end-use segment for zinc oxide, where it plays a critical role in vulcanisation by enhancing heat resistance, tensile strength, elasticity and overall durability. As mobility expands and tyre technology evolves, demand for high-quality zinc oxide is expected to remain structurally strong.

Indias automotive industry delivered record production during FY26. According to SIAM, passenger vehicle production reached 46.43 lakh units (up 7.9%), two-wheelers increased by 10.7% to 2.17 crore units, commercial vehicles grew by 12.6% to 10.80 lakh units, and three- wheelers expanded by 12.8% to 8.36 lakh units — strengthening demand across both OEM and replacement tyre markets.

The replacement market, accounting for more than 55% of tyre volumes, provides an equally important structural driver. Unlike OEM demand, it is supported by the growing vehicle population and usage intensity, offering recurring demand visibility irrespective of short-term production fluctuations. These trends, combined with significant capacity expansion announced by Indian tyre manufacturers, position JG Chemicals to benefit from incremental production volumes and increasing demand for technically consistent zinc oxide.

Demand Engine 2

From Gujarat to the World

The ceramic industry represents another important demand driver for zinc oxide, particularly in tiles, sanitaryware and speciality ceramics, where it enhances surface finish, thermal stability, opacity and durability. India has emerged as a leading ceramic manufacturing hub, with the globally competitive Morbi cluster at its core. Continued investments in housing, commercial construction, infrastructure and exports are supporting sustained demand for technically compliant raw materials.

As manufacturers increasingly focus on premium products and export competitiveness, demand is expected to shift towards organised suppliers capable of delivering specialised grades.

Demand Engine 3

The Micronutrient Multiplier

Agriculture remains the principal end-use industry for zinc sulphate, where it plays an essential role in correcting zinc-deficient soils, improving nutrient uptake and enhancing crop productivity. Indias emphasis on balanced fertilisation, scientific nutrient management and sustainable farming continues to strengthen long-term demand for zinc-based micronutrients. Government initiatives promoting soil health, together with the increasing adoption of precision farming practices, are accelerating the adoption of micronutrient-based crop nutrition across major agricultural regions. As food security and productivity remain national priorities, demand for zinc sulphate is expected to benefit from sustained structural growth across key crop segments.

Beyond the Factory Floor

While tyres, ceramics and industrial manufacturing continue to represent the primary demand base, zinc oxide is increasingly being used in healthcare, protective coatings, energy storage, electronics and specialised industrial chemistry. These applications are characterised by higher technical requirements, greater value addition and increasing demand for customised formulations — expanding the long-term addressable market well beyond traditional industrial uses. As customers seek higher purity, application-specific performance and regulatory compliance, zinc oxide is evolving from a conventional industrial ingredient to a specialised functional material.

Skin Deep

Healthcare and personal care applications are increasingly adopting pharmaceutical-grade and cosmetic-grade zinc oxide for its UV protection, antimicrobial properties and skin compatibility. Rising consumer preference for mineral-based ingredients and stricter regulatory standards are accelerating demand across sunscreens, skincare, medicinal creams and dermatological formulations.

Built to Last

Zinc oxide is gaining wider acceptance across protective coatings, engineered materials and speciality formulations where it improves corrosion resistance, adhesion and long-term surface performance. Continued investment in infrastructure and advanced materials is expected to support sustained growth in these applications.

Stored Energy, New Chemistry

Advancements in zinc-based battery technologies are creating new opportunities across energy storage. Growing investment in renewable energy and interest in safe, cost- effective battery chemistries are expected to support the gradual expansion of zinc oxide usage in next-generation storage solutions.

Smaller Circuits, Bigger Demand

Zinc oxides electrical and optical characteristics are supporting increasing adoption across electronic components, semiconductor devices, sensors and advanced functional materials. As electronics grow more sophisticated, demand for technically engineered zinc oxide is expected to strengthen.

The Long Tail

Beyond established applications, zinc oxide continues to find wider use across catalysts, lubricants, adhesives and speciality chemicals. This expanding application base reinforces the materials versatility while reducing depen- dence on any single downstream industry.

Collectively, these emerging applications are broadening zinc oxides addressable market beyond its traditional in- dustrial uses. As demand shifts towards higher-value formulations requiring greater technical capability, application expertise and product consistency, organised manufacturers are expected to be well positioned to participate in the next phase of industry growth.

SWOT

Analysis Strengths

Indias Largest Zinc Oxide Manufacturer

Leadership position with an estimated ~30% share of the domestic organised market, supported by scale, technical expertise and long-standing customer relationships.

Indias Largest Recycling-Based Zinc Oxide Platform

Integrated recycling capabilities provide raw material flexibility, sustainability advantages and cost competitiveness while reducing dependence on virgin zinc sources.

Diversified Customer Franchise

Long-standing relationships with leading domestic and global manufacturers across tyres, chemicals, pharmaceuticals and industrial applications provide revenue stability and market credibility.

Technical Capability and Product Breadth

A portfolio of over 90 specialised grades of zinc oxide (up from 80+ in FY25), including IATF certified and WHO GMP-compliant formulations, enables the Company to serve the most demanding quality-sensitive applications across tyres, pharmaceuticals, cosmetics and electronics.

Healthy Balance Sheet and Strong Cash Generation

Financial strength with a zero-debt balance sheet, generating Rs. 686 million PAT in FY26, supports capacity expansion, product diversification and long-term strategic investments.

Revenue Concentration in Rubber & Tyres

The tyre industry continues to account for a significant share of revenue, exposing performance to cyclical trends in automotive and replacement demand.

Limited Penetration Across Certain Non- Rubber Segments

While expanding, the Companys presence in select spe- ciality and ceramic applications remains relatively lower than its leadership in tyres and rubber.

Geographic Manufacturing Concentration

Existing manufacturing footprint remains concentrated in eastern and southern India until western capacity expansion becomes operational.

Opportunities

Dahej Expansion to Unlock Western India

The proposed Greenfield facility is expected to improve access to ceramics, pharmaceuticals, cosmetics and speciality chemical clusters while expanding non-rubber applications.

Expansion into High-Value Zinc Oxide Applications

Electronics, healthcare, energy storage, advanced mate- rials and speciality coatings represent attractive long- term growth opportunities.

Growth in Zinc Sulphate and Agricultural Micronutrients

Rising focus on balanced crop nutrition and sustainable agriculture supports structural demand growth for zinc sulphate products.

China+1 and Import Substitution Opportunities

Global customers seeking diversified sourcing partners create opportunities for Indian zinc chemical manufac- turers with proven quality and scale.

Premiumisation Across End-Use Industries

Increasing quality standards across export-oriented manufacturing are expected to favour technically capa- ble and compliant zinc chemical producers.

Threats

• Sharp Volatility in Zinc Prices

Significant movements in LME zinc prices in a very short span of time may impact procurement economics, inventory management and margin visibility.

Geopolitical and Supply Chain Disruptions

Freight volatility, trade restrictions and disruptions in secondary zinc sourcing can affect raw material avail- ability and logistics costs.

Competition from Low-Cost Unorganised Manufacturers

Price-led competition across commoditised applica- tions may exert pressure on market dynamics in certain segments.

Weakness in Global Industrial Demand

Slowdown across automotive, infrastructure or industrial production could temporarily affect downstream zinc chemical consumption.

Global Tariff And Trade Policy Uncertainty

While the Company has no direct US exposure, tar- iff-driven volatility in global commodity, currency, and equity markets creates demand uncertainty for JGs export-oriented customers with secondary impact on zinc oxide offtake.

Increasing Environmental and Compliance Requirements

Evolving sustainability standards may require continued investments in manufacturing processes, emissions management and regulatory compliance.