Jyoti Resins and Adhesives Ltd Management Discussions

FY 2025-26

(Forming part of the Boards Report ? Regulation 34(2)(e) read with Schedule V(B), SEBI (LODR) Regulations, 2015)

1. Forward-looking statements

Statements describing the Companys objectives, projections and expectations may be "forward-looking" within the meaning of applicable laws. Actual results could differ materially owing to factors beyond the Companys control ? demand-supply conditions, raw-material prices and availability (including imported vinyl acetate monomer), currency and interest-rate movements, monsoon conditions and changes in Government regulation. This section should be read with the financial statements and the Boards Report.

2. Economy and industry structure and developments

Indias real GDP grew by 7.7% in FY 2025-26 (Provisional Estimates, 5 June 2026), up from 7.1% in FY 2024-25, with manufacturing rising 10.7% and construction remaining firm ? a direct tailwind for housing, interiors and furniture. The RBI cut the repo rate by 100 bps during the year to 5.25% (December 2025) and has since held, supporting renovation demand; for FY 2026-27 it projects 6.6% GDP growth and 5.1% inflation.

Indias adhesives and sealants market is estimated at USD 2.3-3.4 billion in 2025 (growing ~6-11% p.a.), and the wood-adhesives sub-segment at ~USD 414 million by 2030 (~7.2% CAGR, Grand View Research). Demand is driven by housing and affordable-housing programmes, the modular-furniture boom, formalisation of the plywood/MDF chain, and ? favouring the Companys water-borne PVA chemistry ? the BIS formaldehyde-emission norms in force from February 2025. The category is led by one dominant national player; over twenty years the Companys EURO 7000 has become the second-largest selling wood-adhesive retail brand in India, with an estimated 15-35% share in its strongest states, competing on product performance and channel service rather than price.

3. Opportunities and threats

Opportunities: of the 14 states in which the Company operates only about five are mature, with the top five still contributing ~75-80% of volumes; premiumisation within the EURO 7000 family; adjacent SKUs on the existing dealer network; the BIS regulatory tailwind; and a debt-free balance sheet that funds capacity, brand and channel investment from internal accruals. A brownfield addition of ~1,500 tonnes/month and a greenfield project of ~Rs. 45 crore are planned.

Threats: raw-material volatility and import dependence ? vinyl acetate monomer (~90% of raw-material cost) is fully imported with no domestic manufacture; single-site concentration at Santej; product/category concentration in white glue; channel and scheme dependence; credit risk on the extended receivables cycle; and competitive intensity.

4. Segment-wise / product-wise performance

The Company operates in a single reportable segment (synthetic wood adhesives and allied products) under Ind AS 108; segment-wise disclosure is therefore not separately applicable. The product family comprises the EURO 7000 white-glue range and its performance variants (XTRA, WP 2-in-1, Extreme 3, Ultra 5-in-1) and allied products including PVC Glue, reaching the market through ~12,000 dealers and a network engaging ~2 lakh registered carpenters across 14 states.

5. Financial performance with respect to operational performance

Revenue from operations was Rs. 314.74 crore, up 10.78% ? the Companys first year above Rs. 300 crore. The year built from a soft first quarter (Rs. 75.11 cr, +9.0%) through the second and third to a strong fourth quarter (Rs. 92.94 cr, +18.2% year-on-year and +28.5% sequential), the exit velocity into FY 2026-27.

Particulars (Rs. crore)	FY 2025-26	FY 2024-25	Change
Revenue from operations	314.74	284.12	+10.78%
EBITDA (excl. other income) / margin	84.96 / 26.99%	89.47 / 31.49%	-450 bps
Profit before tax	94.52	98.78	-4.31%
Profit after tax	69.98	73.87	-5.27%
Earnings per share (Rs. )	58.32	61.56	-5.3%
Net worth	288.77	229.26	+25.9%
Operating cash flow	48.06	14.75	+225.8%
Treasury / borrowings	165.93 / Nil	154.49 / Nil	?
Dividend per share (Rs. )	9.00 (recommended)	9.00	Maintained

The profit bridge: Revenue rose Rs. 30.62 crore and gross margin improved ~119 bps to ~70.2%, together adding Rs. 24.87 crore of gross profit. Against this, operating costs rose Rs. 29.74 crore ? employee +Rs. 4.04 crore (+13.5%), sales promotion +Rs. 6.41 crore (+13.9%) and commission +Rs. 2.68 crore (+37.6%), the deliberate brand and channel investment (including the national brand-ambassador campaign), and, decisively, Other Expenses +Rs. 15.81 crore (+83.5%, from Rs. 18.94 to Rs. 34.75 crore). The net effect was a Rs. 4.26-crore decline in profit before tax to Rs. 94.52 crore.

Working capital and cash: Trade receivables were Rs. 159.15 crore ? 185 days on a closing basis ? a design feature of the carpenter-loyalty scheme cycle rather than distress: bad debts were only 0.36% of revenue, the cycle is funded by scheme accruals and own capital (borrowings nil), the cash-conversion cycle was ~181 days and the current ratio strengthened to 2.85. Operating cash flow of Rs. 48.06 crore was 3.3x the prior year (68.7% of PAT) and free cash flow Rs. 44.40 crore. The Company is debt-free (since FY 2017-18), with a Rs. 165.93 crore treasury ? 39% of assets, including ~Rs. 46.8 crore deployed in liquid funds; the Board recommended a dividend of Rs. 9 per share (15.4% payout), the third consecutive year at that level.

6. Key financial ratios

No ratio in the prescribed list changed by more than 25%; explanations are given voluntarily for the movements investors are most likely to examine

Ratio	FY26	FY25	Change	Note
Debtors turnover (x)	2.21	2.60	-15.1%	Scheme-cycle / new-market credit (Sec. 5)
Inventory turnover (x)*	= 11.2	= 10.9	+2.8%	=33 days on materials consumed
Current ratio (x)	2.85	2.30	+23.6%	Liquidity strengthened on cash generation
Debt-equity / Interest coverage	Nil / NM	Nil / NM	?	No borrowings
Operating profit margin (%)	26.99	31.49	-14.3%	Cost bridge (Sec. 5)
Net profit margin (%)	22.23	26.00	-14.5%	Follows operating margin
Return on net worth (%)	27.02	37.36	-27.7%	Detailed explanation in Section 7

*Definitions held constant: debtors turnover = revenue ^ average receivables; inventory turnover = cost of materials -r- average inventory; margins on revenue; RoNW = PAT -r- average shareholders funds.

7. Return on net worth

Return on net worth (average equity) was 27.02% against 37.36% ? a decline of 10.34 percentage points (27.7% relative). Approximately four-fifths of the decline (~8.4 pp) reflects the expansion of the equity base: average net worth grew 31.0% (from Rs. 197.74 to Rs. 259.02 crore) as profits were retained and cash accumulated pending deployment ? at the prior-year base, the years profit would have returned ~35.4%. The balance (~1.9 pp) reflects the 5.27% moderation in profit after tax. Returns were thus diluted principally by retained cash awaiting deployment, not by operating deterioration ? pre-tax return on capital employed remained ~36.5%.

8. Risks and concerns

The Companys risk framework grades and mitigates ten principal risks, each with Board or Audit-Committee oversight: (1) raw-material volatility and VAM import dependence (multi-vendor sourcing, calibrated pricing, low inventory); (2) single-site concentration at Santej (maintenance, insurance, planned capacity); (3) product category concentration (premiumisation, adjacencies with return criteria); (4) channel and scheme dependence (diversified dealers, direct carpenter engagement); (5) credit risk on the 185-day book (credit limits, ageing, Ind AS 109 ECL ? bad debts 0.36%); (6) competitive intensity (brand equity, service); (7) key-person dependence (second-line and succession via the NRC); (8) regulatory, quality and environmental compliance (QC laboratory, compliance calendar, secretarial audit); (9) information-systems and audit-trail integrity; and (10) treasury and market risk on Rs. 165.93 crore of surpluses (Board investment policy, quarterly Audit-Committee review).

9. Internal control systems and their adequacy

The Company maintains internal financial controls commensurate with its size and operations, covering the safeguarding of assets, prevention and detection of fraud and error, and the accuracy and completeness of accounting records. The statutory auditors, R Kabra & Co. LLP (FRN 104502W/W100721), issued an unmodified opinion and reported on the adequacy and operating effectiveness of these controls; the accounting softwares audit-trail feature operated through the year. The internal auditor V M A N & Associates, Chartered Accountants reports to the Audit Committee, which reviews the control environment quarterly; no material weakness was identified.

10. Material developments in human resources / industrial relations

The Company strengthened its sales, technical-service and quality organisation during the year (employee cost +13.5%). As at 31 March 2026 it employed approximately 750 people. Industrial relations remained cordial, with no strike, lock-out or work stoppage; an Internal Committee is constituted under the POSH Act, with the quantitative complaint disclosure in the Boards Report.

11. Outlook

The Company enters FY 2026-27 with an 18.2% fourth-quarter exit, a debt-free balance sheet and Rs. 165.93 crore of internal resources. Its stated medium-term ambition is to build toward Rs. 500 crore of revenue over the coming few years, led by ~15-20% annual volume growth while maintaining a 22-25% EBlTDA-margin band, supported by the planned brownfield and greenfield capacity.

For and on behalf of the Board

Jagdish N. Patel

Chairman & Whole-time director

(DIN: 00304924)

Date: 08th August 2026

Place: Ahmedabad