Laxmi Organic Industries Ltd Management Discussions

ECONOMY

Global

The global economy in 2025 remained resilient, with growth holding steady at IMF estimates of approximately 3.3%. This stability persisted despite restrictive financial conditions and lingering geopolitical uncertainty. Alongside this, inflation eased to around 4.1%, supported by moderating energy and commodity prices and improved supply chains, and softer goods demand.

However, services inflation, particularly in the United States, remained persistent, while labor markets across major economies continued to support consumption. Emerging markets such as India benefited from declining food and input costs. Central banks maintained tight monetary policy to ensure price stability, though expectations for gradual rate cuts began to build toward the end of the year. Overall, 2025 marked a transition toward greater

macroeconomic stability, though not a full return to pre-pandemic norms.

Entering 2026, global growth is projected to stay stable at around 3.2-3.3%, as per IMF estimates. Inflation is forecast to decline to ~3.8% in 2026 and ~3.4% in 2027. This outlook reflects strong investment momentum in technology and artificial intelligence, particularly in North America and Asia.

However, evolving trade policies, geopolitical tensions, and energy market volatility are introducing uncertainty and may slow disinflation, especially in advanced economies such as the United States. As a result, central banks are expected to remain cautious in adjusting monetary policy, balancing inflation control with growth considerations. Taken together, the global economy remains resilient and expanding, though growth is becoming more uneven and increasingly sensitive to external developments.

Outlook

Looking ahead, the global economy is expected to enter a more uneven and shock-sensitive phase of expansion, with growth concentrated in capital-intensive sectors such as technology, artificial intelligence, and infrastructure. While emerging markets may continue to benefit from resilient domestic demand and prices, advanced economies are likely to face more moderate momentum amid still-restrictive financial conditions.

Inflation is expected to ease gradually, though not linearly, with the IMFs April 2026 World Economic Outlook projecting global headline inflation to rise from 4.1% in 2025 to 4.4% in 2026, before declining to 3.7% in 2027, as supply-side factors, particularly energy markets and trade frictions, introduce periodic volatility. Recent geopolitical tensions in West Asia could further disrupt energy prices, feedstock availability, shipping routes, and trade flows, potentially affecting inflation trajectories, industrial demand, currency stability, and the timing of interest-rate normalization. Consequently, several prevailing macroeconomic growth and inflation assumptions may face downside risks in the evolving global environment. In this environment, central banks are likely to remain cautious and data-dependent, prioritizing policy credibility over rapid easing. Overall, the outlook points to a global expansion, but with greater regional divergence, slower normalization, and heightened sensitivity to external shocks.

Source: IMF World Economic Outlook April 2026

Indian Economy

India continues to emerge as a high-growth and relatively resilient economy, supported by strong macroeconomic fundamentals despite a challenging global backdrop. Real GDP is projected to grow 7.4% in 2025-26 and remain close to 7% in 2026-27, driven by robust domestic demand. This is primarily supported by scale rather than high per capita spending. In addition, sustained public capital expenditure and ongoing structural reforms continue to reinforce this momentum. Inflation has moderated toward the lower end of the RBIs target range, aided by easing food prices and stable commodity trends, though price pressures remain.

The services sector remains the primary growth engine, expanding 9.1% and contributing over half of GVA, as per Ministry of Statistics and Programme Implementation (MoSPI). Strong global competitiveness in IT and business services exports continues to support this expansion. Manufacturing is gradually gaining traction, led by production-linked incentive (PLI) schemes and supply chain diversification, while agriculture underpins rural demand with steady output.

However, despite strong aggregate growth, per capita income and consumption remain relatively low compared with global peers, as per World Bank estimates. This gap reflects structural factors such as income distribution, a large informal workforce, and uneven urbanization. This is evident in lower per capita consumption across categories including discretionary spending, energy use, and durable goods.

This highlights both demand-side constraints and significant headroom for future growth.

On the external front, India recorded exports of US$ 825.3 Bn, as per Ministry of Commerce data. Foreign exchange reserves exceeded US$ 701 Bn, supported by robust remittance inflows, as per RBI and World Bank estimates. At the same time, the external sector remains exposed to global demand conditions and energy price fluctuations. Fiscal consolidation efforts have strengthened sovereign credibility, with capital expenditure and debt-to-GDP declining, as per Union Budget and IMF assessments. Overall, Indias growth story remains strong, increasingly defined by translating macroeconomic momentum into broad-based consumption growth.

Outlook

Looking ahead, Indias growth outlook remains strong and increasingly linked to manufacturing expansion and domestic demand. Growth is expected to stay near ~7% over the medium term, supported by services and digital sectors. Sustaining growth depends on scaling up manufacturing, supported by production-linked incentive (PLI) schemes, supply chain diversification, and improved infrastructure, as highlighted by government and World Bank assessments. This matters for exports and investment, job creation, and rising incomes, which help lift per capita consumption over time.

Inflation is expected to remain within the RBIs target range, though food and energy volatility may create short-term fluctuations, keeping policy cautious and data-driven. External factors, including global demand and commodity prices, will continue to influence near-term conditions. Overall, India is well positioned among the fastest-growing major economies, with growth increasingly dependent on stronger manufacturing, improving consumption, and stable external conditions.

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^Global Chemical Industry

The global chemical industry remains a critical pillar of industrial and economic activity, with an estimated market size of US$ 5.5-6.0 Tn, as per International Council of Chemical Associations (ICCA, 2024) and American Chemistry Council (ACC Guide to the Business of Chemistry, 2025). The industry closely tracks global GDP and key end-use sectors including construction, automotive, consumer goods, and agriculture, as per ACC Global Chemical Outlook (2025).

Regionally, Asia-Pacific accounts for over 55-60% of global demand, led by China. In comparison, North America and Europe maintain smaller but technologically advanced shares, as per ICCA

and industry analyses (2024-25). Commodity chemicals remain cyclical and demand-sensitive, while specialty chemicals show stronger structural growth. This growth is linked to electronics, pharmaceuticals, and clean energy, as per McKinsey & Company Chemicals Insights (2024). Weak demand conditions in China and parts of Europe, alongside excess capacity, are weighing on pricing and margins in commodity segments, as highlighted by Deloitte Chemical Industry Outlook (2025).

At the same time, energy cost advantages in regions such as North America continue to influence global competitiveness, as per ACC (2025).

Outlook

Looking ahead, global chemical industry growth is expected to remain aligned with broader economic activity at around 3-4%, as per ACC and ICCA projections. However, the trajectory is uneven across regions and segments, with commodity pressures from demand softness and capacity overhang. Medium-term expansion is expected to be driven by specialty chemicals in electronics, clean energy, and advanced manufacturing, as highlighted by McKinsey and Deloitte (2024-25).

Shifts in global supply chains rebalance production toward emerging hubs such as India, while sustainability, green chemistry and low-carbon processes gain importance. Overall industry performance depends on product mix, geographic positioning, and the ability to adapt to evolving regulatory and environmental requirements.

Global Pharmaceutical Chemical Markets

The global pharmaceutical chemical market, encompassing active pharmaceutical ingredients (APIs), intermediates, and fine chemicals, remains a critical backbone of the healthcare sector. The broader pharmaceutical market reached approximately US$ 1.7 Tn in 2025, as per IQVIA (2026 update). APIs alone are estimated at US$ 250-300 Bn, as per McKinsey & Company (2024-25). The segment is expected to grow at around 5-7% annually, supported by rising medicine usage globally.

Growth is supported by aging populations, increasing prevalence of chronic diseases, and strong innovation momentum across oncology, obesity, and immunology. Manufacturing remains concentrated in Asia, led by China

and India, while North America and Europe continue to dominate high-value drug development and innovation. Structural shifts toward specialty and complex pharmaceutical chemicals, including biologics and advanced therapies, are reshaping the market.

Simultaneously, increasing emphasis on supply chain diversification, regulatory compliance, and resilience is influenced by evolving geopolitical and pricing dynamics, as highlighted by Deloitte and McKinsey (2025-26).

Outlook

Looking ahead, the global pharmaceutical chemical market is expected to sustain mid- to high- single-digit growth, as per IQVIA (2026) and McKinsey & Company projections. These projections are driven by continued innovation and rising healthcare demand. Growth will be led by specialty APIs, biologics, and CDMO services, while generics face pricing pressure. Supply chain diversification and localization efforts will reshape production dynamics, with China and India playing an increasingly important role. Overall, the outlook remains structurally strong, supported by innovation, but influenced by regulatory, pricing, and geopolitical factors.

The global dyes and pigments market was valued at US$ 46.84 Bn in 2025 and is expected to expand to US$ 49.13 Bn in 2026, reaching approximately US$ 73.67 Bn by 2034. End-use growth is supported by demand across industries such as textiles, plastics, paints and coatings, and printing inks. Pigments hold a larger share of the market, driven by applications in coatings and plastics, while dyes are primarily used in textiles and paper, as per industry analyses.

Regionally, Asia-Pacific dominates production and consumption, led by China and India, benefiting from cost competitiveness and strong manufacturing ecosystems. The industry is witnessing a gradual shift toward high-performance and eco-friendly products, driven by tightening environmental regulations and evolving customer preferences, particularly in developed markets.

(Source: .

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Global Agrochemical Marke

The global agrochemicals market is estimated at approximately US$ 260-300 Bn, as per Food and Agriculture Organization, Organisation for Economic Co-operation and Development, and industry analyses (2024-25).

It is expected to grow at around 4-6% annually, broadly in line with global agricultural demand.

The market is driven by increasing demand for crop protection products, particularly pesticides, to improve crop yields, ensure food security, and enhance agricultural productivity. Structural factors such as rising global population, limited arable land, and the need for higher farm efficiency continue to support demand across developed and emerging markets. Fertilizers and

Outlook

Looking ahead, the dyes and pigments market is expected to witness steady, demand-linked growth across sectors. Expansion in construction, packaging, automotive, and textile sectors will support growth as projected by Markets and Markets and Grand View Research. Growth will be driven by specialty and high-performance pigments, including organic and functional

pigments, while traditional dye segments may face regulatory and margin constraints. Rising focus on sustainability, compliance, and supply chain diversification may reshape industry dynamics, with India gaining share as global customers seek alternatives to concentrated sourcing. Overall, the industry remains stable, though competitiveness will depend on product innovation, environmental compliance, and cost efficiency.

crop nutrients remain significant, contributing to soil health and output stability, though recent price normalization has moderated overall growth momentum.

Outlook

Looking ahead, the agrochemical market is expected to maintain steady, demand-linked growth, as per FAO and OECD projections. This growth is supported by the need to enhance agricultural productivity and ensure food security. Growth is likely to be driven by increased adoption of advanced crop protection solutions, precision agriculture, and bio-based agrochemicals, alongside rising awareness of sustainable farming practices.

At the same time, the sector faces challenges from input cost volatility, regulatory tightening, and climate-related risks, which may influence demand patterns and product adoption. Supply chain diversification may reshape global production dynamics, with countries such as India gaining importance. Overall, the industry outlook remains positive, though increasingly shaped by sustainability considerations, regulatory frameworks, and evolving agricultural practices.

The global flexible packaging market is a rapidly growing market, estimated at US$ 280-300 Bn, as per MarketsandMarkets and Grand View Research (2025). It is expected to expand at around 4-5% annually. Growth is driven by demand from food and beverages, pharmaceuticals, personal care, and e-commerce sectors. Flexible formats offer advantages including cost efficiency, lightweighting, and extended shelf life. Materials such as plastics, paper, and aluminum- based laminates are widely used, with plastic-based packaging accounting for the largest share. Regionally, Asia-Pacific dominates consumption and production, led by China and India, supported by rising urbanization, income growth, and changing consumption patterns.

Outlook

Looking ahead, the flexible packaging market is expected to witness steady, demand-driven growth, as per industry projections. It is supported by increasing consumption of packaged goods and the continued expansion of organized retail and e-commerce. Growth is driven by innovation in sustainable and recyclable materials, as regulatory pressure and consumer awareness push the industry toward circular packaging solutions.

At the same time, the sector faces challenges from raw material price volatility, particularly in petrochemical-based inputs, and tightening environmental regulations. Overall, the industry outlook remains positive, with competitiveness increasingly dependent on material innovation, sustainability compliance, and cost efficiency.

Global Industrial Chemical

The global industrial chemicals market remains one of the largest segments within the chemical industry, with an estimated size exceeding US$ 4-5 Tn, as per International Council of Chemical Associations and American Chemistry Council (2024-25). Estimates show annual growth broadly aligned with global GDP at around 3-4%. The market includes bulk chemicals such as petrochemicals, polymers, fertilizers, and industrial gases, and is closely linked to industrial production and construction activity.

Regionally, Asia-Pacific dominates, led by China, while North America benefits from feedstock advantages due to shale gas, as per ACC analyses. Currently, the sector faces uneven demand conditions, with capacity overhang in China and varying regional energy costs influencing pricing and competitiveness, as highlighted in recent industry analyses (2025-26).

Outlook

Looking ahead, the industrial chemicals market is expected to maintain moderate, GDP-linked growth, though with continued regional and segment divergence. Commodity chemicals may remain under pressure due to supply-demand imbalances, while specialty segments are likely to outperform. At the same time, energy cost dynamics, supply chain diversification, and sustainability requirements are expected to reshape global competitiveness. Overall, growth will increasingly depend on cost efficiency, regional positioning, and adaptation to lower-carbon production trends.

Global Ethanol Market

The global ethanol market is estimated at approximately US$ 90-110 Bn, as per International Energy Agency and MarketsandMarkets (2024-25).

It is defined by record production levels in the United States, Brazil, and India, driven by aggressive blending mandates and emerging demand for sustainable aviation fuel.

While pricing faces pressure from high crude oil costs and feedstock volatility, grain and sugarcane yields continue to expand and stabilize the supply chain for the market. This is primarily fueled by biofuel additives, beverages, pharmaceuticals, and industrial solvents. Demand remains closely linked to government policies supporting renewable energy and emissions reduction, particularly as recent developments indicate increasing participation from emerging markets alongside continued policy support in key regions, as per IEA analyses.

Outlook

Looking ahead, the ethanol market is expected to grow steadily, supported by expanding blending mandates and decarbonization policies. IEA projections indicate growth, though near-term dynamics remain influenced by feedstock price volatility and crude oil trends. Increasing adoption in emerging markets is expected to support demand, shaping longer-term growth dynamics. Competition from alternative fuels, including electric mobility, may influence long-term growth alongside energy transition dynamics. Overall, the outlook remains positive but closely tied to policy frameworks, agricultural cycles, and energy market conditions.

Global Acetic Acid Market

The global acetic acid market, a key intermediate used in the production of vinyl acetate monomer (VAM), purified terephthalic acid (PTA), and solvents, is estimated at approximately US$ 20-25 Bn according to Grand View Research and MarketsandMarkets (2025). Driven by downstream applications in packaging, textiles, adhesives, and construction, the market remains sensitive to industrial trends and concentrated in Asia, where Chinese capacity and demand fluctuations influence global pricing and cyclical volatility.

These dynamics were evident during 2025-26, when acetic acid prices fell to unsustainably low levels, compressing ethyl acetate spreads and significantly challenging profit margins across the sector. However, a pivotal recovery emerged in Q4 of 2025-26 as acetic acid prices began to rebound. They catalyzed a corresponding expansion in ethyl acetate spreads, signaling improved market dynamics and overall profitability.

Outlook

Looking ahead, the acetic acid market is expected to grow at a moderate pace of around 4-5% annually, supported by packaging and textile demand. Growth will be supported by downstream sectors particularly packaging and textiles. However, the market remains cyclical, with pricing influenced by feedstock costs (methanol), capacity additions, and regional demand conditions. Overall, the outlook remains stable, though increasingly dependent on supply-demand balance, cost structures, and downstream industry performance.

Indian Chemical Industry

Indias chemicals and petrochemicals industry is on a strong growth trajectory, approaching US$ 300 Bn by 2025-26. It contributes significantly to the countrys manufacturing output. The sector is highly diversified, spanning petrochemicals, specialty chemicals, agrochemicals, and pharmaceuticals across multiple value chains. It is expected to grow around 8-10% annually, supported by strong domestic demand, export growth, and policy support. India emerged as a key alternative manufacturing hub under the global China+1 strategy, benefiting from cost competitiveness, a skilled workforce, and improving infrastructure.

Indian Basic Chemical Industr

The Indian basic chemicals segment, covering petrochemicals, fertilizers, and industrial gases, forms the foundation of the broader chemical industry. This segment is closely linked to core industries such as construction, automotive, and infrastructure, with high volumes and relatively lower margins. Growth aligns with industrial activity and economic cycles, supported by domestic demand and capacity expansion, as per industry analyses. However, the segment remains sensitive to feedstock prices, energy costs, and global commodity cycles, due to its dependence on crude derivatives and imported inputs.

Outlook

Looking ahead, the industry is expected to maintain strong growth momentum, driven by rising domestic consumption, increasing export opportunities, and continued supply chain diversification, as per government and industry assessments (2025-26). Growth is likely

to be led by specialty chemicals and downstream segments, while sustainability, regulatory compliance, and feedstock availability will remain key factors influencing competitiveness. Overall, India is well positioned to increase its share in the global chemicals market.

chemicals-and-petrochemicals-industry

Outlook

Looking ahead, the basic chemicals segment is expected to witness moderate, cyclical growth, aligned with industrial demand. Domestic consumption and infrastructure development provide support, though profitability remains influenced by input cost volatility,

and fluctuating global pricing trends. Capacity utilization levels will also play a key role in determining overall margins and financial performance. Increasing focus on import substitution and backward integration may improve long-term competitiveness.

Indian Specialty Chemicals Industry

The Indian specialty chemicals sector has emerged as a key growth driver, with an estimated market size of US$ 40-50 Bn, as per Indian Brand Equity Foundation and industry reports (2025) and is expected to grow at 10-12% annually. The sector focuses on high-value, low-volume products used across industries such as pharmaceuticals, agrochemicals, textiles, and electronics. India has gained global prominence as a supplier of specialty chemicals, driven by strong process chemistry capabilities, cost advantages, and increasing global outsourcing under the China+1 strategy, as highlighted by government and industry sources.

Outlook

Looking ahead, the specialty chemicals segment is expected to remain a key growth engine, supported by export demand, innovation, and deeper integration into global supply chains. Growth is likely to be driven by segments such as performance chemicals, electronic chemicals, and niche intermediates, while environmental compliance and sustainability will play an increasing role. Overall, the outlook remains strong, with India well positioned to expand its global market share.

Indian Agrochemicals Market

India is among the leading producers and exporters of agrochemicals, with a domestic market size estimated at US$ 8-10 Bn, as per Indian Brand Equity Foundation and Ministry of Agriculture and Farmers Welfare (2024-25). Alongside a strong export presence, growth is supported by strong domestic manufacturing capabilities, rising export momentum, and policy measures encouraging sustainable agricultural inputs.

India exports crop-protection products worth around US$ 5 Bn annually to regions including Europe, Southeast Asia, and West Africa. The sector is driven by a large agricultural base, increasing adoption of crop protection products, and the need to improve farm productivity and yields. India also benefits from cost competitiveness and strong manufacturing capabilities, positioning it as a key supplier of generic agrochemicals in global markets.

Outlook

Looking ahead, the Indian agrochemicals market is expected to grow steadily, driven by rising farm productivity needs, increased adoption of advanced crop protection solutions, and export opportunities, particularly under global supply chain diversification trends. However, growth may be influenced by monsoon variability, regulatory changes, and input cost fluctuations, as per government and industry assessments. Overall, the outlook remains positive, as India strengthens its position in the global agrochemical value chain.

Favorable Macro and

Industry Tailwinds

The ongoing China+1 supply chain diversification, highlighted by International Monetary Fund and industry analyses, continues to create opportunities for Indian manufacturers to gain global market share. This is supported by Indias strong domestic outlook, with the chemical industry expected to grow at 8-10% annually, as per Press Information Bureau and Indian Brand Equity Foundation, driven by rising consumption and export demand.

Shift toward

High-Value Specialty Chemicals ;

:

Increasing global demand for complex, high-margin chemistries across pharmaceuticals, agrochemicals, and electronics provides a strong growth runway. The Companys focus on diketene derivatives and fluorination positions it well to benefit from this structural shift.

Innovation and

Technology

Capabilities ;

Investments in R&D, electrochemical fluorination (ECF), and advanced process capabilities, along with the DSIR-accredited innovation center, enhance the Companys ability to develop differentiated products and scale new chemistries.

Capacity

Expansion and Diversification ;

Ongoing expansions at Dahej and Lote, along with product diversification initiatives, are expected to reduce dependence on core products and improve revenue mix and margin resilience over time.

Sustainability

and New-Age

Applications ;

The global push toward green chemistry and sustainability creates opportunities in eco-friendly intermediates and next-generation materials. Strategic collaborations, including with Hitachi Energy, enable participation in emerging sectors such as energy transition and advanced technologies.

COMPANY OVERVIEW

Laxmi Organic Industries Limited (Laxmi Organic, Laxmi, or the Company) is a globally integrated chemical manufacturer, delivering sustainable, innovation-led solutions across essential and specialty chemical segments. With over three decades of industry experience, the Company has built a strong foundation in process excellence, research and development, and customer-centricity. Its diversified portfolio includes over 50 products, serving 700+ active customers across 55+ countries, with four manufacturing sites in India. The Company caters to industries, including pharmaceuticals, agrochemicals, inks and coatings, packaging, and personal care. It is expanding into emerging sectors such as semiconductors, defense, power grids, electric vehicles, medical devices, and electronics.

The Company has strengthened its innovation capabilities through a DSIR-accredited Global Innovation Center in Navi Mumbai, featuring a kilo lab and pilot plant for sample development and process scale-up.

Its electrochemical fluorination (ECF) platform enables the development of advanced fluorinated compounds, supporting the transition from lab-scale innovation to commercial production efficiently. Building on this capability, the Company has entered a strategic agreement with Hitachi Energy to manufacture an eco-efficient gas for SF 6 -free high-voltage switchgear under the EconiQ platform. The project includes planned capacity and phased execution timelines, as per the Company disclosures.

The Company operates with a clear strategic ambition to strengthen its global positioning. It aims to reach among the top three global producers of diketene derivatives through continued investment in innovation, talent development,

and sustainability. The Company is accredited under the Responsible Care Program and maintains a strong focus on environmental stewardship, sourcing approximately 25% of its energy from renewable sources, as per the Company disclosures. Operational efficiency initiatives have delivered double-digit output improvements from existing assets with minimal incremental capital expenditure.

As part of its expansion strategy, the Company commissioned the Phase 1 manufacturing facility at Dahej, which is now operational following regulatory approvals. Phase 2 is expected to be mechanically completed by Q1 2026-27, followed by chemical charging and customer sampling. This expansion will enhance capacities across essential and specialty chemicals, supporting product diversification and long-term growth. The Company also emphasizes sustainable manufacturing practices, including closed-loop systems, standardized processes, and digital traceability, designed to minimize hazardous effluent discharge and align with global environmental standards.

Essentials

The Foundation of Scale

The Essentials segment serves as the backbone of the Companys operations, focusing on high-volume, cost-efficient products built on core chemistries such as esterification and acetylation. The segment serves diverse end-use industries, including pharmaceuticals, adhesives, coatings, printing inks, and packaging. It addresses a global market estimated at over US$ 12 Bn, with the Company being the leading producer of ethyl acetate in India. The Company ranks among the top three players globally excluding China, maintaining a top- quartile position on the global cost curve.

During 2025-26, the segment demonstrated resilience, achieving 2% volume growth for the full year. However, sustained pressure on spreads continued to impact profitability. Feedstock dynamics remained critical, with acetic acid prices declining by approximately 20% over the past two years. Subsequently, signs of recovery emerged, with prices rebounding to around US$ 360-380 per tonne as of December 2025.

Strategic Direction

Going forward, the Company is actively pursuing product diversification to reduce dependence on ethyl acetate, historically contributing up to ~55% of total revenues. The Phase 1 facility at Dahej is now operational and supplying customers, supported by the commissioning of an acetaldehyde plant. The commissioning of the new world-scale Ethyl Acetate production line at Lote and the commencement of Butyl Acetate production at the Mahad facility have significantly enhanced the Companys production capacity and strengthened its product mix.

Specialties

The Engine of Innovation

The Specialties segment represents the Companys high-margin growth engine, anchored in advanced ketene/diketene derivatives and fluorination chemistries.

These products cater to complex, customer-specific applications across industries including agrochemicals, pharmaceuticals, and emerging sectors, including applications in semiconductors, defense, power grids, electric vehicles, medical devices, and electronics. The segment addresses an addressable market estimated above US$ 3.5 Bn, reflecting the Companys focus on value-added, innovation-led growth.

In 2024-25, the Specialties business delivered about 14% year-on-year revenue growth, while 2025-26 performance was impacted by an anticipated phase-out. This phase-out involves a key agrochemical intermediate contributing approximately 10% of segment revenue.

Despite this near-term headwind, the segment has maintained a strong long-term growth trajectory of approximately 18-20% CAGR since 2016-17. This was supported by product innovation and expanding global demand. The Company holds an estimated ~14% market share in diketene derivatives and plans to further strengthen its position. It aims to become the third-largest global producer as new capacities at Dahej come online.

Capabilities and Expansion

Since acquiring Clariant Chemicals India Limiteds diketene business, the Company has commercialized 40+ new diketene derivatives, expanding its portfolio. Its electrochemical fluorination (ECF) entry positions it among a limited number of players, and the only Indian manufacturer, creating a strong competitive moat. The fluoro-intermediate plant at Lote is ramping up steadily and has achieved ~40-50% of peak revenue potential in 2025-26.

A key milestone is the strategic agreement with Hitachi Energy to

manufacture eco-efficient gas for SF 6 -free high-voltage switchgear under the EconiQ platform. This initiative is supported by a dedicated facility, expected to be mechanically completed by Q2 2026-27, as per the Company disclosures. The Company strengthened its innovation capabilities through its DSIR-accredited Global Innovation Center in Navi Mumbai, including advanced R&D infrastructure and training facilities.

Strategic Direction

As the Company prepares to operationalize Phase 2 of its Dahej facility, it is operating in a hunting mode to ramp up specialty capacities through targeted customer opportunities. Supported by strong R&D capabilities and end-to-end process ownership, the Specialties segment is well positioned for long-term growth and profitability.

It maintains a continued focus on high-value products, innovation, and global market expansion.

PERFORMANCE REVIEW Key Financial Ratios

Financial Ratio	2025-26	2024-25	% Change	Reason for Deviation
Debtors Turnover Ratio	5.11	5.14	(0.57)	NA
Inventory Turnover Ratio	5.36	6.31	(15.07)	NA
Interest Coverage Ratio	4.20	9.47	(55.60)	Variance is due to increase in finance cost and decrease in earnings before interest and taxes during the current year.
Current Ratio	1.33	1.32	1.00	NA
Debt-to-Equity Ratio	0.27	0.13	109.23	Variance is due to increase in borrowings during the current year.
Operating Profit Margin	4.04%	6.30%	(35.69)	Variance is due to decrease in earnings before interest and taxes during the current year.
Net Profit Margin	2.90%	4.02%	(27.85)	Variance is due to decrease in net profits after taxes during the current year.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG)

We continue to embed sustainability at the core of our operations, recognizing the critical role businesses play in shaping equitable and resilient communities. Notable progress was made across key focus areas, improving our Together for Sustainability (TFS) framework from 67% to 87%. This reflects stronger performance across environmental management, occupational health and safety, responsible sourcing, and stakeholder engagement. Recognition from the National Safety Council for the fourth consecutive year further validates our robust safety culture. Through consistent action and governance-driven leadership, we remain committed to delivering sustainable value to stakeholders and the environment.

HUMAN RESOURCES MANAGEMENT

At Laxmi, people remain central to progress, with teams demonstrating exceptional commitment to performance and execution excellence. We emphasize cultivating a work environment that empowers individuals and promotes continuous learning. This is supported by the 1,000+ sq. ft. training center at our Global Innovation Center in Navi Mumbai. Leadership development and succession planning remain key elements of our talent strategy.

As we expand our manufacturing footprint, we have increased our headcount with additional teams at our Lote and Dahej facilities to support new operations. We also remain proactive in our regulatory responsibilities, recently taking a provision of 38 Million for the newly

announced labor codes. This ensures continued compliance and employee welfare, with every individual advancing our growth and innovation agenda as we remain geared to win across all global locations.

ELEVATING QUALITY STANDARDS

We remain committed to delivering products and services that consistently exceed expectations.

Our emphasis on quality underpins customer trust and strengthens long-term relationships. A specialized team of quality professionals, enabled by advanced infrastructure and streamlined processes, ensures that quality benchmarks are rigorously met across all touchpoints. Our supplier ecosystem is also tightly governed through a stringent quality evaluation process. This ensures that the incoming materials meet both technical specifications and customer expectations.

CAUTIONARY

STATEMENT

This Management Discussion and Analysis may include forward-looking statements that reflect the Companys current intentions, beliefs, or expectations. These statements are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those anticipated.