Mahickra Chemicals Ltd Management Discussions

GLOBAL ECONOMY:

The global economy is facing its share of challenges with inflation and rising interest rates slowing growth, but the chemical and reactive dye industries are turning these challenges into opportunities— especially here in India. Indias economy is powering ahead as the fastest-growing major economy, creating a strong foundation for these sectors to thrive.

For the reactive dye industry, which plays a crucial role in specialty chemicals, the rising cost of raw materials and supply chain hurdles have meant companies need to be smarter and more efficient than ever. Yet, the steady global growth outlook combined with Indias energetic economy gives the industry a real chance to expand and reach new markets.

Indias booming textile and manufacturing sectors are driving up demand for reactive dyes domestically, while government initiatives like ‘Make in India and production-linked incentives are helping businesses grow and innovate sustainably. Theres a bigger push now than ever before to develop eco-friendly dyes that appeal to global customers seeking greener, responsible products—a perfect match for todays market.

On the export front, Indian reactive dye manufacturers are gaining ground internationally, thanks to quality products and Indias strong manufacturing base. Advances in technology and digitization are helping the industry boost quality, cut waste, and streamline supply chains, making it more competitive than ever.

In petite, despite global economic uncertainties, the chemical and reactive dye industries are well- positioned to ride Indias growth wave. Backed by government support, driven by innovation, and focused on sustainability, these industries are shaping a future of resilience, growth, and global leadership.

INDIAN ECONOMY:

The Indian economy is showing impressive strength and is on a confident path to lasting growth, driven by strong private spending and smart government investments. With clear policies to make supply chains smoother and secure steady raw material supplies, the government is creating a welcoming environment that encourages growth and attracts investment from around the world.

Against this backdrop, the Indian chemicals industry is shining as a powerful engine of progress, playing a key role in the countrys manufacturing success. Expected to reach $304 billion by 2025 and contribute $383 billion to the GDP by 2030, the sector is booming thanks to rising demand in areas like specialty chemicals used in food processing, personal care, and home care. Indian companies are stepping up, expanding their production and reaching out to customers both here and globally.

Government support through the ‘Make in India campaign and production-linked incentives is speeding up this growth even more. With big investments planned—over Rs. 8 lakh crore ($107 billion) by 2025—and special focus on sectors like agrochemicals, India is building a world- class manufacturing hub driven by innovation and sustainability. Simplified approval processes and welcoming foreign investments (with 100% FDI allowed except for hazardous chemicals) make India a top choice for global chemical players.

Indias strong position in chemical exports and imports highlights its growing influence in global markets. The goal to boost the chemical industrys share of manufacturing GDP to 25% by 2025 shows just how vital this sector is to the countrys economic future.

Leading the G20 with the inspiring theme "One Earth, One Family, One Future," India is showing its commitment to sustainability, climate action, and global collaboration—values perfectly in tune with where the chemical industry is headed.

All in all, the vibrant mix of Indias resilient economy and its booming chemical sector creates exciting opportunities for innovation, investment, and global leadership. This powerful combination sets the stage for a bright future, positioning India as a key player on the world stage while fueling its own economic success.

OUTLOOK:

Your company is actively planning to expand its dealer network both across India and internationally, with a focus on regions characterized by economic stability and a safe business environment. This targeted expansion aims to broaden our market reach and reinforce our presence in key domestic and global markets. By partnering with reliable dealers in these stable regions, we seek to establish strong, longterm collaborations that will support sustained and steady business growth.

As part of this growth strategy, we are also shifting our product focus away from low-margin commodity offerings toward a broader portfolio of higher-margin products. While this transition may temporarily impact overall sales volumes, it is designed to significantly enhance profitability and build a more resilient business model capable of withstanding market volatility. This strategic pivot aligns with industry trends where specialized, value-added products are favored for their improved returns and market differentiation.

Our commitment to innovation and sustainability remains at the core of our development efforts. Our R&D team continuously works on creating new, sustainable products that anticipate and meet evolving customer preferences and regulatory

standards. Emphasizing eco-friendly solutions positions us to capitalize on the growing global demand for greener chemicals, bolstering both our market relevance and corporate responsibility.

To support these initiatives, we have strengthened our sales capabilities by hiring an International Marketing Manager tasked with driving export growth and establishing our presence in untapped international markets. This role is critical for navigating diverse market dynamics, cultivating customer relationships, and effectively promoting our innovative product range globally. Expanding into new regions reflects the broader industry push toward globalization and diversification to reduce dependency on any single market.

Additionally, we are leveraging digital tools and data analytics to optimize our sales strategies and deepen our understanding of customer needs and market trends. By integrating technology into our marketing and distribution efforts, we aim to improve efficiency, responsiveness, and customer engagement.

Overall, these strategic initiatives are designed to deliver sustainable, long-term growth by expanding our global footprint, diversifying our product offerings, prioritizing innovation and sustainability, and building a robust, skilled sales force. Through this forwardlooking approach, we are positioning the company to thrive in an increasingly dynamic and competitive global chemical industry.

COMPANY OVERVIEW:

Mahickra Chemicals Limited, based in Ahmedabad, Gujarat, stands as a trusted leader in the world of chemicals, specializing in pigments, dyes, intermediates, and specialty chemicals. Over the years, weve built our reputation on a foundation of quality, innovation, and unwavering customer trust. Today, our company proudly serves customers at home and abroad, supporting industries such as textiles, coatings, plastics, and printing inks.

Driven by our vision - "Diversify with Insight. Grow with Impact."—weve purposefully evolved. Weve moved beyond low-margin commodities to focus on high-value, sustainable products that benefit both our clients and the environment. Our dedicated R&D team is the heart of this transformation, constantly developing new, advanced solutions that keep pace with international standards and the shifting needs of our customers worldwide.

Mahickras global reach spans Asia, Europe, Africa, and the Americas. Weve showcased our innovations at leading industry events, including Dye Chem World Exhibition (India), Dye Chem Bangladesh, Morocco Fashiontex, and Interdye & Textile Printing Eurasia in Istanbul. These opportunities have allowed us to build strong relationships, strengthen our brand, and demonstrate our commitment to excellence on the global stage. Our efforts havent gone unnoticed— were proud to have earned several distinguished awards and recognitions for our work.

Looking to the future, were more committed than ever to expanding our product offerings, improving efficiency, and championing sustainability We believe in responsible business, supporting our people, partners, and communities every step of the way. Guided by our core values and ethical governance, we aim for growth that truly makes a difference, aspiring to become a global icon in the chemical industry—one built on trust, innovation, and a positive impact for all.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

TThe reactive dye industry in FY 2024-25 is continuing to operate in a challenging environment, with some cost pressures and volatile behavior in the market, in consideration of uncertain rainfall patterns that are affecting production schedules and supply chain efficiency globally While some prices of raw

materials seem somewhat stabilized from a year ago, high input prices and fluctuations in the prices of certain key chemicals remain a concern for every business. The uncertainties regarding global trade, namely the ongoing conflict between Russia and Ukraine, strife in the Middle East, and high shipping costs, have all affected competitiveness in export markets. As domestic demand showed some signs of recovery, low export orders, extended credit cycles, and working capital constraints continue to squeeze the margins of the industry. In this dynamic scenario, companies are focusing on operational efficiency, prudent inventory management, and strategic market diversification to sustain some growth and resilience.

Standalone:

Your Company apprehends a remarkable growth in revenue from operations during the period under review, amounting to Rs. 8,815.78 lakhs in FY 202425 as compared to Rs. 7,191.69 lakhs in FY 2023-24, showing its ability to grow the business despite market headwinds. The Profit After Tax (PAT) attributable to shareholders grew to Rs. 253.34 lakhs in FY 202425, higher than just Rs. 107.44 lakhs in the previous year, suggesting better operational performance and cost management. This was achieved under very competitive circumstances, which confirm the resilience, adaptability, and focus of the Company toward strengthening its market position.

Consolidated

During the year under review, your Company delivered strong performance with Revenue from operations increased to Rs. 8,815.78 lakhs in FY 2024-25 from 7,191.68 lakhs in FY 2023-24. The Profit After Tax (PAT) attributable to the shareholders more than doubled, reaching Rs. 253.25 lakhs in FY 2024-25 as compared to Rs. 107.32 lakhs in FY 202324, reflecting enhanced operational efficiency and improved business outcomes.

Particulars	Consolidated		Standalone
	2024-25	2023-24	2024-25	2023-24
Revenue from Operations	8815.78	7191.68	8815.78	7191.69
Other Income	262.38	227.13	262.38	227.13
Total Revenue	9078.16	7418.81	9078.16	7418.82
Earnings Before Interest, Depreciation and Amortization Expense and Taxes	511.72	294.14	511.90	294.16
Less:- A) Finance Cost	129.23	116.30	129.23	116.30
Less:- B) Depreciation and Amortization Expense	29.90	27.57	29.90	27.57
Profit / (Loss) before ExtraOrdinary Items and tax	352.59	150.27	352.77	150.29
Add/(Less): Extra-Ordinary Item	-	-	-	-
Profit/(Loss) after Extra Ordinary Items and before tax	352.59	150.27	352.77	150.29
Total Tax Expense	99.43	42.85	99.43	42.85
Share of Associates Profit	(0.09)	(0.11)	-	-
Profit / (Loss) After Tax	253.25	107.32	253.34	107.44
Earnings Per Share Basic / Diluted	3.12	1.32	3.12	1.32

KEY FINANCIAL RATIOS:

Ratios	FY 2024-25	FY 2023-24
Current Ratio	1.92	2.03
Debt-Equity Ratio	0.43	0.40
Debt-Service Coverage Ratio	0.51	2.18
Return on Equity	7.34	3.26
Inventory Turnover Ratio	3.22	3.41
Debtors Turnover Ratio	3.60	2.39
Creditors Turnover Ratio	6.29	4.22
Net Capital Turnover Ratio	3.00	2.61
Net Profit Ratio	2.87	1.49
Return on Capital Employed	9.44	5.70
Return on Investment	Nil	-0.42

THE SWOT ANALYSIS:

Strength	Weakness
• Mahickra holds a strong position in the reactive dyes market, with a focus on delivering high- quality dyestuffs and a diverse product portfolio. • The company boasts a wide global footprint supported by efficient distribution networks and strategic acquisitions that enhance market reach. • Significant investments in research and development fuel innovation, especially in sustainable chemical solutions that meet evolving customer needs. • Competitive pricing advantages stem from lower labor and manufacturing costs in India, complemented by supportive government policies. • A seasoned management team with a clear strategic vision drives the companys growth and expansion initiatives. • Our commitment to sustainability positions Mahickra well to capture the increasing demand for eco-friendly and responsible products. • Robust supply chain management and strong customer relationships add to our operational resilience and market adaptability.	• The reactive dyes and dyestuff industry faces challenges from rapid technological advancements and shifting customer preferences, risking obsolescence. • Legacy products and manufacturing methods may hinder the ability to stay agile and competitive in a fast-evolving market. • To counter this, Mahickra actively pursues strategic alliances and collaborations, gaining access to cutting-edge technologies and industry expertise. • Ongoing investment in innovation and R&D ensures the company stays ahead of technological changes and maintains a competitive advantage. • Dependency on raw material imports exposes vulnerability to supply chain disruptions and price volatility. Continuous efforts are underway to diversify sourcing and increase self-reliance.
Opportunities	Threats
• Growing demand for dyes and dyestuffs in textiles, printing, and packaging opens up significant expansion possibilities. • Rising consumer preference for sustainable and eco-friendly dyes creates niche markets for environmentally responsible products. • The expanding Indian textile sector offers a rich opportunity for strengthening domestic sales and production capabilities. • Leveraging Indias rich tradition in textiles and dyes, the company can capitalize on global interest in authentic Indian craftsmanship. • Collaborating with international partners through joint ventures and technology transfers can enhance access to advanced technology and new markets. • Increased R&D investment is crucial to developing innovative, high-performance dyes that align with shifting market trends and standards. • Digitalization of supply chain and marketing efforts can further boost efficiency and customer engagement.	• Economic downturns and slowdowns risk reducing demand for specialty chemicals, potentially impacting sales and margins. • Geopolitical tensions, including trade disputes, regulatory shifts, and political instability, pose risks to global operations and supply chains. • Environmental regulations are becoming increasingly stringent, requiring continuous compliance and potential cost escalations. • Despite these threats, Mahickras strong financial health and ample resources offer resilience, enabling the company to navigate uncertainties effectively. • Competitive pressure from emerging low-cost manufacturers globally may pose challenges to market share and pricing strategy. • Cybersecurity threats remain a growing concern, and ongoing investments in IT security are essential to protect sensitive data and business continuity.

RISK AND CONCERNS:

In todays fast-changing global market, your Companys risk management policy is regularly reviewed by the Audit Committee and Board of Directors to ensure it effectively addresses emerging threats and opportunities. The policy categorizes risks by their causes, impacts, and mitigation plans, with a strong focus on environmental protection and operational safety across all manufacturing sites. We strictly comply with regulations related to emissions, wastewater, and waste disposal, while prioritizing workplace safety.

Additionally, we have a comprehensive business continuity plan to ensure essential operations continue or are quickly restored during disruptions. To enhance our risk framework, we leverage technology for real-time risk monitoring and promote a culture of proactive risk awareness. Sustainability and resilience are integral to our strategy, helping us protect the business and our stakeholders while maintaining consistent performance under any circumstances.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your company has established a robust and comprehensive internal audit and control system designed to safeguard all assets against any risk of loss, misuse, or unauthorized disposal. Every transaction is meticulously approved, clearly documented, and accurately reported to ensure full transparency and accountability. We are committed to continuously improving and adopting best practices to strengthen our internal controls and ensure operational excellence.

To maintain the highest standards, we have engaged a reputable firm of chartered accountants to conduct our internal audits. These audits are

performed regularly and systematically across all functions, enabling us to identify and address any potential vulnerabilities proactively. Our internal control framework rests on the pillars of sound governance, well-defined systems and processes, thorough risk assessments, vigilant monitoring, clear communication, and an independent internal audit function.

The external internal audit team performs thorough reviews throughout the year, covering every significant area of our operations. Complementing this, our Internal Risk and Control function continuously assesses organizational risks and determines the necessary controls to mitigate them effectively. Our controls include continuous monitoring, routine reporting, rigorous checks and balances, well-defined purchase policies, and strict authorization and delegation protocols.

Additionally, compliance audits are regularly conducted and reviewed periodically by the Audit Committee to ensure adherence to all statutory and regulatory requirements. The Audit Committee of Directors actively reviews internal audit findings and oversees the implementation of auditors recommendations, promoting timely corrective actions and improvements.

The Internal Audit departments performance is regularly evaluated by the Board of Directors, with suggestions made to enhance its effectiveness further. We remain fully prepared and committed to implementing any statutory or regulatory recommendations promptly. Moreover, our internal controls extend beyond financial and operational aspects to include cybersecurity measures designed to protect sensitive data and prevent unauthorized access. We foster a culture of accountability across all levels of the organization to ensure that compliance and ethical standards are consistently upheld.

HUMAN RESOURCES:

At our company, we believe that our people are at the heart of everything we do, and are essential for sustainable growth. Were dedicated to creating a positive and supportive workplace where everyone feels valued and safe. Our people-centric policies emphasize health, safety, and responsible care, making sure our teams have what they need to thrive.

Driven by our core values—high performance, collaboration, and ongoing improvement—we focus on attracting and keeping top talent while helping every employee grow their skills to meet our evolving business goals. Our clear and employee-friendly HR policies are designed to build trust, encourage teamwork, and foster a sense of unity across the organization.

We invest heavily in the well-being, safety, and holistic development of our workforce. Strong, open relationships with employees and unions have helped us successfully introduce reforms that boost safety, quality, cost-efficiency, and productivity in our factories and offices.

By making diversity and inclusion a priority, we bring together a wide range of perspectives and talents— strengthening every part of our business. All these efforts combine to create a vibrant, collaborative environment where every individual has the opportunity to succeed and make an impact.

CAUTIONARY STATEMENT:

In accordance with relevant securities laws and regulations, statements in this report on management discussion and analysis regarding the companys goals, plans, estimates, expectations, or predictions may be considered forward-looking. These claims are predicated on specific presumptions and projections of forthcoming occurrences. The actual results may differ significantly from the stated or implied results based on a variety of factors, including the weather, domestic and international demand-supply dynamics, raw material costs, finished goods availability and prices, fluctuations in the foreign exchange market, modifications to governmental laws and tax laws, political and economic developments in India and the other countries where the company operates, and other factors like litigation and labor relations. Regarding the forward-looking statements in this document, the Company disclaims all liability. These statements could change in the future based on new information, events, or developments that are outside the Companys control.

	For & on behalf of the Board of Directors
	Sd/-	Mahickra Chemicals Limited Sd/-
	Miteshkumar Gandhi	Ashishkumar Gandhi
Place : Ahmedabad	Managing Director	Whole-Time Director
Date : August 21, 2025	DIN: 02142361	DIN: 02142344
Registered Office: Plot No. 1209, Phase III, GIDC, Vatva, Ahmedabad - 382445, Gujarat, India