Mayur Floorings Ltd Management Discussions

The global macro-economic scenario for fiscal year 2024-25 is characterized by a slow, uneven recovery, with global growth projected to be around 3.2% in both 2024 and 2025. While some advanced economies are showing signs of stronger growth, emerging and developing economies are experiencing a modest slowdown. Inflation is generally moderating, but services inflation is proving persistent, complicating monetary policy normalization. Geopolitical tensions and potential disruptions to supply chains pose risks to the global economic outlook.

Global growth is projected to remain modest, with advanced economies experiencing a slight acceleration, while emerging and developing economies face a slowdown.

While inflation is generally trending downwards, services inflation is proving sticky, potentially leading to higher-for-longer interest rates.

Ongoing conflicts and tensions could disrupt supply chains, particularly in the oil market, and increase policy uncertainty.

Growth trajectories are uneven across regions, with some economies exhibiting stronger resilience than others.

Central banks are cautiously navigating the path of monetary policy normalization, balancing the need to control inflation with the risk of stifling economic growth.

Growth is projected to be around 1.7% in 2024 and 1.8% in 2025, with the US and some European economies showing positive, albeit modest, growth.

Growth is projected to be around 4.2% in both 2024 and 2025, with some economies facing headwinds from slower global growth and tighter financial conditions.

Fluctuations in commodity prices, particularly oil, could impact inflation and global growth.

Geopolitical tensions and other factors could lead to further disruptions in global supply chains, impacting trade and economic activity.

India is expected to maintain its position as a leading growth engine, driven by strong macroeconomic fundamentals and a promising outlook.

GDP GROWTH

Indias GDP grew by 6.7% and 5.4% in Q1 and Q2 of FY 2024 25, respectively. This implies a real GDP growth of 6% in the first half of the current fiscal year.

The Indias real GDP is estimated to grow by 6.4% in FY 2024-25 and is projected to grow at 6.3% - 6.8% in FY 2025-26

EXTERNAL DEBT

Indias external debt has remained stable over the past few years with the external debt to GDP ratio standing at 19.4% at the end of September 2024.

FOREIGN DIRECT INVESTMENT (FDI)

• FDI recorded a revival in FY 2024-25 with gross FDI inflows increasing from US$ 47 billion in the first 8 months of FY 2023-24 to US$ 55 billion in the same period of FY 2024-25, evidencing a YoY growth of 17.9%.

• Indias foreign exchange reserves increased from US$ 616 billion at the end of January 2024 to US$ 704 billion in September 2024 and stood at US$ 640 billion at the end of December 2024.

FISCAL DEFICIT

The revised estimate of the fiscal deficit for FY 2024-25 is 4.8% of the GDP. The estimate for FY 2025-26 is 4.4% of the GDP.

INFLATION

The Retail inflation has moderated from 5.4% in FY 2023-24 to 4.9% in April - December 2024. IMF has projected an inflation rate of 4.4% in FY 2024-25 and 4.1% in FY 2025-26 for India.

FOREIGN TRADE

• The total exports (merchandise and services) have registered a steady growth in the first 9 months of fY 2024-25, reaching US$ 602 billion, witnessing a YoY growth of 6%.

• The total imports during the same period reached US$ 682 billion, registering a growth of 6.9% on the back of steady domestic demand.

OTHER ASPECTS

• GIFT city has continued its ascent as a leading IFSC, improving its rank by 5 places in the ‘Global Financial Centres Index 36 (GFCI 36), rising to 52nd position.

• India has secured 4th place among the worlds largest foreign exchange reserveholding countries following China, Japan, and Switzerland.

• Viksit Bharat 2047 envisions India as a developed nation by 2047, the centenary of our independence. This would entail sustained economic growth of close to 8% every year for at least a decade.

• Real Estate Investment Trust (REITs) and Infrastructure Investment Trusts (InvITs) have raised Rs. 16,456 Crores during April to December 2024. During FY 2023-24, Rs. 39,024 crore was raised by REITs and InvITs.

The Economic Survey 2024-25, projects Indias real GDP growth at 6.4% for FY25. It highlights the countrys resilient economic growth, driven by strong domestic demand, infrastructure push, and digital advancements, despite global uncertainties and climate risks. The survey also emphasizes fiscal prudence and structural reforms as key factors in achieving Viksit Bharat 2047.

Economic Growth:

Real GDP Growth: The survey projects a 6.4% real GDP growth for FY25.

Nominal GDP: Nominal GDP is estimated to reach ^330.68 lakh crore in FY25, a 9.8% increase from ^301.23 lakh crore in FY24.

Real GVA: Real Gross Value Added (GVA) is also estimated to grow by 6.4% in FY25.

Global Ranking: India is recognized as the worlds fastest-growing major economy and the 4th largest global economy.

Key Drivers:

Domestic Demand: Strong domestic demand remains a key driver of Indias economic growth.

Infrastructure Push: Increased capital expenditure (CAPEX) and infrastructure development are contributing to economic growth.

Digital Advancements: Digital technologies and initiatives are playing a crucial role in economic transformation.

Other Notable Points:

Inflation:

Retail headline inflation has softened, decreasing from 5.4% in FY24 to 4.9% in April-December 2024.

External Sector:

Indias external sector remains resilient, with a stable current account deficit (CAD). Agriculture:

Agriculture growth remained steady in the first half of FY25, supported by healthy Kharif production and above-normal monsoons.

Monetary Policy:

The Monetary Policy Committee (MPC) maintained the repo rate at 6.5% during April-December 2024, and shifted its stance from "withdrawal of accommodation" to "neutral" in October 2024.

Fiscal Prudence:

The survey emphasizes the importance of fiscal prudence and structural reforms for sustained economic growth.

Overall, the Economic Survey 2024-25 presents a positive outlook for the Indian economy, highlighting its resilience and potential for future growth, while also acknowledging the need for continued focus on reforms and addressing global challenges.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

Your Company recognizes human resource a one of its prime resources. Your Company enjoyed excellent relationships with workers and staff during the year under review and considers them their most important assets. Your Company has been actively working with employees and proactively engaging & motivating them through the tough period of the COVID-19 pandemic. Your Company has continuously & transparently maintained communication with its employees on pandemic and business updates.

Your Company is committed to build and strengthen our human capital by defining policies that support their growth, goals and help them achieve excellence.

SPECIALTY CHEMICALS MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS (2023 - 2027):

The specialty chemicals market is experiencing robust growth, driven by increasing demand across various sectors like automotive, construction, and electronics. While the COVID-19 pandemic

caused disruptions, the market is recovering well, fueled by factors like rising urbanization, consumer demand for eco-friendly products, and technological advancements. The market is projected to reach $1.29 trillion by 2034, with a CAGR of 3.66% from 2025 to 2034

The global specialty chemicals market is experiencing steady growth in FY 2024-25, with a projected value of $803.61 billion in 2025, up from $769.75 billion in 2024. This represents a compound annual growth rate (CAGR) of 4.4%. The market is being driven by several factors, including the increasing demand for specialized performance chemicals, globalization, and a shift towards environmentally friendly solutions.

The market is projected to reach $1,000.82 billion by 2031, growing at a CAGR of 5.3% from 2024, according to extrapolate.com. Key trends include the rise of eco-friendly and customized solutions, technological advancements, and a surge in demand from sectors like construction, automotive, and healthcare. The COVID-19 pandemic initially disrupted supply chains and logistics, but the market has largely rebounded, with increased demand for certain chemicals like disinfectants and sanitizers.

Growth:

Overall Market:

The specialty chemicals market is expected to reach $1,001.79 billion by 2029, with a CAGR of 5.7%.

India Market:

The Indian specialty chemicals market is projected to grow from USD 62.78 billion in 2024 to USD 96.73 billion by 2034, with a CAGR of 4.41%.

Specific Segments:

Certain segments like construction chemicals, electronic chemicals, and lubricating oil additives are experiencing particularly strong growth due to specific industry demands.

Key Trends:

Sustainability and Green Chemistry:

Theres a growing emphasis on developing and using eco-friendly specialty chemicals, driven by environmental concerns and regulations.

Advanced Manufacturing Technologies (Industry 4.0):

Smart manufacturing and digital transformation are impacting the specialty chemicals industry, leading to increased efficiency and innovation.

Resilience and Adaptability:

The industry is demonstrating resilience in the face of global challenges, including supply chain disruptions and changing market dynamics.

Increasing Demand for Specialized Performance Chemicals:

The need for high-performance chemicals in industries like electronics, automotive, and advanced manufacturing is a major growth driver.

Government Policies and Funding:

Government initiatives and funding are playing a crucial role in accelerating the production and adoption of specialty chemicals.

Factors Influencing Growth:

Globalization and Market Expansion:

The increasing interconnectedness of global markets is driving demand for specialty chemicals across various industries.

Consumer Demand and Lifestyle Changes:

Evolving consumer preferences and lifestyles are influencing the types of specialty chemicals used in products and applications.

Industry Diversification:

The diversification of industries, including pharmaceuticals, agrochemicals, and industrial chemicals, is contributing to the growth of the specialty chemicals market.

Raw Material Costs:

Fluctuations in raw material costs can impact the production and pricing of specialty chemicals. Digital Transformation:

Digital technologies are reshaping the industry, leading to new business models and opportunities.

Opportunities

India presents significant opportunities for the specialty chemicals sector, driven by robust domestic demand, a global shift in supply chains, and government initiatives promoting domestic manufacturing. The market is projected to grow rapidly, fueled by increasing demand from various end-user industries like pharmaceuticals, agrochemicals, and personal care.

Key Drivers:

Government Support:

Initiatives like "Make in India" and Production Linked Incentive (PLI) schemes are boosting domestic production and attracting investments.

Shift in Global Supply Chains:

The "China+1" strategy, coupled with stricter environmental regulations in China, is pushing companies to diversify their sourcing and production bases, creating opportunities for India.

Growing End-User Industries:

Increasing demand for specialty chemicals in pharmaceuticals, agrochemicals, personal care, and other sectors is a major growth driver.

Cost Competitiveness:

Indias advantages in terms of raw materials, labour costs, and a large domestic market contribute to its cost competitiveness in the specialty chemicals space.

Research and Development:

Growing investments in R&D are enabling the development of innovative and high-value specialty chemicals.

Specific Opportunities:

Agrochemicals:

India is a major player in the agrochemicals market, and growing demand from the agricultural sector offers significant opportunities for specialty chemical manufacturers.

Pharmaceuticals:

The pharmaceutical industry relies heavily on specialty chemicals for drug manufacturing, and Indias strong pharmaceutical sector provides a large market for these chemicals.

Personal Care:

Growing awareness of hygiene and personal care products is driving demand for specialty chemicals used in cosmetics and toiletries.

Other End-Use Industries:

Specialty chemicals are also used in textiles, construction, and other industries, creating diverse opportunities for manufacturers.

Sustainability:

The growing focus on sustainability is leading to increased demand for eco-friendly and bio-based specialty chemicals.

Challenges and Considerations:

Research and Development:

Continued investment in R&D is crucial to develop innovative and competitive products.

Scale and Infrastructure:

Expanding production capacity and improving infrastructure are necessary to meet growing demand.

Sustainability:

Adopting sustainable practices and developing eco-friendly chemicals is becoming increasingly important.

Overall, the Indian specialty chemicals market presents a promising landscape with significant growth potential. By capitalizing on government initiatives, leveraging cost advantages, and focusing on innovation, Indian companies can establish themselves as global leaders in this sector.

Policy Support

Approved in May 2021, Production Linked Incentives (PLI) Scheme aims to boost domestic production and exports with output incentives of 10-20%. The scheme is for setting up manufacturing facilities for Advance Chemistry Cell (ACC) and Battery Storage in India.

The scheme requires procuring entities to follow local content criteria for certain chemicals, with the minimum local content increasing gradually until FY 25-26.

Make in India scheme

This scheme requires procuring entities to follow local content criteria for certain chemicals, with the minimum local content increasing gradually until FY 25-26. Government initiatives such as ‘Make in India and ‘Atmanirbhar Bharat aim to promote domestic manufacturing and reduce dependency on imports, which is expected to boost the production and consumption of specialty chemicals in the country.

Chemical and Petrochemical Development and Standardisation (CPDS)

This policy was implemented to help the chemical industry, including specialty chemicals like dye and dye intermediates, grow and develop

Market Size

The global specialty chemicals market size was valued at USD 904.45 billion in 2024 and is predicted to increase from USD 940.72 billion in 2025 to approximately USD 1,332.04 billion by 2034, expanding at a CAGR of 3.94% from 2025 to 2034.

As per the current market research conducted by the CMI Team, the India Specialty Chemicals Market is expected to record a CAGR of 4.8% from 2024 to 2033. In 2024, the market size is projected to reach a valuation of USD 27,054.3 Million. By 2033, the valuation is anticipated to reach USD 41,256.1 Million.

The chemical industry in India is valued at a substantial US$220 billion and experts predict that it could reach an astonishing US$1 trillion by 2040.

By 2025, the demand for chemicals in India is expected to grow by 9 percent per annum, and the chemical industry is anticipated to contribute US$383 billion to Indias GDP by 2030. This increase is expected due to the rise in demand in the end-user segments for specialty chemicals and petrochemicals segment.

According to Invest India, the market size of the chemical and petrochemical sector in India is US$178 billion.

The Indian chemical industry covers around 80,000 commercial products, employees over two million people, and makes up 3.4 percent of the global chemical industry.

India holds a strong position in international trading of chemicals and ranks ninth in exports and sixth in imports at a global level (excluding pharmaceuticals). India accounts for 2.5 percent of the worlds global chemical sales and exports to more than 175 countries worldwide. The major export destinations are the United States, China, and new destinations—Turkey, Russia, and Northeast Asia (China, Hongkong, Japan, Korea RP, Taiwan, Macao, and Mongolia).

Specialty chemicals, also known as performance or effect chemicals, are popular in the construction and industrial sectors. In India, the specialty chemicals market is valued at $32 billion and accounts for more than 50% of the countrys chemical exports. The electronics industry in India is also a driver of the specialty chemicals market, as it uses adhesives for a variety of applications.

However, the market may face challenges from increased competition, new entrants, and substitutes between 2024 and 2031. To overcome these challenges, companies can implement supply chain management strategies, hedge material costs, and differentiate their products and services.

Government Initiatives

The Indian Government actively supports the chemical industry, prioritizing growth in R&D capacity, manufacturing under the Make in India or Atmanirbhar Abhiyan initiatives, and reductions in the basic customs duty on several products.

2034 vision for chemicals and production-link incentive scheme: A 2034 vision for the chemicals and petrochemicals sector has been set up by the government to explore opportunities to improve domestic production, reduce imports, and attract investments in the sector. The government plans to implement a production-linked incentive system with 10-20 percent output incentives for the agrochemical sector to create an end-to-end manufacturing ecosystem through the growth of clusters.

The Production Linked Incentive (PLI) Scheme, approved on 12th May 2021, aims to enhance Indias manufacturing capabilities and exports in Advance Chemistry Cell (ACC) and Battery Storage. It targets the establishment of 50 Giga Watt Hour (GWh) capacity manufacturing facilities over 5 years, incentivizing domestic and international players to set up competitive ACC battery units in India. Subsidies are provided based on applicable subsidy per KWh and percentage of value addition achieved on actual sales for manufacturers with production capacities ranging from 5 GWh to 20 GWh.

Further, government initiatives such as the petroleum, chemicals, and petrochemicals investment region (PCPIR) policy have strengthened the confidence of manufacturers to invest within the country.

Road Ahead

The Remission of Duties and Taxes on Export Products (RoDTEP) Scheme, which became effective January 1, 2021, replaced the Merchandise Exports from India Scheme (MEIS) with the sole aim of

boosting exports. The scheme allows exporters to receive refunds on the embedded central taxes and state duties that were previously non-recoverable on input products.

Additional support, in terms of fiscal incentives, such as tax breaks and special incentives through PCPIRs or SEZs to encourage downstream units will enhance production and development of the industry. The dedicated integrated manufacturing hubs under Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) policy to attract an investment of Rs. 20 lakh crore (US$ 276.46 billion) by 2035.

Increasing demand

Indias rapid industrialization across various sectors such as agriculture, pharmaceuticals, and automotive is driving the demand for specialty chemicals, which are essential for manufacturing processes and product formulations.

Export opportunities

There is a significant opportunity for Indian specialty chemicals manufacturers to expand their presence in the international market by leveraging their competitive advantages such as cost- effective manufacturing, skilled workforce, and adherence to quality standards.

The growing global demand for specialty chemicals presents opportunities for Indian manufacturers to export their products. Indian chemical exporters will increasingly target emerging markets in Africa, Latin America, and Southeast Asia, diversifying their export destinations beyond traditional markets.

Technical prowess

Indias specialty chemicals sector is expanding due to its technical expertise. Integration of cutting- edge technologies such as artificial intelligence, machine learning, and blockchain in the chemical manufacturing process will enhance efficiency and traceability.

Strategic global shifts

Global shifts are also contributing to the growth of Indias specialty chemicals sector. Indian companies are likely to engage in more strategic alliances and acquisitions to gain access to new technologies and markets, further driving export growth.

Continuous advancements in technology are driving innovation in the specialty chemicals sector, leading to the development of new products with improved performance, functionality, and environmental sustainability, thus stimulating market growth.

To bring about structural changes in the working of domestic chemical industry, future investments should not only focus on transportation of fuels such as petrol and diesel, but also on crude-to- chemicals complexes or refineries set up to cater to the production of chemicals.

Specialty Chemical Segment

The India Specialty Chemicals Market faces several significant threats that could impact its growth

and profitability in the future. Some of these threats include:

• Global Economic Uncertainty: Fluctuations in global economic conditions, such as trade disputes, geopolitical tensions, and economic downturns, can adversely affect the Indian specialty chemicals market by impacting export demand, raw material prices, and investment decisions, posing a significant threat to the industrys growth and stability.

• Volatility in Raw Material Prices: The specialty chemicals industry is highly dependent on various raw materials, including petrochemicals and specialty gases, the prices of which are subject to volatility due to factors such as supply-demand imbalances, geopolitical events, and currency fluctuations, posing challenges for manufacturers in managing production costs and profitability.

• Regulatory Compliance: Stringent regulatory requirements, both domestic and international, about environmental regulations, safety standards, and product quality, pose compliance challenges for specialty chemicals manufacturers, requiring significant investments in research, development, and regulatory affairs, and non-compliance may result in penalties, legal disputes, and reputational damage.

• Competition from Global Players: The Indian specialty chemicals market faces stiff competition from global players who have established brands, advanced technologies, and extensive distribution networks, making it challenging for domestic manufacturers to compete on a level playing field, especially in terms of pricing, product innovation, and market reach.

• Disruption in Supply Chain: Disruptions in the supply chain, such as natural disasters, transportation bottlenecks, and logistical challenges, can disrupt the availability of raw materials, hinder production processes, and affect timely delivery to customers, posing a significant threat to the continuity of operations and customer satisfaction in the specialty chemicals market.

Sluggish demand:

Demand for specialty chemicals may be sluggish.

Dumping from China:

Dumping from China may be a factor in the industrys challenges.

Operational challenges:

Other operational challenges include lack of inventory visibility, compliance, formula management, hazard analysis, quality control, and managing inventory for cost efficiency

Niche markets: It can be difficult to serve niche markets, regardless of the industry.

End-use industries: The performance of the specialty chemicals market depends on the revival period of end-use industries.

Indias makers of specialty chemicals have benefited from a spurt in both domestic and global demand as customers sought to reduce their dependence on China.

Indias share of the global specialty chemicals market is currently around 4-6% and is projected to grow to 6% by 2026. This growth is fueled by factors like increasing domestic demand, shifting global supply chains (the "China+1" strategy), and a strong manufacturing base with competitive costs. While Indias overall chemical industry is significant, the specialty chemicals segment is experiencing faster growth.

The evolutionary nature of the Specialty Chemicals business has meant that the traditionally dominant regions of North America, Europe and Japan have made way for fast growth in emerging Asian, South America and Middle Eastern & African economies. Asia-Pacific, in fact, is estimated as the largest, also the fastest growing, global market for Specialty Chemicals.

This growth can be attributed to rapid industrialization, improved standards of living in several developing regions, discernible shift in the global chemical industrys center of gravity towards the Middle East due to the abundant availability of cheap petrochemical feed stocks and Asian markets offering cheap labor coupled with fast economic growth.

Specialty chemicals are synthetic products used as intermediates to manufacture various products ranging from pharmaceuticals to flavors and essences, and from agro chemicals to detergents. Unlike other chemical products, the specialty chemical segment has greater flexibility, small production volume and vast product categories.

Specialty chemicals are high-value added chemicals used to manufacture a wide range of products, including pharmaceuticals, fine chemicals, additives, advanced polymers, adhesives, sealants, paints, pigments and coatings.

The demand from end-user industries has improved the growth prospects of several specialty chemicals segments in Asia. Currently, the Indian specialty chemicals industry is still at a nascent stage and is expected to grow rapidly over next couple of years as it moves toward higher-quality products and applications, in both industrial and consumer segments.

The demand for environment friendly solutions and stringent emission control legislations has opened up new frontiers especially for the specialty chemical industry. The greater emphasis on energy efficiency and curbing greenhouse emissions has also contributed to demand for specialty

chemical products, such as photovoltaic solar cells, electrode materials, insulating materials and chemicals.

The Indian chemical sector accounts for 13-14% of total exports and 8-9% of total imports of India. In terms of volume of production, it is the twelfth-largest in the world and the third-largest in Asia. Currently, the per capita consumption of products of the Indian chemical industry is one- tenth of the world average, which reflects the huge potential for further growth. The Indian advantage lies in the manufacturing of basic chemicals that are also known as commodity chemicals that account for about 57% of the total domestic chemical sector.

Specialty Chemicals Market Ecosystem

The specialty chemicals market ecosystem is a complex network of interconnected players and factors, including suppliers, manufacturers, distributors, end-users, regulators, and research institutions. Its characterized by high value, tailored products, and diverse applications across various industries. This ecosystem is driven by innovation, sustainability concerns, and increasing demand for high-performance solutions.

Key Components of the Specialty Chemicals Market Ecosystem:

Suppliers:

These are the entities that provide raw materials, intermediates, and other necessary components for the production of specialty chemicals.

Manufacturers:

Companies that synthesize and formulate specialty chemicals based on specific requirements and applications.

> Distributors:

Entities that handle the logistics and distribution of specialty chemicals to end-users.

End-users:

Industries and businesses that utilize specialty chemicals in their products and processes, such as automotive, electronics, construction, and personal care.

Regulatory Bodies:

Organizations like the EPA and FDA that set standards and guidelines for the production, handling, and use of specialty chemicals to ensure safety and environmental protection.

Research Institutions:

Organizations involved in research and development activities to innovate new specialty chemicals and improve existing ones.

The specialty chemicals market is an ecosystem of many chemicals within a category. It includes many different types of chemicals, such as adhesives, construction chemicals, cosmetic additives, elastomers, flavors, food additives, fragrances, industrial gases, lubricants, paints, polymers, surfactants, and textile auxiliaries.

Prominent companies in this market include well-established, financially stable manufacturers of specialty chemicals. These companies have been in business for a while and have broad range of products, cutting-edge technologies, and robust international sales and marketing networks. Prominent companies in this market include BASF SE (Germany), DOW Inc. (US), Nouryon (The Netherlands), LANXESS AG (Germany), Evonik Industries AG (Germany), Huntsman Corporation(US), Coverstro AG (Germany), Clariant AG (Switzerland), Solvay S.A.(Belgium), and Arkema(France)

Key Drivers of Growth in the Specialty Chemicals Market:

Innovation and Technological Advancements:

Continuous development of new and improved specialty chemicals to meet the evolving needs of various industries.

Increasing Industrialization and Urbanization:

The growth of industrial and urban sectors drives the demand for specialty chemicals in various applications, such as construction and automotive.

Sustainability Concerns:

Growing emphasis on eco-friendly and sustainable solutions, leading to the adoption of specialty chemicals that minimize environmental impact.

Regulatory Requirements:

Stricter regulations regarding safety and environmental standards encourage the development and use of specialty chemicals that comply with these requirements.

Consumer Demand:

Increasing consumer awareness and preference for high-performance and specialized products, further driving the demand for specialty chemicals.

KEY MARKET TRENDS

Specialty Chemical Companies Take to Adopting Digital Platforms Specialty Chemicals Sector Earmarks Funds for COVID-19 Stimulus Packages Specialty Chemicals Assisting FMCG Companies in Being Sustainable Specialty Chemicals Market Shaped by Environmental Legislations and Efficiency

Digital Lab Notebook Software Helps Specialty Chemical Producers in Staying Competitive Smart Coatings Now a "Smart" Option

Specialty Chemicals a Key Component of the Automotive Industry Opportunities

The Company uses Natural Raw Materials like Hirda, Tamarind Testa etc. in the manufacturing process. The residue of these raw materials is further used as FUEL for Boiler, thus reducing the consumption of Furnace Oil. Also today the company is Asias largest manufacturer and exporter of natural based vegetable tannin extracts and Eco-friendly leather chemicals.

Threats

The specialty chemicals industry faces several threats including fluctuating raw material costs, intense competition, supply chain disruptions, and stringent environmental regulations. Additionally, the industry is vulnerable to technological advancements, changing customer demands, and potential health and environmental risks associated with chemical usage.

Heres a more detailed breakdown

1. Economic and Market Factors:

Fluctuating Raw Material Costs:

Specialty chemical manufacturers are highly susceptible to changes in the prices of their raw materials, particularly those derived from petrochemicals. This can significantly impact profit margins, especially if customer contracts dont allow for price adjustments.

Intense Competition:

The industry experiences competition from both global players with established brands and smaller niche players. Companies must continuously innovate to maintain a competitive edge and differentiate their products.

Supply Chain Disruptions:

Disruptions in the supply chain, such as natural disasters or logistical bottlenecks, can hinder the availability of raw materials and disrupt production, impacting timely delivery to customers.

Economic Cycles and Demand Fluctuations:

The specialty chemicals industry is affected by the overall economic climate and demand from client sectors like automotive and construction. Downturns in these sectors can negatively impact demand for specialty chemicals.

2. Technological and Regulatory Factors:

Technological Advancements:

Rapid advancements in technology and the need for continuous innovation can be a challenge for companies, particularly smaller ones, to keep up with and meet evolving customer needs. Environmental Regulations:

Stringent environmental regulations can increase the cost of compliance and potentially limit expansion, especially for companies with less developed technologies or those operating in regions with strict regulations.

3. Health and Safety Factors:

Health Risks:

Some specialty chemicals can pose health risks, and theres growing awareness of the potential adverse effects of exposure, even at low doses. This includes potential impacts on fertility, pregnancy, and the immune system.

Environmental Risks:

Concerns about the environmental impact of chemicals, including pollution and potential toxicity, are also a growing concern for the industry.

4. Other Factors:

Cyber security Threats:

Specialty chemical companies are increasingly vulnerable to cyberattacks, which can disrupt operations, steal data, or even compromise the safety of manufacturing processes.

Commoditization:

In some cases, specialty chemicals can become commoditized, meaning they are treated as generic products with little differentiation, making it difficult to maintain premium pricing and profitability.

Sustainability Concerns:

There is a growing global trend towards sustainability and decarbonization, which is driving demand for specialty chemicals that are environmentally friendly and contribute to sustainable practices.

The market for our product is positive. Over the years the company became a leading supplier of natural tannin materials and Eco-friendly leather chemicals of Indian origin to the international leather industry. Today the company has developed, established and maintained an untarnished track record of consistently meeting international quality standards.

Risks and Concerns

The Company has endeavored to optimize the use of energy resources and taken adequate steps to avoid wastage and use latest technology and equipment, wherever feasible, to reduce energy consumption.

Human Resource

Performance measurement is a fundamental principle of the management. The measurement of performance is important because it identifies current performance gaps between current and desired performance and provides indication of progress towards closing the gaps. The Human Resource Department has carefully selected key performance indicators and has taken necessary steps to improve performance of our workforce.

Internal Control System

Internal Control Systems And Procedures

The Company has in place internal control systems and procedures commensurate with the size and nature of its operations. Internal control processes, which consists of implementing and adopting appropriate management systems, are followed. These are aimed at giving the Audit Committee, reasonable assurance on the reliability of financial reporting, statutory and regulatory compliances, effectiveness and efficiency of the Companys operations. The internal control systems are reviewed periodically and revised to keep in tune with the challenging business environment. Internal audit focuses on control systems, optimum utilization of resources, prevention of frauds, adequacy of information system, security and control and compliance with risk management systems.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Company objectives, projections, estimates, expectations may be "forward- looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include climatic conditions, economic conditions affecting demand/ supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors.

Key Financial Ratios

The same has been given under notes to financial statements and forms part of the Annual Report.

	For and On behalf of the Board of Directors of Polson Limited
Place: Mumbai Date: August 14, 2025	Sd/- Amol Kapadia Managing Director DIN: 01462032