Oriental Aromatics Ltd Management Discussions

Global Economic Overview

The global economy moved into 2026 on a steady growth path, though sentiment remained increasingly uneven across regions. Geopolitical tensions, trade restrictions, volatile commodity prices and tighter financial conditions continued to affect investment decisions, trade flows and customer inventory behaviour, particularly for export-oriented sectors and industries linked to discretionary consumption. Headline inflation is expected to rise to 4.4% in 2026 and ease to 3.7% in 2027, driven by higher commodity prices, firmer inflation expectations and tighter financial conditions.

Despite the absence of a sharp slowdown in demand, the combination of prevailing macroeconomic trends and a challenging operating environment continues to keep global economy in a phase where growth is supported more by selective regional resilience than by broad-based momentum.

The economy remains exposed to downside risks as well, including a longer orwiderconflictin the Middle East, fresh trade tensions, higher energy prices and financial market volatility. At the same time, faster productivity gains from artificial intelligence and a sustained easing of trade tensions are expected to support business activity.

Outlook

Global growth is expected to remain steady but below pre-pandemic averages. For chemical companies serving consumer, FMCG, personal care, home care and export-oriented end-markets, the operating environment is expected to remain influenced by currency movements, tariff developments and volatility in raw-material and energy costs. Customer inventory cycles, regional demand patterns and evolving trade conditions are also likely to affect export competitiveness. Policy stability, disciplined working-capital management, cost efficiency and diversification across products, customers and geographies will remain important through 2027.

Indian Economic Overview

India continued to demonstrate resilient growth, sustaining its position among the fastest-growing major economies in FY 2025-26. According to the Economic Survey 2025-26, real GDP growth for the year was estimated at 7.4%, with Gross Value Added (GVA) growth at 7.3%, supported by healthy consumption and investment activity. Private final consumption expenditure grew by 7.0% and accounted for 61.5% of GDP, while gross fixed capital formation increased by 7.8% during the year. Services continued to lead supply-side growth, with services GVA estimated to surge by 9.1% for the full fiscal.

The survey projected real GDP growth for

FY 2026-27 in the range of 6.8% to 7.2%, reflecting continued confidence drivers. Consumption, infrastructure spending and services activity are expected to drive the momentum, with additional upside from a gradual revival in rural demand and investment. Indias growth profile also being propelled by structural drivers, including higher formalisation, expansion of digital payments, sustained focus on public infrastructure creation and manufacturing-led policy support. A young consumer base, growing number of middle-income households and steady demand for daily-use categories remain relevant for FMCG-linked industries. However, the pace of growth will remain sensitive to global trade conditions, commodity price movements, capital flows and private sector investment.

Outlook is

Indias near-term outlook is set to be driven by resilient consumption, sustained public capital expenditure, stable banking-sector indicators and improving private investment intentions. For domestic fragrance, flavour, aroma chemical and camphor manufacturers, sector performance is shaped by end-market demand across consumer staples, personal and home care, processed foods, wellness products and faith-linked consumption segments. However, export demand and profitability may beinfluenced by tariff developments, global customer destocking, raw-material and energy cost fluctuations, logistics conditions and currency movements. In this context, disciplined cost management, efficient working-capital practices, portfolio diversification and stronger customer partnerships will continue to support consistent growth and long-term competitiveness across market cycles.

Global Specialty Chemicals Industry

The global specialty chemicals industry caters to a broad spectrum of end-use sectors, including coatings, construction, water treatment, personal care, electronics, mobility, energy transition and consumer products, among others. Rising demand for electric vehicle materials, semiconductor manufacturing, water treatment solutions, bio-based chemicals and advanced construction chemicals is expected to drive the industrys future growth trajectory.

Demand is expected to remain linked to application performance, regulatory compliance, product consistency and the ability of suppliers to serve global customers reliably. Specialty chemical producers are also investing in process efficiency, product development and sustainability-led formulations to strengthen competitiveness.

(Sources: https://www.thebusinessresearchcompany.com/ report/speciality-chemicals-global-market-report https://www.researchandmarkets.com/reports/6053651/ specialty-chemicals-market-report)

Outlook

The sector is expected to grow in a measured manner, backed by high-performance applications and diversified end-use demand. At the same time, producers face pressure from energy and raw material costs, Chinese capacity in select chains, tariffs and customer inventory cycles. Companies with strong customer proximity, process efficiency and application capabilities are better placed to protect volumes and margins in soft pricing environments.

Regional Highlights

Asia Pacific

Asia Pacific remains a key demand and production for specialty chemicals, driven by manufacturing activity, consumer markets, personal care, electronics, coatings, water treatment and infrastructure. The regional market is anticipated to grow from US$ 435.60 billion in 2025 to US$ 456.29 billion in 2026, reflecting steady demand across agriculture, automotive, electronics, pharmaceuticals and construction applications. India and China continue to influence regional consumption, while Southeast Asia plays an important role in export

-oriented production and supply chain diversification. The region also benefits from expanding urban consumption, rising hygiene and grooming awareness, localisation of supply chains and continued investments in industrial capacity. Demand is becoming more application-led, with customers prioritising consistent quality, reliable supply and cost-effective formulations across FMCG, electronics, construction and water-treatment segments.

(Sources: https://www.towardschemandmaterials.com/ insights/asia-pacific-specialty-chemicals-market https://www.mordorintelligence.com/industry-reports/ specialty-chemicals-market Published/updated: April 2026)

Europe

Europe is witnessing a steady growth in its demand for specialty chemicals, with sustainability rules, energy price sensitivity, industrial output and compliance-driven reformulation shaping the ecosystem. Valued at US$ 95.85 billion in 2025, the regional market is estimated to reach US$ 100.18 billion in 2026, reflecting robust traction from automotive, construction, agriculture, electronics, personal care and pharma applications. Recent supply disruptions and higher energy costs have affected sentiment in the chemical industry, making cost control, capacity discipline, compliance readiness and supply reliability important operating priorities.

Middle East

The Middle East remains important for petrochemical and downstream chemical supply chains. A host of factors, including its robust hydrocarbon base, downstream diversification initiatives and demand from construction, automotive, pharmaceuticals, manufacturing and infrastructure-linked sectors are driving the momentum. According to International Market Analysis Research and Consulting (IMARC) Group, the Middle East specialty chemicals market was valued at US$ 24.5 billion in 2025 and is estimated to reach approximately US$ 25.6 billion in 2026, based on the stated 4.40%

CAGR for 2026 2034. The 2026 Middle East conflict has raised concerns over energy prices, logistics, supply chain continuity and input costs, with potential spillover effects on chemical producers and users globally.

North America

North America remains an important market for specialty chemicals. Valued at US$ 169.45 billion in 2025, the regional market is projected to reach US$ 174.17 billion in 2026. Growth is being driven by increasing adoption across biocides, cosmetic chemicals, corrosion inhibitors, institutional cleaners, lubricating oil additives, synthetic lubricants and construction chemicals. For exporters, key considerations include tariff clarity, landed cost competitiveness, customer inventory rebuilding and regulatory approvals, all of which continue to influence trade flows.

Latin America

Latin America remains a steady player in the global specialty chemicals landscape. The regional market generated a revenue of US$ 65.59 billion in 2024. Based on the industrys projected CAGR of 5.2% for 2026-2033, it is estimated to reach around US$ 69.00 billion in 2025 and US$ 72.59 billion in 2026. Diverse sectors, including agriculture, manufacturing, mining, consumer products, food and beverage, construction and personal care are driving this momentum, with specialty chemicals improving product performance, processing efficiency and quality consistency. External factors, spanning macro stability, currency movement and consumption trends in major economies such as Brazil, Mexico, Chile and Argentina are further influencing this trajectory.

Indian Specialty Chemicals Industry

Indias specialty chemicals industry is propelled by domestic consumption, export opportunities, application-led demand and investments in process and product capabilities. International Market Analysis Research and Consulting (IMARC) estimates the India specialty chemicals market at US$ 67 billion in 2025 and projects it to reach US$ 93.4 billion by 2034 at a CAGR of 3.65% during 2026-2034.

Indian Specialty Chemical Market Size

(in US$ billion)

Increasingly moving towards application-led growth, the trajectory is being shaped by demand from consumer, agriculture, pharma, personal care, home care and industrial segments. Customers are placing greater emphasis on consistent quality, regulatory compliance, technical support and reliable supply. In response, Indian specialty chemicals manufacturers are strengthening process capabilities, fortifying customer relationships and developing differentiated products to serve both domestic and export markets.

Key Growth Drivers

Rising domestic demand from FMCG, personal care, home care, food processing, pharmaceuticals, construction and mobility-linked applications

Surging investments in process efficiency, yield improvement and product development

Growing import substitution potential and export opportunities for reliable Indian suppliers with strong quality and compliance capabilities

Accelerating shift towards specialty, value-added and sustainable product categories

Increasing customer inclination towards application-specific products, technical support and supply consistency

Leveraging Indias cost position and expanding manufacturing base

Global Fragrances and Flavours Market

The global fragrances and flavours market is registering steady growth, steered by rising demand across food and beverage, personal care, home care, fine fragrances and wellness-linked applications. International Market Analysis Research and Consulting (IMARC) estimated the global flavours and fragrances market at

US$ 38.2 billion in 2025 and projects it to reach US$ 45.25 billion by 2034 at a CAGR of 3.93% during 2026-2034.

Growth is further aided by packaged food consumption, premiumisation and customer demand for differentiated sensory experiences. For suppliers, creative formulation, application support, consistency and compliance are key to success.

Key Trends

Demand for natural and sustainable ingredients across flavours and fragrances

Premiumisation and personalisation in fragrance-led categories

Higher use of fragrance in home care, personal care and hygiene products

Stronger focus on traceability, safety, labelling and regulatory compliance

Growth in packaged foods, beverages, Quick Service Restaurant (QSR)-linked consumption and ready-to-eat categories

Expansion of e-commerce, private labels and regional brands

Outlook

The global fragrances and flavours market is expected to grow steadily, supported by rising demand from food and beverages, personal care, home care, fine fragrances and wellness-led applications. Premiumisation, packaged consumption and demand for differentiated sensory experiences are likely to drive opportunities. Suppliers with strong formulation capabilities, application support, quality consistency and compliance readiness will remain better positioned.

Indian Fragrances and Flavours Market

Flavours

The Indian flavours market is supported by food processing, packaged foods, beverages, dairy, bakery, confectionery, oral care and Quick Service Restaurant

(QSR) categories. IMARC estimated the Indian flavours market at Rs 49 billion in 2025 and projects it to reach Rs 87.69 billion by 2034 at a CAGR of 6.48% during 2026-2034.

Accelerating urbanisation and rising consumption of processed food and ready-to-eat variants, coupled with changing consumer preferences, are shaping the landscape of the domestic flavour market. Stringent

FSSAI regulations and growing clean-label expectations are shifting the focus on quality and safety. Oriental Aromatics is aligned with this opportunity through its formulation expertise and sound customer relationships across FMCG and related categories, while consistently strengthening its position through its advanced Ambernath facility.

Key Trends

Growth in packaged and convenience food categories

Expansion in beverages, dairy, bakery, confectionery and snack categories

Use of technology to improve stability, flavour delivery and shelf life

Demand for natural, plant-based and clean-label flavours

Elevated quality and labelling expectations under strict food regulations

Outlook

The Indian flavours market is expected to benefit from continued growth in food processing, organised retail, QSR, beverages, packaged foods and health-linked products. Manufacturers with formulation depth, customer service and regulatory discipline are expected to remain the front runners as brands seek differentiated taste and sensory solutions.

Fragrances

The Indian fragrances market is on a strong expansion pathway, driven by greater emphasis on personal grooming, home care, devotional products, premiumisation and the emergence of domestic fragrance brands. IMARC estimated the India fragrances market at US$ 1,139.3 million in 2025 and projects it to reach US$ 3,480.5 million by 2034, at a CAGR of 12.81% during 2026-2034.

Outlook

For fragrance-ingredient manufacturers, India presents a strong demand opportunity, driven by rising penetration of fragrance compounds in FMCG, personal care, home care, hygiene, incense and wellness-oriented products. Customer requirements are becoming more sophisticated, with increasing emphasis on stable quality, cost-effective formulations, differentiated olfactiveprofiles,compliant ingredients and reliable local supply. At the same time, growth may be influenced by raw-material price volatility, import dependence for select inputs, customer inventory cycles and pricing pressure in mass-market categories.

Global Camphor Market

The global camphor market is charting a sound growth path, propelled by steady expansion in end-use applications, including pharmaceuticals, personal care, cosmetics, household products and industrial categories. Sustained use in religious rituals, pain-management and topical applications further strengthen the momentum.

Verified market sources published in 2026 indicate continued demand across Asia-Pacific, with growth linked to pharma use, devotional consumption, e-commerce access and personal care applications.

The camphor market is also influenced by the balance between synthetic and natural camphor supply, along with domestic production capacity, import dependence, pricing dynamics and evolving quality requirements.

Outlook

The global camphor market is expected to grow steadily, although margins may remain linked to domestic capacity, import trends and raw material pricing. Within this landscape, OALs portfolio spanning formulated camphor, powdered camphor and pharma-grade camphor provides diversified exposure across retail, B2B, export and medical applications.

Indian Camphor Market

Camphor is widely used in India across devotional practices, household applications, personal care, pharmaceuticals, pain relief and select industrial segments. According to publicly available industry sources, the Indian camphor market is expected to register a CAGR in the range of approximately 7-11%. In addition to demand from existing segments, a host of factors, including capacity additions, natural camphor imports from China, and synthetic camphor supply are shaping the markets evolution. Moreover, retail distribution, advent of modern trade, easy accessibility through e-commerce and robust brand positioning are providing further impetus. Given this landscape, product quality, supply consistency, channel reach and formulation capability emerge as important differentiators for organised manufacturers.

Company Overview

Oriental Aromatics Limited (‘OAL or ‘The Company) is one of Indias established manufacturers of fragrances, flavours, camphor and specialty aroma chemicals. With a long operating history in specialty aroma ingredients and the flavours and fragrances domain, the Company leverages its integrated capabilities across creation, manufacturing, formulation and customer delivery to foster a differentiated position within the industry.

OAL operates across three principal business areas: flavours and fragrances, specialty aroma ingredients and camphor and terpene chemicals. The Company serves a diverse range of customers including FMCG, personal care, home care, food, pharma, pain management and devotional product categories across domestic and international markets.

During FY 2025-26, OAL focused on growing volumes, improving customer penetration, strengthening market share and stabilising recent capacity additions. The fragrance division delivered healthy performance with support from softer raw material pricing, new wins with existing customers and addition of new customers. The aroma ingredients division, on the other hand, remained in a competitive pricing environment, while the Mahad facility continued its ramp-up phase. The camphor business continued to operate through a mix of formulated camphor, camphor powder, and pharma-grade camphor.

Key Highlights of FY 2025-26

Production and Sales Volume Growth

During FY 2025-26, the Company delivered steady operating performance, supported by volume-led growth across its portfolio. Production volumes increased by 5% year-on-year, while sales volumes grew by 9%, reflecting continued market engagement, improved customer traction and the Companys focus on strengthening volume leadership despite a challenging pricing environment.

Mahad Facility Optimisation

The Mahad greenfield facility continued to progress through its ramp-up and stabilisation phase. While the facility currently has an estimated 1% to 1.5% impact on consolidated EBITDA margins, it has completed sampling cycles with global customers, commenced commercial shipments and qualified to participate in major global RFQs for the second half of 2026.

Heritage Camphor Brands

In the camphor business, the Company has fully internalised its heritage brands, Saraswati and 3 Pine.

It continues to expand its retail B2C footprint, with the objective of improving brand-led participation and reducing exposure to pricing pressure in the bulk B2B camphor market, where domestic overcapacity remains a key industry challenge.

Revenue Milestone and Quarterly Performance

The Company crossed an important revenue milestone during the year, with consolidated revenue from operations surpassing the 1,000 crore mark to reach

1,030.8 crore. Operational momentum improved through the year, with Q4 FY 2025-26 recording operational income of 282.4 crore, representing growth of 12% sequentially and 11% year-on-year.

Fragrance Division Premiumisation

The fragrance division at Ambernath continued to move towards premium and high-performance fragrance solutions. This strategic focus enabled the Company to add new customers and deepen wallet share with both national and international brands during the year.

Manufacturing Facilities

OAL has integrated manufacturing capabilities across Bareilly, Vadodara, Ambernath and Mahad. Its operations cover camphor and terpene chemicals, specialty aroma ingredients, flavours and fragrances.

Bareilly, Uttar Pradesh

Bareilly is OALs long-standing manufacturing site for camphor and terpene chemicals. It produces synthetic camphor and related products, serving applications across devotional, B2B, pharma and export markets. Management stated that the facility runs at around 85-90% capacity and is also relevant for US FDA and WHO-GMP-certified camphor.

Vadodara, Gujarat

The Vadodara facility manufactures aroma ingredients and supports multiple chemical processes. The hydrogenation facility at this plant is integrated into the wider Vadodara product chain, leading to increased output of aroma ingredients.

Ambernath, Maharashtra

The Ambernath facility is OALs flavour and fragrance compounding facility.

Management stated that the plant operates at one shift, with the ability to expand capacity by adding shifts. The fragrance division continued to benefit from customer wins, improved raw material pricing and integrated aroma ingredient support during FY 2025-26.

Mahad, Maharashtra

Mahad is OALs strategic greenfield facility for specialty aroma ingredients, operated through its wholly owned subsidiary, Oriental Aromatics & Sons Limited. Commercial production commenced in November 2024, followed by customer sampling, commercial shipments and positive product acceptance. While the facility remains in stabilisation and ramp-up phase, with a temporary 1% to 1.5% drag on consolidated EBITDA margins, management expects utilisation to reach 75% to 80% within the next year, enabling EBITDA neutrality and future profit contribution.

Future Expansion Plans

In FY 2025-26, management indicated that the Company is taking a pause on new capex, while emphasising on reviewing and taking recent investments to their logical conclusion. Mahad stabilisation, customer approvals, utilisation improvement and process programmes remain key priorities. Opportunities may be evaluated if they emerge from customer interactions or internal product development.

Research & Development Facilities

OALs R&D and process capabilities support the development of specialty aroma ingredients, fragrances, flavours and process improvements. During FY 2025-26, the perfumery division continued to provide valuable market insights to the ingredients division, supporting a strong and application-focused R&D pipeline.

Centre for Innovation, Mumbai

The Centre for Innovation in Mumbai focuses on synthesis, new product development and specialty aroma ingredient research. It is a state-of-the-art synthesis laboratory approved by the Department of Scientific and Industrial Research (DSIR). This facility focusses on the R&D of generic specialty aroma ingredients through sustainable methods. With a team of 40 research associates, it is equipped with leading-edge analytical instruments including Head-space GC-MS, Flash Chromatography, UV Spectroscopy and a complete set of standard analytical tools. The facility supports OALs strategy to develop specialised products for global flavour and fragrance customers. Additionally, the centre houses a fully operational environmental lab to facilitate sustainability studies and eco-conscious innovation.

Process Re-engineering Lab, Vadodara

The Process Re-engineering Lab at Vadodara is another DSIR-approved facility that plays a critical role in process innovation. It supports process optimisation, yield improvement and new product development. Management highlighted process re-engineering, batch-time reduction and cost programmes as important actions to improve margins in a soft pricing environment.

Diversified Product Suite

Flavours and Fragrances

OAL develops flavours for customers across FMCG, personal care, home care, food, beverages and allied categories, with the Ambernath facility delivering customised formulations and compounding. The fragrance division focused on premiumisation and performance fragrances during FY 2025-26, while recording sound performance for the year.

Management stated that the fragrance division benefited from festive demand and GST 2.0 reforms during the year, while securing additional wins with existing customers and adding new customers.

Speciality Aroma Chemicals

OAL manufactures specialty aroma ingredients that cater to both its in-house fragrance division and global customers. The portfolio is backed by production at Vadodara, Bareilly and Mahad. In FY 2025-26, the segment remained competitive and price-sensitive, especially due to global buyer-market conditions and Chinese supply in non-tariff markets. The Companys response was focused on sales volume, customer retention, process re-engineering and yield optimisation. Mahads Evermoss facility remains an important part of OALs specialty aroma ingredients strategy, strengthening its competitive edge.

Camphor

OAL is a recognised player in the Indian synthetic camphor market, with a portfolio catering to both B2B and retail-led demand. During FY 2025-26, camphor demand followed seasonal patterns, with Q2 and Q3 benefiting from festive consumption and Q4 witnessing post-festive normalisation. The broader market remained impacted by domestic overcapacity and imports, keeping pricing under pressure. Against this backdrop, OAL continued to focus on formulated camphor, customer retention, process improvement and stronger retail participation through its established Saraswati Camphor and 3 Pine brands, while maintaining strategic B2B supply relationships.

Financial Performance

During FY 2025-26, OAL recorded consolidated operating revenue of 1,030.8 crore, compared to 928.3 crore in

FY 2024-25, reflecting a year-on-year growth of 11.5%. EBITDA stood at 68 crores as against 93.4 crore in the previous solutions year, with EBITDA margin at 6.60% compared to 10.06% in FY 2024-25. Profit after tax was at 3.2 crore, as opposed to 34.3 crore in FY 2024-25, while PAT margin stood at 0.31%.

The Companys financial performance during the year reflected higher operating volumes and continued customer engagement across business divisions. However, profitability was influenced by soft pricing in aroma ingredients, the early-stage ramp-up of the Mahad facility, buyer-market conditions, seasonal demand movement in camphor and pressure in select specialty ingredient categories. As per the management, its priorities are to protect volumes, improve market share, implement process and cost programmes and accelerate Mahads commercial ramp-up.

Key Ratios

	Particulars	FY 2025-26	FY 2024-25	YoY Change (%)	Reason for Change
	Interest Coverage Ratio	2.65	4.98	(46.84)	Increase in utilisation of borrowing during the year and reduction in profit
	Operating Profit Margin (%)	5.14	8.49	(39.50)	Increase in input costs and lower sales realisations
Mar (%)	Net Profit or Sector-specific Equivalent Ratios, as Applicable	2.46	5.05	(51.19)	Increase in input costs and lower sales realisations

Details of any change in return on net worth as compared to the immediately previous financial year along with a detailed explanation thereof:

Particulars	FY 2025-26	FY 2024-25	YoY Change (%)	Reason for Change
Return on Net Worth (%)	3.86	7.42	(47.99)	Primarily due to lower profit during the year

Management Outlook

OAL enters FY 2026-27 with a focus on converting recent investments into higher utilisation, customer approvals, volume growth and better operating absorption. FY 2025-26 was a year of consolidation, with the priority to stabilise Mahad, protect market share, improve processes and strengthen customer relationships across camphor, fragrances and specialty aroma ingredients.

Opportunities

Premiumisation in fragrances:

Healthy demand, premiumisation and higher performance expectations from customers continue to support the fragrance division.

Deeper wallet share with customers:

OAL added new customers and expanded wallet share with existing domestic and international accounts during the year.

Backward integration advantage:

Integration with the specialty aroma ingredients division provides OAL with a differentiated value proposition and supports cost, quality and supply-chain control.

Mahad commercial ramp-up:

Positive customer acceptance, completed sampling cycles, commencement of commercial shipments and qualification for global RFQs create a pathway for future capacity utilisation.

Retail camphor expansion:

The Company continues to grow its retail footprint under the Saraswati and 3 Pine brands, while strengthening strategic B2B supply relationships.

Internal efficiency programmes:

Process re-engineering, yield optimisation and disciplined cost management remain key opportunities to rebuild margins structurally.

Diversified business model:

Presence across fragrances, flavours, specialty aroma ingredients and camphor helps reduce dependence on a single product category or customer segment.

The near-term environment remains price-sensitive, especially in aroma ingredients. The Companys plan is to grow volumes, maintain customer retention, undertake process improvements and restore margins towards the stated 8-10% EBITDA range over time, subject to market conditions.

Threats

Input cost inflation:

Gum turpentine, crude culphate turpentine and alpha-pinene prices remained elevated, while crude-based raw materials continued to be volatile and difficult to source.

Currency depreciation:

Rupee depreciation affected the imported portion of the raw material basket across all three divisions.

Buyers market in aroma ingredients:

Global aroma ingredient markets remained buyer-led, limiting pricing power and keeping end-product realisations subdued.

Chinese capacity pressure:

Capacities built by Chinese players continued to flow into non-tariff markets, including India, Southeast Asia and parts of Europe, creating pricing pressure.

Camphor overcapacity:

The Indian camphor market remained impacted by supply exceeding demand due to substantial domestic capacity additions.

Natural camphor imports:

Imports from China, although moderated versus earlier years, continued to influence the pricing environment.

Cautious consumer behaviour:

Broader macroeconomic uncertainty led to cautious consumer behaviour, with fragrances and flavours still perceived at the margin as discretionary categories.

Limited cost pass-through:

In a buyers market, customer resistance to price increases can delay full recovery of raw material cost inflation.

Risk Management

Risk Category	Description of Risk	Company Response
Geopolitical & Trade	Uncertainty regarding North American tariffs (which briefly reached 50% for certain categories) and global trade instability impacted export volumes and inventory building by U.S. customers.	OAL evaluated alternate market channels and engaged in customer-site negotiations. Following a new trade deal, the Company is leveraging its restored 20% tariff advantage over Chinese competitors to encourage U.S. buyers to rebuild inventory.
Market Competition domestic	Dumping by Chinese suppliers in non-tariff markets (India, Southeast Asia, the EU), along with significant overcapacity in the camphor segment, led to a buyers market, characterised by intense pricing pressure.	OAL prioritised volume leadership, market share expansion and customer retention over short-term margins. The Company also implemented a CPR (process re-engineering) programme to structurally reduce costs, independent of external pricing cycles.
Commodity Volatility	Firming prices for key raw materials like alpha-pinene and cost pressures from Rupee depreciation (Forex) threatened profitability.	OAL secured feedstock well ahead of festive production cycles to ensure uninterrupted supply. The Company also made strategic decisions to hold higher inventory positions when raw material prices were perceived to be at their lowest.
Product Concentration	Exposure to highly competitive B2B commodity camphor markets resulted in low pricing power and margin compression.	OAL internalised its heritage camphor brands (Saraswati, 3 Pine, Bhimseni), shifting 60% of the camphor business into the formulated B2C space, boosting brand stickiness and capturing higher value.
fluctuations between Seasonal Demand	Significant quarters, with Q1 and Q3 traditionally being softer than the festive peak in Q2, may bring in volatilities in revenue and cash flow.	OAL maintained a diversified product mix, comprising fragrances, aroma ingredients and camphor, to provide a natural cushion against specific segment seasonality.
Financial Leverage	Rapid asset creation and debt-funded expansion could strain the balance sheet during a soft pricing environment.	OAL followed a conservative capital structure, keeping the net debt-to-equity ratio at a healthy 0.60x to 0.65x, that helps manage volatility while supporting future growth opportunities.

Internal Control System and Its Adequacy

OAL has internal control systems aligned with the scale and nature of its operations. The framework ensures reliable financial reporting, regulatory compliance, safeguarding of assets and effective risk management. It is supported by policies, approval procedures, internal checks and periodic audits.

Internal and external auditors review key processes and report observations to management and the Audit Committee. Corrective actions are taken where required to strengthen process discipline, documentation and control effectiveness.

Human Capital

People form the core of OALs operating model across manufacturing, R&D, sales, technical service, finance, compliance and support functions.

With firm focus on workplace safety, skill development, cross-functional collaboration and stable industrial relations across facilities, the Company fortifies its execution capabilities and organisational resilience.

Creating a Culture of Innovation

OAL encourages product and process development through its R&D and process re-engineering platforms. During FY 2025–26, management emphasised process improvement, yield optimisation and customer-driven product development as key actions in a competitive pricing environment.

Promoting Diversity and Inclusion

The Company strives to maintain a fair and equitable workplace, ensuring equal opportunities across roles, functions and locations. It promotes an inclusive environment that encourages employee participation across business activities.

Investing in Learning and Development

OAL continues to invest in sustained training and development activities to elevate technical, operational, safety, managerial and behavioural capabilities. Through on-the-job exposure, functional training and operational reviews, the Company remains committed to fostering a team that is agile and future-ready.

Upholding Ethical Conduct

OALs governance framework is based on integrity, accountability and compliance. The Company expects employees to follow applicable laws, internal policies and ethical standards in dealing with customers, suppliers, colleagues and other stakeholders.

Employee Welfare and Industrial Harmony

As of 31^st March 2026, OAL employed 768 individuals across its operations. The Company is dedicated to ensuring their well-being through comprehensive benefits, safe working conditions and a positive work culture. Industrial relations remained stable and cordial across all facilities, reaffirming mutual trust and respect shared between the management and workforce.

Environment, Health and Safety

OAL places emphasis on responsible manufacturing, compliance, pollution control, water management and workplace safety. For its chemical operations, it maintains close attention to process safety, material handling, waste management, emissions and employee health.

Occupational Health and Safety

OAL holds ISO 45001:2018 certification for occupational health and safety management and ISO 9001:2015 for quality management across sites. The Companyreaffirmsworkplace safety through the provision of PPE and appropriate safety gear, regular training programmes and structured process control. A strong focus on safety awareness, risk prevention and incident review systems further supports the management of workplace hazards.

Water Stewardship

Water conservation is a key focus area for OAL. The Company follows a structured approach to water management through initiatives that emphasise the principles of reduce, reuse and recycle. By embedding these efforts into day-to-day operations, it boosts resource efficiency and reduces dependence on freshwater sources.

Environmental

Certifications and

Compliance

OAL facilities are ISO 14001:2015 certified for environmental management. Pollution control systems and compliance processes are integrated across manufacturing units to manage environmental obligations effectively.

Cautionary Statement

The Management Discussion and Analysis section contains forward-looking statements regarding the Companys business outlook, growth priorities, product development, market position, expenses and financial results. These statements are based on current assumptions and information available to management. Actual results may differ due to economic conditions, market demand, tariff changes, currency movement, raw material prices, regulatory developments, customer approvals, project ramp-up, tax laws and other factors beyond the Companys control. The Company undertakes no obligation to update forward-looking statements except as required by applicable law.