Patel Chem Specialities Ltd Management Discussions

Global Economy Overview

The global economy demonstrated resilience through 2025, supported by technology-related investment, relatively accommodative financial conditions and fiscal and monetary policy support. Global trade remained robust, with strong growth in technology-related exports helping offset weaker momentum across other product categories, although supply chains and trading relationships continued to be reoriented amid changing trade policies. However, the global economic environment has become more challenging following the escalation of geopolitical tensions and the conflict in the Middle East, which has increased commodity-price volatility, inflationary pressures and uncertainty across financial markets. Against this backdrop, the IMF projects global growth at 3.1% in 2026 and 3.2% in 2027, compared with around 3.4% during 2025, while global headline inflation is expected to rise to 4.4% in 2026 before moderating to 3.7% in 2027. Growth prospects remain uneven across economies, with emerging markets and developing economies facing greater vulnerability to external shocks, while medium-term activity continues to be constrained by geoeconomic fragmentation and structural challenges. At the same time, continued investment in technology and the potential productivity gains from artificial intelligence could provide an important source of future growth.

Indian Economy Overview

India s economy remained resilient during FY 2025-26, with real GDP estimated to have grown by 7.7%, supported by robust domestic consumption, sustained investment, and improving macroeconomic conditions. Headline inflation moderated to 2.1%, supporting purchasing power and providing a favourable environment for consumer and business activity. Agricultural output remained supportive of rural demand, while industrial activity strengthened, with the industrial sector estimated to have grown by 6.2%. Government-led infrastructure spending and initiatives to strengthen domestic manufacturing, MSMEs and supply-chain capabilities continued to reinforce the country s productive base. India s growing integration with global markets was reflected in record exports of US$863.1 billion during FY 2025-26, including US$421.3 billion in services exports, creating a supportive backdrop for businesses serving domestic and international markets.

Global Pharmaceutical Industry

The global pharmaceutical industry continues to expand, supported by rising healthcare expenditure, ageing populations, increasing prevalence of chronic diseases and sustained innovation in drug discovery and formulation technologies. Demand is also being shaped by the growing adoption of specialty medicines, biologics and advanced drug-delivery systems, increasing the need for high-quality and function-specific excipients. Pharmaceutical excipients play an integral role in formulation development by supporting product stability, manufacturability, drug release, bioavailability and patient compliance. As pharmaceutical manufacturing becomes increasingly complex and regulatory requirements become more stringent, global drug manufacturers are placing greater emphasis on consistent quality, regulatory compliance and reliable supply chains, creating opportunities for established excipient manufacturers with specialised capabilities and international certifications

Indian Pharmaceutical Industry

India has established itself as a leading global pharmaceutical manufacturing hub, supported by cost competitiveness, a skilled workforce, a large manufacturing base and increasing investments in research and development. The country is among the world s largest pharmaceutical producers by volume and the largest supplier of generic medicines, with its products reaching more than 200 countries. The Indian pharmaceutical market is estimated at approximately US$65 70 billion and is expected to reach around US$130 billion by 2030, supported by rising domestic healthcare demand, increasing exports, greater penetration of specialty pharmaceuticals and government initiatives such as the Production Linked Incentive (PLI) Scheme. Pharmaceutical exports continue to exceed US$30 billion annually, with the United States, Europe, Latin America, Africa and Asia serving as key markets. The expansion of India s pharmaceutical manufacturing ecosystem is expected to support sustained demand for pharmaceutical inputs, including recipients, while strengthening opportunities for domestic manufacturers to serve both Indian and global customers.

Global Pharmaceutical Excipients Industry

The global pharmaceutical excipients market is estimated at US$11.8 billion in 2026 and is projected to grow at a CAGR of 7.9% to reach US$21.7 billion by 2034. Pharmaceutical excipients are non-medicinal ingredients used to support the physical, chemical and functional properties of drug formulations, including stability, bioavailability, manufacturability and controlled drug delivery. Market growth is being supported by the expanding pharmaceutical industry, increasing complexity of drug formulations, rising adoption of personalised and targeted therapies, and growing demand for advanced drug-delivery systems. At the same time, stricter quality and regulatory requirements are encouraging pharmaceutical manufacturers to partner with reliable excipient suppliers capable of delivering consistent quality and meeting international standards. The industry is also witnessing greater emphasis on sustainable manufacturing practices and the development of specialised excipient solutions, creating opportunities for innovation and value-added products.

Key Industry Trends

» Advanced Excipient Technologies: Increasing adoption of biocompatible polymers, controlled-release excipients and specialised drug-delivery materials is creating demand for higher-functionality excipients.

» Personalised and Targeted Therapies: The growing focus on personalised medicine and targeted drug delivery is driving the development of excipients designed to support specific formulation and patient requirements.

» Sustainability: Excipient manufacturers are increasingly focusing on resource- production processes, alternative materials and lower environmental impact across the manufacturing value chain.

» Higher Regulatory and Quality Standards: Increasing regulatory scrutiny around pharmaceutical ingredients is placing greater emphasis on product quality, consistency, traceability and compliance with international standards.

» Growing Formulation Complexity: The development of complex formulations and advanced drug-delivery systems is expanding the application scope for specialised and multifunctional excipients.

Indian Pharmaceutical Excipients Industry

The Indian pharmaceutical excipients market is estimated to generate revenue of US$296.0 million in 2026 and is projected to reach US$419.2 million by 2033, registering a CAGR of 5.1% between 2026 and 2033. The market encompasses a diverse range of products, including polymers, sugars, minerals, alcohols and gelatin, which serve functions such as binding, disintegration, viscosity modification, emulsification, lubrication, coating and formulation stability across oral, topical and parenteral dosage forms. The expanding pharmaceutical manufacturing base, increasing formulation requirements and growing adoption of specialised excipients are expected to support continued market development, while increasing emphasis on product quality, regulatory compliance and formulation performance is likely to create opportunities for established domestic manufacturers.

Key Industry Trends

» Growing Demand for Functional Excipients: Increasing formulation complexity is supporting demand for excipients with specific functional properties, particularly across tablet, capsule and other dosage forms.

» Shift Towards Specialised Applications: The industry is gradually moving beyond conventional excipients towards products that provide enhanced functionality in areas such as controlled release, viscosity modification, coating and targeted drug delivery.

» Growth in Polymer-based Excipients:Polymers remain the largest product segment in India, accounting for 47.96% of market revenue in 2025.

» Rising Demand for Sugars:Sugars are projected to be the fastest-growing product segment through 2033, reflecting their continued application across pharmaceutical formulations.

» Increasing Quality and Regulatory Requirements:

Pharmaceutical manufacturers are placing greater emphasis on consistent quality, product specifications and regulatory compliance, increasing the importance of technically capable and quality-focused excipient suppliers.

» Emergence of Advanced Excipients: Growth in biopharmaceuticals is creating additional opportunities for specialty excipients.

Business Performance

During the financial year 2025-26, the Company recorded healthy growth across both domestic and export markets, reflecting strong customer confidence, expanding market presence and increasing demand for its pharmaceutical excipients.

Export revenue increased from 1,807.17 Lakhs in the previous financial year to 2,135.08 Lakhs during FY 2025-26, representing a growth of 18.15%. The increase was primarily driven by higher demand from overseas pharmaceutical manufacturers, expansion of the customer base and continued focus on export-oriented business development.

Domestic sales increased from 8701.62 Lakhs in FY 2024-25 to 11591.25 Lakhs during FY 2025-26, registering a robust growth of 33.20%. The performance was supported by increasing demand from pharmaceutical formulation manufacturers, improved market penetration, expansion of customer relationships and the Company s ability to consistently supply quality products meeting customer specifications.

The Company continues to strengthen its position as a reliable supplier of pharmaceutical excipients by emphasizing product quality, timely delivery, regulatory compliance and continuous improvement in manufacturing processes.

Financial Performance

The financial performance of the Company during the year reflects sustained business growth despite a challenging global operating environment.

Financial Highlights

Particulars	FY 2025-26	FY 2024-25
Total Turnover	13,726.33 Lakhs	10,508.78 Lakhs
Profit Before Tax (PBT)	1,698.28 Lakhs	1,409.53 Lakhs

The Company achieved a significant increase in turnover during the year, supported by growth in both domestic and export markets. Profit Before Tax also improved compared to the previous year, demonstrating the Company s fluctuations operational resilience despite in raw material prices, foreign exchange movements, global supply chain challenges and competitive pricing pressures.

The management continues to focus on improving operational efficiencies, optimizing manufacturing costs and enhancing product mix to sustain profitability.

Opportunities

The Company believes that the pharmaceutical excipient industry presents significant long-term growth opportunities.

Key opportunities include:

» Increasing global demand for high-quality pharmaceutical excipients.

» Growing preference for India as a reliable alternative manufacturing destination under the global China Plus One strategy.

» Rising demand for cellulose derivatives in controlled-release formulations, nutraceuticals and specialty dosage forms.

» Expansion of the domestic pharmaceutical industry supported by increasing healthcare expenditure.

» Growing export opportunities in regulated and emerging international markets.

» Increasing emphasis on quality-certified, regulatory-compliant pharmaceutical ingredients.

» Opportunities arising from new product development, process innovation and strategic customer partnerships.

Threats, Risks and Concerns

The Company operates in a competitive business environment and continuously monitors both internal and external risks.

Key risks include:

» Volatility in prices of raw materials and utilities.

» Intense competition from domestic and international manufacturers.

» Changing regulatory requirements across global pharmaceutical markets.

» Foreign exchange affecting export realizations.

» Supply chain disruptions and logistics challenges.

» Increasing customer expectations relating to quality, sustainability and compliance.

» Technology upgradation requirements and continuous investments in manufacturing infrastructure.

The Company has implemented appropriate risk management systems and continues to strengthen its operational capabilities to mitigate these risks.

Internal Control Systems and their Adequacy

The Company has established an adequate and effective system of internal controls commensurate with the size, scale and complexity of its operations.

The internal control framework is designed to provide reasonable assurance regarding:

» safeguarding of assets;

» accuracy and reliability of financial reporting;

» compliance with applicable laws and regulations; » efficient utilization of resources;

» prevention and detection of frauds and errors; and » orderly and efficient conduct of business operations.

The key elements of the internal control framework include:

» Clearly defined organizational structure with appropriate delegation of authority.

» Comprehensive policies and standard operating procedures.

» Well-defined financial and accounting controls.

» Enterprise-wide management information system.

» Annual budgeting and periodic performance reviews.

» Independent internal audit conducted at regular intervals.

» Continuous monitoring by the Audit Committee and senior management.

» Periodic assessment of business risks and implementation of mitigation measures.

Human Resources And Industrial Relations

Patel Chem Specialities Limited firmly believes that its employees are its most valuable asset and key contributors to its long-term success.

The Company continues to invest in employee development through structured training programmes, skill enhancement initiatives, quality awareness, safety practices and leadership development. Particular emphasis is placed on creating a safe, healthy and inclusive workplace while fostering a culture of innovation, teamwork and continuous improvement.

Industrial relations during the year remained cordial and harmonious. The Company appreciates the dedication, commitment and contribution of its employees towards achieving operational excellence and sustained business growth.

Business Outlook

The outlook for the pharmaceutical and pharmaceutical excipient industry remains positive over the medium to long term.

Increasing investments in healthcare infrastructure, expansion of pharmaceutical manufacturing capacities, growing demand for complex formulations and increasing global outsourcing are expected to drive sustained demand for quality pharmaceutical excipients.

The Company s focus areas for the coming years include:

» expanding its portfolio of specialty pharmaceutical excipients;

» strengthening its presence in regulated international markets;

» increasing exports through strategic customer engagement; efficiencies

» enhancing manufacturing through technology and process improvements;

» maintaining the highest standards of quality and fluctuations regulatory compliance; and » developing innovative products aligned with evolving pharmaceutical industry requirements.

With its established manufacturing capabilities, experienced management team, strong customer relationships and continued emphasis on quality and innovation, Patel Chem Specialities Limited is well positioned to capitalize on emerging opportunities in both domestic and international markets.

Cautionary Statement

Statements contained in this Management Discussion and Analysis Report describing the Company s objectives, projections, estimates, expectations or predictions may constitute forward-looking statements within the meaning of applicable laws and regulations.

Actual results may differ materially from those expressed or implied due to various factors including changes in economic conditions, government policies, regulatory developments, industry demand, competitive environment, raw material availability and prices, foreign exchange and other factors beyond the Company s control.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

	By Order of the Board of Directors,
	For, Patel Chem Specialities Limited
Place: Ahmedabad	BHUPESH PATEL
Date: 01stSeptember, 2026	DIN- 02075545