Polson Ltd Management Discussions

Gross Domestic Product (GDP): Real GDP growth in 2026-27 is projected in the range of 6.8% to 7.2%. In 2025-26, GDP is estimated to grow by 7.4%, higher than 2024-25 (6.5%). Growth in 202526 is largely driven by domestic demand. The share of private final consumption expenditure rose to 61.5% in 2025-26, the highest level since 2011-12.

Following factors are conducive for domestic economy:

(i) healthier balance sheets across households, firms, and banks,

(ii) support from public investment,

(iii) resilient consumption demand, and

(iv) improving private investment intentions. External uncertainties remain, including slower growth in major trading partners, trade disruptions arising from tariffs, and volatility in capital flows, which may affect exports and investor sentiment. The Survey estimated India’s medium term GDP growth potential at 7%. It noted that this reflects compounding effect of sustained reforms with strong macroeconomic fundamentals.

(v) Inflation: Retail inflation declined from 4.6% in 2024-25 to 1.7% in 2025-26 (April- December). This has improved real purchasing power and supported consumption. Decline in inflation was driven by lower prices of food items such as vegetables, pulses, and spices. This was owing to favourable weather conditions and higher production. RBI and IMF project a gradual increase in headline inflation in 202627, within the target range of 4% (?2%). The Survey noted that challenges may arise from higher base metal prices due to demand pressures and supply disruptions, rising prices of gold and silver, and imported inflation due to currency depreciation.

(vi) External Sector: India’s current account deficit (CAD) in the first half of 2025-26 was 0.8% of GDP, lower than the first half of 2024-25 (1.3% of GDP). India’s current account shows a trade deficit in goods, which is partly balanced by strong earnings from services and private transfers. The surplus in services has grown steadily due to strong position in IT and professional services. Remittances also remain a key source of external funding. FDI inflows in 2025 were USD 81 billion, 13% higher than the previous year. The Survey noted that FDI inflows remain below their potential, despite favourable macroeconomic fundamentals. Foreign portfolio investments have experienced fluctuations. Inflows have been tepid due to increased uncertainty.

EXTERNAL DEBT

Indias external debt has risen to $762.8 billion at the end of financial year 2025-26, which is an increase of about $26.3 billion compared to the previous year. Indias household debt also rose to 45.5% of GDP by March 2026.

FOREIGN DIRECT INVESTMENT (FDI)

Foreign Direct Investment (FDI) in India has evolved significantly over the past decade. The country has steadily built a policy environment that has welcomed global capital across diverse sectors. It includes financial services, technology, manufacturing, and clean energy.

The numbers are compelling. Between April 2000 and March 2026, cumulative gross FDI inflows in India reached nearly US$1.16 trillion. This marked an all-time milestone. In FY 2025-26, total FDI inflows rose to a record $94.53 billion, a 17% increase over the previous fiscal year.

FDI inflows in India have grown steadily over the past decade. From $36.05 billion in FY 2013-14, inflows rose to $94.53 billion in FY 2025-26. Over the eleven years between 2014 and 2025, India attracted a total of $748.78 billion in FDI investment in India. This is 143% higher than the eleven years before.

This growth has been driven by consistent policy reforms. The government has opened most sectors to 100% FDI under the automatic route. This means investors no longer need prior government approval to invest. Some of the key milestones include allowing 100% Foreign Direct Investment (FDI) in coal mining and contract manufacturing. They also include raising the Foreign Direct Investment cap in insurance to 74% and bringing telecom under the automatic route. [3]. Most recently, the insurance sector cap has been proposed to be raised further to 100%, which is expected to draw in more international insurers.

India’s investor base has also widened considerably. The number of countries investing in India grew from 89 in FY 2013-14 to 112 in FY 2024-25, so this signifies the country’s growing appeal across geographies.

FDI investment in India comes from numerous countries, spanning both major financial centres and strategic bilateral partners. Singapore had the largest FDI investment in India- FDI equity inflows in the last fiscal year, contributing US$19.8 billion. The United States was also one of the top FDI countries in India followed at US$11.17 billion. Additionally, Mauritius contributed US$3.5 billion.

Interestingly, the inflows from the US have more than doubled in the last financial year, reflecting the deepening investment relationship between the two economies. On a cumulative basis since April 2000, Singapore leads with nearly $194.7 billion in equity inflows, followed by Mauritius at $186.8 billion and the United States at $81.8 billion

To further strengthen these ties, India is actively negotiating Bilateral Investment Treaties (BITs) with partners including Saudi Arabia, Qatar, the European Union, Switzerland, and Australia. This is aimed at offering greater legal certainty and protection to international investors.

FISCAL DEFICIT

Indias fiscal deficit for the 2025-26 financial year stood at exactly 4.4% of the Gross Domestic Product (GDP), in line with the governments revised estimates. In absolute terms, the deficit was Rs.15.19 trillion, fulfilling the governments long-term commitment to bring the fiscal deficit below the 4.5% threshold.

INFLATION

Indias average retail headline inflation for the April-December 2025 period was 1.7%, following a sharp disinflationary trend during the first half of the fiscal year. The full fiscal year 2025-26 averaged near 2.09%, aided by healthy food supplies and favorable weather conditions.

FOREIGN TRADE

In FY 2025-26, India’s total foreign trade reached a new milestone with combined exports at US$ 860.09 billion (a 4.22% growth) and total imports at US$ 979.40 billion. The widening gap pushed the full-year overall trade deficit to US$ 119.30 billion, up from US$ 94.66 billion in FY 2024-25.

The external trade figures were characterized by a resilient services sector largely offsetting ongoing stagnation in merchandise manufacturing.

Merchandise Trade: Exports remained largely stagnant at US$ 441.78 billion, while imports grew faster to US$ 774.98 billion, yielding a wide merchandise trade deficit of US$ 333.19 billion.

Services Trade: Services exports were the standout performer, surging to US$ 418.31 billion. This generated a strong services trade surplus of US$ 213.89 billion, providing necessary stability to the current account.

a. China overtook the United States to emerge as Indias largest trading partner.

b. India expanded market access by concluding major Free Trade Agreements (FTAs) with the United Kingdom (UK), Oman, and New Zealand.

c. The India-UK Comprehensive Economic and Trade Agreement (CETA) eliminated tariffs on 99% of Indian exports, significantly boosting export-oriented regions

OTHER ASPECTS

FINANCIAL AND ECONOMIC REFORMS

• Fiscal Deficit: Successfully reduced and estimated at 4.4% of GDP, adhering to federal fiscal consolidation paths.

• Insurance Sector FDI: Increased limit from 74% to 100% for companies investing their total premium amounts within India.

• MSME Credit Support: Enhanced credit guarantee cover limits up to Rs.10 crore for micro/small firms, and up to Rs.20 crore for start-ups and exporting MSMEs.

INFRASTRUCTURE AND URBAN DEVELOPMENT

• Public-Private Partnerships: Mandated infrastructure ministries to outline active 3-year project pipelines.

• Urban Challenge Fund: Established with an allocation of Rs.1 lakh crore to support comprehensive city development initiatives.

• Agricultural Missions: Launched targeted multi-year frameworks to achieve domestic self-reliance in pulses.

Economic Growth:

Indias real GDP growth for the financial year 2025-26 reached 7.7%, accelerating from 7.1% in FY 2024-25, according to provisional estimates released by the Ministry of Statistics and Programme Implementation (MoSPI). Nominal GDP grew at 8.9% to hit Rs.346.36 lakh crore.

Key Growth Drivers

• Manufacturing: Expanded by 10.7% over the fiscal year, up from 9.3% previously.

• Services: Contact-intensive sectors (trade, hotels, transport) surged by 11.0%.

• Investment: Gross Fixed Capital Formation (GFCF) increased by 8.2%, signaling strong infrastructure creation.

SECTORAL TRENDS

• Agriculture: Rose at a moderate 3.0%, reflecting climate and weather vulnerabilities.

• Q4 Performance: Real GDP in the final quarter (Q4 FY26) grew by 7.8% year-on-year.

Indias real GDP growth for the financial year 2025-26 is provisionally estimated at 7.7%, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI). This is an increase from the 7.1% growth rate recorded in FY 2024-25.

Key Economic Indicators

• Real GDP (Constant Prices): Estimated at Rs.323.12 lakh crore, compared to Rs.299.89 lakh crore in FY 2024-25.

• Nominal GDP (Current Prices): Estimated at Rs.346.36 lakh crore, reflecting an 8.9% growth rate over the previous year.

• Real GVA (Gross Value Added): Estimated at Rs.294.91 lakh crore, marking a growth rate of 7.9%. SECTOR PERFORMANCE HIGHLIGHTS

• Strong Sectors: Manufacturing, financial, real estate, professional services, and trade/hotels/transport sectors achieved double-digit growth.

• Q4 Performance: Real GDP during the fourth quarter (Q4) of FY 2025-26 grew by an estimated 7.8%.

The key growth drivers for India in FY 2025-26 are services sector expansion, sustained public and private investments, and resilient domestic consumption.

Core Economic Drivers

• Services Sector: Main anchor of growth with an estimated GVA increase of over 9%, driven by financial, real estate, and professional services.

• Investment & Capex: Gross Fixed Capital Formation grew by 7.8%, supported by high public capital expenditure and a revival in private corporate investments.

• Consumption Momentum: Bolstered by strong agricultural performance helping rural demand, alongside tax rationalisation and steady urban consumption.

• Policy & Focus Sectors: Specific budgetary thrust on Agriculture, MSMEs, Investments, and

Exports to enhance ease of doing business and formalize small enterprises.

Indias external sector for FY 2025-26 demonstrates resilience characterized by a lower current account deficit (CAD), strong export momentum, and robust foreign direct investment (FDI) inflows despite global headwinds.

TRADE AND CURRENT ACCOUNT PERFORMANCE

• Current Account Deficit (CAD): Dropped to 0.8% of GDP in the first half of FY 2025-26, improving from 1.3% in H1 FY 2024-25.

• Export Growth: Cumulative exports reached USD 720.76 billion between April-January 2025-26 (+6.15% YoY), with services hitting USD 354.13 billion (+10.57% YoY).

• Global Standing: Indias share in global merchandise exports rose to 1.8%, and UNCTAD ranked India third in the Global South for trade partner diversification

CAPITAL FLOWS AND RESERVES

• FDI Inflows: Strengthened significantly, recording the highest inflows in the first seven months of a fiscal year following USD 81.0 billion total gross inflows in FY25.

• Forex Reserves: Maintained a high buffer with robust import cover, cushioning external shocks from shifting global portfolio flows.

Agriculture-Indias agriculture and allied sector is estimated to grow at around 3% to 4.6% in FY 2025-26, supported by a favorable monsoon and strong performance in allied segments. According to the Economic Survey, the sectors momentum relies heavily on non-crop activities.

The Reserve Bank of Indias monetary policy for FY 2025-26 featured a cumulative repo rate reduction of 100 basis points, a neutral policy stance, and a cut in the Cash Reserve Ratio (CRR).

Key Policy Rates (Ending FY 2025-26)

• Repo Rate: Maintained at 5.25% following total cuts through December 2025.

• Standing Deposit Facility (SDF) Rate: Held steady at 5.00%.

• Marginal Standing Facility (MSF) & Bank Rate: Maintained at 5.50%.

Liquidity and Stance Actions

• Neutral Stance: Maintained by the Monetary Policy Committee (MPC) to balance growth and inflation risks.

• CRR Reduction: Lowered by 100 basis points to 3.0% between September and November 2025 to ensure ample system liquidity.

• Liquidity Management: Surged with system liquidity averaging Rs.1.89 lakh crore in FY26, supported by Open Market Operations (OMOs) and buy-sell swaps

India achieved its fiscal prudence target for FY 2025-26 by reducing the fiscal deficit to 4.4% of GDP, successfully fulfilling the target set in the Union Budget

Key Fiscal Metrics

• Fiscal Deficit: Reached 4.4% of GDP, down from 4.8% in FY 2024-25.

• Revenue Deficit: Targeted at 1.5% of GDP.

• Nominal GDP Growth: Estimated at 10.1%.

• Debt-to-GDP Ratio: Shifted down to a declining path around 56.1% in the revised estimates. Consolidation Strategy

• Receipts vs Expenditure: Receipts grew faster at 11.1% compared to expenditure growth at 7.4%.

• Capital Expenditure: Maintained a strong thrust on public investment and infrastructure momentum while managing revenue expenditure.

• Macro Stability: The consolidation paved the way for a further reduction to 4.3% of GDP for FY 2026-27.

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 global specialty chemicals market is valued at approximately $750 billion to $940 billion in 2025-2026 and is projected to grow at a steady Compound Annual Growth Rate (CAGR) of 4.9% to 5.5% through the mid-2030s, driven by rising demand for high-performance and sustainable materials.

Market Growth and Forecasts (2025-2026)

• Valuation Baseline: Evaluated at roughly $757 billion to $940 billion in 2025, expanding to over $830 billion entering 2026.

• Long-Term Projection: Expected to scale past $1.1 trillion to $1.5 trillion by the early 2030s.

• Regional Leadership: The Asia-Pacific region commands the largest market share (approx. 41% to 49%) due to heavy manufacturing depth in China, rising output in India, and expanding electronics production.

Key Industry Trends

• EV and Semiconductor Integration: Surging demand for electric vehicles (EVs) and local semiconductor fabrication is pulling heavy volume for battery electrolyte salts, thermal interface materials, and high-purity electronic etchants.

• Regulatory and Green Shifts: Stricter environmental rules?such as low-VOC mandates and PFAS restrictions?are forcing a wave of chemical reformulations toward bio-based and sustainable alternatives.

• Portfolio Restructuring: Companies are shifting investments away from oversupplied, low-margin commodity petrochemicals and toward tailored specialty chemical platforms.

COVID-19 Impact and Post-Pandemic Correction

• The Post-Pandemic Upcycle (2021-2022): Initial sharp economic recovery caused aggressive inventory stocking and strong revenue growth.

• The Subsequent Correction (2023-2025): Supply chains normalized, leading to prolonged customer destocking, downward margin pressures, and excess manufacturing capacity (particularly out of China).

• Current Stabilization: The market in 2026 is seeing targeted cost-reduction actions, asset consolidations, and strategic M&A focused strictly on high-specification sectors.

Growth:

Specialty chemicals growth for 2025-26 reflects a steady global compound annual growth rate (CAGR) of about 5.2% to 5.5%, driven by high-specification applications, electronics, and green tech, despite broader macroeconomic volatility.

Overall Market:

The global specialty chemicals market is valued at approximately $900 billion to $1.0 trillion for FY 2025-26, growing at a steady compound annual growth rate (CAGR) of about 4.9% to 5.5%. Demand is heavily anchored by performance-driven sectors like electronics, construction, and automotive applications.

Global Market Highlights

• Valuation Scope: Estimated between $902 billion (Custom Market Insights) and $1.0 trillion (Grand View Research) for 2025, scaling upward through 2026.

• Regional Dominance: The Asia-Pacific region leads the market, capturing roughly 46% to 50% of global revenue due to expansive manufacturing hubs in China, India, and Southeast Asia.

• Leading Segments: Coatings, adhesives, sealants, and elastomers (CASE) alongside institutional and industrial cleaners command the largest slice of end-user application demands.

Regional Shifts and India Focus

• China-Plus-One: Supply chain adjustments continue favoring alternative manufacturing corridors like India and Vietnam as compliance and environmental regulations tighten in East Asia.

• Domestic Momentum: India’s domestic specialty chemicals sector remains a key growth pocket, propelled by robust strides in pharmaceuticals, agrochemicals, and technical textile segments.

India Market:

The Indian specialty chemical market for FY 2025-26 is valued at over Invest India USD 138 billion, growing at a steady CAGR of roughly 7.6% to 11%. Key growth drivers include rising domestic consumption, the China+1 global supply chain shift, and infrastructure expansion/

Key Trends:

Key economic and structural trends for FY 2025-26 highlight strong GDP growth at 7.4%, aggressive capital expenditure, and robust digital and renewable expansion.

Economic Growth and Fiscal Consolidation

• Robust GDP Growth: Real GDP estimated to grow at 7.4%, driven by strong domestic consumption and a 9.1% expansion in the services sector.

• Fiscal Prudence: The fiscal deficit target was reduced to 4.4% of GDP, down from 4.8% in the previous cycle.

• Capital Expenditure: Central government capex scaled up significantly to Rs.11.21 lakh crore, bolstering infrastructure development.

Infrastructure and Energy Transition

• High-Speed Corridors: Expansion of high-speed transport networks and near tenfold growth in highspeed corridors since FY14.

• Renewable Leadership: Continued global prominence in renewable energy, ranking 3rd globally in overall renewable and installed solar capacity.

• Power Sector Turnaround: Distribution companies (DISCOMs) recorded a positive profit after tax (PAT) for the first time.

Digital and Labor Market Shifts

• Digital Economy Integration: Continued acceleration in digital payments, e-commerce, and AI- based services.

• Employment Gains: Unemployment rate declined to 4.8% alongside a rise in female Labour Force Participation Rate (LFPR) to 35.3%.

• Trade Diversification: Strategic shift in trade partnerships and crude oil import diversification to mitigate geopolitical risks.

Sustainability and Green Chemistry:

Sustainability and green chemistry for fiscal year 2025-26 focus on renewable feedstocks, waste minimization, and energy-efficient processes. Key focal points include scaling bio-based materials, expanding aqueous (in-water) reactions, and integrating artificial intelligence to design safer chemical pathways.

Core Industry Trends

• Renewable Feedstocks: Shifting away from crude oil toward agricultural waste, algal oils, and captured carbon dioxide to lower carbon footprints.

• Benign by Design: Engineering chemical products to minimize hazard potential and eliminate toxic legacy chemicals.

• Aqueous and Flow Chemistry: Increasing adoption of water-based reaction media coupled with continuous manufacturing to reduce solvent waste in sectors like pharmaceuticals.

• AI-Driven Optimization: Utilizing machine learning models to rapidly discover green catalysts and predict safer molecular behavior.

Policy and Strategic Support

• National and Global Frameworks: Alignment with circular economy targets and stricter chemical release protocols governed by international bodies like the UN Environment Programme.

• National Initiatives: Strategic pushes in industrial hubs toward green hydrogen integration and optimized resource efficiency via programs outlined by agencies like NITI Aayog.

Advanced Manufacturing Technologies (Industry 4.0):

For the fiscal year 2025-26, Advanced Manufacturing (Industry 4.0) has evolved past isolated pilot projects into deeply integrated, AI-driven ecosystems. The current landscape focuses heavily on autonomous orchestration, operational resilience, and energy-aware manufacturing to combat labor shortages, complex supply chains, and strict net-zero mandates.

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:

Government support for Indias specialty chemicals sector focuses on cluster-based infrastructure, policy frameworks, and strategic regional value chains. Key initiatives include Dedicated Chemical Parks, Centers of Excellence (CoE), and broader manufacturing frameworks.

Infrastructure and Clusters

• Dedicated Chemical Parks: The government provides support to states to establish three specialty chemical parks using a cluster-based plug-and-play model to cut import dependence and boost local output.

• Plugging into Global Value Chains: Policy recommendations by bodies like NITI Aayog target world- class port infrastructure and fast-tracked environmental clearances to match global shifts.

Research and Technology

• Centers of Excellence: Financial support of up to 50% of project costs (capped at Rs.5 crore under revised guidelines) is extended to upgrade research and develop new product applications.

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:

The global specialty chemicals market has surpassed $1.0 trillion in value, experiencing a highly targeted transition from commodity-adjacent chemicals to high-specification, performance-driven formulations. For the 2025-26 fiscal period, specific growth opportunities are concentrated heavily within technological shifts, supply chain migrations, and advanced manufacturing sectors.

1. Electronics and Semiconductor Process Chemicals

The explosive expansion of AI data centers, high-bandwidth memory (HBM), and national semiconductor fabrication localization (across the US, India, and Europe) has generated critical demand for ultra-pure chemical agents.

• Key Products: Photoresists, Chemical Mechanical Planarization (CMP) slurries, wet chemicals, high- purity solvents, and dielectric materials.

• Strategic Advantage: High entry barriers. Companies capable of cleanroom manufacturing and strict customer co-development are securing premium, long-term contracts.

2. Electric Vehicles (EV) and Energy Transition Materials

The global automotive structural shift is directly altering the material mix used by original equipment manufacturers (OEMs), capturing over 24% of the specialty chemicals market share.

• EV Battery Value Chains: Strong demand pull for battery-grade electrolyte salts, binders, NMP solvents, flame-retardant additives, and thermal interface materials.

• Vehicle Lightweighting: High-performance carbon-fiber resins, engineering structural adhesives, and lightweight fillers designed to replace heavy steel components.

• Renewable Energy: Specialized coatings for solar panels, wind turbine composites designed for easier recyclability, and chemical catalysts for green hydrogen production.

3. Green Chemistry and Circular Economy Solutions

Stricter global environmental mandates?such as impending PFAS group restrictions, low-volatile organic compound (VOC) rules, and the EUs newly implemented Carbon Border Adjustment Mechanism (CBAM)?are making green chemistry an absolute economic necessity rather than a passive corporate social responsibility.

• Reformulation Opportunities: Development of non-fluorinated (PFAS-free) alternatives, bio-based polymers, and biodegradable oilfield surfactants.

• Sustainable Packaging: Water-based adhesives and eco-friendly barrier coatings (e.g., Oil and Grease Resistant coatings) engineered to replace traditional, single-use polyethylene packaging.

4. Custom Synthesis & Global Supply Chain Diversification (The "China+1" Pivot)

Global consumer goods and pharmaceutical conglomerates are shifting high-value sourcing out of single-market concentration. As a result, countries like India?where the local specialty chemical export sector is projected to cross $100 billion over the next decade?are capturing substantial volume.

• Pharmaceutical Intermediates: Advanced fluorine chemistry and key starting materials (KSMs) required for next-generation drug discovery.

• Agrochemical Formulations: High-efficiency, low-toxicity crop protection formulations (herbicides and fungicides) fueled by intensifying global food security programs.

5. Construction and Infrastructure Chemicals

Rapid global urban development, paired with a focus on structural longevity, is boosting the CASE (Coatings, Adhesives, Sealants, and Elastomers) sub-segment, which commands nearly 39% of the overall specialty market.

• Key Products: High-performance cement admixtures, water-proofing chemicals, tile-fixing polymers, and smart industrial anti-corrosion coatings.

Market Size

The global specialty chemicals market size during FY 2025-26 ranges between USD 900 billion and USD 1.1 trillion, depending on the tracking agency, and is growing at a compound annual growth rate (CAGR) of 4.5% to 5.5%.

Comprehensive industry tracking reports break down the market valuation and segments as follows:

1. Market Size & Projections (FY 2025-26)

• 2025 Evaluation: Valued at approximately USD 902 billion to USD 940.7 billion.

• 2026 Evaluation: Projected to reach USD 949 billion to USD 978.8 billion, pushing past the USD 1.0 trillion threshold in parallel tracking matrices.

• Year-on-Year Growth: The sector maintains a steady YoY growth rate of roughly 6.2% going into 2026.

2. Segment-Wise Performance

The global market demand is heavily fragmented across highly specialized application areas:

• Surfactants & Cleaning Agents: This segment captured the largest market share, accounting for roughly 36.9% of the functional chemical market.

• Agrochemicals & Crop Protection: Driven by food security demands, agrochemicals account for 27.04% of product segments.

• Dyes and Pigments: Holds a notable 22.02% market share, closely followed by advanced construction chemicals and electronic formulation materials.

• Fastest Growing Vertical: Biocides and eco-friendly preservatives are tracking the fastest growth at a 6.5% CAGR due to strict wastewater treatment and green industrial standards.

3. Regional Market Share

• Asia-Pacific (APAC): Dominates global supply and demand with a 41% to 49.6% market share.

China, India, and Japan serve as the primary manufacturing epicenters.

• North America: Follows as the second-largest consumer block, securing roughly 22.4% to 32.4% of global revenue, anchored tightly by cutting-edge R&D infrastructure.

• Europe: Accounts for 18.1% of global demand, heavily shaped by low-carbon transition policies like the Carbon Border Adjustment Mechanism (CBAM).

Government Initiatives

The Government of India has significantly escalated its support for the specialty chemicals sector during FY 2025-26 through targeted structural reforms, infrastructure funds, and aggressive clean- tech allocations. The Union Budget allocated Rs.1,61,965 crore to the Ministry of Chemicals and Fertilizers to anchor these developments.

The primary government initiatives driving the specialty chemicals sector include:

1. Launch of the BHAVYA Rasayan Scheme

• Dedicated Chemical Parks: The government introduced the Bharat Audyogik Vikas Yojana Rasayan (BHAVYA Rasayan) to establish three massive, plug-and-play Chemical Parks.

• Financial Outlay: Commanding a total budget of Rs.3,030 crore, the Central Government provides up to Rs.1,000 crore per park to selected State Governments via a challenge-based route.

• Shared Infrastructure: To cut operational expenditures by 20-30%, the parks are mandated to provide built-in Common Effluent Treatment Plants (CETPs), solvent recovery/distillation setups, and interconnected pipeline networks.

2. Radical Low-Carbon & CCUS Incentives

• De-carbonisation Capital: Following the framework laid out in late 2025, the government operationalised a Rs.20,000 crore allocation over five years for Carbon Capture, Utilisation, and Storage (CCUS) technologies.

• Target Beneficiaries: Emission-heavy specialty chemical manufacturing clusters are receiving direct technical and capital subsidies to deploy clean-tech. This helps exporters mitigate upcoming international trade barriers like the European Unions Carbon Border Adjustment Mechanism (CBAM).

3. Supply Chain Protectionism & Quality Control Orders (QCOs)

• Import Substitution: The government implemented mandatory Quality Control Orders (QCOs) for more than 150 industrial materials and compounds.

• Protecting Domestic Yield: These stricter standards function as a non-tariff safeguard, preventing the dumping of sub-standard, low-cost chemical intermediates into the domestic market and protecting local specialty producers

4. Feedstock Cost Management & Downstream PLI Integrations

• NITI Aayog Recommendations: The government implemented NITI Aayogs strategic framework providing port-based clusters and feedstock operating expense (OPEX) subsidies to bridge the global raw-material cost disadvantage.

• Cross-Sector Subsidies: Specialty entities manufacturing advanced intermediates capitalized heavily on the operational Rs.2,444.93 crore allocation for the Bulk Drugs PLI and massive electronics manufacturing schemes.

5. Rare Earth Permanent Magnets (REPM) Scheme

• Niche Chemical Expansion: To build complete self-reliance in high-tech manufacturing, the government launched a specialized REPM financial scheme with a Rs.3,300 crore outlay. This specifically incentivises specialty chemical firms producing advanced metallurgy, rare earth separations, and permanent magnet compositions.

Road Ahead

The road ahead for the specialty chemicals industry focuses on transitioning from a low-cost manufacturing hub to a high-value, compliance-driven global partner. Companies must navigate stricter international regulations while scaling into newly incentivized domestic sectors.

1. Navigating Strategic Crosscurrents Environmental & Export Pressures

• CBAM & ESG Timelines: Compliance with Europe’s Carbon Border Adjustment Mechanism (CBAM) and strict global ESG mandates is no longer optional. Export-oriented players must actively decarbonize production or face heavy import tariffs.

• Aggressive Green Capital Expenditure: Leading companies are pivoting their R&D toward green solvents, bio-based surfactants, and zero-liquid-discharge (ZLD) manufacturing configurations.

Rising Input Costs vs. Import Protection

• Feedstock Volatility: Fluctuating crude oil and natural gas prices continue to pressure margins for downstream specialty chemical producers.

• Safeguard Shielding: Stricter Quality Control Orders (QCOs) and targeted anti-dumping duties will continue to act as a crucial structural shield against cheap imports, particularly from China

2. High-Growth Frontier Opportunities Electronics & Semiconductor Ecosystems

• Local Fabricator Alignment: As India’s multi-billion dollar semiconductor fabrication and packaging units come online, a structural gold rush is opening up for localized supply.

• Niche Formulations: Immediate demand is scaling for ultra-high-purity wet chemicals, specialized gases, photoresists, and CMP slurries.

EV Battery & Advanced Materials

• Gigafactory Supply Chains: The commercial scaling of local advanced chemistry cell (ACC) battery gigafactories requires deep localization of electrolyte formulations, high-performance binders, and thermal management compounds.

Custom Synthesis (CDMO) Scale-up

• China+1 Consolidation: Global innovators are aggressively moving complex chemical supply chains out of single-source countries. Indian specialty chemical firms with strong R&D pipelines are rapidly pivoting toward high-margin contract development and manufacturing operations (CDMO).

3. Immediate Execution Steps for Capitalization

1. Leverage Plug-and-Play Hubs: Companies looking to expand should actively target upcoming allocations within the BHAVYA Rasayan Chemical Parks to cut initial project capital expenditure and setup timelines.

2. Upgrade R&D Infrastructure: Pivot capital expenditure toward custom synthesis and high- purity formulations rather than basic chemical intermediates to secure higher-margin profiles.

3. Conduct Carbon Footprint Audits: Establish immediate baselines for energy consumption and supply chain emissions to ensure uninterrupted export access to Western markets.

Increasing demand

The Indian specialty chemicals export market is projected to reach USD 35.4 billion in 2026, growing rapidly at an estimated 10.4% CAGR. Driven by shifting global supply chains and newly implemented free trade deals, Indian manufacturers have substantial export opportunities in high- margin, compliance-oriented international markets.

1. Structural Growth Drivers

• "China + 1" Consolidation: Global buyers are systematically diversifying from Chinese supply chains due to geopolitical volatility and rising production costs, transitioning India from a single-digit to a double-digit global export share.

• New Free Trade Supercycles:

o India-UK FTA: This agreement eliminates tariffs on 99% of Indian exports, driving target chemical shipments past the USD 1 billion milestone by 2027. o India-EFTA TEPA: This trade pact abolishes heavy historic tariffs (which peaked up to 54%) across 92% of chemical product lines, giving Indian companies seamless access to high-value European consumer markets.

• Strong Operational Rebates: Exporters are directly scaling up margins using existing state incentives like GST zero-rating, RoDTEP, and duty drawback provisions

2. High-Yield Product Segments

n Agrochemicals & Contract Manufacturing (CDMO): India stands as the worlds second-largest producer of agrochemicals. High-margin custom synthesis contracts for complex intermediates are locking in long-term revenues from global innovators.

n Advanced Fluorochemicals: Rapidly scaling demand for high-value fluorine derivatives used in global pharmaceutical synthesis and electric vehicle electrolyte formulations.

n Dyes, Pigments, & Optical Brighteners: India maintains a position as a top-three global supplier, with organic chemistry exports recording a 12.7% YoY increase heading into mid-2026.

n Green Formulation Portfolios: A massive global pull for eco-friendly surfactants, bio-based polymers, and sustainable preservatives is tracking a 6.5% CAGR.

3. Critical Compliance Milestones for Western Markets

With the EU’s Carbon Border Adjustment Mechanism (CBAM) entering its definitive definitive regime on January 1, 2026, market access to Europe requires specific, product-level regulatory benchmarks:

• Mandatory Carbon Tracking: European importers must verify installation-level embedded carbon data. Exporters with low-emission facilities are capturing higher margins, while high-emission alternatives face volume cuts.

• The First Annual Declaration: While taxation is active, the first formal annual declaration and certificate surrender deadline is locked for September 30, 2027.

• Institutional Buffers: The Chemical Export Promotion Council (CHEMEXCIL) and the joint India-EU FTA cooperation framework are deploying compliance resources to help domestic mid-market exporters handle advanced carbon auditing without losing market access

Export opportunities

The global specialty chemicals market during the 2025-26 fiscal year is experiencing a structural realignment, creating major export opportunities for agile manufacturers. Driven by changing trade dynamics and new trade agreements, multiple high-growth product segments are seeing elevated global demand.

Key Macro Growth Drivers

• China-Plus-One Supply Strategy: Global buyers are diversifying their supply chains away from China due to geopolitical tensions and strict environmental regulations, positioning alternative hubs like India at an advantage.

• New Free Trade Agreements: Zero-duty and reduced-tariff regimes, such as the India-UK Comprehensive Economic and Trade Agreement (CETA), have significantly enhanced regional market access.

• Advanced R&D Migration: Global players are shifting complex molecule manufacturing and process chemistry to regional technology hubs to leverage cost-effective expertise.

1. Agrochemical Active Ingredients (AI) & Formulations

• Applications: Advanced crop protection, biopesticides, and patented intermediate molecules.

• Opportunity: Growing reliance from North American and European agricultural sectors for cost- competitive, high-yield active ingredients.

2. Advanced Pharmaceutical Intermediates & APIs

• Applications: Custom Synthesis and Manufacturing (CSM), Contract Development and Manufacturing Organizations (CDMO).

• Opportunity: Stricter quality standards and supply chain resilience demands from global generic drug manufacturers are shifting high-margin chemical synthesis pipelines upward.

3. Electronic & Battery Chemicals

• Applications: High-purity solvents, photoresists, etchants, and lithium-ion battery materials like electrolytes.

• Opportunity: The global expansion of semiconductor fabrication plants and Electric Vehicle (EV) gigafactories in Europe and the Americas.

4. Performance Polymers & Functional Additives

• Applications: Specialty aliphatic amines, engineering plastics, biopolymers, flame retardants, and structural adhesives.

• Opportunity: Aerospace, automotive lightweighting, and modern construction sectors looking for sustainable, highly durable material formulations.

5. Dyes, Pigments, & Eco-Friendly Textiles

• Applications: Reactive dyes, organic pigments, and zero-discharge textile processing chemicals.

• Opportunity: Regulated western textile brands demand non-toxic, sustainable dyes to meet strict ESG compliance goals

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.

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 Indian specialty chemicals market is navigating a complex downcycle in FY 2025-26. While long-term structural drivers remain strong, the industry faces critical operational, geopolitical, and financial threats that are severely squeezing profit margins.

1. Persistent Chinese Overcapacity & Product Dumping

Depressed Global Margins: Massive capacity additions in China have outpaced global demand, pushing utilization rates to multi-year lows.

Predatory Pricing: Domestic Chinese players are flooding international markets with low-cost commodity and basic specialty chemicals. This directly undercuts Indian producers who lack equivalent scaling advantages.

Portfolio Stress: Indian companies shifting from basic petrochemicals to specialty variants are finding their targeted product margins aggressively compressed before achieving scale.

2. Escalating Trade Barriers & Tariff Roadblocks

The US Tariff Shock: Global supply chain rebalancing hit a major roadblock as the US maintained tariffs up to 50% on key Indian imports, including critical chemicals. This has created short-term drop-offs in demand and forced a painful reconfiguration of cost realities.

Non-Tariff Regulatory Shocks: The European Union’s pivot from risk-based to hazard-based control is systematically banning large groups of widely used chemical families, such as PFAS. Compliance Cost Inflation: Standard regulatory maintenance has become prohibitively expensive. REACH registration costs increased by 19.5% in 2025, burdening smaller, low-volume specialty exporters who lack large capital cushions.

3. Structural Import Dependency for Feedstocks

Fragile Upstream Value Chains: India remains a net importer of basic chemicals and petrochemicals, relying on imports for nearly 45% of its petrochemical intermediate inputs.

Price Pass-Through Delays: Smaller, unhedged specialty formulators linked to volatile ethylene and propylene chains face massive financial exposure. Quotation delays of up to three months make them highly vulnerable to global refinery downtimes and raw material spikes.

Geopolitical Volatility: Ongoing maritime and pipeline conflicts continue to heavily disrupt trade patterns and inflate energy costs. This blunts the cost-competitiveness of Indian plants.

4. Impending Carbon and Green Mandates

The CBAM Shockwave: Starting January 2026, the European Unions Carbon Border Adjustment Mechanism (CBAM) requires buying certificates priced at €75.36 per tonne of CO2. Initially targeting chemical intermediates and fertilizers, it penalizes Indian firms lagging in green energy adoption.

Traceability Pressures: Vital downstream domestic sectors, like the Kasturi Cotton Bharat textile program, are mandating strict carbon auditing, forcing chemical suppliers to heavily invest in unbudgeted ESG tracking tools.

5. Domestic Logistics Bottlenecks & Capacity Gaps

Hazardous Transport Deficits: While infrastructure like the Western Dedicated Freight Corridor has expanded, a critical shortage of trained hazardous material (hazmat) drivers keeps domestic distribution tight and expensive.

Compliance Violations: Stricter Petroleum and Explosives Safety Organization (PESO) enforcement has triggered mandatory upgrades to Grade-A smart warehousing. This has forced micro, small, and medium enterprises (MSMEs) to choose between heavy capital expenditures or halting operations.

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:

Operating margins for Indian specialty chemical manufacturers are projected to decline to 1414.5% in FY 2025-26 from roughly 16% the previous year. According to data verified by Crisil Ratings, this downcycle is driven directly by lower-margin export volumes and crude-linked input cost inflation impacting 126 major companies.

1. Capital Drag from Underutilized Assets

Depressed Utilization Rates: Plant utilization rates across Indian specialty chemical facilities are hovering at multi-year lows of 60% to 75%.

Idle Greenfield Assets: Newly commissioned production lines are averaging starting utilization rates of just 20% to 30%.

Fixed Overhead Strain: Manufacturers are being forced to absorb heavy, unrecovered depreciation costs and fixed plant overheads without generating the expected cash flows.

2. High-Tech Infrastructure & Talent Deficits

Practical Skills Shortage: While India is a labor-rich country, plants face an acute shortage of technical professionals equipped to manage specialized, green-chemistry setups.

The Onboarding Training Gap: Fresh chemical engineering graduates often lack the practical discipline, safety protocols, and industrial lifeskills required to immediately step into modern automated plants.

High Hub Turnover: Intense talent poaching in primary industrial clusters (such as Dahej and Jagadia) is driving up local wage inflation and operational instability.

3. Energy Transition & Reliability Bottlenecks

Decarbonization Mandates: Plants face mounting structural pressure to transition away from cheap coal-fired boilers for process steam generation.

Unbudgeted Green Expenditures: Investing in alternative energy setups?such as grid-tied solar, wind, or biomass?demands high, unbudgeted capital outlays.

Process Interruption Risks: Local grid inconsistencies and frequent equipment trippings cause sudden thermal fluctuations. These interruptions ruin entire multi-step synthesis batches, blowing out operational waste margins.

4. Saturated Clusters & Storage Squeezes

No Expansion Room: Land availability for essential wastewater treatment or hazardous material storage expansions has completely dried up in top chemical hubs like Bharuch and Ankleshwar.

Corrosion Maintenance Costs: Humid, coastal cluster environments demand rigid, ongoing maintenance budgets to manage continuous chemical corrosion across piping and heat exchangers.

Escalating Secondary Logistics: Saturated clusters force companies to position external warehouses far inland, compounding transport overheads and increasing on-the-road accident exposures.

5. Fragmented Tech Access & Feedstock Disadvantages

Licensing Deadlocks: Indian producers lack indigenous access to core upstream process technologies, leaving them heavily dependent on expensive foreign technology licensing.

Raw Material Price Volatility: Many core specialty components rely directly on imported crude derivatives. This structural dependency exposes local batch production to global shipping delays and sudden currency fluctuations.

Specialty Chemicals Market Ecosystem

The Indian specialty chemicals market ecosystem in FY 2025-26 operates as a high-value manufacturing cluster worth roughly USD 35 billion to USD 40 billion within Indias broader USD 240 billion chemical industry.

While facing a short-term downcycle that has compressed operating margins to 14-14.5%, the ecosystem is rapidly shifting its structural focus from basic manufacturing capacity to advanced supply chain orchestration and specialized formulations

1. Upstream Inputs & Supply Nodes (Feedstocks)

The base of the ecosystem relies on heavy integration with basic petrochemicals and inorganic chemicals.

The Intermediate Trap: India remains a net importer of raw building blocks, relying on foreign sources for nearly 45% of its petrochemical intermediate inputs.

The Primary Anchor Links: Major domestic primary suppliers (like Reliance and Tata Chemicals) feed basic building blocks?such as toluene, benzene, ethylene, and soda ash?directly into midstream formulation networks.

2. Midstream Processing Profiles (The Manufacturers)

Value creation in the ecosystem is divided between three distinct manufacturer archetypes:

Contract Development & Manufacturing (CDMO / CRAMS): Led by players like PI Industries and SRF, this high-margin segment handles proprietary synthesis for global innovators under rigid intellectual property protections.

Dedicated Product Pioneers: Large, organized entities focus heavily on individual functional chemical families. Prominent examples include Aarti Industries (Benzene derivatives) and Anupam Rasayan (Custom synthesis).

The Fragmented MSME Tail: Thousands of micro, small, and medium enterprises (MSMEs) dominate localized blending operations for lower-margin textile auxiliaries, basic dyes, and plastics additives.

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.

C 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 Asia’s 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.

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, 2026	Amol Kapadia
	Managing Director
	DIN: 01462032