Privi Speciality Chemicals Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

In 2024, the global economy faced a rapidly changing scenario, characterised by both resilience and emerging challenges. Inflation eased, driven by lower commodity prices and stricter monetary policies. Advanced economies began to adopt gradual monetary easing, boosting consumption and investment. In contrast, emerging markets maintained their growth momentum by focussing on domestic demand and advancing crucial structural reforms. Investments in the digital economy, green energy, and supply chain diversification further enhanced global adaptability, providing a solid foundation for long-term stability.

Even amid these positive developments, some challenges remain. Sectoral growth was uneven across regions. Although trade volumes rose, economies continued adjusting to shifting geopolitical dynamics and evolving policies. These trends highlighted the complexities still present in the global economy.

(Source: World Economic Outlook by IMF, January 2025)

Looking ahead, the global economy is projected to grow at 2.8% in CY 2025 and 3.0% in CY 2026. Emerging markets are expected to surpass advanced economies, supported by strong domestic consumption, favourable demographics, and targeted policy reforms. The US has enacted a series of new tariff measures, triggering forceful retaliations from major trading partners. This culminated in the implementation of near-universal tariffs on April 02. Meanwhile, the European area contends with structural challenges, including sluggish productivity growth, demographic shifts, energy transition pressures, and the lingering impact of tighter monetary policies.

Uncertainties around geopolitical risks, policy shifts, and financial market volatility are expected to persist. In this scenario, supply chain endurance, infrastructure investments, and digital transformation will continue to drive and shape the global economic trajectory.

(Source: World Economic Outlook by IMF, January 2025)

INDIAN ECONOMY

Indias economy continues to show strength, supported by solid domestic consumption, robust services and manufacturing sectors, and significant government investment in infrastructure. The International Monetary Fund (IMF) projects a 6.2% growth for 2024-25, driven primarily by these sectors.

The services sector continues to lead, contributing an estimated 55% to Gross Value Added (GVA) in 2024-25, with IT and business process management (BPM) exports achieving double digit growth in 2023-24. Meanwhile, the manufacturing sector, supported by initiatives like Make in India, has also contributed to the countrys growth. Agriculture has seen steady growth, averaging 5% annually from 2016-17 to 2022-23, benefitting from government initiatives aimed at improving productivity. In addition, financial services have expanded significantly, especially due to the thriving fintech ecosystem, which raised over US$ 4 Bn in 2024.

(Source: Economic Survey 2024-25, Press Information Bureau on Union Budget 2025-26)

The governments emphasis on infrastructure development remains a central pillar of long-term economic growth. In the Union Budget 2025-26, significant capital expenditure has been allocated to enhance transportation networks, expand energy capacity, and strengthen digital infrastructure. These investments aim to boost productivity and create employment opportunities.

Alongside infrastructure, the government is focussed on accelerating growth in manufacturing. The nations manufacturing sector is on track to reach US$ 1 trillion by 2025-26, fuelled by initiatives like the National Manufacturing Mission, targeted tax incentives, and the Production-Linked Incentive (PLI) scheme. Strategic investments, along with strong participation from states like Gujarat, are positioning India as a global manufacturing hub.

The Union Budget 2025-26 also outlines targeted investments in industrial corridors, incentives for domestic production through schemes like PLI, and efforts to streamline logistics and supply chains. These measures aim to build a strong domestic manufacturing base and reduce the countrys dependence on imports.

At the same time, macroeconomic stability remains a priority, with prudent fiscal and monetary policies expected to keep inflation contained. Structural reforms such as Ease of Doing Business 2.0, labour market flexibility, and tax rationalisation are creating a more competitive investment climate. These efforts are vital to Indias long-term aim of becoming a developed economy by 2047.

(Source: Economic Survey 2024-25, Press Information Bureau on Union Budget 2025-26)

GLOBAL FLAVOUR AND FRAGRANCE MARKET

The global flavours & fragrances (F&F) market includes a broad array of products like flavourings, fragrances, and essential oils. These serve industries such as food and beverages, personal care, home care, and pharmaceuticals. The market is segmented by product type (natural and synthetic), application (beverages, bakery, confectionery, cosmetics, personal care, household care, and pharmaceuticals), and end-use industry. A notable trend in the sector is the shift towards personalised products, clean- label formulations, and plant-based alternatives. This shift is driving innovation across various sectors.

(Sources: https://www.fortunebusinessinsights.com/ industry-reports/flavours-and-fragrances-market-100375.

https://www.marketsandmarkets.com/Market-Reports/flavour-fragrance-market-175163912.html,

https://www.futuremarketinsights.com/reports/flavour-and-fragrance-market)

Emerging markets in Asia-Pacific and Latin America are witnessing rapid growth, supported by rising disposable incomes and evolving lifestyle preferences.

The industry is undergoing dynamic growth, fuelled by a significant shift in consumer preferences. With an estimated value of US$ 36.55 Bn in 2025, the market is poised to reach approximately US$ 44.2 Bn by 2029, recording a robust CAGR of 4.9% throughout the forecast period.

Todays consumers demand more than just functionality. They seek multisensory experiences that captivate and engage, pushing companies to innovate rapidly. This surge in demand has led to the creation of distinctive flavours and fragrances that not only satisfy evolving tastes but also align with the growing emphasis on sustainability and healthconscious choices.

In 2024, the industry made notable strides in adopting natural and organic ingredients, personalising scents, and exploring novel flavour profiles. This momentum is expected to accelerate further from 2025 onwards, supporting continued market expansion.

KEY TRENDS

1. Shift Towards Natural and Organic Products:

Consumers are placing greater emphasis on clean- label, sustainable, and eco-friendly products, prompting manufacturers to replace synthetic ingredients with natural alternatives. To meet this growing demand, brands are enhancing transparency in sourcing and formulation, reshaping product portfolios across the food, beverage, and personal care sectors.

2. Urbanisation and Changing Lifestyles: Rapid urban migration is accelerating the demand for premium and convenience-oriented products. As disposable incomes rise and lifestyles become busier, consumers are seeking high-quality personal care items, gourmet food items, and innovative home care solutions. This shift is accelerating diversification and premiumisation within the F&F market.

3. Regulatory Stringency: Stricter regulations on ingredient safety, environmental impact, and labelling standards are influencing how companies formulate their products. Compliance with frameworks such as REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) in Europe and the US FDA regulations has become crucial, prompting greater investment in research and safer alternatives.

4. Raw Material Price Volatility: Environmental issues such as climate change, natural disasters, and geopolitical tensions are causing price fluctuations of key natural ingredients like vanilla, citrus oils, and sandalwood. This unpredictability in supply chains is pushing companies to diversify sourcing strategies and invest in synthetic or lab-grown substitutes.

5. Rise of Functional Fragrances: Consumers are seeking products that go beyond traditional sensory appeal to offer health and wellness benefits. Functional fragrances that relieve stress, boost energy, improve sleep, or enhance mood are gaining traction, particularly in sectors like personal care, home ambience, and wellness products.

6. Market Expansion in Emerging Economies: The

Asia-Pacific, Latin America, and Africa regions are emerging as key growth markets. Rising middle-class populations, urbanisation, and higher disposable incomes are driving this shift. Companies are tailoring flavours and fragrances to local tastes and preferences, offering customised products to capture these expanding markets.

7. Technological Advancements in Extraction and Formulation: Innovations in biotechnology, green chemistry, and sustainable extraction methods are enabling the production of high-quality, eco-friendly ingredients. Techniques like enzyme-based extraction and precision fermentation enhance efficiency and reduce waste. These methods also support the development of novel, complex flavour and fragrance profiles in a sustainable manner.

(Source:https: //www.researchandmarkets.com/ reports/5688486/2025-flavours-and-fragrances- market-outlook?srsltid=AfmBOopM0HKcfzTRrwZOKe 1iuN8h9uwm2yUHc8ZD9UklT7ptLWi9A2dK)

DEMAND DRIVERS

1. Increase in Consumer Health Awareness: With growing awareness of health and wellness, consumers are carefully scrutinising product labels. They are favouring products with fewer synthetic chemicals. This shift is driving demand for natural flavours, organic personal care products, and eco-friendly household items, prompting brands to reformulate products with clean, safe, and transparent ingredients.

2. Higher Disposable Income: In both developed and emerging economies, rising disposable incomes are enabling consumers to explore premium product categories. These include luxury fragrances, artisanal food products, and high-end personal care items. The trend towards aspirational purchasing is particularly pronounced in Asia-Pacific, the Middle East, and Latin America, further broadening market opportunities.

3. Customisation and Regional Preferences: Consumers are seeking products that resonate with their cultural tastes and preferences. To meet these demands, companies are creating region-specific flavours and fragrances. For instance, they are incorporating spicy notes for Asian cuisines and floral profiles for the Middle Eastern fragrances. This approach enhances market penetration and fosters stronger brand loyalty.

4. Expansion in Personal Care and Homecare Industry:

The personal care and homecare sectors are experiencing global growth, boosting demand for innovative fragrance and flavour solutions. Increasing consumption of skincare, cosmetics, perfumes, air fresheners, and fabric care products is creating consistent opportunities for tailored and multifunctional sensory experiences.

5. Growth in the Food and Beverage Sector: Consumer demand for natural ingredients, healthier choices, and new taste experiences is driving innovation in the food and beverage industry. To meet these evolving dietary and lifestyle trends, flavour houses are focussing on developing natural enhancers, plant-based alternatives, and organic formulations.

6. Sustainability and Ethical Sourcing: Consumers who prioritise environmental consciousness are increasingly favouring brands that uphold responsible sourcing and ethical production. This shift is propelling companies to invest in sustainable ingredient supply chains, fair-trade certifications, and eco-friendly product development. By doing so, they aim to attract value-driven buyers.

7. E-commerce and Digital Influence: Online retail channels and digital marketing are playing a pivotal role in shaping consumer choices. E-commerce platforms have made niche and premium fragrance and flavour products more accessible. Simultaneously, social media and influencer marketing boost awareness, encourage trials, and drive brand adoption across various demographics.

(Source:https: //www.researchandmarkets.com/ reports/5688486/2025-flavours-and-fragrances- market-outlook?srsltid=AfmBOopM0HKcfzTRrw7OKe 1iuN8h9uwm2yUHc8ZD9UklT7ptLWi9A2dK)

SEGMENTATION OF THE INDUSTRY

The F&F industry is divided into two main segments: Flavours, which account for 43% of the market, and Fragrances, representing 57%.

Within the Flavour Segment:

• Beverages dominate this category, with growing demand for flavoured water, functional drinks, and ready-to-drink options.

• Dairy, bakery, and confectionery are also significant contributors, as consumers seek innovative, clean- label, and healthier flavour profiles across these categories.

• The trend towards plant-based and natural ingredients is further fuelling flavour innovation, especially in alternative proteins and vegan-friendly offerings.

Within the Fragrance Segment:

• Fine and functional fragrances hold the largest share at 35%, driven by the rising demand for perfumes, personal care products, and homecare solutions.

• Aroma chemicals account for 18%, playing a crucial role in fragrance formulation by providing unique and long-lasting scent compounds.

INDIAN FRAGRANCE MARKET

India has a rich legacy of olfactory traditions, with aromatherapy, incense, and ittar deeply rooted in its cultural and medicinal history. Ancient practices like Ayurveda promoted the use of aromatic herbs and essential oils for healing, beauty, and well-being. Today, this traditional foundation has evolved into a dynamic and rapidly growing fragrance market. The Indian fragrances market reached US$ 1,000.8 Mn in 2024 and is projected to clock in a CAGR of 13.9% between 2025 and 2033, touching US$ 3,233.9 Mn by 2033, according to IMARC Group. This growth is fuelled by rising disposable incomes, increasing brand awareness, demand from a growing middle class, and the affordability of mass-market perfumes and deodorants. Indias diverse flora and fauna across 15 geo-climatic zones also position it as a key global supplier of organic fragrant raw materials, offering vast opportunities for both domestic growth and international trade

(Source: https://www.imarcgroup.com/india-fragrances- market)

INDIA FRAGRANCES MARKET TRENDS

Leading brands are ramping up their advertising efforts to influence consumer purchasing behaviour. Many are increasingly relying on social media platforms and celebrity partnerships as part of their marketing and promotional strategies.

A 2022 Financial Express article reported that over 36% of Indian marketers allocate nearly 60% of their marketing budgets to digital channels. Among these, Instagram and Facebook are the most widely used for advertising within Indias fragrances market, with Facebook enjoying a slightly higher usage share. Exemplifying the growing focus on digital investments, LOreal has introduced a tool called Cockpit, which enables real-time assessment of the return on investment and efficiency of its media spending.

In parallel, the rise of online shopping and e-commerce platforms has encouraged fragrance brands to strengthen their digital investments. Responding to this shift, brands now use more imagery, video content, and personalised offerings to drive sales.

(Source: https://www.imarcgroup.com/india-fragrances- market)

AI IN FRAGRANCE INNOVATION

Artificial Intelligence (AI) is reshaping the fragrance industry, which has traditionally relied on human expertise and sensory evaluations. Today, AI is being used across the value chain from analysing consumer behaviour in e-commerce to creating models for scent design and formulation. Key innovations include formula-to-brief matching, predictive formulation, olfactory sensing, and novel chemical design. These tools help fragrance houses repurpose existing formulations, develop cost- effective malodour control solutions, and create near-identical reformulations or personalised scents. As demand grows for micro-personalised fragrances fuelled by social media and a rising global middle class, AI is helping brands meet evolving consumer preferences with precision and speed.

GLOBAL AROMA CHEMICALS MARKET

The global aroma chemicals market has witnessed strong growth in recent years. It is expected to expand from US$ 6.55 Bn in 2025 to US$ 8.82 Bn, recording a 7.7% CAGR.

The growth of the global aroma chemicals market during the forecast period stems from evolving consumer preferences and ongoing industry innovations. The increasing adoption of sustainable and green chemistry practices plays a crucial role. The rising popularity of home fragrances and the exploration of alternative sources for aroma chemicals further drive momentum.

Additionally, the surging demand for cosmetics and personal care products, along with the growing consumption of confectionery and bakery products, is significantly expanding the market base. Heightened consumer awareness regarding product transparency and safety, coupled with rising disposable incomes, also contribute to markets progress.

Several trends are expected to shape the industry. These include a growing preference for natural and biodegradable aroma chemicals, along with customisation of fragrances to regional tastes. Innovation in multifunctional aroma solutions, advancements in olfactory science, and progress in microencapsulation technology will also influence the market. Additionally, sustainable sourcing and formulation practices will continue to drive the markets evolution.

(Source: https://www.researchandmarkets.com/ reports/5806897/aroma-chemicals-market-report?srsl tid=AfmBOookGMNB1WREvqEyGvjMXL8sf0rr TpWNJ NXLWG YSOkwL517P)

KEY MARKET TAKEAWAYS Growth Drivers

• Surge in Demand Across Industries: The market for aroma chemicals is expanding rapidly due to their growing use in sectors like fragrances, flavours, personal care, and home care. As consumers seek richer sensory experiences, the demand for high-quality aroma chemicals has surged, particularly within the fragrance and food & beverage industries. Innovations in flavouring techniques and fragrance profiles are further expanding their application.

• Government Support: Government initiatives and supportive policies, particularly in sustainability and innovation, are fostering growth in the chemical manufacturing sector. These efforts enhance infrastructure, simplify business operations, and attract investment, supporting market growth.

• Growth in Disposable Incomes and Changing

Preferences: The demand for premium products is growing as disposable incomes rise in emerging economies, particularly in regions like Asia-Pacific and Latin America. Consumers are becoming more inclined towards personalised, natural, and customised fragrances. There is also an increasing interest in organic and clean-label products. This shift in preferences is prompting companies to innovate and offer products that align with consumers healthconscious and sustainability-driven choices.

• Innovation and Sustainability: The global inclination towards sustainability and eco-conscious living is transforming the aroma chemicals market. With a heightened focus on reducing environmental impact, there is an increasing emphasis on sourcing sustainable ingredients and using greener technologies for extraction and formulation. Moreover, advancements in product development, such as the creation of new molecules derived from renewable feedstock, are setting new standards in the industry, allowing companies to offer advanced, sustainable solutions that appeal to both consumers and regulators.

Regional Insights

• Asia-Pacific (APAC): The APAC perfume market generated USD 11.1 billion in 2023 and is projected to reach USD 17.4 billion by 2030, growing at a CAGR of 6.6%. Growth is driven by rising disposable incomes, urbanisation, and increasing interest in personal grooming.

• Europe: Valued at USD 21.2 billion in 2024, the European perfume market is expected to reach USD 38.1 billion by 2034 at a CAGR of 6.0%. The region favours luxury and eco-friendly fragrances, with a strong focus on regulatory compliance and safety.

• North America: North America recorded revenues of USD 15.0 billion in 2023, with a projected CAGR of 5.7% through 2030. Consumers increasingly seek artisanal, sustainable fragrances that reflect personal identity and environmental consciousness.

• Middle East: The Middle East market is driven by cultural preferences for rich, opulent scents such as oud and incense. A long-standing tradition of perfume use ensures steady demand for both traditional and contemporary fragrances.

• Latin America: Latin American markets like Brazil are growing due to rising incomes, urbanisation, and a brand-conscious middle class. Consumers are increasingly drawn to premium and luxury fragrances as personal grooming gains importance.

Opportunities

• Customisation and Regional Preferences: The demand for localised flavors and fragrances catering to specific cultural tastes presents significant opportunities. Manufacturers can capitalise on this trend by developing region-specific products that resonate with local consumers.

• Sustainability and Ethical Sourcing: Consumers preference for brands committed to environmentally friendly and responsible sourcing is creating opportunities for companies to enhance their sustainability practices. This includes adopting greener technologies and sourcing ingredients ethically.

• Technological Advancements: Innovations in biotechnology and green chemistry are enabling sustainable ingredient production. The adoption of microencapsulation technology and advancements in olfactory science are further enhancing product offerings and creating new market opportunities.

Challenges

• Raw Material Price Volatility: The costs of natural ingredients fluctuate due to environmental and geopolitical factors, creating challenges for manufacturers. The high prices of natural aroma ingredients, which are often scarce and costly due to their reliance on agricultural production, further complicate the market.

(Source: Fortune Business Insights)

• Regulatory Stringency: Strict regulations regarding ingredient safety and labelling are influencing product formulations. Adhering to these regulations requires significant investment and adaptation, posing challenges for companies operating across multiple regions.

• Supply Chain Disruptions: The aroma chemical industry faces challenges related to interrupted raw material supply. To address this, manufacturers are focussing on developing products that are both natural and compliant with environmental standards.

(Source:https://www.precedenceresearch.com/aroma-chemicals-market)

High Entry Barriers in the Aroma Chemicals Market

• A Lifestyle Product: Fragrance products are deeply tied to individual preferences, values, social status, and personal style, making them lifestyle products that vary widely from person to person.

• Capex-Intensive Industry: High initial investment, strict regulations, and operational challenges make the aroma chemicals industry difficult for new entrants to access.

• Complex Chemistry: Producing aroma chemicals involves intricate chemical processes, making commercial scale-up both challenging and costly.

• Regulatory Norms: Adhering to multiple regulatory standards and agency requirements adds significant complexity, creating further hurdles for new participants.

• Technical Know-How: The handling of aroma chemicals demands advanced technical skills and expertise, with operations requiring precise and advanced knowledge.

• Long Gestation Period: Securing customers takes considerable time, with only a few market players capable of enduring the lengthy acquisition cycle.

• Stringent Purity Measures: Every process and product must meet rigorous purity and impurity specifications, raising production challenges and entry costs.

• High Replacement Cost: Changing vendors or product formulations demands extensive time and investment, as customers require exact composition replacements.

• Customer Olfactive Sensitivity: Maintaining consistent scent profiles is critical, as olfactory preferences differ widely among customers, requiring tailored and precise product offerings.

INDIAN AROMA CHEMICALS MARKET

The Indian aroma chemical market is growing significantly, fuelled by the expanding fragrance industry. Rising demand for natural and niche fragrances, customised to individual preferences, has accelerated this momentum. Consumers increasingly seek unique scents and personalised fragrance experiences, further boosting market expansion. As a result, the market is projected to reach a value of US$ 460.4 Mn by 2033, clocking in a 5.22% CAGR during the period from 2025 to 2033.

(Source: https://www.imarcgroup.com/india-aroma- chemicals-market-grow)

Aroma chemicals are gaining popularity across sectors as evolving consumer preferences and wider applications drive demand. Their growing use in aromatherapy highlights a rising interest in products that promote emotional and psychological well-being. In the food and beverages sector, the introduction of innovative flavours is fuelling the need for specialised aroma chemicals. Greater awareness of hygiene is also fuelling demand for cleaning products and toiletries, where these chemicals play a key role in enhancing sensory appeal. Parallelly, a shift towards natural, plant- based ingredients and the adoption of cleaner extraction methods such as supercritical fluid and microwave-assisted techniques are expected to further propel market growth.

(Source: https://www.imarcgroup.com/india-aroma- chemicals-market-grow)

Key Region and Segment Dominating the Market

The Southern region of India, especially Tamil Nadu and Kerala, drives the aroma chemicals market. Major manufacturers and a strong industrial base support this leadership. The regions robust infrastructure and deep expertise in fragrance and flavour production further strengthen its position.

(Source: https://www.imarcgroup.com/india-aroma- chemicals-market-grow)

Cosmetics and toiletries represent the largest application segment, primarily driven by the rising use of aroma chemicals in skincare, hair care, and perfumes. Furthermore, the growing demand for premium personal care products, along with evolving consumer preferences, continues to accelerate growth in this segment.

(Source: https://www.imarcgroup.com/india-aroma- chemicals-market-grow)

Growth Drivers of the Indian Aroma Chemicals Market

• Rising Demand Across Industries: The growing use of aroma chemicals in fragrances, flavours, personal care, and home care is driving growth. As consumers look for more sensory experiences, the demand for high-quality aroma chemicals has increased. This is particularly evident in the fragrance and food and beverage industries. Additionally, new innovations in flavouring techniques and fragrance profiles are expanding their use.

• Government Support: Several government initiatives and favourable policies are contributing to the growth of the aroma chemicals sector. Programmes promoting sustainable manufacturing, the promotion of Make in India, and investment in infrastructure development are creating a conducive environment for growth. These efforts benefit manufacturers, while encouraging the adoption of eco-friendly technologies.

• Growing Disposable Income and Changing Preferences: Rising disposable incomes in emerging economies, particularly in Asia-Pacific and Latin America, are boosting demand for premium products. Consumers are becoming more drawn to personalised, natural, and customised fragrances. There is a growing preference for organic and clean-label items. As a result, companies are responding by innovating to offer products that align with consumers health-conscious and sustainability-driven choices.

• Innovation and Sustainability: The global transition towards sustainability and eco-conscious living is reshaping the aroma chemicals market. With an intensified focus on minimising environmental impact, companies are increasingly prioritising the sourcing of sustainable ingredients and embracing eco-friendly technologies for extraction and formulation. Significant strides in product innovation, such as the development of novel molecules from renewable feedstocks, are setting new benchmarks in the industry. These advancements empower companies to deliver advanced, sustainable solutions that appeal to both consumers and regulatory bodies.

(Source: https://www.imarcgroup.com/india-aroma- chemicals-market-grow)

COMPANY OVERVIEW About Privi Speciality Chemicals

Established in 1993, Privi Speciality Chemicals Limited (also referred to as Privi or The Company) has evolved into Indias leading manufacturer, supplier, and exporter of aroma and fragrance chemicals. With a portfolio spanning over 75 specialised products and an annual production capacity exceeding 48,000 metric tonnes, the Company has earned a prominent place in the global aroma chemicals market, reaching customers across more than 30 countries. Central to its growth is a dedicated in-house R&D team, which drives continuous innovation in products and processes.

Looking ahead, Privis next phase of growth is underpinned by a strategic focus on improving margins. The Company is improving yields and refining its product mix to boost profitability and sharpen its competitive edge. Simultaneously, it is scaling capacities for its flagship products through carefully planned incremental capital expenditures.

These investments are being made in response to customer inquiries for long-term tie-ups, ensuring Privi meets growing demand, while securing a stable supply chain. A key element of the Companys growth strategy is the continuous development of high-value products. The Company has made significant strides in the creation of a new molecule from renewable feedstock, reinforcing its commitment to sustainability and innovation. This, along with its strong operational foundation, ensures that Privi remains well-positioned to strengthen its leadership in the global fragrance industry.

The Companys state-of-the-art manufacturing facilities in Mahad, Maharashtra, and Jhagadia, Gujarat, are pivotal to its operational excellence. These sites, equipped with advanced technologies, enable complex chemical processes and meet the stringent olfactive demands of the global fragrance market.

Backward integration of manufacturing capabilities, including Crude Sulphate Turpentine (CST) and Gum Turpentine Oil (GTO) facilities, ensures a secure supply of essential raw materials like a- and p-Pinenes, ensuring supply chain efficiency.

The Company maintains a strong focus on sustainability, consistently upholding the highest environmental, quality, and safety standards. It holds certifications, including ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018. Furthermore, Privis Gold Certification from EcoVadis highlights its top-tier performance in sustainability, placing it among the top 5% of global manufacturers in this area.

The Companys Five S Values-Safety, Sustainability, Sense of Urgency, Super Transparency, and Sincere Respect & Care-serve as its guiding principles. They drive Privis strong commitment to employee well-being, environmental responsibility, rapid innovation, open communication, and respectful relationships. These values shape business decisions and ensure long-term growth, trust, and integrity across all operations.

The Company has entered a new phase of growth with the PRIGIV joint venture and a greenfield facility in Mahad, Maharashtra. This significant milestone involves a total capital expenditure of 178 Crores. Through this venture, the Company will manufacture 42 products exclusively for Givaudan SAs high-end product line, strengthening its position in the global fragrance industry.

Financial Performance

In 2024-25, the Company delivered a strong financial performance. Revenue from operations rose to Rs. 210,119.09 Lakhs from Rs. 175,223.47 Lakhs in 2023-24, driven by robust demand for core products and the successful launch of new specialty aroma chemicals.

The expansion of production capacity, particularly for high- demand products such as Dihydromyrcenol and Amber Fleur, and the new products launched in the previous year Galaxmusk and Camphor and all their variants contributed significantly to this growth. EBITDA improved to Rs. 47,415.94 Lakhs from Rs. 35,126.21 Lakhs, supported by enhanced operational efficiency, cost optimisation initiatives, and the integration of sustainable practices into production processes, which helped reduce overall costs.

Profit after Tax (PAT) increased to Rs. 18,460.73 Lakhs from Rs. 9,584.24 Lakhs, largely due to higher revenue and effective management of raw material costs. The Company stabilised these costs through long-term contracts and strategic hedging mechanisms. Diluted Earnings per Share (EPS) rose to Rs. 47.87 from Rs. 24.43, underscoring the Companys focus on value creation and sustainable growth.

Risk Management

Privis risk management framework ensures proactive identification, assessment, and mitigation of financial, operational, and regulatory risks. It adopts a structured approach to protect business continuity and support sustained growth.

Risk	About the Risk	Mitigation Measures
Foreign Exchange Rate Risk	Fluctuations in exchange rates, particularly between the Indian Rupee and the US Dollar, can impact financial performance.	• Maintaining a natural hedge as over 55% of raw materials are imported, while more than 65% of finished goods are exported. • Implementing additional hedging strategies such as forward contracts and US$-denominated borrowings to manage currency risks.
Pricing and Availability of Raw Materials	Volatility in key raw material prices and supply chain disruptions can affect cost structures and production.	• Securing supply through long-term contracts. • Ensuring backward integration using CST waste from pulp mills. • Maintaining diversified supplier base to ensure cost stability and availability.
Quality Risk	Maintenance of consistent product quality poses risks, particularly in meeting customer expectations and regulatory standards.	• Adhering to the ISO 9001:2015 quality management standard. • Utilising state-of-the-art quality assurance laboratories. • Implementing advanced Lab Information Management Systems for rigorous testing and monitoring.
Market Risk	Increase in competition and shifting market trends may impact revenue and profitability.	• Expanding the product portfolio with specialty aroma chemicals. • Increasing manufacturing capacity. • Adopting a waste-to-wealth approach to enhance market positioning and profitability.
Climate Risk	Climate change poses risks to business operations due to extreme weather events and regulatory pressures for sustainable practices.	• Setting science-based emission reduction targets. • Implementing zero liquid discharge initiatives. • Improving CDP and EcoVadis ratings. • Developing sustainable, effluent-free chemical processes to mitigate climate risks.
Capex-Intensive Industry Risk	High startup costs and stringent regulations create entry barriers and financial challenges.	• Driving strategic capital investments in backward integration, specialty chemicals, and efficiency- driven process technologies. • Targeting high-margin niche markets globally to ensure sustainable growth.
Technical Know-How	Manufacture of aroma chemicals involve intricate chemical processes that require specialised expertise.	• Using strong in-house R&D to drive process innovations. • Embracing biotechnology to expand industry reach.
Regulatory Compliance	Adherence to global regulatory norms like REACH and IFRA is crucial to market access and reputation.	• Ensuring compliance through a dedicated regulatory team. • Maintaining sustainable sourcing and benchmarking through CDP and EcoVadis. • Enhancing adherence to international standards.
Long Customer Acquisition Cycle	Customer approvals take a long time due to stringent olfactive and quality requirements.	• Strengthening relationships with global fragrance and flavour companies. • Combining expertise in olfactive customisation and supply chain efficiency to secure long-term contracts.
Stringent Purity & Quality Standards	High purity and olfactive requirements increase manufacturing complexity and quality control demands.	• Implementing advanced quality control. • Driving continuous process improvements. • Maintaining in-house testing facilities to ensure compliance with customer expectations.
High Vendor Replacement Cost	Customers face high costs and risks when switching vendors, making reliability critical.	• Ensuring strong customer retention and minimising the risk of vendor replacement through consistent quality. • Offering olfactive customisation and long-term reliability.

Compliance with International Chemical Regulations

Country/Region	Requirement	Privis Response
EU/EEA (European Union/ European Economic Area)	Products with volumes of 1 MTPA or more require registration under the EU REACH Regulation (EC 1907/2006).	[56] products have been registered under the EU REACH Regulation through a Sweden-based representative.
Turkiye	Products with volumes of 1 MTPA or more must be pre-registered under Turkiyes REACH Regulation (KKDIK) by December 2026.	[39] products have been pre-registered under the KKDIK regulation, extending the registration deadline to December 2026.

TECHNOLOGY INITIATIVES

The Company has recently strengthened its technological and sustainability focus through several key initiatives. In 202425, it commenced operations at a world-class greenfield facility in Mahad, Maharashtra. Developed in partnership with Givaudan, the plant is dedicated to manufacturing high-complexity fragrance ingredients. Strengthening its commitment to clean energy, the Company also approved an additional investment to acquire a 26% stake in a solar power project for some of its other units located at Mahad and Jagadia.

The Company further broadened its product portfolio within the aroma chemicals space. It launched commercial production of Indomerane, Floravane and Amber Woody Xtreme all coming out of the Galaxmusk and its byproducts at its Jhagadia unit. The launch of Camphor manufacturing at its Mahad facility previous year has yielded good results, enhancing its footprint across the aroma chemicals segment.

IFRA STANDARDS COMPLIANCE

The International Fragrance Association (IFRA) sets global benchmarks for the safe use of fragrance ingredients. These benchmarks form the foundation of a widely accepted risk management system across the fragrance industry.

The IFRA Code of Practice contains these standards, which rely on detailed risk assessments by independent experts. The Company ensures full compliance with these standards across all its products, reinforcing its strong focus on safety and quality. As a proud supporting member of IFRA, Privi continues to uphold these standards, adding credibility and trust to its product portfolio.

HUMAN RESOURCES

The Company builds its success on a strong human resource base, powered by a skilled workforce and an agile R&D team. This foundation drives both innovation and operational excellence. As of March 31, 2025, the Company employed over 1,400 personnel, underlining its continued investment in acquiring and nurturing talent.

Over the past year, Privi strengthened its people-first culture through initiatives focussed on employee wellbeing, leadership development, and continuous learning programmes. Policies promoting diversity, inclusion, and safety were further reinforced, while targeted skill enhancement workshops supported professional growth. The leadership team, comprising seasoned industry professionals, fosters an environment of collaboration, recognition, and accountability. Rooted in sustainability and community engagement, the Companys human resource practices continue to build a motivated, resilient, and future-ready workforce.

PRODUCT AND MANAGEMENT SYSTEM CERTIFICATIONS

The Companys manufacturing facilities hold vital certifications like ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018. They also hold Kosher and Halal certifications. These certifications, issued by the esteemed Bureau Veritas after rigorous audits demonstrate the Companys commitment to maintaining the highest standards of quality, environmental management, and workplace safety.

CAUTIONARY STATEMENT

The statements in the Management Discussion and Analysis may contain forward-looking statements as defined under applicable laws and regulations. Actual outcomes may differ materially from those projected or implied. Key factors that could impact the Companys operations include, but are not limited to, economic conditions influencing demand and supply, price fluctuations in both domestic and international markets, changes in government regulations, tax laws, other legal provisions, and unforeseen events such as Force Majeure.