S H Kelkar & Company Ltd Management Discussions

Indias FMCG sector has witnessed robust growth driven by growing consumer awareness, growth in discretionary income, rising urbanisation, dual income families, robust growth in rural spending, good monsoon, and strong support by Government led schemes.

ECONOMIC OVERVIEW

Global economic overview

In 2024, the world economy grew 3.3% maintaining the pace of growth amidst ongoing geopolitical tensions. The growth was not uniform across countries with robust momentum in the US in contrast to slower growth witnessed in the European region.

Growth in advanced economies is expected to slow down to 1.4% in 2025 and 1.5% in 2026 from 1.8% in 2024. Emerging Markets and Developing Economies (EMDEs), led by China and India, grew at 4.3% in 2024 and are projected to grow at 3.7% and 3.9%, respectively in 2025 and 2026.

Global growth in 2025 and 2026, is projected at 2.8% and 3% respectively, led by the swift escalation of trade tensions and extremely high levels of policy uncertainty. The recent US tariffs, led by change in administration, on Canada, Mexico and China, along with retaliatory actions from these nations, could disrupt global trade, drive inflation, and slow economic growth. High global policy uncertainty could undercut investor confidence and constrain financing flows.

Indian economic overview

India has been one of the fastest-growing major economies in the world. According to IMF, India is set to overtake Japan and become the fourth-largest economy in the world in 2025 driven by private consumption, structural reforms and strong policy support by the government. According to the Second

Advance Estimates of GDP, Indias GDP growth is expected at 6.5% in FY 2024-25, lower than 9.2% GDP growth in FY 2023-24. Manufacturing, services and infrastructure investment sectors witnessed good traction. Strong export growth was seen in pharmaceuticals, textiles and engineering goods. Driven by robust domestic demand, a dynamic demographic profile and sustained economic reforms, India is asserting its rising influence in global trade, investment and innovation.

Inflation persisted in FY 2024-25 due to disruptions in global supply chain and global commodity price volatility. The RBIs Monetary Policy Committee (MPC) while maintaining a neutral stance, reduced the repo rate by 25 basis points to 6.25% on February 7, 2025, the first rate cut since May 2020. Then RBI further cut the repo rate by 25 basis points to 6% on April 9, 2025 and again by 50 basis points to 5.5% on June 6, 2025. Consumer Price Index (CPI) inflation for FY 2024-25 is projected at 4.9% as compared to 5.4% in FY 2023-24.

The governments strong commitment to foster economic growth and ensure India outpaces global growth to emerge as Viksit Bharat, reflected in the Union Budget 2025-26. Several policies were announced to strengthen financial resilience and ensure inclusive development. Key focus areas were boosting private sector investments, empowering MSMEs, and advancing infrastructure development, transformative reforms across taxation, financial regulation, agriculture, exports, and urban development. Recognising the crucial role of rural India in economic development, strong emphasis was laid on its upliftment through focus on employment generation, women empowerment, education and infrastructure development in rural India. The broader goal of positioning India as a global economic powerhouse was the central theme.

Rooting for strong and sustained economic development, the government has been attracting substantial foreign direct investment (FDI) aided by various production-linked incentive (PLI) schemes. Strong push for digital transformation, financial inclusion and ease of doing business have created a positive business environment. Building on this positive momentum, the RBI has estimated the Indian economic growth rate of 6.5% in FY 2025-26 similar to that of FY 2024-25. Robust industrial production, prediction of normal monsoons, good agricultural produce and increased household consumption aided by tax reliefs in Union Budget 2025-26, is expected to support economic growth.

Indias total exports saw a marginal increase in merchandise exports, which stood at US$ 437.42 billion in FY 2024-25 as compared to US$ 437.07 billion in FY 2023-24, reflecting stability in goods-based trade. With an impressive outlay of 1.97 lakh crores, the PLI Schemes have played a vital role in enhancing Indias manufacturing prowess, foster technological advancements, and elevate position in global markets. Aligned with the governments goal of strengthening domestic production and expanding exports, the impact of PLI Schemes have led to increased production, job creation, and a boost in exports. PLI Schemes have transformed Indias exports basket from traditional commodities to high value-added products. Domestic spending has seen a major revolution with online payment systems such as UPI. Indias FMCG sector has witnessed robust growth driven by growing consumer awareness, growth in discretionary income, rising urbanisation, dual income families, robust growth in rural spending, good monsoon, and strong support by Government-led schemes.

RBIs monetary policy stance was weak given slow economic activity, despite uptick in both private consumption and government spending. The IMF projects Indias economy to grow at 6.5% in CY 2025 and CY 2026. Robust internal factors indicate conducive growth for Indian economy, amidst tari_ war.

US$ 437.42 billion

Indias total exports increase in merchandise exports FY 2024-25

INDUSTRY OVERVIEW

Global _avours and fragrance market

The global _avours and fragrances (F&F) market grew to US$ 34.86 billion in 2024 from US$ 32.2 billion in 2023. The robust growth is being driven by growing preference for natural ingredients, innovation, globalisation of food and beverage (F&B) industry and rising awareness about personal grooming and hygiene. Of this F&F market, the fragrances market is estimated to be around US$ 20 billion and the _avour market forms the remaining US$ 15 billion.

People are increasingly moving towards natural and clean-label _avours and fragrances led by growing awareness about the harmful effects of synthetic products especially in personal care products. The industry is undergoing a significant transformation with the help of technology such as scent creation powered by AI and biotechnology-based _avour synthesis.

According to the Business Research Company, the F&F market is projected to grow at 5.5% CAGR to US$ 45.26 billion by 2029. This growth is attributable to growing demand, clean label and transparency, premiumisation, strong demand in emerging markets, growing preference for natural products, customisation and personalisation trends, focus on mental health and mood boosting, and sustainable and ethical sourcing. The F&F market is expected to be influenced by biotechnology trends, artificial intelligence product development and green sourcing.

The personal care industry is more focussed on sustainable and skin-compatible fragrances, with a transition to biodegradable and hypoallergenic

US$ 34.86 billion

The global _avours and fragrances (F&F) market grew in 2024 ingredients. Fragrances industry is seeing increased traction due to the growing consumer need for high-end skincare, hair care, and personal hygiene products that are embedded with unique and long-lasting fragrances. Natural and sustainable fragrance materials such as essential oils and plant extracts are also gaining ground as brands lean even more into clean beauty and eco-conscious formulations. Synthetic-free and hypoallergenic personal care product companies are working to develop biotechnology-based fragrance compounds. The properties of fragrance customers are looking for depends on the end use. For instance, _ne fragrances are all about exclusivity and high-end sourcing, while household products such as detergents and air fresheners concentrate on lasting and economical fragrances.

In the food and beverage segment, flavours are of prime importance in enriching taste profiles, with the demand for clean-label and functional _avours increasing. With growing focus on plant-based and functional foods there has been a substantial rise for more natural _avours like those from fruit, herbs, and botanicals. In addition, the development of sugar-free drinks and confections has brought the idea of _avour modulation to the forefront. The rising number of health-conscious consumers have led to the development of healthier alternatives and functional food products, which has increased the need for _avours and fragrances that can enhance the taste of these products, making them more palatable and enjoyable while still meeting consumers dietary requirements.

Within flavours, food and beverage industry continues to drive the market. Continuous innovation and growing popularity of various ready to eat foods/ processed foods like snacks, baked goods, soft drinks etc. are contributing significantly to the growth in _avours market. In the restaurant industry as well, new _avours are constantly in high demand especially in the beverages space. There is a tremendous growth in new and exotic flavours as well as a growing demand for nostalgic _avours. Consumers are increasingly looking out for healthier options and there is a budding segment of _avours with fortified ingredients, including probiotics, ginger, adaptogens, moringa, turmeric and co_ee bean extract. Plant-based _avours are gaining good traction among the vegan population.

In 2024, Asia Pacific continued to remain the largest region in the global F&F industry driven by China and India. Major regions of Europe, Middle East and North America drive the demand for Asian _avours and fragrances. Growing focus on R&D and emerging technologies is driving the future growth in F&F industry.

While population growth and rapid urbanisation continue to be the key drivers of the F&F market, the increasing popularity of natural and organic ingredients is fuelling the F&F market, as consumers seek healthier and sustainable options. Increasing awareness about the harmful effects of synthetic products is leading to a rise in the adoption of natural and clean-label _avours and fragrances. Continuous innovation and product development in the F&B and personal care industries are adding to the growth of the F&F market.

Indian _avours and fragrance market

The dynamic Indian flavours and fragrances market, a significant part of the Asia Pacific F&F market, is rapidly growing. With a diverse and culturally rich nation, the demand for _avours and fragrances is vast and varied catered to by a wide range of players, from global multinational corporations to local manufacturers. According to IMARC, in 2024, the India _avours and fragrances market size reached US$ 3 billion. The key drivers of this market include the rapidly growing F&B sector, the growing popularity of personal care and cosmetics products, increasing disposable income and growing popularity of packaged foods. More than 75% of domestic production of F&F ingredients is exported. India is a leading supplier of natural ingredients catering to 80% of the global demand for mint extracts. The _avours and fragrances industry in India encompasses a wide array of products, including natural and synthetic _avours, essential oils, aromatherapy, incense, ittar and more. With a focus on innovation, product development, and the adoption of sustainable and organic ingredients, the industry is poised for continued growth.

Personal care including perfumes, home care and wellness segments solutions continue to drive the fragrance market in India. Fragrances with therapeutic benefits, providing stress relief, improve mood and provide better sleep quality are driving the market growth including essential oil aromatherapy products and herbal infusions. Healing scents have for long been used for mental wellbeing, beauty, treatment of ailments, hygiene, and age control. The fragrance market in India is undergoing significant transformation leading to customisation and functional demands. There is growing demand for unique, mood-enhancing fragrances. Technology advancements in the market like use artificial intelligence (AI), data analytics are aiding the creation of individualised perfume to match customer preferences. The increasing trend towards premiumisation in home care products such as luxurious air fresheners and scented candles continues to drive market demand.

The Indian _avours market continues to ride on the fast-paced growth in food and beverage industry especially packaged foods. However, as consumers are becoming more health-conscious and mindful of the ingredients they consume, there is a rising demand for natural _avours. Most natural _avours are plant-based, derived from authentic sources such as fruits, vegetables, herbs, and spices. The growth in demand for unique and exotic taste experiences, with consumers seeking novel _avours and sensory experiences in their F&B is leading to transformation in the market. A wide range of innovative _avours, both traditional and unconventional exotic options, are gaining traction in R&D by various players. Technology advancements continue in flavour encapsulation techniques and delivery systems to enhance the stability and shelf life of _avours which can be incorporated into a wider range of products.

The _avours and fragrances market in India is driven by the expanding food and beverage industry and the rising demand for personal care products. As consumers seek unique and appealing sensory experiences, the demand for innovative and high-quality _avours and fragrances continues to grow. The Indian F&F market faces challenges arising from the need for natural and sustainable ingredients. Consumers are increasingly seeking products with clean labels and minimal synthetic additives. This presents a unique opportunity for manufacturers who are increasingly investing in research and development for natural flavour and fragrance solutions. The market is expected to reach US$ 3.9 billion by 2033, at 2.6% CAGR during 2025-2033. The market is expanding due to rising consumer demand for natural and organic ingredients, growing applications in food, beverages (F&B), personal care, and home care products, and increasing investments in research and innovation to develop unique, culturally resonant scent and taste profiles.

US$ 3.9 billion

The Indian _avours and fragrances market is expected to reach by 2033

SWOT OF THE INDIAN F&F INDUSTRY

Strengths	Weaknesses	Opportunities	Threats
• Large domestic market driven by population growth, rising disposable income and rapid urbanisation	• Artificial _avours, chemicals and preservatives causing allergies	• Large domestic market driven by population growth, rising disposable income and rapid urbanisation	• Rapidly evolving consumer preferences
• Steadily growing global demand		• Steadily growing global demand	• Growing competitive pressure
• Focus on R&D		• Focus on R&D	• Change in regulations on international trade
• Increasing use of advanced technology for longer lasting F&F		• Increasing use of advanced technology for longer lasting F&F	• Economic risk
• Automation has aided increased efficiency		• Automation has aided increased efficiency	• Data security risk
			• Innovation risk
			• Geopolitical risk

COMPANY OVERVIEW

S H Kelkar and Company Limited ("the Company"), the largest Indian-origin fragrance and _avour company, rides on strong brand equity with over 10 decades of rich experience. Various fragrances and _avours are sold under SHK, Cobra, Keva & CFF brands. These fragrances & _avours are primarily used in industries like personal care, fabric care, home care, _ne fragrances, bakery products, dairy, pharmaceuticals and other food and beverages.

The Company has robust R&D capabilities with 17 molecules developed over the last five years. The Company has five creation and development centres across the globe with presence in India, Amsterdam, Hamberg, Milan, Singapore and Jakarta. A pro_cient team of perfumers, _avourists, evaluators and application executives strengthens the Companys R&D muscle. The Company has filed 20 patent applications in respect of molecules, systems and processes developed by it, of which 6 have been commercially exploited. The Company varied and large client base includes leading national and multinational FMCG players, MSME and fragrance & _avour producers.

Of the two primary business segments, fragrance segment and _avours segment, the fragrance segment dominates with ~91% of the revenue in FY 2024-25. The Company leadership in the fragrance market in India is the result of its team of specialised perfumers and its domestic market understanding and connect with the consumers.

The Company is well-known for its expertise and innovative approach in the domestic _avour manufacturing market. The Companys flavour products, manufactured in modern manufacturing facilities, find application as raw material in beverages, baked goods, dairy products, savoury and pharmaceutical products. Its products are FSSAI, USFDA and Halal approved. The Flavours Business is gaining strong traction by developing relevant solutions for customers leveraging its sourcing, creation and application capabilities.

Business segment performance:

Key highlights in FY 2024-25 Fragrances segment (excluding Global Ingredients)

• Fragrance division achieved 13.9% growth led by rising demand in the domestic market, particularly from MSME and mid-sized FMCG clients

• Continued penetration into Southeast Asia, supported by the new Indonesia factory

• Expansion in Europe, backed by Creative development centre in Germany

• There was a fire incident at the Vashivali fragrance facility in Q1/FY 2024-25 which led to temporary production loss and an exceptional expense of

160.18 crores. The Company swiftly activated its business continuity plan, shifting operations to alternate sites in India and ramping up the Indonesia facility. Insurance support of 95 crores helped offset losses, and factory reinstatement is underway for commissioning in FY 2025-26

• Margins were impacted in the second half of the year due to elevated raw material costs and growth-led investments

• EBIT declined 21.1% with EBIT margin contraction of 380 basis points to 8.5%

Global Ingredients

• Global Ingredients segment continues to make steady progress with 22.6% revenue growth in FY 2024-25

• Segment delivered a meaningful improvement in performance during the year, moving from an EBIT loss in the previous year to a positive EBIT of

1.4 crores. Re_ecting results from strategic and operational initiatives aimed at enhancing efficiencies

Fragrance segment (excluding Global Ingredients)

Region	Revenue contribution (%) in FY 2024-25	Growth (%) in FY 2024-25	Growth (%) in FY 2023-24
India	58	19.1	14.0
Europe	25	7.0	13.3
RoW	17	8.1	23.2
Total	100.0	13.9	15.3

Global Ingredients

Region	Revenue contribution (%) in FY 2024-25	Growth (%) in FY 2024-25	Growth (%) in FY 2023-24
India	44	35.5	69.8
Europe	35	22.1	(6.0)
RoW	21	1.3	10.2
Total	100.0	22.6	19.7

Flavours segment

• Domestic segment demonstrated a healthy growth of ~42.9% led by revival in core food and beverage clients

• Increased engagement and order wins in both India and Middle east Africa

• EBIT increased 103% with EBIT margin expansion of 860 basis points to 23.1%

• Better margin performance YoY, on account of a subdued base in the previous year, improved product mix and operational efficiency.

Region	Revenue contribution (%) in FY 2024-25	Growth (%) in FY 2024-25	Growth (%) in FY 2023-24
India	57	42.9	14.2
RoW	43	11.4	(2.6)
Total	100.0	27.5	5.0

International business

• The Companys core European operations continued to perform well, delivering 8.4% revenue growth on a like-for-like basis. Operating margins were maintained on the back of a favourable product mix. Gross margin expanded 60 bps to 56.3% and EBITDA margin expanded 110 bps to 23.2% due to premium product mix. The robust growth was driven by strong traction in

Creative Fragrances and Flavours (CFF) and Holland Aromatics, supported by new product introductions and deeper client engagement. The Company also expanded into new customer segments and regional markets, including strategic support for clients in the Middle East and North Africa (MENA).

FINANCIAL PERFORMANCE

Consolidated total income stood at

2,147.25 crores in FY 2024-25, up 16.3% as compared to 1,846.69 crores in FY 2023-24. This was driven by sustained demand across segments, with notable traction in the domestic market for both the fragrance and _avour divisions. Core European business also continued to perform well, reinforcing the Companys position in key international markets. The Company reported a robust performance, despite facing significant challenges arising from geopolitical uncertainty. Emerging markets contributed to 79.2% of business with 17.4% growth over previous year and Europe business comprising Creative Flavours and Fragrances S.p.A and Holland Aromatics BV, core business grew by 8.4%.

Gross margins stood at 43.4% and EBITDA margins were at 14%. EBITDA stood at 297 crores in FY 2024-25, down 2.1% from 303.3 crores in FY 2023-24. Improving raw material availability, together with calibrated price hikes, is expected to enable gradual margin recovery in FY 2025-26.

Reported PAT stood at 73.0 crores in FY 2024-25, down 40.9% from 123.55 crores in FY 2023-24. Delays in GST refunds exceeding 50 crores affected working capital, but the Company balanced liquidity using internal accruals and insurance inflows.

Cash Profit (excluding exceptional items) stood at 224.1 crores in FY 2024-25 as compared to 208.5 crores in FY 2023-24. As on March 31, 2025, net worth of the Company stood at 1,272.4 crores and total fixed assets stood at 999 crores. With net debt at 658 crores, net debt to equity stood at a healthy 0.52x.

BUSINESS OUTLOOK

The Company has embarked on ‘3I strategy focussed on strengthening its presence and manufacturing capabilities in India, Italy and Indonesia. The domestic Indian market is being nurtured as the R&D base and backward integration hub for ingredients. Italy is seen as European market anchor through CFF and Holland Aromatics. Indonesia is being built as ASEAN growth gateway with new Greenfield facility being built for regional exports.

The Company continued to witness positive business sentiment in India, marked by market share gains in select product categories. Demand across key international regions also remained steady, particularly in the core European market. The Company continues to prioritise growth-led investments. Strong global presence, long standing client base, robust cash flows and unwavering focus on R&D provide fundamental strength to the business. Improving raw material availability, together with calibrated price hikes, is expected to enable gradual margin recovery. Meanwhile, incremental costs associated with growth-led initiatives have begun to stabilise, positioning the Company well to benefit from operating leverage going forward. By end of 2025, the Vanavate Greenfield facility is scheduled for commissioning which will enable the Company to replace leased sites, drive operational consolidation and enhance efficiency.

On April 2, 2025, an interim payment of

95 crores was received from the insurer as an on-account interim relief for the fire-related claim. This inflow will support working capital requirements and further strengthen the balance sheet.

In core segments, the fragrance division is poised to sustain double-digit growth, led by MSMEs, exports, and industrial applications. The flavours segment is expected to grow strongly, driven by clean-label demand, health-focussed formulations and deeper client relationships. Margin expansion will be enabled through premium, customised offerings.

Global Ingredients business which turned profitable during the year is aided by backward integration and export momentum. The Company remains focussed on this segment which is expected to constitute 10–15% of the portfolio, offering scalable margin support.

The Company remains committed to leverage its expanded capabilities, which includes the setting up of new Creative Development Centre in the UK reflecting its confidence in the long-term opportunities. The Companys Creative Development Centres supported by experienced perfumers, would aid in deepening of market understanding, driving innovation, and anchoring long-term growth paving the way for market share expansion in Europe, MENA and North America. Though such investments which result in incremental costs impact near term margins, performance continues to remain robust when adjusted for these expenses. Over the next three to five years, the Company expects these investments to help capture a larger market share, both in India and internationally, by driving innovation and expanding global customer base. The Company remains confident that these initiatives will contribute to revenue growth, deliver notable operating leverage, and drive value creation for all stakeholders in the coming years.

With these strategic levers in place, the Company is confident in its ability to capture emerging opportunities across domestic and global markets and deliver sustainable growth for all stakeholders. The Company foresees ample growth opportunities for its business growth in both domestic and international F&F markets. The Companys unwavering dedication is seen in continued investments in capacity building and improving technical capabilities.

The Company has planned capex of

200 crores over FY 2025-26, primarily towards reinstatement of Vashivali facility, Vanavate facility and capacity expansion in Netherlands. This requirement is to be funded through internal accruals and insurance claims,. The Company is confident of delivering 12%+ CAGR revenue growth, with margin expansion over the next fiscal year. In FY 2025-26, EBITDA margin is expected at 15-16% due to transition costs with further improvement expected in FY 2026-27 to 18–20% range driven by the commissioning of the new facilities. The Company expects to reduce its net debt burden from 658 crores to nearly 600 crores by the end of FY 2025-26.

Going ahead, the growth trajectory will be driven by a sharpened focus on innovation, operational excellence and global market expansion. The successful turnaround of the global ingredients business, which delivered two consecutive years of consistent profitability, has been a pivotal achievement. This transformation has been powered by strategic backward integration, capacity enhancements, and a sustained export-led momentum. This momentum is further supported by deliberate shift towards in-sourcing. The Company is witnessing a growing preference for sourcing from India, driven by competitive advantages in cost, quality, and innovation. Indias evolving geopolitical context, particularly led by the China plus one strategy, presents a unique opportunity for the Company to strengthen global supply chains.

In the coming years, the Company will continue to realign the global ingredients business, focussing on innovation, sustainability, and market expansion. It aims to build a more resilient and formidable business that delivers sustained value to all stakeholders.

QUALITY MANAGEMENT

Outlook:

Given the crucial nature of F&F uses, it is mandatory that products confer to the highest quality standards. For domestic and international markets, the Company remains committed to providing superior quality products in strict compliance with highest quality standards. The Company is striving tirelessly to establish a strong connect with the environment-conscious customers preferring greener, safer and more sustainable products leveraging rich experience, strong brand equity, deep domain knowledge, stronghold in digitalisation, project portfolio management, innovation, process standardisation, and capability building.

RISK MANAGEMENT

Successor risk: Business continuity and sustained growth momentum required a strategic management team aligned with organisational ethos, culture and goals.

Mitigation: The Company encourages in-house talent progression by offering several training and development opportunities with focus on building leadership qualities in employees with the right talent. This ensures smooth succession, led by a well-groomed team adept with the Companys philosophy and long-term growth vision. To reduce dependence on individual leaders, cross-training and knowledge-sharing among employees is encouraged. Well devised succession plans are in place to groom potential successors, and offer leadership development and training. The Company closely monitors, reviews and updates its succession strategies with dynamic market conditions.

Innovation risk: Being a part of the dynamic consumer market, the Company needs to evolve and innovate to stay relevant with changing times. Innovation is also imperative for the Company to maintain leadership position, and staying ahead of the curve.

Mitigation: The Company considers innovation as a cornerstone of business growth. Substantial investments in R&D and human capital are reflective of the Companys commitment to staying relevant in dynamic market with strong focus on innovation. The Companys skilled team of professionals is responsible for innovating superior products with well-defined sustainability goals. The Company also has superior in-house capability for safety testing enabling highest standard of Quality and Safety.

The Company is involved in extensive research for natural alternatives for chemical syntheses. The Company is looking to conserve and propagate endangered plant species, and carry out efficacy studies of formulations, combing two complementing divisions – Plant Biotechnology and Microbiology. With a view to achieve success in the new avenues of bio-transformations and gene cloning, the Company employs cutting-edge techniques like genetic engineering, molecular marker technology, tissue culture studies, in-vitro antimicrobial testing, in-vivo efficacy studies, etc.

The Company is constantly striving to enhance its research capabilities for new molecules with improved biodegradability profile. The Company remains focussed on innovation, portfolio expansion, widening reach, exploring new distribution channels, consumer testing, consumer studies to keep pace with evolving market trends.

Data security and cyber risk: With digitalisation and technology becoming an integral part of doing business, data and cyber security risk have become important concerns for all organisations.

Mitigation: The Company has adequate investments for data protection, identification of critical IT systems of business and a recovery plan. To ensure security and data safety, ISO standards are implemented with suitable security for data rooms and servers. The Company has adopted latest cyber security technologies with preventive, detective and reactive controls including firewalls, encryption, multi-factor authentication, and regular security audits. In addition, internal assessments for controls are carried out to further strengthen data security.

ESG compliances risk: Being a part of the F&F industry, the Company needs to comply with appropriate ESG norms.

Mitigation: The Company has strategically chalked out 3-phase roadmap, assigning specific scope and tasks to every site. To ensure energy conservation and emission reduction, adequate energy-e_cient systems have been installed. The Company has Reverse Osmosis Plant, Multi Effect Evaporator and foodie machines which convert waste food into manure. The Company is steadily phasing out fossil fuel consumption completely and enhancing the share of renewable and clean energy.

To ensure collection, proper recycling/ coprocessing and environmentally safe disposal of plastic waste, the Company has successfully registered for Extended Producer Responsibility (EPR). It is investing in low-carbon technologies and equipment.

Geographical business risk: Widespread business operations across the globe exposes the Company to the volatility in economic environment of respective regions. Revenue concentration in a particular geography, creates higher sensitivity to earnings based on the market conditions in that region.

Mitigation: Business expansion is strategically undertaken with a calibrated approach ensuring revenue mix is geographically well-diversified. The Company has a comprehensive disaster recovery plan in place.

Competition risk: High growth prospects of the industry make it susceptible to increased competitive pressure from both domestic and international players, which may impact earnings.

Mitigation measures: The Company has created a moat with its robust brand equity, strong inheritance, established business relationships, healthy balance sheet, proficient team, management support and a diverse product range driven by a zest for innovation and creation. The Company thus stays ahead of competition enjoying a stronghold in the market.

INTERNAL CONTROL AND THEIR ADEQUACY

The Company has devised a comprehensive internal controls system in accordance with the nature, size and complexity of the industry it operates in. The internal control system ensures that all applicable laws, rules and regulations are strictly complied with across business processes. The internal control framework ensures safeguarding of assets, detection and prevention of frauds and errors, adequacy and completeness of accounting records, and timely preparation of reliable financial information.

The Audit Committee of the Board of Directors closely monitors the adequacy and effectiveness of the internal control systems and puts forth its suggestions for improvement. The Audit Committee reviews the observations of the internal audit function periodically and suggests appropriate measures to ensures that internal control systems are adequate, effective and upgraded as required. The internal assessment ensures compliance with Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and policies of the Company. Meaningful observations are addressed and corrective actions taken by the internal controls to maintain robustness of the business.

HUMAN RESOURCES

Human capital is an essential component organisational growth. The Companys people-centric approach enables it to attract and retain the right talent. With an aim to have a pro_cient team, the Company resorts to campus recruitment and lateral hiring. The Company provides employees and their family members professional consultation on personal issues through an Employee Assistance Programme (EAP), ‘Ear2Hear, maintaining absolute confidentiality.

The Company motivates employees in holistic career growth through PACT – Promise of Accountability, Commitment and Teamwork, an impactful morale-boosting programme. The Company offers distinguished platforms to its employees with short-term and medium-term international exposure and learning opportunities. Existing employees are provided with an integrated knowledge base of both _avours and fragrances and groomed for larger roles in the future. The Company fosters a conducive, safe, productive and performance driven work environment. The health & safety of its employees, business partners and communities, remains a top priority for the Company. ‘People first attitude is in the Company DNA.

Industrial Relations continued to remain cordial during the year. The Company had 635 permanent employees on its rolls as on March 31, 2025.

CORPORATE SOCIAL RESPONSIBILITY

The Company is committed to contributing positively towards the social and economic development of the community as a whole, and specifically for the cause of economically, socially and physically challenged groups to support sustainable livelihood. The Companys Corporate Social Responsibility (CSR) initiatives are in this direction aimed at the larger good of the nation, for the upliftment of the underserved sections of the society, especially the rural regions. Inspired by a motivating vision and abiding by the strong value of trusteeship, the Company thrives to create substantial sustainable societal value. The framework for the Companys CSR Programme is detailed in the CSR Policy, which is accessible on the Companys website at the link: https://keva. co.in/investor-updates/#92-178-policies.

The Company strives to provide an improved and advanced education system and support visually challenged people through perfumery trainings and employability. For this, it undertook several measures in areas like environmental sustainability, education, promoting employability through vocational skills and equipping and upgradation of educational infrastructure. We have spent 3.38 crores on CSR initiatives as a Group of which 1.89 crores pertains to the Company.

CAUTIONARY STATEMENT

The document contains statements about expected future events, financial and operating results of the Company, which are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that the assumptions, predictions and other forward-looking statements may not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the managements discussion and analysis of the Companys Annual Report for FY 2024-25.

The Key Financial Ratios of the Company are given as below:

Particulars	2024-25	2023-24	Change (%)	Explanation for variation of 25% or more
Debtors Turnover (times)	4.24	3.95	7.5	-
Inventory Turnover (times)	1.74	1.63	6.6	-
Interest Coverage Ratio (times)	4.58	5.61	(18.4)	Increase in interest cost due to higher debt
Current Ratio (times)	1.39	1.46	(_.4)	-
Debt Equity Ratio (times)	0.59	0.51	15.2	-
Operating Profit Margin (%)	13.99	16.47	(15.09)	-
Net Profit Margin (%)	3.46	6.74	(48.7)	Profit is on the lower side due to loss on account of fire at the Companys facility at Vashivali in FY 2024-25
Return on Net Worth (%)	5.76	10.09	(43.0)	Profit is on the lower side due to loss on account of fire at the Companys facility at Vashivali in FY 2024-25