Shivalik Rasayan Ltd Management Discussions

Agrochemical Industry Overview:

2026-27, supported by steady domestic demand, improving crop intensity, and expanding distribution reach. While global uncertainties persist, the industry is transitioning to a volume-led growth phase, with a gradual improvement in overall operating conditions.

Geopolitical developments, particularly the ongoing US-Israel-Iran conflict, have introduced volatility in energy linked input costs and global logistics. While the temporary ceasefire has provided near-term stability by easing immediate pressure on crude oil prices and freight rates, the situation remains uncertain, with the risks of renewed disruptions.

The Indian agrochemicals sector continues to benefit from strong underlying agricultural fundamentals, with domestic demand providing a stable base for sustained growth. Despite global volatility, India remains a structurally growing market, supported by increasing agricultural activity and improving farm economics. Agrochemical demand in India continues to be supported by structural drivers. In addition, policy support and expansion in distribution networks remain key enablers.

Opportunities:

The global agrochemical industry is evolving rapidly and in 2026, the demand for pesticides, insecticides is witnessing exponential growth. With the increasing global population, the demand for food production has surged. Farmers are adopting advanced agrochemical solutions to boost productivity, driving demand for high-quality agrochemical suppliers.

Sustainability is reshaping the industry. The demand for eco-friendly agrochemical intermediates and green chemistry practices is growing, encouraging manufacturers to produce safer and compliant chemical solutions. Emerging markets, particularly in Asia, are witnessing rapid industrial growth. This has increased the need for bulk agrochemical manufacturers to support large-scale production.

The demand for agrochemical intermediates in 2026 is driven by agricultural expansion, sustainability trends and innovation. Companies focusing on quality, scalability and compliance will lead the future of this evolving market.

Challenges:

Heavy reliance on Chinese intermediates persists, exposing the sector to supply disruptions and price volatility. MSMEs face endless registrations, molecule bans and high compliance costs, while global oversupply keeps their margins pinned.

Moreover, the ongoing geopolitical conflict contributes to elevated macro and operating uncertainty for the agrochemical industry, primarily through energy prices, logistics costs, and currency volatility, rather than direct demand disruption. Agrochemical demand has remained largely resilient, given its linkage to food security and agricultural activity, although short-term ordering behaviour may remain cautious. Volatility in crude oil and freight markets poses margin sensitivity, especially for players with limited backward integration or greater reliance on imported intermediates. Supply chain disruptions, including longer transit times and higher insurance costs, will weigh on the profitability of Indian Companies.

Going forward, margin sensitivity persists, necessitating continued focus on product mix optimization and geographic diversification to mitigate concentration risk.

API (Active Pharmaceutical Ingredients) Industry:

The global Active Pharmaceutical Ingredient Companies market is undergoing a massive transformation. Valued at over USD 159.3 billion in 2026, the sector is projected to surge toward USD 228.7 billion by 2033. This growth is driven by a surge in chronic diseases, the rise of personalized medicine, and a strategic shift in global supply chains. India API manufacturing growth 2026 sits at the center of that shift, steered by capacity expansion, policy support and years of regulatory experience.

India supplies nearly a fifth of the worlds generic medicines by volume, with over 670 USFDA approved plants. The PLI scheme has pushed cumulative pharma investment past Rs. 40,000 Crores targeting around 41 critical bulk drugs. Buyers are diversifying away from single country sourcing and India is a direct beneficiary of that shift. USFDA and EU GMP certification remain the baseline checks for any Indian API supplier.

Pharma firms are shifting from basic APIs to complex APIs — aiming to counter price erosion, strengthen margins, and customer retention. Import reliance on China for Key Starting Materials (KSMs) remains high, though government initiatives are beginning to show progress.

Indian API manufacturers are modernizing production by integrating sustainability, technology, and efficiency through Artificial Intelligence (AI), data analytics, and flow manufacturing.

Growth Opportunities for API Industry:

Indian manufacturers typically operate at lower unit costs than counterparts in the US or Europe. India API manufacturing growth 2026 changes the maths in their favour, even after freight and import duties are added back in. This is due to decade of plant upgrades, dossier filings and inspection history that most Indian API manufacturers had already built well before this current wave of India API manufacturing growth 2026 demand arrived.

Challenges for API Industry:

The Indian API industry is entering a phase of structural change driven by both domestic imperatives and global market dynamics. Rising regulatory scrutiny, evolving customer expectations, and the need for technological sophistication are reshaping how companies operate. At the same time, competitive pressures and supply chain vulnerabilities are compelling companies to rethink their strategies, moving beyond volume-driven growth towards specialization and value creation. These forces are not isolated; they interact to define the industrys trajectory and will determine how Indian manufacturers position themselves in the global pharmaceutical ecosystem.

C. Business Overview:

Although Company has been able to grow its revenue but increase in operational cost has compressed the bottom line.

On a consolidated basis, the revenue for Financial Year 2026 was Rs. 36,800.32 Lakhs, higher by 18.03% over the previous year revenue of Rs. 31,177.31 Lakhs and on Standalone basis, the revenue for Financial Year 2026 was Rs. 17,023.35 Lakhs, higher by 14.07% over the previous year revenue of Rs. 14,922.59 Lakhs.

i. R&D — We are trying to transit our R&D from cost center to profit center. Our main focus remains development of API and formulations for stringent markets.

R&D has developed two NCE-1 molecules for a US based Company. This demonstrates Shivaliks capabilities and capacity to develop API as per most stringent norms of Pharmaceuticals markets. Our firm is capable of developing API through non infringing route having a novel polymorphism.

ii. API — The development and manufacturing of NCE-1 molecules, Shivalik has validated its capability to be dependable partner for Regulated Pharma Companies. This unlocks massive contract development (CDMO) opportunities, validating our infrastructure against top-tier regulatory standards.

iii. Agro-Chemical — We are scaling our agro-chemical plant. This year, our R&D and manufacturing teams successfully commercialized 4 new high-demand agro-chemical products, expanding our presence in technical products. These new launches target high-growth domestic and export crop protection segments. They allow Shivalik to reduce dependence on commoditized generics and gain strong technical pricing leverage.

The new Agro-Chemical plant at Dahej which started its operation last year has one operational block. This block can produce 2500 MT of Insecticides or Fungicides per annum and can achieve revenue of Rs. 200 Crores. The Company is expecting this to be fully utilized in next two years. There is enough land to expand as the total plot size is 50,000 square meters.

D. Human Resources:

We recognized that a strong sense of purpose at work drives higher engagement and productivity. Accordingly, we embed our core values across the organization to ensure they meaningfully connect with our people. By nurturing a positive and inclusive workplace that encourages collaboration, peer learning, and respect for diverse perspectives, we create an environment where individuals feel valued and empowered. This, in turn, supports personal development while aligning individual efforts with our broader organizational goals.

Throughout the year, employees were provided with numerous opportunities to participate in various training programmes, either virtually or in person. The online integrated training platform enabled employees to choose functional or behavioral programmes according to their individual preferences, with unlimited access.

As of March 31, 2026, the Companys total number of payroll employees was 340.

E. Internal Control System:

The Companys internal financial controls framework is based on the "three (3) lines of defence model". The Company has laid down Standard Operating Procedures, policies and authorities to guide the operations of the business. Process owners are responsible for ensuring compliance with the policies and procedures laid down by the management. Robust and continuous internal monitoring mechanisms ensure timely identification of risks and issues. The statutory and internal auditors undertake rigorous testing of the control environment of the Company.

Independence of the Internal Auditor is ensured by way of direct reporting to the Audit Committee. The Audit Committee reviews the adequacy and effectiveness of the Companys internal controls environment and monitors the implementation of the audit recommendations including those relating to strengthening of the Companys risk management policies and systems. The ultimate objective being a zero-surprise risk controlled organization. These internal financial controls help to put in place checks on the implementation of the internal financial controls, policies and procedures that are adopted by the Company for ensuring an orderly and efficient conduct of its business. These internal financial controls help in safeguarding assets, prevention and detection of frauds and/or errors, maintaining the accuracy and completeness of the accounting records.

For Shivalik Rasayan Limited

Sd/-

Rahul Bishnoi

Chairman

(DIN 00317960)