Shree Ganesh Remedies Ltd Management Discussions

Global Economic Review

The global economy proved resilient through 2025, expanding by an estimated 3.4%, even as it absorbed higher trade barriers, tighter financial conditions and elevated policy uncertainty. Activity held up better than many had feared at the start of the year, supported by steady consumption in major economies and the easing of earlier supply-chain disruptions. Growth is now projected to ease to 3.1% in 2026 and 3.2% in 2027. This downward revision reflects the cumulative weight of trade frictions and, more recently, the outbreak of conflict in the Middle East, which has reintroduced volatility to energy markets and global trade routes.

Advanced economies grew by an estimated 1.9% in 2025 and are projected to expand by 1.8% in 2026.

The United States remained comparatively strong, recording growth of 2.1% in 2025 with 2.3% expected in 2026, supported by resilient labour markets and consumer spending. The euro area, where industrial demand and exports have been more subdued, grew by 1.4% in 2025 and is projected at 1.1% in 2026, with weakness in European manufacturing a particular concern. This softness in Europe is directly relevant to the Company, for which the region is an important market.

Emerging market and developing economies are expected to grow by around 3.9% in 2026, with momentum led by Asia even as Chinas growth continues to moderate under the weight of property- sector stress and shifting trade patterns. Inflation has continued to recede across most regions, allowing several central banks to begin easing monetary policy, although the pace of rate cuts remains measured given lingering price and geopolitical risks.

The external environment continues to be shaped by shifting trade policy, geopolitical tension, energy- price volatility and the ongoing realignment of global supply chains. Crude oil, the ultimate feedstock for most chemical solvents, remained volatile through the year, influencing input costs across the sector. For globally integrated manufacturers, these dynamics affect demand, sourcing and pricing, and reinforce the strategic value of a diversified, resilient supply chain and a broad customer base across geographies.

Financial conditions, while easing as inflation receded, remained sensitive to geopolitical developments and changes in trade policy. Though disruptive in the near term, these shifts are creating opportunities for manufacturers in economies positioned as alternative, reliable suppliers. A gradual stabilisation is anticipated over the medium term, conditional on greater policy clarity and an easing of geopolitical tensions.

Indian Economic Review

India remained the fastest-growing major economy for a fourth consecutive year. GDP is estimated to have grown by 7.4% in FY26, underpinned by the twin engines of resilient private consumption and sustained investment. Growth was broad-based, with manufacturing expanding by around 8.4% and services gross value added by around 9.3% in the first half of the year, while private final consumption rose to about 61.5% of GDP. A reduction in goods and services tax rates implemented in September 2025 provided an additional boost to consumption during the year.

Inflation eased markedly. Consumer price inflation moderated to 2.1% by March 2026, and the Reserve Bank of Indias average projection for the year fell to around 2.1%, helped by a favourable monsoon and softer food prices. Against this benign backdrop, the Reserve Bank reduced the benchmark repo rate to 5.25%, from 6.0% a year earlier, enhancing its capacity to support growth while keeping price stability in view.

The Company operates within Indias chemical and pharmaceutical manufacturing landscape, which continued to benefit from improving capacity utilisation, a supportive policy environment and rising business confidence. Government initiatives across production- linked incentives, infrastructure investment and ease of doing business have strengthened the foundations for manufacturing, while supply-chain diversification under the China-plus-one strategy continues to position India as a preferred destination for global sourcing and collaboration.

Investment activity remained a bright spot, supported by sustained government capital expenditure on infrastructure, a gradual revival in private capital expenditure, and healthy corporate and bank balance sheets. Indias external position stayed comfortable, with substantial foreign exchange reserves and a manageable current-account position providing a buffer against global volatility. For the manufacturing sector, improving capacity utilisation, declining borrowing costs and continued policy incentives create favourable conditions for the kind of capacity-building investment the Company is undertaking.

Looking ahead, growth is expected to moderate to around 6.6% in FY27 as the boost from recent reforms normalises, though this remains comfortably above Indias longer- term average. The medium-term outlook is supported by favourable demographics, ongoing formalisation, continued structural reform and a stable macroeconomic position. For the chemical sector, a stable domestic economy, easing interest rates and supportive industrial policy together provide a constructive backdrop for investment, capacity creation and the development of higher-value, export- oriented manufacturing.

From a sectoral perspective, the Indian chemical and speciality chemical industry continued to attract investment, supported by improving capacity utilisation, a favourable policy climate and resilient domestic demand. Advancements in logistics, incentives for value-added production and the acceleration of infrastructure investment have supported industrial activity, while the diversification of global supply chains has reinforced Indias position as an alternative manufacturing base. These conditions are directly relevant to the Companys strategy of building capacity for complex, export-oriented chemistry and deepening its participation in higher-value segments.

Global Pharmaceutical Industry

The global pharmaceutical market remains on a steady longterm growth path, valued at approximately US$1.77 trillion in 2025 and projected to reach around US$3.03 trillion by 2034, a compound annual growth rate of close to 6%. Demand is underpinned by structural forces that are largely independent of the economic cycle: an ageing global population, the rising incidence of chronic and lifestyle diseases, and broadening access to healthcare across emerging markets.

The therapeutic mix continues to shift towards higher-value treatments. Speciality medicines, including biologics and advanced cell and gene therapies, are expected to account for an increasing share of global spending, with oncology, immunology and rare diseases among the principal growth engines. At the same time, established generics and a growing wave of biosimilars remain essential to widening access and containing healthcare costs, with biosimilars alone projected to deliver substantial cumulative savings for health systems over the coming years.

North America continues to lead global revenues, supported by a deep innovation pipeline and consistent demand for advanced therapies, while Asia and Latin America account for a rising share of both consumption and production. Sustained research and development investment, the integration of artificial intelligence into drug discovery, and the wider adoption of digital therapeutics and telemedicine are collectively improving the efficiency and reach of the industry. For manufacturers of intermediates and custom-synthesised molecules, this expansion sustains demand for the complex chemistry on which modern medicines depend, and rewards partners able to deliver quality, reliability and technical depth.

The industrys outlook remains firmly positive. To support long-term growth, companies are increasing focus on the development and large-scale manufacture of innovative treatments, including monoclonal antibodies, biosimilars and advanced therapies, while strengthening supply-chain resilience and quality standards in response to heightened regulatory scrutiny. The outsourcing of development and manufacturing to specialist partners continues to expand, as innovators seek to manage cost, complexity and capacity. This trend directly benefits contract research and manufacturing providers with the technical depth to handle complex, multi-step chemistry.

Indian Pharmaceutical Industry

India is a central pillar of the global healthcare ecosystem. It ranks third worldwide by volume and is the largest global supplier of generic medicines, with the highest number of regulator-approved manufacturing facilities outside the United States. The country supplies a broad portfolio spanning generics, active pharmaceutical ingredients, vaccines, biosimilars and contract research and manufacturing services. The domestic market, valued at around US$55 billion in 2025, is projected to reach US$120 to 130 billion by 2030, growing at over 10% a year, with a longer-term ambition of US$450 billion by 2047 and pharmaceutical exports targeted at US$350 billion over the same horizon.

Several structural enablers underpin this trajectory. Indias cost-effective manufacturing base, deep pool of scientific talent and competitive operating environment allow it to supply affordable medicines at scale. Government policy has reinforced this position through the Production Linked Incentive scheme, the Bulk Drug Parks programme and measures to deepen domestic manufacturing of active ingredients and key intermediates, all aimed at reducing import dependency and moving the industry up the value chain. Reforms promoting ease of doing business, clinical- trial transparency and drug-quality monitoring continue to align the sector with global standards.

The most significant opportunity for companies such as the Company lies in the realignment of global supply chains. As multinational corporations diversify sourcing under the China-plus-one strategy, India is increasingly the partner of choice for contract development and manufacturing, particularly for complex intermediates and custom molecules where technical capability and reliable supply are decisive.

A particular policy priority has been to reduce Indias historical dependence on imported active ingredients and key intermediates. Incentives to localise the manufacture of bulk drugs and intermediates are encouraging investment in precisely the complex chemistry that companies such as the Company provide. Alongside this, the contract development and manufacturing opportunity is expanding rapidly, as global innovators and generic majors alike seek reliable Indian partners for custom and niche molecules. Indias combination of scale, skill and cost competitiveness positions it to capture a growing share of this work over the coming decade.

Global Speciality Chemicals Industry

Speciality chemicals are a foundational driver of innovation and value addition across a wide array of industries, from pharmaceuticals and agrochemicals to electronics, coatings and personal care. The global market was valued at approximately US$979 billion in 2024 and is projected to reach around US$1.31 trillion by 2030, a compound annual growth rate of close to 5%. Growth is underpinned by rising industrialisation, evolving consumer preferences and expanding demand for differentiated, high- performance solutions in both developed and emerging economies.

Asia Pacific is the largest regional market, accounting for the bulk of both consumption and production, supported by industrial expansion and a deepening manufacturing base. A significant proportion of global output is directed towards a few principal end-use sectors, including food and beverages, personal care, construction, and electrical and electronics. The fastest growth is anticipated in segments such as electronic chemicals, speciality coatings, nutraceuticals, and flavours and fragrances, reflecting the strength and direction of their downstream industries.

Several broad trends continue to shape the sector. Advances in technology and the deeper integration of global value chains have enhanced market access and accelerated innovation, while rising demand for

high-performance materials in automotive, aerospace, electronics and renewable-energy applications is expanding the addressable opportunity. A growing emphasis on sustainability, safety and regulatory compliance is also reshaping how speciality chemicals are produced, favouring manufacturers with strong process capabilities and responsible operations.

The medium-term outlook for speciality chemicals is supported by durable demand across healthcare, agriculture, electronics and energy-transition applications. Agrochemicals, in particular, continue to require novel, high-performance intermediates as crop-protection portfolios evolve, while the electronics and semiconductor supply chains are driving demand for ultra-high-purity chemicals. Manufacturers able to combine multiple chemistries, maintain stringent quality and operate responsibly are best placed to benefit from these structural trends.

Indian Speciality Chemicals Industry

Indias speciality chemicals sector is undergoing significant transformation and is emerging as one of the most attractive segments within the broader chemicals landscape. Once a modest sub-segment, speciality chemicals now account for around a fifth of the Indian chemicals market and provide essential inputs to industries spanning pharmaceuticals, agrochemicals, textiles and consumer goods. The market was valued at approximately US$46.6 billion in 2022 and is projected to reach around US$95 billion by 2030, a compound annual growth rate of close to 9%, comfortably ahead of the global average.

India is increasingly recognised as a preferred global manufacturing hub for speciality chemicals. Its technical competencies, growing scale and improving compliance reputation are attracting expanding international demand, a shift reinforced by supply- chain realignment as multinational corporations respond to the diminishing competitive edge of China, where rising labour costs and stricter environmental regulations are reshaping sourcing strategies. Government support, cost advantages and access to a young, skilled workforce make India a compelling alternative destination for production and collaborative ventures.

Policy has reinforced this positioning. Initiatives including the Production Linked Incentive scheme and the Remission of Duties or Taxes on Export Products are supporting capacity creation and export competitiveness, while reforms to land and labour are streamlining the operating environment. Robust investment flows, ongoing process innovation and capacity augmentation reflect the confidence of both domestic and international investors. The pace of expansion will vary by segment, with rapid growth foreseen in electronic chemicals, notably for semiconductor and integrated-circuit applications, in response to rising consumption of electronic devices. This is precisely the high-value, technically demanding territory in which the Company is building its capabilities.

Investment in the sector has accelerated as both domestic and multinational players expand Indian capacity. The agrochemical intermediates segment, a core area for the Company, is benefiting from global crop-protection demand and the relocation of manufacturing away from China. Combined with the rapid growth anticipated in electronic and semiconductor chemicals, this creates a broad and expanding opportunity set for Indian manufacturers with proven multi-chemistry capability and a record of reliable supply to global customers.

Company Overview

Shree Ganesh Remedies Limited is an established manufacturer of pharmaceutical intermediates and speciality and fine chemicals, with more than two decades of operating experience. Leveraging advanced chemical synthesis and technology-led processes, the Company delivers differentiated solutions to healthcare, agrochemical, polymer and electronics customers across more than 20 countries. From its manufacturing base at Ankleshwar, supported by a dedicated, DSIR-recognised R&D centre and pilot facilities, the Company operates through two business verticals and continues to invest in mastering complex chemistries and building scalable capacity. A long record of executing technically demanding, multi-step projects for global customers underpins its position as a trusted custom- synthesis partner.

The Companys two verticals are complementary. Pharmaceutical intermediates, the established foundation of the business, serve off-patent and generic drug manufacturers and provide a stable base of demand. Speciality and fine chemicals, the Companys growth engine, encompass patented and customer-specific molecules developed in partnership with multinational corporations, often under contract research and manufacturing arrangements. This structure provides both resilience and the agility to respond quickly to fast-moving global demand, while the Companys disciplined product-selection approach keeps its portfolio focused on molecules that fit its chemistry, technology and margin criteria.

Performance Review and Outlook

The operating environment for the global and domestic chemical sector remained challenging through FY26. The Company felt the effects of these headwinds on several fronts: the persistent slowdown in Europe, a key market, curtailed demand; the broader geopolitical situation and the volatility of crude-linked raw material prices added uncertainty; and a number of customers deferred purchases as they navigated their own conditions. In the domestic market, heightened competition continued to exert pressure on the pricing of generic intermediates.

Against this backdrop, revenue from operations for the year was 7109.29 crore, broadly in line with the prior year, with the core portfolio maintaining volume and reflecting continued underlying demand. EBITDA was 735.02 crore at a margin of 32.0%, which held above the Companys stated sustainable range of 26 to 28%, supported by a favourable product mix and disciplined cost management. Profit after tax was 717.77 crore, lower year on year, reflecting the higher depreciation and finance costs that follow naturally from recently commissioned capacity. The Company closed the year with a strong fourth quarter, in which revenue rose 36% over the same quarter of the previous year and 57% sequentially, recovering shipments deferred earlier in the year. The balance sheet remained lean and close to debt-free, with shareholders funds rising to 7163.02 crore alongside healthy operating cash generation.

Operationally, the Company made measurable progress during the year. Consolidated capacity utilisation across Unit 1 ran in the range of 60 to 70%, with Block 8, commissioned recently, ramping up towards fuller utilisation. Exports continued to account for the majority of revenue, underscoring the Companys standing with international customers, even as the European slowdown weighed on volumes. The contribution from speciality and fine chemicals continued to rise, in line with the strategy of moving up the value chain.

By segment, the pharmaceutical intermediates vertical, which remains the foundation of the business, continued to provide a stable base of revenue, though it bore much of the impact of domestic price competition and the European slowdown during the year. The speciality and fine chemicals vertical, the Companys growth engine, increased its share of revenue, supported by the progress of CRAMS engagements and a favourable mix of higher- value molecules. Pharmaceutical intermediates now contribute below 65% of revenue, with speciality and fine chemicals expected to become the larger contributor over the coming years as new projects commercialise.

FY26 was, by design, a year of consolidation. The Company prioritised the groundwork for its next phase of growth over near-term top-line expansion. During the year it completed pilot trials for its CRAMS projects spanning agrochemicals, pharmaceuticals and electronic applications with customers in Europe and Japan, commissioned a new pilot facility with automation and flow chemistry, advanced the Block 7 expansion towards commissioning, and progressed construction of common infrastructure at Dahej. It also continued its steady move up the value chain, with pharmaceutical intermediates now contributing below 60% of revenue as speciality and custom chemistry grow in importance.

Looking ahead, the Company expects momentum to build through FY27 and beyond. As CRAMS molecules progress from pilot to commercial trials and then commercial production, as Block 7 begins commercial output, and as the development pipeline strengthens, the Company is positioned to translate its investment into more visible growth. Consistent with the nature of this business, the path will remain non-linear, with periods of upfront investment followed by phased revenue. The Company remains confident in its strategy of building a more profitable and durable business in niche, high-value segments where competition is limited and the runway for differentiated growth is meaningful.

Key Financial Ratios

Ratio Analysis	FY26	FY25	Change	Remarks
Current Ratio	3.96	4.79	(17%)	Not applicable
Debt Equity Ratio	0.18	0.25	(29%)	Reduction due to reduction in liabilities.
Debt Service Coverage Ratio (For Ind AS Companies Profit before OCI)	2.38	4.95	(52%)	Reduction due to prepayment of borrowing.
Return on Equity Ratio	0.12	0.17	(33%)	Reduction due to decrease in profitability.
Inventory Turnover Ratio	1.82	1.53	(19%)	Not applicable
Trade Receivables Turnover Ratio	3.99	5.10	(22%)	Not applicable
Trade Payables Turnover Ratio	5.69	4.65	22%	Not applicable
Net Capital Turnover Ratio	1.70	1.77	(4%)	Not applicable
Net Profit Ratio	0.16	0.21	(24%)	Not applicable
Return on Capital employed	0.15	0.19	(22%)	Not applicable
Return on Investment	0.06	0.07	(7%)	Not applicable

Internal Control and Adequacy

The Company maintains a comprehensive system of internal controls designed to safeguard assets, assure the accuracy and reliability of financial reporting, and ensure compliance with all relevant laws and regulations. This control environment aligns with established best- practice frameworks and undergoes regular evaluation to ensure ongoing effectiveness and responsiveness to business needs. A strong tone at the top, demonstrated by managements commitment to integrity and ethical conduct, is reinforced by clear policies and a zero- tolerance approach to unethical actions.

Segregation of duties is strictly enforced, with critical financial and operational responsibilities allocated to separate individuals to reduce the risk of error or misappropriation. Access to sensitive information and systems is governed by the principle of least privilege. The internal audit function, supported by regular management reviews, provides ongoing monitoring of the control environment, and comprehensive reports on its performance and effectiveness are presented to the Board of Directors for oversight. The Company remains committed to the continuous enhancement of its internal control environment.

Human Resources

The Company regards its employees as its most important asset and places considerable emphasis on attracting, developing and retaining a skilled and motivated workforce. Its people, including an experienced research and process-development team and a base of skilled operators, are central to the Companys ability to execute complex chemistry safely and reliably. During FY26, the Company continued to strengthen its human capital across several dimensions.

In talent acquisition, multiple recruitment channels and targeted strategies were used to secure high-calibre professionals, supported by engagement in industry events and the cultivation of a strong employer brand.

In training and development, ongoing investment in structured programmes ensured employees acquired the skills and knowledge to excel and to adapt to an evolving business environment. A performance-management system provided regular feedback and structured opportunities for advancement, while a continued commitment to diversity and inclusion nurtured a culture of respect, collaboration and equal opportunity. Employee health and safety remained a priority throughout, supported by regular training, health check-ups and comprehensive safety systems across manufacturing operations. Together, these initiatives sustain a capable workforce that is integral to the Companys strategic goals and competitive position.

Opportunities and Threats

The Companys principal opportunity lies in the structural shift of complex chemistry manufacturing towards India, and in its own move up the value chain into speciality and CRAMS molecules, where competition is limited and margins are attractive. Its mastered chemistries, R&D and pilot infrastructure, and deepening relationships with global majors position it to capture a meaningful share of this opportunity as supply chains diversify under the China-plus-one strategy. The progressive commercialisation of its CRAMS pipeline and the addition of new capacity provide clear avenues for growth.

The principal threats are the cyclicality of end-markets, particularly the timing of a recovery in Europe; volatility in crude-linked raw material costs; the lengthening of regulatory approval timelines in an uncertain geopolitical environment; and the inherent lumpiness of a project- based business. The Companys diversified geographic and end-market footprint, its financial discipline and its selective product strategy are designed to manage these risks while preserving its capacity to grow.

Risk Management

The Company maintains a structured risk management framework to identify, assess, prioritise and address risks across its operations. The framework applies systematic methods, including scenario analysis, industry benchmarking and periodic reviews, to surface emerging and existing risks, which are then evaluated by likelihood and potential impact, addressed through tailored mitigation strategies, and monitored on a continuous basis.

Risk identification

Scenario analysis, industry benchmarking and periodic reviews surface emerging and existing risks.

Risk assessment

Risks are evaluated by likelihood and by their potential impact on performance, operations and reputation.

Risk mitigation

Tailored strategies, from avoidance and reduction to transfer or measured acceptance, address each risk.

Risk monitoring

Risks are monitored continuously, with the framework reviewed to stay aligned with the environment.

Business Outlook

The Company enters FY27 better prepared than at any point in its recent history. The macroeconomic backdrop, a stable and fast-growing Indian economy, easing interest rates and supportive industrial policy, is constructive, even as the global environment remains uncertain.

The structural tailwinds behind the pharmaceutical and speciality chemicals sectors, including rising demand for complex molecules and the realignment of global supply chains under the China-plus-one strategy, continue to favour reliable Indian manufacturing partners with deep technical capability.

Within this context, the Company expects the groundwork laid in FY26 to translate into more visible outcomes. With the new pilot facility operational, the Block 7 expansion nearing commissioning, CRAMS projects advancing from pilot towards commercial production, and a strengthening development pipeline, the Company is positioned to pursue improving growth and profitability over the coming years. It will continue to invest selectively, maintain financial discipline, and concentrate on the niche, high- value segments where it can create vdurable, profitable value for all stakeholders.

Cautionary Statement

Certain statements in this report regarding the Companys objectives, projections, estimates, expectations or predictions may constitute forwardlooking statements under applicable securities laws and regulations. While these expectations are based on reasonable assumptions, actual results could differ materially from those expressed or implied.

The Company does not undertake to update these statements.