Shree Hari Chemicals Export Ltd Management Discussions

A. INDUSTRY STRUCTURE AND DEVELOPMENT

The outlook for the H-Acid market remains favorable by consistent global demand from the textile, leather, and dye manufacturing sectors. With key production hubs in Asia and particularly India and China, the industry is expected to witness stable growth over the medium to long term. According to recent industry estimates, global consumption is projected to be around 305 thousand tonnes by 2032. In value terms, the market is projected to grow to USD 5.8 billion by 2032.

This growth trajectory is driven by a combination of structural demand from downstream industries and shifting global manufacturing trends. The rising environmental awareness is leading to greater demand for high-performance, eco-compliant dye intermediates, further supporting H-Acids role in the global value chain.

Emerging demand in sectors is opening new avenues for product utilization and value addition. However, the industry also faces certain headwinds, including raw material price volatility, global trade uncertainties, and increased competition—particularly from low-cost producers in China. Strategic sourcing, backward integration, and cost optimization will remain central to maintaining margins and competitiveness.

In this context, the Company is actively exploring initiatives to enhance manufacturing efficiency, invest in environmentally sustainable technologies, and expand its export footprint. The management remains focused on leveraging these industry trends to deliver long-term value while maintaining a strong commitment to compliance, innovation, and operational excellence.

B. OPPORTUNITIES & THREATS Opportunities

Indias H-Acid industry stands to benefit from shifting global supply chains and the rising preference for nonChina sourcing. The countrys established textile and dye sectors provide a strong domestic market, while export potential is increasing due to competitive production costs and favorable trade positioning. Government initiatives, are creating an enabling environment for capacity expansion and modernization. Additionally, the growing demand for sustainable dye intermediates presents an opportunity for companies adopting and investing in advanced environmental technologies.

Threats

The Indian H-Acid industry faces rising environmental compliance costs due to strict effluent and pollution control norms. Dependency on volatile raw material imports and infrastructure challenges such as high logistics costs can affect operational efficiency. Price competition from Chinese manufacturers remains a

significant threat, especially for export-oriented units. Delays in regulatory approvals and potential trade restrictions, such as anti-dumping duties, further add to market uncertainty.

C. SEGMENT-WISE OR PRODUCT-WISE PERFOMANCE

Since the company operates mainly in single product which is DYE Intermediate - H-Acid (1-Amino, 8-Napthol, 36 Disulphonic acid), therefore the financial performance is related to that product.

D. OUTLOOK

The Indian dyes and dye intermediates industry is poised for sustained growth, fueled by rising demand from key sectors such as textiles, printing inks, plastics, industrial paints, and leather processing. Our outlook for 2025-26 is centered on identifying emerging trends that empower the organization to transform risks into strategic opportunities and unlock new pathways for sustainable growth.

E. RISKS & CONCERNS

The Company faces several risks which can affect the smooth functioning of the Companys operations such as Competition risk, raw material price risk and environmental risk. Risk management at the Company is continuously analyzing and managing all the risks posed to the business.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established a comprehensive internal control system commensurate with the size and complexity of its operations. This system is designed to ensure the orderly conduct of business, safeguard assets, prevent and detect frauds and errors, ensure accuracy and completeness of records, and facilitate timely and reliable reporting.

The adequacy of internal controls is periodically assessed by the Audit Committee. The Statutory Auditors, during the course of their audit, also evaluate the internal control systems and share their observations with the Audit Committee. Identified gaps, if any, are addressed promptly through corrective action.

G. FINANCIAL PERFORMANCE

(Rs. In Crore except EPS)

H. HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Company believes that the quality of the employees is the key to its success and is committed to equip them with skills, enabling them to seamlessly evolve. Company truly values its human resources, who have committed themselves to the Companys Mission and Vision. An effective talent management strategy and an optimum workforce helps us meet the demand for talent in our business.

We have been focusing on training and development for enhancing the capabilities of our personnel and building on their core technical skills throughout the year. Company maintains harmonious Industrial relations and believes in healthy competition. The Company has total strength of 120 employees.

I. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

There were significant changes in the following ratios as compared to the immediately previous financial year:

J. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH

During the year under review the Net Worth of the Company is Rs. 32.01 Crore as against Rs. 20.29 Crore corresponding to previous year.

The Return on Net Worth is 16.10% in the current year and was 11.56% in the previous year.

The Return on Net Worth has now been changed by 39.53% due to favourable market conditions.

CAUTIONARY STATEMENT

Certain statements made in this Report relating to the Companys outlook, estimates, predictions etc. may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ from such estimates, whether express or implied. Several factors that could make a difference to Companys operations include climatic conditions and economic conditions affecting demand and supply, changes in Government regulation tax regimes, natural calamities, etc. over which the Company does not have any direct control.2024-25