Shree Hari Chemicals Export Ltd Management Discussions

A. INDUSTRY STRUCTURE AND DEVELOPMENT

The outlook for the H-Acid industry remains positive, supported by sustained demand from key end-use sectors, including textiles & leather and dyes. The growing requirement for high-quality dye intermediates, both in domestic and international markets, is expected to provide a stable foundation for industry growth over the medium to long term.

India continues to strengthen its position as a reliable global supplier of dyes and dye intermediates, supported by its established chemical manufacturing ecosystem, skilled technical workforce and expanding export capabilities. Increasing global emphasis on supply-chain diversification is also creating opportunities for Indian manufacturers to enhance their presence in international markets.

At the same time, the industry is undergoing a gradual transformation driven by greater emphasis on environmental compliance, resource efficiency and sustainable manufacturing. Companies that invest in modern technology, process efficiency, quality systems and environmentally responsible production practices are expected to be better positioned to address these evolving requirements.

The Company remains focused on strengthening its operational capabilities, maintaining consistent product quality, improving cost efficiency and expanding its customer base. Through disciplined execution, customer-focused strategies and a continued commitment to sustainability, the Company aims to reinforce its competitive position and achieve sustainable long-term growth.

Opportunities

The continued growth of the global textile & leather and dye industries is expected to support demand for H-Acid and other dye intermediates. Increasing demand for quality products and reliable supply to international customers presents opportunities for Indian manufacturers to expand their export footprint.

Indias established chemical manufacturing infrastructure, availability of skilled technical talent and improving production capabilities provide a strong competitive foundation. In addition, global customers are increasingly seeking to diversify their sourcing base and reduce dependence on concentrated supply chains. This trend presents a significant opportunity for Indian manufacturers with consistent quality and reliable delivery capabilities.

The Company can further leverage these opportunities through capacity optimisation, product quality enhancement, customer diversification, export market expansion and improved operational efficiency.

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, 3-6 Disulphonic acid), therefore the financial performance of the Company is related to that product.

D. OUTLOOK

The Indian dyes and dye intermediates industry is expected to witness steady growth in 2026 27, supported by demand from key end-use sectors such as textiles, printing inks, plastics, industrial coatings and leather processing. The outlook focuses on adapting to evolving industry dynamics, improving operational resilience and leveraging emerging opportunities to support sustainable and long-term business growth.

E. RISKS & CONCERNS

The industry is exposed to volatility in raw material and energy costs, which may impact margins. Intense competition from global low-cost producers continues to create pricing pressure.

Stricter environmental regulations, changing compliance requirements and dependence on export markets add further operational and trade-related risks. Demand fluctuations from key end-use industries may also affect business stability. Geopolitical uncertainties, including international conflicts, trade restrictions, tariff changes and sanctions, may disrupt global supply chains, impact export markets and increase input and logistics costs, thereby affecting business operations and profitability.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established a comprehensive internal control system to 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, if any. Identified gaps, if any, are addressed promptly through corrective action.

G. FINANCIAL PERFORMANCE

H. HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Company considers its employees, its greatest asset and a key driver of sustainable growth. It values employees skills, commitment and enthusiasm, while investing in their continuous development through structured learning and development programmes. These initiatives enhance knowledge, strengthen capabilities, and support professional growth while aligning individual development with the Companys strategic goals and vision. Industrial relations remained cordial and harmonious throughout the year, with no significant disruptions to operations. The Company has total strength of 130 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. 44.40 Crore as against Rs. 32.01 Crore corresponding to previous year.

The Return on Net Worth is 9.51% in the current year and was 16.10% in the previous year.

The Return on Net Worth, as on the date, has changed by 40.93% 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 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.