Silkflex Polymers India Ltd Management Discussions

OVERVIEW OF INDIAN ECONOMY

The global economy in FY2026 demonstrated resilience despite persistent geopolitical, trade and energy-related uncertainties. Global GDP growth stabilised at modest but uneven levels across regions, supported by disinflation, a gradual shift toward monetary easing in select economies and continued investments in technology and infrastructure. However, medium-term growth prospects remained constrained by structural challenges, including slowing productivity, elevated public debt and increasing geoeconomic fragmentation.

Global trade moderated during the year following an inventory led recovery. The trading environment was shaped by tariff measures, industrial policies, selective trade restrictions and disruptions to key shipping routes, leading to a heightened focus on supply chain localisation and resilience.

Inflation eased across most major economies, supported by softer commodity prices, improved supply chains and the lagged effects of tighter monetary policy, although services inflation remained sticky in several regions. Energy prices remained volatile during FY2026, particularly crude oil and natural gas, with periodic fluctuations driven by geopolitical tensions in key producing and transit regions. While medium-term supply expectations improved, near-term volatility continued to impact cost structures across energy intensive industries, including chemicals.

Overall, the macroeconomic environment in FY2026 was characterised by stable but modest growth, easing inflation and gradually improving financial conditions in the latter part of the year, offset by elevated geopolitical and policy risks.

Global chemical production (excluding pharmaceuticals) grew by approximately 2.2-2.5% in FY2026, indicating a gradual but incomplete recovery from recent cyclical lows. Overall output remained below long-term historical growth trends, reflecting structural headwinds in mature markets. The improvement was supported by easing destocking pressures, stabilisation in energy prices and a modest recovery in downstream demand. However, growth remained uneven across regions, shaped by divergent industrial activity, energy cost dynamics and evolving trade realignments.

India continues to strengthen its position as a key global chemicals manufacturing hub. As of FY2026, India remains among the top six producers of chemicals globally and among the top three in Asia, with the sector contributing approximately 5 6% to Indias GDP and around 9% to manufacturing gross value added. With production spanning over 80,000 chemical products, India represents one of the most diversified chemical manufacturing bases globally.

The market for Indian textiles and apparel is projected to grow at a 10% CAGR to reach US$ 350 billion by 2030.

Market Size and Growth Trajectory

The Indian chemical industry is estimated to have reached approximately USD 300 - 320 billion in FY2026, supported by steady mid-single-digit growth. Growth momentum remains structurally strong, driven by sustained domestic demand across agriculture, infrastructure, FMCG, automotive and energy-transition segments, alongside rising global interest in India as a resilient and diversified sourcing destination. Specialty chemicals and export-oriented segments continue to outperform the broader industry.

OUTLOOK

The Indian economy is estimated to have grown at around 7.4-7.6% in FY2026, reaffirming its position as the fastest growing major global economy. Growth was driven by strong domestic demand, sustained government capital expenditure and resilient performance across manufacturing and services sectors, particularly infrastructure, construction, financial services and technology-enabled services.

Indias external trade remained resilient in FY2026 despite a challenging global environment characterised by muted goods demand, trade fragmentation and geopolitical disruptions. Total exports (merchandise and services combined) are estimated at approximately USD 840-860 billion, supported primarily by strong growth in services exports, while merchandise exports remained under pressure due to weak global demand.

Government capital expenditure remained a key growth catalyst, with Central Government capex sustained at around 3.1% of GDP, reflecting a continued focus on infrastructure led development. The Union Budget reiterated its long term commitment through elevated allocations toward transportation, energy transition, manufacturing ecosystems and logistics, alongside continued policy support for chemicals, fertilisers and domestic manufacturing.

1. INDUSTRY STRUCTURE AND DEVELOPMENT

The Company is engaged in the business of manufacturing and supplying specialty textile printing inks and allied products, catering to the requirements of the textile printing industry. The Companys products are designed to meet diverse requirements of textile manufacturers and printing houses, with emphasis on product quality, consistency, colour performance and application suitability.

The textile printing inks industry forms an important component of the broader textile value chain. The growth of the industry is closely linked with developments in the textile and apparel sector, domestic consumption, exports, fashion trends, increasing demand for customized and value-added textile products and technological developments in textile printing.

The industry continues to witness a gradual shift towards technologically advanced, efficient and environmentally conscious printing solutions. Customers are increasingly focused on product quality, consistency, productivity, cost optimization and compliance with environmental and sustainability requirements.

During FY 2025-26, the Company continued to focus on strengthening its market position, improving operational efficiencies, expanding its customer base and enhancing its product portfolio.

The Companys strategy remains focused on delivering quality products, maintaining strong customer relationships, improving manufacturing capabilities and responding effectively to changing requirements of the textile printing industry.

Road Ahead

The specialty chemicals industry is expected to remain an important contributor to Indias manufacturing and industrial growth during FY 2026-27. The sector is supported by increasing demand from diverse end-use industries, including textiles, pharmaceuticals, agrochemicals, paints and coatings, construction, automotive, consumer products and other industrial applications.

India has emerged as a significant global chemical manufacturing base and is increasingly positioned to benefit from the ongoing diversification of global supply chains. International customers are seeking to reduce dependence on concentrated manufacturing geographies and diversify sourcing arrangements, creating opportunities for Indian specialty chemical manufacturers with established manufacturing capabilities, technical expertise, quality standards and reliable supply chains.

For specialty chemical manufacturers serving the textile sector, continued growth in textile and apparel production, demand for value-added fabrics, fashion and customised designs and increasing adoption of technologically advanced printing processes are expected to create opportunities for textile printing inks and allied chemical formulations.

The shift towards improved colour performance, durability, process efficiency, lower environmental impact and application-specific formulations is likely to encourage demand for technically advanced textile printing solutions.

Overall, the specialty chemicals industry is expected to maintain a positive medium- to long-term outlook , although nearterm performance may remain subject to global economic conditions, raw material price movements, competitive intensity, regulatory developments and geopolitical factors.

The Company remains cautiously optimistic about the prospects for FY 2026-27 and will continue to pursue a balanced strategy focused on revenue growth, product innovation, operational efficiency, prudent cost management, customer retention and sustainable profitability.

Source: IBEF, Chemicals Industry Report - February 2026

2. OPPORTUNITIES AND THREATS • Opportunities

> Growth in Textile and Apparel Industry

> Increasing Demand for Value-Added Textile Products

> Product Innovation

> Environmentally Conscious Products

> Expansion of Customer Base

> Manufacturing and Operational Efficiencies

• Threats

> Raw Material Price Volatility

> Competitive Environment

> Changes in Regulatory Requirements

> Changes in Textile Industry Demand

> Supply Chain Risks

3. SEGMENT-WISE / PRODUCT-WISE PERFORMANCE

The Company is primarily engaged in the business of textile printing inks and allied products. During FY 2025-26, the Companys principal business continued to contribute substantially to its overall revenues. The Company continued to focus on strengthening its product portfolio and meeting the changing requirements of customers in the textile printing industry.

The Company evaluates its products and operations based on business requirements, market demand, customer requirements and operational considerations.

Since the Company operates predominantly in a single business segment, detailed segment-wise reporting is not considered material beyond the disclosures contained in the audited financial statements.

The product wise revenue are as follows:

The Companys outlook remains focused on sustainable growth, operational efficiency and strengthening its position in the textile printing ink industry.

The Company intends to continue leveraging its product knowledge, manufacturing capabilities, customer relationships and market presence to capitalize on emerging opportunities.

Going forward, the Company proposes to focus on:

• strengthening its domestic market presence;

• exploring additional export and international market opportunities;

• broadening its product portfolio;

• improving manufacturing and operational efficiencies;

• enhancing quality and product consistency;

• developing innovative and environmentally conscious products;

• strengthening customer relationships;

• optimizing working capital; and

• maintaining prudent financial and risk management practices.

While the management remains optimistic about the Companys long-term prospects, the actual performance may be influenced by prevailing economic conditions, market demand, raw material prices, competitive intensity and other external factors.

5. RISK AND CONCERN

The Companys ability to foresee and manage business risks is crucial in achieving favorable results. Risk management at our company is an integral part of the business, focusing to mitigate the adverse impact of risks on business objectives. The Company has laid down a well-defined risk management procedure covering the risk identification, risk exposure, potential impact and risk mitigation process. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUECY

The Company maintains an adequate system of internal controls commensurate with the nature, size, and complexity of its operations. The internal control framework includes:

• Defined authority matrix and approval mechanisms.

• Standard operating procedures for logistics operations.

• Periodic internal audits.

• Financial and operational monitoring systems.

• Compliance monitoring mechanisms.

• Information technology controls and cybersecurity measures.

The Audit Committee periodically reviews the effectiveness of internal control systems and internal audit findings to ensure continuous improvement.

7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Financial performance of the company on Standalone Basis during the FY 2025-26 as compared to FY 2024-25 is as under:

(Rs. In Lakhs

Particulars	2025-2026	2024-2025	% of Increase/Decrease
Gross Revenue from operations	11,020.00	8,001.13	37.73%
Profit Before Tax	1,632.32	940.16	73.62%
Profit after Tax	1,215.33	700.04	73.61%

Operational Performance

The Company continued to focus on improving operational efficiency leading to better returns for the shareholders. Further, During the financial year under review, The commencement of domestic manufacturing represents a major step towards backward integration, enabling the Company to reduce its dependence on imported products, strengthen supply-chain reliability and improve control over production and product quality. The manufacturing facility also provides an opportunity to leverage the Companys established distribution network and technical capabilities to cater to growing demand for sustainable, water-based solutions in the textile, paints, coatings and allied industrial sectors.

During FY 2025-26, the Company continued to strengthen its presence across its principal business segments of water- based textile printing inks and water-based wood coating polymers. The Companys extensive product portfolio, supported by established certifications and a strong focus on environmentally responsible products, enables it to serve customers seeking sustainable alternatives across textile printing and wood coating applications.

8. MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONSHIP FRONT, INCLUDING NUMBER OF PEPOLE EMPLOYED

Human resource practices and policies at our company ensure that all employees, wherever they work, whatever their role is, are always treated equally, fairly and respectfully. We maintain consistent and transparent diversity policies.

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Our human resource team believes in personnel management, which involves planning, organizing, directing and controlling of the recruitment and resource management, training & development, compensation, integration and maintenance of people for the purpose of contributing to organizational, individual and social goals.

People power is one of the pillars of success of company. As on 31 st March, 2026 the Company employs 37 employees. Going ahead, the Company aims to retain and develop the existing employees and align their goals with the common business vision and mission.

9. THE DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

During the financial year, the details of significant change in the key financial ratios i.e. change of more than 25% as compared to the previous year along with the detailed explanation is summarized below on standalone basis:

Sr. Key Financial Ratios No.	F.Y. 2025-26	F.Y. 2024-25	Changes in %	Reasons for change
1. Debtors Turnover Ratio (in days)	49.16 days	36.43 days	-34.94%	Slower collection of receivables as compared to level of sales.
2. Inventory Turnover Ratio	3.70	3.45	7.18%	-
3. Interest Coverage Ratio	4.95 times	5.04 Times	1.79%	-
4. Current Ratio (in times)	1.31	2.04	-35.67%	Increase in turnover, leading to a proportionally higher rise in debtors and inventory compared to trade payables and other current liabilities.
5. Debt Equity Ratio (in times)	1.31	1.02	28.99%	Due to a rise in borrowings during the year, while shareholders\u2019 equity remained largely unchanged.
6. Operating Profit Margin (in %)	18.05	14.03	28.59%	The improvement reflects enhanced operating profitability and improved operating performance during the year under review.
7. Net Profit Margin (in %)	11.03	8.75	26.05%	The improvement was primarily attributable to the growth in profitability during the year under review.
8. Return on Net Worth	29.23	35.22	17.01	-

10. CAUTIONARY STATEMENT

Statement made in the Management Discussion and Analysis describing the various parts may be forward looking statement within the meaning of application securities laws and regulations. The actual result may differ from those expectations depending upon the economic conditions, changes in Government regulation and amendments in tax laws and other internal and external factors.