Vadivarhe Speciality Chemicals Ltd Management Discussions

Your company is engaged in manufacture of Organic Chemicals, Intermediates, Active Pharmaceutical Ingredient (APIs), Personal Care Products and Speciality Chemicals. We have emerged as one of the major sources for chemical intermediates in India.

Your company has been in the industry for the last 14 years. It has a very high degree of operating synergy, economies of scale and high- quality standards. The products of your company have diverse uses and applications in several industries ranging from pharmaceuticals, agro-chemicals and personal cares.

The Company has a good clientele base, which is well diversified all over the world. Considering the market situation, global companies have chosen Indian Manufacturers as compared to Chinese companies due to better documentation, reliability and quality product supply from India which has resulted in providing growth opportunities. Your Company is WHO-GMP certified company.

Your company is engaged in manufacturing of Organic Chemical, Intermediates, Active Pharmaceutical Ingredient (APIs), Personal Care Products and Speciality Chemicals, which is considered as a single segment.

The Company is making all the possible efforts for increasing turnover and profits from year to year by developing new products. However, the total revenue from the operations for the year ended March 31, 2025, declined to Rs. 3817.45 Lakhs as against Rs. 4,056.57 Lakhs in the previous financial year.

Your company has a healthy order book position. The Companys R&D programs are focused on new products development & successfully added a range of products to its basket. The newly developed products will contribute to a significant growth in revenue in coming years and have also started contributing, which can be seen in the growth chart of the Company.

A better product mix, operational efficiency and stringent control on the cost have contributed towards increasing productivity, production and operating margins.

The Company continued to focus on cost control at every level to improve operational efficiency which along with the increased operating level and upward revision of product prices is expected to improve the margin. Continuous efforts are being made for efficient energy and raw material consumption. The rate of flow of orders is encouraging. Production facilities are realigned to meet the demand. Your company, barring unforeseen circumstances, expects to further improve the turnover and performance. Increasing working capital is vital towards substantial growth in the coming years. Recently the Company has installed greener technologies like briquette fired boilers to save fuel costs, the positive effect of which will be reflected in the coming financial years.

The extreme volatility of the exchange rate of rupee against US dollar is having significant impact on Raw Material cost of the Company. Approximately 10% of its raw materials are imported from other countries. However, the company has managed to mitigate the risk to a great extent through exports.

The Company has an adequate Internal Control System commensurate with the size and nature of its business. The preparation, designing and documentation of Policy on Internal Financial Control have been finalized and implemented which is being reviewed periodically and modified suitably to ensure controls. The Internal Audit functions are carried out by a separate firm of Chartered Accountants. This is supplemented through an extensive Internal Audit Programme and periodic review by the Management and Audit Committee.

The total revenue from the operations for the year ended March 31, 2025, declined to Rs. 3790.53 Lakhs as against Rs. 4007.55 Lakhs in the previous financial year.

Although the revenue has decreased in the current financial year as compared to the previous financial year, the Company has incurred a loss of Rs. 926.53 Lakhs in year ended March 31, 2025, as compared to a profit of Rs. 6.15 lakhs in the previous financial year. The Company has taken continuous efforts to reduce consumptions and to get maximum yield from its products and effective cost control and cost cuttings measures were also being implemented. The Company is confident that the newly developed products will contribute towards a significant growth in revenue in coming years.

Although Company has incurred significant loss in FY 2024-25, company was able to secure Sales order to be executed in First half of FY 2025-26 which could turnaround the company in FY 2024-25. Also, Company is working on various new products and technologies which will give company good sales and margin in FY 2025- 26.

Human Resources are always the most important and valuable asset to the Company. The Company has 75 permanent employees as on March 31, 2025, at factory and office level. Human Resource, Quality Control and Quality Assurance Department had arranged a number of training programs on CGMP, Safety Awareness. Apart from these internal training programs, employees are also sent for training/seminars on regular basis for upgrading their knowledge and skill level. Your company believes in investing in people to develop and expand their capability. The Company has been able to create a favorable work environment that motivates performance, customer focus and innovation VSCLs strategies are based, inter alia, on processes of continuous learning and improvement.

The return on net worth decreased to Negative as against 0.95% in the previous year.

Statements in the Management Discussion & Analysis Report describing the Companys expectations, opinion, and predictions may please be considered as "forward looking statements" only. Actual results could differ from those expressed or implied. A companys operations should be viewed in light of changes in market conditions, prices of raw materials, economic developments in the country and such other factors.

DIN: 00064412 DIN: 00834085

Date: 26.08.2025

Place: Mumbai