Valiant Organics Ltd Management Discussions

Global Economy

The global economy exhibited sustained buoyancy throughout 2025, despite an increasingly complex operating environment. Economic growth was supported by resilient consumer spending, continued investment in technology and digital infrastructure, easing inflationary pressures and relatively strong labour market conditions across major economies. At the same time, geopolitical tensions, evolving tariff measures and trade policy uncertainties continued to influence global economic activity and business sentiment.

World GDP expanded by 3.4%, with advanced economies growing by 1.9%, while emerging market and developing economies outperformed with growth of 4.4%, led by India and China.

Global inflation eased to 4.1%, reflecting the impact of restrictive monetary policies and improving supply conditions. World trade volumes grew by 5.1% during the year, supported by steady demand, technology-led exports and improving trade activity across key markets. Monetary policy across major economies remained cautious and data-dependent as central banks sought to balance growth objectives with lingering inflationary pressures.

Global geopolitical conditions remained uncertain during the year, with escalating tensions in West Asia and the prolonged Russia-Ukraine conflict continuing to influence economic activity, trade flows and energy markets. Disruptions across key shipping routes, volatility in crude oil and commodity prices, and evolving geopolitical developments contributed to heightened uncertainty across global markets. These developments affected supply chains, sourcing strategies and logistics networks across industries, resulting in higher procurement and freight costs, periodic disruptions in material availability and longer lead times in certain markets. Consequently, businesses remained cautious in their investment and operational planning amid concerns surrounding inflation, energy costs and the broader economic outlook.

Trade policy uncertainty also persisted during the year, with evolving tariff measures and geopolitical considerations continuing to influence investment activity, supply-chain strategies and cross-border trade flows. These factors reinforced a cautious global operating environment and remain important risks to global growth and trade prospects.

(Source: World Economic Outlook (IMF), WEO (IMF)-April)

Outlook

The global economy is expected to remain broadly stable over the medium term, with growth projected at 3.1% in 2026 and 3.2% in 2027. Continued investment in technology, digital infrastructure and productivity-enhancing innovations, including artificial intelligence, is expected to support economic activity despite ongoing geopolitical tensions, trade policy uncertainties and evolving political developments across major markets.

Growth in advanced economies is projected at 1.8% in 2026. The United States is expected to expand by 2.3%, supported by resilient consumer spending and investment activity, while the euro area and Japan are projected to grow by 1.1% and 0.7%, respectively. Emerging market and developing economies are expected to grow by 3.9%, with China projected to expand by 4.4% on the back of domestic policy support and improving trade conditions. India is expected to remain among the fastest-growing major economies, supported by strong domestic demand, ongoing infrastructure investments and continued progress in manufacturing and digital transformation.

Global headline inflation is projected to moderate from 4.4% in 2026 to 3.7% in 2027 as supply conditions improve and inflationary pressures gradually ease across major economies. In response, central banks are expected to continue adopting measured monetary policy actions, balancing inflation management with growth objectives. Global trade growth is projected to moderate to 2.6% in 2026 amid tariff-related adjustments and geopolitical uncertainties, although sustained demand for technology products, digital infrastructure and advanced manufacturing solutions is expected to provide continued support to global economic activity.

(Source: World Economic Outlook (IMF), WEO (IMF)-April)

Indian Economy

The Indian economy demonstrated resilience during 2025-26 despite ongoing global trade uncertainties and market volatility. According to the Second Advance Estimates, real GDP and Gross Value Added (GVA) are projected to grow by 7.6% and 7.7%, respectively, reflecting the strength of the countrys domestic demand-driven growth model.

(Source: PIB)

2023: 7.6%

2024: 7.2%

2025(FRE): 7.1%

2026(SAE): 7.6%

2027(P): 7.2%

FRE = First Revised Estimate; SAE = Second Advance Estimate; P = Projections

(Source: PIB (SAE), PIB (FAE), MoSPI)

Economic activity was supported by healthy agricultural output, which strengthened rural incomes and consumption, while urban demand remained resilient on the back of stable employment conditions and easing inflationary pressures. Strong domestic consumption, sustained investment activity and continued policy support helped maintain growth momentum across key sectors of the economy.

The global economy is expected to remain broadly stable over the medium term, with growth projected at 3.1% in 2026 and 3.2% in 2027.

India continued to remain among the worlds fastest-growing major economies during FY 2025-26, supported by resilient domestic demand, robust investment activity and ongoing structural reforms. With a nominal GDP of approximately $4.15 trillion in 2026, the country remains one of the largest economies globally. While recent estimates indicate a moderation in its global ranking from fourth to sixth position, Indias strong economic fundamentals, expanding domestic market, and sustained growth trajectory continue to reinforce its significance within the global economy.

Private consumption remained a key driver of growth, supported by moderating inflation and improving real incomes. Public capital expenditure of Rs 12.2 lakh crore under the Union Budget 2026-27 continued to support infrastructure development and stimulate activity across manufacturing, construction and allied sectors. Government initiatives such as Viksit Bharat 2047 further reinforced the focus on long-term economic development, self-reliance and capacity creation.

Inflation remained relatively benign during the year, supporting household purchasing power and consumer spending. Average headline Consumer Price Index (CPI) inflation stood at 1.7% during the first nine months of FY 2025-26, while the Ministry of Statistics and Programme Implementation (MoSPI) estimated inflation at 3.4% as of March 2026. Fiscal discipline, stable domestic demand and continued expansion in bank credit contributed to the overall macroeconomic stability.

(Source: PIB, PIB 2, MoSPI)

Outlook

The outlook for the Indian economy remains favourable, with real GDP growth projected between 6.8% and 7.2% in FY 2026-27. Growth is expected to be supported by continued infrastructure spending, rising private investment, expanding manufacturing activity and sustained strength in the services sector.

Supported by a stable macroeconomic environment, improving consumer sentiment and ongoing structural reforms, India remains well positioned to navigate external uncertainties while sustaining long-term economic growth. Continued progress in infrastructure development, industrial expansion and domestic consumption is expected to support broad-based economic activity across sectors.

Rising disposable incomes, increasing urbanisation and continued premiumisation trends are expected to support consumer demand across discretionary spending categories.

(Source: PIB)

Industrial Overview

Specialty Chemicals Industry

The Indian specialty chemicals industry plays an important role in supporting a wide range of end-use sectors, including agriculture, automotive, construction, electronics, consumer goods, pharmaceuticals and water treatment. Unlike commodity chemicals, specialty chemicals are manufactured for specific applications and performance requirements, making them an integral part of various industrial and consumer value chains.

The Indian specialty chemicals market was valued at approximately $67.0 billion in 2025 and is projected to reach $93.4 billion by 2034, registering a CAGR of 3.65% during 2026-2034. The sector continues to benefit from growing domestic demand, increasing industrial activity and expanding applications across multiple industries.

Demand for specialty chemicals is being supported by ongoing urbanisation, infrastructure development and rising consumption across the economy. Growth in the construction sector has increased the use of construction chemicals such as waterproofing agents, sealants and concrete admixtures, while the automotive sector continues to drive demand for performance materials and specialty polymers. The agriculture sector also remains an important consumer of specialty chemicals through the use of crop protection products and related formulations.

The industry comprises a diverse range of product categories, including agrochemicals, polymer additives, construction chemicals, water treatment chemicals, surfactants, electronic chemicals, specialty polymers and food additives. Increasing focus on product performance, operational efficiency and regulatory compliance has encouraged manufacturers to develop application-specific products catering to evolving customer requirements across industries.

The growth of Indias electronics manufacturing ecosystem is creating new opportunities for electronic chemicals used in semiconductors, printed circuit boards and other electronic components. At the same time, investments in research and development, product innovation and process improvements continue to support the development of higher-value specialty chemical products for domestic and export markets.

The outlook for the Indian specialty chemicals industry remains supported by expanding industrial activity, increasing urbanisation, infrastructure investments and growing demand from key end-use sectors. The continued development of manufacturing capabilities, product innovation and broader application of specialty chemicals across industries is expected to support the sectors long-term growth.

(Source: Imarc Group)

Growth Drivers

- Large integrated chemical hubs such as Dahej, Paradeep, Cuddalore and Visakhapatnam have already drawn investments of over Rs 2.1 lakh crore (about $28 billion), creating PCPIR-led ecosystems with common utilities and infrastructure that favour specialty chemical manufacturers.

- Demand from user industries is a key growth engine, with paints and coatings benefiting from faster urbanisation and higher home renovation activity, while textiles, home and personal care products are supported by export momentum and shifting consumer lifestyles.

- Indian specialty chemical producers are responding with an aggressive capex cycle, adding capacity ahead of expected offtake from sectors such as construction, agrochemicals, paints, textiles and personal care.

- The policy environment is turning more supportive through proposed incentives like the PLI scheme for agrochemicals and continued development of PCPIRs, which together aim to deepen domestic manufacturing and curb reliance on imports.

- Sustainability has become a central theme, prompting companies to channel more resources into R&D, green chemistry practices and higher value-added product portfolios, thereby enabling a gradual move up the global value chain.

- Backed by these structural drivers, Indias specialty chemicals space is estimated to grow at around 11-12% CAGR up to 2027, which would lift its share in global specialty chemical trade from roughly 3% to about 4%, aided also by capacity constraints in China arising from stricter environmental norms.

Government Initiatives

- The Chemicals and Petrochemicals Vision 2034 lays out a roadmap to position India as a major global production base, with emphasis on strengthening infrastructure, enhancing domestic value addition, improving self-sufficiency and lowering reliance on imports.

- A Production-Linked Incentive programme is under consideration for agrochemicals, envisaging output-linked benefits of about 10-20% and cluster-led development to nurture a globally competitive manufacturing ecosystem.

The growth of Indias electronics manufacturing ecosystem is creating new opportunities for electronic chemicals used in semiconductors, printed circuit boards and other electronic components.

- Four Petroleum, Chemicals and Petrochemicals Investment Regions at Dahej, Paradeep, Cuddalore-Nagapattinam and Visakhapatnam have together attracted investments exceeding Rs 2.1 lakh crore (around $28 billion), offering integrated infrastructure, streamlined approvals and large-scale employment opportunities.

- Policy enablers include 100% foreign direct investment permitted under the automatic route for most chemical segments and the removal of industrial licensing for all but hazardous chemicals, simplifying entry for global players and accelerating project implementation.

- The operating environment is being further improved through customs duty rationalisation on selected raw materials and intermediates, fiscal and institutional support for R&D and innovation, and stronger university-industry linkages to build competitiveness.

- Broader initiatives such as the National Medical Devices Policy 2023, Make in India and ease-of-doing-business reforms indirectly bolster specialty chemicals by stimulating demand for medical-grade materials and by making project development and clearances more investor-friendly.

Opportunities and Threats

Opportunities

- Strong overseas offtake is prompting Indian specialty chemical manufacturers to advance their capacity addition plans, with the countrys share of the global specialty chemicals market projected to move from about 3% to roughly 4% by 2027.

- The ongoing China+1 realignment, driven by tighter environmental norms and closures of chemical facilities in China since 2018, is encouraging global customers to diversify sourcing to India, thereby opening up scope to gain further market share.

- Momentum in end-user segments is a key demand pillar: paints and coatings derive support from urbanisation and stronger housing replacement activity; construction chemicals remain relatively underpenetrated when compared with large markets such as China and the US; textile chemicals benefit from higher exports and domestic consumption; and home care and cosmetics are lifted by rising disposable incomes and greater hygiene awareness.

- Dedicated chemical investment hubs at Dahej, Paradeep, Cuddalore and Visakhapatnam have together attracted more than Rs 2.1 lakh crore (about $28 billion) of capital, reinforcing the ecosystem through shared infrastructure and services.

- The sector has also seen healthy capital inflows, with foreign direct investment of around Rs 1.39 lakh crore (approximately $22.8 billion) received between April 2000 and September 2024, and an additional investment pipeline of close to Rs 8 lakh crore (around $107.4 billion) estimated across chemicals and petrochemicals by 2025.

- Leading Indian players, including names such as Aarti Industries and UPL, now derive over 30-40% of their revenues from international markets, signalling a growing global footprint in higher value-added specialty chemical segments.

Threats

- Heavy reliance on exports leaves the industry exposed to swings in overseas demand, including the impact of global slowdowns, tariff changes and shifts in trade policy.

- Many manufacturers still depend on imported raw materials, which makes costs and supplies vulnerable to international price movements, logistics disruptions and currency volatility.

- New Quality Control Orders issued in February 2025 for more than 150 product categories are intended to improve safety and performance standards, but they also add to compliance and testing requirements for producers.

- Sector-wide spending on research and development remains low, at around 1% of revenue for most Indian chemical companies, which restricts progress in more advanced and technology-intensive product areas.

- Rising expectations around environmental performance are pushing companies to allocate more capital to cleaner processes, waste management and energy-efficient operations, increasing both upfront and ongoing costs.

This geographic spread and connectivity help in efficient logistics planning, better capacity utilisation and cost-effective manufacturing.

Company Overview

Valiant Organics Ltd. (referred to as Valiant or the Company) is an Indian specialty chemicals manufacturer with its roots in Valiant Chemical Corporation, set up in 1984 and later incorporated as a private company in 2005 before becoming a public company in 2015. Headquartered in Mumbai, the Company focuses on producing and supplying a wide range of specialty chemicals and pharmaceutical intermediates, including chlorophenol and benzene derivatives, PNA, PAP, Ortho Anisidine and Para Anisidine.

The Company operates multiple manufacturing facilities across Western India at Sarigam, Tarapur, Vapi, Jhagadia and Ahmedabad, providing an integrated production base with access to nearby ports for both raw material imports and product exports. This geographic spread and connectivity help in efficient logistics planning, better capacity utilisation and cost-effective manufacturing.

Valiants portfolio caters to several end-use sectors such as agrochemicals, pharmaceuticals, dyes, pigments, cosmetics, rubber, polymers and veterinary products. Its products are manufactured using a range of process chemistries, including chlorination, ammonolysis, hydrogenation, acetylation, sulphonation and methoxylation, allowing the Company to offer varied, customised solutions.

A key strength for the Company is its in-house technology and quality capability, supported by a modern laboratory and a team of qualified chemists that work on process optimisation and adherence to international standards. Growth has also been supported through the integration of entities such as Abhilasha Tex-Chem Limited and Amaryjot Chemicals Limited, which has helped expand the product range and deepen technical know-how.

With this combination of diversified products, integrated manufacturing and an established export presence across Asia, Europe and the USA, Valiant Organics has built a position as a dependable and evolving participant in the specialty chemicals space.

Manufacturing Capacity

Valiant Organics Limited manufactures specialty chemicals through six integrated plants spread across five locations in Gujarat and Maharashtra. As of June 2026, the Companys total installed production capacity stood at 80,000+ tonnes per annum (TPA), with facilities designed to handle a range of chemical processes as outlined below.

Manufacturing facilities

Manufacturing facilities	Process
Sarigam	Chlorination
Tarapur	Ammonolysis
Vapi	Ammonolysis
Jhagadia (Units 1 & 2)	Hydrogenation, Methoxylation
Ahmedabad	Sulphonation and Acetylation

Revenue Break-Up

Revenue share (%)	FY 2025-26	FY 2024-25
Domestic	95%	94%
Exports	5%	6%

Operational Diversity

Valiant Organics Limited forms part of the Aarti Group, alongside companies such as Aarti Surfactants, Aarti Industries and Aarti Drugs. The Company works with a wide set of chemical processes, including acetylation, hydrogenation, ammonolysis, chlorination and methoxylation, allowing it to address varied chemistry requirements with consistent product quality.

Its core product basket comprises key intermediates such as Para Chlorophenol, Ortho Chlorophenol, 2,4 Dichlorophenol, Para Nitro Aniline, Ortho Anisidine, Para Anisidine and Para Amino Phenol, which together support multiple industrial applications. Valiant Organics ranks among the leading global manufacturers of chlorophenol derivatives and is an important domestic producer of Para Nitro Aniline and benzene derivatives, with a niche presence in Ortho Anisidine and Para Anisidine where only a few commercial suppliers operate.

The Company was also among the early domestic producers of Para Amino Phenol (PAP), reflecting its long-standing process know-how. These capabilities are underpinned by a skilled and experienced team that plays a central role in sustaining operational performance and product reliability.

Financial Overview

Financial Performance 2025-26

(Rs in millions)

Particulars	FY 2025-26	FY 2024-25	YoY (%)
Revenue from operations	7,384	7,188	2.73%
EBITDA	1,008	618.09	63.08%
Profit After Tax	344	(30)	Turnaround to Profit
EPS-diluted (In Rs.)	12.26	(1.09)	Turnaround to positive EPS

Key Financial Ratios

Particulars	FY 2025-26	FY 2024-25	YOY (% Change)	Explanations
Current ratio	1.12	0.99	13.53%	Current Assets increased more than Current Liabilities. Current Assets increased on account of Trade Receivables & Inventories while Current Liabilities decreased on account of Trade Payables.
Net debt-to-equity	0.31	0.31	0.48%	Borrowings increased on account of new borrowing and dependency on short term funding.
Return on equity	5.06	(0.45)	1224.00%	Profit/Loss increased mainly due to price improvement across products and increase in output; while Average Total Equity increased compared to the previous year.
Net profit ratio	4.65	(0.42)	1207.81%	The improvement was primarily attributable to better product realisations, increased production volumes, improved operating efficiencies and the resulting increase in profitability during the year.
Trade Receivable Turnover ratio	3.54	3.75	(5.68%)	Revenue from operations increased less compared to average trade receivables increase.
Inventory Turnover ratio	4.84	4.50	7.60%	While Raw Material Consumption increased; average inventory increased significantly due to market conditions.
Debt Service Coverage ratio	0.96	0.64	50.48%	EBITDA increased more than the total debt service. Decrease in Long Term Borrowing was compensated by increase in Finance cost and current maturities of LTB.
Trade Payable Turnover ratio	4.47	3.48	28.36%	Adjusted expenses remained reduced while average trade payables reduced more.
Net Capital Turnover Ratio	51.10	(41.69)	222.56	Revenue from operations increased also to average working capital turned positive.
Interest Coverage ratio	5.54	2.58	114.7%	Change is on account of rise in EBITDA and Fall in Interest cost, showing that the companys ability to service debt has improved substantially.
Operating Profit ratio	40.81	36.39	12.14%	Operating profit increase on account of increase in product prices as well overall increase in product output and efficiency in production.

Other key ratios forms part of the notes to the financial statements.

Strategic Outlook

The improvement in the Companys operating performance during FY 2025-26, reflected in higher output, improved product realisations, stronger operating margins and a return to profitability, provides a more stable base for the next phase of its operations. At the same time, the Company remains mindful that the specialty chemicals industry continues to be influenced by fluctuations in demand and product prices, volatility in raw material and energy costs, evolving global trade conditions, geopolitical developments and increasing regulatory and environmental requirements. Accordingly, the Companys outlook remains cautiously positive and will continue to be guided by disciplined execution and sustainable improvement rather than volume growth alone.

During FY 2026-27, the Company intends to focus on improving the utilisation of its existing manufacturing facilities, stabilising and scaling up operations at Jhagadia Unit 2, which includes PAP division, and strengthening performance across its key product segments. Selective debottlenecking, process modifications, automation and equipment upgrades will continue to be undertaken where operationally and commercially justified. The Company will also focus on maintaining product quality and supply reliability, deepening engagement with existing customers and broadening its product and customer base over time.

Cost competitiveness will remain an important area of focus. The Company proposes to continue its initiatives relating to energy optimisation, renewable-energy sourcing, improved by-product recovery, process efficiency, vendor management, logistics optimisation and tighter control over operating expenditure. The process and technology improvements undertaken during the year are expected to support better operational reliability, resource utilisation and capacity utilisation across the Companys manufacturing facilities.

The Company will concurrently maintain a close focus on working-capital management, particularly receivable collections, inventory optimisation and cash-flow conversion. Capital expenditure and other financial commitments will continue to be evaluated prudently, taking into consideration expected business requirements, available liquidity and anticipated returns.

The Company remains positive about its prospects and intends to build upon the improved operating performance achieved during FY 2025-26. The Management will continue to focus on strengthening capacity utilisation, improving product and process efficiencies, optimising costs and working capital, and pursuing business opportunities aligned with the Companys capabilities. These initiatives, supported

Valiant Organics Limited integrates health, safety, environmental, social and governance considerations into its day-to-day operations, viewing responsible conduct as central to long-term growth and value creation. by a continued emphasis on quality, safety, environmental responsibility and financial discipline, are expected to contribute to sustainable performance and long-term value creation.

Risks and Concerns

The specialty chemicals industry remains dependent on continuous innovation, product development and process improvements to address evolving customer requirements and maintain competitiveness. In addition, the sector is exposed to risks arising from volatility in crude oil prices and fluctuations in foreign exchange rates, which may affect input costs and profitability. The continued scale and cost competitiveness of Chinese chemical manufacturers also present a challenge, as increased availability of lower-priced imports may intensify competitive pressures in both domestic and export markets.

Environmental, Social and Governance

Valiant Organics Limited integrates health, safety, environmental, social and governance considerations into its day-to-day operations, viewing responsible conduct as central to long-term growth and value creation. The Companys approach is strongly people-focused, with environmental, health and safety practices aligned to international benchmarks.

A range of proactive measures is in place for employees and contractual workers, including initiatives on satisfaction, human rights, talent development, skill-building and engagement to maintain a supportive workplace. Valiant Organics also undertakes Corporate Social Responsibility projects around its operating locations, reflecting its commitment to surrounding communities as well as its own workforce.

Environmental management is a key priority, with efforts aimed at lowering hazardous waste generation, conserving water, improving energy efficiency and using natural resources more judiciously to limit the Companys carbon footprint. Most manufacturing units are equipped with Zero Liquid Discharge systems for effective effluent management, and a captive renewable energy plant helps curb emissions while also containing power costs.

The Company considers sound governance and transparency as the foundation for sustained performance and stakeholder trust. Its governance framework stresses clear accountability and responsible decision-making, underpinned by policies designed to safeguard the interests of all stakeholders.

Human Resources and Industrial Relations

The Company recognises that an appropriately skilled and engaged workforce is important for maintaining operational efficiency, product quality and workplace safety. During the year, the Company continued to focus on employee development, capability building and the alignment of its workforce with its operational and business requirements.

Training and development activities covered functional and technical skills, operational procedures, regulatory compliance and workplace safety. Regular Environment, Health and Safety and Operations and Maintenance training programmes were conducted across the manufacturing locations. Toolbox talks, safety-awareness sessions and other need-based programmes were also organised for employees and contract workers to reinforce safe working practices and improve awareness of operating procedures.

The Company continued to maintain appropriate systems for performance management, employee communication and grievance redressal. Efforts were also made to encourage teamwork, accountability and coordination across functions and manufacturing locations. Human-resource policies and practices were periodically reviewed to ensure that they remained aligned with the changing requirements of the business and applicable statutory provisions.

Industrial relations remained cordial during the year, and the Company continued to engage with its employees to maintain a stable and productive working environment. As at March 31, 2026, the Company had 908 permanent employees across its manufacturing facilities and administrative office. The Company will continue to focus on skill development, employee retention, workplace safety and the development of capabilities required to support its operations.

Internal Control System

The Company has established a robust internal control framework, including governance, compliance, audit, control, and reporting aspects. These internal controls play a crucial role in ensuring regulatory compliance, fraud prevention, financial safeguarding, and the reliability of financial reporting. The internal audit team regularly evaluates the effectiveness of these controls and reports its findings to management. Based on these audits, prompt corrective actions are taken to improve the accuracy and efficiency of the internal controls.

Cautionary Statement

The narrative within this Management Discussion and Analysis includes forward-looking statements relating to, among other things, the execution of strategic plans, future business developments, and economic performance. While these statements reflect the Companys assessment and expectations for the future direction of its business, numerous risks, uncertainties, and other unforeseen factors could cause actual outcomes to differ significantly from these expectations. These factors include, but are not limited to, general market, macroeconomic, governmental, and regulatory trends, fluctuations in currency exchange and interest rates, competitive pressures, technological advancements, changes in the financial standing of third parties engaged with the Company, legislative changes, and other significant factors that could influence the Companys business and financial results.