Vinati Organics Ltd Management Discussions

GLOBAL OVERVIEW

The global economy has o_cially transitioned into an era of polycentric growth, as highlighted in the IMFs April 2026 economic assessments. While global GDP is steadying at 3.1%, the fundamental composition of this expansion is radically di_erent from the previous decade. The era of synchronised, borderless growth has been replaced by isolated, localised economic booms. Capital is no longer flowing freely to the lowest-cost producer. Instead, it is increasingly shaped by state-sponsored industrial policies and national security imperatives, heavily favouring friend-shoring and localised resilience over mere labour arbitrage.

During 2025-26, this transition was visible across global markets. Growth remained steady but uneven, with advanced economies navigating tight financial conditions, slower consumption and policy uncertainty, while emerging economies continued to benefit from domestic demand, infrastructure spending and manufacturing diversification. Persistent geopolitical tensions, tari_ actions, volatile freight movement and shifting energy prices kept global trade conditions fluid.

Consequently, the international trade environment is now permanently defined by structural friction. Sweeping reciprocal tari_s and stringent cross-border carbon regulations have fundamentally altered the mathematics of global manufacturing. In response, multinational corporations are actively dismantling elongated, fragile supply chains in favour of tightly clustered, regional hubs. This shift is driving a significant capital expenditure supercycle, particularly across key emerging markets. As a result, companies are investing heavily to build resilient, fully integrated production ecosystems that are completely immune to sudden geopolitical disruptions.

GDP Growth Projections (%)

		CY 2025		CY 2026		CY 2027
Particulars
		(A)		(P)		(P)
Global Economy		3.4		3.1		3.2
Advanced Economies		1.9		1.8		1.7
Emerging Markets and		4.4		3.9		4.2
Developing Economies
USA		2.1		2.3		2.1
Euro Area		1.4		1.1		1.2
Germany		0.2		0.8		1.2
Japan		1.2		0.7		0.6
	CY 2025		CY 2026		CY 2027
Particulars
	(A)		(P)		(P)
The UK	1.3		0.8		1.3
Canada	1.7		1.5		1.9

Strategic Outlook

In this fragmented global environment, the traditional export-volume model is no longer e_ective. Success requires pivoting from a transactional supplier model to an embedded, indispensable partnership model, deeply integrated into clients strategic operations.

Organisations must evolve into secure, localised nodes within their proprietary supply chains. By achieving total backward integration and sustainable atomic e_ciency, manufacturers can bypass tari_ walls, completely insulate themselves from freight volatility, and command premium pricing in a global market desperately starved for supply certainty.

(Source: IMF World Economic Outlook Update, April 2026)

INDIAN ECONOMY

According to recent updates from the RBI, the Indian economy continued to demonstrate resilience despite a slower and more uncertain global environment. Growth remained supported by steady domestic demand, improving rural consumption, easing inflationary pressures and sustained public investment. Importantly, the expansion is no longer being driven only by post-pandemic normalisation or government-led infrastructure spending. A gradual revival in private capital expenditure, healthy capacity utilisation and improving credit flow are contributing to a more balanced growth cycle. With retail inflation remaining within a manageable range, the broader macro-economic environment has remained supportive of consumption, investment and business confidence.

Parallel releases from the Press Information Bureau highlight Indias continuing policy-led manufacturing push. The maturation of Production-Linked Incentive (PLI) schemes, increased focus on domestic value addition, and the development of industrial corridors and logistics infrastructure are strengthening Indias production base. These initiatives are helping the country move beyond basic import substitution towards deeper participation in global value chains. The emphasis is increasingly on scale, technology adoption, export competitiveness and the creation of domestic capabilities across strategic sectors.

This momentum creates a wider opportunity landscape for the Indian economy. Rising investments in infrastructure, energy transition, digitalisation, logistics, manufacturing and urban development are expected to generate multiplier e_ects across employment, consumption and enterprise growth. Indias large domestic market, favourable demographics, expanding formal economy and improving business ecosystem provide a strong foundation for sustained medium-term growth. As global companies diversify supply chains and seek reliable production destinations, India is well positioned to emerge as one of the key engines of global economic expansion.

Strategic Outlook

The mandate for Indian enterprises is to aggressively capture this generational, policy-backed momentum. With booming domestic consumption providing an unshakeable revenue floor, firms must deploy capital to completely bridge the technological gap with western competitors. The strategic focus must shift immediately towards dominating complex chemical synthesis and permanently embedding operations into the newly forming China-plus-one global supply architectures, transforming regional scale into undisputed international dominance.

(Source: h t t p s : / / w w w. p i b . g o v. i n / P r e s s R e l e a s e P a g e . aspxRsPRID=2246085 https://www.pib.gov.in/PressReleasePage.aspxRsPRID=2230621 h t t p s : / / r b i d o c s . r b i . o r g . i n / r d o c s / P r e s s Re l e a s e / P D F s / PR121405ABA7B50F645B68B30FB90F609D8C2.PDF )

Global Chemical Industry

According to early 2026 global trade assessments, the structure of the international chemical industry has definitively bifurcated. The divide is no longer just geographic, but a matter of how well companies are integrated. While fragmented, non-integrated players are under significant pressure from elevated energy costs and rising trade tari_s, highly integrated manufacturers are experiencing a strong profit cycle.

Global chemical production is rebounding, driven by rapid growth in electric vehicles, advanced semiconductor manufacturing, and increasing demand for e_cient municipal water treatment systems. As the industry adapts to this fragmented environment, it is moving away from the legacy model of bulk, low-margin exports. The focus is now on capacity-engineered, hyper-specialised molecular solutions that command strong pricing power, regardless of underlying geopolitical friction.

Global Chemical Industry Size Projections

Metric	CY 2025	CY 2033	CAGR
Market Value	US$ 785.4 billion	US$ 1,120.5 billion	4.5%

KEY TRENDS FOR 2025 26

Hyper-Localised Supply Chains

Following the severe disruptions caused by the 2025-26 reciprocal tari_ wars, multinational corporations are moving away from just-in-time global sourcing. They are actively mandating localised, fully resilient chemical supply ecosystems and favouring integrated suppliers who can guarantee uninterrupted regional delivery.

Regulatory-Driven Green Premiums

With the enforcement of stringent new cross-border carbon mechanisms in Western markets, verifiable sustainability is no longer a corporate social responsibility metric; it is a financial requirement. Chemical companies operating with high renewable energy mixes and circular atom economies are successfully charging green premiums and actively displacing heavily polluting legacy competitors.

The AI-Driven Molecule

The integration of Generative AI and advanced machine learning has moved from the IT department directly onto the factory floor. Companies are utilising predictive algorithms to reduce process cycle times, eliminate batch failures, and digitally simulate complex polymer reactions, fundamentally accelerating the speed-to-market for proprietary new compounds.

Portfolio Discipline and Value Migration

In a softer demand environment, chemical companies are prioritising cash generation, margin protection and portfolio quality over volume-led expansion. This is driving a shift away from low-return commodity assets towards di_erentiated, higher-value chemistries with stronger customer stickiness and long-term demand visibility.

Resource Security and Water Stewardship

Water availability, wastewater treatment and resource e_ciency are becoming key operating priorities for chemical manufacturers. Stricter norms and rising industrial water demand are increasing the need for reuse technologies, closed-loop systems and lower-e_uent manufacturing practices.

(Source: https://www.deloitte.com/us/en/insights/industry/chemicals-and-specialty-materials/chemical-industry-outlook.html https://cen.acs.org/business/economy/Trade-group-expects-meager-US/103/web/2025/12 https://www.futuremarketinsights.com/reports/water-and-wastewater-treatment-chemicals-market)

INDIAN CHEMICAL INDUSTRY

According to the Ministry of Chemicals and Fertilizers, the Indian chemical industry has o_cially crossed the US$ 230 billion valuation mark in early 2026. India is no longer just a high-volume, low-cost alternative; it has structurally transformed into a deeply sophisticated, high-value exporter. Contributing nearly 9% to the nations manufacturing Gross Value Added (GVA), the sector has become a key pillar of both industrial and consumer growth.

The true test of the industrys strength came in late 2025, when the US imposed tari_s on Indian goods. While this aggressive trade barrier initially sparked fears of an export collapse, the reality proved the exact opposite. The tari_s acted as a brutal catalyst for industry consolidation. Highly integrated, cost-e_cient Indian manufacturers seamlessly absorbed the shock, adjusted their pricing matrices, and increased their global market share, while weaker, less competitive players were priced out of existence. Indias unshakeable rank as the 6^th largest global chemical producer was not only defended but substantially strengthened.

Indian Chemical Industry Size Projections

Metric	2025	2029	CAGR
Market Value	CY/PY A/P	CY/PY A/P	8.3%
	US$ 322.6	US$ 447.4
	billion	billion

GROWTH DRIVERS

The Domestic Consumption Supercycle

Propelled by rapid urbanisation and indigenisation of high-tech manufacturing, domestic demand for chemicals has entered a structural supercycle. India is no longer just exporting chemicals, it is rapidly consuming them to build next-generation infrastructure, e_ectively creating a massive, highly lucrative revenue floor for domestic producers.

Defensive Export Moats

The China-Plus-One strategy has evolved from a boardroom theory into binding, multi-year procurement contracts. Global supply chain managers are securing Indian manufacturing capacity to permanently de-risk their operations, driving an unprecedented surge in high-value, long-term export orders.

The PLI Catalyst and Capex Explosion

Government-backed PLI schemes and the development of Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) have fundamentally altered the capital expenditure landscape. This structural support is triggering a massive wave of Foreign Direct Investment (FDI) and deeply incentivising total backward integration.

The Specialty Chemicals Upshift

Indias chemical growth is increasingly moving beyond basic volumes towards specialised, application-led products. Rising demand from pharmaceuticals, agrochemicals, electronics, construction, automotive and personal care is creating strong opportunities for higher-value chemistries, where technical capability, quality consistency and customer-specific solutions matter more than scale alone.

Green Chemistry and Sustainable Substitution

Sustainability is becoming a clear growth driver as customers seek low-emission, safer and more environment-friendly inputs. Demand for green solvents, biodegradable surfactants, bio-based polymers and cleaner formulations is creating new opportunities for Indian manufacturers to serve both domestic and export markets with di_erentiated, compliant and future-ready chemical solutions.

(Source: h t t p s : / / w w w. p i b . g o v. i n / P r e s s R e l e a s e P a g e . aspxRsPRID=2246357&reg=3&lang=2 https://www.mckinsey.com/industries/chemicals/our-insights/from-challenges-to-possibilities-leading-indias-chemical-industry-through-global-headwinds https://www.custommarketinsights.com/report/india-chemical-products-market/ https://www.ibef.org/industry/chemical-industry-india)

GLOBAL SPECIALTY CHEMICALS

Early 2026 trade analytics suggest the industry could cross the US$ 830 billion mark this year. Specialty chemicals have completely shed their historical label as mere additives; they have become enablers of the global green transition. Whether it is engineering the ultra-pure monomers required for advanced municipal water desalination, synthesising the binders critical for next-generation solid-state batteries, or creating biodegradable packaging polymers, specialty chemistry is the gateway through which all future industrial progress must flow. Due to this critical role, the sector enjoys strong pricing power and near-total immunity to the cyclical downturns that impact bulk commodities.

Global Specialty Chemical Industry Size Projections

Metric	2025	2030	CAGR
Market Value	CY/PY A/P US$ 834.97 billion	CY/PY A/P US$ 1,010.2 billion	5.1%

Key Trends Shaping the Future of Specialty Chemicals Molecular Customisation:

The era of one-size-fits-all chemicals is dead. Global end-users in pharmaceuticals, aerospace, and advanced electronics are demanding heavily specific, ultra-high-purity molecular formulations. Manufacturers with the intellectual agility to co-developtheseproprietarysolutionsarebuildinghighlylucrative, multi-decade supplier monopolies.

Circular Atom Economy:

Driven by severe global waste mandates, the industry is pivoting towards circular chemistry. Utilising bio-based feedstocks and engineered, highly stable, high-performance antioxidants that drastically extend the lifecycle of underlying industrial materials is now a critical metric of competitive advantage.

The Smart-Materials Boom:

Growth in electric vehicles, 5G infrastructure, and smart-city grid management is driving demand for highly specialised thermal management chemicals, electromagnetic shielding polymers, and advanced protective resins.

(Source: https://www.researchandmarkets.com/reports/6053651/ specialty-chemicals-market-reportRssrsltid=AfmBOorjHDgjeSI4g_ A6o0FJVxyROqYDOGunWIuPBZ4imColY4fGQvSw&utm_ campaign=2191432++United+Sta&utm_code=rl_2l8t4l&utm_ exec=chdomsai&utm_medium=PressRelease& https://www.polarismarketresearch.com/industry-analysis/specialty-chemicals-market https://www.globenewswire.com/newsrelease/2025/12/1 8/3207546/0/en/Specialty-Chemicals-Market-Size-to-Surpass-USD-1-37-Trillion-by-2035-Amid-Sustainability-and-EV-Driven-Demand. html )

INDIAN SPECIALTY CHEMICALS

In early 2026, the sector accounted for over 55% of the nations total chemical exports. This segment has become a key driver of the countrys manufacturing renaissance, expanding at a CAGR of over 12%. Indian manufacturers have moved up the global value chain, transitioning from supplying basic precursors to dictating the global pricing of highly complex, multi-stage agrochemical intermediates, pharmaceutical APIs, and specialised polymer inhibitors. Strong domestic capital generation and a supportive regulatory environment prioritising import substitution are driving this shift. Indian specialty chemical firms are investing in their Western counterparts in greenfield capacities. By combining Indias structural cost advantages with better technology and engineering, the country is positioning itself as a primary global destination for manufacturing the complex molecular structures.

GROWTH DRIVERS

Aggressive Import Substitution

Supported by government mandates and massive private capital, Indian firms are focusing on producing complex chemical derivatives that were previously 100% imported. This deep localisation secures domestic supply chains and opens highly profitable captive markets.

The China-Plus-One Reality

As Western multinationals aggressively restructure their vendor bases away from single-nation dependencies, Indian specialty chemical manufacturers are capturing a bulk of this diverted global demand. This is fundamentally transforming the scale of Indian operations from regional champions into undeniable global titans.

FDI and Intellectual Capital Convergence

The sector is witnessing a massive influx of both international capital and returning scientific talent. This powerful convergence is accelerating Indias R&D capabilities, allowing domestic firms to directly challenge entrenched European and American legacy chemical monopolies.

Trade Remedies and Fair Competition

The Government of Indias use of anti-dumping duties is helping create a fairer operating environment for domestic chemical producers facing low-priced imports. By addressing unfair pricing practices, these measures support local capacity creation, protect viable manufacturing investments and encourage greater confidence in domestic value chain development.

(Sources: https://www.ibef.org/industry/chemical-industry-india https://dgtr.gov.in/sites/default/files/2026-05/PAN%20NCV%20 ENGLISH%20%281%29.pdf https://www.investindia.gov.in/team-india-blogs/chemical-industry-growth-drivers-and-investment-opportunities-india)

COMPANY OVERVIEW

Vinati Organics Limited (Vinati, The Company or We) has historically been a highly aggressive, deeply strategic early mover in successfully combining relentless innovation with highly advanced, proprietary chemistry to create immensely value-added products. Since our founding in 1989, we have evolved rapidly from a highly focused, single-product operation into a well-established player in the global specialty chemicals and organic intermediates sector.

Today we have a presence in over 35 countries and supply to leading industrial and chemical conglomerates across the US, Europe, and Asia.

We operate highly advanced, fully automated, state-of-the-art manufacturing complexes in Mahad and Lote, enabling us to deliver a wide range of specialised and highly complex chemical portfolio for niche markets. Our portfolio includes complex organic intermediates to ultra-niche specialty monomers and polymers, designed to meet stringent global standards. Supported by a strong, heavily funded R&D infrastructure, we consistently deliver highly reliable, incredibly cost-e_cient molecular solutions, while continuing to invest in innovation to maintain our position in the high-value segments of the industry.

Strengths

DIVERSE, HIGH VALUE CHEMICAL SOLUTIONS

We develop and deliver a wide, highly complex array of specialised chemical solutions, thoughtfully developed to serve highly critical sectors including agrochemicals, pharmaceuticals, municipal water treatment, personal care, high-performance automotive resins, and industrial textiles

INNOVATIVE, DEEP TECH R&D

Backed by a highly specialised team of PhDs and chemical engineers, we focus on crafting proprietary products and relentlessly refining existing chemical processes to enhance both final product quality and e_ciency

DOMINANT GLOBAL MARKET PRESENCE

With significant exports to over 35 nations, we actively collaborate with leading players in the global chemical, petrochemical, and industrial sectors, strengthening our international footprint

HIGH STANDARDS, ZERO DEFECT MANUFACTURING

Our manufacturing units uphold strict environment, health and safety protocols, ensuring consistent product quality, timely delivery, and compliance with global benchmarks

DEEPLY INTEGRATED VALUE CHAIN

Through strong continuous-flow production capacity with backward integration into key raw materials, we sustain a durable competitive edge in the global specialty chemicals domain

Developments during the Year

The year was marked by the successful execution of large, complex projects that significantly expanded our operational scale and capabilities.

ATBS Capacity

We successfully completed phase 1 of our ATBS capacity expansion. This milestone increases our total ATBS capacity from 40,000 MT to 50,000 MT. The balance is expected to be completed in the current financial year, reinforcing our position as a global leader and enabling us to meet the surging global demand in water treatment and energy recovery.

Strategic Capacity Additions

The Veeral Organics Private Limited (VOPL) commissioning successfully brought online massive, highly strategic new capacities, including MEHQ, Guaiacol and Anisole. This level of backward integration strengthens pricing control and enhances supply chain reliability.

High-Growth Portfolio Expansion

Our product portfolio was expanded to serve critical, high-growth, high-margin segments, including advanced skincare intermediates, highly complex polymerisation inhibitors, premium flavours and fragrances, pharmaceuticals, and next-generation pesticides.

Financial Highlights

In a year characterised by severe global macroeconomic headwinds, muted industrial demand, and highly disruptive US tari_ impositions, we delivered an absolute masterclass in protecting margins, maintaining operational e_ciency, and strong financial resilience. By leveraging our significant economies of scale and profound backward integration, we successfully absorbed raw material shocks while defending our strong pricing power.

Metrics	2025-26	2024-25	YoY change (%)
Total Income	2,280.79	2,292.39	(0.50%)
EBITDA	740.94	629.50	17.70%
PAT	487.78	415.23	17.47%
Net Worth	3,216.61	2,806.71	14.60%

For the financial year 2025-26, the total income stood at _2,280.79 crores, compared to _2,292.39 crores in the previous financial year, reflecting a 0.50% decrease. EBITDA rose by 17.70% to _740.94 crores from 629.50 crores. As a result, profit after tax also increased by 17.47%, climbing from 415.23 crores to _487.78 crores. Furthermore, the EBITDA margin improved from about 27.46% to 32.49% for the financial year 2025-26.

Key Financial Ratios

Ratios	2025-26	2024-25
Net Debt-Equity Ratio (%)	0.00	0.02
Current Ratio	5.25	3.28
Interest Coverage Ratio	1,582.80	1,055.29
Receivables Turnover Ratio	3.96	4.00
Inventory Turnover Ratio	4.16	4.79
Operating Profit Margin (%)	28.45	23.94
Net Profit Margin (%)	21.89%	18.47%

Outlook

We are strongly positioned for a highly promising and potentially transformative year ahead, supported by structural tailwinds in the global specialty chemicals sector. These include, rising global demand, a geopolitical shift towards secure domestic sourcing, and meaningful policy support through national tax incentives and PLI schemes.

Our clear competitive edge in highly niche o_erings like ATBS and IBB, combined with a debt-free financial profile and strong margins, reinforces our leadership position. The capacity expansion, signals our ability to meet growing global demand, especially from a rapidly recovering and highly active US oil and gas sector and expanding global water treatment markets.

Meanwhile, the investment in VOPL, commissioned in Q4, adds huge capacities across MEHQ, Guaiacol and Anisole. This will strengthen our backward integration and unlock new financial value in new product categories.

With a multi-decade, unbroken track record of flawless execution and a continued focus on digital and chemical innovation, we are well placed to sustain our growth trajectory and further improve operational performance in the year ahead.

RISK MANAGEMENT

Risk management is integral to Vinatis decision-making and business planning processes. The Company systematically evaluates potential uncertainties and takes appropriate measures to manage their impact on long-term performance and value creation. This approach encompasses risks related to customers, sustainability, workforce, supply chains, operational continuity and evolving geopolitical conditions. For more details, refer to Page no. 88 (BRSR Section A, Q26).

HUMAN RESOURCES

We consider our people to be our core strength and are committed to cultivating a people-centric culture grounded in diversity and inclusion. We strive to create an environment where individuals feel valued and experience a sense of belonging. Continuous investment in learning and development supports employee growth, resulting in among the lowest attrition levels in the industry. Through sustained focus on talent development, we attract capable professionals and nurture future leaders, strengthening our organisational capability over the long term.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis section relating to the Companys future outlook are forward-looking in nature. These involve known and unknown risks and uncertainties, both identified and unforeseen, that may cause actual results to di_er materially from those expressed or implied. Factors such as macroeconomic shifts, global events like pandemics, geopolitical tari_ impositions, and rapidly evolving business environments may significantly impact outcomes. These statements are based on highly complex assumptions derived from internal and external data and information available at the time of writing. As these structural assumptions are inherently subject to change, so are the highly detailed estimates based on them. Forward-looking statements reflect the Companys current views, beliefs, and strategic intentions as of the date of publication. The Company undertakes no obligation to publicly update or heavily revise any such statements in light of future developments, unforeseen events, or changing market dynamics.