Vipul Organics Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Global Economy

The global economy remained resilient during 2025, supported by domestic demand, easing financial conditions and continued investment across technology and infrastructure. However, geopolitical tensions, trade-policy uncertainty and energy-market volatility continued to affect business confidence and operating costs.

The International Monetary Fund projects global growth at 3.0% in 2026 before a recovery to 3.4% in 2027. Higher energy prices may slow the pace of disinflation, while global trade and manufacturing performance are expected to remain uneven across regions.

Strategic Relevance for Vipul Organics

Higher crude-oil and freight costs can affect petrochemical- derived inputs and export logistics. At the same time, Vipul Organics diversified exposure across end-use industries and international markets provides a measure of resilience against weakness in any single geography or customer segment.

(Source: International Monetary Fund, World Economic Outlook Update, July 2026)

Indian Economy

India remained among the fastest-growing major economies during FY26, supported by resilient consumption, governmen capital expenditure, manufacturing and services activity.

Real GDP expanded by 7.7% during the year, reflecting the strength of domestic demand despite an uncertain external environment.

Inflation remained contained through much of the year, allowing monetary conditions to become more supportive. Manufacturing activity remained expansionary, while infrastructure investment, urbanisation and continued formalisation supported demand across industrial and consumer-linked sectors.

Indias external sector faced evolving tariff, freight and currency conditions. While these developments created challenges for export-oriented industries, the continued expansion of domestic paints, plastics, packaging, paper, textiles and other manufacturing sectors provided an important demand base.

Indian Economic Outlook: What It

Means for Vipul Organics

What will shape Indias growth in FY27?

Indias growth is expected to remain healthy, supported by domestic demand, manufacturing and infrastructure investment. Energy prices, inflation, trade conditions and external demand will remain important monitorables.

India Real GDP Growth

Where does Vipul Organics stand to benefit?

Demand across paints, plastics, packaging, paper and textiles supports the Companys established colour-chemistry business, while growing water-treatment, filtration and Zero Liquid Discharge requirements strengthen the opportunity for AdiMem.

(Source: Ministry of Statistics and Programme Implementation; Reserve Bank of India; Ministry of Commerce and Industry.)

Industry Overview

Vipul Organics participates across two connected opportunity areas. Its established business operates within the global dyes, pigments and intermediates market, while its emerging membrane vertical provides exposure to water treatment and industrial- filtration solutions. Both markets increasingly reward product consistency, application expertise, regulatory compliance and integrated manufacturing capability.

Global Dyes and Pigments Market

Demand for dyes and pigments continued its steady, structural expansion through 2025-26, underpinned by population growth, e-commerce-driven packaging demand and the shift toward high-value, differentiated colourants across textiles, plastics, paints and inks. The global market stood at an estimated USD46 billion entering 2026 and is on course to reach roughly USD72 billion over the next decade at a compound annual growth rate of about 5.3%, with Asia Pacific consolidating its position as both the largest producing and consuming region, accounting for close to 47% of global volumes.

Demand is increasingly shifting towards high-performance, certified and environmentally compliant colourants. Customer requirements now extend beyond shade and pricing to consistency, durability, traceability, regulatory compliance and application-specific performance.

Asia-Pacific remains a significant manufacturing and consumption base, supported by downstream industrial growth and an established colour- chemistry ecosystem.

The industry nevertheless remains exposed to raw-material volatility, global construction and textile cycles, trade-policy changes, freight disruptions and growing compliance requirements.

Indian Dyes, Pigments and Intermediates Market

Indias dyes, pigments and intermediates market is estimated at approximately USD 17 billion and is growing at around 8% annually. India contributes about 10% to the global dyestuff market, supported by established manufacturing capabilities, process-engineering expertise and a broad export base. Gujarat and Maharashtra together account for a significant share of domestic production.

Textiles remain a major demand segment, while paints and coatings, plastics, masterbatches, printing inks, paper, packaging, food and cosmetics provide increasing diversification. Demand from these sectors is supported by urbanisation, real-estate activity, consumer spending, e-commerce and growth in organised manufacturing.

Indias position is also being strengthened by supply-chain diversification and international customers preference for compliant and reliable alternative sourcing locations. At the same time, domestic manufacturers must continue investing in environmental compliance, product certification, process efficiency and application development to compete in premium markets.

Membrane and Water-Treatment Solutions

Water scarcity, tighter discharge requirements and increasing adoption across pharmaceuticals, food processing, chemicals, textiles and municipal infrastructure are supporting demand for membrane-based solutions.

According to the June 2026 investor presentation, the global membrane market is projected to increase from approximately USD 7.41 billion in 2025 to USD 11.48 billion by 2033. India remains dependent on imported membrane products, creating an opportunity for indigenous product development, manufacturing and application engineering.

Global Membrane Market Opportunity

The opportunity extends beyond membrane components to solution design and turnkey sewage and effluent-treatment projects. Customer acceptance in this business will depend on technical performance, operating reliability, application engineering, project execution and after-sales support.

Strategic Relevance for Vipul Organics

Vipul Organics established colour-chemistry platform provides revenue scale, customer relationships and application knowledge across multiple industries. AdiMem extends this platform into water-treatment solutions, where several of the Companys existing textile, chemical, pharmaceutical and industrial customers also require effluent treatment, filtration and Zero Liquid Discharge capabilities.

Company Overview

Vipul Organics Limited is an integrated colour-chemistry company with more than five decades of experience across pigments, dyes, dispersions and intermediates.

Its portfolio spans pigment powders, pigment dispersions, naphthols, fast colour bases and salts, reactive dyes, acid dyes, direct dyes, vat dyes, intermediates, and lake and food colours. These products serve a broad range of industries, including textiles, paints and coatings, plastics, printing inks, paper, packaging, leather, food and cosmetics.

The Companys operating model is supported by backward and forward integration—from selected intermediates to pigment powders and finished pigment dispersions. This structure supports product consistency, cost control, application customisation and customer responsiveness. The official website also describes this integrated chain from intermediates through pigment powders to dispersions.

Vipul Organics operates across Palghar, Tarapur, Ambernath and Sayakha, with in-house R&D, laboratory and application- development capabilities supporting the manufacturing network. The Company serves customers across India and more than 50 international markets.

FY26 marked an important expansion of this platform.

The Sayakha facility commenced operations and added capabilities across high-performance pigments and membrane manufacturing. Through AdiMem, the Company has also entered membrane manufacturing, water-treatment solution design and turnkey sewage and effluent-treatment projects. The latest presentation identifies spiral-wound, tubular ultrafiltration, membrane-bioreactor and hollow-fibre membrane ranges within the AdiMem portfolio.

Business Architecture

Established Colour-Chemistry Platform

Pigments, dyes, dispersions and intermediates.

Application-led Growth Platform

Specialised products for paper, automotive, food, cosmetics, packaging and other emerging applications.

Emerging Water-Solutions Platform

Membranes, system design and turnkey water and wastewater-treatment projects.

Enabling Capabilities

Backward-forward integration, R&D, application development, certifications and global distribution.

Strategic Position Assessment

Vipul Organics principal strength lies in the breadth and integration of its colour-chemistry platform. The Company operates across intermediates, pigment powders, dispersions and multiple dye categories, enabling it to serve customers at different stages of the value chain.

A second differentiator is end-market breadth. The Companys products serve textiles, paints and coatings, plastics, printing inks, paper, packaging, leather, food and cosmetics. This diversification reduces dependence on any single application, although textiles and export markets remain important to overall demand.

Compliance and certification also provide market access. OEKO-TEX, ZDHC Level 3, REACH, GOTS and other product and operating certifications support participation in applications where traceability, safety and environmental performance are increasingly important. The June 2026 presentation positions these certifications as qualifiers for premium domestic and international markets.

The Companys R&D and application capabilities provide a fourth layer of differentiation. The first commercial order for an automotive intermediate demonstrates the ability to extend existing chemistry into new applications, while AdiMem broadens the business into industrial water solutions.

The next phase will depend on execution. Sayakha must scale efficiently, the automotive intermediate must move from initial commercialisation towards repeat demand, and AdiMem must establish product performance, customer acceptance and project-delivery capability without weakening the financial discipline of the established business.

Operational Performance

During FY26, Vipul Organics strengthened its established colour-chemistry business while commencing the commercial development of new applications and the membrane vertical.

Core Colour-Chemistry Business

• Pigments, dyes, dispersions and intermediates continued to account for substantially all revenue and profitability.

• Domestic demand across paints, plastics, packaging, paper and other industrial applications supported the business during a more uncertain export environment.

• The Company continued to serve customers across a wide range of industries and international markets, supported by its integrated manufacturing and distribution platform.

• Pigment dispersions remained an important value-added offering by enabling direct application, reducing pigment loss and improving customer-process efficiency.

Sayakha Facility

• The Sayakha facility commenced operations during 2026.

• The facility adds capabilities across high-performance and organic pigments and membrane production.

• Sayakha expands the Companys manufacturing presence beyond Maharashtra and provides a platform for both the established business and the emerging membrane vertical.

Automotive Intermediate

• The Company fulfilled its first commercial order for a newly developed organic intermediate used in the automotive industry.

• The product followed an approval process of more than 18 months after the initial trial shipment.

• The development represents Vipul Organics entry into a new application category and validates its ability to convert R&D into commercial opportunities.

AdiMem - Membranes and Water Treatment

• More than three years of R&D preceded the development of the Companys in-house membrane offering.

• AdiMems portfolio includes membrane manufacturing, solution design and turnkey municipal and industrial water-treatment projects.

• The business entered its early commercialisation phase during the year and will require progressive customer acquisition, technical validation and execution scale-up.

Research and Development

Research and development supports product innovation, process improvement, quality consistency and expansion into new applications at Vipul Organics.

During FY26, the Company converted its development work on an organic intermediate for automotive use into a first commercial order following an extended customer-approval process. This demonstrated the R&D teams ability to apply existing chemistry capabilities to a new end-use sector.

The Company also completed more than three years of membrane-development work and developed an in-house membrane offering for applications that were earlier substantially import-dependent. The Sayakha facility brings together membrane development, application engineering and manufacturing capability.

Key Focus Areas

• New intermediates and application-specific products for adjacent industries.

• Membrane development and industrial water-treatment applications.

• Product and process improvement across pigments, dispersions and dyes.

• Green and sustainable chemistry aligned with customer and regulatory requirements.

• Laboratory testing, pilot validation and commercial scale-up.

Financial Performance

Vipul Organics delivered strong financial performance during FY26, with profit growth materially outpacing revenue growth.

On a standalone basis, total revenue increased by 7.74% to C175.40 crore from C162.80 crore in FY25. Profit before tax increased by 50.24% to C9.55 crore, while profit after tax rose by 55.63% to C6.92 crore. Earnings per share increased to C3.84 from C2.71.

Vipul Organics: Standalone Financial Performance

The improvement reflects stronger operating leverage, disciplined cost management and greater efficiency in the established business despite volatility in export and logistics conditions.

Q4 FY26 recorded revenue of C52.62 crore, representing year-on-year growth of 19.67%. Profit after tax for the quarter stood at C 1.97 crore, compared with C0.79 crore in Q4 FY25.

On a consolidated basis, profit before tax increased by 50.44% to C9.53 crore, while profit after tax increased by 55.99% to C6.90 crore.

Key Financial Highlights

Key Financial Ratios

The following table presents the key financial ratios on a standalone basis, together with explanations for year-on-year changes of 25% or more, in accordance with Regulation 34(3) read with Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Particulars	FY26	FY25	% Change	Explanation (where change is 25% or more)
Current Ratio (times)	1.48	1.23	20%	-
Debt-Equity Ratio (times)	0.45	0.71	-37%	There is variation in ratio mainly due to increase in Equity share capital along with Reserves in FY 25-26 as compared with previous year.
Debt Service Coverage Ratio (times)	1.36	1.58	-14%	-
Return on Equity / Return on Net Worth (%)	7.62%	7.24%	5%	-
Inventory Turnover Ratio (times)	2.78	3.00	-7%	-
Trade Receivables Turnover Ratio (times)	3.37	3.45	-2%	-
Trade Payables Turnover Ratio (times)	2.70	2.80	-4%	-
Net Capital Turnover Ratio (times)	3.75	8.67	-57%	There is substantial change in net capital turnover due to increase in other current assets (mainly due to increase in Fixed Deposit and inventory) as compared with previous year
Net Profit Margin (%)	3.95%	2.73%	45%	There is substantial Increase in Profit after Tax in Current FY 25-26 as compared with previous year.
Return on Capital Employed (%)	6.88%	8.13%	-15%	-
Return on Investment (%)	4.93%	4.34%	14%	-

Human Resources and Industrial Relations

Vipul Organics people capabilities are evolving alongside the expansion of its manufacturing and product portfolio. The Companys workforce supports manufacturing, quality, R&D, application development, sales, logistics and corporate functions across its operating locations.

During FY26, the commencement of Sayakha and the commercial development of AdiMem increased the requirement for capabilities across process engineering, membrane applications, water-treatment solutions, quality assurance and project execution.

The Company continued to invest in technical training, plant- level capability building, safety awareness and knowledge transfer. It remains focused on creating a performance- oriented and learning-led environment capable of supporting both the established colour-chemistry business and emerging growth areas.

Industrial relations remained cordial during the year, with no material disruption to operations.

Information Technology

Information Technology supports coordination and operational visibility across Vipul Organics manufacturing, sales and corporate functions.

The Company uses SAP-based processes to support procurement, inventory, production, sales, finance and management reporting. As operations scale across Maharashtra and Gujarat and the AdiMem vertical develops, integrated data and reporting systems will become increasingly important for planning, cost control and timely decision-making.

Vipul Organics also recognises the importance of system access controls, data protection, backup processes and business continuity. Technology systems and related controls are periodically reviewed in line with the growing scale and complexity of the business.

Internal Control Systems and Their Adequacy

Vipul Organics has established internal control systems designed to safeguard assets, support reliable financial reporting, ensure statutory compliance and promote disciplined operational decision-making.

The framework includes documented policies, standard operating procedures, delegated authority limits, approval mechanisms and periodic review processes across procurement, inventory, production, sales, finance, capital expenditure, human resources and compliance.

Internal audits are conducted periodically to assess the adequacy and effectiveness of key controls. The Audit Committee reviews significant findings, management responses and corrective actions.

The Company continues to align its internal-control framework with its expanding manufacturing footprint and emerging business verticals.

Risks and Concerns

Vipul Organics operates across manufacturing, exports and emerging business verticals, exposing it to a range of market, operational, financial, regulatory and execution-related risks. The Company periodically evaluates these exposures and adopts appropriate mitigation measures to protect operational continuity, financial discipline and long-term stakeholder value. The principal risks and corresponding mitigation measures are outlined below.

Raw-Material and Input-Cost Risk	The Company follows multi-supplier sourcing, monitors raw-material and energy- price movements and manages inventory and pricing decisions in line with prevailing market conditions. Cost pass-through is pursued where commercially feasible.
(3) Export, Freight and Foreign-Exchange Risk	Vipul Organics serves customers across multiple international markets, reducing dependence on a single geography. Freight and currency exposures are monitored regularly, and appropriate commercial and treasury measures are adopted in accordance with approved policies.
& End-Market Cyclicality	The Companys portfolio serves diverse applications across textiles, paints, plastics, packaging, paper, printing inks, leather, food and cosmetics. This breadth helps moderate exposure to weakness in any single end-use sector.
Sayakha and AdiMem Commercialisation Risk	The Company is following a phased scale-up approach supported by product testing, customer engagement and progressive execution. Existing customer relationships may provide cross-selling opportunities, while investments are aligned with business development and operating readiness.
Product Quality and Customer-Approval Risk	The Company maintains in-house laboratory, quality-control and application- development capabilities. New products are progressed through testing, pilot validation and customer-approval processes before commercial scale-up.
Regulatory, Environmental and Safety Risk	Vipul Organics maintains environmental, safety and compliance systems across its facilities. Certifications, Zero Liquid Discharge capabilities, operating procedures and periodic reviews support adherence to applicable requirements.

Outlook

Vipul Organics enters FY27 with a strengthened profitability base and a broader operating platform.

In the established business, the Company will focus on scaling its integrated pigments, dyes, dispersions and intermediates portfolio across domestic and international markets.

Demand from paints, plastics, packaging, paper, textiles and other industrial applications is expected to provide a diversified opportunity base. However, raw-material volatility and changing export conditions will remain important monitorables.

The Sayakha facility is expected to support additional manufacturing capability and improve the Companys ability to serve customers across high-performance and application- specific products. The immediate priority will be to stabilise operations, improve utilisation and align capacity with customer demand.

The first commercial order for the automotive intermediate creates an opportunity to build a new application-led revenue stream. Future contribution will depend on repeat orders, customer approvals and development of additional products for performance-critical applications.

AdiMem represents the Companys most significant diversification initiative. The business will focus on membrane customer development, technical validation, solution design and execution of water and wastewater-treatment projects. Commercial scale-up will be phased and will depend on product performance, customer acceptance and disciplined project execution.

Vipul Organics strategy is therefore not to move away from colour chemistry, but to use its established manufacturing, customer and R&D platform to build adjacent, higher-value solutions.

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations and outlook may constitute forward-looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied due to changes in economic conditions, government policies, raw-material and energy prices, foreign- exchange movements, trade conditions, customer demand, project-execution timelines, product approvals, customer acceptance and other factors beyond the Companys control. The Company assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable law.