Vishnu Chemicals Ltd Management Discussions

Global Economic Overview

In 2024, the global economy grew moderately by 3.3%, reflecting relative stability despite subdued momentum. However, 2025 brought significant disruption, as countries reorder policy priorities amid rising geopolitical tensions and economic challenges. The United States new tariff measures, met with swift retaliations, culminated in near-universal tariffs on April 2, 2025. Effective tariff rates have now surged to century-high levels, delivering a sharp blow to global growth. The rapid and unpredictable policy shifts have further heightened economic uncertainty, rendering traditional forecasting models less reliable and clouding the near-term outlook.

Amid this volatility, global headline inflation is projected to decline more slowly, easing to 4.3% in 2025 and 3.6% in 2026. The revision largely reflects higher inflation expectations in advanced economies, partially offset by slight downward adjustments in emerging and developing markets.

For advanced economies, growth is projected to slow from 1.8% in 2024 to 1.4% in 2025, before edging up to 1.5% in 2026. In the United States, growth is expected to ease to 1.8% in 2025, reflecting heightened policy uncertainty, trade tensions, and weaker-than-anticipated consumption. Tariffs are also likely to weigh on the 2026 outlook, with growth projected at 1.7% amid moderate private consumption. In the euro area, growth is forecast to dip slightly to 0.8% in 2025, before recovering modestly to 1.2% in 2026. Elevated uncertainty and tariff impacts are the main factors behind the muted 2025 performance.

Following a slowdown in 2024, growth in emerging and developing Asia is projected to decline further to 4.5% in 2025 and 4.6% in 2026. ASEAN countries have been particularly impacted by the April tariffs. For China, 2025 GDP growth is revised down from 4.6% to 4.0%, reflecting the effects of new tariffs, which offset the stronger carryover from 2024 and fiscal expansion in the budget. For India growth is relatively stable at 6.2% in 2025, supported by private consumption in particular the rural areas.

Global trade growth is projected to slow to 1.7% in 2025, driven primarily by heightened tariff barriers and, to a lesser extent, the fading impact of cyclical factors that had recently supported goods trade.

Outlook

Despite the challenges facing the global economy, this period offers a unique opportunity to strengthen resilience and chart a more sustainable path forward. The adaptability shown by many economies under pressure signals that recovery is possible with the right mix of coordinated policies and proactive reform. By working together to establish a stable and transparent trade environment, advancing timely debt resolution, and addressing structural imbalances, countries can support a more balanced and inclusive global recovery.

Maintaining clear monetary policy direction, using macroprudential tools as needed, and implementing credible fiscal plans will help restore financial stability and protect long-term growth. International cooperation will be essential in navigating the road ahead. With aligned strategies, strong leadership, and a commitment to shared progress, the global economy can regain momentum, rebuild buffers, and open up new opportunities for prosperity across regions.

Source: IMF World Economic Outlook April 2025

Indian Economic Overview

Indian economy remains promising, with an anticipated growth rate of 6.5% for 2024-25, reflecting sustained strength despite global headwinds.This projection is supported by strong domestic demands and strategic policy interventions that continue to propel the nations growth. Sustained policy support and domestic resilience continue to fuel the nations economic momentum.

RBIs proactive policies have played a crucial role in stabilizing liquidity and inflation exception. At the same time, steady consumption and a stronger labour market reinforce the positive outlook. Alongside these drivers, the strong performance of agriculture and services supports overall economic resilience, anchored by steady consumption and macroeconomic balance.

October also varied across consecutive years, leading to growth slowdown.

Despite these challenges, the manufacturing sector continues to gain traction. In 2024-25 Manufacturing PMI slipped to 56.3, indicating the slowest expansion primarily due to softer growth in output and sales, coupled with input purchasing dropping to a 14-month low.

Growth remains driven by resilient domestic and international demand, increased hiring, and improving supply chains, despite persistent inflationary pressures. Performance of manufacturing companies was supported by stronger corporate earnings, greater foreign investment, and technology-led efficiencies that helped manufacturers protect margins, particularly in consumer goods, chemicals, and pharmaceuticals.

Industrial Sector in India is projected to grow by 6.2% in 2024-25, driven by robust growth in electricity and constructions. Weaker manufacturing exports due to reduced demand from destination countries aggressive trade policies by major trading nations, have contributed to this deceleration.

Moreover, an above-average monsoon had mixed effects. It replenished water reserves and supported agriculture but disrupted mining, construction, and certain manufacturing segments. The timing of festivals between September and

Alongside domestic economic expansion, Indias external sector remained strong and stable, underpinned by strong export growth and controlled imports during the first half of 2024-25. Overall exports grew by 6.0% year-on-year

(Y-o-Y) from April to December 2024, with dynamic services exports driving India to secure the seventh-largest share in global services exports, highlighting its international competitiveness.

The positive contribution of net exports to real GDP growth reflects the effectiveness of macroeconomic policies, including inflation management, fiscal discipline, and monetary interventions such as the recent rate adjustment. These measures have reinforced macroeconomic stability, fostering a favourable environment for sustained growth and endurance across both domestic and external sectors.

Outlook

Looking ahead to 2025-26, Indias economic outlook remains cautiously measured in the face of ongoing geopolitical uncertainties, trade disruptions, and potential commodity price fluctuations. Domestically, GDP growth will depend on stronger private investment, higher consumer confidence, and faster corporate wage growth.

Rural demand is expected to rise as agriculture recovers, food inflation stabilises, and macroeconomic conditions remain favourable.To enhance medium- term economic resilience, India must focus on boosting its global competitiveness through structural reforms and deregulation at the grassroots level. Furthermore, creating a more business-friendly environment will be critical to mitigating external vulnerabilities and ensuring long-term economic viability.

Source: Economic Survey2024-25

Global Chemical Industry Overview

The global chemical industry was valued at USD 6,182 Bn in 2024 and is projected to reach USD 6,324 Bn by 2025, registering a compound annual growth rate (CAGR) of 2.3%.

In 2024, the industry showed modest growth, continuing its recovery from the economic disruptions caused by the COVID-19 pandemic and adapting to the growing focus on sustainability.

This growth was driven by surging demand for energy transition materials like battery chemicals, lightweight materials, and renewable feedstocks. Key industries such as automotive, construction, and electronics also continued their steady consumption, further fuelling the sectors expansion. Looking ahead to 2025, the industry will need to accelerate its progress, as government policies and incentives promoting clean energy, circular economy models, and sustainable manufacturing become more deeply embedded across global markets.

The Asia-Pacific region will continue to drive the industrys progress, led by China, which is expected to maintain approximately 5.0% growth in chemical production. This expansion will be further supported by policy-driven demand, especially from construction and automotive sectors. In contrast, Europes chemical industry is recovering at a slower pace, marked by low production levels and increased reliance on imports. Despite global economic uncertainties, the chemical sector continues to grow, propelled by the global shift towards sustainability, rising adoption of speciality chemicals, and innovation across value chains.

Green energy is set to transform production by promoting bio-based chemicals and renewable feedstocks. Chemical companies are reducing carbon emissions by using renewable energy sources like solar, wind, and bioenergy for production.

Green energy is driving the growth of bio-based chemicals and renewable feedstocks, offering sustainable alternatives to petrochemical products. This shift to green energy demands significant investment in infrastructure and technology but it creates growth opportunities, enhances competitiveness, and meets rising demand for sustainable chemical products.

3D printing will revolutionise manufacturing with custom, efficient, and material-saving production. It supports rapid prototyping and enables tailored chemical formulations across pharmaceuticals, automotive, and electronics, reducing costs, enhancing innovation, and cutting supply chain emissions through localised production.

Simultaneously, AI will improve efficiency, spark innovation, and support smarter decision-making. By using real-time data, it will cut costs, reduce waste, and speed up research and development (R&D) through faster material discovery. AI will also enhance supply chain planning with improved forecasting and logistics, inventory control, making the industry more agile, sustainable and competitive.

I Outlook

By 2025, several key trends are expected to drive growth in the chemical industry. Digital technologies, including artificial intelligence and predictive analytics, will play a critical role in enhancing operational efficiency, minimising waste, and enabling the development of more sustainable products. At the same time, global political shifts will continue to impact supply chains and market access, prompting chemical companies to become more agile and resilient.

The Asia-Pacific region will remain at the forefront of global chemical production. To stay competitive, companies will need to strike a balance between cost efficiency and product quality. Additionally, emphasis on tailored specialty chemicals will rise. These products, designed for specific applications, offer higher margins and stronger customer loyalty. As sustainability and performance expectations increase, businesses will need to focus on innovation and customer-centric solutions to meet evolving demands.

Sources: Markets and Markets, Yahoo Finance

Indian Chemical Industry Overview

India ranks as the sixth-largest chemical producer globally and holds the third position within Asia contributing 7% to Indias GDP. The nation also features among the top three countries in base chemical production worldwide. Currently valued at approximately USD 220 Bn, the Indian chemical market is expected to expand significantly. Projections suggest it could reach between USD 300 Bn by 2030 and USD 1 Tn by 2040.

India maintains a prominent position in the global chemical industry, ranking 14th in exports and 8th in imports internationally. With sustainability gaining importance, India presents compelling opportunities for foreign companies offering green and sustainable chemical solutions. The government supports this by allowing 100% Foreign Direct Investment (FDI) in the sector, reducing import duties, and providing financial incentives under the Make in India initiative. In addition, investments in R&D, combined with a large pool of skilled, low-cost labour, make India an attractive manufacturing hub, especially in high-growth segments like polymers and agrochemicals. Additionally, the Department of Chemicals and Petrochemicals is planning to introduce a Production-Linked Incentive (PLI) scheme for the chemical and petrochemical sector, aimed at further strengthening domestic manufacturing and enhancing export potential.

India benefits from its strategic location near the Middle East, a key source of petrochemical feedstocks. This proximity strengthens competitiveness by supporting economies of scale. Growth is also fuelled by strong domestic demand and rising export potential. The government aims to establish world-class chemical hubs by upgrading existing clusters (Dahej, Paradip, Visakhapatnam, Cuddalore-Nagapattinam) and developing new ones, supported by a central committee and chemical fund for infrastructure and VGF. Port and logistics infrastructure will be enhanced through a dedicated chemical committee and development of eight coastal clusters. An Opex Subsidy Scheme will incentivise incremental production with a focus on import reduction, exports, and critical sectors. R&D and innovation will be boosted through increased funding, industry-academia collaboration, and a joint agency under DCPC and DST. Green and sustainable chemical production will be promoted to align with global trends. These supportive policies, along with the benefits under Make in India, position Indias chemical industry as a compelling long-term investment opportunity.

Outlook

The outlook for the chemical sector remains robust, with significant momentum driven by emerging and transformative trends. The industry is undergoing a evolution, marked by rapid digitalisation, increased automation, and a continued push for technological innovation. A growing emphasis on green initiatives and sustainable practices is reshaping traditional business models and guiding long-term strategies.

Source: https://www.indiaconnected. co.uk/industries/chemical-industry-india/

Indian Specialty Chemical Industry Overview

Indias specialty chemicals market size reached USD 64.5 Bn in 2024 and is projected to grow to USD 92.6 Bn by 2033, at a CAGR of 3.8% during 2025-2033. This sector produces application-specific chemicals that cater to a wide array of industries, including agriculture, pharmaceuticals, personal care, and automotive.

Backed by rapid industrial expansion, innovation, and growing focus on sustainability, the sector remains among the most dynamic in Indias chemical industry. The countrys cost-effective manufacturing capabilities, along with favourable government policies and rising global demand, further strengthen its position as a strategic hub for specialty chemicals. As a result, the industry is expected to play a pivotal role in supporting the nations overall economic growth and industrial development in the coming decade.

Sources: Imarc Group

Outlook

Looking ahead, sustained demand from both domestic and international markets is set to drive significant revenue growth for Indian speciality chemical companies. This momentum is likely to translate into strong earnings over the medium term and help maintain high market valuations. To support this trajectory, the industry will continue to rely on government support. This includes promoting a business-friendly climate, improving infrastructure, expanding Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs), and securing stable feedstock supply.

However, to truly capitalise on these opportunities, the Indian speciality chemicals sector must embrace strategic transformation. Key focus areas will include innovation, decarbonisation, digitalisation, automation, and workforce upskilling. Combined with macroeconomic tailwinds such as a growing population, rising disposable income, and expanding export potential, these efforts will be essential for enabling the industry to make a significant leap forward in global competitiveness and sustainability.

Sources: Custom Market Insights, EY Indian Specialty Chemical Industry Report

Indian Inorganic Chemical Industry Overview

The Inorganic Chemicals Market in India is projected to grow at a CAGR of 5.8% between 2024 and 2033, with the market size expected to rise from USD 44,603.3 Mn in 2024 to USD 74,086.3 Mn by 2033.This sector plays a crucial role in the countrys industrial ecosystem, involving the production and distribution of chemical compounds derived from minerals and metals.These inorganic chemicals are integral to a wide range of industries, including agriculture, construction, automotive, and manufacturing.

The markets growth is driven by strong industrial expansion, large-scale infrastructure projects, and a rising focus on sustainable practices. Moreover, technological advancements, R&D initiatives, and strategic collaborations are spurring innovation, improving product quality, and boosting global competitiveness. Consequently, the inorganic chemicals market is becoming a key contributor to Indias economic development and industrial transformation.

Industrial Expansion

The rapid growth of sectors like construction, automotive, electronics, and manufacturing is driving the demand for inorganic chemicals. These chemicals play a vital role in producing coatings, adhesives, glass, ceramics, and electronic components, making them crucial to Indias industrial growth.

Infrastructure Development

Large-scale government initiatives like the Smart Cities Mission, highway expansion,and urban infrastructure projects are increasing demand for inorganic chemicals in cement, steel, and construction materials.These materials are essential for building roads, bridges, and sustainable urban infrastructure nationwide.

Agricultural Demand

Indias expanding agricultural sector continues to rely heavily on fertilisers, pesticides, and agrochemicals, many of which are inorganic in nature. The rising need to enhance crop yield and food quality to meet the demands of a growing population ensures steady market demand for these products.

PCPIR Scheme

India has developed PCPIRs as integrated industrial zones offering advanced infrastructure, transparent policies, and a competitive business environment. Each PCPIR spans over 250 sq. km and includes manufacturing, logistics, and support services. Under the revised PCPIR Policy 2020-35, the government targets cumulative investments of Rs. 10 Tn (USD 142 Bn) by 2025, Rs. 15 Tn (USD 213 Bn) by 2030, and Rs. 20Tn (USD 284 Bn) by 2035. Four PCPIRs have been established in Dahej (Gujarat), Vishakhapatnam-Kakinada (Andhra Pradesh), Paradeep (Odisha), and Cuddalore-Nagapattinam (Tamil Nadu), with a total realisation cost estimated at Rs. 7.63Tn (USD 92 Bn).

Technological

Advancements

Continuous innovation in manufacturing processes and product formulations is enhancing the performance, quality, and efficiency of inorganic chemicals.These —• advancements enhance domestic competitiveness and help Indian manufacturers meet evolving industrial standards.

Government Initiatives

The Indian Government actively supports the chemical industry, emphasising growth in R&D and manufacturing under the Make in India and Atmanirbhar Abhiyan initiatives. Additionally, it has reduced the basic customs duty on several products.The government has also set a bold Vision 2034 for the chemicals and petrochemicals industry, aiming to enhance domestic production, reduce import dependency, and attract large-scale investments. A key part of this strategy includes the implementation of a PLI scheme offering 10-20% output incentives, particularly focussed on the agrochemical sector.The goal is to create a comprehensive manufacturing ecosystem through cluster- based growth and strong industrial infrastructure.

Sustainability Focus

Increasing environmental regulations and consumer awareness are pushing the industry towards more eco-friendly and sustainable inorganic chemical solutions. This shift offers a strategic opportunity for manufacturers to innovate and lead in the development of green inorganic chemical products that align with global sustainability goals.

Source: https://www.custommarketinsights.com/report/india-inorganic-chemicais-market/

Export Opportunities

The global demand for cost-effective, high-quality inorganic chemicals has opened significant export opportunities for Indian producers. With strengths in efficient production, skilled labour, and regulatory compliance, India is well-positioned to expand its presence in international markets.

Risk Management

Vishnu Chemicals takes a proactive and strategic approach to risk management, regularly assessing potential threats and creating innovative strategies to adapt to changing market dynamics.The Company prioritises early risk mitigation to ensure smooth and uninterrupted operations. A collaborative effort between the Audit Committee and Management enables timely identification and resolution of emerging risks.This structured approach helps the Company maintain operational resilience and sustain long-term business performance.

Risk	Impact	Mitigation Strategy
Sluggish Financial Climate	A slowdown in the Indian economy could impact revenue and profitability.	Diversification across domestic and international markets with a broad product portfolio helps the Company mitigate market risks and expand global presence.
Supply Chain Disruption	Manufacturing operations may be affected due to raw material shortages or price volatility.	Proactive sourcing strategies and inventory planning are in place to minimise the impact of supply chain disruptions and raw material price fluctuations.
Green Responsibility	Environmental incidents may impact public health, safety, and business sustainability if not managed responsibly.	Strict adherence to environmental regulations, rigorous safety protocols, and responsible handling of materials are ensured. Additionally, significant investments are made in green initiatives to enhance sustainability.
Competitive Environment	Inability to respond quickly to market changes can affect profitability in a highly competitive industry.	The Company remains agile and proactive, focussing on innovation and expanding its product portfolio to stay ahead of industry trends

Internal Financial Control

Vishnu Chemicals has built strong internal financial controls suited to its scale and operational complexity. These controls ensure accurate financial and operational reporting, compliance with accounting standards and legal regulations, protection of assets from unauthorised use, proper transaction authorisation, and adherence to corporate policies.

A clear delegation of authority is in place, outlining clear limits for both capital and revenue expenditure approvals.To improve operational efficiency, Vishnu Chemicals has recently implemented SAP for seamless transaction recording and financial reporting.

Human Resources

Vishnu Chemicals views its people as its greatest strength and fosters a culture built around respect, dignity and inclusion.

The Company has cultivated a balanced team of seasoned professionals and dynamic young talent, enabling a well- rounded and strategic approach to operations.

At the core of our success lies a strong, committed, and empowered workforce. The Company continues to invest in creating a workplace culture that promotes learning, inclusivity, well-being,and performance excellence. In recognition of these efforts, the Company was certified as a Great Place to Work for the period 2024-25 and 2025-26.This prestigious acknowledgment underscores our constant focus on building a people-first organization anchored in trust, transparency, and collaboration.

The Company views employees as strategic partners in value creation and is committed to providing them with opportunities for continuous growth, meaningful engagement, and holistic development. Our focus on nurturing talentand fostering a culture of innovation remains central to our long-term strategic objectives.

The Company places high importance on employee growth through regular training and skill development programmes to support both individual growth and organisational excellence. In addition to professional development, the Company promotes work-life balance through regular team-building initiatives, including sports, recreational activities, and wellness programmes, contributing to a positive work environment and long-term employee retention.

Vishnu Chemicalsongoing investment in workforce capabilities has significantly improved operational execution, internal communication, and customer service standards, strengthening the Companys global standing.

The Audit Committee regularly engages with the management to evaluate the effectiveness of these internal controls, drawing insights from both internal and external auditors to ensure system robustness.

The Committee has confirmed the adequacy and effectiveness of the current control framework and provides regular updates to the Board of Directors. While the Company recognises the inherent limitations of any control system, it mitigates risks through periodic audits and continuous improvements, ensuring the systems remain dynamic and effective in supporting business operations.

Way Forward

The Company operates under principle-driven leadership, with a steadfast focus on manufacturing excellence. Over the years, Vishnu Chemicals has developed distinct capabilities, including innovative process execution, positioning itself as one of the most efficient and resilient producers in the chemical industry.

The growth in market share underscores the strength of the Companys multi-site operations, dependable procurement strategies, and a customer-centric approach that drives long-term success. Vishnu Chemicals is also committed to sustainability, integrating waste reduction, recycling, and reusing initiatives into its core operations.

In addition to its business goals, the Company remains dedicated to empowering communities and fostering socioeconomic development, ensuring that its progress contributes to broader societal well-being.

Cautionary Statement

We wish to emphasise that this report contains forward-looking statements regarding anticipated future events, financial outcomes and operational milestones of Vishnu Chemicals Limited. These statements inherently rely on assumptions and are subject to various risks and uncertainties. There is a significant risk that these assumptions, predictions, and other forward-looking statements may not accurately reflect future outcomes. We advise readers to exercise caution and refrain from placing undue reliance on forward-looking statements,as several factors could lead to disparities between assumptions and actual future results and events. Therefore, this document is subject to the disclaimer and is gualified in its entirety by the assumptions, gualifications, and risk factors outlined in Vishnu Chemicals Limiteds Annual Report for 2024-25, as discussed in the Management Discussion & Analysis.