Vital Chemtech Ltd Management Discussions

The Management s views on the Company s Performance and outlook are discussed below:

GLOBAL ECONOMY:

Global growth is projected at 3.3 percent both in 2025 and 2026, below the historical (2000 19) average of 3.7 percent. The forecast for 2025 is broadly unchanged from that in the October 2024 World Economic Outlook (WEO), primarily on account of an upward revision in the United States o setting downward revisions in other major economies. Global headline in ation is expected to decline to 4.2 percent in 2025 and to 3.5 percent in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies. Growth is projected to be at 2.7 percent in 2025. This is 0.5 percentage point higher than the October forecast, in part reflecting carryover from 2024 as well as robust labour markets and accelerating investment, among other signs of strength. Growth is expected to taper to potential in 2026.

INDIAN ECONOMY:

India is currently ranked as the 4th largest economy globally in 2025 , surpassing Japan to secure the 4th position among the worlds top 10 largest economies, with a nominal GDP of $4.19 trillion in 2025 . Moreover, the IMF forecasts that by 2027, India will overtake Germany to become the 3rd largest economy worldwide

India has maintained a strong economic performance despite global challenges and geopolitical concerns. This resilience can be attributed to robust domestic demand, a pickup in rural demand, strong investment levels, and sustained momentum in manufacturing. Despite global challenges, India stands out for its robust economic growth, demonstrating broad-based expansion across various sectors and rea rming its pivotal role in supporting global economic growth.

India s economy continues to grow at a steady and con dent pace, standing out as the fastest growing major economy in the world. Gross Domestic Product (GDP) is a measure of size and health of the economy. It is the total value of all the goods and services produced within a country. In 2024 25, real GDP growth was estimated at 6.5 per cent. The Reserve Bank of India expects the same rate to continue in 2025 26. This performance comes at a time when the global economy faces uncertainty, making India s steady momentum all the more significant.

India s growth story continues to draw global attention, backed by strong fundamentals and consistent performance. Real GDP, which measures the economy s output after removing the effects of in ation, expanded by 6.5 per cent in 2024 25. The Reserve Bank of India expects this pace to continue into 2025 26. Other projections echo this optimism, with the United Nations forecasting growth of 6.3 per cent this year and 6.4 per cent next year, while the Confederation of Indian Industry places its estimate slightly higher at 6.40 to 6.70 per cent.

India s economic performance over the past year reflects not just growth, but a deeper sense of stability and direction. With real GDP rising at 6.5 per cent and in ation easing to its lowest in years, the country has shown that it can balance expansion with price stability. At the same time, strong participation in capital markets, record levels of exports, and healthy foreign exchange reserves point to growing con dence both at home and abroad. Key sectors such as manufacturing, services, and infrastructure are pushing ahead, supported by steady investment and policy focus. External risks remain, but India s fundamentals are sound. As the global economy continues to face challenges, India s consistent performance offers reassurance that it is well placed to lead from the front and keep building a stronger, more inclusive future.

GLOBAL CHEMICAL MARKET:

The chemical industry has made moderate progress in 2024, increasing year-over-year production above 2023 levels, and it is estimated that production levels will continue to rise as the destocking cycle wanes and demand rises across most products. However, to further support revenue growth, chemical companies have announced cost-reduction plans and begun to increase margins, while continuing to invest in decarbonization and innovation. In 2025, we expect the industry to continue its recovery, adjusting to new market drivers while balancing short- and long-term goals. The Global chemical industry size was valued at USD 6,182 billion in 2024 and is projected to reach USD 6,324 billion by 2025. growing at 2.3% CAGR from 2024 to 2025.

Global chemical growth moderated in 2022 due to lockdowns in China, supply chain bottlenecks, and disruptions caused by the Russian invasion of Ukraine. As a result, global chemical output grew by only 2.0% in 2022. In 2023, production is expected to expand at 2.9% amid rebound in Western Europe and the Asia-Paci c. The industry is focussing on meeting the growing global demand and enhancing sustainability through carbon reduction projects and advanced recycling and recovery. The biggest risk to the outlook is persistent in ation and continued increase in interest rates that could prolong and deepen the downturn, but other risks may include escalation of wars, financial instability, and supply chain disruptions.

The US chemical industry had a strong start in 2022, with output growing by 3.9%. However, in 2023, this growth is expected to marginally decline due to deceleration in end-use markets, a stronger dollar, and lower global growth. Many manufacturers have increased inventories of raw materials and products due to supply chain issues, which resulted in higher-than-normal inventories at the end of the year. US chemicals remain advantaged due to abundant domestic production of natural gas. Capital spending grew 9.0% to US$ 33.5 billion in 2022 and is expected grow at 3.6% in 2023.

After declining by 3.2% in 2022, chemical production in Western Europe is expected to marginally grow at 0.8% in 2023. This is mainly due to an uncertain energy price outlook and depressed economic growth outlook. However, the silver lining is that natural gas prices have dropped to their pre-war levels and are expected to remain below the 2022 levels.

INDIAN CHEMICAL INDUSTRY:

Covering more than 80,000 commercial products, India s chemical industry is extremely diversi ed and can be broadly classified into bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers, and fertilisers. India is the 6th largest producer of chemicals in the world and 3rd in Asia, contributing 7% to India s GDP. The Indian chemical industry is currently valued at US$ 220 billion and is expected to reach US$ 300 billion by 2030 and US$ 1 trillion by 2040. This industry remains an active hub of opportunities, even in an environment of global uncertainty.

Globally, India is the fourth-largest producer of agrochemicals after the United States, Japan and China. India accounts for 16-18% of the worlds production of dyestu s and dye intermediates. Indian colourants industry has emerged as a key player with a global market share of ~15%. The country s chemicals industry is de-licensed, except for a few hazardous chemicals.

India has traditionally been a world leader in generics and biosimilars and a major Indian vaccine manufacturer, contributing more than 50% of the global vaccine supply.

India holds a strong position in exports and imports of chemicals at a global level and ranks 14th in exports and 8th in imports at the global level (excluding pharmaceuticals). From April-November 2024, Indias dye exports (Dyes and Dye Intermediates) totalled Rs. 14,712 crore (US$ 1.70 billion).

Markets Size:

The Indian chemicals industry stood at US$ 178 billion in 2019 and is expected to reach US$ 304 billion by 2025 registering a CAGR of 9.3%. The demand for chemicals is expected to expand by 9% per annum by 2025. The chemical industry is expected to contribute US$ 300 billion to India s GDP by 2025.

Growing Demand:

Rise in demand from end-user industries such as food processing, personal care and home care is driving development of different segments in India s specialty chemicals market. Exports of Organic and Inorganic Chemicals reached Rs. 7,13,090 crore (US$ 82.4 billion) during April-December 2024. Chemicals and petrochemicals demand in India is expected to nearly triple and reach US$ 1 trillion by 2040. India is the 6th largest producer of chemicals in the world and 3rd in Asia, contributing 7% to India s GDP

Opportunities:

India s specialty chemicals companies are expanding their capacities to cater to rising demand from domestic and overseas. With global companies seeking to de-risk their supply chains, which are dependent on China, the chemical sector in India has the opportunity for a significant growth. The Dahej PCPIR project in Bharuch, has attracted an investment of Rs. 1 lakh crore (~US$ 12 billion) and is expected to generate 32,000 jobs The Indian chemical industry is currently valued at US$ 220 billion and is expected to reach US$ 300 billion by 2030 and US$ 1 trillion by 2040. This industry remains an active hub of opportunities, even in an environment of global uncertainty.

Policy Support:

PLI schemes were introduced to promote Bulk Drug Parks, with a budget of Rs. 1,629 crore (US$ 213.81 million). Under the Union Budget 2025-26 the government allocated Rs. 1,61,965 crore (US$ 18.7 billion) to the Ministry of Chemicals and Fertilizers. The Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) set up at Paradip has attracted investments worth US$ 8.84 billion (Rs. 73,518 crores) resulting in employment of about 40,000 people. Government to open 25,000 Jan Aushadhi Kendras to make medicines available at a ordable prices.

Increasing Investments and spending

FDI in flows in the chemicals sector (other than fertilizers) reached Rs. 1,39,776 crore (US$ 22.8 billion) between April 2000-September 2024. An investment of Rs. 8 lakh crore (US$ 107.38 billion) is estimated in the Indian chemicals and petrochemicals sector by 2025. Prime Minister, Mr. Narendra Modi, laid the foundation stone of development projects worth more than Rs. 50,700 crore (US$ 6.11 billion) on September 14, 2023.

Challenges:

The intricate assets and equipment found in chemical plants pose inherent risks to employee safety, making rigorous compliance and meticulous maintenance essential. Ensuring adherence to stringent regulatory standards and implementing proactive maintenance protocols are crucial to mitigating hazards, preventing accidents, and safeguarding the well-being of personnel. By prioritizing these critical aspects, chemical plants can minimize risks, optimize operational efficiency, and foster a culture of safety and responsibility.

The chemical industry, while a vital sector, has a significant environmental footprint, generating hazardous substances and waste products that pose substantial risks to ecological balance and human well-being. The release of toxic chemicals and pollutants can contaminate air, water, and soil, causing irreparable harm to ecosystems and human health. As such, it is imperative for the industry to adopt sustainable practices, invest in eco-friendly technologies, and implement stringent waste management protocols to minimize its environmental impact and ensure a healthier planet for future generations.

Implementing rigorous quality control procedures is essential to guarantee the safety, e cacy, and excellence of products throughout the entire manufacturing process. These procedures ensure that every stage, from raw material selection to nal product testing, meets stringent standards, thereby preventing defects, minimizing risks, and consistently delivering high-quality products that meet customer expectations and regulatory requirements. By integrating quality control measures, manufacturers can maintain the highest levels of product integrity, reliability, and performance.

COMPANY OVER VIEW

Vital Chemtech Limited was originally incorporated as a private limited company on November 11, 2013, as Rudra Chemtech Private Limited , under the provisions of the Companies Act, 1956. Subsequently, Our Company was converted to Limited Liability Partnership Firm as Rudra Chemtech Limited Liability Partnership having duly passed the necessary resolution in terms of Rule 20(1) of the LLP Rules, 2009 on February 12, 2015, under the LLP Act, 2008. Thereafter, on February 20, 2015, name was changed to Vital Chemtech Limited Liability Partnership pursuant to Rule 20(3) of the LLP Rules, 2009. Later on, our Limited Liability Partnership was converted to Public Limited Company under section 366 Part I chapter XXI of the Companies Act, 2013 as Vital Chemtech Limited and fresh Certificate of Incorporation dated November 25, 2021, was issued by Assistant Registrar of Companies, Ahmedabad.

BUSINESS OUTLOOK

Vital Chemtech Limited is engaged in the business of manufacturing of Phosphorus Derivatives Products. Our Company is a manufacturer and supplier of Phosphorus base chemicals with highest quality practice and compliant with Highest Environmental, Health, and Safety (EHS) in the chemical industry. The company has State of the Art Programmable Logic Controller (PLC) and Supervisory Control and Data Acquisition (SCADA) operated in integrated complex in PCPIR region of Dahej, Gujarat, India for manufacturing of phosphorus base chemicals. Manufacturing Facility of our company is having integrated manufacturing facility for manufacturing of phosphorus base chemical. Our manufacturing Facility located in Dahej, Gujarat, has been certified with ISO 9001:2015, ISO 45001:2018 and ISO 14001:2015 from Bureau Veritas to maintain highest quality, environmental and safety practices. Our plant is ZLD (Zero Liquid Discharge) to ensure minimum emissions and waste generation. The state of the art operation ensures organized uni flow state of the art manufacturing and supply sustainability to our valued customers.

Presently our company manufactures Phosphorus Trichloride (Pcl3), Phosphorus Oxychloride (POCl3), Phosphorus Pentachloride (PCl5), Phosphorus Pentoxide (P2O5), Poly Phosphoric Acid (PPA) and Phosphorus Pentasul de (P2S5) for our customers across segments such as Lifesciences, Crop Care, Specialty Chemicals, Textile Auxillaries, Dyes, Pigments and Plastic Additives. Our company also does trading of its raw Material. Our company is in the process of obtaining approval of Phosphorus Pentasul de (P2S5) from our customers.

Our Company has robust growth and improvement in top line and bottom line on restated financial statement. We have approximately half a decade of track record in manufacturing phosphorous based specialty chemicals. We have experienced sustained growth with respect to the various financial indicators as well as a consistent improvement in our balance sheet position in the last three Fiscals, wherein we have seen an increase in our net worth. We have organically grown our operations over the years.

Risk and Concerns

The Company adopts a proactive and comprehensive approach to risk management, identifying, assessing, and mitigating potential risks through the implementation of tailored measures. To ensure the effectiveness of its risk management framework, the Company continuously develops and re nes its Risk Management Policy, which is regularly presented to the Board for approval. The Risk Management Committee plays a crucial role in:

- Ensuring the establishment and maintenance of robust methodologies, processes, and systems to monitor and evaluate business-related risks - Overseeing the implementation of the risk management policy, including assessing the adequacy of risk management systems - Periodically reviewing and updating the risk management policy to address emerging risks and trends - Keeping the Board of Directors informed about the Committees discussions, recommendations, and actions taken to address identified risks

Through this structured approach, the Company demonstrates its commitment to effective risk management, ensuring the protection of its assets, reputation, and long-term sustainability.

PRODUCTS

Our company is engaged in manufacturing of Phosphorus based products. We manufacture the products for our customers on purchase order basis.

Phosphorus Trichloride (PC1 3 )	Phosphorus Pentachloride (PC1 5 )	Poly Phosphoric Acid (PPA)
Phosphorus Oxychloride (POCl 3 )	Phosphorus Pentoxide (P 2 O s )	Phosphorus Pentasulfide (P 2 S 5 )

Following are the products manufactured by our company:

1. Phosphorus Trichloride (PCl3)

Phosphorus Trichloride is colorless or slightly yellow fuming liquid with a pungent and irritating odor resembling that of hydrochloric acid. It is used during electrodeposition of metal on rubber and for making pesticides, surfactants, gasoline additives, plasticizers, dyestu s, textile nishing agents, germicides, medicinal products, and other chemicals.

2. Phosphorus Oxychloride (POCl3)

Phosphorus Oxychloride is a colorless fuming liquid with a pungent odor. It is toxic by inhalation and corrosive to metals and tissue. It is used in gasoline additives and hydraulic uids.

3. Phosphorus Pentachloride (PCl5)

Phosphorus Pentachloride is a greenish-yellow crystalline solid with an irritating odor. It is decomposed by water to form hydrochloric and phosphoric acid and heat. This heat may be sufficient to ignite surrounding combustible material. It is corrosive to metals and tissue. It is used to manufacture other chemicals, in aluminum metallurgy, and in the pharmaceutical industry.

4. Phosphorus Pentoxide (P2O5)

Phosphoric anhydride appears as a white amorphous powder. Corrosive to metals and tissue and moderately toxic. The usage of phosphorus pentoxide varies significantly in the chemical industry due to its applications as laboratory reagent, starting or reagent material in synthesis processes, and in heat-insulating glass production.

5. Poly Phosphoric Acid (PPA)

Polyphosphoric acid is a hygroscopic, clear and viscous liquid. It has been synthesized by reacting phosphoric acid with phosphorus (V) oxide. It is a moderately strong mineral acid with a wide range of applications. Polyphosphoric acid can be used in the manufacture of special supported catalysts, e. g. for use in the production of cumene from benzene. Polyphosphoric acid can be used in the descaling and brightening of metal surfaces. Polyphosphoric acid is suitable for the drying of gas streams.

6. Phosphorus Pentasul de (P2S5)

Phosphorus pentasul de is the inorganic compound with the formula P2S5. It is generally yellow solid in nature. It is used in the production of safety matches, lube oil additives, and pesticides.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Internal Control system and adequacy Internal Control measures and systems are established to ensure the correctness of the transactions and safe guarding of the assets. Thus, internal control is an integral component of risk management. The Internal control checks and internal audit programmers adopted by our Company plays an important role in the risk management feedback loop, in which the information generated in the internal control process is reported back to the Board and Management. The internal control systems are modified continuously to meet the dynamic change. Further the Audit Committee of the Board of Directors reviews the internal audit reports and the adequacy and effectiveness of internal controls.

FINANCIAL HIGHLIGHTS:

Particulars	Standalone-Year Ended		Consolidated-Year Ended
	31/03/2025	31/03/2024	31/03/2025	31/03/2024
Revenue From Operations	12022.87	10,173.26	13,390.37	9,827.38
Other Income	198.86	330.91	207.58	333.21
Total Income	12,221.72	10,504.17	13,597.95	10,160.59
Less: Total Expenses before Depreciation, Finance Cost and Tax	11256.58	9681.64	12,262.19	9807.84
Profit /(Loss) before Depreciation, Finance Cost and Tax	965.15	822.53	1335.76	352.75
Less: Depreciation	208.49	217.55	497.48	263.30
Less: Finance Cost	82.05	113.77	217.40	124.71
Profit /(Loss) Before Tax	674.61	491.21	620.88	(35.26)
Less: Current Tax	180.52	116.49	180.52	116.49
Less: Deferred tax Liability (Asset)	31.31	(27.63)	34.77	(21.52)
Profit /(Loss) after Tax	462.77	402.35	405.59	(130.23)

HUMAN RESOURCES:

Human Resources play a critical role in driving the Company s strategies and growth. The Company endeavours to become the best place to work for its employees and to provide them with a nurturing environment that is essential for their growth. The Company has implemented comprehensive and well-structured HR Policies to ensure employee growth both at personal and professional levels. The Company s talent pool comprises a diverse set of experienced and skilled people who play key roles in enhancing business efficiency, devising strategies, setting up systems and evolving business as per industry requirements. The Company provides a safe, conducive and productive work environment to its people. Overall, the Company provides a nurturing work environment to a diverse set of workforce.

We continue to invest in developing a pipeline of future talent and nurture them. As part of this process, we provide development and training opportunities to our workforce, which motivates and encourages them to grow in their work. As on March 31, 2025, the Company had 60 permanent employees. The Company has been maintaining cordial and healthy Industrial Relations, which has helped to a great extent in achieving the upper growth.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR:

Ratio	As at 31st March, 2025	As at 31st March, 2024	% CHANGE FROM LAST YEAR	Explanation for Change in Ratio (for more than 25% in comparison with last year)
Current Ratio	1.92	1.91	0.52%	Reason for Movements is not Required since Movement is not more than 25%
Debt-Equity Ratio	0.05	0.14	64%	Reason for movement is due to repayment of debt.
Debt Service Coverage Ratio	4.32	3.55	31.31%	Due to an increase in earnings available for debt service in Fiscal Year 2025 compared to Fiscal Year 2024.
Return on Equity Ratio	5.04%	4.49%	12.25%	Reason for Movements is not Required since Movement is not more than 25%
Inventory turnover ratio (in times)	8.86	5.88	47.28%	Inventory turnover ratio is Increased because sales is Increased.

Trade Receivables turnover ratio (in times	2.77	2.49	11.24%	Reason for Movements is not Required since Movement is not more than 25%
Trade payables turnover ratio (in times)	4.07	4.20	3.10%	Reason for Movements is not Required since Movement is not more than 25%
Net capital turnover ratio (in times)	1.19	0.98	21.43%	Reason for Movements is not Required since Movement is not more than 25%
Operating Profit Margin	4.69 %	3.46%	35.55%	Due to Increase the Profit of the Company in respect to increase in sale in Fiscal Year 2025 compared to Fiscal Year 2024.
Net profit ratio	3.85%	3.96%	2.78%	Reason for Movements is not Required since Movement is not more than 25%
Return on Capital employed	7.24%	5.25%	43.37%	Return on Capital Employed is Increased significantly because sales is increased & the profitability is also significantly Increased
Return on investment.	4.59%	3.87%	18.60%	Reason for Movements is not Required since Movement is not more than 25%
Interest Coverage Ratio mm	-L0.27	6.19	65.91%	Due to an increase EBITDA in Fiscal Year 2025 compared to -Fiscal-Year.2024.

CAUTIONARY NOTE:

Statements in this Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results may be different from those expressed or implied since the Companys operations are affected by many external and internal factors, which are beyond the control of the management. Hence the Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.

Registered o ce:		For and on behalf of Board of Directors
B-406, Mondeal Heights, Opp. Karnavati Club,		VITAL CHEMTECH LIMITED
S. G. Highway, Ahmedabad- 380015, Gujarat.		CIN: L24299GJ2021PLC127538
	Sd/-	Sd/-
	Jay Bhatt	Vipul Bhatt
Place: Ahmedabad	Whole Time Director	Chairman & Managing Director
Date: September 01, 2025	DIN: 09363173	DIN: 06716658