Positioned for What’s Coming

Dear Shareholders,

There is an old wisdom that both nature and engineering understand: nothing rises safely unless it is firmly anchored. Trees that outlive the storm are the ones with deepest roots. Engineering marvels stand tall because their foundations run deep. Height, in the end, is only a reflection of depth.

The same philosophy applies at Aksharchem. Every period of difficulty we pass through inspires us to anchor ourselves more firmly than ever. I write to you today with the quiet satisfaction that we did the same yet again in FY 2025-26. Let me be honest, this was not an easy year for us. Profitability came under pressure, and the operating environment offered little relief. But choices are what made this year different. We did not retreat, but chose to build. We strengthened what lies beneath the surface of the business, so that when conditions turn favourable, we are all set to rise higher than before.

A year that tested us

The wider operating environment for the dyes, pigments, and precipitated silica industry was shaped by a series of overlapping pressures.

A little bit on the macro context first. Global economic growth remained subdued in FY 2025-26, as geopolitical conflicts, tariffs, and trade restrictions had a spiralling impact, driving inflationary pressures, elevated interest rates, and volatility in input costs. Weaker demand was witnessed across end-user industries, including textiles, paints and coatings, plastics, automotive, construction and consumer goods, as customers bought cautiously and rationalised inventory.

Our cost structure came under pressure due to multiple factors, the prices of key petrochemical-based raw materials, on which a significant part of our portfolio depends, remained elevated, geopolitical conflicts, trade restrictions, and global logistics bottlenecks increased freight costs and affected raw material availability, reinforcing the need for supply-chain diversification and regional sourcing strategies.

On the regulatory side, stricter environmental norms and REACH compliance requirements accelerated industry investments in cleaner technologies, green chemistry, and lowemission manufacturing processes. For an industry as exposed to input costs, global markets, and the regulatory landscape as ours, these were meaningful headwinds.

I will not understate our own performance. Even as we ended the year with revenue growth backed by agility to capture demand, profitability was under strain. That said, years like this reveal character. And I am proud of the character your Company showed: choosing longterm focus over short-term relief, and protecting customer relationships that we spent three decades building, even if it meant accepting thinner margins.

A world reshaping around us

If this year taught us anything, it is that short-term conditions and long-term direction are not always the same. This is the big message that I want to give to the shareholders, because even though the markets remained challenging, several structural changes continued to gather momentum. This reinforces our confidence in the future.

Companies across the world are rethinking how they source critical materials. Continued supply chain disruptions globally have explicitly highlighted the importance of diversifying sourcing strategies. And importantly, the customers are now acting upon it. At the same time, there is a growing demand for differentiated, value-added products and sustainably manufactured solutions, with lower emissions and responsible sourcing.

These expectations are steadily raising the bar for the industry, and I think going ahead the market will be a two-speed one. Undifferentiated commodity players will face continued pricing pressure, while those with specialty grades, export capability and genuine differentiation will be rewarded.

Building through the downturn

These are precisely the shifts that we have spent years positioning for. Our decision to enter precipitated silica has given us a foothold in one of the most attractive specialty chemistry opportunities. With the global automotive industry shifting towards high-performance, fuel-efficient, eco-friendly tyres, their demand is set to surge. Thus, what was once incubated as a new venture has become a critical diversification and growth engine.

This year, we expanded our precipitated silica capacity to meet rising demand and to strengthen our position as a larger, more dependable supply partner. Across all segments, we broadened our customer base across existing and new geographies, reducing our dependence on any single market.

We deepened our commitment to responsible manufacturing as well. During the year, we invested in a solar plant, and with this, ~45% of our power needs will be met through renewable energy. We maintained zero liquid discharge across our operations and continued our efforts to lower coal consumption and the emissions that come with it.

Together, these efforts strengthen our competitiveness, especially among leading international customers who evaluate suppliers based on product differentiation, responsible manufacturing and reliability in delivery. The investments we make today will help qualify us for the long-term, higher-value contracts of tomorrow.

A vision for the future

Our portfolio, business model and balance sheet have been proven through cycles.

Looking ahead, the fundamentals of our industry remain strong. With a stronger foundation that we have built, we remain well-positioned to emerge from this cycle not only larger, but more balanced and more resilient than the one that entered it.

I thank you, our shareholders, for your continued trust and confidence. Together, let us look forward to a year in which the groundwork of today becomes the growth of tomorrow.

Best regards,

Paru M. Jaykrishna

Chairperson