Rossari Biotech Ltd

Rossari is increasingly shifting its focus towards growing its international business. This year, the Company witnessed a significant increase in the export share, which now stands at almost 24% of our total revenue. Despite challenges like the recessionary trend in Europe impacting some of our sales, we are optimistic about the future. The Company is targeting growth in key markets like Bangladesh, Turkey, and Latin America. Establishing a sales office and expanding the product offerings in the US are steps towards this goal.

What is your take on the overall macro-environment?

The overall macro-environment for Rossari has been a mix of stabilising factors and challenges. The stabilisation of raw material pnces in the third and fourth quarters has provided some relief, especially after experiencing fluctuations earlier in the year. However, there is pressure on margins due to the nature of the business, which involves formulation and innovation, making it challenging to pass on complete price increases immediately to customers.

Despite these challenges, the Company has seen significant volume growth in all segments. It is planning to establish new international sales offices with a focus on exports. The response and the growth witnessed demonstrate the Company's proactive approach to navigating the macro-environment and capitalising on opportunities for growth. This factor fuels our optimism about growth opportunities, particularly in export markets like the US, South America, the Middle East & Africa.

Talking about the overall business review, how would you sum the year up for Rossari?

The year has been a transformative one for Rossari, marked by both challenges and notable successes. Despite facing fluctuations in raw material pnces and disruptions in supply chains due to geopolitical conflicts, the Company has achieved significant volume growth across all segments.The strength of the HPPC segment has been a key highlight, with an exceptional year-on-year growth of almost 18%. TSC saw volume growth during the year though pnces were soft, while AHN has been a little slow this year due to lower demand. However, we are optimistic that both these verticals will show good growth in the coming years.

Rossari has also made strides in diversifying its product portfolio and expanding into new markets. The launch of products for the aquaculture feed additives business and the successful manufacturing of biosurfactants with antimicrobial properties are notable achievements helping the Company in achieving a steady growth. Additionally, innovations

in textiles, such as spin finishes, lubricants for yarns, and coatings for technical textiles, have shown promising results. A continued momentum is expected in the HPPC segment, driven by detergents, ingredients, paints, ceramics, water treatment, and surfactants for agro and non-agro sectors, as well as institutional chemicals.

The new CAPEX of approximately ' 1,780 Million is expected to stimulate growth, positioning the Company for continued success and expansion in the future. Overall, the year has been a testament to Rossari's resilience, adaptability, and commitment to innovation and growth.

What is your thought on the collaborate part, how have we collaborated in practical terms?

The collaborations within Rossari have been instrumental in driving innovation and enhancing competitiveness. The partnership with Romakk has allowed the Company to backward integrate into silicon oils, a key raw material used in textile finishing, wetting agents, spreading agents in agrochemicals, and lubricants for various industries. This move has reduced dependency on imported raw materials and improved margins.

Furthermore, the collaboration between Tristar & Unitop has led to the production of various raw materials. Tristar's expertise in distillation and Unitop's knowledge of esters and amines have been shared across the Company, enabling them to collectively establish production of these raw materials. This cross-functional experience sharing and collaboration have been key drivers of success. Another significant collaboration has been the utilisation of Rossari's distribution network to sell surfactants produced by Unitop. This collaboration has led to complete capacity utilisation at Unitop, necessitating the doubling of capacity.

The cleaning chemical business of BRPL has also seen major success over the last few years, with revenues growing at CAGR of 34% over the last 3 years. The new introductions of various cleaning products includes expanding our operations within Indian Railways to offer various services such as on-board housekeeping

Services, clean train stations, kitchen/pantry cleaning, railway laundry and even undertaking projects like foam cleaning of urinals in certain states. These efforts have witnessed notable success across these endeavours driving to this growth story. BRPL's product strategy focusses on introducing improved cleaning chemicals including gel series and a specialised healthcare disinfection range along with a host of other allied offerings to meet evolving market demands. Gel Series was launched with the thought process of providing a distinct solution compared to the conservative powder and liquid form. Since the product is concentrated and uses low dilution, low rinsing is required, thereby conserving water. BRPL plans to provide innovative solutions in the cleaning chemicals range by leveraging advanced formulations, eco-friendly ingredients, and effective disinfection technologies to ensure superior performance and safety.

Overall, these collaborations have not only driven innovation but also improved efficiency, reduced costs, and expanded market reach for Rossari.

How is the Company progressing in terms of product innovation?

The Company is making significant strides in product innovation across various fronts.

One notable example is the implementation of production for longer runs in loop reactors for ethoxylation, a key raw material for surfactants. This continuous production process translates to greater efficiency and cost savings.

Building on this momentum, at Tristar, the Company is doubling the distillation capacity for phenoxyethanol, a critical product, while simultaneously expanding into new offerings like phenoxypropanol and polyethylene glycol powders for the pharmaceutical industry.

Notably, the introduction of spray cooling technology for polyethylene glycol powders leverages our success in pharma tablet coating from the previous year, creating a powerful solution for the sector.

The Company is also undertaking a significant project for a molecule, a key product for the oil and gas industry. This project, along with the dedicated team, demonstrates our commitment to expanding our presence in the oil and gas industry, not just in India, but also in the Middle East.

At Rossari, we are fostering backward integration to enhance margins. We have developed the capability to produce certain key molecules in-house, which were previously outsourced. Furthermore, we have established a range of successful products for viscose manufacturing, further expanding our offerings in this space.

What is your take on the capacity enhancement of the Company and how is it creating synergy to your business delivery?

The capacity enhancement initiatives undertaken by the Company are pivotal for driving growth and meeting customer demands. The expansion of the facility at Dahej and the increase in ethoxylation capacity at Unitop are strategic moves that will allow the Company to enter new domains within the HPPC segment and produce essential ingredients for the Group. This expansion aligns with the growing demand in sectors like Agrochemicals, Home & Personal Care, Oil & Gas, and Pharma.

The doubling of ethoxylation capacity is particularly significant, considering the robust demand for surfactants and Phenoxy Series products. The planned expansions at Unitop, including the increase in distillation capacity and the focus on key molecules, are aimed at meeting this high demand. The introduction of new molecules, along with the expansion of capacity for Biosurfactants and Silicone Surfactants, further demonstrates the Company's commitment to innovation and meeting market needs. Overall, these capacity enhancement initiatives are creating synergies by enabling the Company to meet growing market demands, expand its product offerings, and enhance its competitiveness in various industries.

What is the outlook for our export business this year?

The Company is increasingly shifting its focus towards growing its international business.

This year, the Company witnessed a significant increase in the export share, which now stands at almost 24% of its total revenue. Despite challenges like the recessionary trend in Europe impacting some of our sales, we are optimistic about the future. The Company is targeting

growth in key markets like Bangladesh, Turkey, and South America. Establishing a sales office and expanding the product offerings in the US are steps towards this goal. In South America, we are gaining traction in regions like Latin America, Sudan, Brazil and Peru. Additionally, the Company is focussing on strengthening its presence in Bangladesh through the establishment of a new sales office, and a revamped distribution channel. Overall, the Company is confident that our strategic focus on export markets will drive significant growth in the coming years.

What key message would you like to share with your shareholders?

Rossari's key message to its shareholders is one of optimism and growth. The Company remains focussed on its strategic priorities and is confident in its ability to deliver sustainable growth. The Company's investments in technology, capacity expansion, and new product developments demonstrate its commitment to creating long-term value for its shareholders. Rossari values the trust and support of its shareholders and is dedicated to delivering strong financial performance and shareholder returns.

Looking Back on a Year of Strong Growth

We are pleased to report another year of growth at Rossari Biotech.

Over the past three years, we have consistently delivered strong results through a combination of organic initiatives to expand our core business and inorganic growth strategies like acquisitions. While the strategic investments have had a temporary moderating effect on our return ratios, it is important to remember that these investments were made with a long-term perspective in mind. The Company's balance sheet remains extremely strong, and we are confident that these investments will position the Company for even greater success in the years to come.

The HPPC segment, which represents a significant portion of the overall revenue, is well-positioned for continued healthy growth. The underlying industries that we serve picked up in the second half of the year, which bodes well for our future performance. The growth in our HPPC segment is being fuelled by volume increases across a variety of product categories.

While the outlook for the textile sector remained muted during the year due to falling raw material prices, the demand for the products was visible. The Company remains confident in the long-term potential of the textile sector and is actively exploring new opportunities within this space.

The AHN division experienced softer demand during the year. Overall, the Company is confident of the long- term prospects of all its businesses and remains focussed on delivering continuing value to our stakeholders.

While the Company delivered strong performance in the HPPC business led by accelerated momentum in

the Home Care, Agrochemicals and Performance Chemicals sectors, broader operating constraints and a slowdown in demand slightly influenced the TSC business during the fiscal. Overall, the Company reported a resilient performance in 2023-24, with steady gross margins and EBITDA margins. Our international business is showing positive momentum, with this year achieving the highest-ever export sales figure. This trend is expected to continue.

Further, with the ethoxylation capacity nearing optimum utilisation at Unitop and Tristar, the Company has initiated expansion projects to augment the capacity. The ' 1,780 Million projects for capacity expansion and the addition of some new molecules are expected to be completed in 2024-25. This significant investment underscores our commitment to growth and positions us for a strong financial performance in the years to come.

Rossari Biotech's innovation and R&D strategy are geared towards creating new products and technologies to meet market demands and maintain a healthy competition. The Company prioritises growth drivers like surfactants, esters, and biosurfactants, investing in expanding capacities and developing new products in these areas. The commitment to sustainability and innovation is evident with a focus on green chemistry, aligning with the industry's shift towards eco-friendly products. Rossari is also pursuing backward integration for raw materials and exploring new markets and applications to drive further growth and profitability.

A recent milestone in Rossari Biotech's innovation journey is the development of biosurfactants. By establishing a manufacturing process based on fermentation, the Company is

embracing a greener approach to surfactant production. This move is strategic, considering the increasing demand for environmentally friendly surfactants in industries like home care and personal care. Currently, a pilot plant is operational, with plans to scale up to a large-scale manufacturing plant in the future.

Furthermore, we have taken steps to strengthen our leadership team in order to ensure that we have the talent and expertise in place to execute on our ambitious growth plans. By nurturing and promoting talent from within our own organisation, we have built a strong leadership team that is fully equipped to guide us to scale our operations to meet the demands of a growing business.

The Company believes success is built on a strong foundation. The Board of Directors provides strategic direction and ensures responsible and transparent operations through a commitment to the highest governance standards, which creates the framework for the team to thrive. The employees, driven by passion and integrity, consistently deliver exceptional performance.

Rossari Biotech deeply values the trust placed on it by all its stakeholders - customers, suppliers, investors, and employees alike. Their continued support fuels the pursuit of innovation and growth. As the Company navigates its future trajectory, upholding highest ethical standards, sustainable growth, and governance practices remains paramount. This collaborative spirit ensures that the Company continues to exceed expectations and create long-term value for everyone invested in its success.

Our HPPC segment has been the primary driver of our growth, showing the highest growth rate. This segment is expected to continue driving our growth in the future as well. This growth has been underpinned by significant contributions from specialty surfactants, phenoxy series products, institutional cleaning products, and performance chemicals, which have played a crucial role in sustaining our performance. Within the HPPC segment, we have experienced a significant volume-driven growth year-on-year, which underscores our commitment to innovation and our ability to seize emerging market opportunities.

We are pleased to report that Rossari Biotech delivered a steady financial performance in the year ending March 31,2024. Our revenues increased by 10.5% to reach ' 18,305.58 million, and EBITDA grew by 12% to ' 2,497.55 million. Our gross margins stood at 29.3%, and EBITDA margin at 13.6%, reflecting our focus on expanding our high-margin product portfolio. The PAT stood at ' 1,306.89 million as against ' 1,072.57 million. This performance is a testament to the resilience of our business model, demonstrating our ability to navigate a complex economic landscape while maintaining profitability.

During the year, capex approval has been received for a total of ' 500 million in Rossari, for expansion of its capacity dedicated to products related to HPPC and producing ingredients for our subsidiary companies and ' 1,280 million for Unitop, for ethoxylation capacity expansion and for setting up a new facility for products related to the oil and gas industry.

Our HPPC segment has been the primary driver of our growth, showing the highest growth rate. This segment is expected to continue driving our growth in the future as well. This growth has been underpinned by significant contributions from specialty surfactants, phenoxy series products,

institutional cleaning products, and performance chemicals, which have played a crucial role in sustaining our performance. Within the HPPC segment, we have experienced significant volume-driven growth year- on-year, underscoring our commitment to innovation and our ability to seize emerging market opportunities. Apart from that, TSC has performed well in terms of volume growth, driven by spin finishes for textiles and lubricants for yarn and thread. During the year, we acquired the remaining stake in Tristar and now Rossari holds a 100% stake.

Looking ahead, we are optimistic about India's economic activity, despite concerns over global geopolitical tensions. The economy will end the year on a high note with GST receipts, PMI indices and other lead indicators at or near record levels. Full-year growth may exceed the 7.6% official forecast and now, the 202425 numbers are being bumped up.

The Inflation is range-bound at close to the 5% mark but RBI continues to tread a cautious path. Policy-wise, the government has concluded a ground breaking, investment and jobs linked trade deal with the 4-member European Free Trade Association (EFTA) bloc and several other key initiatives are in the works.

At Rossari Biotech, we remain dedicated to our long-term growth strategy. We are continuously driving innovation and improving operational efficiency across all our plants, with a focus on optimising capacity utilisation. Our strategic investments, coupled with disciplined financial management and a commitment to R&D and customer expansion, position us well to deliver sustained growth in the years to come. We are confident in our ability to navigate the current global environment and emerge even stronger by leveraging our diversified business model, commitment to innovation, and strategic focus.

I take this opportunity to extend my heartfelt gratitude towards all our stakeholders and partners for their unwavering support through our journey. With strong teamwork and backing from all, we remain confident of achieving greater heights in the coming years and continuing to create value for each stakeholder.