S H Kelkar & Company Ltd

We delivered a strong performance in FY 2024-25, marked by consistent demand across all segments and healthy momentum in both domestic and international markets.

Dear Shareholders,

It is my privilege to present the 69^th Annual Report of S H Kelkar and Company Limited for FY 2024-25. During the year, we demonstrated resilience, strong execution, and continued strategic expansion despite a challenging operating landscape. Our relentless focus on innovation and quality, backed by deep expertise and sustained R&D investments, enabled us to meet evolving customer demands. Our focus remains steadfast on creating value for all stakeholders while strengthening our leadership position in the industry.

The global fragrance and _avour (F&F) industry remains a vital pillar of the consumer products sector, deeply integrated across categories like personal care, home care, fabric care, beauty care, healthcare, and in food and beverages segments. The sector is benefiting from multiple structural tailwinds, such as rising consumer incomes, urbanisation, premiumisation, technological advancements, and growing preference for health-oriented ingredients. Emerging markets across Asia, Africa, and Latin America are at the forefront of this demand while global FMCG companies increasingly seek resilient supply chains and localised innovation, creating significant opportunities for differentiated, high-quality solution providers.

The Group delivered a strong performance in FY 2024-25, marked by consistent demand across all segments and healthy momentum in both domestic and international markets. Total income rose by 16.3% to 2,147 crores from 1,847 crores in the previous year. EBITDA stood at

297 crores in spite of increased cost of operations and investment in new geographies, with EBITDA margins steady at 14%, primarily driven by operating efficiencies, product mix optimisation, and our ability to respond to market dynamics swiftly. While raw material prices remained volatile for part of the year, we are confident in our ability to maintain healthy margins going forward. Profit After Tax (PAT) stands at 73 crores in FY 2024-25 after adjusting for one off exceptional loss due to fire of 61 crores compared to 124 crores in the previous year.

The fire incident at our Vashivali facility tested our resilience and agility. We activated our Business Continuity Plan, shifting production to alternate sites and ramping up capacity at our newly commissioned Indonesia facility to ensure uninterrupted customer service. Our turnaround initiatives, coupled with recent client wins and increasing demand, position us for a stronger and more sustainable future.

Our core fragrance division grew by 19%, supported by robust demand from MSMEs and mid-sized FMCG customers, improved penetration across Southeast Asia through our Indonesia facility, and expanded presence in Europe through our newly launched Creative Development Centres (CDCs). Our _avours business rebounded sharply, delivering 43% growth, led by increased client engagements across India and ASEAN markets, and growing demand for natural, health-focussed formulations. Our ingredients business also made significant progress, overcoming past challenges through strategic backward integration in India, productivity improvements, and cost reduction measures.

Our European segment delivered impressive revenue growth during the year. This can be attributed to robust performance of Creative Fragrances & Flavours (CFF) and Holland Aromatics, combined with deeper client engagements and product innovations. We also expanded into new customer segments and geographies, including strategic support for clients in the Middle East and North Africa (MENA). Europe contributes 28% to our consolidated revenue and continues to offer ample growth potential.

Our partnership with a distinguished global MNC saw exponential growth this year, resulting in a healthy order book, almost more than doubling the previous year's value. This achievement underscores our innovation and R&D, service, and marketing capabilities. We intend to fortify this partnership over the long term with a view to propel our growth plans and become a top fragrance and _avour company of choice globally.

FY 2024-25 also marked meaningful progress in expanding our global footprint. Our ‘3I' strategy, focussing on India, Italy, and Indonesia, has proven to be highly successful. In India, we reinforced our position as the largest India-origin F&F company by deepening customer relationships and advancing backward integration initiatives. Italy strengthened our presence in Europe, while the commencement of operations at our greenfield facility in Jakarta significantly enhanced our reach across Southeast Asia.

Building on this foundation, we strengthened our global presence by entering the US, the world's largest fragrance market, through the establishment of Keva USA Inc. To further support our growth ambitions, we continued investing in innovation infrastructure, commissioning a new Creative Development Centre (CDC) in Germany during the year, while setting up of another CDC in Manchester, UK, is progressing well. These hubs, along with our US presence, will enable us to deepen client engagement, accelerate product development, and enhance proximity to key markets across Europe, North America, and beyond. These strategic initiatives are aligned with our long-term ambition to emerge among the top 10 fragrance and _avour companies globally.

Sustainability remains integral to our operations. Through backward integration, we have de-risked critical ingredient sourcing by shifting key production to India, ensuring supply security while reducing our environmental footprint. Our new greenfield facility in Indonesia and the upcoming unit in Vanavate, India, are designed with energy-e_cient infrastructure, process automation, and resource optimisation at their core. Even during the Vashivali fire response, we demonstrated agile risk management to minimise disruptions.

In parallel, our innovation efforts are focussed on enabling cleaner, safer, and more sustainable product solutions. With a growing emphasis on natural and biodegradable formulations, our R&D is aligned with evolving global preferences. The upcoming commissioning of the Vanavate facility and reinstatement of the Vashivali fragrance unit will further strengthen integration, enhance operational efficiency, reduce our environmental footprint, and elevate ESG outcomes, reinforcing our commitment to building a future-ready, responsible enterprise.

As we look ahead, we remain confident in our growth prospects, supported by a clear strategic roadmap. Our focus is to complete the setup of the Creative Development Centre in Manchester, leveraging the existing CDC in Germany, deepening our product innovation capabilities, and strengthening customer partnerships globally. We see favourable opportunities across both domestic and international markets, driven by evolving consumer preference towards clean-label products, premiumisation, and health-oriented formulations. With disciplined execution, innovative product portfolio and operational excellence, we are well-positioned to deliver sustainable growth and create enduring value for all stakeholders.

I sincerely thank our employees, partners, customers, suppliers, shareholders and Board members for their continued trust and support. Together, we are building a stronger, more global Keva, poised to lead with purpose, creativity and growth.