Gem Aromatics Limited (GEMAROMA.NS) is a specialty ingredients manufacturer operating across mint, clove, and synthetic aroma chemicals. The company serves over 225 domestic and 44 international customers in 18 countries, offering a diverse product portfolio. Its client base includes major consumer brands, and the company has recently commissioned a greenfield manufacturing facility to expand its production capacity and higher-value specialty offerings.
Management Overview
Gem Aromatics held its board meeting on January 27, 2026, following the release of its third-quarter and nine-month results. Management highlighted the commissioning of the Dahej greenfield facility. Commercial production has commenced, but volumes contributed minimally to the reported quarter, as processes are in the initial stabilization phase. Management emphasized that this facility represents a strategic long-term investment and that operational ramp-up is critical to achieving medium-term growth targets. Non-cash depreciation charges associated with the facility materially impacted consolidated profitability in the reporting period.
Operational Efficiency and Process Stabilization
Management underscored the focus on improving operating leverage as asset utilization at the new facility increases. The primary operational challenges relate to process optimization, equipment commissioning, and initial throughput logistics. These factors, while limiting near-term profitability, are expected to moderate as production stabilizes. The company reaffirmed its commitment to cost optimization and efficiency improvements across legacy operations to support sustainable margins.
Product Ramp-Up
Commercial production at the Dahej facility includes high-value specialty offerings. Management confirmed that initial output was limited due to process stabilization, and emphasized ongoing efforts to enhance throughput, product consistency, and quality control. These operational adjustments are intended to support medium-term revenue and margin growth.
Capital Expenditure and Depreciation Impact
Total capital expenditure at the Dahej facility amounted to approximately ₹2,500 million, generating a non-cash depreciation charge of ₹87.1 million in Q3 FY26. Management clarified that these charges are accounting effects and do not affect cash flows. They anticipate that depreciation pressures will decline as asset utilization improves, allowing margins to benefit from increased operating leverage.
Medium-Term Strategic Outlook
Management outlined a long-term revenue target of ₹10,500–11,000 million by FY28, with expected EBITDA margins of 16–18%. These targets are expected to be achieved through:
- Gradual ramp-up of the Dahej facility.
- Expansion of higher-value specialty offerings.
- Operational efficiency and throughput enhancements.
Management noted that near-term performance is primarily influenced by operational execution, rather than market conditions, and that the facility’s ramp-up is a key determinant of margin recovery and profitability.
Operational Priorities and Efficiency Measures
Gem Aromatics continues to focus on:
- Optimizing production processes to improve yields and reduce operational waste.
- Stabilizing workflows in the new facility to maximize throughput and asset utilization.
- Leveraging capital investment to drive cost efficiency and medium-term margin expansion.
Medium-Term Profitability Drivers
The key factors supporting future profitability, according to management, include:
- Improved asset utilization at the Dahej facility.
- Process optimization and stabilization.
- Increased output of higher-value specialty offerings.
- Ongoing cost control initiatives across all operations.
Bottom Line
Gem Aromatics’ near-term results are affected by initial ramp-up costs and depreciation charges from the new facility. Management emphasized that medium-term performance depends on stabilizing operations, increasing production efficiency, and scaling high-value product output, which are expected to support profitability and margin recovery.