Agro Phos India Ltd Management Discussions

1. Overview

Our company M/s. Agio Phos (India) Limited being a fertilizer manufacturer is also a part of the agriculture sector of India and continuously serving our best since its pioneering stage. The Company is an ISO 9001:2008 certified Company. We are engaged in manufacturing of Single Super Phosphate (SSP). Nitrogen Phosphate and Potassium (NPK), Zinc Sulphate. PROM, PDM. Organic manure and Calcium Sulphate commonly known as soil conditioner or gypsum. We have one unit at Dewas. Madhya Pradesh which has its capacity of 75000 MT per year and another at Meghnagar, Madhya Pradesh which has Its capacity of 1 15500 MT per year. Our Company also undertakes trading of Diamonium Phosphate (DAP), Urea, Ammonium Sulphate and other fertilizers depending upon the demand of the customer.

We are having at our plant a well- equipped in-house testing laboratory accredited with NABL to test the products as per quality standards and relevant chemical composition. In our quest to maintain high standards of quality for our products, we have imported testing machine to test the product in real time basis. The final product has to pass special quality test to ensure that it is of the requisite quality and contains the requisite chemical composition, apart from manufacturing of above products company since last three years also trading in agricultural produce and Animal feeds management is expecting an extensive growth in this segment in future.

Segment-wise Business Review and Operational and Financial Performance:

Companys production and sales as well as companys Financial Performance are as below:

(Quantity In MT) Financial Performance (Aint. in Lakhs)

S.No.	Particulars	F.Y. 2025- 26	F.Y. 2024 -25
	Production
1.	SSP	67,722	98,150
2.	NPK	100	1,581
3.	Calcium Sulphate	-	-
4.	Zinc Sulphate (Heptahydrate )	-	-
5.	Potash	30?	-
6.	Phosphate Rich Organic Manure (PROM)		-
	Sales
1.	SSP	87,429	73,519
2.	NPK	204	1.541
3.	Calcium Sulphate	-	-
4.	Zinc Sulphate (Heptahydrate)	-	-
5.	Potash	280	-
6.	Phosphate Rich Organic Manure (PROM)

S. No,	Particulars	2025-26	2024-25
1.	Revenue from operation	14,795.14	11,987.88
2.	Other Income	98.06	90.88
	Total Income	14.893.19	12078.76
3.	Total Expenses	13,739.25	11,168.94
4.	Profit /Loss before Exceptional Items & Tax	1,153.94	909.82
5.	Profit /Loss before Tax	1,178.38	909.82
6.	PAT	818.20	525.60
7.	Total Comprehensiv e Income	832.58	542.89
8.	Paid up Capital	2027.41	2027.41
9.	EPS	4.04	2.59

2. Segment-wise Business Review and Operational and Financial Performance and Key Financial ratios

SSP: During the year 2025-26, company recorded 87,429 MT of sales for all variant of SSI* Product as compared to last F.Y. 2024-25 is 73.519 MT due to high demand of this product. Our pre- dominant product is SSP.

NPK: In FY 2025-26, the Company recorded consolidated sales of 204 MT of NPK fertilizers (12:32:06 and 12:12:12 variants), as compared to 1,541 MT in the previous year.

Potash: In FY 2025-26. the Company recorded sales of 280 MT of Potash fertilizers.

Traded Quantity: Company apart of the manufacturing of fertilizers products also engaged in trading of the many fertilizers and agri- products the total quantity traded of such products recorded as 3188 MT as the trading of the products is completely depends on the availability of some products in companys stock and market demand of particular products so company may have earn more profit from trading also.

Financial Performance of company during the period under review

The companys performance during the year showed a turnover of < 14,795.14 lakhs, compared to <11,987.88 lakhs in the previous year. Other income also increased from <90.88 lakhs to <98.06 lakhs during the year. Consequently, the company recorded a profit after tax of <818.20 lakhs, as against a profit of <525.60 lakhs in the previous financial year reflecting increase in profit this year.

Details of Significant Changes in Key Financial Ratios:
Ratio	Measure	For the Year 2025-26	For the Year 2024-25	% of change from preceding year	Reason for variance
Current Ratio	Times	1.58	1.44	9.98%	N.A.
Debt-Equity Ratio	Times	0.42	0.44	-3.49%	N.A.
Debt Service Coverage Ratio	Times	7.30	2.66	174.31%	Due to increase in turnover and profitability during the year.
Return on Equity	Percentage	12.14%	8.54%	42.13%	Due to Increase in Net profit after taxes from last year and also increse in shareholders equity from previous year.
Inventory Turnover Ratio	Times	2.86	2.63	8.96%	N.A.

Trade Receivables Turnover Ratio	Times	6.10	6.86	-11.06%	NA
Trade Payables Turnover Ratio	Times	2.37	3.79	-37.63%	Duo to Increase In purchases as compared to previous year.
Net Capital Turover Ratio	Times	3.45	3.44	0.23%	N.A.
Net Profit Ratio	Percentage	5.53%	4.38%	26.13%	Due to increase in Net profit during the year.
Return on Capital Employed	Percentage	15.33%	13.72%	11.77%	N.A.
Return on Investment	Percentage	4.82%	0.00%	100.00%	During the year there is income generated from sale of investments.

3. Glob.il Fertilizer Industry Overview

The global fertilizer industry plays an important role in supporting agricultural productivity and global food security. Fertilizer demand is influenced by population growth, increasing food requirements, limited availability of arable land, crop prices and the need to improve agricultural productivity.

The global industry primarily comprises nitrogenous, phosphatic and potassic fertilizers. While conventional chemical fertilizers continue to account for the major share of global nutrient consumption, the industry is increasingly witnessing demand for specialty fertilizers, micronutrients, biofertilizers, nano-fertilizers, water-soluble fertilizers and enhanced-efficiency products.

The industry remains sensitive to fluctuations in natural gas and energy prices, phosphate rock, phosphoric acid and potash prices, freight costs, foreign exchange rates and geopolitical developments. International supply disruptions, export restrictions and changes in trade policies may also affect fertilizer availability and prices.

At the same time, the industry is undergoing technological transformation through the adoption of precision agriculture, digital farming, soil testing, nano-fertilizers, biofertilizers and enhanced nutrient- efficiency products. Increasing emphasis on soil health, reduction of nutrient losses and sustainable agricultural practices is expected to support demand for innovative fertilizer products.

The long-term outlook for the global fertilizer industry remains positive, supported by the continuing requirement to enhance agricultural productivity and ensure food security. However, industry participants will continue to face challenges arising from commodity price volatility, geopolitical uncertainties, energy costs and changing environmental requirements.

Developments in the global fertilizer industry are relevant to the Company, particularly in respect of raw material availability and prices, international fertilizer prices, import dependence, logistics costs and competitive conditions, which may have an impact on the domestic operating environment.

4. Indian Fertilizer Industry & Companys Contribution toward the same

The Indian fertilizer industry is strategically important for agricultural productivity, food security and rural economic development. India is one of the worlds maor fertilizer consumers, and fertilizer demand Is closely linked to agricultural production, cropping patterns, monsoon conditions, Government policies and subsidy support.

According to Indian Fertilizer Market Report (2025-2033) by IMARC Group, the Indian fertilizer market was valued at USD 11.35 Billion in 2025 and is projected to reach USD 22.78 Billion by 2034. growing at a CAGR of 3.84% during 2026-2034.

Chemical fertilizers dominated product demand at 83.0% in 2025, reflecting their established role in crop nutrition and government-subsidized affordability. Biofertilizers, at 17.0%. are growing rapidly as sustainability mandates and the National Mission on Natural Farming accelerate adoption

The industry has evolved significantly in terms of product range, technology, manufacturing capacity and quality standards. In addition to conventional chemical fertilizers, increasing attention is being given to biofertilizers, nano-fertilizers, organic fertilizers, micronutrients, specialty fertilizers and precision nutrient management. Government subsidy programmes continue to play a significant role in maintaining fertilizer affordability and ensuring adequate availability to farmers. At the same time. Government initiatives are increasingly focused on balanced nutrient application, improvement of soil health and reduction of excessive dependence on chemical fertilizers.

The Company contributes to the fertilizer sector through manufacturing of SSI*, NPK, Zinc Sulphate. PROM, PDM. Organic Manure and Gypsum and through trading of fertilizers and agricultural products. SSP remains the Companys principal product, and the increase in SSP sales during FT 2025-26 reflects continued market demand. The Company intends to strengthen its presence by improving manufacturing efficiency, maintaining product quality, expanding its product portfolio and utilizing opportunities in fertilizer and allied agricultural product trading.

Every nutrient requirement of the soil Is either fulfilled domestically or imported to meet demands. This

industry encompasses private, public, and cooperative sectors, each making significant and collaborative

contributions to the agricultural and economic development of India.

India is the worlds second-largest fertilizer consumer, with agriculture contributing approximately 17-

18% to GDP and employing 42% of the national workforce.

India Fertilizer Industry Insights, FY 2025-26

¦ Chemical fertilizers account for 83.0% of the Indian fertilizer market in 2025.

¦ Dry formulations dominated at 77.0% in 2025 due to ease of storage, handling, and application.

¦ North India holds 33.0% of the domestic fertilizer market in 2025.

¦ South India at 26.4% is the fastest-growing region.

¦ Biofertilizers at 17.0% arc growing rapidly, supported by the governments National Mission on Natural Farming (1NR 2,481 crore) and PM-PRANAM policy rewarding states that reduce chemical fertilizer consumption.

News and Developments into the Market:

• Indigenous Water-Soluble Fertilizer Technology: In August 2025, Indias Ministry of Mines successfully developed its first indigenous water-soluble fertilizer technology after seven years of research, using domestic raw materials. This breakthrough could transform India from a specialty fertilizer importer into a potential global exporter of high-value water-soluble formulations, creating a new manufacturing and export opportunity.

¦ Nano-Fertilizer Production Technology: IFFCOs Nano Urea and Nano DAP plants use proprietary nano-particle synthesis technology that creates nutrient particles of 20-50 nanometers for superior foliar absorption. The technology enables a single 500ml bottle of Nano Urea to replace one bag of conventional urea for certain applications, reducing transportation costs and environmental load.

¦ Biofertilisers and Natural Farming: Government initiatives, including the National Mission on Natural Farming and PM-PRANAM, are supporting the adoption of biofertilisers, organic inputs and balanced nutrient application. The Government has also introduced measures to promote organic and biofertiliser production.

¦ Specialty and Horticulture Fertilisers: Growing horticultural production and increasing demand for high-value crops are creating opportunities for specialty NPK blends, micronutrients and water- soluble fertilisers suited to crop-specific requirements.

• Digital Soil Health and Precision Application Technology: Precision Nutrient Management: Soil Health Cards, digital agriculture platforms, drone-based applications and loT-onabled monitoring are increasingly being integrated into nutrient management practices, supporting efficient and targeted fertiliser application.

¦ Digital Fertilizer Distribution Reform (e-Vikas 2.0): To optimize resource allocation and streamline the rural supply chain, the Government of Madhya Pradesh launched a tech-driven distribution model via the e-Vikas 2.0 system, which rolled out state-wide on April 1. 2026, and became strictly mandator } on August 20,2026, following its integration with the central Digital Agriculture Mission (AgriStack). Under this framework, a farmers subsidized fertilizer quota is systematically calculated based directly on verified land records and crop acreage in the MP Farmer Registry. Cultivators securely reserve their supply by generating a time-bound QR-code e-token via Aadhaar OTP verification, ensuring equitable access, enhanced Inventory traceability, and efficient, direct-to- farrner delivery.

5. Governments Initiatives in the Fertilizer Sector

The Government continues to provide substantial policy and financial support to the fertilizer sector with the objective of ensuring availability of fertilizers at affordable prices while promoting balanced nutrient application.

For FY 2026-27, substantial budgetary support has been provided to the Department of Fertilizers. The overall fertilizer subsidy allocation is approximately <1.71 lakh crore, comprising approximately <54,000 crore under the Nutrient Based Subsidy (NBS) Scheme and <1,16,799 crore under the Urea Subsidy. The fertiliser subsidy allocations for the relevant years are summarised below:

Particulars	Amount in Rs.
	FY 2024-25	FY 2025-26	FY 2025-26	FY 2026-27
	Actuals	Budget Estimates (BE)	Revised Estimates (RE)	Budget Estimates (BE)
Fertiliser	170,682.96	167,887.20	186,460.00	170.799.00
1. Nutrient Based Subsidy	52,810.00	49,000.00	60,000.00	54.000.00
2. Urea Subsidy	117,872.96	118,887.20	126,460.00	116.799.00

Indias fertiliser subsidy allocation moderates in FY27 but remains structurally high. The Department of Fertilisers has been allocated a net <1.71 lakh crore for 2026-27, marking an 8.4% decline from the FY26 Budget Estimate of <1.87 lakh crore, reflecting easing global input prices and lower import dependence. However, the outlay is still nearly 10% higher than the FY26 Revised Estimate, underscoring persistent fiscal pressure from farm input subsidies

Urea subsidies continue to dominate expenditure. Urea continues to be supplied to farmers at a statutorily notified Maximum Retail Price (MRP), with the difference between the applicable cost and notified price being supported through Government subsidy. The MRP of a 45 kg bag of urea remains <242, excluding applicable taxes and ncem-coating charges

For phosphatic and potasslc (P&K) fertilisers, including DAP. MOP, NPK and NPKS, subsidy Is provided under the NBS Scheme based on the nutrient content of the fertiliser. For Kharif 2026, the Union Cabinet approved NBS support of <41.533.81 crore for the period from April 1, 2026 to September 30,2026. The approved nutrient-wise subsidy rates are <47.32 per kg for Nitrogen (N), <52.76 per kg for Phosphate (P), <2.38 per kg for Potash (K) and <3.16 per kg for Sulphur (S). The Kharif 2026 allocation represents an increase of approximately <4,317 crore over Kharif 2025. The Government has also approved <37,952.29 crore under the NBS Scheme for the Rabi season and provided special support of <3,500 per metric tonne for DAP. helping maintain Its retail ju ice at <1,350 per 50 kg bag.

The Governments continued subsidy support and price-stabilisation measures provide greater visibility to the fertiliser Industry, support farmer affordability and help mitigate the impact of volatility in international fertiliser prices.

Government initiatives include:

• PM PRANAM scheme: PM Programme for Restoration, Awareness Generation. Nourishment and Amelioration of Mother - Earth (PMPRANAM) was launched to incentivize States/ Union Territories to promote alternate fertilizers and balanced use of chemical fertilizers.

• Neem-coated urea: The government has introduced 1.00% Neein Coating on all subsidized agricultural grade urea in the country

• Sulfur Coated Urea (Urea Gold) was introduced to overcome the sulfur deficiency in the soil and reduce the input cost of the farmers.

¦ Nutrient-based subsidy policy: It aims to promote the balanced use of fertilizers by linking subsidies to the nutrient content (nitrogen, phosphorus, potash, and sulfur) rather than the final product.

¦ Under this scheme, the government sets a fixed subsidy amount per kilogram for each nutrient in P&K fertilizers.

• Nano Urea: It is a liquid fertilizer developed by IFFCO. It is an alternative to conventional urea.

¦ Real-Time Tracking: Logistics completely mapped on the Integrated Fertilizer Management System (iFMS) to monitor movements from manufacturing plants to retail districts.

6. Indian Fertilizer Market Trends/Drivers:

¦ Advancements in agricultural technology: IFFCO launched the Nano Fertilizer Usage Promotion Mahaabhiyan covering 200 model nano village clusters across 800 villages, offering farmers a 25% subsidy on Nano Urea Plus, Nano DAP, and Sagarika.

¦ Precision Farming and Digital Agriculture Adoption: Soil Health Card program rollouts, drone- based fertilizer application, and loT-enabled soil monitoring are optimizing fertilizer use efficiency. Digital agronomy platforms providing crop-specific nutrient recommendations are improving application precision and reducing wasteful over-fertilization across Indias diverse farm size categories.

¦ Green Revolution Success: The success of the Green Revolution showed farmers that fertilizers could dramatically increase crop yields. This created confidence in using fertilizers and led to widespread adoption across the country.

¦ The implementation of government initiatives: Government policies and subsidies are essential in influencing the fertilizer market The Gol is providing financial support and incentives to farmers to encourage the adoption of modern agricultural practices, including the use of fertilizers. Moreover, subsidies lower cost for farmers, making them more accessible and affordable, thereby boosting productivity, food production, and food security. Indias fertilizer subsidy budget reached approximately INR 1.64 trillion in 2024-25, ensuring that urea and NBS-covered fertilizers remain affordable for farmers. The DBT mechanism directly transfers subsidy benefits to certified retailers, reducing diversion and improving nutrient access for smallholder farmers across all states • Rising Agricultural Productivity Demand: Indias foodgrain production is projected to reach around 368 million tonnes by 2030-31. driven by continued growth In agricultural output and rising demand, according to a recent report.

These drivers reinforce a self-sustaining growth cycle, government subsidies maintain accessibility, innovation improves efficiency, and productivity demand sustains consumption growth that justifies continued policy investment across the fertilizer ecosystem.

7. Challenges (Risks and Concerns):

¦ Government policies and subsidies significantly influence the fertilizer market. Changes in government policies, such as the reduction or elimination of fertilizer subsidies, can have adverse effects on the fertilizer market by impacting demand and profitability. The interplay between government regulations and subsidies can shape the usage and production of fertilizers on a regional and global scale.

• Competition and Market Dynamics: Intense competition among domestic players and increasing presence of international companies. Fluctuating market prices, demand, and supply affect industry profitability.

• Raw Material Dependency: The industry heavily relies on imported raw materials like rock phosphate, potash, and phosphoric acid. India imports approximately 80% of its phosphoric acid and potash requirements, exposing the market to global commodity price volatility and geopolitical supply disruptions. Raw material cost inflation passes through to manufacturer margins and subsidy outflows, creating fiscal pressure on the governments support architecture

• Nutrient Imbalance and Soil Degradation: Heavy subsidization of urea has historically skewed Indias N:P:K ratio to as high as 8:3:1, causing long-term soil health deterioration across the Indo- Gangetic Plain. Correcting this imbalance requires sustained policy and behavioral change that constrains near-term urea volume growth while promoting balanced nutrition inputs.

¦ We are subject to various laws and regulations relating to the handling and disposal of hazardous materials and wastes and bio-medical wastes.

• We require a number of approvals, NOCs, licenses, registrations and permits in the ordinary course of our business and any failure or delay in obtaining the same in a timely manner may affect our operations.

¦ Distribution and Last-Mile Access: Reaching fertilizers to Indias 100+ million smallholder farmers across 640,000 villages requires extensive distribution infrastructure. Cold-ch3in requirements for biofertilizers and short shelf-life constraints for certain liquid formulations add logistical complexity and cost to rural distribution networks.

• Farmer Awareness and Technology Adoption: Transitioning farmers from established urea-heavy application practices to balanced nutrient management, nano-fertilizers, and biofertilizers requires sustained agronomic extension and demonstration programs Low digital literacy in rural areas limits the penetration of precision farming platforms among the smallholder farmer majority.

• The aspect of climate change has created unpredictability in crop production, complicating the demand for fertilizers, which impacts stability and, in turn, affects the Indian fertilizer market share.

8. FUTURE OUTLOOK (2026-2034)

The Indian fertilizer market is positioned for steady, policy-supported growth through 2034. From a base of USD 11.35 Billion in 2025, the market is projected to reach USD 22.78 Billion by 2034. representing total incremental value creation of approximately USD 412.3 Billion over the forecast decade.

Policy evolution, particularly the operationalization of the National Mission on Natural Farming and the NBS frameworks continued shift toward balanced nutrient application, will drive significant product portfolio transformation. Manufacturers achieving commercially viable biofertilizer and nano-fertilizer portfolios with government subsidy integration by 2026 are positioned to capture a disproportionate share of incremental market revenue.

Long-term, the Indian fertilizer market trends are tied to three structural macro-themes: food security imperatives requiring sustained productivity growth from finite arable land, sustainability transition mandating reduced chemical nutrient intensity and adoption of biological alternatives, and digital agriculture infrastructure enabling precision nutrient management at scale.

The Companys future strategy will focus on:

• Strengthening its core SSP manufacturing business:

¦ Improving capacity utilization and operational efficiency:

¦ Maintaining consistent product quality;

• Expanding Its fertilizer and agricultural product portfolio;

• Exploring opportunities in agricultural produce and animal feed trading:

¦ Responding to Increasing demand for specialty and sustainable nutrient products; and

• Maintaining prudent financial and working-capital management.

9. Conclusion:

The Indian fertilizer industry continues to remain strategically Important for agricultural productivity and food security. Government support, increasing agricultural requirements, technological developments and growing emphasis on balanced and sustainable nutrient management are expected to provide long-term opportunities for the industry.

During FY 2025-26, the Company recorded improvement in turnover and profitability, with SSP continuing to remain its principal product. The Company will continue to focus on strengthening its manufacturing operations, improving capacity utilization, maintaining product quality, expanding its fertilizer and allied trading activities and responding to changing market requirements. The Company remains committed to sustainable growth, operational efficiency, prudent financial management and creation of long-term value for its stakeholders.

10. Internal Control System and Their Adequacy

The Company has clearly laid down policies, guidelines and procedures that form a part of the internal control system which provide for automatic checks and balances. The Audit committee reviews the effectiveness and efficiency of these systems to ensure that all the assets are protected against loss and that the financial and operational information is complete and accurate, in addition of external audit, company has also appointed Internal Auditor to list out any deficiency or loop hallsin companys Internal Control and financial reporting. Audits are finalized and conducted based on the internal risk assessment. Significant findings are brought to the notice of the Audit committee of the Board and corrective measures recommended for implementation. Our work opportunities and competitive compensation policy help us in attracting and retaining our personnel.

Apart of the same company was also conducted with PDIL (Project Development India Limited a Govt, authorized unit for Audit) for Dewas plant which conducted audit for companys overall production process report to the concerned department.

11. Health, Safety, Security and Environment

Health, safety, security and environment have always been an integral part of our value system, we always having concern about Health safely and security of our Employees, workers at their work place, we are aiming at Zero Accident as goal of our company, when the matter Is about health and safety, company always follow these some important measure

> Identification of hazard and risk present in work environment and its rectification.

> Continuous monitoring of unsafe condition and unsafe acts through safety inspection.

> Safety induction training for all employees and specific job safety awareness programs on a continuous basis.

Our factories are well equipped with required facilities including machinery, crane, conveyor belt, other handling equipments to facilitate smooth manufacturing process and easy logistics. We endeavor to maintain safety in our premises by adhering to key safety norms. We are having enough greenery at our plant location and also having modern and efficient system to dispose of factory waste, mainly we focus on re- made process of waste and scrap and we always keep in mind about optimum use of energy resources and conservation of natural resources, company is continuously visited by pollution control officers and, we will do it good, if they found any lack of safety measure and other element to protect the surrounding environment of the company.

12. Cautionary Statement:

Statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressedor implied. Important factors that could make a difference to the Companys operations include, among other things, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in Government regulations, tax laws and other statutes and incidental factors.