Andhra Sugars Ltd Management Discussions

The Business Operations of the Company are into Sugar, Chloro-Alkali,

Chemicals, Pharma and Power

SUGAR - Outlook, Opportunities & Threats :

Initially when Unit-1 (Tanuku) was setup cane was supplied from the Delta Area around Tanuku which had a rotational 2^nd Crop But after the Godavari Barrage was built the Delta Area was converted to continuous 2^nd Crop causing a Drop in cane Growing Area resulting in Uneconomic Quantity of Cane Supply. So, Unit-1 at Tanuku was permanently closed.

Unit-2 (Taduvai) was basically a Tobacco Growing Area. But when Black soil Tobacco Exports Ceased Farmers swiched to Cane Growing due to which we setup our Unit -2 at Taduvai. For past few seasons due to a shortage of Tobacco, Rates Shot-up causing Farmers Switching back to Tobacco resulting in Cane Supply dropping to uneconomic levels resulting in Temparary Ceasing of operation at Unit-2.

Unit-3 (Bhimadolu) Area Farmers switch to growing Maize, so Cane supply dropped to uneconomic quantities resulting with ceasing at Bhimadolu. Location of Unit-3 at Bhimadolu has the National Highway on both sides, plus the main Railway line which makes the site very suitable for Warehousing. The New Sugar Godowns at Unit- 3 have been rented for Warehousing. As Demand picks up we could add more Warehouse space.

CHLOR ALKALI & CHEMICALS - Outlook, Opportunities & Threats :

Your Company has an Integrated Chemical Complex at Saggonda manufacturing Caustic Soda, Chlorine and other Allied Products. Caustic Soda Plant has a capacity of 600 TPD as on 31.03.2026. Further Sulphuric Acid Capacity is 800 TPD. A 25 TPD Caustic Potash Plant is in operation at Kovvur, East Godavari District, Andhra Pradesh.

During the year 2025-26, Caustic Soda Industry has witnessed the following Scenario.

Increased production capacities and volatile demand cycles have impacted market prices.

Difficulty in the disposal of Chlorine and HCL is a vital bottle neck.

End users of Chloro-Alkali products have not lifted stocks due to slowdown in their operations.

The industry is currently facing supply chain gap caused by Geopolitical and logistics issues.

In addition, enhanced production capacities came into existence, which lead to accumulation of stocks of co-products of Chlorine and HCL. Some of the Pharma Units as well as medium-scale industrial segments reduced their production capacities by 30% to 40%. All these factors have adversely influenced domestic manufacturers in terms of disposal of Chlorine and HCL.

Power, which is a major input for the production of Caustic Soda, is required to be available at an economical price. The high cost of Power is always a matter of concern and there is a need for the Government to classify this Industry under "Energy Intensive Industry" to get the benefit of availing Power at a concession rate. The Company is continuously representing the State Government and Regulatory Authorities in this regard.

Despite the market constraints as prevailed, consequent upon long-lasting association, your Company has been getting consistent support from the bulk Customers and Traders who have been honoring their off take. This has given an advantage to your Company to produce Caustic Soda as per the Production and Marketing Plans perceived.

Price of Sulphur, raw material for Sulphuric Acid, has gone up significantly and imported material availability is almost stopped from February, 2026.

BULK DRUG (ASPIRIN & SALICYLIC ACID) - Outlook, Opportunities & Threats :

We expect to restart the US business by the end of 2026 which was on a standstill because of bifurcation and merges happening among the worlds major consumer brands.

We have got approvals from prospective new customers in the US for supply of our Aspirin Starch Granules along with Aspirin Crystals. Their usage is expected to be around 900 MT per annum.

We continue to work to increase our Global business particularly in Regulatory Markets, as our Aspirin Plant is in

line with updated international standards with Good Manufacturing Practices (cGMP) and approvals from USFDA, EDQM and TGA. Our customers have increased in recent years because of the availability of regulatory documents facilitating our customers to register their end products in respective markets. These are to get results in coming years with increased commercial value.

Meanwhile, indigenous business is continuing which is currently helping in reducing the gap of decreased export sales.

We manufacture various grades of Salicylic Acid and Sodium Salicylate.

We have REACH certification to export our Salicylic Acid to European Markets.

There is a good potential for Salicylic Acid in India and overseas markets apart from Pharma applications. We continue to work on to increase the business of these products in overseas markets as well. Our product is approved and under validation by prospective overseas customers. With this, volumes are expected to increase in 2026-27.

The focus is on Cost competency with better quality in the coming years and to widen our Overseas and Indigenous client base.

POWER - Outlook, Opportunities & Threats :

Your Company operates Chlor Alkali Plants which are Power Intensive with Power being a major input cost. Therefore, it is essential for your Company to ensure the availability of quantity and quality of Power to be selfsufficient in production and remain competitive. Keeping this in view, your Company established a 33 MW Captive Generation Thermal Power Plant at Saggonda. This is in addition to Solar Power Plant in operation at Kovvur. The Company is also setting up 1.5 M.W. Solar Power Plant at Tanuku and 12 M.W. Solar Power Plant at Saggonda. These two Plants will ensure adequate Power for Chemical Plants. Apart from this, the Company as a Shareholder avails Power from Andhra Pradesh Gas Power Corporation Limited (APGPCL), a Gas based Power Generation Company. The Power availed from this source is cheaper compared to State Electricity Board Power. From October, 2022 onwards there was no allocation of Natural Gas to APGPCL which resulted in the operations of APGPCL came to a halt. The Company also opts to avail Open Access Power to ensure that the Power is obtained at an economical rate. This would facilitate in augmenting the Power requirements of Chemical Plants.

INTERNAL CONTROL SYSTEM

Management and Audit Committee regularly review the financial and operating controls of the various Units. The Internal Control System of your Company is commensurate with its size and nature of business.

As per the provisions of the Companies Act, 2013 the Statutory Auditors have annexed a Report on Internal Control System to the Independent Auditors Report pertaining to Financial Year 2025-26.

SEGMENT-WISE PERFORMANCE

Segment-wise performance has been given separately vide Annexure - II of Group Consolidated Accounts. Details of Significant changes in key financial ratios:

Details of change in Return on Net worth:

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Company has earned a Gross Profit of Rs.190.22 Crores (before interest and depreciation) against Rs. 118.70 Crores (before interest and depreciation) in last year. The main reason for the increase in the profitability is the increase in the operating profitability of Chloro-Alkali and Chemical Products and decrease in the loss of Sugar Segment.

The Gross Fixed Assets of your Company as on 31.3.2026 is Rs.1464.39 Crores compared to Rs.1247.54 Crores during the previous year 2024-25. Your Company has a net worth of Rs.1411.32Crores.

As on 31.03.2026 the Fund based working capital limits are Rs.50.00 Crores and Non-fund based working capital limits are Rs.47.10 Crores.

HUMAN RESOURCE DEVELOPMENT / INDUSTRIAL RELATIONS

Your Company continuously reviews and monitors its manpower requirements to ensure that it has human skills commensurate with its needs. Industrial relations continued to be cordial. As of 31.3.2026 your Companys Employees strength stands at 1,801.