Astec Lifesciences Ltd Management Discussions

Economic and Industry Overview

Global Economy and Outlook

The global macroeconomic environment during the Financial Year 2025–26 remained volatile, with persistent geopolitical tensions, supply chain disruptions, and evolving trade policies continuing to influence industrial sectors, including agrochemicals. Conflicts in key regions, particularly West Asia and Eastern Europe, led to disruptions in energy markets and critical shipping routes such as the Red Sea corridor, resulting in elevated freight costs and volatility in crude-linked intermediates.

The agrochemical industry, being closely integrated with global trade flows and commodity markets, experienced continued pricing pressure and cautious demand recovery. Elevated channel inventories across developed markets, particularly from prior-year overstocking, resulted in delayed order replenishment and muted demand for active ingredients, particularly in fungicides and herbicides.

Global agrochemical demand trends were further influenced by:

• Destocking by global innovators and distributors

• Farmer affordability constraints in certain markets

• Weather variability impacting crop cycles across geographies

• Stringent regulatory frameworks in Europe and other developed markets

The shift towards supply chain diversification (China+1 strategy) continued during the year, with global agrochemical companies increasingly de-risking sourcing bases. While this trend presents long-term opportunities for Indian manufacturers, it also entails near-term cost pressures due to compliance, qualification, and supply chain realignment.

Despite these challenges, global GDP growth is expected to stabilize at ~3% over the medium term, with gradual inventory normalization and improved demand visibility expected over the next 12–24 months. The agrochemical sector is likely to witness phased recovery driven by volume growth, albeit with continued pricing discipline.

Indian Economy and Outlook

India continued to demonstrate strong macroeconomic resilience during the Financial Year 2025–2026, supported by robust domestic demand, sustained government capital expenditure, and stable financial conditions. As per estimates, Indias real GDP growth remained strong at approximately 7.0%–7.4%, positioning it among the fastest-growing major economies globally.

From an agrochemical perspective, the Indian economy benefited from:

• Favourable monsoon conditions and healthy reservoir levels

• Stable agricultural output and record foodgrain production

• Improving rural liquidity and farmer sentiment

• Government support through agricultural and rural-focused policies

The agriculture sector remained a critical driver of rural consumption and input demand. Growth in high-value crops, increased mechanization, and focus on yield improvement supported demand for crop protection chemicals.

Structural tailwinds for the Indian agrochemical sector include:

• Low per hectare agrochemical consumption compared to global averages

• Rising shift towards scientific and precision farming

• Increasing adoption of crop protection and yield-enhancing solutions

• Strong export competitiveness of Indian manufacturers

Indias medium-term growth outlook remains robust, with GDP growth expected around 6.5%, supported by structural reforms, demographic advantages, and growing domestic consumption.

Agrochemical Industry and Implications for the Company

The agrochemical industry plays a pivotal role in enhancing agricultural productivity, addressing food security, and supporting sustainable farming. India, with one of the largest agricultural bases globally, remains a key market and manufacturing hub for agrochemicals.

Industry Structure and Trends

The industry comprises:

• Enterprise (Generic Actives & Intermediates)

• Contract Development & Manufacturing (CDMO) for global innovators

During FY 2025–26:

• The enterprise segment faced pricing pressure, especially in key fungicide molecules due to global oversupply.

• The CDMO segment witnessed subdued volumes due to destocking, although long-term demand outlook remains robust.

• Export markets saw gradual recovery in volumes but continued pricing compression.

Key Industry Drivers

• Rising global population and food demand

• Declining arable land and need for productivity enhancement

• Increasing pest resistance and need for effective crop protection

• Shift towards high-value crops (fruits, vegetables)

• Technology adoption and formulation innovations

• Off-patent opportunities in agrochemical molecules

Implications for the Company

As a B2B agrochemical player with strong presence in triazole fungicides and CDMO, the Company is strategically positioned to:

• Benefit from global supply chain diversification

• Strengthen partnerships with global innovators

• Expand portfolio through off-patent molecules

• Improve margins through backward integration and process innovation However, the Company remains exposed to:

• Global agrochemical cyclicality

• Pricing volatility in key molecules

• Customer concentration risks in CDMO

• Supply chain dependencies

Your Company is one of the leading players in triazole fungicides and is well placed to capitalize on opportunities arising in the domestic as well as the international markets with well-established market credentials. The Company has 4 (four) manufacturing facilities in Mahad, Maharashtra and has a state- of-the-art Research and Development (R&D) Center which will further augment your Companys R&D capabilities.

Companys Financial and Operational Performance

The highlights of overall performance are as follows:

Key Financial Highlights

Particulars (in Lakh)	FY 2025-26	FY 2024-25
Sales	44,815	38,130
Total Income	45,322	38,693
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)	54	(6,058)
Profit / (Loss) Before Exceptional Items & Taxation	(7,891)	(14,099)
Profit / (Loss) Before Taxation	(8,100)	(14,099)
Profit / (Loss) After Taxation	(8,088)	(13,471)
Particulars	FY 2025-26	FY 2024-25
Earnings Per Equity Share ( ) - Basic	(37.79)	(68.71)
Earnings Per Equity Share ( ) - Diluted	(37.79)	(68.71)
Profitability Ratios	FY 2025-26	FY 2024-25
EBITDA / Sales	0.1%	-15.9%
Operating Margin (in %)	-11.0%	-28.8%
PBT / Sales	-17.6%	-37.0%
Net Profit Margin (in %)	-18.0%	-35.3%
Return on Capital Employed	-9.3%	-19.9%
Return on Net Worth	-25.8%	-44.6%
Financial Risk Ratios	FY 2025-26	FY 2024-25
Debt Equity Ratio	1.15	2.36
Debtors\u2019 Turnover Ratio	2.25	3.14
Inventory Turnover Ratio	3.01	2.14
Current Ratio	0.89	0.93

The formulae used for computation of key financial ratios are as follows:

EBITDA / Sales	Earnings before Interest, Tax, Depreciation and other Amortizations
	and Exceptional Item / Net Sales
Operating Profit Margin (%)	Profit Before Interest and Taxes and Exceptional Item / Net Sales
PBT / Sales	Profit Before Tax and Exceptional Item / Net Sales
Net Profit Margin (in %)	Profit After Tax / Net Sales
Return on Capital Employed	Earnings before Interest and Tax and Exceptional Item / Average of
	Capital Employed
Return on Net Worth	Profit After Tax / Average of Total Equity
Debt Equity Ratio	Total Debt / Shareholders\u2019 Equity
Debtors Turnover Ratio	Net Credit Sales / Average Trade Receivable
Inventory Turnover Ratio	Net Sales / Average Inventory
Current Ratio	Current Assets / Current Liabilities

The Companys CDMO and Enterprise businesses witnessed a strong recovery during the year, supported by improved performance in both export and domestic markets. This growth was primarily driven by higher volumes and favorable pricing trends across key products. Consequently, the Company reported an increase in revenues albeit on a lower base, along with improvement in margins for FY 2025–26.

• Export sales grew by 6.7% YoY, while domestic sales witnessed a strong growth of 40.6% YoY.

• CDMO contributed 52% of total sales in FY 2025–26, with Enterprise segment accounting for the remaining 48%.

• Geographically, exports constituted 62% and domestic sales 38% of total revenue.

• Gross margin improved significantly to 33.4% in FY 2025–26, compared to 22.1% in FY 2024–25.

Despite the short-term challenges, your Company continued to focus on Contract Development and Manufacturing Operations (CDMO) segment in line with the long-term strategic ambitions. Improved volumes, better realizations, and higher capacity utilization across Enterprise and CDMO portfolios position the company for sustained recovery.

The state-of-the-art Research & Development Center, named the Adi Godrej Center for Chemical Research and Development in Rabale, Maharashtra, is equipped with advanced synthesis and formulation laboratories along with sophisticated safety infrastructure to strengthen the Companys CDMO capabilities. This strategic investment enhances product development, accelerates time-to-market, enables end-to-end solutions through advanced analytical facilities, and positions the Company as a preferred partner for global innovator companies. Despite near-term challenges, this future-ready R&D Center underscores Astecs strong commitment to innovation and long-term value creation.

Godrej Agrovet Limited, the Holding Company has increased its shareholding in your Company (1,49,35,245 Equity shares, 67.03% as on 31 st March 2026 and 1,26,99,054 Equity Shares, 64.75% as on 31 st March 2025).

Opportunities, Strengths and Concerns

Opportunities:

Indian chemical companies are expected to rapidly gain market share on the back of multiple favorable factors listed below:

• Rising Domestic Demand

With Indias growing population and expanding middle class, the demand for chemicals in various sectors such as agriculture, pharmaceuticals, and consumer goods is increasing. This provides a substantial market for domestic chemical companies.

• Export Growth and CDMO Expansion

Global customers are increasingly diversifying sourcing beyond China due to geopolitical, regulatory, and environmental considerations. With several active ingredients going off patent globally over the next decade, Astec is well placed to capitalize on custom development and manufacturing opportunities, particularly in triazole fungicides and herbicides. There is potential to expand exports further, especially to markets in Europe and North America.

• Focus on Sustainability and Responsible Manufacturing

Growing regulatory scrutiny, ESG expectations, and stakeholder focus on sustainable business practices are driving the adoption of responsible manufacturing processes, resource efficiency, and enhanced environmental stewardship across the industry. These trends align well with the Companys R&D-led approach and focus on process innovation, operational excellence, and sustainable growth. This positions the Company to strengthen customer relationships, access new market opportunities, and meet the evolving expectations of global customers and regulators.

• Technological Advancements and Digitalization

Automation, process optimization, and digital tools across R&D and manufacturing offer opportunities to improve yields, reduce costs, enhance safety, and strengthen competitiveness in both domestic and export markets.

• Ingredients going off-patent

Globally, around 22 active ingredients are expected to go off patent over the next 10 years. The estimated market size for these products will be around $4.1 billion by 2026. Indian chemical sector is well placed to capitalize on such opportunities and to build a strong manufacturing base.

• Government and Policy Tailwinds

Increased Government focus on agriculture productivity, domestic manufacturing, and export competitiveness supports the medium-term growth prospects of Indian agrochemical companies.

• Geopolitical Shifts

Changes in global trade dynamics, such as stricter environmental regulations in China and trade conflicts, are creating opportunities for Indian chemical companies to fill the gaps in the global supply chain.

Strengths:

• Strong Position in Select Chemistry Platforms

The Company has established a leadership position in triazole fungicides and continues to diversify its portfolio in herbicides, supported by longstanding relationships with reputed domestic and global customers.

• Robust R&D Capabilities

Astecs well-equipped R&D infrastructure plays a critical role in both new product development and the rapidly expanding CDMO business. The Companys ability to support global innovators through process development, scale-up, and commercial manufacturing is a key competitive advantage.

• Export Orientation with Diversified Geographies

A significant share of revenues from exports provides access to multiple geographies, reducing dependence on any single market and enabling participation in global growth opportunities.

• Expanding and Flexible Manufacturing Infrastructure

The commissioning of herbicide plants in recent years has strengthened backward integration, and enhanced portfolio flexibility, positioning the Company to respond swiftly to evolving customer requirements.

Concerns:

• Global Trade and Regulatory Uncertainty

Escalating trade tensions, evolving tariff structures, and changing regulatory regimes across key export markets may impact demand visibility, pricing, and supply chain continuity. Given Astecs significant export exposure, policy shifts can materially affect revenues. The Company is in the process of expanding its CDMO space to hedge itself from the effects of market volatility and vagaries.

• Raw Material Dependence and Supply Chain Risks

A meaningful portion of raw materials continues to be sourced from overseas markets, exposing the Company to risks related to availability, logistics, geopolitical developments, and price volatility. The Company is actively working on vendor diversification and de-risking strategies.

• Weather Variability and Agricultural Cyclicality

Agrochemical demand is closely linked to weather patterns, pest incidence, and crop acreage since it directly impacts the application of crop protection products. Erratic monsoons and climate volatility can lead to demand fluctuations, particularly in focused product segments. Your Companys presence into wider geographies through exports limits the risk, to a significant extent.

• Foreign currency volatility and interest rates:

Export led revenues expose the Company to currency fluctuations. While a structured hedging policy is in place, sharp movements in exchange rates or interest costs can impact profitability.

Segment-wise Performance or Product-wise performance:

Your Company has only 1 (One) reportable segment, i.e., Agrochemicals. The Consolidated Total Income from agrochemicals was 45,321.65 Lakh for the FY 2025-26.

Internal Control System:

Your Company has adequate internal controls in place designed and developed to :

a. Safeguard its assets from unauthorized use or losses b. Conduct its business operations efficiently in line with the Companys policies c. Maintain accuracy, completeness and reliability of the financial and accounting records d. Comply with the applicable laws, rules and regulations e. Detect and prevent any fraud in the accounting and reporting system

The Audit Committee of the Board of Directors oversees and evaluates the internal financial controls and risk managements system as well as spearheads the internal audit mechanism, on a regular basis.

Human Resources

Your Company has adopted progressive Human Resources (HR) policies to develop and empower its valuable employee force. We provide ample, equal and fair opportunities to groom our employees and put them on career progression paths, without any form of discrimination in terms of religion, gender, race, color, caste, etc. We take several initiatives to inspire our workforce and to care for them. As a part of Godrej Group, we have Whistleblower Policy and Prevention of Sexual Harassment Act Policy to empower our employees to be able to identify and report any wrong doings in the system. The Company believes in being an employer that provides all tools and guidance to its employees so that they can discover their full potential and add value to the organization through their skills and behavior.

Deep Knowledge

• Our specialization in multi-step synthesis undertaking complex chemical reactions to produce key specialty chemicals with a focus on developing innovative manufacturing processes

Timely Delivery

• Our proven track record of timely delivery of products and services to our partners without compromising on compliance and quality, despite of tight deadlines

• Partner of choice for process optimization and large scale production

Focus on Safety

• Astec LifeSciences is a Responsible Care Company

• DuPonts 14 element-based Process Safety Management System implemented across our Plants to ensure Safe Operations

• Achieved signi cant sustainability milestone by acquiring EcoVadis Gold rating

State-of-the-art R&D Centre

• Adi Godrej Center for Chemical Research and Development, equipped with best-in class research infrastructure

• Laboratories for Product Synthesis, Analytical method development, Process Safety,

• Fluorination, Kilo & Flow Chemistry, and Formulation Development

Assets – Infrastructure and Capability

• 8 multi-purpose and multi-product manufacturing plants constituting 4 factories, rendering us ability to handle multi-synthesis and complex chemistries

• A dedicated Herbicide manufacturing facility with high-potency blocks and zero-Liquid discharge facility

• All the manufacturing plants are fully/semi-automated with the DSC system to ensure best practices process monitoring and operations

Quality Governance

• Best in class accreditations including Responsible Care, ISO 9001:2015 (QMS), ISO 14001:2015

(EMS), ISO 27001:2022 (ISMS) and ISO 45001:2018 (OHSAS)

Strong Team

• Our team of visionary leaders along with the strong and dedicated management as well as highly experienced R&D & technology team together plan, develop and deliver solutions tailored to t the needs of the customer.

Key Growth Drivers

Vision and Capability to Predict Emerging Market Needs - Key Drivers of Success

With the ability to anticipate industry shifts and global chemical supply chain, India is being constantly recognized as a global hub for agrochemical innovation and manufacturing. Astec LifeSciences Limited has made strategic moves to enhance its business by expanding Contract Development and Manufacturing Operations (CDMO) capabilities. Our Research & Development (R&D) Center at Rabale is continuously innovating new products. These advancements, coupled with strategic partnerships, address the evolving needs of global innovators. We remain committed to growing CDMO portfolio, ensuring that our manufacturing capabilities are agile and positioned for sustained leadership and long-term growth.

In our pursuit of growth, we have thoughtfully identified our key enablers with the vision of creating a diverse portfolio of chemistries, products, and solutions to meet the demands of the future. Our growth trajectory will be reinforced by fortifying our intangible assets, built upon the foundational pillars of our values – safety, responsibility, sustainability, quality, cost leadership and speed to market.

Contract Development and Manufacturing Operations (CDMO)

The global agrochemicals market is projected to experience substantial growth, with forecasts indicating a Compound Annual Growth Rate (CAGR) of around 3.4%.The market size which was USD 223.03 billion is expected to be around $301.34 billion by 2033. The global Contract Development and Manufacturing Operations (CDMO) market is poised to grow at a CAGR of 10% up to 2029. Indian companies have increasingly been recognized as the as strategic partners in this evolution, and your Company well positioned to capitalize on this trend. Your Company is actively developing a robust pipeline with end to end solution for its CDMO business. Our flexible approach focuses on cost and quality backed with strong research infrastructure. Your Company did face some challenges in H1 due to the unforeseen global tensions, however the company managed to improve its CDMO business by 2.5x in H2 in Financial Year 2025-26. We are future ready with Capacity expansion and new Herbicides facility which will yield tangible returns. Effective utilization of the new R&D Centre with world-class infrastructure will boost our efforts towards adding new customers in the CDMO segment. Our current infrastructure is fully ready to realize our long-term vision.

Adi Godrej Center for

Chemical Research & Development

Our Companys state-of-the-art Research & Development Center in Rabale (Maharashtra) named the Adi Godrej Center for Chemical Research and Development which was inaugurated in April 2023, reflects our strong commitment to innovation and future-readiness. The Center continues to spearhead advancements in green chemistry, sustainability and faster go-to-market strategies for innovators. This investment stands as a clear testament to our forward-thinking approach — setting benchmarks well ahead of current industry standards.

In the past three years, the R&D Center has demonstrated a remarkable growth and contributed significantly towards the vision of your Company. The Companys state-of-the-art R&D Center projects have increased to fivefold since its inception. This has also enhanced commercialization of new products. With a strong focus on delivering innovation through continuous chemistry process, the team is also expanding in the development of adjacent segments such as specialty chemicals and advanced intermediates for pharmaceuticals, leveraging its broad expertise in diverse chemistries. In order to support this momentum, the diversity in the workforce of scientists and engineers has also grown significantly in last three years.