Bengal Tea & Fabrics Ltd Management Discussions

(Forming part of Directors Report for the financial year ended 31st March, 2026)

Industry Structure and Developments: India is one of the largest Black Tea producers in the world producing approximately 1383 million kgs during the financial year 2025-26 and consuming 80% of the total production domestically. Financial year 2025-26 has been a positive year for the Indian Tea Industry. Record export, strong prices and healthy domestic consumption outweighed production. Despite higher crop, the tea market has been strong and growing. Robust export demand particularly for orthodox tea has contributed well. Prices of the common medium teas coupled with good quality teas moved up as a result the overall North Eastern India average has been 224.00 during the financial year 2025-26 as against 201.39 during the financial year 2024-25 which resulted in the overall increase of about 11.23% during the previous year.

Opportunities and Threats: The continuous promotional efforts and better marketing and brand building initiatives, taken jointly by the Government/Tea Board to increase the per capita consumption of Tea which is still lower than the global peers. Also, ATISIS/TRUSTEA programs for specialty tea /orthodox tea, are likely to have positive impact on the industry in the long term. Technological modernization, climate resilient cultivation, better labour policies and stronger market support will sustain its position.

Main challenges faced by the Indian Tea Industry are climate change reducing both tea yield and quality, changes in weather pattern effecting the timing of the tea _ushes making production less predictable, rising cost of wages, fertilizers, chemicals, power and fuel, transportation and packaging, labour shortages, import competition etc.

Product-wise Performance: During the year under review, the production of Black Tea moved down by about 14% as compared to previous year. The gist of performance of the division during the financial year 2025-26 is as under:

*excludes operation of traded goods

Outlook: Market sentiment for the financial year 2026-27 is cautiously optimistic. Volume growth is likely to remain steady but value growth will be driven by premium products, wellness positioning and ready to drink formats. Focus on branding, speciality teas sustainability is likely to outperform. An increase in the number of people having disposable incomes and the rising middle-class population is fueling the demand for high-end and health-related tea. Government plans and developments via the Tea Board of India remain helpful. Adoption of technology in the tea manufacturing process and advancements in new and innovative packing materials will aid significantly in the future. While black tea remains the most widely consumed and largest revenue generating product in 2025, herbal is the most lucrative product segment registering the fastest growth during the forecast period. The industry is also expected to see innovation in _avors, packaging, and specialty blends.

Risks & Concerns: Climate change and weather risks, market and consumer trends, shortage of labour during peak season, increase in wages and other costs could affect the fortunes of the Tea Industry. Also, the export market is likely to be affected by the geopolitical tension in the Middle-East and the global economic slowdown.

During the year under review, production and sales realization were higher in comparison to the previous year resulting in the growth of profit of the Tea Division.

A. Details of significant changes (i.e. change of 25% or more as compared to the immediately preceding previous financial year) in key financial ratios or sector specific ratios along with detailed explanations therefore:

Internal Control Systems and its Adequacy: The Company has laid down guidelines, procedures and policies for better management control which are periodically tested and supplemented by an extensive internal audit program. Significant findings are placed before the Audit Committee and the corrective measures are recommended for implementation. In the opinion of the management, the existing internal checks and controls are effective and adequate.

Information regarding Human Resources/Industrial Relations: The relationships were cordial with the employees throughout the year. The total numbers of manpower employed by the Tea Division as on 31st March, 2026 was 1477.

Cautionary Statement: The forward-looking statements and the views expressed in the Management Discussion and Analysis Report are based on certain assumptions. The actual results, performances or achievements may differ materially from those stated therein. The Company would not be held liable, in any manner, if the future turns out to be quite different, even materially.