Dhampure Speciality Sugars Ltd Management Discussions

The global economy has shown resilience through 2025 and into 2026, though the outlook has become more uneven following the outbreak of conflict in the Middle East in early 2026. According to the International Monetary Funds (IMF) World Economic Outlook Update of July 2026, global growth is projected at approximately 3.0% for 2026 and 3.4% for 2027, broadly unchanged on a cumulative basis from the April 2026 projections. Growth remains divergent across regions: energy-importing and vulnerable economies are absorbing the impact of the war-related commodity price shock, while economies integrated into the global technology and AI value chains continue to benefit from strong technology investment. Global headline inflation, after a period of steady disinflation, has stalled and is expected to firm modestly through 2026 before resuming its decline, with risks to the outlook broadly balanced between renewed geopolitical escalation and a potential re-rating of AI-driven productivity expectations.

Advanced economies are estimated to grow at a modest pace, with the United States benefiting from fiscal support and lower policy rates even as elevated trade barriers continue to weigh on activity, while growth in the Euro area and other advanced economies remains comparatively subdued. Among emerging markets, Asia continues to be the primary engine of global growth, with India retaining its position as the fastest-growing major economy and Chinas growth gradually moderating. Elevated public debt levels, tighter-for-longer financial conditions in parts of the world, and the fluid geopolitical backdrop remain key downside risks that the Company continues to monitor given their bearing on commodity prices, freight costs and global trade flows relevant to the sugar and allied products business.

INDIAN ECONOMIC REVIEW

India continued to be the fastest-growing major economy in the world through FY2025-26. Provisional estimates released by the Ministry of Statistics and Programme Implementation (MoSPI) placed Indias real GDP growth for FY2025-26 at a robust level, supported by resilient private consumption, strong services exports and sustained public investment, with the Reserve Bank of India (RBI) having progressively raised its growth estimate for the year over successive policy reviews. For FY2026-27, forecasts from the IMF, World Bank, Asian Development Bank and domestic agencies converge in a range of approximately 6.4% to 6.8%, reflecting some moderation from FY2025-26s exceptionally strong outturn as external headwinds - including elevated crude oil prices linked to West Asian tensions and a wider current account deficit - offset otherwise resilient domestic fundamentals.

Retail inflation has remained comfortably within the RBIs tolerance band through much of the year, aided by softer food prices, providing room for an accommodative monetary policy stance. Rural demand, supported by a normal monsoon and government welfare spending, and continued momentum in manufacturing and infrastructure investment, have underpinned

domestic consumption - a key demand driver for the branded food, sugar and jaggery products that the Company and its subsidiaries sell. The agriculture and allied sector, including sugarcane cultivation, remains central to rural incomes and, by extension, to the raw-material availability and cost structure of the sugar industry in which the Company operates.

GLOBAL SUGAR SECTOR

Global sugar markets moved from a supply deficit in 2024/25 to a projected surplus in 2025/26 as production recovered in key growing regions. The International Sugar Organisation (ISO) most recently estimated global sugar production for 2025/26 at a record level of around 182 million tonnes, up approximately 3.5% year-on-year, with a global surplus of around 2.2 million tonnes, reversing a deficit of roughly 3.5 million tonnes in 2024/25. This recovery has been driven principally by higher output in Brazils Centre-South belt, together with improved harvests in India and Thailand. Looking ahead to 2026/27, the ISO has flagged a swing back toward a modest global deficit - of the order of 0.25 to 0.5 million tonnes on various estimates - citing potential El Nino-related disruption to cane yields in India and Thailand, alongside Brazilian mills diverting a larger share of cane toward ethanol amid firmer fuel prices.

Global sugar prices have accordingly been volatile through the year: benchmark futures eased on the back of the record 2025/26 crop estimate before firming again on deficit concerns for 2026/27 and on supply-side uncertainty linked to geopolitical developments affecting energy and freight markets. For a speciality and value-added sugar and jaggery player such as the Company, this volatility in commodity sugar prices reinforces the strategic rationale for a branded, differentiated product mix that is less directly exposed to swings in bulk sugar realisations.

EXPORTS

India is the worlds second-largest producer and exporter of sugar. For the 2025-26 sugar marketing year (October-September), the Food Ministry initially permitted exports of 1.5 million tonnes, later supplementing this with an additional pool of 0.5 million tonnes. However, citing concerns over domestic closing stock levels amid an uncertain production outlook for the 2026-27 season, softer global price realisations, and precautionary considerations linked to potential El Nino effects and geopolitical uncertainty, the Directorate General of Foreign Trade (DGFT), by notification dated 13 th May 2026, moved raw, white and refined sugar from the " restricted " to the " prohibited " export category with effect from that date until 30th September 2026 (or until further orders), other than shipments exempted under the notification, including committed quota volumes to the European Union and the United States.

This marks a sharp change from the export-friendly stance seen in recent seasons and reflects the governments continuing priority of ensuring adequate domestic availability and price stability over export revenue maximisation. Indias sugar export earnings had already been on a declining trend in value terms over the preceding few years amid weaker global price parity and rising domestic consumption and ethanol diversion. For manufacturers such as the Company, the export restriction is expected to have limited direct impact given the domestic and branded-FMCG orientation of its product portfolio, though it underscores the broader policy environment - shaped by the trade-off between export opportunity, ethanol diversion and domestic price stability - within which the Indian sugar industry operates.

Particulars	Amount (Rs. In Lakhs)
2025-26	16.99
2024-25	150.90
2023-24	56.80

INDIAN ETHANOL SECTOR REVIEW

Indias Ethanol Blending Programme (EBP) has been a defining feature of the sugar and biofuel policy landscape in recent years. Blending levels rose steadily from about 1.5% in 2013-14 to roughly 18% by early 2025, and the country achieved its 20% ethanol-blending (E20) target for Ethanol Supply Year (ESY) 2025-26, well ahead of the originally planned 2030 timeline. The programme draws on a diversified feedstock base spanning sugarcane juice, B-heavy molasses, surplus and damaged foodgrains, and maize, with maizes share in ethanol production having grown markedly as the government has sought to reduce dependence on sugarcane- based feedstock and balance food-versus-fuel considerations. The government has also indicated a longer-term ambition of moving toward E27 blending by 2030, alongside continued support for second-generation (2G) ethanol capacity.

For the sugar industry, ethanol diversion has become a structurally important, higher-margin outlet for surplus cane and B-heavy molasses, helping stabilise mill cash flows and reduce dependence on volatile export and domestic sugar-price cycles. At the same time, the diversion of cane juice and molasses toward ethanol - estimated at over 30 lakh tonnes of sugar- equivalent in the current season - has been a contributing factor behind tighter domestic sugar stock projections and, in turn, the recent export restrictions discussed above. The government has periodically recalibrated the extent of permissible diversion (including temporary curbs on juice/syrup-based ethanol in years of tight sugar output) to balance farmer income, fuel-security and food-security objectives. Global ethanol production and consumption are also expected to rise further in 2026, supported by recovery in Brazil and continued expansion in India, reinforcing ethanols role as a structural growth avenue for cane-based industries such as the one in which the Company operates.

INDUSTRY STRUCTURE, DEVELOPMENTS AND BUSINESS OVERVIEW

Dhampure Speciality Sugars Limited ( " the Company " / " DSSL " ), incorporated in 1992 and headquartered at Village Pallawala, Tehsil Dhampur, Bijnor (Uttar Pradesh), is engaged in the manufacturing, processing, trading, import and export of sugar and allied products, including raw sugar, refined sugar, gur (jaggery), khandsari and related by-products. The Company markets its products under the " Dhampur Green " and " Sugarindia " brands and, through its wholly owned subsidiaries - Dhampur Green Private Limited, Sun Burst Services Private Limited and Nostalgic Foods Retail Private Limited - has extended its footprint into the fast- moving consumer goods (FMCG) space, covering mocktails and drink mixes, snacks, syrups and toppings, organic groceries, gur mithai and desserts, baking products and mouth fresheners.

Within the broader industry backdrop described above - a record but increasingly policy- managed global and domestic sugar supply, an export environment now constrained by the May 2026 prohibition, and a fast-maturing ethanol economy - the Companys speciality and value-added product mix positions it to participate in the premiumisation trend within the

branded foods and FMCG space, which is comparatively less exposed to the cyclicality of commodity sugar and export policy than bulk sugar manufacturing and trading.

FINANCIAL PERFORMANCE - STANDALONE AND CONSOLIDATED The Board of Directors, at its meeting held on 28th May 2026, approved the Companys audited standalone and consolidated financial results for the quarter and year ended 31st March 2026. The statutory auditors, M/s JLN US & Co. LLP, Chartered Accountants, issued an unmodified (unqualified) opinion on both sets of results. Key highlights are summarised below.

Standalone Performance

Particulars (Rs in Lakh)	FY 2025-26	FY 2024-25	Growth (%)
Revenue from Operations	5,530.56	3,578.35	54.56%
Cost of Materials Consumed	4,107.27	2,330.31	76.26%
Net Profit for the Year	540.85	250.34	116.06%

Consolidated Performance

Particulars (Rs in Lakh)	FY 2025-26	FY 2024-25	Growth (%)
Revenue from Operations	5,838.98	3,979.86	46.71%
Net Profit for the Year	554.78	287.79	92.77%
Total Assets	5,065.37	3,973.59	27.47%
.Basic & Diluted EPS	6.35	3.45	84.06%

On a standalone basis, revenue from operations grew by approximately 55% year-on-year, driven by higher sales volumes across the sugar, jaggery and allied product range. Cost of materials consumed rose broadly in line with the higher scale of operations, reflecting the passthrough nature of raw material (sugarcane and cane-derivative) costs. Net profit more than doubled on the back of operating leverage and improved realisations. On a consolidated basis - incorporating the three wholly owned FMCG subsidiaries - revenue grew by approximately 47% and net profit nearly doubled, with consolidated basic and diluted EPS rising to Rs6.35 from Rs3.45 in the previous year. Management has noted that the sugar and jaggery business is seasonal in nature and that quarter-on-quarter performance may accordingly vary.

BALANCE SHEET STRENGTH AND KEY RATIOS

The Company remains almost debt-free, providing balance sheet flexibility to fund working capital and growth capex.

Debtor days improved from 33.9 days to 23.1 days, reflecting tighter receivables management.

Working capital cycle shortened from 111 days to approximately 66.6 days, aiding cash conversion.

Return on equity has averaged approximately 9.9% over the last three years.

Promoter shareholding stood at approximately 60.3%; shareholders approved issuance of warrants to the promoter group at an Extraordinary General Meeting held on 18th March 2026, which is expected to further strengthen net worth on conversion.

SEBI Schedule V - Key Ratio Disclosure

Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 requires disclosure of significant changes (25% or more compared with the immediately preceding financial year) in specified key financial ratios, together with explanations, and disclosure of changes in Return on Net Worth. The source draft does not contain all the underlying ratio figures required for this disclosure.

The following figures should be inserted from the audited financial statements / approved financial-ratio workings before the Annual Report is finalised:

Ratio	Units	FY 202526	FY 202425	Variance (%)	Explanation for change of 25% or more, if applicable
Current Ratio	Times	2.61	3.08	(15.18%)	Not applicable
Debt-Equity Ratio	Times	Not Applicable	Not Applicable	Not Applicable	^ot applicable, as _ the Company has no debt.
Debt Service Coverage Ratio	Times	Not Applicable	Not Applicable	Not Applicable	Not applicable, as the Company has no debt. \u201e \u201e
Inventory Turnover Ratio	Times	5.29	4.77	10.91%	Not applicable
Trade Receivables Turnover Ratio	Times	16.78	11.43	46.84%	Increase in revenue from operations resulted in improved trade receivables turnover.
Trade Payables Turnover Ratio	Times	26.34	10.85	142.78%	Increase in the turnover ratio is primarily attributable to a decrease in trade payables.
Net Capital Turnover Ratio	Times	4.34	4.68	(7.26%)	Not applicable
Net Profit Margin	Percentage	9.78%	7.00%	39.79%	Increase in revenue and profit for the year resulted in improvement in the net profit margin.
Return on Equity	Percentage	14.04%	8.25%	70.24%	Increase in profit for the year and improvement in overall profitability
					resulted in higher Return on Equity.
Return on Capital Employed	Percentage	18.54%	11.01%	68.43%	Increase in operating performance and revenue resulted in improvement in Return on Capital Employed.

Segment / Product-wise Performance

The Companys principal reportable activity remains the manufacture and trade of sugar, jaggery (gur) and khandsari products, which continues to contribute the majority of standalone turnover. The FMCG segment, housed under the subsidiaries, is a smaller but faster-growing contributor to consolidated revenue, spanning organic groceries, snacks, syrups, mocktail and drink mixes, and dessert/mithai products sold under the Dhampur Green and Sugarindia brands. Consolidated numbers, which are higher than standalone figures across revenue, profit and assets, indicate that the subsidiary/FMCG businesses are incrementally accretive to the Groups overall performance.

OPPORTUNITIES AND THREATS

Opportunities

Rising consumer preference for natural, organic and speciality sweeteners (jaggery- based and low-processed products) over conventional refined sugar.

Brand-led premiumisation and expansion of the FMCG portfolio (snacks, syrups, mixes, desserts) offering higher margins than commodity sugar.

A largely debt-free balance sheet and shortening working-capital cycle provide headroom to fund organic growth and new product launches.

Potential capital infusion from the promoter warrant issue approved in March 2026, which could support capacity expansion or working capital.

Export opportunities for value-added sugar and jaggery products, subject to prevailing government export policy.

Threats and Challenges

Sugar and jaggery are seasonal, Agri-linked businesses; cane availability, weather and yield variability can cause volatility in input cost and quarterly performance.

Regulatory changes in cane pricing (FRP/SAP), export-import quotas and ethanolblending policy can materially affect realisations and volumes.

Intensifying competition from larger, integrated sugar producers and from other branded FMCG players entering the speciality-foods space.

Profitability remains sensitive to commodity price movements, given that cost of materials consumed forms the largest expense line.

Relatively small scale of operations compared with larger listed sugar companies may constrain economies of scale and bargaining power.

Weakness

Cane prices in India remain relatively high compared with global sugar-producing regions, putting pressure on the cost structure and margins of sugar mills.

Technology adoption across the sugar industry remains uneven, with several mills continuing to require investments in modernisation, automation, energy efficiency and process optimisation.

Sugar mills continue to face financial and operational pressures arising from fluctuations in sugar prices, cane costs, production levels, working-capital requirements and regulatory changes.

OUTLOOK

Management expects the growth momentum seen in FY2025-26 to continue, supported by the Companys speciality and branded product strategy, an increasingly efficient working-capital cycle, and the planned capital infusion through the promoter warrant issue. The Board will continue to evaluate opportunities to expand capacity, deepen distribution for the FMCG portfolio, and diversify the product mix toward higher-margin, value-added offerings, while remaining watchful of Agri-commodity price cycles and regulatory developments affecting the sugar industry.

RISKS AND CONCERNS

The principal risks facing the Company include agricultural/commodity risk (sugarcane price and availability), regulatory risk (changes in minimum support price, export policy and ethanolblending norms), competition risk from larger integrated players, and execution risk associated with scaling the newer FMCG subsidiaries. Currency and export-market risk apply to the extent the Company undertakes cross-border trade. The Company seeks to mitigate these risks through prudent working-capital management, a conservative debt profile, diversification across product categories, and continuous monitoring by the Board and its committees.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an internal control framework commensurate with its size and the nature of its business, covering financial reporting, safeguarding of assets and compliance with applicable laws. M/s Ankit Bahuguna & Co., Cost Accountant, has been appointed as Internal Auditor to periodically review and report on the adequacy of internal controls. The Audit Committee of the Board reviews internal audit findings, the adequacy of internal financial controls and the statutory audit process, and the statutory auditors, M7s JLN US & Co. LLP, have issued an unmodified opinion on the standalone and consolidated financial statements for FY2025-26.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company maintains a lean corporate structure appropriate to its current scale of operations, supplemented by operational and factory-level personnel. Industrial relations during the year remained cordial. The Company continued to comply with applicable labour and employment laws, including the Maternity Benefit Act, 1961, and applicable requirements relating to the prevention, prohibition and redressal of sexual harassment at the workplace, as disclosed in the Corporate Governance Report.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates and expectations may be " forward-looking statements " within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied, depending on cane and commodity price movements, changes in government policy and regulation, competitive conditions, and other economic, business and market factors. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.