Dollex Agrotech Ltd Management Discussions

1. Industry Structure and Development

India continues to be the worlds largest producer and consumer of sugar and the second-largest exporter globally, with the sugar economy deeply intertwined with rural livelihoods, cooperative and private milling capacity, and the countrys biofuel programme. The sector operates on an October-September crushing / marketing year, with sugarcane pricing governed by the Fair and Remunerative Price (FRP) mechanism and a regulated Minimum Selling Price (MSP) for sugar. For the 2025-26 season, 541 sugar mills operated nationally (2024-25: 533). Per NFCSF, cumulative sugar production reached 271.20 LMT as of 30 March 2026 (previous season: 248.65 LMT), with average recovery improving to 9.56% from 9.37%. By early March 2026, 465 of 541 mills had concluded crushing, reflecting an early close in several regions. Full-season output estimates varied through the year. ISMA initially projected 30.95 MT (up 18.6% YoY), with total availability of 35.95 MT (including 5 MT opening stock) against domestic demand of 28.5 MT. AISTA later revised its estimate to 28.3 MT net (gross 31.5 MT, less 3.2 MT diverted to ethanol), while USDA-FAS placed output near 30 MT (still 7% above 2024-25). The moderation reflected excessive rainfall in Maharashtra and Karnataka during August-September 2025, which caused waterlogging and affected ratoon crops. State-wise, Maharashtra led with 98.95 LMT (previous: 80.10 LMT), followed by Uttar Pradesh at 87.45 LMT (marginally lower YoY) and Karnataka at 46.75 LMT (previous: 39.90 LMT), with recovery improving across all three leading states.

Cane pricing and farmer payments. The FRP for 2025-26 was fixed at 3,550 per tonne (a 4% increase), while the MSP for sugar has remained unchanged at 31,000 per tonne since 2019 - a structural mismatch that continues to pressure mill economics. Of total cane dues of about USD 8.87 billion, mills had cleared about 80%, leaving about USD 1.79 billion outstanding (Karnataka highest at USD 530 million). Prices. Average wholesale sugar prices (October 2025 - mid-April 2026) were about 43,370 per tonne and retail about 46,600 per tonne. Ex-mill prices in Maharashtra and Karnataka had earlier fallen below cost of production (around 3,600 per quintal), prompting calls for an MSP revision; prices subsequently firmed on early mill closures and sustained buying. 2. Ethanol Blending and Diversification

The Ethanol Blending Programme (EBP) remains a defining structural shift. India achieved the 20% blending (E20) target in 2025, five years ahead of the 2030 timeline under the National Policy on Biofuels, 2018 (amended 2022). Oil marketing companies (OMCs) now procure over 11,000 million litres of ethanol annually, with blending running close to 19-20%. For Ethanol Supply Year (ESY) 2025-26 (November-October), the Government lifted all quantitative restrictions on ethanol production from sugarcane juice, syrup and molasses with effect from 1 November 2025, reversing prior-year curbs. Producers offered 17,750 million litres against OMC requirement of about 10,500-12,000 million litres - sugarcane-based 4,710 million litres and grain-based 13,040 million litres. The sugar-based share of procurement was set at about 28% (about 289 crore litres of about 1,050 crore litres total), with grain-based ethanol gaining a larger share. ISMA has sought a clearer roadmap for blending beyond E20 (up to E27) and a revision in cane-based ethanol procurement prices (unchanged since 2022-23).

Relevance to the Company. This policy backdrop is directly material to Dollex Agrotech Limited, given its ethanol project under implementation (see Section 4). 3. Exports, Trade Policy and Global Position

Indias role in global sugar trade has moderated from the peak export years (up to 2022-23, about 6.8 MT per year). Reflecting a narrower surplus and rising ethanol diversion, exports were capped at about 800,000 tonnes before the Government extended a ban on sugar exports until 30 September 2026, prioritising domestic price and supply stability. ISMA has urged calibrated exports (it sought up to 2 MT) alongside an MSP revision.

4. Business Overview and Segment-wise Performance

Dollex Agrotech Limited is engaged in the manufacturing / processing and trading of agro-commodities, and is establishing an ethanol production facility funded in part by the Rights Issue completed in June 2025. As of 31 March 2026, the ethanol plant was under installation and had not commenced commercial production; accordingly, there was no ethanol / distillery revenue during the year under review. The Company therefore participates in the broader sugar and bio-energy ecosystem principally through this upcoming ethanol capacity, positioning it to benefit from the EBP once operational.

Segment / Activity	FY 2025-26	FY 2024-25	Y-o-Y (%)
Manufacturing /	10726.25	14414.66	(25.59%)
Processing
Trading of goods	11789.52	9328.39	26.39%
Ethanol / Distillery	Under implementation (nil)	Not applicable	-
Total Revenue from Operations	22515.77	23743.05	(5.17%)

Ethanol project: Given the removal of production caps on cane-based ethanol from November 2025 and continuing EBP procurement, the Companys ethanol facility - once commissioned - is expected to contribute to revenue diversification. The Company will disclose distillery capacity, feedstock mix and OMC offtake in the year of commissioning.

5. Opportunities and Threats Opportunities

- Continued Government support for the EBP and prospective blending beyond E20 (up to E27), supporting future offtake from the Companys ethanol facility.

- Two consecutive years of above-normal monsoon supporting cane availability and feedstock economics.

- Diversification of revenue streams through the upcoming ethanol capacity and by-product value addition.

- Potential calibrated resumption of sugar exports after 30 September 2026, subject to the supply-demand balance. - Elevated global crude oil prices, which strengthen the economic case for ethanol as a petrol substitute.

Threats and Challenges

- Persistent FRP-MSP divergence compressing sector margins and contributing to cane-payment arrears. - Policy uncertainty on ethanol feedstock allocation (sugar-based share about 28% for ESY 2025-26), favouring grain-based ethanol. - Weather-related production volatility affecting feedstock cost and availability. - Continuing export restrictions (to 30 September 2026) that cede market share to Brazil and Thailand. - Working-capital and liquidity stress from sector-wide payment delays. - Rising input costs (fertiliser, diesel, labour) and dependence on monsoon performance.

6. Outlook for FY 2026-27

USDA-FAS projects 2026-27 sugar production at 33.6 MT (raw value; about 31.4 MT crystal plus 62,000 tonnes khandsari), a 12% increase over the revised 2025-26 estimate, on a projected 2% rise in cane area (5.9 million hectares) and cane production (about 463 MT). Consumption is projected at about 31 MT (raw) / 29 MT (crystal), up 3% - the first year in two seasons where production may exceed consumption, potentially reopening room for calibrated exports and / or higher ethanol diversion. Crushing for 2026-27 is scheduled to begin in October 2026, contingent on a normal monsoon. For Dollex Agrotech Limited, the year ahead will be shaped by the commissioning and ramp-up of the ethanol project, developments on ethanol feedstock policy and procurement prices, and the export / MSP framework.

7. Risks and Concerns

- Regulatory risk: changes in FRP / MSP, ethanol pricing and export / import policy, largely outside the Companys control. - Project-execution risk: timely commissioning, cost and ramp-up of the ethanol facility. - Climatic risk: monsoon dependence and extreme-weather events affecting feedstock. - Feedstock competition: rising grain-based ethanol allocation may affect cane-based offtake. - Liquidity / counterparty risk: sector-wide payment delays and working-capital cycles. - Price volatility: domestic policy and global supply trends (Brazil, Thailand). - Currency / commodity risk: exposure on any imports of machinery / chemicals or exports.

8. Internal Control Systems and their Adequacy

Dollex Agrotech Limited maintains an internal control framework commensurate with the size, scale and complexity of its operations, encompassing budgetary controls, standard operating procedures for procurement and sales, inventory management, and statutory-compliance monitoring across its manufacturing, trading and project-implementation activities. The internal audit function periodically reviews the adequacy and effectiveness of these controls, and its findings are placed before the Audit Committee of the Board. During the year under review, no material weakness or significant deficiency in the design or operation of the Companys internal control systems was observed that could have a material impact on the Companys financial reporting or operations. The management believes that the existing internal control systems are adequate and effective and continue to provide reasonable assurance regarding the orderly and efficient conduct of the Companys business.

9. Financial Performance and Analysis

Particulars	FY 2025-26	FY 2024-25	% Change
Revenue from Operations	22515.77	23743.05	(5.17%)
EBITDA	1695.96	1592.11	6.52%
EBITDA Margin (%)	7.53%	6.71%	Improved
Finance Costs	361.80	293.45	23.29%
Profit After Tax	841.61	828.11	1.63%
Net Worth	12397.42	6612.15	87.49%
Current Ratio	1.69	2.33	Declined
Debt Equity Ratio	1.27	2.47	Improved
Net Profit Margin (%)	3.74	3.49	Improved
Inventory Turnover Ratio	1.58	1.33	Improved

During the financial year 2025-26, the Company recorded Revenue from Operations of 22,515.77 lakhs, as against 23,743.05 lakhs in the previous financial year, reflecting a decline of 5.17%. The decline in revenue was primarily attributable to lower manufacturing revenue, which was partially offset by improved trading activities. Despite the moderation in revenue, the Company achieved an EBITDA of 1,695.96 lakhs, representing a growth of 6.52% over the previous year. The EBITDA Margin improved from 6.71% in FY 2024-25 to 7.53% in FY 2025-26, an improvement of 0.82 percentage points, reflecting enhanced operational efficiency and effective cost management. The Profit After Tax (PAT) stood at 841.61 lakhs, registering a marginal increase of 1.63% over the previous financial year despite the challenging business environment. The Companys Net Worth increased significantly to 12,397.42 lakhs as on 31 March 2026, compared to 6,612.15 lakhs in the previous year, representing a growth of 87.49%. The substantial increase was primarily attributable to the successful Rights Issue of 49.44 crore completed in June 2025, which strengthened the Companys capital base and improved its overall financial position. Current Ratio declined from 2.33 to 1.69, primarily due to increased current liabilities and working capital requirements relating to the implementation of the expansion project. Nevertheless, the ratio remains above 1, indicating that the Company continues to maintain adequate liquidity to meet its short-term obligations. Debt-Equity Ratio improved substantially from 2.47 to 1.27, reflecting a stronger capital structure due to the increase in shareholders equity and improved leverage management. Net Profit Margin improved from 3.49% to 3.74%, indicating better overall profitability through efficient cost control and operational performance. Inventory Turnover Ratio improved from 1.33 to 1.58, reflecting improved inventory management and more efficient utilization of inventory during the financial year.

10. Human Resources

The Company recognizes that its employees are its most valuable asset and remain committed to fostering a work environment that promotes professionalism, teamwork, integrity, continuous learning, and employee well-being.

Industrial relations remained cordial and harmonious throughout the financial year under review, and no material industrial disputes or disruptions affecting the Companys operations were reported. As on 31 March 2026, the Company had 48 permanent employees on its rolls. The Company continues to focus on enhancing employee capabilities through training and development initiatives, strengthening workplace safety, and ensuring compliance with applicable labour laws and statutory requirements. The Company is committed to maintaining high standards of occupational health and safety across its operations and continuously strives to provide a safe, healthy, and productive working environment for all its employees.

11. Cautionary Statement

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates and expectations may constitute "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results may differ materially due to factors including changes in Government policy on FRP / MSP, ethanol pricing and export regulation, monsoon and climatic conditions, global sugar and crude oil prices, project-execution outcomes, and other economic developments in India and overseas. The Company assumes no obligation to publicly update or revise any forward-looking statements.

Sources: ISMA; AISTA; NFCSF; USDA-FAS New Delhi (Sugar Annual, 2026); Ministry of Consumer Affairs, Food & Public Distribution; Ministry of Petroleum & Natural Gas; and financial / trade press, as of July 2026.