Excel Industries Ltd Management Discussions

EXECUTIVE SUMMARY AND STRATEGIC OVERVIEW

During FY 2025-26, Excel Industries Limited navigated a challenging business environment by maintaining an emphasis on operational resilience and structural agility. The Company continued its transition path in line with its strategic priorities.

One of the key strategic goals of the Company is to reduce its dependence on the agrochemical sector. To that end, the Company has prioritized performance solutions, contract manufacturing and Yellow Phosphorous (YP) derivatives as the future growth areas. This approach is designed to insulate the Company from sectoral overdependence while building reliable, long-term shareholder value.

The Company made good progress towards the strategic goals set out above. Progress in contract manufacturing and biocides products, part of the performance solutions portfolio, was particularly noteworthy.

FINANCIAL AND OPERATIONAL PERFORMANCE REVIEW

Despite challenging demand conditions, particularly for agrochemical intermediates, the Company achieved steady top-line growth, reinforcing its established market position across core product segments:

Revenue Growth

Consolidated sales turnover reached 1,094.25 Crores, a 12% increase over the previous years turnover of 978.07 Crores.

Market Position Preservation

In response to unpredictable monsoon patterns and raw material price fluctuations, the Company focused on securing volume and protecting market share, positioning it ahead of the next economic recovery cycle.

Profitability Management

Net profit for the period stood at 73.40 Crores, compared to 83.50 Crores in FY 2024-25. This near-term correction reflects compressed operating margins driven by elevated raw material input costs and pressure on demand for agrochemical intermediates following the extended monsoon. Cash flows were managed carefully to support ongoing strategic initiatives.

SECTORAL DYNAMICS AND OPERATIONAL MOATS

The chemicals industry is highly diversified, and dynamics vary depending on the subsegment being analyzed. An overview of the sectors relevant to Excel Industries follows.

Market Context

The domestic market remains entirely dependent on imports for YP, YP has limited supply sources China is a key competitor in YP derivatives, with advantages of local YP production. China also imposes export price controls on YP which means that Chinese origin YP is not available to non-Chinese producers at competitive prices.

Operational Positioning

The Companys scale of operations gives it an advantage in YP sourcing, and it manages the YP supply position through proactive procurement and inventory planning. Advanced backward integration across multiple process steps in the YP derivatives manufacturing chain provides a steady cost advantage.

Market Context

India is the worlds fourth-largest agrochemical manufacturing base, with a domestic industry valued at USD 8 bn. Generic manufacturers in this space face high volatility and heavy dependence on outsourced intermediates.

Operational Positioning

The Company operates global-scale backward integrated capacities in key intermediate lines. This scale allows the Company to meet peak seasonal demand. Together with backward integration, it gives the Company a competitive advantage.

Market Context

The Indian pharmaceutical industry is valued at USD 60 bn, with the API segment comprising USD 15 bn. Approximately USD 4 bn of the API segment relies on imports, underlining the need for reliable domestic suppliers.

Operational Positioning

Positioned as a niche player, the Company maintains full backward integration from basic raw materials through to multi-step synthesis and final APIs, which keeps it cost- competitive. That strength has secured custom manufacturing contracts with multinational pharmaceutical clients.

STRATEGIC INITIATIVES AND CAPITAL DEPLOYMENT

The Company continues to deploy capital for strategic initiatives in the identified growth areas.

Contract Manufacturing Operations

The successful completion of commercial qualification trials under a long-term supply agreement initiated in May 2024 with a multinational corporation establishes a clear pathway for phased volume scaling.

In November 2025, the Company executed a binding term sheet for an additional longterm supply contract, projected to generate 35-40 Crores in annual revenue (excluding raw material costs). Servicing this demand required a dedicated facility at a capital expenditure of ~ 40 Crores. The customer has supported by way of trade advance of 25 Crores.

Biocide Capacity Expansion

Biocides is a focus growth area for the Company. The capacity expansion commissioned in March 2025 became fully operational in November 2025, allowing the Company to service additional volumes during the second half of the fiscal year.

R&D Infrastructure

The Company commissioned its Corporate R&D Centre at Rabale, Navi Mumbai, in October 2025. The facility is already supporting the new product development pipeline, and will be used to shorten development timelines and maintain a structured, continuous flow of new products aligned with the Companys strategic goals.

OUTLOOK FOR FY 2026-27

While broader sector challenges, including unpredictable weather patterns and macroeconomic headwinds, remain, the Companys agile operating model provides a reliable foundation to navigate market cycles. Growth over the next financial year is expected to be driven by disciplined operational execution and a clear focus on executing the strategic plan.

Phased Product Scaling

The Company is targeting the launch of a new biocide product during the year to complement its existing biocides portfolio.

Prudent R&D Commercialization

Development work is underway on new products in the identified growth areas of contract manufacturing, performance solutions, and YP derivatives and the Company is targeting commercial launches of some of these products in FY 2026-27.

Realization of Revenues from Contract Manufacturing Agreements

Financial performance in FY 2026-27 is expected to benefit from revenues under the contract manufacturing agreements already concluded.

ESG - SUSTAINABILITY

Excel remains committed to responsible corporate governance and methodical environmental stewardship as core components of its operating philosophy.

Emissions Tracking and Reduction

The Company has finalized its comprehensive Scope 1 to 3 emissions mapping spanning the periods FY 2021-22 to FY 2024-25. Key Performance Indicators (KPIs) have been finalized to systematically monitor and lower overall emission intensity.

HUMAN RESOURCES MANAGEMENT (HRM)

AND INDUSTRIAL RELATIONS (IR)

The Company continues to maintain a positive IR environment. To support long-term operational mandates, Excel has aligned its talent management framework to business needs through structured job rotations, clear succession planning, and the targeted onboarding of specialized external industry talent. The Company has also undertaken Learning and Development (L&D) initiatives aligned to the business goals.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has put in place adequate internal financial controls with reference to the financial statements, some of which are outlined below:

The Company has adopted accounting policies which are in line with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 that continue to apply under Section 133 and other applicable provisions of the Companies Act, 2013 read with Rule 7 of the companies (Accounts) Rules, 2014. These are in accordance with generally accepted accounting principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with the Auditors.

The policies to ensure uniform accounting treatment are prescribed to the subsidiaries of the Company. The accounts of the subsidiary companies are audited and certified by their respective auditors for consolidation.

The Company has a proper and adequate system of internal audit and control which ensures that all the assets are safeguarded against loss from unauthorized use and that all transactions are authorized, recorded, and reported correctly.

The Company continuously improves upon the existing practices for each of its major functional areas with a view to strengthening the internal control systems.

The Company has assigned the internal audit function to an independent firm of Chartered Accountants. Regular internal audits and checks are carried out to ensure that the responsibilities are discharged effectively. All major findings and suggestions arising out of internal audit are reported and reviewed by the Audit Committee.

The management ensures implementation of the suggestions made by the internal auditors and reviews them periodically.

FINANCIAL PERFORMANCE AND ANALYSIS

During the year under review, the net revenue from operations increased by 12% from 978.07 Crores in FY 2024-25 to 1094.25 Crores, largely due to a sharp focus on volumes and market share. The Companys profit before tax decreased by 14% from 110.91 Crores in FY 2024-25 to 95.12 Crores due to an increase in key input material costs. Net profit after tax for the year decreased by 12% from 83.50 Crores to 73.40 Crores.

The reserves excluding revaluation reserves as of March 31,2026 are at 1,214.96 Crores.

KEY FINANCIAL RATIOS

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to give details of significant changes (i.e, change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof.

The Company has identified following ratios as key financial ratios.

Note: For those ratios where the percentage change exceeds 25%:

(a) Movement in the debt-equity ratio is mainly due to a decrease in debt (lease liabilities) during the year.

HUMAN RESOURCE

DEVELOPMENT/INDUSTRIAL

RELATIONS

At Excel, the Company continued to focus on strengthening leadership capability, developing internal talent, and driving organizational effectiveness. During FY 2025-26, significant emphasis was placed on succession planning and creating a strong pipeline of future leaders across functions.

A key initiative during the year was the strengthening of the Excel Learning Academy under the Young Leaders framework, aimed at grooming high- potential employees for larger and business-critical roles. Through structured development journeys, leadership assessments, mentoring by senior leaders, coaching interventions and cross-functional exposure, the program focused on building leadership readiness and creating a sustainable internal talent pipeline.

The Company also strengthened distributed decision-making and accountability by enhancing operational

structures across sites and functions. Executive coaching initiatives for identified leaders further supported capability building and succession readiness aligned with long-term business objectives.

The BloomGrowth? platform continued to strengthen organizational alignment by enabling structured tracking of business objectives, KRAs, project milestones and delivery priorities across functions. This has improved collaboration, visibility and execution discipline across the Company.

During the year, the organization undertook preparatory initiatives toward alignment with the Labour Codes, including review of compensation structures and related HR processes to ensure compliance readiness and operational effectiveness.

All company locations continued to operate smoothly with strong support from employeecentric policies, proactive industrial relations practices, and continued focus on employee engagement and well-being.

As of March 31, 2026, employee strength stood at 1,162.

CAUTIONARY STATEMENT

Statements in this report on Management Discussion and Analysis relating to the Companys objectives, projections, estimates, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results might differ materially from those expressed

or implied depending upon factors such as climatic conditions, global and domestic demand-supply conditions, raw materials cost, availability and prices of finished goods, foreign exchange market movements, changes in Government regulations, tax structure, economic and political developments within India and the countries where the Company conducts its business and other factors

such as litigation and industrial relations. The Company assumes no responsibility in respect of forward-looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.