Gujarat State Fertilizers & Chemicals Ltd Management Discussions

Economic Overview 1

Global Economy

In CY 2025, the global economy demonstrated resilience, augmenting by 3.5%. Growth is projected to remain steady at 3.0% in CY 2026 amid significant headwinds form evolving trade policies and escalating fiscal pressures. However, sustained policy interventions and resilient domestic demand will accelerate progress. Further, escalating conflict in the Middle East has triggered enormous disruptions in commodity markets, including fertilizers, thereby heightening inflationary pressure. Nevertheless, the inflation outlook remains highly uncertain because of the intensity and duration of these supply shocks.

Indian Economy2

Indias economy maintains strong momentum with a steady growth rate of 7.7% in FY 2025-26, positioning India as the fastest-growing major economy for the fourth consecutive year. Robust domestic demand, propelled by lower income tax and GST rates, catalysed progress. Inflation was maintained below the Reserve Bank of Indias (RBI) target range, at approximately 3.48 %, primarily due to declining food prices. The easing of price pressures enabled the RBI to execute a cumulative 125 basis points reduction in the policy repo rate during the year. Private consumption was accelerated by significant agricultural and rural demand, GST rationalisation and easing monetary measures, which minimised production costs. Simultaneously, industrial activity was bolstered by robust performance in services and manufacturing, even as the agriculture and allied activities segment recorded moderate growth. Additionally, the construction industry has remained resilient, underpinned by sustained public capital expenditure and substantial infrastructural investments.

In FY 2025-26, the nations total exports are estimated at US$860.09 billion registering a 4.22% growth, with merchandise exports accounting for US$441.78 billion as compared to US$437.70 billion in FY 2024-25. Total imports reached approximately US$979.40 billion, indicating a 6.47% expansion, driven by merchandise imports of US$774.98 billion compared to US$721.20 billion in FY 2024-25 3 .

Economic activity is expected to remain resilient, with GDP growth projected at 6.6% for FY 2026-27, driven by robust performance in the services sector, sustained domestic demand and healthy financial activity. The industry is positioned for sustained growth through operational excellence, balanced execution and sustained resilience.

Trade tensions resurgence has led to a decline in crude oil prices, US dollar depreciation, weaker trade relations and equity market recalibrations. Despite these factors, CPI inflation for FY 2026-27 is projected at 5.1%, facilitated by ongoing GST rate rationalisation. To address consumer demand within this dynamic environment, the Monetary Policy Committee (MPC) has reduced the repo rate to 5.25% and maintained its neutral stance.

FRE- First Revised Estimate; PE- Provisional Estimate; P- Projected Source: RBI Bulletin

Industry Overview

Agriculture Industry

Indias agriculture and allied sectors have expanded significantly due to ongoing policy prioritisation and increased public funding. Agriculture and allied activities accounted for 17.8% of the total Real Gross Value Added (GVA) in FY 2025-26 4 . Agricultural activity was further backed by a favourable monsoon. Allied activities, particularly livestock and fisheries, have experienced stabilisation. Consequently, total agricultural growth is balanced by volatile crop performance with the stable allied sector expansion.

Total food grain production for the agricultural, during the FY 2025-26 reached 3,486.57 Lakh Metric Tonnes (LMT). This output was primarily fuelled by the strong performance of paddy, wheat, coarse cereals and pulse crops 5 .

Government Schemes

The Government of India is implementing various programmes for the welfare of farmers, by increasing production, remunerative returns and income support. The details are given below:

National Food Security and Nutrition Mission (NFSNM) aim to increase the production of key crops like rice, wheat, pulses and coarse cereals through area expansion and productivity enhancement, while focusing on soil fertility restoration and farm-level incomes enhancement.

The Rashtriya Krishi Vikas Yojana (RKVY) is dedicated to ensuring economic viability by bolstering pre- and post-harvest infrastructure, with sub-components such as Per Drop More Crop and Crop Diversification Programme. National Mission on Natural Farming (NMNF) aims at promoting natural farming practices to provide safe and nutritious food for all. The mission is designed to support farmers while reducing the input cost of cultivation and minimising dependency on externally purchased inputs.

National Bee Keeping and Honey Mission (NBHM) is a government initiative aimed at promoting and developing beekeeping and honey production in India. It encompasses various programs and strategies to support beekeepers and accelerate honey production. Per Drop More Crop (PDMC) is a component of the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) aimed at enhancing water utilisation efficiency in agriculture by promoting micro-irrigation techniques like drip and sprinkler irrigation.

Soil Health and Fertility (SH&F) refers to the ability of soil to support plant growth and sustain agricultural productivity. It encompasses both the physical and chemical properties of the soil, as well as its biological activity.

The National Mission on Edible Oil Palm (NMEO-OP) seeks to make India self-reliant in edible oil production, particularly in the North-Eastern States and Andaman & Nicober Islands, aiming to expand oil palm plantations over the next five years.

Sub-Mission on Agriculture Extension (SMAE) is a scheme to promote state extension programmes for reforms as a part of the centrally sponsored SAME under the Krishonnati Yojana has been implemented in 684 districts of 29 states and 3 union territories of the country.

Sub-Mission on Seed and Planting Material (SMSP) aims to produce and supply quality seeds to farmers to bolster agricultural productivity through the implementation of the Seed Village programme, the creation of seed processing-cum-seed storage godowns at the gram panchayat level along with the establishment of the National Seed Reserve, thereby optimising private sector seed production and enhancing quality control infrastructure facilities.

Pradhan Mantri Kisan Samman Nidhi (PM KISAN) provides financial assistance to landholding farmer families across the country, by enabling direct bank account payments to streamline agricultural activities. Pradhan Mantri Fasal Bima Yojana (PMFBY) offers comprehensive crop insurance to safeguard farmers from natural risks. It has been further reinforced through significant enrollment rates and fund allocation in the recent years.

Provisions of Union Budget 2025-26 on Agriculture 6

Agricultural sector investment has augmented substantially over this period. Budgetary allocation for the Department of Agriculture and Farmers Welfare increased to Rs.1,40,528.78 crore for 2026-27 from Rs.1,33,370 in 2025-26. This significant rise indicates thesustainedpolicysupportandconsistentagriculturalinfrastructure investments, to propel strategic agricultural expansion.

Key Initiatives

A dedicated programme for the production and processing cashew and cocoa to promote Indias self-reliance. It will further enhance export competitiveness and is expected

Pradhan Mantri Kisan Maan Dhan Yojana (PM-KMY) ensures pension security for vulnerable farmer families with the collective contribution from both farmers and the Central Government.

Kisan Credit Card (KCC) scheme addresses the financial requirements of farmers at various farming stages. The scheme aims to provide adequate and timely credit support from the banking system through single window operations, thereby ensuring seamless activity for farmers.

The Agriculture Infrastructure Fund (AIF) aims to enhance post-harvest management infrastructure and community farming assets through medium to long-term debt financing.

The promotion of Farmer Producer Organizations (FPOs) empowers farmers through collective action, with the establishment of several registered and financially supported FPOs.

The Namo Drone Didi scheme will provide drones to Women Self Help Groups (SHGs) to offer rental services to farmers for agricultural purposes, such as the application of fertilizers and pesticides.

Agricultural Technology Management Agency (ATMA) promotes decentralised extension services, thereby providing the nations farmers with the latest technologies and practices for diverse application. Digital Agriculture Mission (DAM) is a government initiative to facilitate agricultural sector transformation through digital technologies and data-driven solutions. Central Sector Scheme for Development of Makhana is to be implemented for improving production, processing, value addition and marketing of makhana in Bihar and other states.

to transform Indian cashew and Cocoa into premium global brands by 2030.

Bharat-VISTAAR (Virtually Integrated System to Access Agricultural Resources),a multilingual AI tool will integrate the AgriStack portals and the ICAR package on agricultural practices with AI systems. It will enhance farm productivity, improve the farmers decision-making ability while reducing risks by providing customised advisory support.

The National Fibre Scheme will drive self-reliance in the production of natural fibre such as silk, wool, jute, along with man-made and new-age fibres.

The launch of the National Handloom and Handicraft Programme will facilitate the integration of existing schemes, to ensure targeted support for weavers and artisans.

To increase veterinary professional availability, the introduction of a loan-linked capital subsidy support scheme will promote the establishment of veterinary and para-vet colleges, veterinary hospitals, diagnostic laboratories and breeding facilities in the private sector. Prioritisation of high-value crop production such as coconut, sandalwood, cocoa and cashew in coastal regions, along with agar trees in the north-east and almonds, walnuts and pine nuts in hilly areas will promote output diversification, bolster agricultural productivity, augment farmers income while generating new jobs. Integrated development of approximately 500 reservoirs and Amrit Sarovars will further strengthen value chain in coastal areas and enable market linkages for start-ups and women-led groups in collaboration with Fish Farmer Producer Organisations (FFPOs).

The allocation of Rs 9,967 crore for agricultural education and research, primarily through the Indian Council of Agricultural Research (ICAR), will accelerate progress despite slight moderation. In collaboration with state governments, measures to promote targeted cultivation and post-harvest sandalwood processing are to be implemented.

Minimum support price (MSP) 7

The Minimum Support Price (MSP) serves as a safeguard by guaranteeing pre-determined prices for agricultural products. These prices are announced every year for 22 mandated crops. Over the 2014-2026 period, total procurement reached 1,229.2 million tonnes.

Industry Outlook

Indias agricultural sector is witnessing a structural transformation, primarily due to targeted interventions. Although the emergence of El Niño conditions continue to pose a significant challenge, policy reforms prioritising productivity enhancement, ensuring income stability and mitigating sector risks will optimise the sectors performance. This transition towards more resilient ecosystem is reinforced by output augmentation and greater institutional efficacy. Furthermore, these advancements are well backed by improved banking credit and crop insurance accessibility. Minimum Support Price (MSP) operations and digital infrastructure networks are thereby accelerating robust progress.

Eight Core Industries 8

The integrated Index of Eight Core Industries (ICI) registered a provisional decline of 0.4% as compared to the previous years index. This deceleration resulted from the negative growth in the production of fertilizers, crude oil, coal and electricity. These eight core industries constitute 40.27% of the total weight of evaluated items in the Index of Industrial Production (IIP).

	March	FY 2025\u201326
Core Industry
	2026 YoY	Cumulative
Coal	-4.0%	-0.5%
Crude Oil	-5.7%	-2.8%
Natural Gas	+6.4%	-2.8%
Petroleum Refinery Products	+0.1%	-0.1%
Fertilizers	-24.6%	-0.1%
Steel	+2.2%	+9.1%
Cement	+4.0%	+8.6%
Electricity	-0.5%	+0.9%

Fertilizer Industry

India experienced an above-normal Southwest Monsoon during FY 2025-26, with rainfall approximately 8% above the Long Period Average (LPA). Rainfall distribution remained broadly favourable, with around 91% of the countrys meteorological subdivisions receiving normal to excess rainfall. Except for the North-Eastern region, most parts of the country received rainfall above the LPA, supporting overall agricultural activity.

Excess rainfall during the latter part of the monsoon resulted in localized damage to standing Kharif crops in parts of Punjab, Gujarat and Maharashtra. While timely support and compensation by State Governments helped mitigate the impact on farmers, harvesting of Kharif crops and sowing of Rabi crops were delayed in certain areas. Overall, however, favourable monsoon conditions and adequate soil moisture supported agricultural activity during the year.

The Governments announcement of remunerative Minimum Support Prices (MSPs) for Kharif and Rabi crops, with increases ranging from 7% to 14%, together with improved

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prices for crops such as sugarcane and maize, supported farmers sentiments and acreage. Consequently, the combined Kharif and Rabi sowing area increased by around 4% during the year. Paddy and coarse cereals recorded strong acreage, while maize acreage benefited from increasing demand from the ethanol and poultry feed sectors. Oilseed acreage, which declined during the Kharif season, improved during Rabi following higher MSP support for mustard. Cotton acreage, however, declined amid subdued market demand and recurring pest-related concerns.

Indian Fertilizer Industry Performance

The Indian fertilizer industry operated in a generally supportive demand environment during FY 2025-26, aided by favourable monsoon conditions, remunerative MSPs and stable Maximum Retail Prices (MRPs) for major fertilizers. At the same time, sustained increases in international prices of finished fertilizers and key raw materials, including ammonia, phosphoric acid and sulphur, exerted pressure on industry margins and constrained inventory build-up, particularly for phosphatic fertilizers such as DAP.

The Department of Fertilizers (DoF) announced Nutrient Based Subsidy (NBS) rates for the first half of FY 2025-26 in a timely manner. However, expectations of a global DAP supply deficit led to higher international prices of both finished DAP and critical raw materials, particularly phosphoric acid, thereby increasing the cost pressures faced by fertilizer manufacturers. To address these challenges and ensure adequate availability of DAP, the Government introduced additional financial support and price protection measures for imported as well as domestically produced DAP. During the second half of FY 2025-26, NBS rates for Phosphorus (P) and Sulphur (S) were also enhanced by around 10% to partially offset the increase in raw material costs. The NBS framework was further extended to imported Ammonium Sulphate to encourage the use of alternative nitrogenous fertilizers and support balanced nutrient application.

In response to changing market conditions, fertilizer manufacturers optimized their product mix between DAP and various NPK grades to manage margins and align production with market demand. The industry also entered into long-term offtake arrangements with producers and suppliers in key producing countries, including Saudi Arabia, Russia and Morocco, to secure supplies of DAP, TSP and NPK fertilizers. The domestic market witnessed relatively high carry-forward inventories of certain NPK fertilizers, particularly Ammonium Phosphate Sulphate (APS), arising from a combination of domestic production and imports. This resulted in increased competitive intensity, with market participants adopting higher trade discounts, promotional schemes and extended credit terms to facilitate product movement.

Global Raw Material Scenario

Global fertilizer raw material markets remained volatile during the year. Sulphur prices continued to remain firm, supported by demand from refining and downstream industries, which in turn contributed to higher phosphoric acid prices. Despite the increase in prices, availability of phosphoric acid remained reasonably adequate for the Indian fertilizer industry.

Ammonia prices remained relatively range-bound during the initial part of the year. However, scheduled maintenance shutdowns at major ammonia production facilities in the Middle East reduced global availability and resulted in a significant increase in ammonia prices during the latter part of the financial year. The situation intensified towards the close of FY 2025-26 following the escalation of geopolitical tensions in the Middle East. The resulting disruption to energy and commodity supply chains led to increased volatility in the prices and availability of critical fertilizer feedstocks, including natural gas, ammonia and sulphur, particularly during March 2026.

Raw Material Price Trends

The fertilizer industry witnessed heightened imported raw materials during FY 2025-26. Average CFR prices of phosphoric acid, ammonia, rock phosphate and sulphur surged, with sulphur recording a steep rise. In contrast, benzene prices declined during the year. The variations in average raw material prices are presented below.

	FY 2024\u201325	FY 2025\u201326		Price as on
Product			Change
	(USD/MT)	(USD/MT)		31.03.2026 (USD/MT)
Phosphoric Acid (CFR), P O	1,003.00	1,248.00	+24%	1,290.00
Ammonia (CFR)	394.00	439.00	+11%	880.00
Rock Phosphate (CFR)	147.50	172.46	+17%	175.00
Sulphur (CFR)	142.48	375.82	+164%	532.25
Benzene (CFR)	1,001.47	722.27	-28%	769.61

Production, Imports and Consumption

Overall fertilizer production in India during FY 2025-26 remained marginally lower than the previous year, primarily on account of lower urea production. The domestic supply gap was supplemented through higher imports, which increased by approximately 44%, largely driven by urea and NPK fertilizers. DAP imports increased by approximately 37% to 62.5 LMT, while NPK imports increased by 64% to 37.2 LMT, supported by strong demand during the first half of the year. Muriate of Potash (MOP) imports, on the other hand, declined by approximately 21%, reflecting affordability considerations at the farmer level. Domestic fertilizer sales reached a historic high of 708.9 LMT, registering growth of approximately 2% over the previous year. Urea consumption increased by 2% to 396.4 LMT, while DAP consumption increased by 1% to approximately 94 LMT, supported by improved domestic production and imports. NPK fertilizer sales moderated marginally due to affordability constraints. In contrast, SSP recorded record sales of 55.3 LMT, representing growth of approximately 12%, supported by improved availability and its relative cost competitiveness.

Industry Outlook

The Indian fertilizer industry is expected to be bolstered by favourable agricultural fundamentals, including greater crop sowing, consistent government policy support and steady fertilizer demand. However, industry performance will be impacted by volatile raw material prices, geopolitical developments and global supply chain disruptions. In preparation for the upcoming kharif season, the Department of Agriculture and Farmers Welfare (DA&FW) has projected a total fertilizer requirement of 390.54 LMT. 9 Further, the Government of India ensured that the supply chain for fertilizers and fertilizer raw materials remained uninterrupted through continuous coordination with various countries. Simultaneously, the restoration of 100% natural gas supply enabled a significant increase in domestic fertilizer production.

The combined efforts in fertilizer imports, domestic production and adequate stocking have ensured satisfactory fertilizer availability across the country. The Government of India has ensured necessary measures for timely and adequate fertilizer availability to farmers and safeguard farmers interests 10 .

Company Overview

Gujarat State Fertilizers and Chemicals Limited (GSFC) is a multi-product industrial public sector enterprise co-promoted by the Government of Gujarat. Established in 1962 and headquartered in Vadodara, the Company specialises in the manufacture and marketing of fertilizers and industrial chemicals. Its integrated production structure encompasses major agricultural nutrients such as urea, Ammonium Sulphate (AS) and Diammonium Phosphate (DAP), alongside industrial materials including caprolactam, melamine and nylon-6. Through its dual-segment operations, the Company supports Indias agricultural sector and industrial chemical supply chain.

The Company aligns its strategic business objectives with resource conservation, pollution control and sustainable operations. Its Clean Development Mechanism (CDM) initiatives prioritise lowering greenhouse gas emissions and preserving the purity of air, water and soil. The Company also utilises its in-house research and development capabilities to capture waste gas from its plants for ammonia manufacturing.

Renewable Energy and Power Utilization

GSFC commenced its renewable energy journey in 2008 with the commissioning of its first 10 MW wind power project and has since expanded its renewable energy capacity through investments in wind and solar power. As at the end of the reporting period, the Company had an aggregate renewable energy capacity of 217.94 MW, comprising 152.80 MW of wind power and 65.14 MW of solar power. Its wind power portfolio comprises 88 wind turbines across seven locations in Saurashtra and Kutch, while its solar portfolio includes ground-mounted, rooftop, floating and group-captive solar installations across Gujarat.

At the Baroda Unit, approximately 67% of power consumption up to July 2026 was met through renewable sources, compared with approximately 47% during FY2025-26. The share of renewable power is expected to remain above 55% during FY2026-27. The increasing utilisation of renewable power reflects the Companys efforts towards energy transition, optimisation of power costs and reduction of its environmental footprint, while supporting its broader sustainability objectives.

Business Performance

Fertilizers

The fertilizer business environment became increasingly challenging during the fourth quarter of FY 2025-26. Rising prices of key raw materials, particularly sulphur and ammonia, had already placed pressure on industry margins. The escalation of geopolitical tensions in the Middle East towards the end of the financial year further increased raw material price volatility and disrupted the availability of critical feedstocks, including natural gas, ammonia and sulphur.

Against this challenging backdrop, GSFC demonstrated strong operational resilience and market execution. The Company recorded fertilizer sales of 22.31 lakh MT, registering growth of approximately 14% over the previous year and achieving its highest annual fertilizer sales in the last four years.

Among the Companys focus products, Ammonium Sulphate (AS) recorded sales of 5.76 lakh MT, representing growth of approximately 10% over the previous year. Ammonium Phosphate Sulphate (APS) sales increased to 7.16 lakh MT, registering growth of approximately 12% year-on-year. Both AS and APS achieved their highest-ever annual sales volumes in the Companys history, supported by sustained production from the Baroda and Sikka Units and growing demand across various agricultural markets. Overall, despite volatility in international raw material prices, geopolitical uncertainties and increased competitive intensity, the Company leveraged its integrated manufacturing capabilities, diversified product portfolio, efficient supply chain and established market presence to achieve record fertilizer sales during the year. The Company remained focused on ensuring timely and reliable availability of fertilizers to the farming community while responding proactively to changing market and input-cost conditions.

Industrial Products

The Industrial Products segment demonstrated strong operational performance during FY 2025-26, despite a challenging global business environment marked by geopolitical uncertainties, trade fragmentation, financial market volatility, elevated energy costs and continued disruptions in global supply chains. The evolving geopolitical situation, including conflicts in the Middle East, further impacted global energy and commodity flows, while changing trade policies and tariff measures added to market uncertainties.

Against this backdrop, the Company achieved its highest-ever annual sales volumes of Technical Grade Urea, Nylon and HX Crystal. The Company also recorded its highest-ever export volumes of Melamine and HX Crystal, thereby further strengthening its presence in international markets. The performance was supported by a focused product strategy, optimized product mix and increased emphasis on products and markets offering better realization opportunities.

However, the overall sales value of the segment remained impacted by lower international prices. On a year-on-year basis, international prices declined by approximately 21% for Nylon-6 Chips, 20% for Caprolactam and 10% for Melamine. The decline in global chemical prices was largely attributable to prevailing global overcapacity, particularly in China, along with subdued demand conditions and continued trade disruptions. The Caprolactam-Benzene spread remained under pressure for most of the year, primarily due to subdued international Caprolactam realisations and the continued risk of dumping of Caprolactam and downstream products into India amid global trade dislocations. The spread, however, improved significantly during the fourth quarter.

Domestic demand for Melamine remained subdued during the year, mainly due to lower operating rates in the downstream laminate and plywood industries, resulting in moderation in domestic offtake. The Company partly mitigated the impact by adopting a strategic focus on exports, which supported higher export volumes.

Despite pressure on product prices, spreads and certain product volumes, the Industrial Products segment recorded its best-ever annual EBIT performance. The improvement was driven primarily by higher sales of Technical Grade Urea and HX Crystal, increased traded Ammonia volumes and a strategic shift towards higher Melamine exports, along with an optimized product mix.

Overall, the segment demonstrated resilience in a volatile global environment by leveraging its product portfolio, export capabilities and market flexibility, while continuing to focus on improving product mix, strengthening export markets and optimizing margins.

Financial Performance of the Company during the FY 2025-26

Particulars ( Crores)	FY 2025\u201326	FY 2024\u201325	YoY Change (%)
Operating Revenue	10,827	9,429	14.8%
Total Revenue	11,100	9,742	13.9%
Operating EBITDA	781	629	24.2%
PBT	838	740	13.2%
PAT	652	573	13.8%
EPS ( /Share, not annualised)	16.35	14.38	13.7%

Key Financial Ratio
Key Financial Ratio	FY 2025-26	FY 2024-25	YoY change (%)	Reasons for changes greater than 25%
Debtors Turnover Ratio	10.20	10.82	-6%
Inventory Turnover Ratio	17.00	17.68	-4%
Interest Coverage Ratio	108.67	163.23	-33%	Interest Coverage was lower due to higher utilisation of short term borrowings
Current Ratio	4.86	4.36	12%
Debt Equity Ratio	--	--	0%
Operating Profit Margin (%)*	9.74	9.99	-3%
Net Profit Margin (%)	6.02	6.08	-1%

*Including Other Income

Ten Years Product Performance Record

The last 10 years Product-wise performance is given below:

PARTICULARS	Unit	2025-26	2024-25	2023-24	2022-23	2021-22	2020-21	2019-20	2018-19	2017-18	2016-17
Production
FERTILIZERS	MT	1759147	1647232	1432315	1389458	1461910	1908828	1665824	1733957	1678958	1507911
Ammonium Sulphate	MT	552740	526295	395235	500246	503100	487250	445630	374720	372330	337370
Ammonium Sulphate	MT	717540	628940	325980	300380	251330	268730	267140	291940	282360	313860
Phosphate
Di-Ammonium	MT	147120	137290	261130	193810	307880	565790	484720	459090	503830	411850
Phosphate
N P K	MT	5630	19430	69600	20550	28870	208730	128120	193150	154220	38340
UREA	MT	332765	333960	377410	371070	362826	370700	332705	405360	361181	406571
CAPROLACTAM	MT	78550	82704	84009	87198	86639	81927	83134	91479	86662	86191
NYLON-6	MT	24449	26015	27291	26794	25623	24455	24296	23887	20215	17421
MELAMINE	MT	37889	42452	43500	47756	52847	38732	29215	14161	15188	14886
ARGON	000NM3	3537	3272	3369	3564	3294	3325	3116	3574	3319	3549
Sales
FERTILIZERS*	MT	1767770	1661026	1440694	1377337	1504194	1945122	1682171	1598428	1604222	1412044
Ammonium Sulphate	MT	575637	521346	402892	475917	523891	497430	441335	385952	360555	308214
Ammonium Sulphate	MT	715648	637583	327284	279885	264959	299160	249482	293115	262134	299025
Phosphate
Di-Ammonium	MT	146279	150548	257859	230822	297765	563510	524410	399309	500999	417820
Phosphate
N P K	MT	5539	19837	69126	20579	46431	214999	141409	184270	130194	35024
UREA	MT	324666	331712	383534	370134	371148	361049	325536	366763	313448	360879
CAPROLACTAM*	MT	54671	56515	59684	57402	60359	58170	58764	65596	63217	63101
NYLON-6	MT	35010	28828	32545	29187	27644	28150	23752	25311	22569	13697
MELAMINE	MT	38780	43103	47448	48487	48452	40173	26234	13953	15298	15341
ARGON	000NM3	3535	3268	3389	3545	3292	3349	3099	3563	3317	3546

*excluding captive consumption

Research and Development (R&D)

The Companys DSIR-approved Research Centre at the Vadodara Complex catalysed product innovation, process development and technical excellence through consistent research, pilot-scale validation and plant support initiatives during FY 2025-26.

Key Highlights

The DSIR-approved Research Centre promoted research and development activities across fertilizers, industrial products, biotechnology, waste utilisation, corrosion and metallurgy. The R&D pilot plant facilitated process validation, parameter optimisation and small-scale production for market development and customer evaluation. A pilot-scale Ammonium Sulphate (AS) granulation unit was successfully installed and commissioned. Initial trials demonstrated satisfactory granule strength and handling capabilities further enhanced through process optimisation, product quality improvement and scale-up strategies for commercial implementation. Product improvement trials for APS were successfully executed out at the Vadodara and Sikka units to evaluate a newly developed anti-caking agent and a revised body colouring agent formulation. Performance evaluation will drive further performance optimisation through strategic implementation. The R&D team developed technical reports on global caprolactam market dynamics, emerging technologies, the operational status of the Caprolactam-I plant, along with the Vision 2047 roadmap prioritising fertilizer expansion, specialty chemicals, digital and AI-driven technologies and sustainability initiatives. The Company enhanced plant operations through advanced technical capabilities across in heat treatment, welding, repair procedures, import substitution, material selection and erosion-corrosion assessing. During the year, cooling water monitoring included approximately 170 corrosion coupons and 400 cooling water samples. The R&D team conducted 10 Root Cause Failure Analysis (RCFA) investigations and assessed more than 90 critical equipment locations to evaluate material degradation under high-temperature and high-stress operating environments. A detailed investigation of recurring liquid ammonia pipeline leakages in the Urea-II plant identified Ammonia Stress Corrosion Cracking (SCC) at weld heat-affected zones. Based on the findings, corrective measures including the regulation of oxygen/CO levels and post-weld heat treatment/stress relief were recommended to improve plant safety and operational reliability. Additionally, the R&D team conducted training programmes and hands-on demonstrations for cast nylon production to accelerate marketing-IP activities, expand the caprolactam consumer base and support the MSME sector.

Human Resources

Gujarat State Fertilizers & Chemicals Limited considers its workforce the key driver for implementing its policies and achieving its corporate objectives. As of the end of the financial year, the company had a total strength of XX permanent employees on its rolls.

For detailed information, please refer to page XX of this report.

Business Outlook

The Company will continue to maintain a balanced approach towards optimising sales opportunities, strategic stock placements and margin management, while remaining closely aligned with Department of Fertilizers supply objectives. The announcement of Nutrient-Based Subsidy (NBS) rates for H1 FY2026-27, including a 10% increase in Nitrogen, Phosphorus and Sulphur nutrient support, reflects the Governments commitment towards ensuring adequate fertilizer availability during the upcoming Kharif season. The demand outlook will remain influenced by the progress of the south-west monsoon and possible emergence of El Niño conditions. The revival of rainfall during July 2026 has improved the outlook for the agri-input sector ahead of the Rabi season. Over the longer term, the Companys Growth Strategy Plan up to 2035 and Vision 2047 envisages a strategic shift towards chemicals while maintaining growth in fertilizers, with focus on specialty and bulk chemicals, specialty fertilizers and crop protection, and green chemicals including green hydrogen and green ammonia. The strategy also envisages increasing the share of value-added chemicals and exports to approximately one-third of total revenues, leveraging long-term trade agreements and the global China+1 shift. The Company will also focus on expanding specialty fertilizers and crop protection through its distribution network and farmer connect, and green hydrogen and green ammonia through its existing ammonia infrastructure, land availability and proximity to ports.

Risk and Management

The Companys Risk Management Policy outlines the risk management process followed by the Company and sets out the responsibilities of the Board and the Risk Management Committee. The process comprises identification, assessment, planning, implementation, monitoring and review, and communication of identified risks. Key risks include Government Policy Risk, Currency Risk, Input Price Risk, Raw Material

Availability Risk, Phosphatic Fertilizer Market Risk and Market Condition Risk, relating to policy revisions and subsidy-driven recoveries, foreign exchange fluctuations, input and natural gas prices, raw material availability, domestic phosphatic fertilizer prices and market conditions. The Company manages these risks through an online risk management portal for categorisation and monitoring of identified risks, including efficient Foreign Exchange Risk Management. It is also focusing on higher production levels, efficient raw material procurement enhancing operational efficiency and minimising marketing and distribution expenditure through targeted strategies. For phosphatic fertilizer market risk, the Company is focusing on production of various complex grade fertilizers at Sikka and targeted product/segment strategies to maximise sales while leveraging its existing portfolio.

Internal Control Systems and their Adequacy

Gujarat State Fertilizers & Chemicals Limited maintains a robust internal control system. The framework matches the size and complexity of its operations. This system provides adequate financial controls and safeguards all corporate assets. It also maintains the absolute integrity of accounting records. To reduce manual errors, the company uses an advanced SAP-ERP system. This platform enforces strict validation controls and authorization matrices across all factories.

The Finance-cum-Audit Committee directly oversees these internal frameworks. This committee evaluates the efficacy of the system and governs the internal audit function. Internal audits are carried out routinely across all business departments. All audit findings and corrective actions are presented directly to the committee. The members discuss and debate these queries at length. This process ensures immediate rectification of operational gaps and strict regulatory compliance.

Cautionary Statement

Some of the statements made in this Management Discussion

& Analysis Report regarding the economic and financial conditions and the results of operations of the Company, the Companys objectives, expectations and predictions may be futuristic within the meaning of applicable laws/regulations. These statements are based on assumptions and expectations of events that may or may not materialize in the future.

The Company does not guarantee that the assumptions and expectations are accurate and/or will materialize. The Company does not assume responsibility to publicly amend, modify or revise the statements made therein nor does it assume any liability for them. Actual performance may vary substantially from those expressed in the foregoing statements. The investors are, therefore, cautioned and are requested to take considered decisions with respect to these matters.