Kanco Tea & Industries Ltd Management Discussions

d) Outlook: The compounded annual growth rate of auction price realizations has been modest at 3.81% over the past decade. Concurrently, input costs, encompassing energy, fertilizers, and other farm inputs, have experienced signi3cant increases, thereby exerting pressure on the viability of tea estates. The demand for tea exports is currently subdued, primarily due to the geopolitical unrest in the Gulf region. Furthermore, domestic market prices are lower compared to the same period in the preceding year. Collectively, these factors present a challenging landscape for the industry, characterized by rising costs and stagnant selling prices, which may render the upcoming year particularly di3cult for the sector.

e) Risks & Concerns: The tea Industry is largely dependent on vagaries of weather and weather plays a major role in determining the 3nal output of produce. Both excess and scarcity of rainfall play havoc with the 3nal output of produce.

The Tea Industry is highly labour intensive and is subject to stringent labour laws. The cost of production is substantially higher compared to other tea producing countries and as compared to Small Tea Growers sector due to high labour wage and social cost. Any further increase in wage will substantially hit the bottom line.

The share of unorganized section in Indian Tea Industry is increasing year to year basis and their cost of production is signi3cantly lower than organised section because they operate in a totally di3erent cost structure. To mitigate various type of risks that the Company has to face, the Board of Directors of the Company has adopted a Risk Management Policy and implemented the same.

f) Internal control systems and their adequacy:

The Company has adequate system of internal controls and necessary checks and balances are introduced/ strengthened so as to ensure: -

a) that its assets are safeguarded and protected against losses. b) that all transactions are authorised, recorded and reported properly. c) that accounting records are properly maintained and its 3nancial statements are reliable.

The signi3cant 3ndings, if any, are placed before the Audit Committee of the Board and corrective measures are recommended for implementation. The internal audit reports are reviewed by the management and the Audit Committee.

There is no variation than that of as prescribed under the various Accounting Standards as applicable to the Company in preparation of 3nancial statements of the Company during the year under report

g) Discussion on 3nancial performance with respect to operational performance:

The results for the year ended 31st March, 2026 are lower mainly on account of lower average realisation of teas.

h) Information regarding Human Resources/Industrial Relations:

The Company is an ISO 9001:2015 certi3ed Company. The Company has a favourable working environment that motivates performance, customer focus and innovation and adheres to the highest degree of quality and integrity amongst employees. Industrial relations at the Company remain cordial. Manpower employed with the Company as at 31st March, 2026 was 2346 compared to 2312 as on 31st March, 2025.

i) Details of Signi3cant Changes in Key Financial Ratios

Notes on signi3cant changes in 3nancial ratios, where change is more than 25%:

Note-1 The change in ratio resulted from increase in turnover of the Company in the year under review.

Note- 2 The change in ratio resulted from increase in interest expenses of the Company in the year under review.

Note- 3 The change in ratio resulted due to increase in borrowings and losses su3ered by the company in the year under review.

j)j) Details of any change in Return on Net Worth as compared to the immediately previous 3nancial year along with a detailed explanation thereof:

Cautionary Statement

The statements in this report describing the companys policy, strategy, projections, estimation and expectations may appear forward looking statements within the meaning of applicable securities laws or regulations. These statements are based on certain assumptions and expectations of future events and the actual results could materially di3er from those expressly mentioned in this Report or implied for various factors including those mentioned in the paragraph "Risks and Concerns" herein above and subsequent developments, information or events.