Kesar Enterprises Ltd Management Discussions

GLOBAL SUGAR OVERVIEW:

Bifurcation of global sugar production by top 5 sugar production countries is as follows:

Market	Total Production (2025/2026,
	Metric Tons)
Brazil	44.7 Million
India	35.3 Million
European	16.5 Million
Union
China	12.0 Million
Thailand	10.5 Million

(Source: USDA Foreign Agricultural Service — PSD Database: https://apps.fas.usda.gov/psdonline/app/index.html#/app/compositeViz USDA WASDE Report, May 2026)

Brazil continues to lead as the worlds top sugar producer and the dominant global exporter. Total sugarcane production is forecast at around 671 million metric tons, W sugar production projected at approximately 44.7 million metric tons in 2025/26. The sugar-to-ethanol mix has tilted in favour of sugar, with around 51% of cane destined for sugar manufacturing. Favourable weather conditions and continued agricultural investment underpin Brazils position as the price-maker in global sugar markets, accounting for approximately 54% of world sugar exports.

The European Union continues to be a significant player in the global sugar market. EU production is forecast at approximately 16.5 million metric tons in 2025/26, reflecting a meaningful increase driven by strong sugar beet yields and improved agricultural conditions. Advanced farming technology and continued support for the sugar sector sustain the EUs strong output levels.

China has continued to grow its domestic sugar production, with output projected to reach approximately 12.0 million metric tons in 2025/26. Rising domestic consumption and government support for the agricultural sector remain key drivers of Chinas expanding role in the global sugar industry. China also remains one of the worlds largest sugar importers, with imports projected at around 5.3 million tons.

Thailand remains a prominent sugar producer and the worlds third-largest producer and second-largest exporter. The Thai Sugar Millers Corp projected the 2025/26 sugar crop to increase by approximately 5% year-on-year to around 10.5 million metric tons, supported by the countrys tropical climate and fertile agricultural land. Thailands exports are forecast to rebound strongly to around 7.0 million tons in 2025/26.

Apart from the above-mentioned top 5 contributors, the United States continues to produce approximately 8.4 million metric tons of sugar. Australia is forecast to produce around 4.0 million tons, supported by slightly higher yields. Global sugar production for 2025/26 is projected by USDA at approximately 189.3 million metric tons, with consumption forecast at around 178.1 million metric tons, resulting in a global surplus and rising ending stocks — a broadly bearish signal for world sugar prices.

(Source: USDA World Agricultural Supply and Demand Estimates (WASDE) — https://www.usda.gov/about-usda/general-information/staff-offices/office-chief-economist/commodity-markets/wasde-report USDA Production, Supply & Distribution (PSD) Online — https://apps.fas.usda.gov/psdonline/app/index.html#/app/compositeViz )

INDIAN SUGAR INDUSTRY (SUGAR SEASON 2025-26):

Sugar production in India has reached 272.31 lakh tonnes as of March 31, 2026, for the ongoing 2025-26 sugar season (SS), registering a growth of approximately 9% over the 248.78 lakh tonnes produced during the corresponding period last year, according to the Indian Sugar & Bio-Energy Manufacturers Association (ISMA). A total of 56 mills are currently operational across the country.

Uttar Pradesh has produced 87.50 lakh tonnes of sugar as of March 31, 2026, broadly in line with last years output. However, only 28 mills are currently operational in the state, compared to 48 mills during the corresponding period last season. Improved plant cane availability and better recovery rates have supported production despite a reduction in operational mills.

Maharashtra has witnessed a notable rise in production, with output reaching 99.30 lakh tonnes as of March 31, 2026, compared to 80.26 lakh tonnes in the corresponding period last year — a significant increase of approximately 24%. Karnataka has similarly outperformed, with sugar production at 47.90 lakh tonnes against 39.94 lakh tonnes during the same period last season, reflecting a growth of approximately 20%. As of March 31, 2026, Maharashtra had 2 mills and Karnataka had 2 mills still operational, with the season approaching its close. Some mills in South Karnataka are expected to resume operations during the special season from June/July to September 2026, and certain mills in Tamil Nadu will also continue through the special season, with both states historically contributing around 5 lakh tonnes during that period.

Sugar Production Data as of March 31, 2026

ZONE	Number of Mills Started	Number of Mills Closed	Number of Mills Operating	Sugar Production (Lakh Tonnes)
U.P.	121	93	28	87.50
Maharashtra	210	208	2	99.30
Karnataka	81	79	2	47.90
Gujarat	14	12	2	7.10
Tamil Nadu	30	15	15	5.00
Others	83	76	7	25.51
ALL INDIA	539	483	56	272.31

(Note: Above sugar production figures are after diversion of sugar into ethanol)

(Source: ISMA Production Data as reported by ChiniMandi, April 1, 2026 — https://www.chinimandi.com/crushing-season-approaches-its-final-phase-sugar-production-at-272-lmt/ ) The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) has released advance estimates projecting a strong rebound in sugar production for the 2025-26 sugar season. According to ISMAs third advance estimates (February 2026), gross sugar production is projected at approximately 324 lakh tonnes, with net production after ethanol diversion estimated at approximately 293 lakh tonnes — representing an increase of over 12% compared to the net production of 261.2 lakh tonnes in 2024-25.

With an opening stock of 50 lakh tonnes as of October 1, 2025, and net production of approximately 293 lakh tonnes after ethanol diversion, total sugar availability is estimated at 343 lakh tonnes for the season. Domestic consumption is projected at 283 lakh tonnes, while exports are expected to reach 7 lakh tonnes. Closing stocks as of September 30, 2026 are forecast at approximately 53 lakh tonnes, indicating a comfortable inventory buffer heading into the 2026-27 season.

The Government of India permitted 15 lakh tonnes of sugar exports in the 2025-26 season. ISMA has urged the government to announce further export policy measures at the earliest, emphasizing that early permissions help mills plan production, channel surplus sugar into global markets, and maintain domestic price stability. ISMA has also requested a revision of the Minimum Selling Price (MSP) of sugar and an upward revision of ethanol prices to restore mill viability amid rising production costs.

Industry body ISMA highlighted that rising production costs, coupled with inadequate ex-mill realisations, are exerting significant pressure on mill cash flows, resulting in an increase in cane payment arrears. A timely MSP revision aligned with current cost structures is considered essential to restore financial viability across the sector. ISMA also highlighted the need to accelerate ethanol blending in light of evolving geopolitical dynamics and rising crude oil import prices, which can strengthen Indias energy security.

Early reports indicate improved planting for the 2026-27 season in Maharashtra and Karnataka. With anticipated opening stocks of around 53 lakh tonnes, the forthcoming crushing season appears well-positioned to meet domestic demand while supporting the ethanol blending programme.

(Source: ISMA 3rd Advance Estimates, SS 2025-26 — February 26, 2026: https://agrospectrumindia.com/2026/02/26/ isma-releases-3rd-advance-estimates-for-2025-26-sugar-season-net-output-pegged-at-293-lakh-tons.html ChiniMandi: https://www.chinimandi.com ) OPERATIONAL HIGHLIGHTS (2025-26): Sugar Division

During Season 2025-26, crushing commenced on 18th November 2025 and ended 23rd February 2026 (98 days). The plant crushed 55.31 lakh quintals as against 59.46 lakh quintals in 108 days in SS 2024-25, lower primarily due to cane diversion to neighbouring factories on account of delayed cane price payments.

Sugar recovery improved to 10.23% during SS 2025-26 as against 9.55% in SS 2024-25. Sugar production during the season was 5.66 lakh quintals as against 5.68 lakh quintals in the previous season.

Molasses produced during Season 2025-26 was 2.56 lakh quintals as against 2.99 lakh quintals in SS 2024-25.

Power Division

Power Plant operated from 17th November 2025 to 26th February 2026. Bagasse consumed: 1.59 Lakh MT; alternate fuel: 0.04 Lakh MT; power generated: 0.74 Lakh MW (vs. 1.70 LMT bagasse, 0.13 LMT alternate fuel, 0.78 Lakh MW in SS 2024-25). Plant was not operated during off-season due to unviable power tariffs.

Power exported to UPPCL: 0.48 lakh MW — Rs. 21.19 Crores (vs. 0.49 lakh MW — Rs. 17.09 Crores in SS 2024-25). UPERC revised tariff: Rs. 4.43/unit for FY 2025-26. Supplementary bill for FY 2024-25 of Rs. 4.22 Crores paid by UPPCL, revising FY 2024-25 export realisation to Rs. 21.40 Crores as against earlier reported value of Rs. 17.09 Cr.

Spirits Division

Distillery plant not operated during FY 2025-26 due to high molasses cost (Rs. 1,000 1,100/qtl) and low RS/SDS/Ethanol realization (Rs. 50 or below). Restart decision deferred to September/October 2026 subject to market conditions.

FINANCIAL REVIEW (F.Y. 2025-26):

For the Financial Year 2025-26, Revenue from operations is Rs. 30,449.72 lakhs against revenue from operations of Rs. 33,396.97 lakhs in the previous year (FY 2024-25). Reduction in revenue from operations is on account of decrease in sugar sale quantity from 7.53 Lakh quintals of FY 2024-25 to 6.23 Lakh Quintals of current FY 2025-26.

For the Financial Year 2025-26, there is a loss of Rs. 4,840.91 lakhs as against a loss of Rs. 7,262.40 lakhs in the previous year (FY 2024-25). After taking into account the effect of other Comprehensive Income based on Ind-AS norms, there is a loss of Rs. 4,673.71 lakhs for the Financial Year 2025-26 as against a loss of Rs. 7,308.51 lakhs in the previous year. The Company generated EBIDTA of Rs. (1,100.28) lakhs as against Rs. (3,892.47) lakhs in the previous year (FY 2024-25). During the Financial Year 2025-26, the Company did not raise any funds by issue of equity shares or debt securities and there was no change in Paid-up Share Capital except for sub-division of face value of equity shares from Rs. 10 each to Rs. 1 each.

During the Financial Year 2025-26, no fresh credit facilities were obtained by the Company from any bank or financial institution.

SEGMENT-WISE FINANCIAL PERFORMANCE:

Segment-wise reporting of performance of the Companys primary business segments (Sugar, Power and Spirits) is provided in Note No. 38 to Financial Statements forming part of this annual report.

OPPORTUNITIES & THREATS: Sugar

Untimely changes in government policy and upward revisions of Fair Remunerative Price (FRP) and State Advised Price (SAP) pose a continuing threat to industry viability. In SS 2025-26, the Company paid SAP of Rs. 390 400 per quintal as against FRP of Rs. 354.23 per quintal, a premium of Rs. 45.77 per quintal. The UP sugar industry operates with the highest production costs in India, rendering it cash-starved and uncompetitive vis-?-vis mills in Maharashtra and Karnataka. The Minimum Selling Price (MSP) of sugar continues to remain at Rs. 31.00 per kg — unchanged for over six years — despite significant increases in input costs and FRP. There is an urgent need to revise the MSP in line with FRP increases and to adopt a linkage formula as recommended by the Rangarajan Committee. The Governments restriction on sugar exports for 2025-26 is expected to support domestic sugar prices and improve industry margins. Excess global production may exert downward pressure on international sugar prices and limit Indias export window going forward.

Power

The Company has set up a state-of-the-art cogeneration plant operating at high pressure of 115 kg/cm2 , making it significantly more efficient compared to most other cogeneration plants in the sector (which operate at 45 87 kg/cm2), enabling higher power output from the same quantity of bagasse. UPERCs revised tariff of Rs. 4.43 per unit for FY 2025-26 (up from Rs. 3.46 per unit earlier) and the multi-year tariff framework effective from 1st April 2024 provide greater revenue visibility for the power division. The cogen plant will continue to be synchronised with the sugar plant operations and will start from the last week of October 2026 for the 2026-27 season.

Spirits

The State and Central Government policy framework for the Spirits/Ethanol division remains supportive in principle, with the Government promoting ethanol production through better price discovery and allowing production from B-heavy molasses and cane juice directly. However, current market prices of Rs. 1,000 1,100 per quintal for molasses combined with RS/SDS selling prices at Rs. 50 or below render distillery operations commercially unviable. The Company will take a call on restarting distillery operations based on market dynamics by end of September/October 2026. An improvement in ethanol blending mandates and pricing by the Government could provide a meaningful trigger for resumption.

OUTLOOK FOR FINANCIAL YEAR 2026-27 Sugar Division

Crushing for Season 2026-27 is expected to commence in the last week of October or first week of November 2026, subject to cane maturity and related factors. The sugar price outlook for FY 2026-27 is expected to be steady, supported by low opening stock levels and the possibility of reduced cane availability. The Governments current restriction on sugar exports is expected to exert a positive impact on domestic sugar prices. These factors are expected to collectively improve operational margins for the Company. However, the risk of cane diversion to neighbouring factories — particularly given a new sugar mill being set up within 15 km of the Companys zone — remains a material concern unless the Company substantially improves its cane price payment cycle. The industry outlook is broadly positive in the short and medium term with sugar prices expected to be encouraging and stable.

Power Division

The Cogen Power Plant for 2026-27 will be synchronised with the start of sugar plant operations and is expected to commence from the last week of October 2026, operating through the end of the crushing season. The revised UPERC tariff of Rs. 4.43 per unit for FY 2025-26 and the multi-year framework provide continued tariff visibility for the power business.

Spirits Division

Resumption of distillery operations is entirely dependent on the combined market scenario of molasses procurement cost and

RS/SDS/Ethanol realization. At current molasses prices of Rs. 1,000 1,100 per quintal and RS/SDS prices at Rs. 50 or below, operations remain unviable. The Company will evaluate market conditions by end of September/October 2026 to take a final decision. An improvement in ethanol pricing policy by the Central Government and a favourable molasses market could be key catalysts for restarting the Distillery.

RISKS AND CONCERNS: Raw Material Risk

Sugarcane is the principal raw material for manufacture of Sugar, Spirits and Power, and shortages can arise from pest attacks, crop diseases, adverse weather, or diversion of land by farmers. Critically, as experienced in SS 2025-26, delayed payment of cane price dues can trigger large-scale diversion of cane to neighbouring factories, severely impacting crushing volumes — the Companys cane area fell from 27,012 hectares in SS 2024-25 to 18,636 hectares in SS 2025-26 on this account. Additionally, the setting up of a new sugar mill within 15 km of the Companys command zone adds a structural competitive pressure on cane availability going forward. To mitigate these risks, the Company is focused on improving its cane payment cycle, agronomic practices, and farmer relationship management within its command zone.

Price Risk

Sugar price is susceptible to fluctuations on account of domestic and international demand-supply dynamics, government pricing interventions for both cane and sugar, and variance in production capacities of peers. The MSP of sugar has remained unchanged at Rs. 31.00 per kg for over six years despite significant increases in FRP and production costs, putting sustained pressure on mill realisations. Domestically, sugar prices are expected to be steady in FY 2026-27, supported by lower opening stocks and the Governments export restriction, which is expected to have a positive impact on domestic prices. However, global sugar price weakness — driven by record production forecasts for 2025/26 — may impact Indias future export competitiveness. Any change in these parameters may materially affect the Companys margins.

Regulatory Risk

The policies of the Central and State Governments in terms of FRP and SAP directly impact cane procurement costs and thereby the overall viability of the Company. In SS 2025-26, the FRP payable at the Companys recovery of 10.23% stood at Rs.

354.23 per quintal, while the SAP mandated by UP was Rs. 390 400 per quintal a differential of Rs. 45.77 per quintal borne entirely by the mill. This SAP premium system, unique to Uttar Pradesh, renders UP mills structurally less competitive than mills in other states. Government decisions on MSP, export quotas, ethanol procurement pricing, and molasses reservation ratios continue to be critical regulatory variables affecting the Companys operational and financial performance.

INTERNAL CONTROL SYSTEM:

The Companys internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance with corporate policies. The Company has a well-defined delegation of power with authority limits for approving contracts as well as expenditure.

The Company has appointed independent internal auditors to oversee and carry out internal audit of its activities on a half yearly basis. The audit is based on an internal audit plan, which is reviewed and approved by the audit committee. The audit committee reviews audit reports submitted by internal auditors. The audit committee also discusses with the Companys statutory auditors, their views on the adequacy of internal control systems.

Based on its evaluation (as defined in section 177 of Companies Act 2013 and 18 of SEBI (LODR) Regulations 2015), the audit committee has concluded that, as of 31st March 2026, the companys internal financial controls were adequate and operating effectively.

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS AS REQUIRED TO BE DISCLOSED UNDER SEBI (LISTING OBLIGATIONS & DISCLOSURE REQUIREMENTS) REGULATIONS, 2015:

Particulars	Numerator	Denominator	March31, 2026	March31, 2025	Remarks/Reason for significant change
(i) Trade Receivable Turnover Ratio (times)	Sales	Average Debtors	58.46	36.89	Significant change is on account of reduction in average debtors and reduced sales as compared to previous year.
(ii) Inventory Turnover Ratio (times)	Cost of Goods sold	Average Stock	15.24	4.67	Significant change is on account of reduction in average stock value and reduced cost of goods sold value
(iii) Interest Coverage Ratio (times)	Earnings before Interest and Tax	Interest Exp	(2.40)	(4.76)	Reason for change is due to increase in earnings before interest and tax.
(iv) Current Ratio (times)	Current Assets	Current Liabilities	0.07	0.17	Significant change is due to high reduction of current assent value as compared to previous year - from 62.19 Cr to 24.28 Cr.
(v) Debt Equity Ratio	Borrowings	Equity	1.28	0.60	The significant change is due to the impact of higher reduction in other equity and increase in borrowings.
(vi) Operating Profit Margin (%)	Gross Profit	Sales	(12.60%)	(16.96%)	The significant change is on account of reduced sale value as compared to previous year.
(vii) Net Profit Margin (%)	Net Profit	Sales	(15.90%)	(21.75%)	There has been significant change due to interest written back on SDF Sugar Modernization OTS settlement, Insurance claim received and sale of lease hold land rights during FY 2025-26.
(viii) Return on Equity / Net Worth	Net Profit after Tax	Equity	(64.90%)	(61.57%)	There is no significant change and hence, details are not disclosed.
(ix) Trade payables turnover Ratio (%)	Average Trade payables	Purchases & Other manufacturing expenses	77.64%	82.91%	There is no significant change and hence, details are not disclosed.
(x) Net capital turnover Ratio (%)	Net Sales	Working Capital	(100.48%)	(108.00%)	There is no significant change and hence, details are not disclosed.
(xi) Return on capital (%)	Earnings before Interest and Tax	Capital Employed	(47.43%)	(50.46%)	There is no significant change and hence, details are not disclosed.
(xii) Return on Investment (%)	Dividend & Gain on Investments	Average Investments	2.54%	(2.44%)	The significant change is on account of change of market rates of listed equity investment as compared to previous year.

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR:

Details of change in return on net worth is already provided in table given above and hence, the same is not repeated here.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT:

The Company considers human capital as a critical asset and success factor for smooth organizational workflow. Efforts are made to improve skills, knowledge and performance of employees by timely training, job satisfaction and enrichment. The Company has added to its fold, experienced manpower in line with future areas of growth. As on 31st March 2026, the Company had 211 permanent employees.

CAUTIONARY STATEMENT:

The above Management Discussion and Analysis Report contains "forward looking statements" within the meaning of applicable laws, and regulations and is futuristic in nature. All statements that address expectations or projections about the future, including, but not limited to statements about the Companys strategy for growth, market position, expenditures and financial results are forward-looking statements. The Companys actual results, performance or achievement could thus differ materially from those projected in any such forward-looking statements. Investors are requested to make their own independent judgments before taking any investment decisions and the Company assumes no responsibility.

	On behalf of the Board of Directors
	Harsh R Kilachand
	Chairman & Managing Director
29th May 2026	DIN:00294835