Khaitan Chemicals & Fertilizers Ltd Management Discussions

CAUTIONARY STATEMENT

Some of the statements in the report may be forward looking and are stated as required by applicable laws & regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance and outlook The Companys Performance is dependent on several external factors such as performance of monsoons, government policy, fluctuation of prices of raw material and finished products and also their availability.

BUSINESS OVERVIEW:

The Company is mainly engaged in the manufacture of Single Super Phosphate (Fertilizer), Sulphuric Acid and other chemicals; the main business segment is related to agriculture and greatly affected by monsoons.

Segment-wise Business Review and Operational and Financial Performance:

The summarized performance of the Company in terms of production and sales for last 5 years is as under:

(Quantity in MT)

Particular	2025-26	2024-25	2023-24	2022-23	2021-22
Production:
Fertilizer (SSP)	4,40,271	3,73,870	4,35,810	4,92,613	5,34,645
Chemicals & Speciality Chemicals	183,943	198048	1,96,143	2,06,377	2,13,969
Sales:
Fertilizer (SSP)	4,54,276	4,40,365	3,45,851	4,73,194	5,33,654
Chemicals & Speciality Chemicals	1,28,086	1,25,397	1,07,533	1,13,681	1,17,910

The summarized financial performance of the Company for last 2 years is as under:

Particular	2025-26	2024-25
Sales
Fertilizer (SSP)	81953.22	63,619.15
Chemicals & Speciality Chemicals	26199.50	13,627.27
Segment Operating Profit/(Loss) {PBIT}:
Fertilizer (SSP)	6350.63	(977.19)
Chemicals & Speciality Chemicals	4111.67	2307.91
EPS(Rs) :	7.09	0.14
Dividend:	0.05 per share	-
Face Value (Per share)	1/-	1/-

The Government of India (GOI) has successfully implemented the Direct Benefit Transfer (DBT) system in the fertilizer sector to improve transparency, efficiency, and accountability in subsidy disbursement. Further, the GOI continues to evaluate and undertake initiatives towards strengthening the DBT framework, including pilot projects aimed at facilitating direct benefit transfer to farmers.

The Company believes that such reforms and continued digitization efforts by the Government are expected to enhance operational efficiencies, improve subsidy management, and support long-term growth and transparency in the fertilizer industry.

During the current financial year, the turnover of your Company increased from Rs. 72,102.58 lacs in FY 2024-25 to Rs. 100,313.07 lacs in FY 2025-26. The Companys profit before interest, depreciation, exceptional items and tax improved significantly from Rs. 2,391.66 lacs in FY 2024-25 to Rs. 11,449.91 lacs in FY 2025-26.

The Company reported a cash profit before tax of Rs. 8,160.36 lacs during FY 2025-26 as against a cash loss of Rs. 589.04 lacs in the previous financial year. Further, the Company reported a net profit after tax of Rs. 6,875.95 lacs in FY 2025-26 as compared to a net profit of Rs. 139.91 lacs in FY 2024-25.

FERTILIZER, CHEMICALS & SPECIALITY CHEMICALS DIVISION:

The Company has one of Indias largest Single Super Phosphate (SSP) Fertilizer production capacity of 11,13,500 MT in the states of Madhya Pradesh, Rajasthan, Uttar Pradesh, Chhattisgarh & Gujarat alongwith Chemicals production capacity of 2,70,600 MT in the States of Madhya Pradesh, Uttar Pradesh & Chhattisgarh. Sulphuric Acid is also a raw material for production of SSP.

The Company has produced 4,40,271 MT (previous year 3,73,870 MT) of Single Super Phosphate (SSP) Fertilizer and 183,943 MT (previous year 198048 MT) of Chemicals & Specialty Chemicals and sold 454,276 MT of SSP (previous year 4,40,365 MT) & 128,086 MT of Chemicals (previous year 125397 MT) respectively.

The Company is continuously trying to improve its share in the fortified high value added fertilizers segment. The products are picking up well in the market.

The Company is continuing its efforts for optimizing its current assets to leverage sales on the one hand and diversifying into new geographical markets on the other. Focus this year is to bring down the inventory levels and reduce carrying costing.

INDUSTRY STRUCTURE AND DEVELOPMENTS:

Agriculture is the third largest sector of Indian Economy, which contributes around 17% of total GDP of the Country. Fertilizer Industry, with the emerging scenario, plays vital role in the growth of Agriculture Sector. The balanced use of chemical fertilizer is important not only for increasing agricultural productivity but also for sustaining soil fertility.

Single Super Phosphate is a multi nutrient fertilizer containing phosphate (16%) and sulphur (11%) as primary nutrients. SSP is applied as a basal fertilizer being rich in secondary nutrients like calcium and magnesium oxide and several micro nutrients. It is an essential Fertilizer for crops likes Oil seeds, Pulses, Sugarcane, Fruits and Vegetables, Tea etc. and for sulphur deficient soils. Main features of SSP Fertilizer Industry are-

A Basic need for agriculture and its development.

A SSP is a multi-nutrient fertilizer containing P O as primary nutrient and

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Sulphur, Calcium & magnesium as secondary nutrients.

A SSP fertilizer is the lowest priced fertiizer per kg, and preferred by small & marginal farmers.

A Highly dependent on Imported Raw Material.

A Subsidised by Government of India to control the prices of the input to the farmers.

A Substantial Import of Finished Products other than SSP.

Agronomic Importance of SSP:

A SSP helps in improving root growth and development which is most important for uptake of plant nutrient and water.

A For Leguminous crops like groundnut, use of SSP, ensures a large number of nodules on the roots, which fix atmospheric Nitrogen directly into the soil and also increase Nitrogen uptake.

A SSP improves soil aeration and increase water holding capacity of the soil and increase root growth which increase crop yield.

A Oil content of Groundnut and other oil seeds increases. The quantity and quality of oil seeds crops increases.

A In Sugarcane, the sugar content increases which provide more production and monetary benefit to the farmers

A SSP increases resistance power of the plants against attack of pest and disease.

A SSP increases protein content in pulses crop

A SSP helps in leaching excess water from the root zone and prevent yellowing of the crop

A SSP improves storage capacity of product

A SSP also acts as a soil reclaiming agent.

SSP, which is a poor farmers fertilizer (price wise), is an option to optimize the use of phosphate fertilizers. It also helps to treat sulphur deficiency in soil (about 36% of Indian soil is Sulphur deficient) as well as for further enhancement of yields at the least cost. SSP being an indigenously manufactured fertilizer saves on foreign exchange outgo vis a vis imported phosphoric fertilizers.

The current year under review was comparatively much more favorable for the fertilizer industry as a whole and also the SSP industry. The monsoons were also 109% of Long Period Average leading to better sales. The GOI also supported with increase in subsidy rates. However, the prices of Sulphur one of the major raw materials of the Company saw a continuous increase in prices posing a challenge, which had to be overcome with strategic management and cost controls.