Kothari Industrial Corporation Ltd Management Discussions

Your Directors have pleasure in presenting the Management Discussion and Analysis Report for the year ended 31st March, 2026.

1. INDUSTRY STRUCTURE, DEVELOPMENTS : Kothari

Industrial Corporation Limited operates across diversified business segments including fertilizers, footwear, drones

& geospatial services, food services, FMCG & vending,

Facility Management services and other emerging business areas.

The Indian fertilizer industry continues to play a critical role in supporting agricultural productivity and food security.

The sector remains influenced by government policies, subsidy mechanisms, raw material prices, monsoon conditions and evolving agricultural practices. Increasing awareness towards balanced nutrition, specialty fertilizers, bio-organic inputs and sustainable farming practices presents significant growth opportunities.

The Indian footwear industry continues to witness strong growth supported by rising disposable incomes, urbanisation, increasing brand awareness and expansion of organised retail. India remains one of the largest footwear producers globally, with significant potential in domestic consumption, exports, premium footwear and underserved segments including women and children footwear. The Companys initiatives in footwear manufacturing, retail expansion and brand development are aligned with the growing opportunities in this sector. The Indian drone and geospatial industry is witnessing rapid adoption across agriculture, infrastructure, mining, forestry, urban planning, defence and environmental monitoring. Government initiatives promoting drone technology, digital mapping and indigenous capabilities are accelerating industry growth. The increasing application of LiDAR, GIS, DGPS, remote sensing and drone-based solutions is creating opportunities for technology-driven service providers.

The FMCG and food service industries continue to benefit from changing consumer preferences, increasing urbanisation, digital commerce and demand for convenience-oriented products and services. The organised segment is expected to grow steadily, supported by evolving consumption patterns and expansion of modern retail channels.

2. OPPORTUNITIES & THREATS : The Company continues to pursue sustainable growth by leveraging opportunities across its diversified business portfolio comprising fertilizers, footwear, drone and geospatial services, FMCG products, food services and publishing. Supported by favourable industry trends, technological advancements and evolving consumer preferences, the Company remains well-positioned to strengthen its market presence while creating long-term value for its stakeholders.

Fertilizer Business

The fertilizer business continues to benefit from various

Government initiatives aimed at enhancing agricultural productivity, improving soil health and promoting balanced nutrient application. Increasing awareness among farmers regarding specialty fertilizers, bio-organic products, micronutrients and crop-specific nutrient solutions is expected to drive demand in the coming years. The Companys established distribution network, strong dealer relationships and focus on quality products position it well to capitalize on emerging opportunities in the agricultural sector. Continued emphasis on sustainable farming practices, efficient nutrient management and expansion into value-added products is expected to support long-term growth.

Footwear Business

The footwear business offers significant opportunities driven by rising disposable incomes, increasing consumer spending, changing fashion trends and growing demand for quality footwear across both urban and rural markets. Strengthening of retail presence, enhanced penetration through digital and e-commerce platforms and continued investment in brand development are expected to support business growth. The Company also intends to focus on product innovation, operational efficiencies and customer-centric offerings to strengthen its competitive position and expand its market reach.

Drone and Geospatial Business

The drone and geospatial business represents a high-growth segment with expanding applications across agriculture, infrastructure development, mining, utilities, forestry, environmental monitoring, disaster management and smart city initiatives. Increasing adoption of drone-based surveying, precision agriculture, digital mapping and remote sensing solutions is expected to create substantial business opportunities. Government initiatives promoting indigenous drone manufacturing and wider acceptance of geospatial technologies are expected to further accelerate market growth.

The Companys continued investment in advanced technologies such as LiDAR, GIS, Artificial Intelligence

(AI), data analytics and automation, together with its focus on innovation and skilled manpower, is expected to strengthen its capabilities and enable it to capitalize on emerging opportunities in this rapidly evolving sector.

FMCG and Food Service Business

The FMCG and food service businesses continue to offer growth opportunities supported by changing consumer lifestyles, increasing urbanization, rising disposable incomes and growing demand for quality, hygienic and convenient food products. Expansion of organised retail, modern trade, institutional sales and digital distribution channels provides additional avenues for market expansion. The Company remains focused on strengthening its product portfolio, improving customer experience, expanding distribution reach and enhancing operational efficiencies to capitalize on these opportunities while responding effectively to evolving consumer preferences.

Facility Management Service

The Company is exploring opportunities in andfacility management, housekeeping, manpower support, integrated operations and maintenance, logistics and allied services, including institutional and government contracts such as those relating to Indian Railways and other public sector and large institutional organisations. The growing outsourcing of non-core operational activities by government institutions, public sector undertakings, railways and corporates presents significant opportunities for the Company to expand its service portfolio and establish recurring revenue streams. Supported by favourable industry trends, technological advancements, evolving consumer preferences and increasing demand for outsourced facility and support services, the Company remains well-positioned to strengthen its market presence and create long-term value for its stakeholders.

Overall Outlook

The Company remains optimistic about the long-term growth prospects of its diversified businesses. At the same time, it remains conscious of challenges arising from changes in Government policies and regulatory frameworks, fluctuations in raw material prices, inflationary pressures, foreign exchange volatility, supply chain disruptions, technological advancements, cybersecurity risks, labour availability and increasing competitive intensity across business segments. Evolving consumer preferences and changing market dynamics also require continuous adaptation and innovation.

The Company will continue to focus on prudent financial management, operational excellence, digital transformation, product innovation, technology adoption, effective risk management and strengthening of internal controls to enhance business resilience. By leveraging its diversified business portfolio, expanding market opportunities and maintaining a customer-centric approach, the Company is confident of delivering sustainable growth and creating long-term value for its shareholders and other stakeholders.

3. SEGMENT-WISE PERFORMANCE : Segment-wise performance of the Company is disclosed in the Financial Statements forming part of this Annual Report. 4. OUTLOOK : The Company remains focused on buildingadiversified business model by strengthening its existing operations and exploring new growth opportunities across multiple sectors. The agriculture and fertilizer segment is expected to benefit from increasing demand for improved agricultural productivity, balanced crop nutrition, specialty fertilizers and bio-organic solutions. The Company aims to expand its product offerings and strengthen its market presence through innovation and customer-focused solutions.

The footwear segment continues to present significant growth opportunities driven by rising consumer spending, expansion of organised retail, increasing preference for branded footwear and Indias growing position as a global footwear manufacturing hub. The

Companys initiatives in footwear manufacturing, brand development and retail expansion are expected to support future growth.

The Drones & Geospatial Division is well positioned to benefit from the increasing adoption of drone technology and geospatial solutions across agriculture, infrastructure, mining, forestry, urban planning and other sectors. The Companys expertise in drone operations, GIS, LiDAR, DGPS and mapping solutions provides opportunities for expanding its technology-driven service offerings.

The hotel and food service business is expected to benefit from growing demand for organised dining, changing consumer preferences and increasing urbanisation. The Company aims to enhance its presence in this segment through improved operations, customer experience and strategic expansion.

The Company has initiated new business diversification initiatives, including the FMCG & Vending segment, which are expected to commence operations in FY

2026-27 and create additional growth avenues.

The Company intends to leverage emerging opportunities in institutional and government sectors, including facility management, housekeeping, manpower support, operations and maintenance, logistics and allied services, and participate in suitable tenders and contracts floated by Indian Railways, Integral Coach

Factory (ICF), public sector undertakings and other government and institutional organisations.

5. RISK & CONCERNS : The The Company operates across diverse business segments comprising fertilizers, footwear, drone and geospatial services, FMCG products, food services, facility Management services and publishing. Given the varied nature of its operations, the Company is exposed to a range of strategic, operational, financial, regulatory and market-related risks. An effective risk management framework enables the Company to identify, assess, monitor and mitigate risks that may adversely affect its business objectives, financial performance and long-term sustainability.

The Company has established appropriate internal control systems and risk management practices to identify potential risks at an early stage and implement suitable mitigation measures. Risks are periodically reviewed by the management, and wherever applicable, appropriate policies, procedures and controls are strengthened to ensure business continuity and operational resilience.

Fertilizer Business

The fertilizer business operates in a highly regulated environment and is significantly influenced by

Government policies relating to nutrient pricing, subsidy mechanisms, import regulations and distribution systems. Timely receipt of subsidies, availability and pricing of key raw materials, fluctuations in global commodity prices, foreign exchange movements and logistics costs have a direct bearing on the profitability of the business. The business is also dependent on monsoon patterns, agricultural output, cropping patterns and overall rural demand. Any adverse changes in these factors may impact production, sales volumes and financial performance. The Company continuously monitors regulatory developments, maintains efficient procurement practices and optimizes inventory management to mitigate these risks.

Footwear Business

The footwear industry is highly competitive and influenced by rapidly evolving consumer preferences, changing fashion trends and pricing pressures. The business is exposed to risks arising from fluctuations in the prices of raw materials such as leather, synthetic materials and rubber, labour availability and wage costs, supply chain disruptions and changing customer demand. In addition, increasing competition from domestic as well as international brands, changing retail dynamics and e-commerce penetration require continuous product innovation and operational efficiency. The Company seeks to mitigate these risks by strengthening product development, improving manufacturing efficiencies, maintaining quality standards, expanding market reach and optimizing its distribution network.

Drone and Geospatial Business

The drone and geospatial business operates in a rapidly evolving technological and regulatory environment. The sector is subject to frequent changes in Government regulations governing drone operations, licensing requirements, airspace management and data privacy norms. Technological obsolescence, cybersecurity threats, increasing competition, dependence on skilled professionals and rapid advancements in digital mapping and geospatial technologies also present significant challenges. The Company continues to invest in research and development, technology upgradation, cybersecurity measures, employee training and compliance with applicable regulatory requirements to maintain its competitive position and support sustainable growth.

FMCG and Food Service Business

The FMCG and food service businesses are influenced by changing consumer behaviour, purchasing power, inflationary trends, competitive pricing and evolving market dynamics. Rising input costs, fluctuations in commodity prices, supply chain disruptions, food safety and quality requirements, changing consumer preferences towards healthier products and compliance with statutory and regulatory standards may affect operational performance. The Company focuses on product quality, cost optimization, efficient procurement, effective inventory management, brand strengthening and customer satisfaction to address these risks while maintaining operational excellence.

Facility management Services

In the facility management and institutional business, including opportunities relating to Indian Railways, Integral Coach Factory (ICF), public sector undertakings and other government organisations, the Company may be exposed to risks associated with competitive bidding, stringent eligibility and technical requirements, performance obligations, contract renewal, manpower availability, statutory compliance and extended payment cycles. Such contracts may also involve significant working capital requirements and penalties for non-compliance with specified service levels.

Overall Risk Management

The Company recognizes that effective risk management is an integral part of good corporate governance and sustainable business growth. It continuously evaluates emerging risks arising from economic conditions, technological developments, regulatory changes, environmental factors and market uncertainties. Through a combination of robust internal controls, periodic risk assessments, business continuity planning, prudent financial management and strategic decision-making, the Company endeavors to minimize the impact of risks on its operations and safeguard the interests of all stakeholders.

6. INTERNAL CONTROL SYSTEMS & THEIR

ADEQUEACY : The Company has established adequate internal control systems commensurate with the size and complexity of its operations. These systems ensure effective operational control, reliable financial reporting, compliance with applicable laws and safeguarding of assets.

The Audit Committee periodically reviews internal audit observations and monitors implementation of corrective actions. Continuous improvements are undertaken to strengthen processes, risk management and governance practices.

7. DISCUSSION ON FINANCIAL PERFORMANCE

WITH RESPECT TO OPERATIONAL PERFORMANCE :

During FY 2025-26, the Company continued to focus business operations and onstrengthening itsdiversified implementing strategic initiatives across its business segments. progress in expanding TheCompanymadesignificant its footwear, drone & geospatial, agriculture, facility management services and consumer-focused business activities. Strategic initiatives undertaken during the year are expected to create long-term growth opportunities and enhance operational capabilities.

The detailed financial performance and segment-wise operational performance of the Company are provided in the Financial Statements forming part of this Annual Report.

8. HUMAN RESOURCE DEVELOPMENT : The Company recognises its employees as a key driver of sustainable growth. During the year, the Company continued to focus on employee development, skill enhancement, operational training and strengthening organisational capabilities across its business divisions.

The Company maintains a conducive work environment and encourages continuous learning, innovation and professional growth. Industrial relations across the

Companys operations remained cordial during the year. Total number of employees as on 31st March, 2026 was 853.

9. KEY FINANCIAL RATIOS:

Description U/M 2025-26 2024-25 Remarks

Debtors Turnover Days 8.97 23.83 The ratio decreased significantincrease indue to average trade receivables compared to sales during the year.

Inventory Turnover Days 15.05 18.46 Inventory turnover decreased due to a higher average inventory level compared to the increase in cost of goods sold during the year.

Interest coverage ratio Times -7.66 -8.17 Due to loss in CY, ratio becomes negative.

Current ratio Times 5.38 7.89 Current ratio decreased mainly due to Decreased in Other Financial Asset. Debt Equity ratio - 0.29 0.11 Debt-Equity ratio increased due to an increase in total outside liabilities.

Margin OperatingProfit % -17.40 -25.88 The Operating Profit Margin improved during the year increase in revenue primarily due to afrom significant operations. While operating expenses increased during the year, the growth in revenue was comparatively higher, resulting in a reduction in the operating loss as a percentage of revenue.

Net Profit Margin % % -0.17 -0.19 The Net Profit Ratio improved from -0.19 to -0.17 during the year, primarilydueto significantincrease in Net Sales during FY 2025-26. Although the Company continued to incur a net loss, the growth in revenue was higher than the corresponding increase in net loss, resulting in an improvement in the negative net profit margin.

Return on Net worth % -0.11 -0.09 The ratio remained negative due to net loss incurred during the year, resulting in a negative return on shareholders equity

	By Order of the Board of Directors
	For KOTHARI INDUSTRIAL CORPORATION LIMITED
	J RAFIQ AHMED
	Executive Chairman &
Place : Chennai	Managing Director
Date : 14.08.2026	DIN : 02861341