Kotyark Industries Ltd Management Discussions

The following discussion provides an overview of the operational and financial performance of the Company during the financial year 2025 26, along with the managements perspective on the future outlook. The analysis is based on current economic and industry conditions and may vary based on future developments, changes in government policies, and market dynamics.

ECONOMIC OVERVIEW-GLOBAL AND INDIA

Global Economy

The global economy remained resilient during 2025 despite heightened geopolitical tensions, evolving trade policies and volatility in energy markets. According to the International Monetary Fund (IMF), global GDP growth is projected at 3.0% in 2025 and 3.1% in 2026. Although inflation eased across several advanced economies and financial conditions improved, the IMF continues to highlight trade uncertainty, geopolitical risks and fiscal pressures as key challenges to the global economic outlook.

India registered one of the highest GDP growths in the World in 2025, making the IMF revise the GDP growth projections for the calendar year 2026 in the backdrop of robust private consumption, rapid expansion of high value services, lower US tariffs, and stronger momentum from 2025.

The energy sector continued to undergo a significant transformation as countries accelerated efforts to strengthen energy security and reduce carbon emissions. Governments across the world increased investments in renewable energy, clean transportation and sustainable fuels to meet their climate commitments and reduce dependence on fossil fuels. This global transition is creating long-term growth opportunities for renewable fuels, including biodiesel, which is increasingly recognised as a practical solution for decarbonising the transportation sector.

Despite the positive long-term outlook, the global energy market continued to face challenges during the year due to fluctuations in crude oil prices, geopolitical tensions and supply chain disruptions. These factors impacted energy prices and created uncertainty for businesses across industries. However, growing government support for clean energy, increasing investment in renewable energy projects and the global focus on reducing carbon emissions are expected to support the long-term growth of renewable fuels, including biodiesel.

Indian Economy

India remained one of the fastest-growing major economies during FY 2025 26, supported by strong domestic demand, sustained public investment, resilient manufacturing activity and stable macroeconomic fundamentals. According to the Economic Survey 2025 26, Indias growth continued to be driven by healthy household consumption, government capital expenditure and improving private investment, despite uncertainties in the global economy.

The Government of India continued to focus on infrastructure development, manufacturing, digital transformation and clean energy to support long-term economic growth. The Economic Survey also highlights the importance of strengthening Indias energy security through renewable energy, green hydrogen, biofuels and other sustainable energy sources.

Indias commitment to achieving Net Zero emissions by 2070, along with policies aimed at increasing the share of renewable energy and reducing dependence on imported fossil fuels, continues to create favourable opportunities for the biofuel industry. These initiatives are expected to support the adoption of cleaner fuels and strengthen the countrys transition towards a more sustainable energy ecosystem.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The global biodiesel market size was valued at USD 40.26 billion in 2025 and is projected to grow from USD 42.67 billion in 2026 to USD 67.4 billion by 2034, registering a CAGR of 6.75% over the forecast period. Europe dominated the biodiesel market with a market share of 41.92% in 2025.

Biodiesel is a renewable and biodegradable fuel primarily produced through transesterification to yield fatty acids and methyl esters. It is manufactured from various feedstocks: vegetable oils, including soybean oil, palm oil, canola oil, waste oils, animal fats, and recycled restaurant grease. Biodiesel is low carbon-intensity fuel used in diesel engines, boilers, and home heating systems, and is commercially available. Biodiesel is available in different blends, namely B5 and lower blends, B6 to B20 blends, and above B20 blends. B20 blends or lower are used in on and off-road vehicles & locomotives.

Globally, the market is growing as the product is used as a supplement to petro-diesel to boost its lubricating properties, which are affected by sulfur removal. Biodiesel has virtually no sulfur, owing to which reduces the emission of hydrocarbons, NOx, carbon monoxide, and ozone formation. Also, it minimizes the particulate discharge from engines at any concentration. The rise in petro-diesel prices globally is also driving the market growth.

Indias biofuel industry is undergoing a structural transformation driven by policy support, increasing environmental awareness and the need to reduce dependence on imported crude oil. Biodiesel has emerged as an important component of Indias clean energy strategy due to its ability to reduce greenhouse gas emissions while utilising renewable and waste-based feedstocks.

The Government continues to encourage biodiesel production through the National Policy on Biofuels and procurement initiatives undertaken by Oil Marketing Companies (OMCs).

COMPANY OVERVIEW

Kotyark Industries Limited is engaged in the manufacturing of biodiesel, a renewable and environmentally sustainable alternative to conventional fossil fuels. The Company is committed to supporting Indias clean energy transition by producing high-quality biofuels that contribute to reducing greenhouse gas emissions, enhancing energy security and promoting the efficient use of renewable resources.

Incorporated in December 2016, the Company initially commenced operations as a trader of biofuels before establishing its first biodiesel manufacturing facility at Sirohi, Rajasthan, in 2019. Since then, the Company has steadily expanded its manufacturing capabilities and strengthened its position in the renewable energy sector. In November 2021, the Companys equity shares were listed on the NSE Emerge Platform. During FY 2025 26, the Company achieved another significant milestone with the migration of its equity shares to the Main Board of both the National Stock Exchange of India Limited (NSE) and BSE Limited, reflecting its continued growth and enhanced corporate profile.

The Company operates two strategically located manufacturing facilities at Sirohi, Rajasthan, and Anand, Gujarat. Last year the Company expanded the biodiesel production capacity at its Rajasthan facility from 500 KLPD to 1,500 KLPD, significantly strengthening its manufacturing capabilities. Consequently, the Companys total installed annual production capacity increased to approximately 4,80,000 KL of biodiesel and 63,000 KL of crude glycerine. The Companys modern manufacturing facilities are equipped with multi-feedstock processing capabilities, enabling efficient production using a wide range of renewable feedstocks. The manufacturing platform can process approximately 10 15 different feedstocks, providing operational flexibility, supply-chain resilience and cost optimisation.

The Company continues to focus on improving operational efficiency, increasing capacity utilisation, strengthening its raw material sourcing network and expanding its participation in tenders issued by Oil Marketing Companies (OMCs). The enhanced production capacity positions the Company to meet the growing demand for biodiesel arising from increasing blending initiatives and industrial consumption.

A significant achievement for the Company is receiving approval for the registration and issuance of Carbon Credits under Verra, a leading global standard for carbon certification. Our Company is the first Indian Company in the Bio-Diesel sector to obtain this prestigious recognition. For the period from September 15, 2020, to March 31, 2022, our Company has accumulated a total of 57,874 carbon credits. This achievement underscores our commitment to environmental sustainability and positions us as a leader in the industrys efforts to reduce carbon emissions.

Kotyark Industries Limited has received a Certificate of Recognition from Infinite Solutions, an esteemed international Environment & amp; Sustainability Consulting Company. This recognition acknowledges Kotyark

Industries Limited as the worlds first project to produce biodiesel registered under the Voluntary Carbon

Mechanism (VCS, GS, GCC, etc.), with Project ID: VCS 3095. (Infinite Solutions is the first company from India to join the Carbon Neutral Initiative by the UNFCCC, reinforcing our commitment to sustainability and environmental responsibility.

Going forward, Kotyark Industries remains committed to strengthening its position in the renewable energy sector by expanding its market presence, improving manufacturing efficiencies, adopting advanced technologies and creating sustainable value for all stakeholders while building a sustainable, integrated and scalable green energy platform and contributing meaningfully to Indias clean energy transition and sustainability objectives.

OPPORTUNITIES

The Company believes that the long-term outlook for the biofuel industry remains positive, supported by favourable government policies, increasing environmental awareness and the growing need for sustainable energy solutions. Key opportunities include:

Supportive Government Policies: The Government of Indias continued focus on renewable energy, energy security and cleaner fuels under the National Policy on Biofuels provides a favourable environment for the growth of the biodiesel industry.

Growing Demand for Biodiesel: Increasing emphasis on reducing greenhouse gas emissions and promoting sustainable transportation is expected to drive higher demand for biodiesel from Oil Marketing Companies (OMCs), industrial consumers and other commercial users.

Expansion of Manufacturing Capacity: The Companys expanded biodiesel production capacity provides an opportunity to meet the growing market demand and improve operational efficiencies through better capacity utilisation.

Energy Security: Indias efforts to reduce dependence on imported crude oil and increase the use of domestically produced renewable fuels are expected to create long-term growth opportunities for the biofuel sector.

Technological Advancements: Continuous improvements in production technology and multi-feedstock processing capabilities are expected to enhance operational efficiency, optimise costs and improve competitiveness.

Carbon Reduction Initiatives: Growing focus on carbon reduction and environmental sustainability presents opportunities through green initiatives and potential participation in carbon credit and sustainability-linked programmes.

THREATS/RISKS & CONCERNS

While the Company remains optimistic about the long-term prospects of the biofuel industry, its operations are exposed to certain risks that are continuously monitored and managed.

Raw Material Availability and Price Volatility: Availability and prices of feedstocks such as used cooking oil and other renewable raw materials may fluctuate due to market dynamics, impacting production costs and margins.

Regulatory and Policy Changes: The biofuel industry is influenced by Government policies relating to procurement, blending programmes, taxation and environmental regulations. Any significant changes in these policies may impact business operations.

Dependence on OMC Procurement: Procurement programmes and tender schedules of Oil Marketing Companies play an important role in the biodiesel market. Changes in procurement volumes or timelines may affect sales performance.

Operational Risks: Manufacturing operations are exposed to risks associated with plant operations, equipment reliability, utilities, logistics and supply chain disruptions. The Company continues to strengthen its operational processes and preventive maintenance systems to mitigate such risks.

Commodity and Energy Price Risks: Fluctuations in crude oil prices and energy costs may influence the competitiveness of biodiesel compared to conventional fuels and affect overall industry dynamics.

Customer Concentration: A significant portion of revenue comes from Oil Marketing Companies (OMCs), potentially exposing the Company to risks associated with reliance on a limited customer base.

The Company has established appropriate risk management practices to identify, assess and mitigate these risks. Management continuously reviews business risks and implements suitable measures to enhance operational resilience, maintain business continuity and support sustainable long-term growth.

PRODUCT-WISE PERFORMANCE

Our Products- Products Description

1. Bio-Diesel

Biodiesel is a promising alternative fuel that mimics many characteristics with traditional fossil diesel. In its pure, undiluted form, known as B100 or neat biodiesel, it functions as a liquid fuel. Chemically referred to as mono alkyl ester, biodiesel is derived from various sources, including vegetable oil, animal fats, tallow, and used cooking oil. The process of converting these oils into biodiesel is called transesterification.

Importantly, biodiesel meets the requirements of the Renewable Fuel Standard, qualifying as both biomass-based diesel and advanced biofuel. It is produced from renewable resources such as vegetable oils and biomass through a process that combines oils with alcohols, resulting in biodiesel and crude glycerin as a by-product. This eco-friendly fuel represents a sustainable approach to energy production, utilising waste materials and renewable resources to create a viable alternative to conventional diesel.

Any vehicle that has a diesel engine can be powered by biodiesel easily, without any modifications. It is just like petroleum diesel, which can be used to fuel compression-ignition engines.

OMCs procure biodiesel for blending in diesel and premium category speed-diesel. At present blending in biodiesel less than 1%, with Indian Government setting a goal to take this level to 5% by 2030.

Bulk buyers include transport contractors, mining companies and industries. Traditionally, biodiesel trades cheaper than diesel in India, offering bulk buyers an opportunity to cut costs. Company supplies biodiesel to bulk buyers in its vicinity.

Biodiesel forms the core of Kotyarks product portfolio. However, in recent years, the Company is also focusing on processing crude glycerine - a by-product of biodiesel manufacturing. The Company has commenced further refining crude glycerin to produce glycerine, thus expanding its product offerings.

2. Veg Ester-Semi Finished

It is a semi-finished Biodiesel and with some further processing converted in to Biodiesel. This can be sold to other processing units for generation of Biodiesel.

3. Crude Glycerin

Crude glycerin is a by-product of the biodiesel production process, specifically resulting from the transesterification reaction. It serves as an essential raw material for producing high-purity glycerin through further refining. Typically, the production of 100 litres of biodiesel yields about 14 litres of crude glycerin as a secondary product.

Through additional processing, crude glycerin becomes a valuable resource with applications in various industries, including food, cosmetics, pharmaceuticals, and carpet manufacturing. At Kotyark Industries Limited, the crude glycerin undergoes further refinement in an on-site processing plant, resulting in different grades of refined glycerin suitable for diverse end-use applications. On further processing, it finds application in food, pharmaceutical and cosmetic industries.

The Company took a significant step forward by installing a glycerin processing pilot plant with a capacity of 210 KL per day at its Sirohi facility.

Our Products- Performance

During the financial year 2025 26, our Company continued to strengthen its position by generating revenue from sell of bio diesel of 29,649.16 Lakhs as compared to 28,380.87 Lakhs in previous financial year 2024-25. The Company achieved a marginal increase in total sales, rising by 4.47.

Our commitment to quality, innovation, and operational efficiency remains at the core of our strategy. This is reflected in our sustained investments in state-of-the-art machinery, a highly skilled workforce, and comprehensive manufacturing capabilities. These elements collectively ensure streamlined production processes, product consistency, and customer satisfaction.

Outlook

While FY26 presented several external and operational headwinds, Kotyark Industries remains confident about its trajectory heading into FY27. Challenges such as delays in the issuance of Purchase Orders (POs) and Indents despite sizable tender allocations led to elevated inventory levels and impacted short-term margins. However, with the Oil Marketing Companies (OMCs) now shifting to a more streamlined procurement process through direct Letters of Intent (LOIs), execution visibility has significantly improved.

Encouragingly, Kotyark received LOIs worth 223.53 crores during FY 2025-26period, laying a good start for FY26 performance. Additionally, more tenders are expected to open shortly, which should support further business momentum in the upcoming year.

Management remains confident of improving utilization level gradually over the next few years towards 60 to 70%, supported by stronger participation in OMCs tender and expansion across industrial and retail channels. One of the Kotyarks key strengths continues to be its flexible multi feedstock platform capable of processing nearly 10 to 15 feedstocks depending upon availability and procurement economics. Combined with our integrated sourcing capability and internally conceptualized manufacturing infrastructure, this provides strong supply chain rising, operating effective and cost competitive.

With continued government support for biofuels and an improving procurement landscape, Kotyark is well-positioned to strengthen its industry leadership. The Company remains focused on long-term growth, operational excellence, and creating sustainable value for stakeholders.

INTERNAL CONTROL AND ADEQUACY

Kotyark Industries Limited has established a comprehensive internal control system that is well-aligned with the size, scale, and nature of its operations. This system is designed to provide reasonable assurance regarding the protection and effective management of the Companys assets, safeguarding them against unauthorised use, loss, or disposal. It also ensures that all business transactions are duly authorised, accurately recorded, and properly reported, maintaining strict adherence to the Companys policies, procedures, and regulatory requirements.

The internal control framework undergoes regular evaluation by the Audit Committee to assess its adequacy and effectiveness. Based on these reviews, appropriate enhancements are implemented to strengthen the control environment and address emerging risks. This well-defined system of checks and balances plays a pivotal role in upholding the integrity of Kotyarks financial and operational processes, while supporting its broader business objectives and risk mitigation strategies.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The key highlights of the Companys standalone and consolidated financial performance for the financial year ended March 31, 2026, are summarized below: ( in Lakh)

	F.Y. 2025-26		F.Y. 2024-25
Particulars	Standalone	Consolidated	Standalone	Consolidated
Revenue from Operations	29,649.16	31,487.01	28,380.87	28,809.83
Other Income	4.46	4.53	75.07	75.09
Total Income	29,653.62	31,491.54	28,455.94	28,884.92
Operating expenditure before Finance cost, depreciation and amortization	25195.72	26,693.28	24,150.13	24,545.09
Earnings before Finance cost, depreciation and amortization (EBITDA)	4457.9	4798.26	4305.81	4339.83
Less: Depreciation	1,280.58	1,281.70	1,525.76	1,525.76
Less: Finance Cost	921.99	831.91	783.58	773.31
Profit before Tax	2,255.33	2,684.65	1,996.47	2,040.76
Less: Current Tax	737.00	846.00	635.00	647.25
Less: Short/Excess provision for Income Tax	(3.27)	(4.06)	3.49	3.49
Less: Deferred tax Liability (Asset)	(93.69)	(93.69)	(63.31)	(63.31)
Profit after Tax	1,615.29	1,936.40	1,421.29	1,453.33
Less: other Comprehensive income	17.82	17.82	(11.98)	(11.99)
Total Comprehensive income	1,633.11	1,954.22	1,409.31	1,441.34

*Previous year figures have been regrouped / re-arranged wherever necessary.

The key aspects of the Companys performance during the financial year 2025-26 are as follows:

I. Standalone Performance

For the financial year ended 2025-26, the companys standalone revenue from operations reached 29,649.16 Lakhs. This represents an increase of 4.47% compared to the revenue of 28,380.87 Lakhs recorded in the previous financial year, 2024-25.

The Companys standalone EBITDA increased to 4,457.90 lakh during FY 2025-26 from 4,305.81 lakh in FY 2024-25, reflecting a growth of 3.53%.

The standalone Profit After Tax (PAT) stood at 1,615.29 lakh for FY 2025-26 as against 1,421.29 lakh in FY 2024-25, representing a year-on-year growth of 13.65%.

II. Consolidated Performance

For the financial year ended 2025-26, the consolidated revenue from operations was 31,487.01 Lakhs, compared to 28,809.83 Lakhs in the previous year, 2024-25. This represents a growth of 9.29% over the previous year.

The consolidated EBITDA stood at 4,798.26 lakh for FY 2025-26 as compared to 4,339.83 lakh in the previous financial year, reflecting a growth of 10.56%.

The consolidated Profit After Tax (PAT) increased to 1,936.40 lakh during FY 2025-26 from 1,453.33 lakh in FY 2024-25, representing a year-on-year growth of 33.24%.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

Our Company believe that our employees are key contributors to our business success and its ability to maintain growth depends to a large extent on our strength in attracting, training, motivating and retaining employees. We focus on attracting and retaining the best possible talent. Our Company looks for specific skill-sets, interests and background that would be an asset for its kind of business.

As of March 31, 2026, Kotyarks permanent workforce stood at 137 employees. Our manpower is a prudent mix of the experienced and youth which gives us the dual advantage of stability and growth. Our work processes and skilled resources together with our strong management team have enabled us to successfully implement our growth plans.

Industrial relations across all manufacturing facilities and offices remained cordial and harmonious throughout FY 2025 26. The Company did not experience any material industrial disputes or work stoppages during the year and continues to maintain a collaborative and positive work culture that supports sustainable business growth.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS

Ratio	Figures As At 31.03.2026	Figures As At 31.03.2025	% Change From Last Year	Explanation for Change in Ratio (for more than 25% in comparison with last year)
Debtors Turnover/Trade Receivables Turnover Ratio (Times)	20.93	12.59	66.18	The ratio increased due to lower average trade receivables during the year compared to the previous year.
Inventory Turnover (Times)	1.68	2.13	(20.82)	NA
Current Ratio (Times)	3.24	2.89	12.09	NA
Debt Equity Ratio (Times)	0.49	0.41	19.03	NA
Operating Profit Margin (%)	15.02	14.91	0.74	NA
Net Profit Margin (%)	5.45	5.01	8.79	NA
change in Return on Net Worth (%)	10.71	9.91	8.12	NA
Debt Service Coverage Ratio (Times)	4.46	3.69	20.91	NA
Creditor Turnover/Trade Payables Turnover Ratio (Times)	30.72	18.42	66.74	The ratio increased due to lower average trade payables during the year as compared to the previous year.
Net capital turnover ratio (Times)	2.67	2.97	(10.08)	NA
Return on Capital employed	14.46	13.64	6.01	NA
Return on investment	0.74	2.01	(63.16)	During the year, company has made an investment in LLPs but the interest income has not rised comparatively which has resulted in decrease in Return-on-Investment ratio.

 

Registered office:	For and on behalf of Board of Directors
2nd Floor, A-3 Shree		For, Kotyark Industries Limited
Ganesh Nagar Housing
Society, Ramakaka
Temple Road, Chhani,
Vadodara-391740
	Sd/-
	Dhruti M. Shah	Sd/-
	Whole time Director & Chief Financial	Gaurang R. Shah
Place: Vadodara	Officer	Chairman cum Managing Director
Date: July 30, 2026	DIN:07664924	DIN: 03502841