Madhya Bharat Agro Products Ltd Management Discussions

Global Economy¹

The global economy remained resilient in CY 2025, with global output growing by 3.4% despite geopolitical tensions and trade disruptions. This stability was bolstered by Emerging Market and Developing Economies (EMDEs) which expanded by 4.4%, while advanced economies grew at a modest 1.9%. Technology- driven exports fuelled this momentum and offset slower sectors, highlighting international trade as a vital engine for cross-border income convergence.

Global inflation stabilised at 4.1% in CY 2025, maintaining a steady track compared to the previous year. Inflation in advanced economies witnessed a gradual rate of 2.5%, while Emerging Market and Developing Economies (EMDEs) recorded inflation of 5.2%. Although global trade relations and supply chain disruptions created temporary pressures, trade activity remained broadly steady as supply chains and sourcing networks continued to realign. The conflicts in Middle East, affecting energy production and services, would be gauged only after the end of hostilities. This ongoing situation introduces potential moderations in supply chains and the overall cost of energy-intensive commodities and services could be moderately affected.

The global fertiliser sector in CY 2025 operated within a complex yet generally favourable environment, aided by robust agricultural demand, geopolitical supply constraints and a shift towards sustainable practices. While structural demand remained firm, the industry experienced a significant qualitative evolution. Advancements in technology and tightening environmental mandates drove a distinct transition toward precision and ecofriendly fertilisers. Concurrently, supply-side dynamics exerted a dominant influence on market availability and pricing structures.

The global economy is anticipated to sustain growth, with a moderate pace in CY 2026 and a gradual recovery in CY 2027. Global economic output is forecast to expand by 3.1% in 2026 before rising marginally in 2027. The medium-term recovery will be driven by improved business confidence, adapting trade dynamics, and diversified supply chains. Meanwhile, advanced economies are expected to grow by 1.8% in 2026 amid tighter financial conditions and slowing industrial output. Emerging Markets and Developing Economies are expected to maintain a relatively strong growth momentum, expanding by 3.9%, supported by robust domestic demand and strategic policy measures. Global trade dynamics and geopolitical tensions in the Middle East remain a key uncertainty. Although the global economy is expected to sustain growth aided by investments in technology, digital infrastructure, and manufacturing

Global inflation is expected reach 4.4% in CY 2026, primarily driven by elevated energy prices and supply-side pressures arising from geopolitical developments in West Asia. Disruptions in the Strait of Hormuz a strategically important energy transit route, continue to pose risks to global supply networks and commodity price stability.

Additionally, inflationary pressures will potentially register moderation over the medium term as monetary conditions stabilise. Consequently, these macroeconomic developments are expected to shape the operating environment for industrial sectors, ensuring that global supply networks continue to adjust, thereby contributing to broader market stability worldwide. In the long term, the global fertiliser market is shifting heavily toward sustainability, efficiency and supply chain resilience. This evolution is being driven by decarbonisation efforts, new technology and aligned government policies, all of which are fundamentally reshaping how companies compete and manage their supply chains.

Indian economy registered a steady growth of 7.6% in FY2026, aided by robust economic activity and healthy consumption and sustained investment momentum. Government policy measures to stabilise bank financials and strengthen corporate supply chains have significantly strengthened Indias overall economic growth. This momentum is further driven by a highly resilient service sector and continuous tax rationalisation initiatives.

High-frequency external indicators highlight this steady progress, as the country remains a preferred global destination for greenfield investments and continues to attract healthy Foreign Direct Investment (FDI) inflows. India witnessed improvement, with retail inflation relatively moderate at around 3.40% during the year. This was primarily due to calibrated monetary measures by the Reserve Bank of India (RBI) and stable demand conditions, which successfully countered intermittent volatility in food and energy prices.

A favourable rural economic outlook is supported by optimal reservoir levels. Furthermore, business confidence remains high, with leading indicators demonstrating sustained resilience across manufacturing and services. The Government?s proactive focus on scaling up domestic manufacturing in several strategic and frontier sectors augurs well for India?s ensuing growth trajectory. These positive developments further reinforce the nations industrial momentum, thereby laying a strong foundation for sustained macroeconomic expansion in the upcoming periods.

India?s real GDP growth is projected at around 6.8-7.2% during FY 2026-27, supported by rising domestic demand, improving consumption trends and continued infrastructure investments. Over the medium term, growth will potentially be supported by the governments focus on manufacturing expansion, industrial development and logistics enhancement across sectors. Urban consumption is poised for further growth, boosted by simplified GST structures and a booming services sector. The governments strong push for public infrastructure continues, while private business investment is expected to recover, fuelled by high factory utilisation, strong credit availability and favourable financial conditions. Turning to the inflation outlook, CPI inflation for FY 2026-27 is projected at 4.6% while core inflation is expected to stand at 4.4%. This trajectory is primarily influenced by upside risks from recent spikes in global energy prices due to geopolitical conflicts, which have triggered price increases in several fuel items, alongside the potential emergence of El Nino conditions. However, these pressures are balanced by a comfortable near-term food outlook, supported by robust rabi production, high reservoir levels and adequate food grain buffer stocks. Furthermore, excluding precious metals, core inflation remains even lower, indicating that underlying inflationary pressures are expected to remain well-contained as global supply networks adjust.

In CY 2025, the global fertiliser market was valued at USD 214.50 billion. The market maintained its steady upward trajectory, primarily propelled by the consistent expansion of the agriculture and horticulture sectors. The market is projected to grow at a CAGR of 2.89%. This growth was largely driven by rising food demand driven from a growing global population and increasing household wealth. Concurrently, rapid urbanisation has reduced cultivable land, compelling farmers to intensify their use of fertilisers to optimise crop yields from limited acreage.

Globally, governments further supported this expansion through targeted investments, financial subsidies and research grants aimed at enhancing manufacturing and promoting sustainable cultivation. A major portion of the market remained diversified, with key international producers strengthening their regional presence and product lines through strategic partnerships, collaborative ventures and joint alliances. Public-private collaborations played an important role in broadening global production networks.

In FY 2025, nearly 73% of the country?s total fertiliser requirement was met through domestic production, representing a significant milestone in achieving self-reliance. Reinforcing the vision of Atmanirbhar Bharat, the Government of India has significantly reduced the country?s dependence on fertiliser imports.

The Government continues to work proactively to empower farmers, promote indigenous manufacturing and ensure a reliable and uninterrupted supply of nutrients across the country. With a strong focus on fertiliser security and timely availability, long-term supply agreements for key raw materials have been prioritised alongside strategic diversification to safeguard against global uncertainties and supply disruptions.

The Department of Fertilisers (DoF), in close collaboration with leading manufacturing enterprises, has launched a nationwide Maha Abhiyan to accelerate the adoption of alternative nutrients. This initiative spans all major agro-climatic zones of the country, utilising extensive stakeholder consultations and large-scale farmer field trials supervised by the Indian Council of Agricultural Research (ICAR) and Krishi Vigyan Kendras (KVKs). Key achievements under these initiatives include:

? Nano DAP Implementation: Progressive field trials conducted across multiple sowing seasons have demonstrated the viability of advanced phosphatic solutions, showing a sequential increase in experimental field coverage.

? Nano Urea Plus Expansion: A specialised, district- focused campaign was rolled out alongside technical field trials, verifying application standardisation and enhancing nutrient-use efficiency across diverse soil profiles.⁵

These coordinated efforts highlight the governments dual strategy of utilising fiscal frameworks to curb the overuse of conventional chemical formulations while scaling up modern, data-backed alternatives to secure long-term agricultural resilience

The Government has allocated ?1.71 Lakh Crore to the Department of Fertilisers to ensure affordable fertilisers and support for farmers in the Indian Economy. On the global stage, India maintains a highly prominent position, ranking as a leading consumer of polymers, a dominant producer of agrochemicals and a major contributor to the worldwide chemical market.

Looking ahead, India?s strategic long-term vision focuses on becoming a premier global hub for chemical manufacturing, significantly expanding its share across the international value chain. This rapid industrial expansion is heavily supported by robust Foreign Direct Investment (FDI) inflows, which continue to channel capital into the chemical sector. Alongside industrial chemicals, India has traditionally established itself as a world leader in pharmaceuticals, particularly in the production of generics and biosimilars, while major domestic vaccine manufacturers supply a critical share of global immunisation requirements.

Macroeconomic growth is being driven by state-led initiatives and dedicated industrial zones. Key coastal states are investing heavily to transform their industrial corridors into leading petrochemical hubs.. Furthermore, major infrastructure programmes, such as the Petroleum, Chemical and Petrochemical Investment Regions (PCPIR), are successfully incentivising manufacturing investments, reinforcing supply chain capabilities and generating substantial employment opportunities. Complementing these heavy industries, the establishment of dedicated power and renewable energy manufacturing zones is driving localised economic development, thereby strengthening India?s manufacturing ecosystem and ensuring long-term industrial resilience.

The Indian specialty fertiliser market is projected to grow from an estimated USD 1.27 billion in FY 2026 to USD 1.35 billion in FY 2027 highlighting a steady upward momentum. Driven by the shift towards precision nutrition, the market is projected to expand at a CAGR of 6.53%, potentially reaching USD 1.86 billion by 2031. This growth is backed by government subsidies that now reward nutrient-use efficiency over blanket tonnage. Concurrently, forward-looking growers are increasingly linking advanced crop nutrition strategies to carbon credit income, reinforcing a qualitative evolution across the agricultural sector.

Advanced technological integrations, particularly IoT sensors, are playing a pivotal role by identifying critical micronutrient deficiencies that traditional laboratory testing methods often overlook. This has driven an increasing demand for specialised chelated zinc and boron blends. In response to this trend, leading domestic market players, such as Tata Chemicals, have integrated real-time sensor data into their digital retail applications to deliver localised crop nutrition prescriptions that dynamically account for localised weather deviations and soil organic matter.

Incorporated in 1997 and acquired by the Ostwal Group of Industries in 2004, Madhya Bharat Agro Products Limited (MBAPL), is one of India?s leading phosphatic fertiliser manufacturers with a strong presence in the SSP and NPK/DAP segments. Over the years, the Company has transformed from a single-product SSP manufacturer into an integrated agri-input player with capabilities across complex fertilisers, sulphuric acid, phosphoric acid and beneficiation of low-grade rock phosphate.

The Company is progressive towards becoming India?s third- largest private sector phosphatic fertiliser Company and operates under well-established brands such as ‘Annadata? for SSP fertilisers and ‘Bharat? for NPK/DAP complexes. MBAPL has developed an extensively backward-integrated business model that enhances operational efficiency and cost competitiveness. Its integrated operations include Beneficiated Rock Phosphate (BRP), Sulphuric Acid and Phosphoric Acid manufacturing, enabling greater control over raw material sourcing and production economics.

The Company is also among the pioneers in utilising BRP-based SSP technology in India. With long-term sourcing arrangements for rock phosphate and a landmark 10-year green ammonia supply agreement under India?s National Green Hydrogen Mission, MBAPL continues to strengthen supply security and sustainability initiatives.

The Company currently operates manufacturing facilities at Sagar in Madhya Pradesh and Dhule in Maharashtra. These facilities are strategically positioned near key agricultural markets, raw material sources and access to ports. It manufacture SSP, NPK/DAP fertilisers, sulphuric acid, phosphoric acid and BRP, with ongoing expansion projects expected to increase total fertiliser capacity from approximately 9 lakh MTPA to nearly 16 lakh MTPA by FY28.

MBAPL maintains a strong distribution network comprising over 3,000 wholesalers/dealers and more than 40,000 retailers across multiple states in India. The Company places significant emphasis on product quality, sustainable agriculture and farmer engagement through NABL-accredited laboratories, awareness programs and village-level outreach initiatives. All manufacturing facilities are ISO 9001:2015 compliant, reflecting adherence to global quality and operational standards.

Single Super Phosphate (SSP) forms the foundation of MBAPL?s fertiliser portfolio and is marketed under the brand ‘Annadata?. SSP is a phosphatic fertiliser that supplies essential nutrients such as phosphorus and sulphur, both of which are critical for crop growth, root development and higher agricultural productivity. The product is widely used in crops such as oilseeds, pulses, cereals and sugarcane, where sulphur deficiency is common. MBAPL manufactures SSP in both powder and granular forms and has significantly expanded its production capabilities to meet increasing domestic demand.

MBAPL manufactures NPK and DAP complex fertilisers under the brand ‘Bharat? to address India?s increasing focus on balanced nutrient application. These fertilisers provide a scientifically balanced combination of Nitrogen (N), Phosphorus (P) and Potassium (K), which are essential for improving soil fertility, crop yield and nutrient-use efficiency. The Company has strategically positioned itself in the high- growth phosphatic fertiliser segment as India gradually transitions from excessive urea usage toward balanced fertilisation practices encouraged by government policies such as Soil Health Cards and PM-PRANAM.

By processing indigenous low-grade rock phosphate into high-grade Beneficiated Rock Phosphate (BRP), MBAPL creates a structural cost advantage. This vertical integration shields the company from supply chain volatility and drives the profitable, in-house production of downstream fertilisers like SSP and NPK complexes. BRP is produced by upgrading low-grade rock phosphate into high-grade material suitable for manufacturing phosphatic fertilisers such as SSP and NPK/DAP. MBAPL is regarded as one of the pioneers in BRP-based SSP technology in India and has established crushing and beneficiation facilities with substantial processing capacity.

MBAPL also caters to secondary nutrient requirements through specialised crop nutrition products. Sulphur Bentonite fertiliser, acts as a controlled-release nutrient source that supports higher oil recovery in oilseed crops, improves the quality of root crops and enhances storage life by ensuring a steady sulphur supply. Additionally, Annadata Casma helps improve soil health by supplying essential nutrients such as calcium, magnesium and sulphur, thereby promoting balanced nutrition and better crop performance across varied soil conditions.

To meet the rising demand for organic farming, MBAPL offers natural solutions that boost soil health and maximise crop yields. The Company?s flagship soil conditioner, Annadata Prom, is perfect for all crop types. For best results, apply at a standard rate of 100 kg per acre to improve nutrient uptake and resource efficiency.

Driven by sustained capacity expansions, robust backward integration and a resilient supply chain, MBAPL delivered steady operational performance in FY2026. The company achieved a record production of 4,75,154 MT and successfully sold 4,72,270 MT. This near-perfect conversion rate highlights strong market demand and supports a sprawling distribution footprint of over 3,000 wholesalers and 40,000 retailers across 11 states.

SSP production held at 59,137 MT (99% utilisation), NPK/DAP at 57,144 MT (95% utilisation), Sulphuric Acid at 30,423 MT (74% utilisation) and BRP crushing continued its upward trajectory

at 37,106 MT (79% utilisation), the highest across the three comparable quarters. Phosphoric Acid production was stable at 8,092 MT, maintaining the operational rhythm.

Additionally, In FY2026, MBAPL?s operational focus centres on the early March commissioning of major strategic expansions. This milestone significantly scales the Company?s production footprint, delivering an additional 330,000 MT of SSP at Dhule, 90,000 MT of NPK/DAP at Sagar and a combined 363,000+ MT of Sulphuric Acid. This ahead-of-schedule execution not only demonstrates managements project delivery capability but also meaningfully expands the Companys production frontier, positioning the MBAPL to generate substantially higher volumes and revenue in FY2027 from a much larger and more diversified asset base.

The company achieved a record operational efficiency across its key product segments in FY2026. SSP, the companys flagship product, achieved a record-high 98% utilisation against an installed base of 240K MTPA. This represents a significant improvement from 73% in FY25 and 77% in FY24, reflecting both strong market demand and the operational maturity of the Sagar plant.

In the high-value complex fertiliser segment, NPK/DAP surpassed its rated capacity entirely to run at over 100% utilisation. This rare achievement highlights structurally strong demand for balanced nutrient products and validates the Companys strategic pivot towards complex fertilisers.

At the backward integration level, Sulphuric Acid operations ran at 92% utilisation against a 165K MTPA installed capacity. This performance reinforces the cost competitiveness and selfsufficiency provided by the integrated model. Meanwhile, BRP crushing operated at 80% utilisation.

Finally, Phosphoric Acid recorded 49% utilisation. This lower percentage reflects a capacity upgrade from 49.5K to 69K MTPA completed in March 2025. While this mid-year addition naturally dampened the utilisation percentage, it successfully expanded the absolute output base.

The domestic agricultural sector has historically faced heavy vulnerability due to its structural dependence on imports of complex fertilisers and finished nutrients. This reliance exposes the domestic market to global geopolitical tensions, volatile shipping costs and sudden supply shocks that can disrupt the timely availability of essential crop inputs during peak sowing seasons.

Strong Opportunity for Domestic Capacity Expansion: The widening gap between supply and demand establishes a strong strategic foundation for ambitious manufacturing growth throughout the Indian market. By establishing state-of-the-art production facilities and optimising localised industrial infrastructure, agile domestic players can expand internal production capacities to systematically substitute foreign imports. This strategy captures valuable market share while advancing national selfreliance initiatives.

Backward Integration Enhances Cost Efficiency and Self-Reliance: Integrating critical upstream manufacturing capabilities—specifically for essential building blocks like Beneficiated Rock Phosphate (BRP), Phosphoric Acid and Sulphuric Acid, fundamentally transforms an enterprises cost structure. This localised captive supply chain mitigates raw material price volatility, ensures an uninterrupted production flow, reduces dependence on third-party suppliers and directly reinforces long-term margin stability and strategic independence.

Seasonal Nature of the Industry: The domestic fertiliser market is inherently tied to cyclical agricultural timelines, leading to highly uneven demand patterns across the year. Consumer purchasing is heavily concentrated around the primary Kharif and Rabi sowing windows, the final quarter typically sees a distinct contraction in consumption. This imbalance often stretches working capital cycles during the offseason, creates quarterly revenue fluctuations and complicates inventory planning and inventory planning.

Rising Raw Material Costs: Heavy reliance on imported feedstock, such as sulphur, rock phosphate and key chemicals leaves industry players highly exposed to global market shocks. This vulnerability is evident in recent sulphur price spikes, which have directly driven up manufacturing costs. Even with supportive state subsidy mechanisms in place, manufacturers face financial risk if these policy adjustments fail to fully or dynamically offset rising input costs, putting pressure on operating margins.

Delays in Government Subsidies: To keep essential crop inputs affordable for the farming community, manufacturers rely heavily on timely state subsidy disbursements. When these payments face systemic delays, it locks up massive amounts of outstanding capital. This forces enterprises to deplete internal cash reserves or take on short-term debt to fund daily operations, placing significant pressure on liquidity and potentially slowing down long-term infrastructure investments and capacity expansion timelines.

Indias fertiliser industry is at a structural inflection point, driven by four converging forces:

? Rising Food Demand: Feeding an estimated 1.7 billion people by 2030 requires higher agricultural yields, making efficient fertiliser use critical.

? Balanced Fertilisation Push: With consumption heavily skewed toward nitrogen, policy initiatives like Soil Health Cards, PM- PRANAM and the ONOF "Bharat NPK" scheme are driving a structural shift toward underutilised phosphorus and potassium.

? Import Substitution: India?s heavy reliance on imported complex fertilisers presents a massive growth opportunity for domestic manufacturers.

? Policy Stability: A supportive regulatory framework, anchored by the Nutrient Based Subsidy (NBS) regime and timely government subsidy allocations ensures ongoing demand and pricing stability for domestic players

MBAPL is exceptionally well-positioned to capture this opportunity. As an exclusive producer of complex fertilisers in Central India, with its integrated SSP, NPK/DAP and intermediates portfolio directly mapped to the phosphorus, potassium and sulphur gaps in Indian soils, the company is aligned with every structural demand driver. Critically, the early commissioning of 330K MT of SSP at Dhule, 90K MT of NPK/DAP at Sagar and 363K MT of Sulphuric Acid across both facilities in March 2026, combined with the landmark 130K MTPA green ammonia sourcing deal with SECI, ensures both the scale and cost competitiveness to convert this market opportunity into sustainable long-term profitability.

Based on the management approach as defined in Ind AS 108 - Operating Segments, the MD and CFO evaluate the company?s performance and allocates resources based on an analysis of various performance indicators of business segment/s in which the company operates. The Company is primarily engaged in the business of Fertilizer manufacturing/ packing and trading of imported fertilizer but other products are backward integration supporting fertilizer division, therefore, we have started showing in house consumption of all products. Hence, disclosure of segment-wise information is not required and accordingly not provided.

Madhya Bharat Agro Products Limited considers its workforce to be a core pillar of its business strength and future growth. The Company relies on capable, well-trained and growth-oriented team to support manufacturing operations, marketing activities and expansion initiatives. MBAPL places strong emphasis on employee commitment, expertise and productivity, viewing them as critical contributors to sustainable long-term performance.

As of early 2026, the Ostwal Group of Industries (OGI) had built a strong on-ground presence with more than 170+ marketing professionals engaged in promoting products and connecting with farmers across various regions. This represents a significant increase compared to the previous year and reflects the Company?s expanding business reach and growing market penetration.

The Company also remains focused on employee welfare through various initiatives and support programmes. A portion of its CSR spending is directed towards employee wellbeing, welfare measures and community-oriented activities. MBAPL believes that a motivated and skilled workforce plays a vital role in strengthening market presence, supporting product diversification and driving the Company?s long-term growth strategy.

Madhya Bharat Agro Products Limited places strong emphasis on maintaining high operational and product quality standards across its manufacturing facilities. All production units are certified under ISO 9001:2015, reflecting the Company?s commitment to robust quality management systems and standardised operational practices. Additionally, its laboratories are accredited under NABL ISO/IEC 17025:2017 standards, ensuring reliable testing, calibration accuracy and adherence to globally accepted quality benchmarks.

Each manufacturing facility is supported by NABL-accredited laboratories that enable continuous monitoring and quality assessment of products throughout the production cycle. The Company has also received required approvals and certifications for the safe handling and management of raw materials and finished products, including SSP, BRP, Phosphoric Acid, Sulphuric Acid and other sensitive chemical substances.

MBAPL remains focused on supplying high-quality fertilisers that help improve soil fertility and enhance agricultural productivity. Alongside manufacturing excellence, the Company actively conducts village-level awareness and farmer education programmes to promote the proper application of fertilisers, helping farmers achieve better crop performance and improved nutrient efficiency.

Madhya Bharat Agro Products Limited has established a robust internal control framework to ensure efficient and streamlined business operations. The system is designed to safeguard Company assets, maintain reliability in financial reporting and ensure compliance with applicable regulations, policies and internal procedures. Periodic reviews, audits and monitoring mechanisms are conducted to identify operational gaps and strengthen overall control effectiveness.

The management continuously focuses on improving internal processes and governance standards to enhance operational transparency, accountability and reliability. These measures not only support better business efficiency and risk management but also help protect the interests of shareholders and other stakeholders while reinforcing confidence in the Company?s overall governance practices.

The Management Discussion and Analysis (MDA) section contains forward-looking statements regarding the Company?s expectations, future strategies and business outlook. These statements are based on current assumptions, information and estimates available from both internal and external sources at the time of preparation. Since future events and market conditions are subject to uncertainties and risks, actual outcomes may differ from the expectations expressed in these statements.

The assumptions and projections discussed in the report may change over time due to evolving business, economic, regulatory, or industry conditions. Therefore, these forwardlooking statements should be viewed as indicative rather than guaranteed future outcomes. The Company is under no obligation to revise or publicly update such statements at a later stage in light of new developments or unforeseen events.