P I Industries Ltd Management Discussions

Global Economic Outlook: Between Resilience and Rising Uncertainty

The global economy in FY 2025-26 operated in an environment of cautious optimism, tempered by persistent trade uncertainties, geopolitical tensions and uneven recovery across major economies. Elevated interest rates in developed economies, tightening regulatory oversight across the chemicals and life sciences sectors and the continuation of conflicts in

Eastern Europe and the Middle East had consequences for energy markets, agricultural commodity flows, maritime trade routes and input cost structures across the agri-sciences value chain. These were largely structural rather than transient dislocations and they reinforced the need for more resilient supply chains and more diversified business models.

Global Macro Context

Global Growth	Global Agrochemical (AgChem) Cycle
The IMF April 2026 WEO reported world output growth at 3.4% in 2025 and projected 3.1% in 2026 and 3.2% in 2027. India, in contrast, continues to demonstrate strong growth momentum with GDP growth estimated at 7.6% in FY 2025-26 and 6.5% each for FY 2026-27 and FY 2027-28.	The global crop protection market is broadly characterised as being in the latter phase of a prolonged downcycle.
Prolonged geopolitical tensions, renewed trade frictions and commodity volatility remain key downside risks, while emerging market economies, including India, are expected to demonstrate relative resilience.	Signals from global innovators suggest that inventory normalisation is under way, with demand recovery expected to gain momentum, subject to the pace of end- market inventory absorption and normalisation of innovator delivery schedules.

Source: IMF, World Economic Outlook, April 2026 (Growth Projections Table). Public link: https://www.imf.org/en/public%e2%80%a6ons/weo/ issues/2026/%2004/14/world-economic-outlook-april-2026

Advanced economies remained on divergent trajectories, with the United States recording relatively resilient growth, while the Euro Area and Japan continued to navigate slower recoveries. Emerging market economies, led by India and Southeast Asia, continued to outperform, consistent with the longer-term shi• in economic weight toward Asia.

Indian Economic Landscape: Sustained Growth and Macro Stability

India is among the worlds fastest growing major economies and is progressing toward becoming the third largest economy, with long-term estimates indicating GDP of approximately USD 7.3 trillion by 2030.

The domestic economy delivered resilient performance, with real annual GDP growth for FY 2025-26 estimated at 7.6% by Ministry of Statistics and Programme Implementation / National Statistical O?ce (MoSPI/ NSO), supported by private consumption, investment momentum and benign inflation.

Indias macroeconomic stability, reflected in a contained fiscal deficit, a manageable current account and a strengthening banking system, provided a stable operating environment even as global conditions remained volatile.

India GDP: Key Indicators

RBI FY 2026-27 GDP Projection	IMF FY 2026-27 GDP Forecast
6.9%	6.5%

Sources: MoSPI/PIB GDP release dated 27 February 2026 (https://pib.gov.in/PressReleasePage.aspx?PRID=2233792);

RBI Monetary Policy Statement dated 8 April 2026 (https://www.rbi.org.in/Scripts/Error.aspx?aspxerrorpath=/Script%e2%80%a6S_ PressReleaseDisplay.aspx) IMF World Economic Outlook, April 2026 (https://www.imf.org/en/public%e2%80%a6ons/weo/issues/2026/%2004/14/world-economic-outlook-april-2026).

Key macroeconomic tailwinds in FY 2025-26 included a favourable monsoon, with above-normal Kharif acreages in rice, cotton and pulses, followed by a robust Rabi season with strong wheat and gram sowing. GST rationalisation and income-tax reforms supported rural disposable income and farmer purchasing power. Infrastructure-led capex by the government supported rural connectivity and supply-chain e?ciency. Benign crude oil and input commodity prices improved cost competitiveness for chemical manufacturers, for Indias growing position as a preferred manufacturing destination continued to attract global innovators toward long-term supply partnerships based in India.

Global Agrochemicals: Structural Shifts Shaping the Future

The global agrochemicals market was estimated at approximately USD 299.7 billion in 2025. Growth is expected to be driven by population pressures, shrinking arable land, climate variability, the structural shi• toward biologicals and precision agriculture and continuing demand for di–erentiated crop-protection solutions. Asia-Pacific remains the dominant region, accounting for 52.7% of global agrochemicals value in 2025. India remains at the centre of the global supply chain.

Global demand for food, feed, fuel and fibre continues to rise, with estimates suggesting that food production must increase by nearly 50% by 2050 to meet the needs of a growing population. This challenge is compounded by constraints such as limited natural resources, environmental degradation, pollution and the impacts of climate change.

Addressing it will require a multifaceted approach focused on enhancing agricultural productivity, promoting sustainable and healthy consumption patterns, reducing post-harvest losses, conserving resources, minimising reliance on chemical inputs and adopting climate-resilient practices. Plant pests and diseases also remain a critical concern, posing risks to food security, trade and farmer livelihoods, with annual crop losses estimated at up to 40% globally.

Sector View: Global Agrochemicals

Market Scale and Growth	Structural Transformation
Global agrochemicals market is estimated at approximately USD 299.7 billion and projected to reach USD 449.9 billion by 2033 at a CAGR of 5.2%.	Biologicals and precision agriculture are among the faster-growing sub-segments, supported by sustainability regulations, resistance management and rising farmer demand for lower-residue, soil- friendly crop-protection solutions. This shi• is aligned with PIs portfolio strategy.
Growth is supported by food security needs, crop- yield intensity and the shi• toward sustainable and precision-led solutions.

Source note: Grand view research

The global agrochemical (AgChem) industry, demand remained subdued through much of FY 2025-26 due to prolonged inventory destocking across the global crop-protection value chain, including innovator, distributor, retailer and grower-level inventories. This has been further accentuated with deferrals in customer delivery schedules and reduced procurement intensity by global innovators. Input cost volatility, particularly in energy, intermediates and logistics, continued to a–ect industry margins, even as inflationary pressures so•ened in select markets. Geopolitical events during the quarter ending March 2026, including heightened Middle East tensions, added a further layer of disruption and supported a shi• toward more cautious, just-intime purchasing by global customers. For companies with geographic diversification, established customer relationships and di–erentiated molecule portfolios, these pressures increased the relative importance of strategic breadth.

Policy and Trade Tailwinds Strengthening Indias Position

A combination of policy developments and evolving trade dynamics during FY 2025-26 reinforced Indias structural advantages within the global agrochemical supply chain. Chinas announced withdrawal of VAT rebates on certain pesticide technicals/intermediates from April 2026 is expected to temper aggressive export pricing in selected product lines, although the precise impact will vary by molecule and customer contract.

Progress on the India-EU Free Trade Agreement, including phased tari– elimination and the prospect of zero duty on approximately 97.5% of Indias export basket, is expected to enhance Indias competitiveness in specialty chemicals and agrochemical inputs in European markets. This momentum may also catalyse higher European foreign direct investment into India through joint-venture and greenfield manufacturing,

Indian Agrochemical Industry: Transitioning Toward Value and Differentiation

India ranks as the fourth-largest producer of agrochemicals globally and the third-largest exporter. The domestic market is expected to be supported by rising crop intensity, labour-scarcity-led herbicide adoption and increasing penetration of di–erentiated branded and biological products. Beyond these headline drivers, the Indian agri-input market is shi•ing from a price-led, volume-driven commodity market toward a quality-led, innovation-oriented market, where di–erentiated branded products, precision agronomy and biological solutions are gaining traction.

supporting a more favourable long-term market infrastructure for Indian manufacturers.

The Union Budget FY 2026-27 reinforced this direction with an allocation of 6 billion toward three cluster-based, plug-and-play Chemical Parks with shared infrastructure and standard environmental compliance facilities. This public investment in industrial-grade chemical infrastructure is expected to reduce the cost and complexity of capacity expansion for domestic players, improving the economics of further investment in Indias agrochemical and specialty chemicals ecosystem.

(Source: PIB, Union Budget FY 2026-27 Chemical Parks release, https://www.pib.gov.in/PressReleasePage. aspx?PRID=2222931&reg=48&lang=2

Indian Agrochemical Market: Key Indicators

India Agricultural Biologicals Market size in 2026 is estimated at USD 3.39 billion, growing from 2025 value of USD 3.19 billion with 2031 projections showing USD 4.62 billion, growing at 6.36% CAGR over 2026-2031.

Domestic demand for agrochemicals in India is on a steady upward trajectory. According to Mordor Intelligence, the market is valued at approximately USD 9.0 billion in 2025 and is projected to expand to USD 13.25 billion by 2031 – a compound annual growth rate of 6.66% over the period. Indias crop protection chemicals segment is set for measured expansion over the next several years. Market value stood at USD 2.59 billion in 2025 and is projected to climb to USD 3.36 billion by 2031, implying a 4.45% CAGR across the forecast window.

The strength and spread of the monsoon remains a vital external force influencing the AgChem industry. Rainfall distribution, sowing acreage and reservoir levels together shape the extent to which farmers invest in crop-protection inputs during each season, influencing both the breadth of addressable acreage and the intensity of spend per acre across the crop categories. Adequate and well-distributed rainfall supports stronger Kharif acreage, sustains reservoir levels through the post-monsoon period and provides the soil-moisture conditions that underpin Rabi sowing, extending the seasonal demand environment across both cropping cycles.

In FY 2025-26, cumulative seasonal rainfall reached 108% of the Long Period Average, with 32 of 36 meteorological subdivisions receiving normal or above-normal rainfall; reservoir storage stood at 91.4% of capacity in October 2025, 18.5% above the five-year normal; and Rabi sowing reached 67.7 million hectares in January 2026, 6.1% above the seasonal norm.

Indias position in global agrochemical trade has strengthened threefold over the past decade. The countrys agrochemical exports climbed from US$1.3 billion in FY15 to US$3.3 billion in FY25, establishing India as the worlds third-largest agrochemical exporter, behind only China and the United States.

Government Schemes Supporting Indian Farmers

The Budget Estimate for the Department of Agriculture and Farmers Welfare (DA&FW) for FY 2025-26 stood at 1,272,900 million, compared with 219,330 million in FY 2013-14, an increase of nearly six times. On the same DA&FW basis, the FY 2025-26 allocation represented approximately 2.51% of the Government of India Budget Estimate, reflecting a sustained policy commitment to agriculture and farmer welfare.

Source: PIB/Ministry of Agriculture & Farmers Welfare release dated 25 July 2025

This budgetary commitment operates across multiple vectors. The PM-KISAN scheme provides direct income support to over 110 million farm households, supporting purchasing power for quality agri-inputs. PM Fasal Bima Yojana and PM Krishi Sinchayee Yojana reduce the financial risk associated with crop failures and water scarcity, which can encourage farmers to invest in higher-quality crop-protection solutions. The Kisan Credit Card programme extends a–ordable institutional credit to smallholder farmers, enabling timely purchase of inputs. Taken together, these interventions can support a gradual improvement in e–ective demand for quality agrochemical products, including the branded, di–erentiated and biological crop-protection solutions

Global Pharmaceutical CRDMO Sector: Outsourcing-Led Growth

The global Contract Research, Development and Manufacturing Organisation (CRDMO) market was valued at approximately USD 196 billion in 2023 and is projected to reach approximately USD 329 billion by 2029, growing at a CAGR of about 9.0% during

2023-2029. Increasing outsourcing by global biotech and pharmaceutical companies, driven by pipeline complexity, capital-e?ciency requirements and the need for specialised capabilities, is expanding the addressable market for quality CRDMO players.

Source: Arizton CRDMO Market Report, Global Outlook and Forecast 2024-2029 (https://www.arizton.com/market-reports/crdmo-market).

Consolidated Financial Performance: Balancing Cyclical Pressures with Structural Strength

FY 2025–26 was marked by cyclical revenue headwinds across the global AgChem sector. With a long-term lens, PI continued to invest in platforms supporting its next phase of growth. On a consolidated basis, revenue declined 16% year-on-year to 67,137 million, reflecting the agrochemical sector challenges , while the underlying commercial positioning and customer relationships remained intact. As on 31 March 2026, PI maintained a net debt-free balance sheet and a disciplined capital allocation framework.

Key Consolidated Financial Ratios

Metric	=RIGHT>FY 2024-25	FY 2025-26
Operating Profit	27.4%	25.4%
Net Profit Margin *	19.95%	18.80%
Debt / Equity Ratio	0.01x	0.02x
Current Ratio	4.02	4.22
Debtors Turnover #	5.46	3.23
Inventory Turnover	3.30	2.58
Interest Coverage Ratio	65.88	104.45
Return on Net worth **	26.38%	16.56%

*FY 26 Net Profit includes exceptional items: 1,260 million write-back of contingent consideration and 229 million New Labour Code provision. ** Return on Net worth is calculated excluding Cash, Bank and Investments

# Debtors turnover ratio is calculated including contract assets

PI demonstrated margin resilience with gross margin at 58%. The consolidated EBITDA margin stood at 25.4% and PAT of 18.80% for the year. Movements in key financial ratios (including return on net worth) during the year have been a result of revenue and profitability decline due to industry headwinds and a calibrated credit extension approach in line with customer requirements.

Capital Allocation: Enabling Growth, Scale and Long-Term Value Creation

PI capital allocation framework is anchored on a balanced, multi-track approach, directing capital towards R&D and strategic capex for manufacturing expansion and new business scale-up, pursuing selective acquisitions to strengthen capabilities and technology and delivering sustained returns to shareholders.

• 3,556 million invested in R&D, supporting 700+ scientists across 4 R&D centres and a pipeline of 90+ molecules, reinforcing PIs innovation-led growth strategy.

• 11,508 million of capex deployed towards manufacturing expansion, R&D infrastructure and Pharma CRDMO facilities, including capacity additions at Jambusar, Panoli, Jaipur and Lodi (Italy).

• Strong net cash position maintained, with 34,265 million surplus cash, providing strategic flexibility for future growth and opportunities.

• 2,278 million returned to shareholders ( 15 per share dividend), reflecting commitment to consistent shareholder returns despite cyclical industry headwinds.

• Capital deployment remained directed towards strengthening capabilities across AgChem, Biologicals, Pharma CRDMO and Specialty & Electronic Chemicals, while retaining flexibility for selective strategic acquisitions.

Business-wise Performance Analysis

The performance of business segments, providing insights into key drivers, trends and outlook:

AgChem

Custom Synthesis and Manufacturing (CSM): CSM operates through strategic partnerships with global AgChem innovators to develop and manufacture proprietary molecules. It involves complex process chemistry and IP driven collaborations with long term contracts. In FY 2025-26, the order book held steady, indicating an intact pipeline. New products contribute to 18% of AgChem Exports revenue and five new molecules were commercialised during the year (15+ over three years), supporting gross-margin expansion.

Agri Brands: The performance was mixed, impacted by adverse weather conditions, lower crop prices and regulatory disruptions in biologicals and elevated channel inventory. Four new products were launched and have a strong pipeline of 20+ products at di–erent stages of development.

Biologicals: Built over two decades in India and scaled globally through acquisition of PI AgSciences (formerly known as Plant Health Care (PHC)), operates across the USA, Brazil, Mexico, Spain and UK via PHCs proprietary technology.

A notable development for the biologicals platform in FY 2025-26 was the US EPA registration and commercial launch of PIs foliar bionematicide, worlds first foliar-application nematode product.

Nematode management has historically been a soil-applied chemistry problem; a foliar application creates a new use-case model, enabling farmers to address nematode pressure in standing crops in a way that was previously not possible with biological solutions.

Research and developments: Innovation is a core growth driver for PI, supported by an R&D platform of over 700 scientists and sustained investments across AgChem, Biologicals and Health Sciences. The Company is progressing a robust pipeline of commercialised and late-stage molecules, enabled by advanced chemistry, process innovation and AI-driven platforms.

Pharma (CRDMO)

PI Health Sciences (PIHS) extends PIs process chemistry and regulatory capabilities into pharma, positioned as a CRDMO partner for global pharma and biotech innovators. The CRO facility in Hyderabad strengthens its discovery and development capabilities, while the commissioning of the kilo-lab facility in Lodi, Italy will enhance its ability to serve global pharmaceutical customers

Revenue grew 40% YoY to 3,005 million. Positive momentum through new partnerships and expanded active customer base.

Managing Risk in a Dynamic Environment

PI has adopted an integrated Enterprise Risk Management (ERM) framework, operationalised across the organisation. Built on leading global frameworks and practices, it is tailored to the Companys unique business model and geographic footprint. A detailed view of the framework, along with key and emerging risks and their mitigation measures, has been provided in the Integrated Annual Report (under section E–ective Risk Management).

Internal Control Systems and their Adequacy

PI maintains a system of internal financial controls, commensurate with the size, scale and complexity of its operations across manufacturing, R&D, branded distribution, pharmaceutical CRDMO and global biologicals. The Company went live on SAP S/4HANA under Project INDRA providing a single system of record for procurement, planning, inventory and financial reporting, reducing data silos and enabling enterprise-wide real-time visibility.

An independent internal audit function, supported by Protiviti India Member Private Limited as the external internal auditor, reports directly to the Audit Committee of the Board, supporting arms-length assessment of process adherence, risk management and financial-reporting integrity. The Audit Committee, comprising of majorly Independent Directors, reviews internal audit reports, financial statements and risk-management frameworks quarterly.

The internal control framework is supported by the following policies, certifications and governance practices:

01 ISO-certified quality management systems (ISO 9001:2015, ISO 14001:2015, ISO 45001:2018, ISO 50001:2018) across all manufacturing and R&D sites.

02 ISO/IEC 27001:2022 certification at PIHS sites (Mumbai, Jaipur, Hyderabad), reflecting data-security governance at international standards.

03 Whistle-blower policy, Code of Conduct and policy on dealing with related-party transactions are in place and reviewed periodically.

04 Board performance evaluated externally; 40% of Board members are Independent Directors; Non-Executive Chairperson.

05 Financial delegation of authority, segregation of duties and documented standard operating procedures across critical financial and operational processes.

Based on internal audit reports, management representations and Audit Committee oversight, the Board is of the opinion that the Companys internal financial controls were adequate and operating e–ectively as at 31 March 2026.

Human Resources and Industrial Relations

PIs workforce spans across India, Italy, the USA, the UK, the Netherlands, Japan, China, Brazil, Mexico, Spain, the UAE and Germany. The Company considers its human capital, particularly its scientific and technical talent, an important contributor to its competitive position.

The talent strategy is built around three pillars: attracting scientific and commercial talent across PIs geographies; investing in capability development through formal training, rotational programmes and access to laboratory infrastructure; and fostering a culture of innovation and ownership in which researchers and business leaders are encouraged to think beyond their immediate mandates. The Companys purpose, Reimagining a Healthier Planet, is intended to support the recruitment and retention of scientific talent.

Human Capital: Key Indicators FY 2025-26

Workforce and Diversity	Capability and Development
Total permanent employees and workers: 3,840 (consolidated basis)	700+ scientists and 200+ doctorates across R&D facilities
Women in management positions: 9.12% in FY 2025-26 15.50% women employees in STEM roles across R&D, manufacturing and quality functions	1,00,000+ total training hours in FY 2025-26 Human Capital Return on Investment (HCROI) above 4x
All manufacturing sites ISO 45001:2018 certified	ESOP programmes align management and employee interests with long-term shareholder value creation.
	Experienced leadership across business verticals and departments

Employee well-being initiatives covered physical, mental and emotional health, including flexible work arrangements, mental-health awareness sessions and comprehensive leave policies spanning paid maternity, paternity, adoption and childcare leave.

Management Priorities for way forward

Building on the foundations established in FY 2025-26, management has identified priorities for near term to midterm. These are organised around the near-term recovery opportunity in AgChem Exports and domestic business, the medium-term scaling of PIHS and Global Biologicals and the innovation positioning of the Company through the new chemical entity programme. They are being translated into focused execution across the following areas:

01 AgChem Exports growth momentum: strengthen order book and innovator relationships to support export volume recovery, as inventory normalisation progresses, subject to customer delivery schedules

02 Improve Asset utilisation: drive higher throughput across existing manufacturing facilities through product-mix optimisation and operational-e?ciency programmes

03 Scale-up Global Biologicals: strengthen go-to-market approach anchored on geography-specific distribution, farmer outreach and field-level e?cacy demonstrations to accelerate adoption

04 Commercialise Pioxaniliprole: domestic commercial launch of Indias first new chemical entity, subject to regulatory approval; initiate global regulatory filings in select geographies for commercialisation

05 Achieve PIHS revenue scale: conversion of development-stage engagements into long-term commercial supply agreements, anchored on the growing late-stage clinical pipeline

06 Expand non-AgChem: continue to expand specialty chemicals and electronic chemicals enquiries in the new-business pipeline

07 Optimising working capital: drive disciplined receivables and inventory management to strengthen cash flow and balance sheet resilience

These priorities reflect managements intent and estimate and are subject to prevailing risks and market conditions.

Outlook

• Management remains optimistic about the medium- to long-term outlook. Early signals from global innovator partners—evidenced by indicative o–take plans and a stabilised order book—suggest that industry inventory normalisation is underway. Supported by healthy reservoir levels entering Kharif FY2026–27 and a stabilised domestic biologicals portfolio following regulatory disruptions, the Company is well positioned to benefit from improving market conditions.

• The AgChem business is expected to maintain strong momentum, driven by a healthy order book, a robust pipeline of commercialised and late-stage molecules and deepening partnerships with global innovators. PI Health Sciences (PIHS) continues to scale steadily, while the Global Biologicals platform is progressing in line with strategic priorities, strengthening the Companys diversified growth portfolio.

• Investments made over the past three years are now transitioning from deployment to production, creating a strong foundation for future growth. As these capacities ramp up, the Company expects to enhance operational leverage, support new product introductions and improve growth visibility.

• Pioxaniliprole represents a key milestone in PIs innovation journey and portfolio expansion. As a di–erentiated proprietary o–ering with significant market potential, it is expected to strengthen the Companys branded formulations business while enhancing value capture across the agricultural value chain. The NCE programme is aimed at establishing a new R&D-led value creation pathway, with learnings from Pioxaniliprole guiding the development of future molecules and optimizing the global distribution platform.

• Sustainability remains integral to the Companys long-term strategy. Continued focus on green chemistry, responsible sourcing, energy e?ciency, water stewardship, carbon intensity reduction and circularity is expected to strengthen operational resilience and long-term competitiveness.

• Aligned with its strategic vision, the Company continues to invest in digital transformation, AI-enabled innovation and operational excellence to enhance productivity, accelerate product development and improve customer responsiveness. While near-term industry headwinds may persist, the Company remains committed to delivering sustainable and profitable growth through disciplined capital allocation, strong balance sheet management and execution excellence.

Cautionary Statement: Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, or expectations may be forward-looking in nature and subject to risks and uncertainties. Actual results may differ materially from those expressed or implied. Forward-looking statements are based on managements current expectations and are subject to the risks described in the Risk Management section of this report.