Paradeep Phosphates Ltd Management Discussions

Economy Overview Global Economy

In a year characterised by escalating trade tensions and heightened geopolitical uncertainties, the global economy demonstrated resilience with GDP growth of 3.4% in Calender Year (CY) 2025. This performance was supported by multiple factors. Front-loaded trade activity provided impetus to manufacturing and logistics, while sustained investments in Artificial Intelligence (AI), semiconductor ecosystems and digital infrastructure, particularly in North America and parts of Asia, strengthened capital expenditure cycles. Concurrently, supportive fiscal measures across major economies helped maintain a balance between economic stability and growth stimulus.

Advanced economies recorded growth of 1.9% during the year, reflecting moderate yet steady expansion supported by stable policy environments, despite persistent trade-related pressures. In contrast, emerging markets and developing economies grew by 4.4%, driven by robust domestic demand, resilient services activity and continued public investment. However, several smaller economies remained constrained by limited fiscal capacity, currency volatility and elevated debt burdens.

Policy responsiveness and ongoing technological advancement have continued to support global economic stability. However, the global economy remains exposed to potential trade disruptions and geopolitical risks. Escalating tensions in West Asia have added further uncertainty to the macroeconomic environment. While global growth has remained steady, the international landscape continues to face heightened geopolitical risks. Disruptions around critical chokepoints, such as the Strait of Hormuz, are constraining key energy supply routes. This has led to increased volatility in oil markets, elevating fuel costs and creating ripple effects across global logistics and industrial production worldwide. In response, several countries have intensified diplomatic engagement and diversifying energy sourcing and crude import channels to mitigate supply risks.

Outlook

At 3.1% in CY 2026 then slightly improving to 3.2% in CY 2027. Over the longer term, this reflects the impact of easing inventory cycles, trade-related pressures and softer consumption trends across major economies.

Inflation is expected to be volatile with Global headline inflation is projected to rise to 4.4% in CY 2026 before easing to 3.7% in CY 2027, with upward adjustments made to forecasts for both years. The uptick is due to the evolving geopolitical developments could particularly impact energy markets, resulting in temporary cost pressures and supply-side disruptions.

Overall, while the growth trajectory remains stable, the global environment necessitates a measured approach, with continued emphasis on resilience and adaptability. Sustained economic expansion will depend on deeper trade integration, institutional reforms and stronger investment-driven growth, particularly across emerging markets.

Due to potential escalations in trade tensions and a deterioration Projections in financial sentiment, the Global growth is expected to moderate Source - IMF

Global Macro Disruptions and Supply Chain Realignment

Disruption Theme	Key Developments	Business & Supply Chain Impact
Geopolitical Conflicts & Trade Route Instability	The ongoing impact of the Russia-Ukraine conflict continues to disrupt global grain, fertiliser and energy markets. Concurrently, escalating tensions in West Asia, including the widening conflict involving Israel, Iran and the United States have significantly heightened geopolitical risk. These developments have disrupted key maritime routes, including the Red Sea and raised concerns over the stability of the Strait of Hormuz.	Higher freight and insurance costs, extended transit timelines and increased supply uncertainty across energy, fertilisers and agri-commodities. Companies are accelerating diversification of sourcing, rerouting logistics and building strategic inventories to mitigate risks.

l http.s://www.imf.orn/en/publication.s/weo/i.s.sue.s/2026/04/14/world-economic-outlook-april-2026

2 https://www.imf.ora/-/media/files/publications/weo/2026/april/enalish/execsum.pdf

Disruption Theme	Key Developments	Business & Supply Chain Impact
Protectionism & Tariff Escalation	Renewed protectionist policies, particularly in the United States, have resulted in aggressive tariff measures targeting China and key industrial sectors, prompting retaliatory actions and increasing fragmentation in global trade.	Increased input cost volatility and supply chain reconfiguration. Businesses are shifting toward regionalised manufacturing and rebalancing export strategies amid evolving trade barriers.
Climate Volatility & Agricultural Disruptions	The increasing frequency of extreme weather events, including droughts, floods and erratic rainfall across major agricultural regions. Persistent water constraints in critical choke-points such as the Panama Canal have further impacted cargo movement.	Lower agricultural yields, commodity price volatility and increased logistics costs, resulting in procurement uncertainty and margin pressures for agri-linked industries.
Global Logistics & Maritime Bottlenecks	Ongoing disruptions in the Red Sea, vessels rerouting and congestion at alternative ports have structurally altered global shipping patterns. War-risk premiums and vessel insurance costs remain elevated.	Structural increase in logistics costs and working capital requirements due to longer inventory cycles. Supply chain resilience and route optimisation have become strategic priorities.
Energy Market Volatility	Geopolitical tensions, particularly in West Asia, continue to drive volatility in crude oil and natural gas markets highly volatile, with periodic supply concerns impacting global benchmarks.	Elevated fuel and energy costs affecting transportation, manufacturing and fertiliser production, placing continued pressure on margins and pricing strategies across industries.
Food Security & Inflationary Pressures	The combined effects of geopolitical conflicts, climate disruptions and trade restrictions have intensified global food security concerns, with staple prices remaining elevated in several regions.	Increased government intervention, subsidy support and regulatory oversight. Businesses must balance cost pressures with demand sensitivity and affordability considerations.

Indian Economy

India has reinforced its position as one of the fastest-growing major economies globally. Real GDP was estimated to grow by approximately 7.6% in FY 2026, compared with 7.1% in the previous year, reflecting sustained momentum. Growth is supported by resilient rural demand, healthy agricultural output and a gradual improvement in industrial activity.

Government initiatives, including the Production Linked Incentive (PLI) schemes, continue to support manufacturing, while the services sector remains a key growth driver. Sustained public investment in infrastructure is also aiding overall expansion.

Inflation remains well contained, with the latest Consumer Price Index (CPI) at 3.40% based on the revised 2024 base year. Stable inflation has supported purchasing power and demand across both urban and rural markets. This is further reinforced by measures such as income tax relief, ongoing GST rationalisation efforts and an accommodative monetary policy stance, which together are sustaining consumption.

India is also strengthening its integration with global value chains. Ongoing trade negotiations with the United States and the European Union are expected to boost exports, enable technology transfer and attract long-term investment. In response to geopolitical developments in the Middle East, India has diversified crude oil sourcing and strengthen alternative supply channels, improving overall energy security.

Outlook

Looking ahead, India is projected to remain the fastest-growing major economy. Real GDP growth for FY 2027 is expected in the range of 6.8% to 7.2%, supported by continued government capital expenditure and a recovery in private consumption. Real Private Final Consumption Expenditure was projected to grow by around 7.0% in FY 2026, indicating improving demand.

Ongoing structural reforms, including GST rationalisation, progress on new and upgraded free trade agreements and continued efforts to improve the ease of doing business.

Inflation is likely to remain moderate under the revised base year framework, providing room for the Reserve Bank of India (RBI) to maintain a supportive monetary policy stance. This is expected to facilitate investment and sustain credit growth, even as global conditions remain uncertain due to tariff pressures and geopolitical uncertainties.

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Industry Overview

Agriculture and Crop Production Industry Global

The global agriculture and crop production industry in CY 2026 is entering a phase of relative stability following the sharp volatility observed in previous years. According to the World Bank, agricultural commodity prices are expected to moderate, with the global agricultural price index projected to decline by around 2% in CY 2026. This trend reflects improved supply conditions, as production growth across key crops such as grains and oilseeds remains broadly aligned with global demand.

Prices of food and agricultural raw material are expected to remain largely stable, while beverage crops such as coffee and cocoa are likely to witness a sharper correction of approximately 7%, primarily due to higher supply. Overall, the sector is currently characterised by balanced supply-demand dynamics, supported by better harvests and easing commodity pressures compared to earlier years.

Despite near-term price stability, the medium-term outlook remains uncertain, with multiple risks influencing future production and pricing trends. Extreme weather conditions, including potential La Nina events, may adversely impact yields for major crops including wheat, maize and soybeans.

Concurrently, volatility in input costs, particularly fertilisers and energy continue to pose challenges, although fertiliser prices are expected to decline by around 5% in CY 2026 following a sharp increase in 2025.

Additionally, slower global economic growth may moderate demand for certain agricultural commodities, especially higher- value products. Trade policies, currency fluctuations and biofuel demand are also expected to play a critical role in shaping agricultural market dynamics. As a result, while the industry is entering a phase of stabilisation, it remains highly sensitive to climatic, geopolitical and policy-driven disruptions.

Indian

Indias agriculture sector continues to play a pivotal role in the economy, contributing nearly one-fifth of Gross Value Added (GVA), employing about 46.1% of the workforce, while supporting around 55% of the population. The sector has demonstrated consistent performance, recording an average annual growth rate of approximately 4.4% over the past five years, supported by improved farm practices, increased technological adoption and sustained policy support.

India Foodgrain Production Trend

Foodgrain Production (MMT)

FY 2025 357.73

7.65%

YoY Growth

FY 2024 332.30

Source: PIB

In FY 2025, India achieved a record foodgrain production of 357.73 million metric tonnes (MMT), driven by higher output of rice, wheat and coarse cereals. Horticulture production also reached 362.08 million tonnes, reflecting a structural shift towards high-value crops.

India maintains a strong global position as one of the leading producers of key crops including 150.18 MMT of rice, 117.94 MMT of wheat, 25.68 MMT of pulses and 18.59 MMT of millets. This diversified production base coupled with an increasing focus on value-added agriculture is strengthening Indias role in global food security and agricultural markets.

Agricultural Footprint

The Government of India has significantly strengthened its focus on agriculture through sustained budgetary support. Allocation to the Department of Agriculture and Farmers Welfare has increased from Rs. 21,933 crore in 2013-14 to Rs. 1,30,561 crore in 2026-27, reflecting a strong policy commitment to improving farmer income, productivity and rural livelihoods.

The union budget 2026-2027 emphasises the promotion of high- value crops, with targeted support for coconut, cocoa, cashew, almonds and walnuts across region-specific agro-climatic zones. This strategy aims to encourage crop diversification, improve farm incomes and strengthen value-added agricultural output.

Agricultural Export Market

Indias agricultural exports have demonstrated steady growth, driven by diversification and increasing value addition across the agri-value chain. Export earnings rose from USD 34.5 billion in FY 2020 to USD 51.1 billion in FY 2025, reflecting a CAGR of around 8.2%.

The share of processed food exports has increased to 20.4%, >) indicating a gradual shift towards higher-value products and enhanced global competitiveness. Strong demand for key commodities such as rice, spices and horticulture products continues to support export growth, reinforcing Indias position as a major global supplier of agricultural produce.

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Outlook

The outlook for Indias agriculture sector remains positive, backed by continued policy support, increasing adoption of technology adoption and a gradual shift towards high-value and sustainable farming practices. Government initiatives focused on productivity enhancement, irrigation expansion and improved seed quality are expected to further strengthen crop output and operational efficiency.

Additionally, rising investments in market infrastructure, digital platforms such as e-NAM and food processing are expected to improve value realisation for farmers and improve supply chain integration. The increasing share of processed food exports, along with diversification in cropping patterns, reflect a transition towards a more resilient and market-oriented agricultural ecosystem. However, the sector remains sensitive to climatic variability and input cost fluctuations, which may influence production stability in the near term.

Growth Drivers of Indian Agriculture and Crop Production Industry
Growth Driver	Description
Strong Production Growth	India recorded foodgrain production of 357.73 MMT and horticulture output of 362.08 MT in FY 2025, reflecting sustained improvements in productivity and input management.
Rising Agricultural Exports	Agricultural exports reached USD 51.1 billion in FY 2025, with increasing contribution from processed and value-added products, enhancing global competitiveness.
Increased Government Support	Budget allocation for agriculture rose to Rs. 1.30 lakh crore in FY 2027, highlighting strong policy emphasis on farmer welfare, productivity enhancement and rural development.
Expansion of Institutional Credit	Agricultural credit disbursement reached Rs. 28.67 lakh crore, supported by 7.72 crore Kisan Credit Card accounts, improving farmers\u2019 access to timely financing.
Irrigation and Soil Health Initiatives	Expansion of irrigation coverage to 55.8% and issuance of 25.55 crore Soil Health Cards are improving water-use efficiency and nutrient management.
Technology Adoption and Mechanisation	Establishment of 27,554 Custom Hiring Centres is enhancing farm mechanisation and productivity, particularly among small and marginal farmers.
Shift Towards Sustainable Agriculture	Natural farming has expanded to 17,632 clusters covering 6.39 lakh hectares, supporting resource-efficient and climate-resilient farming practices.
Strengthening Market Infrastructure	Integration of 1.8 crore farmers and 1,656 mandis with the e-NAM platform is enhancing price discovery, transparency and market access.
Growth in Food Processing and Value Addition	The food processing sector contributes 12.91% of organised manufacturing employment, supported by increased investment through government schemes in processing and cold-chain infrastructure.
Policy Push for Crop Diversification	Focus on high-value crops, including horticulture, oilseeds and plantation crops is encouraging diversification and improving farmer income potential.

Fertiliser Industry Global

The global fertiliser industry in 2025-26 is characterised by stable demand fundamentals but heightened supply-side uncertainties, primarily driven by geopolitical disruptions, energy price volatility and evolving trade policies. Fertilisers remain globally traded commodities, with supply chains highly concentrated in key regions such as the Middle East, China and Eastern Europe. Recent disruptions in critical trade routes, particularly the Strait of Hormuz and the Red Sea, have introduced significant risks to global supply chains, affecting both finished fertilisers and key raw materials such as ammonia and sulphur.

Despite these challenges, underlying demand remains supported by stable global crop production and a growing population. However, fertiliser affordability has become a concern in the short term, particularly for nitrogen-based fertilisers, where price increases have outpaced crop price movements, creating pressure on farmer margins and application rates.

Insight:

• Nitrogen remains the largest and most traded segment

• Potash trade growth is relatively stronger due to supply realignment

• Overall market reflects moderate growth with stable fundamentals

Supply Concentration & Trade Exposure

Global fertiliser trade is highly dependent on a few key regions, particularly the Middle East, which plays a central role in nitrogen and phosphate exports.

Fertiliser markets are highly exposed to geopolitical chokepoints, so any disruption in Middle East trade routes has disproportionate global impact.

Carbon Regulation (CBAM - Europe)

1. Implementation from January 2026

2. Expected to increase import costs for fertilisers

3. Encourages low-carbon production and supply chain shifts

Trade Restrictions and Policy Interventions

1. China imposed phosphate export restrictions till Aug 2026

2. Russia restricted ammonium nitrate exports

3. Turkiye imposed urea export controls

4. US policy shifts (tariffs, sanctions removal on Belarus potash) impacting trade flows

Geopolitical Disruptions

1. Strait of Hormuz and Red Sea disruptions impacting:

A Shipping routes A Raw material availability A Energy markets

2. Risk of plant shutdowns and supply constraints

Energy Price Volatility

1. Natural gas accounts for 60-80% of nitrogen production costs

2. Rising gas prices directly impact fertiliser pricing and margins

Outlook

The global fertiliser industry is expected to witness moderate growth with elevated volatility in the near term. While demand fundamentals remain intact, supply-side risks driven by geopolitics, energy markets and trade policies will continue to influence pricing and availability. Nitrogen markets are likely to remain tight due to energy dependency, while phosphates and potash are expected to stabilise with improving supply conditions.

Over the medium term, structural drivers such as population growth, food security concerns and increasing focus on nutrient efficiency are expected to support steady demand. However, the industry will increasingly need to adapt to sustainability regulations, carbon pricing mechanisms and supply chain diversification, which are expected to reshape global trade flows and production economics.

Regional Overview

Asia continues to dominate global fertiliser consumption, driven by strong agricultural demand and population growth. India and Southeast Asia are witnessing increased use of nitrogen and phosphate fertilisers, supported by government policies and crop demand. However, Chinas export restrictions on phosphates until 2026 and controlled urea exports have tightened global supply dynamics, while demand for potash remains strong across the region.

Eastern Europe and

The region is stabilising following earlier geopolitical disruptions, with Russia continuing to play a key role in global fertiliser supply, particularly in nitrogen and potash.

Trade flows have gradually normalised, although ongoing geopolitical tensions and trade restrictions continue to influence export patterns and pricing dynamics.

Fertiliser demand in Sub-Saharan Africa is gradually increasing, supported by policy initiatives, international funding and adoption of balanced fertilisation practices. Countries such as Ethiopia are promoting efficient fertiliser use, although affordability constraints and infrastructure limitations remain key challenges for wider adoption.

Fertiliser demand trends remain mixed across the region. In major markets such as Brazil and Argentina, high phosphate prices have impacted consumption of MAP and DAP, while potash demand has remained relatively stable due to improved availability and pricing. The region continues to be a key growth driver for global fertiliser demand.

Mature markets such as North America and Western Europe continue to exhibit stable demand with limited volume growth. However, there is a clear shift towards sustainable and efficiency-enhancing fertilisers, driven by regulatory pressures such as carbon policies (including CBAM in Europe) and increasing focus on environmental compliance.

Indian

India remains one of the largest fertiliser consumers globally, with demand driven by strong agricultural output, government support and seasonal cropping patterns. The industry continues to operate under a regulated framework, with urea under price control and phosphatic and potassic fertilisers governed by the Nutrient-Based Subsidy (NBS) regime.

During April-December 2025, the industry witnessed a divergence in production trends, with urea and DAP production declining by 3.2% and 3.9%, respectively, while production of NP/NPK fertilisers and SSP increased by 13.1% and 10.3%, indicating a structural shift towards balanced fertilisation.

At the same time, import dependence increased significantly, with imports of urea, DAP and NP/NPK fertilisers rising by 85.3%, 45.7% and 121.8%, respectively, reflecting supply gaps and strong domestic demand.

Industry Demand and Consumption Trends

Fertiliser Type	DBT Sales (Apr-Dec 2025)	YoY Growth (%)
Urea	31.16 million MT	3.8%
DAP	7.99 million MT	(4.1%)
NP/NPK	11.74 million MT	0.2%
SSP	4.71 million MT	13.1%
MOP	1.77 million MT	5.3%

Insight:

A Strong growth in urea and SSP demand

A Decline in DAP usage indicates substitution towards alternatives A Stable NP/NPK demand reinforces gradual shift to balanced fertilisation

Policy and Subsidy

The fertiliser industry remains highly dependent on government subsidies to ensure affordability and demand stability. The fertiliser subsidy for FY 2026-27 is budgeted at Rs. 1.71 lakh crore, including:

The marginal reduction in subsidy allocation compared to revised estimates reflects expectations of moderating global fertiliser and energy prices, although actual requirements remain sensitive to international price movements.

Key Industry Trends

Shift Towards Balanced Nutrient Usage:

Increasing awareness and policy push are driving demand for NPK fertilisers over traditional urea-heavy usage.

Rising Import Dependency:

India remains dependent on imports for key raw materials such as rock phosphate, phosphoric acid, ammonia and potash, exposing the industry to global price volatility.

Subsidy-Driven Demand Stability:

Government subsidies continue to play a crucial role in ensuring affordability and maintaining steady demand across fertiliser categories.

Growth in Specialty and Nano Fertilisers:

Adoption of products such as Nano Urea and specialty fertilisers is gradually increasing, supported by efficiency benefits and government initiatives.

Digitalisation and Direct Benefit Transfer (DBT):

DBT implementation has improved subsidy targeting, reduced leakages and enhanced transparency in fertiliser distribution.

Key Challenges

Challenge	Impact
Global Price	Fluctuations in raw material and energy prices impact cost structures and margins
Volatility
High Subsidy Burden	Delays in subsidy disbursement affect working capital cycles
Import Dependence	Exposure to global supply disruptions and currency fluctuations
Imbalanced Nutrient Usage	Over-reliance on urea impacts soil health and long-term productivity
Logistics and Distribution Complexity	Seasonal demand and wide geographic spread increase operational challenges

Outlook

The outlook for the Indian fertiliser industry remains positive, supported by strong agricultural demand, favourable government policies and increasing focus on balanced fertilisation. The shift

towards NPK and value-added fertilisers is expected to continue, driven by agronomic benefits and policy incentives.

However, the industry will continue to navigate challenges related to global supply chain disruptions, input cost volatility and subsidy dependence. Increased focus on backward integration, efficiency improvements and product innovation is expected to play a key role in enhancing long-term sustainability and competitiveness.

Company Overview

Paradeep Phosphates Limited (PPL) is among Indias leading private sector manufacturers of phosphatic fertiliser, with an expanded manufacturing footprint following the integration of Mangalore Chemicals & Fertilizers Limited (MCFL). The Company operates four strategically located manufacturing facilities at Paradeep (Odisha), Zuarinagar (Goa), Mangalore (Karnataka)and Mahad (Maharashtra) with a total installed capacity of approximately 3.9 MMTPA.

The Company benefits from strong backward integration, with in-house capabilities in phosphoric acid, sulphuric acid and ammonia, complemented by proximity to ports that enables efficient raw material sourcing. The Companys diversified product portfolio includes DAP a broad range of NPK fertilisers, urea and emerging products such as Nano Urea and Nano DAP, catering to evolving agricultural requirements.

PPL has established a strong market presence through its flagship brands, Jai Kisaan Navratna and Mangala, supported by an extensive pan-India distribution network. The integration of MCFL has further strengthened its presence in southern markets, enhanced product portfolio diversification and enabled operational synergies across sourcing, manufacturing and distribution.

Opportunities

Favourable Policy Support for Balanced Fertilisation

The continued emphasis on nutrient balance, soil health and efficiency-driven fertiliser usage under the Nutrient-Based Subsidy (NBS) regime is expected to support sustained demand for phosphatic and complex fertilisers. Increased subsidy allocation for non-urea fertilisers provides a stable demand environment for value-added products.

Shift Towards NPK and Specialty Fertilisers

Growing adoption of balanced nutrient practices is driving a structural shift from urea and DAP towards NPK and specialty fertilisers. The Companys diversified portfolio and focus on higher-margin NPK products position it well to capitalise on this transition.

Expansion of Nano and Sustainable Product Portfolio

Increasing government and industry emphasis on nutrient- use efficiency and sustainable agriculture is creating opportunities for advanced products such as Nano Urea and Nano DAP. These offerings present long-term growth potential while supporting improved agronomic outcomes.

Merger Synergies and Expanded Market Reach

The integration of MCFL has strengthened the Companys presence in southern India, expanded its product portfolio and improved access to key agricultural markets. Synergies across procurement, manufacturing and distribution are expected to enhance operational efficiencies.

Strengthening Backward Integration

Ongoing investments in phosphoric acid and sulphuric acid capacities are expected to enhance self-sufficiency in key raw materials, reduce import dependency and improve cost competitiveness over the medium term.

Capacity Expansion and Operating Leverage

Planned capacity expansion and debottlenecking initiatives are expected to support volume growth, improve capacity utilisation and drive operating leverage, enabling the Company to capitalise on rising fertiliser demand.

Challenges

Volatility in Raw Material and Energy Prices

The Company remains exposed to fluctuations in global prices of key inputs, including rock phosphate, phosphoric acid, ammonia and sulphur. Ongoing geopolitical tensions, particularly in energy-producing regions, have heightened input costs volatility, impacting margins and working capital.

Geopolitical and Supply Chain Disruptions

Global conflicts and trade disruptions continue to affect shipping routes, freight costs and raw material availability. Dependence on imports exposes the Company to supply chain uncertainties and logistical constraints.

Regulatory and Subsidy Dependence

The fertiliser industry remains highly regulated, with profitability influenced by subsidy policies, pricing controls and disbursement timelines. Any delays or changes in subsidy structure may impact liquidity and earnings visibility.

Climatic Variability and Demand Uncertainty

Fertiliser demand is closely linked to monsoon patterns and cropping cycles. Erratic rainfall, extreme weather conditions or shifts in sowing patterns may affect product off-take and inventory levels.

Foreign Exchange Exposure

A significant portion of raw material sourcing is import- dependent, exposing the Company to currency fluctuations. Depreciation of the Indian Rupee may result in higher input costs and margin pressures.

Operational Highlights Operational Efficiency

The Company maintained strong operational momentum during the year, with production reaching approximately 3.36 million tonnes in FY26, representing a growth of around 8% year-on- year. The Company achieved turnover of Rs 21,826 Cr higher by 29%, EBIDTA of H 2259 Cr (H 5,364/MT Vs Rs 4,449/MT) higher by 33% and PBT of Rs 1,328 Cr (after exceptional item H 39 Cr) higher by 45% compared to corresponding period of the previous year.

Operational performance was further supported by the stabilisation of the newly commissioned sulphuric acid capacity at Paradeep, along with ongoing process optimisation initiatives across Goa and Mangalore, resulting in improved plant reliability and throughput.

Integration and Capacity Expansion

The successful integration of MCFL marked a significant milestone, increasing total installed capacity to approximately 3.9 MMTPA and strengthening its presence in southern India. The Company continued to advance its expansion initiatives, including the increase in phosphoric acid capacity from 0.5 MMTPA to 0.7 MMTPA. These initiatives are expected to enhance backward integration, reducing dependence on external sourcing and improve operational efficiencies while supporting future growth.

Product Mix Optimisation

The Company continued to optimise its product mix towards higher-margin and value-added products, with NPK fertilisers contributing a significant share of overall volumes. Growth in NPK categories remained strong, with select segments recording growth exceeding 30% during the year, supported by increasing adoption of balanced fertilisation practices. This strategic shift has partially mitigated pressure in traditional segments such as DAP and improve overall product realisations.

Product Innovation

The Company continued to expand its portfolio of nutrient- efficient and sustainable fertilisers, including Nano Urea, Nano DAP and other advanced formulations. Adoption levels are gradually increasing, supported by field-level engagement and rising awareness among farmers. In addition, the Company has strengthened its presence in alternative phosphatic products such as TSP, registering strong growth, reflecting an industry-wide shift towards balanced fertilisation practices.

Performance Highlights Overall Performance

Particulars	FY 2025-26	FY 2024-25
Production (MT)	36,66,516	34,03,866
Sales Volume (MT)	42,09,890	38,19,246

Particulars	FY 2025-26	FY 2024-25
Revenue from Operations (Rs. Crores)	21,826.34	16,958.65
PBT (Rs. Crores)	1,328.45	911.59
PAT (Rs. Crores)	996.84	662.85

Production

Production in \u2018000 MT	FY 2025-26	FY 2024-25
DAP	561	670
N-20	1,508	1,346
Other fertilizers	1,597	1,388
Total Fertilizers	3,666	3,404

Consolidated Financial Performance

This section presents an overview of the consolidated financial performance for the fiscal year ending 31 st March, 2026. The financial statements of PPL and its joint ventures have been prepared in accordance with Indian Accounting Standards (Ind AS), as mandated by Section 133 of the Companies Act, 2013.

The accompanying notes to the consolidated financial statements outline the significant accounting policies adopted in the preparation of these results.

Revenue

Rs. in Crore

Particulars	FY 2025-26	FY 2024-25	% Change
Operating Revenue	21,826.34	16,958.65	28.70%
Other Income	146.58	148.04	-0.99%
Total Revenue	21,972.92	17,106.69	28.45%

Revenue from Manufactured Products and Trade Products

Rs. in Crore

	FY 2025-26	FY 2024-25	% Change
Manufactured Products	17,912.00	15,122.00	18.45%
Traded Products	3,914.34	1,836.65	113.12%
Operating Revenue	21,826.34	16,958.65	28.70%
Cost of Materials			Rs in Crore
	FY 2025-26	FY 2024-25	% Change
Cost of Material Consumed	13,247.47	10,303.90	28.57%
Purchase of Stock in Trade	3,956.96	1,770.01	123.56%
Changes in Inventories	(1,071.85)	(160.11)	569.45%
Total Materials	16,132.58	11,913.80	35.41%
Operating Revenue	21,826.34	16,958.65	28.70%
Cost of Materials / Operating Revenue	73.91%	70.25%	5.21%

Key Financial Ratios

Ratio	Numerator	Denominator	FY 2025-26	FY 2024-25	% Change
Current Ratio (In Times)	Total Current Assets	Total Current Liabilities	1.15	1.16	-0.86%
Debt-Equity Ratio (In Times)	Total Borrowings	Total Equity	1.01	0.86	17.44%
Debt Service Coverage Ratio (In Times)	Earning for Debt Service = Interest + Profit for the Year + Interest Expenses + Depreciation and Amortisation Expenses + Other Non-Cash Adjustments	Debt Service = Interest + Principal Repayments	2.34	1.84	27.17%
Return on Equity Ratio (In %)	Profit for the Year	Average Total Equity	15.75%	11.89%	32.46%
Inventory Turnover Ratio (In Times)	Revenue from Operations	Average Inventory	6.05	7.72	-21.63%
Trade Receivables Turnover Ratio (In Times)	Revenue from Operations	Average Trade Receivables	5.42	5.71	-5.08%
Trade Payables Turnover Ratio (In Times)	Purchase of Raw Materials and Traded Goods	Average Trade Payables	6.75	6.55	3.05%
Net Capital Turnover Ratio (In Times)	Revenue from Operations	Average Working Capital (i.e. Total Current Assets Less Total Current Liabilities)	16.67	20.17	-17.35%
Net Profit Ratio (In %)	Profit for the Year	Revenue from Operations	4.59%	3.91%	17.39%
Return on Capital Employed (In %)	Profit Before Tax and Finance Costs	Capital Employed = Tangible Net Worth + Total Debt	13.6	12.1	12.40

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous Financial Year) in key financial ratios:

Debt Service Coverage Ratio

The percentage increase in the Debt Service Coverage Ratio was primarily on account of higher profitability during the year, supported by improved operational performance, better product mix and higher EBITDA generation.

Employee Benefits

Rs. in Crore

	FY 2025-26	FY 2024-25	% Change
Employee Benefits	336.68	320.58	5.02%
% of Total Revenue	1.54%	1.89%	-18.40%

Finance Costs

Rs. in Crore

	FY 2025-26	FY 2024-25	% Change
Finance Costs	527.78	443.18	19.09%
% of Revenue	2.42%	2.61%	-7.47%

Depreciation and Amortisation

Rs. in Crore

	FY 2025-26	FY 2024-25	% Change
Depreciation and Amortisation	403.20	344.29	17.11%
% of Revenue	1.85%	2.03%	-9.01%

Other Expenses

Rs. in Crore

	FY 2025-26	FY 2024-25	% Change
Other Expenses	3,204.81	3,173.25	0.99%
% of Revenue	14.68%	18.71%	-21.53%

Income Tax

Rs. in Crore

	FY 2025-26	FY 2024-25	% Change
Income Tax	331.61	248.74	33.31%
Profit Before Tax	1,328.45	911.59	45.73%
Tax as % of Profit Before Tax	24.96%	27.29%	-8.52%

Risk Management

The Company operates in a dynamic global and domestic environment characterised by geopolitical uncertainties, commodity price volatility and evolving regulatory frameworks. To address these challenges, it has implemented a structured risk management framework to identify, assess and mitigate key business risks, thereby ensuring operational resilience and sustainable performance.

Risk Matrix

Risk	Risk Description	Risk Drivers	Risk Mitigation
Raw Material Price Volatility	The Company remains exposed to fluctuations in the prices of key imported inputs including rock phosphate, phosphoric acid, ammonia and sulphur, which may adversely impact cost structures and margins.	\u2022 Ongoing geopolitical tensions affecting supply markets	\u2022 Long-term sourcing arrangements with strategic partners
		\u2022 Volatility in energy prices influencing input costs \u2022 Currency fluctuations impacting landed cost of imports	\u2022 Strengthening backward integration through expansion of phosphoric and sulphuric acid capacities
			\u2022 Active product mix optimisation towards higher-margin offerings
Geopolitical and Supply Chain Disruptions	Disruptions in global trade routes and logistics networks may affect the timely availability of raw materials and increase freight costs.	\u2022 Conflicts in key regions affecting shipping routes (Red Sea, West Asia) \u2022 Port congestion and rerouting of vessels \u2022 Rising insurance and freight costs	\u2022 Diversified sourcing strategy across geographies \u2022 Optimised logistics planning and route flexibility \u2022 Maintenance of strategic inventory levels to mitigate disruptions
Regulatory and Subsidy Dependence	A significant portion of the Company\u2019s business is linked to government subsidy	\u2022 Changes in Nutrient- Based Subsidy (NBS) rates	\u2022 Continuous engagement with policymakers and industry bodies
	regimes, affecting pricing, demand and cash flows.	\u2022 Delays in subsidy disbursement \u2022 Policy changes in fertiliser pricing and nutrient norms	\u2022 Diversification towards non- subsidised and specialty products \u2022 Strengthening working capital management to absorb delays
Integration and Execution Risk (MCFL)	Integration of acquired operations may pose challenges in aligning processes, systems and efficiencies.	\u2022 Operational alignment across multiple manufacturing locations	\u2022 Phased integration strategy focus on operational harmonisation
		\u2022 Variations in product mix and regional demand \u2022 Execution risks in achieving synergy targets	\u2022 Leveraging combined distribution and procurement strengths \u2022 Continuous monitoring of synergy realisation and cost optimisation
Climate and Demand Variability	Fertiliser demand is dependent on monsoon patterns and cropping cycles, leading to variability in sales volumes.	\u2022 Erratic rainfall and extreme weather conditions	\u2022 Diversified geographic presence across multiple states
		\u2022 Shifts in cropping patterns and farmer behaviour	\u2022 Broad product portfolio catering to diverse crops and regions
		\u2022 Regional demand fluctuations	\u2022 Strengthened market intelligence and demand forecasting capabilities

Risk	Risk Description	Risk Drivers	Risk Mitigation
Foreign Exchange Risk	Dependence on imported raw materials exposes the Company to currency fluctuations, affecting procurement costs and profitability.	\u2022 Volatility in INR against major currencies	\u2022 Use of hedging instruments and forward contracts
		\u2022 Global macroeconomic uncertainty	\u2022 Natural hedging through pricing strategies
			\u2022 Increased backward integration to reduce import dependence

Working Capital and Liquidity Risk	The business is working capital intensive, with exposure to inventory buildup and receivables linked to subsidy cycles.	\u2022 High inventory requirements due to	\u2022 Tight control on inventory and receivables
		supply uncertainty \u2022 Timing mismatch in	\u2022 Strong banking relationships and access to credit lines
	subsidy receipts \u2022 Commodity price cycles	\u2022 Improved cash flow management systems
Increasing competition from domestic and global players may impact market share and pricing power.	\u2022 Capacity expansion by competitors	\u2022 Strong brand equity and farmer engagement
	\u2022 Increased focus on specialty and differentiated products \u2022 Pricing pressures in commoditised segments	\u2022 Focus on value-added and differentiated fertilisers \u2022 Expanded distribution network post-merger

Outlook

The Company is focused on strengthening its integrated operating model through continued investments in backward integration and capacity expansion. The planned increase in phosphoric acid capacity, along with the expansion of granulation facilities is expected to enhance self-sufficiency, improve cost efficiencies and support higher production volumes.

PPL continues to prioritise a calibrated shift in its product mix towards value-added and balanced nutrition fertilisers, particularly NPK variants and specialty products, in alignment with evolving agronomic practices and the governments focus on nutrient efficiency. The integration of MCFL is expected to yield synergies through improved capacity utilisation, expanded geographic reach and optimisation of procurement and distribution networks.

Supported by a strong sourcing strategy, diversified product portfolio and an expanding distribution footprint, the Company remains well positioned to strengthen its presence in the nonurea fertiliser segment while maintaining operational resilience amid global commodity and input cost volatility.

Human Resource

The Company continues to strengthen its position as a peoplecentric organisation, guided by the core values of sustainability, customer focus, integrity and collaboration. It remains committed to building a high-performance culture through strong employee engagement, continuous capability development and an inclusive work environment.

Talent Management and Leadership Development

The Company has instituted a structured talent management framework aimed at identifying, developing and retaining talent across all levels. Through competency mapping, leadership development initiatives and robust succession planning, it seeks to build a future-ready workforce aligned with evolving business requirements.

Leadership pipelines are further strengthened through targeted development programmes, mentoring initiatives and performance management systems, ensuring continuity in leadership and organisational resilience.

Learning and Capability Building

Learning and development remain integral to the Companys growth strategy. Structured training programmes are conducted to enhance technical, behavioural and digital capabilities, enabling employees to contribute effectively in a dynamic business environment.

The Company continues to strengthen domain expertise, digital awareness and cross-functional capabilities through curated learning interventions and partnerships with reputed institutions and platforms.

Employee Engagement and Culture

The Company promotes a culture of engagement and empowerment through structured initiatives that promote collaboration, recognition and continuous feedback. These initiatives are designed to enhance employee motivation, strengthen organisational alignment and drive a sense of ownership across teams.

Focused initiatives also encourage cross-functional collaboration and support a cohesive work environment that drives innovation and operational excellence.

Diversity and Inclusion

The Company is committed to support an inclusive and equitable workplace where employees from diverse backgrounds are empowered to contribute and grow. Its diversity initiatives emphasise equal opportunity, skill development and creating a culture rooted in respect, collaboration and belonging.

Digital HR Transformation

The Company continues to leverage digital technologies to enhance HR efficiency and employee experience. The adoption of integrated digital platforms across HR processes, including employee services, learning and performance management, has enabled streamlined operations and improved accessibility.

Internal Control

The Company maintains a robust internal control framework designed to ensure operational efficiency, safeguard assets and ensure compliance with applicable regulations. The internal audit function periodically reviews key business processes and findings are reviewed by the Audit Committee and the Board to strengthen governance practices and internal controls.

Cautionary Statement

Certain statements in the MDA section regarding future prospects may be forward-looking and involve risks and uncertainties that could lead to actual results differing materially. These statements are based on current assumptions and available information, which may change over time. As such, they reflect only the Companys intentions, beliefs, or expectations as of their date and are subject to change. The Company assumes no obligation to update these forward-looking statements in light of new information or future events.