Sanstar Ltd Management Discussions

1. REVIEW OF ECONOMY AND INDUSTRY Indian Economy

The Indian economy continued to demonstrate strong resilience during F.Y. 2025-26, maintaining its position among the worlds fastest-growing major economies. Indias real GDP grew by 7.7% in F.Y. 2025-26, compared with 7.1% in F.Y. 2024-25, supported by sustained domestic demand, investment activity, manufacturing and services growth. The growth momentum remained broad- based, with industry and services recording growth of approximately 8.8% and 9.0%, respectively, during F.Y. 2025-26, highlighting the continued strength of productive and consumption-led economic activity.

The domestic economy continued to benefit from rising consumption, increasing urbanization, improving connectivity and ongoing investments in physical and digital infrastructure. Indias expanding consumer base, strengthening manufacturing ecosystem and continued formalization are creating opportunities for businesses across consumer- oriented, manufacturing and agricultural value chains. The governments continued focus on infrastructure, domestic manufacturing, investment and trade integration is further supporting the transition towards higher-value and more organized economic activity.

The medium-term outlook remains favorable, with real GDP growth projected at approximately 6.4%- 6.6% for F.Y. 2026-27 by the IMF and World Bank, respectively. Continued growth in consumption, manufacturing capacity, infrastructure and global supply-chain integration is expected to support Indias economic momentum.

For the manufacturing and agricultural processing ecosystem, this outlook remains encouraging. Continued growth in domestic consumption, rising demand for processed and value-added products, increasing integration with global supply chains and investments in manufacturing capacity are expected to create opportunities across the value chain. Indias strong agricultural base further provides a foundation for expanding food processing and ingredient industries, enabling a gradual shift from primary production towards value addition, processing, product innovation and integrated supply chains .

Food Processing Industry - From Agricultural Output to Value Creation

Indias food processing industry continued to evolve during F.Y. 2025-26, supported by changing consumer preferences and the increasing need to convert Indias substantial agricultural output into higher-value products.

Urbanization, rising disposable incomes, increasing participation of organized retail and food-service channels, and greater preference for convenience and ready-to-use products are changing the way food is produced, processed and consumed. This is creating opportunities across the food value chain, ranging from primary processing to specialized ingredients and application-specific solutions.

The continued development of Indias foodprocessing ecosystem, supported by increasing investments in processing capabilities, evolving consumer preferences and greater focus on product innovation, is expected to further strengthen demand for value-added food products and ingredients. The growing adoption of processed and convenience foods is also creating opportunities for manufacturers to develop differentiated solutions tailored to specific customer and application requirements.

This evolving industry environment is expected to support demand for starch, speciality ingredients and functional food solutions, providing a favorable operating environment for ingredient manufacturers such as Sanstar Limited. The Company remains positioned to serve evolving customer requirements across food and other end-use applications through its portfolio of maize-based speciality products and ingredient solutions.

Maize - Strengthening the Raw Material Base

Maize remains a critical raw material for the starch and starch derivatives industry, making developments in domestic production and underlying demand important factors for the sector.

At the same time, the underlying demand for maize is expected to continue increasing across food, feed and industrial applications. The projected demand outlook indicates continued growth over the medium term, supported by increasing consumption across diverse end-use sectors.

India s Maize Production and Demand Outlook 1 & 2 :

Particulars	Volume
F.Y. 2024-25 Production	43.41 Mn tonnes
F.Y. 2025-26 Production	55.09 Mn tonnes
F.Y. 2025-26 Production Growth	26.9%
F.Y. 2025-26E Demand - BAU	36 Mn tonnes
F.Y. 2030-31E Demand - BAU	45 Mn tonnes

The combination of a strong domestic production base and sustained demand across multiple end- use sectors provides a favourable foundation for downstream maize processing. For the starch industry, continued demand growth supports opportunities for value-added processing, product diversification and development of application- specific maize derivatives.

For manufacturers such as Sanstar, efficient sourcing and processing capabilities remain important to convert the growing availability of maize into higher-value products and serve evolving demand across domestic and international markets.

Starch and Starch Derivatives - Expanding Opportunity

Starch and starch derivatives play an important role across the food and beverage, pharmaceutical, paper and packaging, textile, adhesive, animal nutrition and other industrial sectors. Their functional properties make them versatile ingredients for applications requiring binding, viscosity, texture, stability and processing performance.

The industry is witnessing a gradual shift towards speciality, modified and functional starch products, driven by customers increasing focus on product consistency, functionality and application-specific performance. This is encouraging manufacturers to diversify their product portfolios, strengthen application capabilities and develop customized solutions.

Indias Corn & Corn Starch Derivatives Market 1 2 3

Industry estimates indicate that Indias corn and corn starch derivatives market was valued at approximately US$4.63 billion in 2022 and is projected to reach approximately US$8.00 billion by 2030, representing a CAGR of approximately 7.1%

during 2023-2030. Corn starch derivatives accounted for the largest product segment in 2022.

The expected expansion of the market reflects the increasing adoption of corn-based ingredients across diverse food and industrial applications. For manufacturers such as Sanstar, this evolving demand provides opportunities to expand value- added product offerings, strengthen application- specific solutions and participate in higher-value segments of the starch value chain.

Export Opportunity - Expanding Global Market for Indian Maize Starch 4

Indias established maize-processing ecosystem and growing participation in international markets provide opportunities for Indian manufacturers to expand their presence across global food and industrial value chains. During F.Y. 2025-26, approximately 7 million tonnes of maize is estimated to have been utilized for starch production in India, with maize consumption for starch production expected to grow at around 5-6% over the next few years.

Indias export market for maize starch is geographically diversified, with established demand across South-East Asia, the Middle East, Africa and other international markets. The presence of Indian manufacturers across these markets reflects the growing acceptance of Indian-origin starch products and provides opportunities to deepen exports through product quality, reliable supply and application-specific solutions.

Indias broader agricultural and processed-food export ecosystem also continued to expand. During F.Y. 2025-26, exports of agricultural and processed food products were reported at approximately US$25.71 billion, reflecting Indias growing participation in international food and agricultural value chains.

1. F.Y. 2025-26 and F.Y. 2030-31 demand figures are projections under NITI Aayogs demand assessment and are not actual consumption figures. BAU (Business-as-Usual) assumes continuation of the prevailing economic growth trajectory of approximately 6.34%

2. Ministry of Agriculture & Farmers Welfare - Third Advance Estimates; NITI Aayog, Working Group Report on Demand & Supply Projections / Crop Husbandry, Agriculture Inputs, Demand & Supply 2024.

3. Grand View Research - India Corn and Corn Starch Derivatives Market.

4. FICCI-YES BANK, Indian Maize Sector, 2026 & Directorate General of

Commercial Intelligence and Statistics (DGCI&S) / APEDA data, as reported in April 2026.

For manufacturers such as Sanstar Limited, the combination of a growing domestic starch industry and established international demand provides opportunities to expand across higher-value segments of the starch and starch derivatives market. Product quality, manufacturing scale, supply reliability and application-specific capabilities remain important enablers for strengthening international market presence and supporting sustainable export growth.

Sanstar Limited- Positioned to Participate in the Emerging Opportunity

Against this evolving industry landscape, Sanstar Limited is positioned as a manufacturer of maize- based speciality products and ingredient solutions serving a diversified range of applications.

The Companys product portfolio enables it to participate across multiple segments, includinfood

and beverages, pharmaceuticals, paper and packaging, textiles, adhesives, animal nutrition and other industrial applications.

Sanstars diversified application base provides a platform for addressing changing customer requirements and participating in the industrys movement towards higher-value and speciality ingredients. During F.Y. 2025-26, the Company continued to focus on strengthening its manufacturing capabilities, improving operational efficiency, expanding its product portfolio and enhancing its ability to serve evolving customer requirements.

The Companys manufacturing footprint across Gujarat and Maharashtra, together with its processing capabilities and established customer relationships, provides a strong foundation for serving domestic and international markets.

Sanstar Limited at a Glance - F.Y. 2025-26

Key Indicator	F.Y. 2025-26
Revenue from Operations (Rs in crore) Profit Before Tax (Rs in crore) Profit After Tax (Rs in crore) Manufacturing Capacity (TPD) Core Raw Material Key Application Areas	784.63 38.44 34.45 2,350 Maize Food, Pharmaceutical & Industrial Applications

The Companys scale and diversified product applications provide it with the ability to participate in the expanding demand for functional and speciality ingredients. Its continued focus on capacity, product development and operational efficiency is expected to support its ability to capture opportunities arising from the growth of Indias food-processing and industrial ecosystem.

2. STRATEGIC POSITIONING - OPPORTUNITIES AND KEY RISKS

Opportunities	Key Risks / Challenges
Growing Demand for Value-added Ingredients	Competitive Intensity
Increasing adoption of speciality, modified and functional starches across food, pharmaceutical, personal care and industrial applications provides scope to expand higher- value products.	The Company operates in a competitive industry with domestic and international manufacturers. Increasing competition may exert pressure on pricing, customer retention, product differentiation and market share.
Capacity Expansion and Scale-up	Changing Customer Requirements
Expanded manufacturing capacity provides headroom to cater to incremental demand, strengthen customer relationships and improve operating leverage as utilization increases.	Evolving customer preferences, product specifications and application requirements may require continuous investment in product development, quality improvement and process capabilities.
Product Diversification	Global Market and Trade Conditions
Increasing focus on speciality and modified starches provides opportunities to develop application-specific products and improve product differentiation and value realization.	Changes in international trade policies, geopolitical developments, freight costs and global market conditions may affect export competitiveness and demand across certain markets.
Export Market Expansion	Availability of Substitute Ingredients

Established international demand for Indian maize starch The availability and adoption of alternative ingredients provides scope to deepen Sanstars export presence and for certain applications may affect demand for specific diversify its customer base across geographies. starch-based products.

Opportunities	Key Risks / Challenges
Technology and Process Efficiency	Market and Pricing Volatility
Process optimization, automation and resource-efficient technologies can support improvements in product consistency, yields, energy efficiency and manufacturing costs.	Fluctuations in demand and pricing across end-use industries may impact sales volumes, product realizations and overall market conditions.
Growing Food and Industrial Processing Ecosystem	Agricultural and Climate Risks
Expansion of organized food processing and increasing use of starch-based ingredients across diverse industries can support long-term demand for the Companys products.	Adverse weather conditions and variations in maize production may affect raw-material availability, quality and procurement costs.

3. SEGMENT-WISE / PRODUCT-WISE PERFORMANCE

Sanstar Limited operates as an integrated manufacturer of maize-based ingredients, comprising starches, starch derivatives and associated co-products. In accordance with Ind AS 108 - Operating Segments, the Companys business activities constitute a single operating segment, as the Chief Operating Decision Maker reviews the business as a whole for the purpose of resource allocation and performance assessment.

The Companys diversified product portfolio includes Native Maize Starch, Modified Starch, Liquid Glucose, Maltodextrin, Dextrose Monohydrate, Tapioca and maize-based coproducts, catering to a wide range of applications across food and beverages, pharmaceuticals, paper,

4. RISKS AND CONCERNS

textiles, packaging, adhesives, personal care, animal nutrition and other industrial segments.

During F.Y. 2025-26, the Company continued to focus on product diversification, operational efficiency and increasing the contribution of value- added products. Performance across product categories remained influenced by varying market conditions, demand trends and application-specific requirements.

Going forward, the Company remains focused on strengthening its value-added product portfolio, expanding application-specific offerings, improving operational efficiency and deepening its presence across domestic and international markets. These initiatives are expected to support portfolio diversification and sustainable long-term growth.

Key Risks / Concerns	Potential Impact / Mitigation
Raw Material Price Volatility
Dependence on maize exposes the Company to fluctuations in crop yields, weather conditions, seasonal availability and procurement prices.	Any disruption in the availability or procurement of maize may affect production schedules, inventory levels and manufacturing costs.
Foreign Exchange Risk
Export transactions expose the Company to fluctuations in foreign exchange rates.	Adverse currency movements may affect export realizations and profitability.

5. OUTLOOK

The medium-to-long-term outlook for Indias food processing and ingredient industry remains constructive, supported by rising consumption, increasing penetration of processed and packaged foods, expansion of organized food manufacturing and growing adoption of functional ingredients.

The starch and starch derivatives industry is expected to benefit from the increasing shift towards specialized, functional and application- specific solutions, supported by Indias strong

agricultural base and expanding food-processing ecosystem.

For Sanstar, the opportunity lies in leveraging its manufacturing scale, diversified product portfolio, multi-industry application base and focus on value- added products to participate in this growth. The Company will continue to focus on strengthening its product capabilities, improving capacity utilization, expanding its application base and deepening its presence across domestic and international markets.

At the same time, the Company remains mindful of maize price volatility, climatic conditions, energy and logistics costs, competitive intensity and global market developments. Sanstar will continue to focus on operational efficiency and prudent resource management to navigate these factors.

Overall, the Company remains focused on building a scalable and sustainable business, with continued emphasis on product innovation, value addition and market diversification to support long-term growth and stakeholder value.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established an internal control framework commensurate with the size, scale and nature of its operations, designed to provide reasonable assurance over the reliability of financial reporting, accuracy and completeness of accounting records, safeguarding of assets, prevention and detection of frauds and errors, compliance with applicable policies and regulations, and timely availability of reliable financial information.

The Companys internal control environment is supported by appropriate policies, processes and control mechanisms covering key financial and operational activities. These controls are subject to periodic internal audit, management review and monitoring, enabling timely identification of control gaps and implementation of corrective measures.

The Company has an internal audit function commensurate with the size and nature of its business in accordance with Section 138 of the Companies Act, 2013. Internal audit observations

and recommendations are reviewed by the management and the Audit Committee, with appropriate follow-up on corrective actions.

The Statutory Auditors have evaluated the Companys internal financial controls with reference to financial statements and have expressed an unmodified opinion that the Company had, in all material respects, adequate internal financial controls with reference to financial statements and that such controls were operating effectively as at March 31, 2026.

During the year, the statutory audit also did not identify any material weakness in the Companys internal financial control framework. The audit procedures further reported that the Company maintained appropriate records relating to Property, Plant and Equipment and inventories, and no material discrepancies were identified during the verification procedures.

The Company also maintained the required audit trail/edit log mechanism in its accounting software during the year. Based on the statutory auditors procedures, no instance of tampering with the audit trail was identified.

The Company remains committed to continuously strengthening its internal control environment through periodic evaluation, internal audit, management oversight and process improvements. The Board believes that the Companys internal control systems are adequate and operating effectively to support its operations, safeguard its assets and ensure the reliability of its financial reporting.

7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During F.Y.2025-26, the Companys financial performance was influenced by prevailing market conditions, product-wise demand and realizations, raw material costs and the overall operating environment. The Company continued to focus on operational efficiency, product diversification, capacity utilization and strengthening its value-added product portfolio.

FINANCIAL PERFORMANCE

(Rs in crore, except EPS)

Particulars	F.Y.2025-26	F.Y.2024-25	Change(%)
Revenue from Operations	784.63	957.45	(18.05)
Other Income	11.78	14.01	(15.92)
Total Income	796.41	971.46	(18.02)
Total Expenses	757.97	916.43	(17.29)
Profit Before Tax (PBT)	38.44	55.03	(30.15)
Tax Expense	3.99	11.23	(64.47)
Profit After Tax (PAT)	34.45	43.80	(21.35)
Basic & Diluted EPS	1.89	2.58	(26.74)
Note: Figures are based on the audited financial statements of the Company for F.Y. 2025-26.

Financial Performance Commentary

The Company recorded Revenue from Operations of Rs784.63 crore during F.Y. 2025-26 compared with Rs957.45 crore in F.Y. 2024-25. The movement in revenue was primarily influenced by product-wise demand, realizations and prevailing market conditions across the Companys key product categories.

Profit Before Tax stood at Rs38.44 crore, compared with Rs55.03 crore in the previous year. Profitability during the year reflected the impact of lower revenue,

OPERATIONAL PERFORMANCE

product realizations and the cost environment. The Company continued to focus on cost discipline, operational efficiency and product-mix optimization.

Profit After Tax was Rs34.45 crore, compared with Rs43.80 crore in F.Y. 2024-25. Despite the moderation in profitability, the Company continued to strengthen its operating platform and focus on increasing the contribution of value-added products, which remains an important part of its medium-to-long-term strategy.

(Rs in crore, except EPS)

Particulars	F.Y.2025-26	F.Y.2024-25	Change(%)
Domestic Sales	506.63	601.59	(15.78)
Export Sales	265.66	339.96	(21.86)
Total Sales	772.29	941.55	(17.98)

During F.Y. 2025-26, domestic sales contributed Rs506.63 crore, while export sales contributed Rs265.66 crore. The Company continued to maintain a diversified market presence across domestic and international markets, providing a broad customer base across multiple applications and geographies.

Overall Assessment

The Companys F.Y. 2025-26 performance reflects a year of moderation in revenue and profitability amid varying product and market conditions, while the business continued to strengthen its underlying operating platform. The growth in selected value- added product categories demonstrates the potential for further product-mix diversification.

Going forward, the Company remains focused on improving capacity utilization, strengthening the contribution of value-added products, enhancing operational efficiency and expanding its domestic and international customer base. These initiatives are expected to support improved operating performance and strengthen the Companys position for sustainable growth over the medium to long term.

8. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

Human resources remain an important enabler of the Companys operations and growth. During F.Y. 2025-26, the Company continued to focus on employee capability, workplace safety, employee engagement and maintaining a positive work environment.

The Company continued to undertake employee training and skill-development initiatives to support operational and functional requirements. Given the manufacturing-oriented nature of its operations, emphasis was also placed on workplace safety, safety awareness and adherence to applicable safety practices.

The Company maintains a workplace culture based on professionalism, teamwork, mutual respect and equal opportunity. The Company has implemented a Prevention of Sexual Harassment (POSH) Policy in accordance with applicable law and remains committed to providing a safe and respectful workplace.

Industrial Relations

Industrial relations remained cordial and harmonious during F.Y.2025-26. The Company continued to encourage constructive communication between employees and management, supporting operational continuity and a positive workplace environment.

The Company continues to focus on strengthening its human resource capabilities in line with its evolving operational requirements, while fostering a culture of accountability, collaboration and continuous improvement.

The Management appreciates the contribution and commitment of employees across the organization towards the Companys operations and growth.

9. SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

The key financial ratios of the Company for F.Y. 2025-26, as compared with F.Y. 2024-25, are set out below:

Sr. No.	Ratio	F.Y.2025-26	F.Y.2024-25	Variance (%)	Reason for Variance
1	Current Ratio	5.50	8.99	(39%)	Decrease primarily due to utilization of cash and bank balances generated from the fresh issue of shares in the previous year for the intended purposes.
2	Debt Equity Ratio	0.03	0.04	(30%)	Decrease due to reduction in borrowings during the year.
3	Debt Service Coverage Ratio	12.57	2.57	390%	Increase primarily due to lower interest and principal repayments during the year.
4	Return on Equity (%)	5.09	9.60	(47%)	Decrease primarily due to lower Profit After Tax during the year.
5	Inventory Turnover Ratio	11.19	8.35	34%	Improvement due to a proportionately higher reduction in average inventory compared with the reduction in Cost of Goods Sold.
6	Trade Receivables Turnover Ratio	7.93	8.68	(9%)	No material change.
7	Trade Payables Turnover Ratio	21.98	11.36	94%	Increase primarily due to reduction in purchases and lower average trade payable balances.
8	Net Capital Turnover Ratio	2.28	3.90	(42%)	Decrease due to lower revenue and an increase in average working capital.
9	Net Profit (%)	4.39	4.57	(4%)	No material change
10	Return on Capital Employed (%)	5.57	9.22	(40%)	Decrease primarily due to lower EBIT generated from capital employed during the year.
11	Return on Investment (%)	3.82	12.25	(69%)	Decrease mainly due to lower income from investments and higher average investment balances during the year.

Management Commentary

During F.Y. 2025-26, movements in the Companys key financial ratios were primarily influenced by changes in profitability, working capital, borrowings and utilization of funds raised through the fresh issue of shares.

The Companys liquidity position remained comfortable, although the Current Ratio moderated from 8.99 to 5.50 following utilization of funds raised in the previous year. The reduction in borrowings resulted in an improvement in the Debt Equity Ratio, while the higher Debt Service Coverage Ratio reflects lower debt servicing requirements during the year.

The improvement in Inventory Turnover and Trade Payables Turnover reflects more efficient working capital management. In contrast, the Net Capital Turnover Ratio moderated in line with the movement in revenue and average working capital.

Profitability-linked ratios, including Return on Equity and Return on Capital Employed, declined during the year primarily due to lower profitability. The Return on Investment also moderated due to lower investment income and higher average investment balances.

The Trade Receivables Turnover Ratio and Net Profit Ratio remained broadly stable, indicating relative

stability in collection efficiency and net profitability margins. Overall, the ratio movements are consistent with the Companys financial and operating

performance during F.Y. 2025-26 and should be viewed in conjunction with the financial

performance and operational developments discussed elsewhere in this report.

10. RETURN ON NET WORTH

During F.Y. 2025-26, the Companys Return on Net Worth stood at 5.09%, as compared to 9.60% in F.Y. 2024-25, representing a decrease of approximately 47%. The decrease was primarily attributable to the lower Profit After Tax during the year, resulting in a lower return generated on the Companys net worth.

Particulars	F.Y.2025-26	F.Y.2024-25	Change (%)
Return on Net Worth	5.09%	9.60%	(47%)

The Company continues to focus on improving operational efficiency, strengthening its product mix and enhancing profitability, with the objective of improving returns on shareholders funds over the long term.

11. CAUTIONARY STATEMENT:

This report on Management Discussion and Analysis includes forward-looking statements, which are predictions, expectations, projections, or estimates about the Companys objectives. These statements are based on certain assumptions and expectations of future events. However, actual results may differ from these statements due to various factors such as changes in government regulations, tax laws and other statutes. Additionally, unforeseen events such as force majeure could affect the actual result. It is important for readers to understand the context in which these statements are made and that they may not reflect future outcomes accurately.

For and on behalf of the Board of Directors Sanstar Limited

Mr. Gouthamchand Sohanlal Chowdhary Chairman and Managing Director DIN: 00196397	Mr. Sambhav Gautam Chowdhary Joint Managing Director DIN: 01370802
Date: 13 th August, 2026 Place: Ahmedabad