Shree Pushkar Chemicals & Fertilizers Ltd Management Discussions

(A) Industry structure and developments:

1. Economic Performance

India remained one of the fastest growing major economies during the financial year 2025-26, supported by strong consumption, rising investments, and continued expansion across the manufacturing and services sectors. According to the Economic Survey 2025-26, real GDP growth for the financial year 2026 is estimated at 7.4%, driven by the combined strength of consumption and investment. Private Final Consumption Expenditure increased to 61.5% of GDP, reflecting strong household spending supported by stable employment conditions, lower inflation and improving purchasing power. Investment activity also remained favourable, with Gross Fixed Capital Formation accounting for 30.0% of GDP

Inflationary pressures eased considerably during the financial year 2025-26. Headline consumer inflation declined during the year, supported by favourable agricultural output, improved food supplies and lower food prices. The Reserve Bank of India estimated average CPI inflation at 2.1% for the financial year 2025-26. Lower inflation, along with policy rate reductions and improved liquidity conditions, supported economic activity during the year.

Indias external sector remained stable despite global trade uncertainties. Total exports continued their upward trajectory, with the country recording a 5.8% increase in exports during April, 2025 to February, 2026. Services trade remained a key strength, with the services trade surplus increasing by 17.7% during the period. Foreign investment activity also remained favourable, with Foreign Direct Investment equity inflows increasing by 21.7% year-on-year during the first nine months of the financial year 2025-26. The signing and conclusion of trade agreements with the United Kingdom, Oman, New Zealand and the European Union further strengthened Indias trade outlook. Supported by favourable macroeconomic fundamentals, continued policy reforms and growing participation in global value chains, India remains well placed to sustain economic growth in the years ahead.

2. Chemical Industry

The chemical industry continues to be a key contributor to Indias manufacturing sector, supplying essential inputs to industries such as textiles, agriculture, pharmaceuticals, automobiles, construction and consumer goods. India is the worlds sixth-largest chemical producer and the third largest in Asia, manufacturing more than 80,000 products across bulk chemicals, specialty chemicals, petrochemicals, agrochemicals and fertilisers. Production of major chemicals and petrochemicals increased from 45.6 million metric tonnes in the financial year 2015-16 to 58.6 million metric tonnes in the financial year 2024-25, reflecting the steady expansion of the sector and strengthening Indias position as a competitive global manufacturing hub.

During the financial year 2025-26, the global chemical industry operated in a dynamic environment characterised by evolving trade dynamics, raw material price volatility and changing demand across end-user industries. Despite these factors, Indias chemical industry continued to benefit from strong domestic demand, increasing integration with global supply chains and sustained demand from key sectors such as textiles, pharmaceuticals and agriculture. Growing emphasis on sustainability and supply chain diversification also continued to support opportunities for Indian manufacturers.

Government initiatives continued to support the sectors long-term development. The Union Budget for the financial year 2026-27 announced the establishment of three dedicated Chemical Parks under the BHAVYA Rasayan scheme to strengthen industrial infrastructure, improve supply chain efficiency and encourage investments across the chemical value chain. According to NITI Aayog, Indias chemical sector has the potential to reach US$1 trillion by 2040, supported by expanding domestic demand, increasing exports and continued investments across the manufacturing value chain. These structural drivers are expected to strengthen Indias position across the global chemicals value chain and create long-term opportunities across specialty chemicals, intermediates and other value-added chemical products.

3. Fertiliser Industry

The fertiliser industry continues to play a vital role in supporting Indias agricultural productivity, food security and rural economy. Supported by favourable agricultural activity and continued policy support, the sector remains an integral part of Indias agricultural ecosystem. According to the Third Advance Estimates released by the Ministry of Agriculture & Farmers Welfare, Indias foodgrain production is estimated at a record 376.56 million tonnes during 2025-26, compared with 353.96 million tonnes in the previous year. Higher production of key crops, including rice, wheat, maize and oilseeds, reflected favourable agricultural conditions and continued to support demand for fertilisers.

During the financial year 2025-26, the industry operated in a challenging environment amid elevated prices of key raw materials such as ammonia, phosphoric acid, sulphur and potash, driven by geopolitical developments and supply chain disruptions. Despite these challenges, timely government interventions and diversified sourcing ensured adequate fertiliser availability across the country. Urea availability was 450.79 lakh metric tonnes against a requirement of 381.45 lakh metric tonnes, while DAP availability reached 121.72 lakh metric tonnes against a requirement of 110.42 lakh metric tonnes, ensuring sufficient supplies during the key cropping seasons.

Government policy continued to support the sector through the Nutrient Based Subsidy (NBS) scheme for phosphatic and potassic fertilisers. For the Kharif 2026 season, the Government approved an estimated subsidy outlay of Rs. 41,533.81 crore to mitigate the impact of elevated international raw material prices while maintaining affordability for farmers. Continued policy support, increasing focus on balanced nutrient management and sustained agricultural demand are expected to support the long-term growth of the fertiliser industry, while creating opportunities for greater adoption of value-added and specialty fertilisers.

(B) Opportunities and Threats:

1. Opportunities

i. Growth of Indias Chemical Industry

Indias chemical industry continues to benefit from increasing demand, expanding export opportunities and greater participation in global supply chains. According to NITI Aayog, the Indian chemical sector has the potential to reach US$1 trillion by 2040, creating opportunities across specialty chemicals, intermediates and other value-added chemical products.

ii. Increasing Demand for Balanced Crop Nutrition

Higher agricultural output, rising foodgrain production and continued government focus on balanced nutrient management and soil health are expected to support long-term demand for fertilisers. Increasing adoption of value-added and specialty fertilisers also provides opportunities for product diversification and market expansion.

iii. Manufacturing Capacity Expansion

The Companys ongoing expansion projects across its Chemicals and Fertilisers businesses, together with backward integration initiatives, are expected to enhance manufacturing capabilities, improve operating efficiencies and support future growth.

iv. Renewable Energy and Manufacturing Efficiency

Continued investments in captive solar power and integrated manufacturing operations are expected to improve energy efficiency, optimise operating costs and strengthen sustainable manufacturing practices.

2. Threats

i. Raw Material Price Volatility

The Company remains exposed to fluctuations in the prices and availability of key raw materials such as sulphur, ammonia, phosphoric acid and rock phosphate. Changes in international commodity prices, freight costs and foreign exchange movements may impact input costs and profitability.

ii. Geopolitical and Supply Chain Disruptions

Geopolitical developments and disruptions in global supply chains may affect the sourcing, availability and pricing of imported raw materials, resulting in operational challenges and increased procurement costs.

iii. Regulatory and Policy Changes

The Chemicals and Fertilisers industries continue to operate under evolving environmental regulations and government policies. Changes in environmental compliance requirements, fertiliser subsidy mechanisms and nutrient-based pricing policies may influence industry dynamics and require continued investments in compliance and sustainable manufacturing practices.

iv. Competitive and Agricultural Risk

Increasing competition across the Chemicals and Fertilisers industries, together with fluctuations in agricultural demand arising from changing weather patterns and monsoon variability, may influence market conditions and pricing across both businesses.

(C) Segment-wise or Product-wise performance:

The standalone vertical-wise quantitative sales for the financial year 2025-26 and the financial year 2024-25 are presented below:

(D) Outlook:

The Company remains focused on strengthening its Chemicals and Fertilisers businesses through disciplined execution, capacity expansion and operational excellence. While the operating environment continues to be influenced by raw material price volatility and geopolitical developments, the Company believes that the long-term fundamentals of both businesses remain favourable, supported by increasing demand from end-user industries, rising agricultural productivity and continued policy support.

The ongoing expansion projects at Ratnagiri and Meghnagar will remain key strategic priorities. These investments are expected to enhance manufacturing capacities, strengthen backward integration and improve operational efficiencies, enabling the Company to support future growth across both business segments. The Company will continue to leverage its integrated manufacturing platform to improve resource utilisation, optimise costs and strengthen operational performance.

The Company also continues to expand its renewable energy footprint. The company remains committed to maintaining a prudent capital allocation framework. The ongoing expansion programme is being supported primarily through internal accruals, supplemented by preferential allotment and limited external borrowings where appropriate. Supported by a strong liquidity position and a conservative capital structure, the Company remains focused on executing its long-term growth strategy while maintaining financial discipline and creating sustainable value for stakeholders.

(E) Risks and concerns:

The Company navigates inherent industry risks, such as raw material price volatility for phosphate and potash, and unpredictable monsoon patterns that can impact agricultural demand. However, we actively safeguard our margins and supply chain through established long-term supply agreements and strong supplier diversification. While climatic variability remains a factor, our implemented risk mitigation strategies ensure resilient, consistent performance. Furthermore, as environmental and compliance regulations tighten, our capacity to meet these standards provides us with a distinct competitive advantage over smaller industry players.

The Chemicals and Fertilizers industry operates in a highly complex and scrutinized environment where companies must constantly balance operational efficiency with profound safety, environmental, and regulatory risks. Core challenges include managing the severe hazards of volatile and toxic substances to prevent catastrophic accidents, while simultaneously addressing intense pressure to reduce their environmental footprint, such as mitigating greenhouse gas emissions and harmful agricultural.

(F) Internal control systems and their adequacy:

The Company has established robust internal control systems designed to ensure the orderly and efficient conduct of its business, adherence to policies, the safeguarding of assets, and the prevention and detection of fraud and errors. These controls also help ensure the accuracy and completeness of accounting records and the timely preparation of reliable financial information in compliance with applicable laws and regulations.

The Statutory Auditors, while conducting the statutory audit, review and evaluate the internal controls, with their observations being discussed with the Audit Committee of the Board. The Company continues to monitor its internal controls through regular internal audits and by leveraging ERP systems to enhance operational oversight. These measures collectively support a framework of sound corporate governance and compliance across its business activities.

(G) Discussion on financial performance with respect to operational performance

During the financial year 2025-26, Shree Pushkar Chemicals & Fertilisers Limited continued to strengthen its operational capabilities through focused execution across its Chemicals and Fertilisers businesses. The Company made steady progress on its ongoing expansion and integration initiatives aimed at enhancing production capacity, improving operational efficiencies and supporting long-term growth. As of 31^st March, 2026, the Company had incurred Rs. 189 crore towards its planned capital expenditure programme of Rs. 512 crores, with the investments funded through a combination of internal accruals and preferential allotment. These investments reflect the Companys disciplined approach to capital deployment and long-term value creation.

During the year, the Company also commissioned a 1.1 MW DC solar power plant at Hisar, Haryana, increasing its total installed solar capacity to 10.6 MW DC.

Subsequent to the year, the 10 MW DC solar power project at Nanded, Maharashtra, also commissioned.

These initiatives strengthen the Companys renewable energy capabilities, improve energy efficiency and reinforce its commitment to sustainable operations.

(h) Material developments in Human Resources/Industrial Relations front, including number of people employed:

As on 31^st March 2026, the Company employed 536 individuals across its various facilities in India. Shree Pushkar considers its employees its most valuable asset and remains committed to fostering talent through continuous development, engagement, and retention initiatives. The Company has undertaken various programs to strengthen employee capabilities and promote a culture of growth and inclusivity.

Amidst the expanding business operations, industrial relations remained cordial during the year, with no significant disputes reported. The Companys focus on maintaining a motivated and skilled workforce continues to support its long-term strategic objectives.

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

(J) Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof:

CAUTIONARY STATEMENT: Some of the statements in the report may be forward looking and are stated as required by applicable laws & regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance and outlook. The Companys Performance is dependent on several external factors such as performance of monsoons, government policy, fluctuation of prices of raw material and finished products and also their availability, which could adversely affect the operations of the Company.