Sukhjit Starch & Chemicals Ltd Management Discussions

Economic Overview

Global Economy 1

Overview

The global economy remained resilient during CY 2025, sustaining a steady growth trajectory despite a complex macroeconomic environment characterised by tight financial conditions, evolving trade policies and persistent geopolitical uncertainties. Global growth stood at 3.4%, supported by continued strength in the services sector, stable labour markets in major economies and sustained investments in digital infrastructure and emerging technologies.

Growth in advanced economies was at 1.9%, reflecting the impact generated from elevated interest rates. Investment activity remained below historical levels, as high borrowing costs and cautious business sentiment constrained capital expenditure. In contrast, Emerging Markets and Developing Economies (EMDE) registered growth of 4.3%, driven by resilient domestic consumption, infrastructure investments and favourable demographic trends, particularly across Asia.

Global inflation moderated during the year, supported by easing commodity prices and normalising logistics costs. Central banks largely maintained a cautious monetary stance, keeping interest rates elevated for an extended period. This influenced input costs, working capital cycles and capital expenditure decisions across manufacturing sectors, including agro-processing industries.

From an agro-industrial perspective, global economic conditions continued to influence both demand and input dynamics across the starch value chain. Stable consumption trends in food and beverages, along with expanding pharmaceutical and industrial applications, supported steady demand for starch and its derivatives. Industrial activity in sectors such as paper, textiles and packaging also remained broadly stable.

On the supply side, agricultural commodity markets experienced moderate volatility due to weather-related disruptions, shifting crop patterns and evolving trade policies. However, improved supply chain efficiencies and relatively stable global output helped contain extreme price fluctuations compared to prior periods.

Global trade exhibited a gradual recovery, supported by improving supply chain conditions and steady cross-border demand. Nevertheless, ongoing geopolitical tensions and increasing emphasis on supply chain diversification continued to reshape trade flows.

Outlook

The global economy is expected to maintain a stable growth trajectory over the near term, with GDP projected at 3.1% in 2026 and 3.2% in 2027. However, the outlook remains characterised by persistent inflationary pressures acrossseveraleconomies,drivenbysupply-sideconstraints, energy price volatility and tight labour markets.

Monetary policy is expected to remain relatively restrictive, which may moderate investment activity and consumption in the near term. Global trade is anticipated to recover gradually, however, the pace of recovery is likely to remain uneven amid persistent geopolitical tensions, including the US-Iran conflict, as well as trade frictions among major economies arising from sanctions and tariff measures.

For the starch and agro-processing sector, demand is expected to remain resilient across food, pharmaceutical and industrial applications. At the same time, industry performance will continue to be influenced by raw material dynamics, particularly given the impact of climatic conditions and ethanol-linked demand. In India, structural drivers, such as growth in processed food, pharmaceuticals and exports, are expected to support industry expansion, alongside a gradual shift towards higher value-added products.

Indian Economy

Overview

India remained one of the fastest-growing major economies globally, supported by structural strengths such as a large consumption base, infrastructure development and ongoing policy reforms. The economy sustained a strong growth trajectory during FY 2025-26, with real GDP growth standing at 7.7% 2 , reflecting broad-based momentum across key sectors. Growth was driven by robust domestic demand, continued government capex and improving performance in manufacturing, construction and services.

GDP Growth Trend in India (%)

Source: MoSPI, RBI

The agriculture sector stable support during the year, aided by broadly normal monsoon conditions and improved crop output across key segments. Favourable rainfall distribution enabled higher sowing levels and stable yields, particularly for cereals and coarse grains, including maize, a critical input for agro-processing industries. However, regional variability in rainfall and intermittent weather disruptions continued to influence crop productivity and supply dynamics. Ongoing government initiatives focused on irrigation, crop diversification and strengthening agri-value chains further enhanced sectoral resilience.

On the external front, exports remained stable, with total exports reaching USD 860.09 billion during FY 2025-26 3 , despite mixed global demand conditions. However, exports of some items including Maize Starch experienced a contraction during the year under reference. Inflationary pressures moderated during the year, supported by policy measures undertaken by the Reserve Bank of India and easing food price volatility. In addition, sustained policy emphasis on ethanol blending, food processing and rural development influenced demand-supply dynamics within

Source: PIB - Ministry of Commerce & Industry

Outlook

The Indian economy is expected to sustain its growth momentum, with real GDP for FY 2026-27 projected in the range of 6.6% 4 . This outlook is supported by strong domestic demand, continued government focus on infrastructure development and improving private sector investment.

Capital expenditure remains crucial to long-term infrastructure development, with a budgetary allocation of _12.2 lakh crores for FY 2026-27 5 . Growth is expected to remain robust relative to global peers, underpinned by expansion across manufacturing, services and construction sectors. Inflation is likely to remain within a manageable range, aided by prudent monetary policy, while external sector performance is likely to improve gradually in line with the recovery in global demand. However, having regard to geo-political situation & uptick in global uncertainties, the inflation may rise.

From an agricultural perspective, the outlook remains cautious, with forecasts indicating a below-normal monsoon, which may introduce uncertainty around crop output and rural demand. Continued government focus on irrigation, crop productivity and agri-value chain development is expected to provide structural support, although near-term variability cannot be ruled out.

Policy initiatives such as ethanol blending are likely to influence crop allocation patterns, particularly for maize, thereby impacting input availability for agro-processing industries. Overall, steady domestic consumption and ongoing policy support are expected to provide a relatively stable operating environment, albeit with some near-term risks arising from agricultural variability.

2 https://www.mospi.gov.in/uploads/latestReleases/latest_release_1780655857536_5ac01869-ca4a-422d-b7a7-57b81da60932_Press_Note_on_GDP_ Estimates_for_Q4_2025-26_and_PE_FY_2025-26_F.pdf 3 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2252272r=3&lang=1 4 https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR3855508EB4A59FF46F9B57BBA200AA250B8.PDF

5 https://www.pib.gov.in/PressReleasePage.aspx?PRID=2222521r=3&lang=1

Industry Overview

Global Starch Industry

Overview

The global starch industry remains a critical segment within the agro-processing and speciality ingredients value chain, with widespread applications across food and beverages, pharmaceuticals, paper, textiles and other industrial sectors.

The global starch market has witnessed steady growth in recent years, reaching approximately USD 68.1 billion in 2025 and estimated to grow to USD 71.69 billion in 2026, at a compound annual growth rate (CAGR) of 5.3%. 6 This expansion is supported by rising consumption of processed foods, increasing industrial applications of starch-based inputs and intensifying demand for functional and texture-enhancing ingredients.

North America continues to hold a significant share of the global market, supported by a well-established agricultural and processing ecosystem. Meanwhile, Asia-Pacific is emerging as a key growth region, driven by rising population, rapid urbanisation and increasing consumption of packaged and convenience foods.

Key industry trends indicate a gradual shift towards higher-value and speciality starch derivatives. This transition is driven by growing preference for clean-label and plant-based ingredients, as along with advancements in starch modification technologies. Innovations such as chemical-free processing and the development of functional starches with enhanced stability and performance characteristics are gaining traction. In addition, sustainability considerations, including the use of starch in biodegradable packaging solutions, are becoming increasingly relevant.

From a supply-side perspective, the industry remains closely linked to agricultural output, particularly maize, which dominates global starch production due to its cost efficiency and scalability.

Outlook

The global starch industry is expected to maintain a steady growth trajectory over the medium term, supported by diversified end-use demand and evolving consumer preferences. According to industry estimates, the global starch market is projected to reach around USD 88.9 billion by 2030, growing at a CAGR of 5.5%. 7

This growth is underpinned by sustained expansion in the food and beverage sector, rising demand for natural sweeteners and functional ingredients and increasing adoption across pharmaceutical and industrial applications.

Looking ahead, key structural drivers such as increasing consumption of processed and convenience foods, growth in pharmaceutical manufacturing and rising demand for clean-label and plant-based ingredients are expected to support industry expansion. Technological advancements in starch modification and expanding applications in biodegradable materials and packaging further strengthen long-term prospects.

However, the industry remains closely tied to agricultural fundamentals, particularly maize availability and pricing. Raw material volatility and competing uses, such as biofuel production, are expected to continue influencing cost structures. Overall, the industry is likely to witness stable growth, with a gradual shift towards higher-value speciality and modified starch products.

Indian Starch Industry

Overview

The Indian starch and starch derivatives industry is witnessing steady growth, supported by stable demand across food, pharmaceutical and industrial applications. The market was valued at approximately USD 3.45 billion in 2025, reflecting robust structural demand in the domestic market. 8

The food and beverage segment remains the largest consumer, accounting for nearly half of total demand. This is driven by expansion in the processed food industry and evolving consumption patterns. At the same time, the pharmaceutical sector is emerging as the fastest-growing segment, supported by Indias position as a global hub for generic manufacturing and the increasing use of starch-based excipients in drug formulations.

Industrial applications, particularly in paper, packaging and adhesives, continue to provide a stable demand base. This is further supported by the growth of e-commerce and increasing adoption of sustainable packaging solutions.

Maize remained the dominant raw material in the Indian starch and starch derivatives market, accounting for 62.05% of the market in 2025. 9 Sector growth is further influenced by government initiatives such as ethanol blending, which is driving demand for maize-based derivatives, along with increasing adoption of clean-label and modified starches across applications. However, the industry remains exposed to raw material price volatility, capacity constraints in wet milling and quality-related challenges, which may impact margins.

6 https://www.thebusinessresearchcompany.com/report/starch-derivatives-global-market-report 7 https://www.thebusinessresearchcompany.com/report/starch-derivatives-global-market-report 8 https://www.mordorintelligence.com/industry-reports/india-starch-and-starch-derivative-market 9 https://www.mordorintelligence.com/industry-reports/india-starch-and-starch-derivative-market

Outlook

The Indian starch and starch derivatives industry is expected to witness decent growth over the medium term, supported by strong demand across key end-use sectors, including food, pharmaceutical and industrial. The market is projected to grow from approximately USD 3.7 billion in 2026 to USD 5.25 billion by 2031, registering a CAGR of 7.25%. 10 This reflects favourable structural demand and increasing penetration of value-added products.

Growth is expected to be driven by expanding processed food consumption, rising adoption of clean-label and modified starches, and rising demand from pharmaceutical and nutraceutical applications. In addition, policy support such as ethanol blending, growth in e-commerce-driven packaging demand and increasing use of starch-based biodegradable materials are expected to further strengthen industry prospects.

However, the outlook remains sensitive to maize availability and pricing, given its dominant share in raw material sourcing. Challenges related to capacity constraints and input cost volatility may also persist. Overall, the industry is well-positioned for sustained growth, with a gradual shift towards higher-margin speciality starch products.

Opportunities across Industry

Food Processing and FMCG Industry

The food processing and FMCG sectors remain the largest demand drivers for starch and its derivatives. Rising consumption of packaged, convenience and ready-to-eat foods, along with changing dietary patterns and rapid urbanisation, is driving demand for functional ingredients such as thickeners, stabilisers and texturisers.

In addition, increasing preference for clean-label, low-fat and low-calorie products is accelerating the adoption of modified and speciality starches. This trend is particularly evident across bakery, dairy, confectionery and processed food applications.

Pharmaceutical and Nutraceutical Industry

The pharmaceutical sector presents a significant growth opportunity, supported by Indias strong position as a global hub for generic drug manufacturing. Starch derivatives are widely used as excipients, binders and disintegrants in drug formulations.

Furthermore, the expanding nutraceutical and wellness segment is driving demand for functional ingredients, creating opportunities for specialised starch products with enhanced performance characteristics.

Paper, Packaging and Adhesives Industry

Demand from the paper and packaging sector remains stable, supported by growth in e-commerce, organised retail and sustainable packaging solutions. Starch is extensively used in paper manufacturing for surface sizing and coating, as well as in adhesives for packaging applications.

Increasing focus on biodegradable and eco-friendly materials is expected to further drive demand for starch-based solutions as a substitute for synthetic chemicals.

Textile Industry

The textile sector continues to utilise starch derivatives in sizing, finishing and printing applications. With India being a major textile producer and exporter, recovery in global demand along with continued government support, is expected to drive consumption of starch-based inputs. Additionally, increasing emphasis on sustainable and natural processing agents is likely to support demand for starch derivatives.

Animal Nutrition and Feed Industry

The animal feed industry presents a growing opportunity, driven by rising demand for protein consumption and increasing focus on livestock productivity. Starch derivatives are used as energy sources and binding agents in feed formulations.

With growing demand for meat and dairy products, coupled with a shift towards scientifically formulated feed, the need for high-quality feed ingredients is expected to increase.

Personal Care and Cosmetics Industry

The personal care and cosmetics sector is witnessing increasing adoption of starch derivatives, particularly in natural and plant-based formulations. Starch is widely used in products such as powders, creams and emulsions due to its absorbent and stabilising properties. Rising consumer preference for sustainable and chemical-free products is expected to support demand in this segment.

Export Markets

Barring the present geo-political uncertain situation, Indias cost competitiveness and strong agricultural base positions it as a viable exporter of starch and its derivatives. Increasing demand from emerging markets across Asia, Africa and the Middle East, along with global supply chain diversification, is expected to create opportunities for export growth in the years to come.

Threats

Raw material volatility and ethanol-led demand shift

The starch industry remains highly dependent on maize as a primary raw material, making it vulnerable to fluctuations in crop output, climatic conditions and policy-driven demand. This continues to exert pressure on input costs and margin stability.

Limited capacity in speciality and value-added starches

A gap between demand and supply of high-value, application-specific starch products poses a challenge for industry players. This may limit the ability to meet evolving customer requirements and capturing higher-margin opportunities.

Intense competition and pricing pressures

The Indian starch industry is characterised by the presence of both organised and unorganised players. This competitive intensity leads to pricing pressures, particularly in commoditised product segments and impacts profitability.

Global trade and demand uncertainties

The industry remains exposed to global trade dynamics, including geopolitical tensions, shifting trade policies and fluctuations in export demand. The risk of low-cost imports and changes in tariff structures can affect domestic competitiveness.

Company Overview

Established in 1943, The Sukhjit Starch and Chemicals Limited is among Indias oldest and leading manufacturers of starch and its derivatives, with a well-established presence across diverse end-use industries. Over the decades, the Company has built long-standing relationships with reputed customers and brands, supported by a consistent focus on quality, product innovation and reliable supply.

The Company offers a comprehensive and diversified product portfolio, including maize starch, dextrins, pre-gelatinised starch, liquid glucose, high maltose syrup (HMS), malto dextrin powder, dextrose monohydrate, anhydrous dextrose, sorbitol 70% and co-products such as maize gluten, maize germ, maize oil and maize bran (cattle feed). This broad product mix enables the Company to cater to a wide range of industries, including food and beverages, paper and packaging, pharmaceuticals, textiles, personal care, FMCG and animal nutrition.

Sukhjit operates an integrated manufacturing network, with facilities located at Rehana Jattan, Phagwara in Punjab, at Nizamabad in Telangana, at Malda in West Bengal and at Gurplah in Himachal Pradesh, with an overall maize grinding capacity of 1,600+ TPD. Its operations adhere to stringent quality and safety standards, as reflected in certifications such as FSSAI, GMP, ISO 9001:2015, Halal, Kosher, Sedex and FSSC 22000. With a strong manufacturing base, diversified product portfolio and multi-sector presence, the Company is well-positioned to capitalise on growth opportunities in the starch and agro-processing industry.

Strengths

Integrated operations with a diversified product portfolio

The Company operates across the starch value chain with a diversified portfolio comprising native starch, modified starch and value-added derivatives catering to multiple end-use industries, including food, pharmaceuticals, FMCG, paper and textiles. This diversification mitigates risks arising from demand fluctuations in any single sector and supports stable revenue generation.

Strong presence across multiple end-user industries

Established relationships across key sectors such as FMCG, food processing, pharmaceuticals and industrial applications provide a diversified demand base. This multi-industry presence enhances business resilience and enables the Company to benefit from growth across sectors.

Strategic sourcing and proximity to the raw material base

Given the criticality of maize as a primary input, the Company benefits from established sourcing networks and proximity to key maize-growing regions. This supports procurement efficiency, reduces logistics costs and ensures relatively stable raw material availability compared to peers with less integrated sourcing capabilities.

Focus on value-added and speciality products

The Company has been progressively increasing its focus on higher-margin value added products, in line with evolving industry demand for application-specific and functional ingredients. This strategic shift supports margin expansion and strengthens competitiveness in value-added segments.

Established manufacturing capabilities and operational experience

With a longstanding presence in the starch industry, the Company has developed strong operational expertise, process efficiencies and quality standards required to serve diverse industrial applications. This provides a competitive advantage in terms of consistency, scalability and customer retention.

Human Assets

The Company recognises its human capital as a key enabler of operational efficiency and long-term growth. It fosters a performance-driven and inclusive work environment, with a strong focus on capability building through structured training and development initiatives. Employees are provided opportunities for skill enhancement, cross-functional exposure and career progression, supporting organisational agility and operational depth.

TheCompanyplacessignificantemphasisonemployeewell-being, health and safety, supported by established systems, regular training and preventive measures. It is committed to maintaining a culture of inclusivity, equal opportunity and merit-based growth, while encouraging collaboration and knowledge sharing. A stable work environment and competitive compensation framework have contributed to strong employee retention across all levels.

Research and Development

The Company continues to place strategic emphasis on research and development as a key enabler of product innovation and application development. Its centralised R&D facility at Rehana Jattan (Phagwara) supports all manufacturing units and focuses on developing customised, application-specific starch solutions across end-use industries.

R&D efforts are closely aligned with customer requirements, enabling co-development of products with food processors, pharmaceutical companies and industrial clients. This strengthens the Companys position as a solution-oriented supplier.

The notable R&D activities include:

Development of high-yield maize varieties in collaboration with agricultural universities, leading seed companies and progressive farmers.

Construction of cost-effective solutions for the paper industry, with a focus on reducing environmental impact.

Customisation of sweetener formulations to meet specific customer requirements.

Collaboration with processed food manufacturers for supporting healthier product offerings.

Outlook

The Company expects a gradual improvement in operating performance over the near to medium term, supported by stabilising raw material dynamics and a recovery in demand across major end-user industries.

Development of solutions catering to sugar-free applications in the confectionery segment.

Development of low moisture-absorption solutions for pharmaceutical applications.

Corporate Social Responsibility

The Company remains committed to corporate social responsibility, with a focus on education, healthcare, environmentalsustainabilityandcommunitydevelopment. Its CSR initiatives are designed to create meaningful and long-term impact, with particular emphasis on promoting education, especially for girls and underprivileged students, alongside improving healthcare access and hygiene awareness in surrounding communities.

During the year, the Company undertook several initiatives, including organising health check-ups and blood donation camps, supporting educational programmes, distributing essential supplies, rural sports development activities, disaster management & rehabilitation projects and promoting environmental sustainability through tree plantation drives etc.

Financial Performance

Particulars	FY 2026	FY 2025
Revenue from operations (_ crore)	1425.68	1,486.19
Other income (_ crore)	16.72	6.83
Total income (_ crore)	1442.40	1,493.02
Profit before tax (_ crore)	34.09	52.88
Profit after tax (_ crore)	26.09	39.48
Basic earnings per share (_)	8.35	12.64
Diluted earnings per share (_)	8.35	12.64

Key financial ratios

Particulars			FY 2026	FY 2025	Variance (%)
1. Debtors\u2019 turnover ratio			13.57	15.23	(10.90)
2. Inventory turnover ratio			18.35	20.23	(9.29)
3. Interest coverage ratio			2.14	2.85	(24.91)
4. Current ratio			1.74	1.65	5.45
5. Debt-equity ratio			0.16	0.17	(5.88)
6. Operating profit			4.49	5.48	(18.06)
margin (%)
7. Net profit margin (%)			1.83	2.66	(31.20)
8. Return on net worth (%)			4.51	7.21	(37.45)
Notes on Variation
Sr. 1 & 2	Due to lower sales.
Sr. 3 & 8		Due to lower profits.
Sr. 5		Due to increase in Net Worth.
Sr. 6 & 7	Due to lower margins on sales.

With maize prices showing signs of moderation and improved crop availability, input cost pressures are expected to ease, providing support to margins.

Demand from core segments such as food processing, pharmaceuticals and packaging is likely to remain resilient. In addition, recovery in industrial sectors such as paper and textiles is expected to further support volume growth.

The Company continues to focus on improving profitability through product mix optimisation and cost efficiency measures. Improving export competitiveness, supported by alignment of domestic maize prices with global levels, is also expected to create growth opportunities in international markets.

Backed by operational efficiencies, prudent working capital management and a diversified end-user base, the Company is well positioned to capitalise on emerging opportunities while effectively navigating industry challenges.

Risk Management

SukhjitStarchandChemicalsLimitedhasestablishedacomprehensiveriskmanagementframeworktoeffectivelyidentify, assess and mitigate key business risks and challenges. This framework supports strong corporate governance practices, proactive risk identification and robust internal controls, thereby ensuring sustainable growth and financial stability.

Risk	Impact	Mitigation
Climate Risk	Adverse weather conditions such as erratic monsoons, floods or droughts may impact agricultural output & affect the availability of the basic raw material (Maize). Volatility in maize prices, driven by climatic factors, Government Policies and competing demand (including ethanol production), may impact input costs and margins.	Manufacturing units are strategically located across regions with access to multiple crop cycles (kharif, rabi and spring), reducing dependence on a single harvest and mitigating supply disruptions.
Raw Material Availability and Pricing Risk		A proactive procurement strategy with optimal inventory levels and dynamic sourcing helps manage price fluctuations and ensures continuity of supply.
Water Management Risk	The need for water conservation and responsible water usage remains critical for sustainable operations.	Implementation of water conservation measures, including recycling, rainwater harvesting and Zero Liquid Discharge (ZLD) systems, along with community-level water conservation initiatives.
Employee Health and Safety Risk	Workplace incidents or health issues may affect productivity and operational continuity.	Robust safety protocols, regular health check-ups, training programmes, insurance coverage and emergency response systems are in place to manage the risk.
Demand Fluctuation and Market	Variability in demand from end-user industries such as FMCG, pharma, paper, textiles may affect volumes and realisations.	A diversified customer base and flexible product mix enable alignment with evolving sectoral demand trends.
Risk Inventory Management Risk	Elevated inventory levels may expose the Company to price fluctuations and increased carrying costs.	A calibrated inventory strategy, supported by continuous market monitoring and efficient working capital management, mitigates this risk.
Competition Risk	Competition from other large players may result in pricing pressures and market share challenges.	Focus on boosting customer relationships, high quality products due to strict quality controls, enhancing the product portfolio and leveraging strategically located manufacturing facilities.
Financial and Liquidity Risk	Exposure to working capital requirements and commodity price movements may impact financial stability.	A conservative capital structure, low leverage, strong liquidity position and prudent financial management practices support financial resilience.

Risk	Impact	Mitigation
Policy and Regulatory Risk	Changes in government policies including ethanol blending, taxation and agricultural regulation may impact raw material availability, demand and cost structures.	Continuous monitoring of regulatory developments and adaptive business strategies ensure alignment with policy changes.

Internal control systems and adequacy

The Company upholds strong internal control protocols to manage timely and accurate reporting and documentation of every transaction, as well as to protect and maintain its assets from unauthorised use. The management has also established and maintained internal controls for financial reporting and regularly evaluates their effectiveness. The independent auditors have also examined the internal financial control systems of the Company and have expressed their opinion that the Company has an adequate internal financial control system over financial reporting, which was operating effectively as of 2026. Further, the Audit Committee of the Board meets regularly to discuss the important issues (if any) highlighted by the internal Auditors and the statutory Auditors of the Company.

Cautionary statement

The Management Discussion and Analysis Report contain forward-looking statements based on data available to the Company, assumptions about economic circumstances, current government policies and so on. Despite managements ongoing monitoring of market conditions and other factors, the Company cannot guarantee the accuracy of its assumptions or future performance. As a result, actual results, performance, or accomplishments may vary significantly from those anticipated in any such forward-looking statement. The Company accepts no responsibility to publicly change, modify, or revise any forward-looking statement based on any later development, information or event.