Zuari Agro Chemicals Ltd Management Discussions

The Board of Directors presents the Management Discussion and Analysis of the business performance and outlook of Zuari Agro Chemicals Limited ("the Company") in the context of the prevailing economic conditions, regulatory framework, and market environment.

The Company has undergone a significant transformation during the year pursuant to the divestment of its manufacturing undertakings. As a result, the Company currently does not have any operating business segments and has significant investments in its subsidiary, joint ventures, and other companies.

The Company is in the process of evaluating strategic opportunities for redeployment of capital into new business areas with a focus on long-term value creation. The timing and outcome of such initiatives remain subject to market conditions and regulatory approvals.

Industry Structure and Developments

During the financial year under review, the Company has undergone a significant structural transformation pursuant to the divestment of its manufacturing undertaking. The Company continues to evaluate its operational and business structure in line with evolving market conditions and long-term strategic objectives.

The fertilizer industry in India continues to be largely driven by government policies, subsidy support, monsoon conditions and global commodity price trends. However, these industry developments do not have a direct impact on the Companys current operations.

Post divestment, the Companys structure is primarily that of an investment holding entity, with investments in subsidiary, joint ventures and other companies. The Company is in the process of evaluating strategic opportunities to diversify into new business areas, including manufacturing, trading, investments, and other sectors, with a focus on disciplined capital allocation and long-term value creation.

Fertilizer Subsidy

Pursuant to the sale of the Mahad Plant and the Companys consequent exit from fertilizer manufacturing operations, the Company ceased to be eligible for fertilizer subsidy with effect from 1^st October 2025. Accordingly, fertilizer subsidy was applicable only up to 30^th September 2025, and no fertilizer subsidy was applicable to the Company for the remaining period of the financial year under review.

Opportunities and Threat

Post divestment of the manufacturing undertaking, the Company has the opportunity to redeploy its capital into diversified business areas and investments. With a strengthened balance sheet and investments in subsidiary, joint ventures, and other companies, the Company is well positioned to explore new avenues for growth, including manufacturing, trading, investments, and other emerging

sectors. Strategic investments, partnerships and disciplined capital allocation are expected to support long-term value creation.

The Company operates in an environment where its performance is influenced by investment returns, market conditions and the pace of execution of new business initiatives. Accordingly, factors such as market volatility, regulatory developments and broader economic trends may impact investment outcomes.

The identification and timely deployment of capital into suitable opportunities remains a key focus area. The Company continues to adopt a measured and prudent approach towards evaluating opportunities, with emphasis on sustainability, scalability and risk- adjusted returns.

Segment wise or product wise performance

In view of the strategic rationalisation of manufacturing operations, the Company does not have any reportable operating segments during the year under review. The product wise details upto September, 2025 are given below:

Outlook

Following the divestment of its manufacturing undertaking, the Company is currently focused on strengthening its financial position and enhancing the quality of its investment portfolio, while simultaneously evaluating avenues for future business expansion. The Company intends to adopt a prudent and disciplined approach towards capital allocation, with an emphasis on long-term value creation.

The Company continues to evaluate and pursue opportunities across sectors such as manufacturing, trading, investments, and other emerging areas, subject to market conditions and regulatory approvals. The timing and outcome of such initiatives remain uncertain in view of prevailing market conditions.

In the interim, the Companys performance is supported by returns generated from its investment portfolio, while it continues to build a sustainable and diversified business platform for future growth.

Risk and concern

The Company operates in a dynamic business environment where its performance is influenced by factors such as market conditions, investment performance, regulatory developments and broader economic trends. Movements in capital markets, interest rates and macroeconomic variables may have an impact on the value and returns of the Companys investment portfolio.

The Company also faces risks relating to identification and execution of suitable business opportunities for future growth. Any delay or inability in deploying capital effectively may impact the Companys long-term prospects.

Further, regulatory changes, macroeconomic factors, and sector- specific developments may affect the Companys investment decisions and returns. The absence of stable operating revenue streams may also impact financial predictability in the near term.

The Company adopts a disciplined and prudent approach towards risk management, with emphasis on careful evaluation of opportunities, diversification of investments and maintaining financial flexibility. The Audit Committee periodically reviews key risks and mitigation measures to ensure effective oversight.

Internal control system and their adequacy

The Company has in place adequate systems of internal control commensurate with its current size and nature of activities. Post divestment of its manufacturing undertaking, the internal control framework has been aligned to the Companys present structure.

These controls are designed to provide reasonable assurance with respect to maintaining reliable financial information, safeguarding assets, compliance with applicable laws and regulations, and ensuring that transactions are executed with proper authorization in accordance with established policies, including documented Standard Operating Procedures (SOPs) and the Limits of Financial Authority Manual (LOAM), which are reviewed periodically.

The Company continues to leverage its ERP system (SAP S/4 HANA) and GRC framework to support robust financial controls and compliance processes.

The Internal Auditors conduct periodic reviews of the internal control systems and their effectiveness. The reports are placed before the Audit Committee, which reviews the same and provides necessary directions for strengthening the control environment, wherever required.

Discussion of financial performance with respect to operational performance

The revenue from continuing operations (Standalone) for the year ended 31^st March 2026 was Nil Lakhs as compared to Nil Lakhs for the previous year.

The revenue from discontinued operations (Standalone) for the year ended 31^st March 2026 was Rs. 1,941.99 Lakhs as compared to Rs. 4,779.74 Lakhs for the previous year.

The profit before tax from continuing operations for the year ended 31^st March 2026 was Rs. 1,11,671.57 Lakhs as compared to Loss of Rs. 7083.83 Lakhs for the year ended 31^st March 2025. The profit after Tax from continuing operations stood at Rs. 95,745.25 Lakhs for the year ended 31^st March 2026 as compared to loss of Rs. 7,214.93 Lakhs for the previous year.

The loss before tax from discontinued operations for the year ended 31^st March 2026 was Rs. 266.65 Lakhs as compared to loss of Rs. 95.23 Lakhs for the year ended 31^st March 2025. The loss after tax from discontinued operations stood at Rs. 266.65 Lakhs for the year ended 31^st March 2026 as compared to loss of Rs. 95.23 Lakhs for the previous year.

The Companys EBITDA before exceptional item for financial year 2025-26 was Rs. 405.18 Lakhs as against previous year ended 31^st March, 2025 was Rs. 1,727.45 Lakhs.

The Finance Costs for 2025-26 were Rs. 5,756.14 Lakhs as against Rs. 8,590.27 Lakhs in 2024-25. During the year the Companys other income stood at Rs. 1,764.76 Lakhs as against Rs. 2,724.87 Lakhs in the previous year.

The Performance of own manufactured fertilizers & other Agri Products

#Pursuant to the execution of the Business Transfer Agreement (BTA) dated 29^th August 2025 between the Company and Mangalore Chemicals and Fertilisers Limited (MCFL), the Company sold its SSP fertilizer plant at Mahad along with the associated business to Mangalore Chemicals and Fertilisers Limited by way of slump sale, which was consummated with effect from 30^th September, 2025.

Material development in human resource/ industrial relation front including no of people employed

The overall Industrial Relations situation has been cordial. The HR Policies have been reviewed keeping in mind the business needs. The Company has 9 employees as on 31^st March, 2026.

Enterprise Risk Management (ERM)

The Company has in place a Risk Management Policy in accordance with the provisions of the Companies Act, 2013 and applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The oversight of risk management is undertaken by the Audit Committee.

The risk management framework is aligned with the Companys present business profile. The Company continuously evaluates potential opportunities and associated risks to ensure balanced and prudent decision-making.

The Companys ERM framework encompasses practices relating to the identification, assessment, monitoring, and mitigation of strategic, financial, compliance and other relevant risks. The framework considers both internal and external factors that may impact the Companys objectives.

Risks are identified and prioritized based on their potential impact and likelihood of occurrence. Inputs from internal audits and periodic risk assessments are also considered in the risk identification and evaluation process. Appropriate mitigation plans are implemented and monitored on an ongoing basis and adopted a disciplined approach towards investment decisions, with emphasis on preserving capital and enhancing long-term value.

The Company has conducted a risk assessment exercise during the year to review the existing processes for identifying, assessing and prioritizing risks. The Audit Committee periodically reviews the key risks and the effectiveness of the mitigation measures to ensure that the Company remains resilient in a dynamic environment.

Details of Significant Changes in Key Financial Ratios, alone with detailed explanations

* EBIT stands for earnings before interest (both interest cost and interest income) and taxes.

**EBITDA stands for earnings before interest (both interest cost and interest income), taxes, depreciation and amortization.