Dollex Agrotech Ltd Management Discussions

Industry Scenario and Development Global Sugar Outlook

The estimated Global sugar production as per the International Sugar Organization (ISO) is

175.5 million tons with a decreaseof 7.1 million tons over the previous season. The consumption is expected to grow by 3.4 million tons over the previousseason; it is now estimated at 180.4 million tons. The overall global deficit is anticipated to be 4.9 million tons.Global economic growth declined marginally from 3.3% in 2023 to an estimated 3.2% in 2024. This was marked by a slowdown in global manufacturing, particularly in Europe and parts of Asia coupled with supply chain disruption and weak consumer sentiment. In contrast, the services sector performed more creditably.On the positive side, global inflation was expected to decline from 6.1% in 2023 to 4.5% in 2024 (projected at 3.5% and 3.2% in 2025 and 2026 respectively). This decline was attributed to the declining impact of erstwhile economic shocks, and labour supply improvements. The monetary policies announced by governments the worldover helped keep inflation in check as well.

Regional Growth (%)	2024	2023
World Output	3.2	3.3
Advanced economics	1.7	1.7
Emerging and Developing Countries	4.2	4.4
(Source: IMF, KPMG, Press Information Bureau, BBC, India Today)

Performance of major sugar growing countries

United States: Sugar production is projected to decline slightly to 8.4 Million Tonnes due to lower yields of sugarbeet and sugarcane in SS 2024-25. Imports are also expected to decrease, reflecting projected quota programs aligned with minimum requirements under World Trade Organization and free-trade agreement obligations. Additional factors include reduced imports from Mexico, re- exports and high-tier tariff imports. While consumption remains largely unchanged, stocks are anticipated to decline due to reduced import volumes.

India:Indias sugar production is projected to stand at 27 Million Metric Tonnes, while domestic consumption is anticipated to surpass 29 Million Tonnes over the year.

Brazil: For the 2024/25 season, the Centre-South region of Brazil is expected to produce 42.5 Million Metric Tonnes of sugarcane, driven by optimal weather and an increase in cultivated land.

China: Sugar production is estimated to rise by 1.0 Million Tonnes to reach 11.0 Million Tonnes in SS 2024-25, driven by an expansion in the area cultivated for both sugarcane and sugarbeets. Consumption is expected to increase slightly, supported by higher consumer spending driven by lower sugar prices. Imports are forecasted to remain steady, while stocks are anticipated to grow due to the increased production.

Thailand: Sugar production is projected to increase by 16% to 10.2 Million Tonnes in SS 2024- 25, driven by favourable weather conditions that have boosted sugarcane output and sugar yields. While consumption continues to grow, the rate of increase is slower due to lower anticipated disposable income. Exports are expected to nearly double,supported by the higher production, while stock levels are forecast to drop by one-third due to the surge in exports.

EU: Sugar production is forecast to rise by 6,90,000 Tonnes, reaching 15.6 Million Tonnes in SS 2024-25, as an expansion in sugarbeet cultivation aims to meet higher demand. Consumption remains stable, while imports are expected to decline due to the increased domestic production. Despite the production growth, exports are projected to decrease compared to the elevated levels seen in recent marketing years. Stocks are anticipated to increase as a result of reduced export volumes.

Mexico: Sugar production is estimated to rise by 8% to 5.4 Million Tonnes, supported by favourable weather alleviating some drought impacts. Consumption and stock levels are expected to decline, driven by higherexport volumes. Exports are projected to increase due to greater supply availability, with shipments to the United States determined by the terms of the amended suspension agreements.

Indonesia: Sugar production is estimated to decrease by 3,00,000 Tonnes, reaching 2.0 Million Tonnes in SS 2024-25, due to adverse weather conditions. Consumption is projected to grow in line with population increases and higher demand from the food and beverage industry. To meet this rising demand amid lower domesticproduction, imports are expected to increase, resulting in a decline in stock levels.

Sugar Balance Sheet 2024-25 (in Million Tonnes)

Opening stock	8
Estimated production during sugar season FY 2024-25	26.2
Sugar availability	37.9
Estimated domestic consumption	28
Targeted exports during sugar season	1
Closing stock	5

(Source:Gleaf, Business Standard)

Sugar opening stock, production, consumption and closing stock in India over the years (in Million Tonnes)

Year	Opening Balance	Production	Consumption	Closing Balance
2014-15	7.47	28.3	25.6	9.08
2015-16	9.08	25.1	24.8	7.75
2016-17	7.75	31.6	24.5	3.88
2017-18	3.38	32.5	25.4	10.72
2018-19	10.72	33.16	26	14.5
2019-20	14.5	27.4	25.3	10.7
2020-21	10.7	30.8	26	8.5
2021-22	8.5	36	27.5	7
2022-23	5.7	35.0	27.5	6.2
2023-24	5.18	34.0	29.50	7.68
2024-25	8	33.3	30.10	5

(Source: ChiniMandi, The Hindu Business Line)

Risks

?‚? Raw material risk (cane availability): Weather variability (drought/excess rain) and competing crops can constrain cane. Nationally, 2024/25 supply tightness shows sensitivity to monsoon and disease?€”MP is not immune.

?‚? Regulatory/price risk:

?‚? Rising FRP (?‚?355/qtl for SS 2025-26) without commensurate Minimum Selling Price (MSP) of sugar adjustment compresses mill margins. (Press Information Bureau)

?‚? Export policy swings (e.g., small quota talk in 2025) affect domestic stock-to- use and prices.

?‚? Ethanol procurement prices are notified and can be revised; if unchanged for B-heavy/juice while FRP rises, ethanol spreads could narrow. (Business Standard)

?‚? Execution risk (distillery): Project/financial closure, environmental clearances, feedstock assurance (C-heavy/B-heavy/juice), and timely OMC contracts. (General risk; prices cited above.) (Business Standard)

?‚? Consumer/technical risk (E20): Early field complaints on vehicle mileage/compatibility could slow demand or invite calibration in rollout, indirectly affecting offtake pacing. (The Times of IndiaFinancial Times)

SWOT analysis Strengths

?‚? Sugarcane is one of the most lucrative cash crops cultivated in India.

?‚? India ranks first in global sugar consumption and is the worlds second-largest sugar producer.

?‚? The sugar industry promotes the growth of allied sectors and significantly supports the rural economy.

?‚? The Indian government recognizes the sugar sectors vital contribution to the local economic development.

?‚? The Indian sugar sector plays a crucial role in supporting the livelihoods of approximately 50 Million sugarcane farmers and provides direct jobs to 500,000 workers

Opportunities

?‚? Overall domestic consumption volume of sugar was expected to be 32 Million Metric Tonnes in India.

?‚? Adopting improved farming methods can significantly increase crop yields and operational efficiency.

?‚? The governments ethanol blending mandate plays a crucial role in driving ethanol demand.

?‚? Modernizing technology can improve by-product usage, leading to higher overall efficiency.

Weaknesses .

1.Cane prices in India remain significantly above the global average. 2.Many mills still operate with outdated machinery and technology.

3.A widespread lack of funds leads to financial difficulties for numerous sugar mills. 4.Environmental concerns, such as water-intensive cultivation, pose sustainability challenges for the industry.

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Threats .

1.Climate change affects cropping patterns and reduces yield levels. 2.The industry is heavily dependent on the variability of monsoon rains.

3.Limited infrastructure makes cane farming vulnerable to uncertain weather conditions.

Risk management Geographical risk

The operational efficiency of mills may be impacted by their distance from cane fields. Mitigation: To address this, mills are strategically positioned within a 30 km radius of key cane- growing areas, ensuring smooth access through well-established road networks.

Procurement risk

Challenges in sourcing sugarcane could arise.

Mitigation: The Company mitigates this by fostering strong, long-term relationships with cane farmers and supporting their welfare and productivity through dedicated programs.

Quality risk

The risk of receiving substandard sugarcane remains a concern.

Mitigation: The Company encourages the adoption of early- maturing cane varieties, provides subsidized insecticides, and educates farmers on advanced agricultural practices to improve cane quality.

Financial risk

Rising debt levels could affect financial stability.

Mitigation: Timely repayment of debts ensures the Company maintains a strong financial position.

Human capital risk

Attracting and retaining skilled talent may present challenges.

Mitigation: The Company implements a well-defined human resource policy aimed at attracting, developing, and retaining top talent.

Internal control systems and their adequacy

The Company maintains a strong internal audit system that is consistently monitored and updated to safeguard assets, ensure regulatory compliance, and swiftly resolve any concerns. The audit committee actively reviews internal audit findings,implementscorrective measures when necessary, and collaborates closely with both statutory and internal auditors to uphold an efficient internal control framework.

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Human resources and industrial relations

The Company places great importance on its employees and is dedicated toequipping them with skills aligned with technological advancements. Over the past year, it has organized a variety of training programs focusing on technical expertise, behavioural development, business acumen, leadership, customer service, safety, and ethical practices. As of March 31, 2025,

Cautionary statement

Statements in this Report describing the Companys objectives, estimates and expectations may constitute ?€•forward lookingstatements?€– within the meaning of applicable laws and regulations. Actual results might differ materially from those eitherexpressed or implied.

For & Behalf of DollexAgrotech Limited

Mr. Mehmood Khan Managing Director DIN: 00069224