NACL Industries Ltd Management Discussions

Global Economic Landscape (FY 2025-26)

The global economy during FY 2025-26 continued to navigate a complex and evolving macroeconomic environment, marked by moderating growth, easing inflationary pressures, and persistent geopolitical and trade-related uncertainties. According to the latest updates from the International Monetary Fund, global GDP growth is estimated at approximately 3.3% in 2025 and is projected to moderate slightly to around 3.2% in 2026, reflecting a phase of stable yet below-trend expansion compared to the pre-pandemic average of 3.8% (2000-2019).

Emerging market and developing economies (EMDEs) continued to act as the primary drivers of global growth, expanding at approximately 4.4% in 2025. Chinas economy recorded growth of around 4.8% in 2025, supported by policy stimulus measures and export resilience, although structural challenges in the real estate sector persist, with growth projected to moderate to around 4.1% in 2026. India continued to stand out as one of the fastest-growing major economies, with growth projected at 6.5% in 2025 and around 6.4% in 2026, supported by robust domestic demand, infrastructure investments, and ongoing structural reforms.

Commodity markets, particularly in the agricultural sector, exhibited relative stabilization following periods of significant volatility in prior years. However, prices remain susceptible to climate-related disruptions, geopolitical tensions, and policy interventions, underscoring continued vulnerabilities in global supply chains. Energy markets also remained sensitive to geopolitical developments, particularly in key regions such as the Middle East, contributing to periodic volatility in oil prices.

Overall, the global economic outlook remains cautiously stable yet exposed to downside risks, including geopolitical tensions, trade fragmentation, climate-related disruptions, and slower productivity growth.

Key Global Indicators

Indicator	2023 (Actual)	2024 (Est.)	2025 (Est.)
Global GDP Growth	3.0%	3.2%	3.3%
Advanced Economies GDP Growth	1.6%	1.7%	1.7%
Emerging & Developing Economies GDP Growth	4.3%	4.3%	4.4%
Euro Area GDP Growth	0.5-0.7%	1.3%	0.9%
Global Inflation	6.8%	5.8%	4.4%

Global GDP Growth Projections (2024-2026)

Year	Global (%)	United States (%)	Euro Area (%)	China (%)	India (%)
2024	3.2	2.1	1.3	4.5	6.3
2025	3.3	1.9	0.9	4.8	6.5
2026	3.2	2.0	1.1	4.1	6.4

Sources:

International Monetary Fund (World Economic Outlook Update - Jan 2026), World Bank (Global Economic Prospects -Jan 2026), United Nations, Organisation for Economic Co-operation and Development (latest available edition), World Trade Organization, United Nations Conference on Trade and Development (Global Trade Update), Reuters (coverage of IMF growth and inflation outlook - 2025-2026).

Indian Economic Landscape:

Indias economy continued to demonstrate strong resilience and above-global-average growth during FY 2025-26, maintaining its position among the worlds largest economies and steadily progressing toward becoming one of the leading global economies in the medium term. Real GDP growth is estimated in the range of approximately 6.2%-6.5% in FY 2025-26, based on provisional estimates and multilateral projections, reflecting sustained economic momentum despite global uncertainties. This growth was supported by steady domestic consumption, continued public capital expenditure, and strong performance in the services sector, along with improving manufacturing activity. While certain high-frequency indicators and quarterly estimates suggest stronger momentum, annual growth estimates remain within a stable medium-growth band.

Nominal GDP continued to expand steadily, supported by stable price conditions and sustained economic activity. Overall economic output continued to increase in absolute terms, supported by consumption demand, investment activity, and government-led infrastructure spending. This trajectory remains broadly consistent with projections by the Reserve Bank of India and other multilateral institutions, which place Indias medium-term growth in the range of 6.4%-6.7%. The International Monetary Fund also projects Indias growth in the mid-6% range, reaffirming its position as one of the fastest-growing major economies.

Inflationary pressures moderated further during FY 2025-26. Consumer Price Index (CPI) inflation eased to approximately 4.5%, supported by favourable monsoon conditions, easing food prices, and stable global commodity trends, bringing inflation closer to the central banks target band. In response, the Reserve Bank of India adopted a calibrated approach toward monetary policy, with easing bias emerging as inflationary pressures moderated. These developments supported consumption growth and improved liquidity conditions.

Indias external sector remained resilient during FY 2025-26. The current account deficit remained within manageable levels, supported by strong services exports, stable remittance inflows, and moderation in commodity prices. Despite global trade uncertainties, Indias diversified economic base and domestic demand supported external stability.

On the fiscal front, the Government continued its focus on fiscal consolidation alongside growth-oriented expenditure during FY 2025-26. Public capital expenditure remained strong, particularly in infrastructure and logistics. The fiscal deficit is estimated to moderate toward -5.1% of GDP, supported by buoyant tax collections, including strong Goods and Services Tax (GST) revenues.

Overall, Indias macroeconomic performance in FY 2025-26 reflects a stable and resilient growth trajectory, underpinned by strong domestic demand, improving macroeconomic stability, and sustained policy support. While growth momentum remains robust, it is characterised by steady and sustainable expansion rather than sharp acceleration, ensuring macroeconomic stability. Looking ahead, India is expected to maintain its position as one of the fastest-growing major economies, supported by structural reforms, infrastructure development, digitalisation, and favourable demographics, despite global headwinds.

Key Global Indicators:

Indicator	FY 2023-24	FY 2024-25 (Est.)
Real GDP Growth	8.2%	6.4%
Nominal GDP Growth	9.6%	9.7%
Nominal GDP (H lakh crore)	-295.6	-324.1
CPI Inflation	6.7%	-5.4%
Current Account Deficit	-0.7% of GDP	-0.6% of GDP
Repo Rate	6.5%	6.5% (steady)
Projected Real GDP Growth (RBI)	—	-7.0%
Projected Real GDP Growth (IMF - WEO)		6.8% (FY 2024-25), 6.5% (FY 2025-26)

Sources: Ministry of Finance; Press Information Bureau (PIB); Ministry of Statistics & Programme Implementation (MoSPI); Reserve Bank of India (Monetary Policy Report, April 2025 and subsequent updates); International Monetary Fund (World Economic Outlook - April 2025, January 2026 update); World Bank (Global Economic Prospects); Reuters.

Global Agriculture Landscape:

The global agriculture sector in FY 2025-26 continued to demonstrate resilient growth, supported by sustained global food demand, evolving consumption patterns, and increasing adoption of technology-driven and sustainable farming practices. The sector remains structurally strong, driven by population growth projected to reach nearly 10 billion by 2050, rising income levels in emerging economies, and the increasing need to enhance agricultural productivity under constraints of land, water, and climate variability.

While overall growth momentum remained positive, the sector entered a phase of moderation and normalization, with global agriculture market expansion estimated to remain in the range of -6-7% annually, reflecting a shift from high-growth recovery to stable, productivity-led expansion. Growth is increasingly influenced by climate volatility, policy interventions, and global trade realignments.

Global crop production remained near record levels during FY 2025-26. Total cereal output is estimated at approximately 2.82.9 billion tonnes, broadly stable with marginal year-on-year increases. Major crops such as maize (-1.2-1.25 billion tonnes) and rice (-520-540 million tonnes) continued to dominate global output, while production trends showed increasing variability across regions due to erratic weather conditions. India remained a key contributor to global agricultural output, with wheat production remaining above 110 million tonnes, despite climatic challenges.

Food security continues to remain a critical global concern. Over 9% of the global population remains undernourished, with the number of chronically undernourished projected to remain above 570-580 million by 2030, reflecting persistent structural challenges in food distribution, affordability, and access. Rising food price volatility and supply disruptions continue to exacerbate these challenges, particularly in developing economies.

In FY 2025-26, monsoon patterns exhibited regional variability, including delayed onset and uneven rainfall distribution across key agricultural regions. These conditions impacted sowing timelines, crop acreage decisions, and overall farm-level activity.

Variability in rainfall and temperature patterns also influenced pest and disease intensity, leading to fluctuations in demand for crop protection products. In several regions, compressed spray windows and irregular crop cycles affected consumption patterns and inventory movement.

Key Trends & Insights

• Climate Risk as a Structural Driver: Climate variability is now a structural factor influencing agricultural output, impacting crop cycles, pest dynamics, and yield stability globally.

• Shift Toward Sustainable & Biological Inputs: Regulatory pressures and sustainability requirements are accelerating the adoption of biological crop protection products and low-residue solutions, particularly in developed markets.

• Precision Input Application Gaining Importance: Technologies such as drone-based spraying and variable rate application are transforming crop protection practices, improving efficiency and reducing input wastage.

• Supply Chain Diversification: Global agrochemical and agricultural supply chains are undergoing reconfiguration, with increasing focus on "China+1" strategies, positioning countries like India as key manufacturing hubs.

• Farmer Economics Driving Adoption: Technology adoption is increasingly guided by return-on- investment considerations, rather than subsidy-driven or experimental usage.

Strategic Implications

• Shift Toward Integrated Crop Solutions: Companies must move beyond standalone products toward integrated offerings combining chemistry, biologicals, and digital advisory.

• Precision Compatibility as a Core Requirement: Products need to be compatible with precision agriculture systems, including drones and smart application technologies.

• Regulatory Compliance as Growth Driver: Regulatory changes are reshaping product portfolios, necessitating continuous innovation and sustainable product development.

• Supply Chain Resilience & Localization: Strengthening regional manufacturing and sourcing capabilities is critical to mitigate geopolitical and logistical risks.

• Data-Driven Agriculture as Competitive Edge: Integration of data, analytics, and agronomic insights is emerging as a key differentiator in delivering value-added solutions.

The global agriculture sector is undergoing a structural transformation, balancing rising food demand, climate challenges, sustainability imperatives, and technological disruption. While the sector remains fundamentally strong, future growth will increasingly depend on enhancing productivity under resource constraints and adapting to evolving regulatory and environmental expectations.

For the agrochemical industry, these developments translate into sustained demand for advanced crop protection solutions, alongside increasing emphasis on innovation, precision application, and environmentally sustainable product portfolios.

Sources

The Business Research Company (Global Agriculture Market Report 2026), OECD-FAO (Agricultural Outlook 2025-2034), Food and Agriculture Organization, World Bank, International Monetary Fund, UNCTAD, Markets and Markets, Reuters.

Indian Agriculture Landscape:

Agriculture remains a cornerstone of Indias economy, contributing approximately 16% to GDP and supporting nearly 46% of the population. In FY 2025-26, the sector maintained robust momentum with growth estimated in the range of -3.5%-4.5%, supported by a normal monsoon, improved reservoir levels, and continued policy support, although growth moderated from the higher base of FY 2024-25. In FY 2024-25, the sector demonstrated strong resilience with 4.6% annual growth, accelerating to 5.4% in Q4, aided by a favourable monsoon, record foodgrain production, and sustained policy support. Foodgrain output reached an all-time high of 353.95 million tonnes, led by rice (+8.2%) and wheat (+1.3%), while oilseeds and maize also posted significant gains. Preliminary estimates for FY 2025-26 indicate foodgrain production remaining near record levels at -350355 million tonnes, with variability across crops due to weather fluctuations and acreage shifts. Allied sectors such as fisheries and livestock emerged as major growth drivers, recording CAGRs of 13.67% and 12.99%, respectively, underscoring their rising role in rural incomes and nutrition security. Allied activities continue to demonstrate stronger and more stable growth relative to crop agriculture, contributing an increasing share to agricultural GVA. Over the past five years, agriculture and allied activities have grown at an average of 4.2-5%, though FY 2023-24 saw a slowdown with GVA growth dipping to a seven-year low of 1.4% due to uneven monsoon patterns, rural income pressures, and elevated inflation. The sector in FY 2025-26 reflects a normalization from the previous years high growth, with increased focus on productivity, resilience, and diversification.

The Government of India reinforced its focus on farm sector resilience, price assurance, and modernization through several measures. The Union Budget for FY 2024-25 raised allocation for agriculture and allied sectors to H1.75 lakh crore, the largest increase in six years (+15%), with emphasis on natural farming, digital agriculture, and irrigation expansion. The Union Budget for FY 2025-26 continued this policy momentum, with sustained allocation levels and increased emphasis on climate-resilient agriculture, value chain development, and technology-driven farming solutions. Minimum Support Prices (MSP) were raised sharply—59% for arhar, 77% for bajra, 89% for masur, and 98% for rapeseed—to ensure farmer profitability and incentivize production. MSP revisions in FY 2025-26 remained supportive, with continued focus on ensuring remunerative pricing and encouraging diversification toward pulses and oilseeds. PM- KISAN continued to extend direct income support to over 11 crore farmers, strengthening rural household consumption. The scheme continues to play a critical role in supporting rural liquidity and consumption demand. Major flagship schemes included the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) for expanding irrigation coverage, the Digital Agriculture Mission with a funding outlay of H2,817 crore driving initiatives such as AgriStack, soil mapping, and decision-support systems, and the Soil Health Card Scheme under which more than 53 lakh cards were issued in FY 2024-25. Digital agriculture initiatives gained further traction in FY 2025-26, with increasing adoption of AgriStack-enabled services, precision advisory platforms, and farm-level data integration. In addition, e-NAM integrated 1.78 crore farmers and 1,410 mandis, facilitating agri-trade worth approximately H4 lakh crore. Digital market integration continued to strengthen, improving price discovery and market access for farmers. The Natural Farming Mission was allocated H2,481 crore to promote climate- resilient practices, while the newly launched Dhan-Dhaanya Krishi Yojana earmarked H24,000 crore annually to 100 districts for sustainable and inclusive development. Policy focus has increasingly shifted toward sustainable agriculture, water-use efficiency, and climate adaptation strategies.

Despite headwinds, Indias robust production supported a 9% increase in agricultural exports in FY 2023-24, led by demand from the Middle East, Southeast Asia, and Africa. Export momentum in FY 2025-26 remained stable, though influenced by global price trends, trade restrictions on select commodities, and shifting demand patterns across regions. However, food inflation remains a persistent policy challenge, with rural inflation peaking at 5.7% in June 2023 and food inflation surging to 9%, largely driven by supply-chain inefficiencies and commodity price volatility. Food inflation moderated during FY 2025-26 but remained sensitive to supply-side disruptions, particularly in perishables and pulses. On the structural side, AgriTech adoption accelerated significantly, with over 35% growth in mobile-based farming platforms during 2023, enhancing yield optimization and farmer decision-making. In FY 2025-26, the focus of AgriTech adoption has shifted toward precision input application, drone-based spraying, and digital advisory platforms. Digital penetration through platforms such as e-NAM and Soil Health Cards is fostering a unified agrimarket and more scientific input usage, while the policy thrust on micro-irrigation, precision farming, and climate-smart agriculture is steadily strengthening the sectors long-term sustainability. Adoption of precision farming technologies and digital tools is increasingly driven by cost efficiency and productivity enhancement.

Given the short-term challenges such as fragmented landholdings, climate variability, and persisting post-harvest losses, Indias agriculture sector is structurally strengthening through higher public investment, digital adoption, and climate-smart policies. The sector is increasingly transitioning toward a more diversified and resilient model, with greater contribution from allied activities, improved supply chain infrastructure, and enhanced integration with technology. With record foodgrain production, rising allied sector contribution, and strong export momentum, the sector is well-positioned to drive rural transformation, enhance farmer incomes, and contribute meaningfully to Indias long-term growth trajectory. For agrochemical and crop protection companies, these developments translate into sustained demand for yield-enhancing inputs, biological solutions, and precision- compatible products, alongside the need to align with evolving regulatory and sustainability frameworks. For NACL Industries, aligning strategies with government priorities in irrigation, agri-services, supply chains, and sustainable inputs offers significant scope for value creation.

Sources:

Ministry of Agriculture & Farmers Welfare (Government of India), Ministry of Finance (Union Budget 2025-26), Press Information Bureau (PIB), Economic Survey 2025-26, Reserve Bank of India, Food and Agriculture Organization, World Bank, Reuters.

Global Agrochemical Market Overview:

In FY 2025-26, the global agrochemical market demonstrated steady expansion, with overall market size estimated in the range of ~USD 250-270 billion, reflecting annual growth of ~4%-5%, supported by sustained crop protection demand, rising food security concerns, and evolving agricultural practices.

Global Agrochemicals Sector - Snapshot:

Herbicides are the dominant category, fungicides are showing the highest growth momentum, and insecticides continue to expand on the back of pest evolution and climate variability. In FY 2025-26, fungicides recorded relatively stronger growth (mid-single digit) driven by increased disease incidence linked to climate variability, while insecticides demand was supported by rising pest resistance and shifting pest cycles across key crops. Technological adoption, including precision agriculture, drone-based spraying, AI-powered diagnostics, and digital farming platforms, is reinforcing demand for efficient and tailored agrochemical usage across regions. Adoption of precision application technologies has accelerated, particularly in Asia and Latin America, improving input efficiency and reducing overall chemical load per hectare.

The market is undergoing a structural transition as biologicals, eco-friendly formulations, and sustainable chemistries gain traction, supported by regulatory reforms, consumer preference for organic produce, and environmental imperatives. The biologicals segment is witnessing faster growth (estimated ~10%-12% CAGR), significantly outpacing conventional agrochemicals, driven by regulatory restrictions on certain synthetic molecules and increasing demand for residue-free produce. Developed markets like North America and Europe are at the forefront of adopting biopesticides, precision application, and carbon-efficient solutions. In Europe, tightening regulatory frameworks, including restrictions on active ingredients and sustainability mandates, have accelerated the shift toward low-residue and environmentally compliant solutions. At the same time, Asia-Pacific dominates global demand with over one-third of the market share, led by China, India, and Japan, while Latin America continues to expand rapidly through agricultural intensification. Latin America, particularly Brazil, has emerged as a high-growth region driven by soybean and corn cultivation, while Asia continues to benefit from rising crop intensity and increasing agrochemical consumption per hectare.

Despite the optimistic outlook, the industry faces regulatory hurdles, pest resistance, and ecological concerns around synthetic pesticide use. Product approval delays and stringent compliance regimes are pushing companies to diversify toward bio-based and integrated pest management solutions. In FY 2025-26, regulatory timelines have lengthened further in several jurisdictions, increasing time-to-market for new molecules and elevating compliance costs for manufacturers. To address these challenges, leading players are investing in biologicals, digital farming, and carbon-efficient R&D pipelines, while pursuing strategic mergers and acquisitions to strengthen portfolios. The industry has also witnessed continued consolidation, with companies focusing on portfolio optimization, backward integration, and geographic expansion to enhance competitiveness.

Looking ahead, the global agrochemical sector stands at a pivotal transition point—balancing the scale and reliability of traditional inputs with innovation in sustainable, high-tech, and environmentally conscious solutions. Future growth is expected to be driven by a combination of yield enhancement requirements, climate-resilient farming practices, and increasing adoption of precision agriculture technologies. With the UN projecting the global population to reach 9.7 billion by 2050, necessitating a 70% increase in food production, agrochemicals will remain central to global food security. However, growth will increasingly be shaped by regulatory evolution, sustainability mandates, and the pace of adoption of biological and integrated crop protection solutions.

NACL Industries stands to benefit from these developments through increased demand for diversified crop protection solutions, including specialty formulations and contract manufacturing opportunities, particularly in export-oriented markets. Alignment with regulatory standards, investment in R&D, and expansion into biologicals and precision-compatible products will be critical to sustaining long-term growth.

Sources:

Grand View Research (Global Agrochemicals Market Outlook 2025-2030), Global Market Insights, The Business Research Company (Global Agrochemicals Market Report 2026), Mordor Intelligence, Research and Markets, CropLife International, Food and Agriculture Organization, World Bank, Reuters.

Indian Crop Protection Overview:

In FY 2025-26, the Indian crop protection sector demonstrated a gradual recovery following the export-led correction witnessed in the previous year, with overall market size estimated in the range of ~USD 8.5-9.0 billion, supported by improving global demand conditions and stable domestic consumption. The Indian crop protection sector demonstrated strong resilience in FY 2024, with the market valued at ~USD 8.1 billion, growing at ~9% CAGR between FY 2021-24. Domestic market contributes to ~49% and Export market contributes ~51% of total ~USD 8.1 billion market size. In FY 2025-26, the domestic market share has shown relative stability, while export contribution remains sensitive to global pricing cycles, inventory normalization, and demand recovery across key geographies. This performance stands out against a 22% export volume dip in FY 2024, caused by global inventory destocking, subdued international demand, and aggressive pricing from China. Export volumes in FY 2025-26 have shown early signs of stabilization, although pricing pressures persist due to continued competition from Chinese manufacturers and elevated global inventories. India remains a pivotal global player—ranking among the top four crop protection chemical producers and emerging as the second-largest exporter worldwide. The country benefits from its cost-competitive manufacturing base, strong formulation capabilities, and expanding agricultural technology adoption. India continues to strengthen its position as a preferred sourcing hub under the "China+1" strategy, supported by supply chain diversification and regulatory alignment in export markets.

The domestic market is expected to expand to USD 11.3 billion by FY 2027-28, implying a CAGR of ~9%. In FY 2025-26, domestic demand growth is estimated in the range of ~6%- 8%, supported by normal monsoon conditions, increased crop intensity, and gradual adoption of modern crop protection practices. Growth will be driven by expanding domestic consumption, rising adoption of precision farming, drone spraying, biotechnology, and the increasing penetration of bio-based and sustainable crop protection chemicals. Adoption of drone-based spraying and precision application technologies has accelerated during FY 2025-26, particularly in states promoting mechanized and technology-enabled agriculture. Crop protection chemicals usage in India remains significantly below global averages 0.27-0.6 kg per hectare, compared with the Asian average of 3.6 kg/ha and the global average of 2.4 kg/ha—highlighting vast untapped potential for yield optimization. This structural gap continues to present a significant long-term growth opportunity for the industry, particularly in high-value crops and intensive farming regions.

Indias exports have grown at a ~9% CAGR between FY 202124. Herbicides lead this momentum, expanding at a 20-23% CAGR and increasing their share of total exports from 31% to 37%. In FY 2025-26, herbicides continue to remain a key export driver, supported by global demand for labor-saving solutions, particularly in developed markets facing labor shortages. Key destinations include the United States, Brazil, Japan, Vietnam, and Indonesia, which collectively account for a majority of outbound volumes. Export recovery trends vary across geographies, with Latin America and Southeast Asia showing relatively stronger demand revival compared to North America and Europe. Although exports fell sharply in FY 2024 due to global corrections, the long-term trajectory remains positive as supply chains stabilize and international demand revives. However, near-term export performance continues to be influenced by pricing pressures, currency fluctuations, and regulatory requirements in destination markets. Rising labor costs in overseas markets are also creating tailwinds for Indias herbicide exports.

Policy support in FY 2025-26 continues to focus on strengthening domestic manufacturing capabilities, promoting sustainable inputs, and enhancing export competitiveness. Industry-academia collaborations are driving new molecule registrations and smart farming technologies, while digitization and e-commerce platforms are enhancing access to inputs for small and medium farmers. Regulatory focus has also increased on faster approval of new molecules and promotion of safer chemistries, although timelines remain relatively extended. Furthermore, Indias emphasis on digital agriculture, carbon-efficient R&D, and bio-based formulations positions the industry at the forefront of sustainable transformation. The increasing push toward biologicals and integrated pest management is reshaping product portfolios across the industry.

Despite strong fundamentals, challenges persist. These include regulatory complexity and long approval timelines for new products; raw material price volatility and logistics bottlenecks; and intense competition from low-cost Chinese imports. In FY 2025-26, input cost volatility has moderated compared to the previous year, although competitive pricing pressures remain high in export markets. Indian manufacturers are responding with cost efficiencies, product diversification, and export market realignment to sustain competitiveness. Strategic focus has shifted toward value-added formulations, contract manufacturing, and diversification into new geographies.

Indian Agrochemicals Sector - Snapshot:

Given the outlook, NACL Industries is poised to harness emerging opportunities while navigating persistent headwinds in the agri-input landscape. In FY 2025-26, the domestic retail business experienced relatively stable demand conditions, supported by improved monsoon distribution compared to the previous year, although regional variability continued to impact crop patterns. In FY 2025, the domestic retail business was impacted by erratic monsoons, uneven rainfall, and constrained cropping patterns, with prolonged dry spells and late-season swings tapering demand. The Company reinforced its farmer-centric approach through wider channel outreach and customized solutions. The Company continued to strengthen its distribution network and expand product reach through targeted farmer engagement and technology- led advisory initiatives. Exports too faced pressures from global oversupply, pricing challenges, and inventory imbalances, which weighed on performance. Export performance in FY 2025-26 showed gradual improvement, supported by normalization of channel inventories and selective demand recovery in key markets. Nonetheless, NACLs diversified presence and long-standing institutional relationships lent resilience in key international markets. Looking ahead, the Company remains committed to innovation-led growth, stronger farmer engagement, and resilient operations to address evolving domestic and global needs in crop protection. Strategic priorities include expanding product portfolio, enhancing backward integration, and aligning with global sustainability and regulatory standards.

Sources:

Rubix Data Sciences, ICRA Limited, Ministry of Agriculture & Farmers Welfare (Government of India), Press Information Bureau (PIB), Economic Survey 2025-26, Food and Agriculture Organization, World Bank, OECD, Reuters, AgroPages, Mordor Intelligence, Expert Market Research.

Product Sector Performance:

Herbicide:

In FY 2025-26, the herbicide segment witnessed steady demand recovery, with the Indian herbicides market estimated to grow at ~7%-9%, supported by increasing mechanization, labour shortages, and rising adoption in cereals and plantation crops. While the global herbicides market is expected to grow at a CAGR of -5.1%, the Indian herbicides market is projected to expand at a faster pace of around -8.1% CAGR. Rising food security concerns, declining arable land, and modern farming practices such as conservation tillage are driving adoption. Asia Pacific, led by India and China, remains a key growth hub supported by economic expansion, mechanization, and higher disposable incomes. Cereals and grains dominate demand, with rice and wheat as leading crops.

For NACL Industries, FY 2025 saw the launch of two key herbicide products—Dash for paddy and Carpet for wheat. However, erratic rainfall delayed sowing of kharif crops, narrowing weed-control windows and softening demand. In FY 2025-26, improved monsoon distribution supported relatively better sowing patterns, leading to stabilization in herbicide demand, particularly in rice and wheat segments. Continued product innovation and a focus on critical crop segments remain central to sustaining growth. The Company continues to focus on expanding its herbicide portfolio with precision-compatible and crop-specific solutions to address evolving farmer needs.

Fungicides:

In FY 2025-26, the fungicides segment demonstrated relatively stronger growth momentum, with the Indian market estimated to expand at ~9%-11%, driven by increased disease incidence linked to climatic variability and higher adoption in horticulture crops. While the global fungicides market is expected to grow at a CAGR of -8.1%, the Indian fungicide market is projected to expand at a faster pace of around -11% CAGR. Growth is driven by rising incidences of fungal diseases and climate variability, with Asia Pacific contributing the largest share due to extensive cultivation of cereals, fruits, and vegetables. Seed treatment and foliar applications lead usage, while systemic, contact, and biological fungicides play complementary roles. In FY 2025-26, demand from fruits, vegetables, and plantation crops has increased, reflecting higher focus on crop quality and export standards.

In India, cereals account for over 30% of fungicide demand, followed by oilseeds (-25%). The countrys warm, humid climate makes crops highly vulnerable to fungal diseases like blast, blight, and mildew, strengthening the role of fungicides in agricultural productivity. Increasing awareness of preventive crop protection practices has also contributed to higher fungicide consumption.

NACL Industries fungicide portfolio delivered resilient performance in FY 2025, supported by flagship brands such as Oscar, Index, and Sivic. The Company continued to deepen farmer engagement and provide technical support to enhance product efficacy. In FY 2025-26, the Company maintained stable performance in this segment, supported by brand strength, expanded distribution, and targeted crop solutions. With innovation and strong brand equity, NACL remains well positioned in Indias competitive fungicide market.

Insecticides:

In FY 2025-26, the insecticide segment experienced mixed demand trends, with overall growth estimated at -6%-8%, influenced by pest intensity variations and cropping patterns across regions. While the global insecticides market is expected to grow at a CAGR of -5.4%, the Indian insecticides market is projected to expand at a faster pace of around -8.1%. The global insecticide market faced headwinds in FY 2025 due to unfavorable weather and lower acreage in key crops such as cotton and chilli. Despite these pressures, insecticides remain the largest crop protection segment in India, accounting for over 45% of the domestic market. In FY 2025-26, demand from cotton and chilli segments showed partial recovery, while fruits and vegetables emerged as key growth drivers.

During the year, reduced cotton planting and weak chilli prices curtailed demand. However, opportunities are emerging in fruits and vegetables, where farmers are increasingly adopting advanced pest management solutions to enhance yields and quality. Rising pest resistance and changing pest dynamics are also driving demand for newer, more effective molecules.

Despite sluggish market conditions, the Company strengthened its competitive position through innovation, farmer outreach, and tailored solutions. In FY 2025-26, the Company continued to focus on expanding its presence in high-value crop segments and improving product mix.

Plant Growth Regulators (PGRs) / Bio-stimulants:

In FY 2025-26, the PGR and bio-stimulant segment recorded strong growth momentum, with the Indian market estimated to expand at -12%-15%, supported by increasing focus on crop quality, yield enhancement, and stress management. The global PGR market is projected to grow at -10-12% CAGR and India PGR market is expected to grow at -15% CAGR. Rising adoption of sustainable practices, demand for improved crop quality, and innovations in bio-based formulations are key drivers. In India, the PGR market growth is led by fruits, vegetables, cereals, and oilseeds, with government initiatives promoting sustainable inputs and residue-free farming. Adoption of bio-stimulants is accelerating as farmers seek solutions to mitigate abiotic stresses such as drought, heat, and soil degradation.

For NACL Industries, FY 2025 was marked by continued emphasis on innovation-led growth in this segment. Flagship brands such as Atonik and Gallant remain central to the portfolio, backed by regulatory approvals and farmer confidence. NACL strengthened R&D capacities and promoted next-generation PGRs and bio-stimulants aimed at mitigating abiotic stresses like heat and drought. In FY 2025-26, the Company continued to invest in product development and expand its presence in this high-growth segment.

With increasing demand for sustainable agriculture and consumer preference for high-quality produce, NACLs focus on integrated PGR and bio-stimulant solutions positions it strongly for long-term leadership. This segment is expected to play a critical role in future growth, given the shift toward sustainable and climate-resilient farming practices.

Segment-wise Snapshot:

Segment	Global Outlook (CAGR)	India Outlook (CAGR)
Crop Protection	-4-6%	-7-9%
Herbicides	-5-6%	-7-9%
Fungicides	-7-9%	-9-11%
Insecticides	-5-6%	-6-8%
PGRs / Bio-	-10-12%	-12-15%
stimulants

Sources:

Ministry of Agriculture & Farmers Welfare (Government of India), Economic Survey 2025-26, Food and Agriculture Organization, World Bank, OECD, Technavio, Mordor Intelligence, Research and Markets, CARE Ratings, Reuters.

FY 2025-26 represents a transition phase for Indias agrochemical industry, characterized by stabilization in export markets, steady domestic demand, and increasing alignment with sustainability and regulatory trends. Despite near-term challenges and a demanding operating environment, the sectors underlying strengths—cost-efficient manufacturing, a vast underpenetrated domestic market, supportive policy measures, and opportunities from upcoming patent expirations—position it for sustainable, innovation-led growth. Strategic emphasis on biologicals, precision- compatible products, regulatory alignment, and supply chain resilience will be critical for long-term value creation in the crop protection industry.

Sources:

Ministry of Agriculture & Farmers Welfare (Government of India), Economic Survey 2025-26, Food and Agriculture Organization, World Bank, OECD, Rubix Data Sciences, Mordor Intelligence, IMARC Group, Reuters.

Consolidated Financial Performance:

In FY 2025-26, the Companys financial performance reflects the ongoing transition in the agrochemical sector, with gradual stabilization in demand conditions and continued focus on cost optimization, working capital management, and portfolio realignment.

During the year FY 2025-26, the Revenue from Operations of the Company stood at H1,58,446 Lakhs, reflecting recovery/ stability compared to the previous year, supported by normalization in export demand and steady domestic performance. The EBITDA stood at H10,563 Lakhs, indicating improvement compared to the previous year, depending on pricing environment, input costs, and product mix.

The financial performance of the Company for FY 2025-26 is summarized below:

(Rs in Lakhs)

Particulars	2025-26	2024-25	2023-24
Revenue from Operations	1,58,446	1,23,452	1,77,873
EBITDA Margin	6.7%	-4.4%	1.4%
Profit before exceptional items, depreciation, tax (as % of revenue from operations)	3.7%	-9.7%	-2.8%
Return on Capital Employed	5.7%	-6.6%	0%
Return on Net Worth	0.7%	-21.6%	-11.5%
Earnings per share (FV H1 each)	0.21	-4.27	2.96
Book Value per share	29	21	26

Significant Changes in Financial Ratios:

The Companys financial ratios reflected a notable improvement during FY 2025-26, driven by higher revenues, improved operating performance, enhanced capital structure, and better utilization of resources. Revenue from operations increased to H1,58,446 Lakhs during the year from H1,23,452 Lakhs in the previous year, while the Company reported a profit after tax of H457Lakhs as against a loss after tax of H9,213 Lakhs in FY 2024-25.

The Debtors Turnover Ratio improved during the year owing to better quality of sale and credit management practices. The Inventory Turnover Ratio improved, reflecting better inventory management, optimized stock levels, and improved sales realization. The Interest Coverage Ratio witnessed a significant improvement due to the Companys return to profitability and improved earnings before interest and taxes, coupled with a relatively stable finance cost structure.

The Current Ratio remained at a comfortable level, demonstrating the Companys ability to meet its short-term financial obligations. The Debt-Equity Ratio improved considerably during the year as a result of the strengthening of shareholders funds through the successful rights issue and the profit earned during the year. The improvement in the Companys capital structure also contributed to a stronger balance sheet position.

The Operating Profit Margin improved compared to the previous year, driven by higher revenue, improved product mix, operational efficiencies, and focused cost management initiatives. Similarly, the Net Profit Margin recorded a substantial improvement and turned positive during the year, reflecting the Companys successful turnaround from a loss-making position in the previous financial year.

Return on Net Worth also improved significantly and turned positive during FY 2025-26 as compared to the previous year. The improvement was primarily attributable to the profit earned during the year, coupled with the strengthening of the Companys net worth following the rights issue and improved overall financial performance. The positive movement in Return on Net Worth reflects enhanced value creation for shareholders and improved returns on the capital employed in the business.

Financial Ratio	FY 2025-26	FY 2024-25	% Change
Debtors Turnover Ratio (Times)	3.57	2.21	61%
Inventory Turnover Ratio (Times)	4.19	3.15	33%
Debt Service Coverage Ratio (Times)	0.53	0.26	107%
Current Ratio (Times)	1.27	0.97	31%
Debt-Equity Ratio (Times)	0.44	0.93	-52%
EBIDTA Margin (%)	6.7%	-4.4%	250.1%
Net Profit Margin (%)	0.3%	-7.5%	103.9%

The above ratios have been computed based on the audited consolidated financial statements of the Company for the respective financial years. Variations in the ratios are primarily attributable to changes in business volumes, profitability, working capital management, capital structure, and overall operating performance during the year under review.

Outlook and Strategic Path Forward:

In FY 2025-26, the agrochemical industry is witnessing gradual recovery from the correction phase, with improving global demand conditions, stabilization in inventory levels, and continued growth in domestic consumption.

The agrochemical industry is set for steady expansion, supported by rising global food demand, shrinking arable land, and the urgent need for higher agricultural productivity. Growth in the near to medium term is expected to be driven by recovery in exports, increased adoption of precision agriculture, and rising demand for sustainable crop protection solutions.

The outlook remains strong, as companies increasingly embrace bio-based and sustainable crop protection solutions, digital farming tools, and advanced formulations that improve efficiency while reducing environmental impact. There is also an increasing shift toward biologicals, integrated pest management, and precision-compatible products, driven by regulatory changes and sustainability imperatives.

Strategically, the path forward lies in enhancing R&D capabilities, deepening collaborations with agri-tech startups, and aligning portfolios with evolving regulatory frameworks that prioritize sustainability and climate resilience. For India, leveraging cost competitiveness, strengthening backward integration, and expanding into regulated markets will remain critical growth drivers.

Human Resources:

As of March 31,2026, NACL Industries employed 1355 people and maintained a culture of strong industrial harmony.

During FY 2025-26, the Company continued to focus on strengthening organizational capabilities through targeted training programs, leadership development initiatives, and employee engagement practices.

The Company places high emphasis on employee development, offering extensive training programs and capability-building initiatives designed to strengthen both individual and team performance. By fostering continuous learning and professional growth, NACL ensures a motivated, skilled, and future-ready workforce.

Corporate Social Responsibility:

At NACL, community well-being is an integral part of our growth journey.

The Company continued to focus on initiatives that enhance quality of life in its operating regions, including:

• Provision of clean drinking water and sanitation facilities

• Support for education through scholarships, infrastructure, and community programs

• Healthcare and medical assistance initiatives for local communities

• Community development and safety initiatives in collaboration with local authorities

CSR interventions during the year remained aligned with sustainability, inclusivity, and long-term community impact objectives.

In the financial year 2025-26, the average net profits of the Company for the immediately preceding three financial years, resulted in a negative figure of H15.21 Lakhs. In view of the losses incurred during the year, the Company was not required to spend on Corporate Social Responsibility (CSR) activities under the applicable statutory provisions. Accordingly, no amount was spent towards CSR activities during the year..

QEHS (Quality, Environment, Health and Safety):

1) Quality: Quality remains integral to NACLs identity and operations. Supported by process-driven management systems, the Company upholds the highest international benchmarks across all stages of production.

During FY 2025-26, the Company continued to strengthen its quality systems through enhanced process controls, advanced analytical capabilities, and continuous improvement initiatives across manufacturing and R&D functions.

Technical plants, formulation facilities, and R&D centres continued to operate with robust quality frameworks supported by advanced laboratories and skilled professionals.

The Company maintained and further strengthened its accreditations and certifications, ensuring compliance with domestic and international quality standards.

2) Environment: Environmental responsibility is embedded across design, execution, and process management, reinforcing NACLs leadership in sustainable operations. Risks are proactively managed through robust methodologies such as HAZOP, EA&I, and HARA, ensuring the highest standards of environmental safety. The Company operates a pioneering Zero Liquid Discharge (ZLD) system with Distributed Control System (DCS) integration, enabling 100% wastewater recovery and reuse—a benchmark in the Indian agrochemical industry. Commitment to emission control is supported by multistage scrubbers, advanced monitoring tools including online pH and VOC meters, CEMS, and CAAQMS. Safety and resilience are further strengthened through secondary containment, bunding, dyke wall protection, and automated alarm systems integrated with the DCS. Stormwater management through conductivity-based reuse and in-house validation ensures water stewardship. Guided by the 5R philosophy—Refuse, Reduce, Reuse, Recycle, and Recover—the Company continues to minimize waste, eliminate /reduce effluent loan instead of existing HTDS effluent in one product, reduce effluent load by up to 75% in others, and recover high-value salts for reuse and commercial sale, thereby driving both ecological sustainability and business value.

3) Health: Employee health and well-being are central to the EHS framework. Occupational Health Centres operating round the clock across sites provide immediate care, emergency response, and preventive consultation. Comprehensive medical check-ups, health surveillance, and early risk identification, particularly for chemical exposures, are complemented by wellness programs on fitness, mental health, ergonomics, and chronic disease prevention. Initiatives such as vaccination drives, yoga sessions, and health awareness campaigns foster a culture of holistic well-being. Alignment with ISO 45001:2018 standards further strengthened workplace safety, resilience, and employee engagement, positioning wellbeing as a cornerstone of organizational sustainability.

4) Safety: Safety is ingrained as a core organizational value. Facilities are equipped with state-of-the art fire detection and prevention systems, structured Permit- to-Work mechanisms and comprehensive emergency preparedness plans to ensure continuous protection. Employee engagement is driven through initiatives such as Suraksha Sammelan, Suraksha Yojana, and the Safety Monthly Star program, fostering a culture of shared responsibility. Integration of Process Safety Management (PSM) with ICCs Responsible Care principles, along with advancement of Behaviour-Based Safety (BBS), has established a robust safety ecosystem that safeguards people, strengthens operational integrity, and reinforces stakeholder trust.

Internal Control Systems and their Adequacy:

NACL has established a comprehensive and resilient internal control framework designed to safeguard assets, ensure regulatory compliance, and enable swift resolution of operational issues. The system is continuously monitored, strengthened, and adapted to evolving business needs and regulatory changes. Oversight is reinforced through rigorous reviews by the Audit Committee, which ensures that audit observations are addressed with timely corrective actions. Regular and transparent engagement with both internal and statutory auditors further enhance the efficiency, reliability, and integrity of our control environment, reflecting our commitment to strong governance and operational excellence.

Cautionary Statement:

In this Annual Report, we have disclosed forward-looking information to help investors understand our prospects and make informed investment decisions. This Report, along with other written and oral communications made by us periodically, contains forward-looking statements that reflect anticipated results based on managements plans and assumptions. Wherever possible, we have identified such statements using words such as "anticipates", "estimates", "expects", "projects", "intends", "plans", "believes", and words of similar substance in discussions of future performance. While we believe these assumptions are prudent, there is no assurance that the forward-looking statements will be realized. The achievement of results is inherently subject to risks, uncertainties, and potential inaccuracies in assumptions. Should known or unknown risks or uncertainties arise, or should underlying assumptions prove inaccurate, actual results may differ materially from those anticipated, estimated, or projected. Readers are therefore advised to bear this in mind. We undertake no obligation to publicly update any forward looking statements, whether because of new information, future developments, or otherwise.