Harshil Agrotech Ltd Management Discussions

1. Industry Overview & Growth Trajectory

• Rapid expansion of food processing: Indias food processing sector is on a fast growth curve. Market projections estimate growth from approximately US $866 billion in 2022 to US $1,274 billion by 2027.

• Broader sector outlook: The processed food market is expected to reach US $535 billion by 2025, growing at a CAGR of ~15.2%, with substantial employment impacts.

• Agriculture as backbone: The wider agriculture sector, including raw and processed produce, is estimated at INR 99.7 trillion in 2024, with forecasts pointing to INR236.6 trillion by 2033 (CAGR ~10.1%).

Implication: These trends affirm significant upside potential for companies operating in spices, oil seeds, grains,

vegetables, herbs, pickles, and other agro-products?especially in value-added segments.

2. Drivers of Industry Growth

A. Urbanization & Changing Consumption

• Urban population growth and lifestyle shifts are driving demand for convenient, processed food formats like ready-to-eat (RTE) and ready-to-cook (RTC) meals. The market for these is projected at ~Rs 12 lakh crore (US $150 billion) by 2025.

• Rising health consciousness has spurred demand for organic, plant-based offerings. The organic food market is set to reach US $9 billion by 2025, growing at ~20% CAGR.

B. Exports & Value-Added Products

• Food exports are expanding rapidly?India targets increasing agricultural & food exports from US $48 billion in 2023-24 to US $100 billion by 2030.

• Proportion of processed food in agri-exports grew from ~13.7% (2014-15) to 25.6% (2022-23).

• Leading exports in FY 25 include rice (US $11.3 bn), marine products (US $6.7 bn), spices (US $3.8 bn), buffalo meat (US $3.7bn), sugar (US $1.86 bn), processed fruits and juices (US $0.93 bn).

C. Technological Innovation & Digitalization

• Precision and digital agriculture (IoT, drones, AI, blockchain traceability) are increasingly adopted?yield improvements up to 20%; water savings up to 30-40%; input reductions notable.

• Digital marketplaces and agritech platforms (e.g., e-NAM) strengthen farmer-producer linkages and improve transparency.

D. Policy Support & Infrastructure

• Governments Production-Linked Incentive (PLI) and PMKSY schemes, Mega Food Parks, PMFME, and other incentive programs are significantly enhancing processing capacities, investment and export readiness.

• Infrastructure investments in cold chains and logistics help reduce post-harvest losses (currently estimated at ~30% of produce).

• Initiatives like Prime Minister Dhan-Dhaanya Krishi Yojana (^24,000 crore annually) aim to improve yields, crop diversification, and farmer incomes across 100 low-performing districts.

E. Sustainability & Value Addition

• State-level initiatives (e.g., Tamil Nadus “Agri2.0”) promote value addition, processing clusters, and exports of GI-tagged products, aligning with modern agribusiness strategies.

• Gujarats push into biofuels and circular dairy-byproduct usage (e.g., Amuls whey ethanol, CBG plants) showcases climate-conscious innovation and income uplift for farmers.

3. Challenges and Risk Factors

• Climate volatility severely disrupts supply?TOP (tomato, onion, potato) crops are especially vulnerable, driving food inflation with spikes up to 42% for vegetables.

• Sugar sector volatility: Weather varieties cause fluctuations in sugar production and export ability, impacting revenue stability.

• Trade pressures: Rising imports from Kenya into Indias tea market risk price erosion and quality dilution, threatening local producers.

• Infrastructure gaps remain: Despite government schemes, deficits in storage, cold chain logistics, road access, and power hinder efficiencies.

• Fragmentation & scale issues: Small land holdings and fragmented operations limit economies of scale and investor appeal.

• Skill shortages & technology adoption: SME access to capital, skilled workforce, and R&D remains limited.

4. Strategic Outlook for the Company

To capitalize on industry momentum and mitigate risks, management should consider:

A. Expanding Value-added, Processed Portfolio

• Focus on RTE/RTC products, organic lines, specialty products (e.g., pickles, herbal mixes) that cater to urban health-conscious and export markets.

• Target rising export segments via stronger branding, certifications (HACCP, organic, ISO), and tapping into APEDA/APEX benefits.

B. Embracing Technology & Digital Platforms

• Implement precision farming, supply-chain digitization, blockchain for traceability, and IoT-enabled postharvest monitoring to elevate quality and efficiency.

• Explore digital marketplaces and agritech tie-ups for better procurement and distribution.

C. Leverage Government Schemes & Clusters

• Apply for PLI incentives, leverage Mega Food Parks, PMKSY, PMFME, and benefit from subsidies for cold chains and infrastructure.

• Participate in value-chain clusters (e.g., Tamil Nadu Agri2.0 avenues) to improve logistics and reduce costs.

D. Sustainability & Climate Resilience

• Incorporate sustainable practices: drought-resistant crop sourcing, renewable-energy usage, bioplastic packaging (e.g., eco-friendly options like those from ghee-residue research).

• Build climate-resilient supply chains?use weather forecasting, cold storage, and buffer stocks to manage TOP crop risk.

E. Social Impact & Farmer Empowerment

• Support FPOs, invest in farmer training (especially around tech adoption), and ensure fair pricing? enhances supply security, loyalty, and brand credibility.

• Align with schemes like Dhan-Dhaanya Krishi Yojana for farmer upliftment and sustainable sourcing.

5. Conclusion & Forward-Looking Statement

The agro and food products industry in India is undergoing transformative growth, propelled by urbanization, export thrusts, technology infusion, and favorable policy frameworks. However, climate risks, infrastructure gaps, and market volatility persist.

For your company, seizing this momentum means doubling down on value addition, tech-enablement, export readiness, and sustainability?all while empowering farmers and aligning with government initiatives. These strategies will enhance competitiveness, resilience, and long-term value creation in an evolving sector.

For and on behalf of the Board of Director of HARSHIL AGROTECH LIMITED

Sd/-

PANKAJKUMR PATEL Managing Director and CFO DIN: 09054613

Date: 05-09-2025 Place: Ahmedabad