Simran Farms Ltd Management Discussions

(a) Industry structure and developments

The Indian poultry industry is one of the fastest-growing segments of the agricultural sector, driven by rising demand for protein-rich diets, changing consumer preferences, urbanization, and increased health awareness. Poultry meat, particularly broiler chicken, remains the most affordable source of animal protein. India is among one of the the top global producers of eggs and broiler meat. During FY 2024 25, the sector witnessed steady growth despite challenges such as fluctuations in feed costs (maize and soybean meal), disease management risks, and volatile market prices. Integration of technology, better breeding practices, and bio security measures have helped strengthen productivity and resilience within the industry. Government initiatives for rural poultry, cold chain infrastructure, and the growing acceptance of contract farming models have further contributed to the sectors stability.

The Indian poultry industry is projected to achieve 8-10% revenue growth in FY 2025-26, driven by strong demand from urbanisation, rising incomes, and a growing preference for protein-rich foods. While profitability is expected to narrow due to rising feed costs for maize and soy, the sectors overall financial health is expected to remain stable, supported by strong consumer demand and stable credit profiles.

The Indian poultry market has witnessed significant growth in recent years, fueled by various opportunities such as the rising demand for affordable protein sources among urban and rural consumers, the increasing penetration of organized retail, quick service restaurants (QSRs), and e-commerce platforms, which have collectively driven higher broiler consumption. Additionally, there is a growing demand for value-added products, including ready-to-cook and ready-to-eat chicken, alongside advancements in breeding techniques, feed management, and the development of disease-resistant strains. However, despite this thriving environment, the Indian poultry industry faces several formidable challenges that hinder its growth and sustainability. These challenges include volatility in raw material prices (such as maize and soybean meal), which significantly impact profit margins; the ongoing risk of disease outbreaks, the effects of climate change and high temperatures on mortality and production costs; and competition from alternative protein sources, including plant-based and meat substitutes.

The Company performs in one segment only i.e. poultry and poultry farming. The Company also deals in one product only i.e. broilers. Hence no information is reportable under this head. Further, the financial performance of the Company is specified at Point No. (g) of this Management Discussion and Analysis Report.

At present, the poultry sector in India is encountering challenges such as disease outbreaks in certain regions and production losses related to it, which have temporarily increased prices while adversely affecting farmers earnings in some areas. However, the industry continues to demonstrate significant resilience. Looking forward, the industry is projected to achieve substantial growth. Revenue is expected to rise by 8 10% in the forthcoming fiscal year, propelled by increased demand and higher product prices. Volume is also anticipated to grow by about 4 6%, as more individuals choose affordable, protein-rich poultry options. Additionally, the broader market is on a positive trajectory, with a projected compound growth rate of approximately 8.1% through at least 2034, as modernization, supply-chain improvements, and robust demand continue to drive the sector forward.

The poultry business in India faces several risks and concerns that can affect its growth. The biggest challenges are disease outbreaks like bird flu, which can lead to sudden drop in demand and heavy losses for farmers. Further, rising feed costs (mainly maize and soybean) also put pressure on profitability, since feed makes up more than 60% of production costs. In addition, extreme weather conditions such as heat waves can reduce bird health and productivity. Price fluctuations in chicken and eggs, lack of proper cold storage and transport facilities, and strict food safety regulations also add to the challenges. Together, these risks make the industry vulnerable to sudden ups and downs, even though demand remains strong in the long run. However, the Company consistently monitors these risks and has established mitigation strategies, including forward contracts for feed, vaccination programs, comprehensive insurance coverage, and a diversified product lineup.

The Company has implemented robust internal control systems that are appropriate for its size and operations, aimed at safeguarding assets, ensuring accurate recording and reporting of transactions, and complying with relevant laws and regulations. Regular internal and statutory audits are performed to facilitate timely risk identification and corrective measures, while the Audit Committee periodically assesses the adequacy and effectiveness of these internal controls. Further The Audit Committee, consisting of professionally qualified Directors, engages with the external auditor, internal auditors, and management to address matters within its terms of reference. Both the Audit Committee and the Board believe that the Company has implemented robust Internal Financial Controls that are appropriate for the nature and scale of its business operations, operating effectively, and that no material weaknesses were identified during FY 2024-25.

The Standalone and Consolidated Financial Statements of the Company have been prepared in accordance with Ind AS as per the Companies (Indian Accounting Standards) Rules, 2015 and in compliance with the requirements of the Companies Act, 2013 and the Regulations issued by the Securities and Exchange Board of India (SEBI).

The highlights on Companys financial performance for the FY 2024-25 are as follows:

During the year ended March 31, 2025, the Company has achieved total income of INR 83624.22 Lakhs as against INR 48868.75 Lakhs in the previous year. Further, the Company earned a net profit (Before Comprehensive Income) of INR 579.50 Lakhs as compared to INR 31.12 Lakhs in last year. The significant increase in profits can be attributed primarily to the heightened demand for poultry products, improved price realization for broilers, and enhanced operational efficiency. Furthermore, a reduced incidence of disease, better feed conversion ratios, and effective cost management initiatives also played a vital role in boosting productivity and margins, resulting in a robust overall performance for the year. This growth reflects not only higher sales and better price realization but also improved operational performance through efficient farm management, enhanced productivity, and better cost control. The consistent efforts of the management in strengthening processes, optimizing resources, and focusing on quality and efficiency played a key role in achieving these results.

The Company acknowledges that human resources are a vital asset. To this end, regular training programs focused on farm management, bio security, feed efficiency, and technical skills were conducted. Throughout FY 2024 25, industrial relations remained cordial and positive. Further, as on 31st March, 2025 the Company had 876 employees on its payroll.

As per the amendment made under Schedule V to the Listing Regulations read with Regulation 34(3) of the Listing Regulations, details of key financial ratios and any changes in return on net worth of the Company are given below:

Reason for change in Return on Net Worth: The return on net worth has seen a remarkable increase primarily attributed to a significant rise in profitability while maintaining a relatively stable equity base

Some of the Statements in Management discussion and Analysis describing companys objective may be"forward looking statement" within the meaning of applicable Securities law and Regulations. Actual results may differ substantially or materially from those expressed or implied. Important factors that could influence companys operation include various global and domestic economic factor.