Adon Agro Commodities Ltd Management Discussions

1. INDUSTRY OUTLOOK

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NUTS & DRY FRUITS INDUSTRY AT A GLANCE

- Large & Growing Market: Robust demand driven by health awareness and rising incomes

- Global Integration: India is a key importer and re-exporter of nuts

- Healthy & Nutritious: High in protein, vitamins and essential nutrients

KEY GROWTH DRIVERS

- Rising health consciousness and wellness trend

- Increasing disposable income and urbanization

- Expansion of modern retail and e-commerce

- Product innovation and value-added offerings

- Growing demand in food service and gifting segments

KEY TRENDS

- Shift towards premium and healthy snacking

- Rise in online sales and home delivery

- Clean label, organic and sustainably sourced products

- Convenient packaging and ready-to-eat formats

KEY OPPORTUNITIES

- Rising domestic consumption across age groups

- Untapped potential in tier II & III towns and rural markets

- Increasing export opportunities to global markets

- Focus on processing, branding and value addition

KEY CHALLENGES

- Dependence on imports for certain varieties

- Volatility in commodity prices

- Supply chain disruptions and logistics challenges

- Regulatory compliance and quality standards

MAJOR PRODUCTS: Almonds, Cashews, Pistachios, Walnuts, Raisins & Others

MAJOR END-USE SEGMENTS: Household, Food Service, Confectionery, Bakery, Gifting

IMPORT SOURCES: USA, Afghanistan, Iran, Australia, Turkey & Others

EXPORT MARKETS: UAE, USA, Europe, Canada, Australia & Others

The information presented under this section is based on the industry report titled "Nuts and Dry Fruits Industry", dated March 13, 2026, prepared by Infomerics Analytics and Research Private Limited, which was commissioned by the Company for the purposes of the Issue. The report provides an overview of the nuts and dry fruits industry, including relevant industry trends, market dynamics, growth drivers and other factors influencing the sector.

The Company has relied upon the information contained in the aforesaid industry report for presenting the industry-related information in this section. While the information has been compiled from sources believed to be reliable, the Company does not independently verify the accuracy, completeness or underlying assumptions of such information. Industry data and publications are generally based on information available as on specific dates and may, therefore, be subject to changes arising from evolving market conditions, economic factors, consumer trends, regulatory developments and other external factors.

Accordingly, the industry-related information contained herein should be read in conjunction with the relevant disclosures made in the Companys Red Herring Prospectus and other publicly available information. Forecasts, estimates, projections and other forward-looking statements relating to the industry are subject to inherent uncertainties and may differ materially from actual developments or future outcomes.

The Company believes that the nuts and dry fruits industry is influenced by factors such as changing consumer preferences, increasing awareness regarding healthy and nutritious food choices, evolving retail and distribution channels, availability and sourcing of raw materials, import dynamics, pricing trends and overall economic conditions. The Companys performance and future prospects are consequently dependent, among other factors, on the overall growth and development of the industry in which it operates.

The industry information presented in this section is intended to provide a broad perspective on the sector and should not be construed as a guarantee of future industry performance or the Companys future results. Investors and other stakeholders are advised to undertake their own assessment of the relevant industry conditions and associated risks while evaluating the Companys business and prospects.

2. OPPORTUNITIES AND THREATS

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OPPORTUNITIES

- Growing Demand for Packaged and Value-Added Dry Fruits

- Expansion of Retail and E-commerce Channels

- Corporate and Festive Gifting Segment

- Product Diversification and New SKUs

- Geographic Expansion

THREATS

- Commodity Price Volatility

- Intense Competition

- Regulatory and Compliance Risks

- Logistics and Supply Chain Disruptions

- Shifts in Consumer Preferences

OPPORTUNITIES

1. Growing Demand for Packaged and Value-Added Dry Fruits

Increasing consumer preference for packaged, hygienic and value-added food products is creating opportunities for greater adoption of processed, flavoured and customised dry fruit offerings. The shift towards convenience, product quality and improved packaging is expected to support the growth of organised players in the segment.

2. Expansion of Retail and E-commerce Channels

The continued expansion of organised retail, e-commerce platforms and quick-commerce channels is providing wider avenues for market penetration and direct access to consumers. The increasing adoption of online purchasing and home-delivery models also presents opportunities to enhance product reach and brand visibility across geographies.

3. Growth in Corporate and Festive Gifting

The increasing demand for premium dry fruit assortments in corporate gifting, festive occasions and other social and institutional segments presents opportunities for customised product offerings and expansion of the gifting segment. Growing consumer preference for premium and health-oriented gifting solutions may further support demand.

4. Product Diversification and Introduction of New SKUs

Changing consumer preferences provide opportunities for product innovation and portfolio diversification across different categories of nuts, seeds, health mixes and innovative snack formats. Development of differentiated and value-added products can help address evolving consumption patterns and create additional avenues for market expansion.

5. Geographic Expansion

There remains potential for expanding distribution and market presence across additional domestic markets, particularly in emerging consumption centres. In addition, selective exploration of export opportunities for processed and packaged products may provide avenues for geographic diversification and long-term growth.

THREATS AND MITIGATION MEASURES

1. Commodity Price Volatility

The prices of nuts and dry fruits are subject to fluctuations arising from climatic conditions, global supply-demand dynamics and geopolitical developments, including conflicts and disruptions in major producing and supplying regions. Such volatility may affect procurement costs, product pricing and operating margins.

Mitigation

The impact of commodity price volatility may be managed through prudent procurement planning, regular monitoring of market conditions and inventory levels, and appropriate pricing strategies. Diversification across product categories and sourcing arrangements may also help reduce dependence on any single commodity or source market.

2. Intense Competition

The nuts and dry fruits industry is highly competitive, with the presence of unorganised traders, regional processors and established branded players. Competitive intensity may exert pressure on product pricing, market share and margins.

Mitigation:

The industry can address competitive pressures through product differentiation, quality and packaging, product innovation, customer-focused offerings and expansion across multiple sales and distribution channels. Focus on value-added products and customised offerings may further support differentiation in the market.

3. Regulatory and Compliance Risks

Changes in food safety regulations, import policies, customs duties, quality standards and other applicable regulatory requirements may increase compliance obligations and affect sourcing and procurement processes.

Mitigation:

Continuous monitoring of applicable laws, regulations and quality requirements, together with appropriate internal compliance processes, quality controls and documentation, can help address regulatory risks. Timely adaptation to changes in applicable requirements is important for maintaining operational continuity and compliance.

4. Logistics and Supply Chain Disruptions

Dependence on international sourcing exposes the industry to risks relating to shipping delays, port congestion, freight cost fluctuations and other disruptions in the global supply chain. Such disruptions may affect the timely availability and cost of raw materials.

Mitigation:

Supply chain risks may be managed through advance procurement planning, inventory management, monitoring of logistics conditions and diversification of sourcing arrangements wherever commercially feasible. Maintaining appropriate inventory levels can also provide flexibility in responding to temporary supply disruptions.

5. Shifts in Consumer Preferences

Consumer preferences relating to taste, product formats, health considerations and purchasing behaviour may change rapidly. Failure to respond to evolving preferences may affect demand for existing products and require continuous product adaptation.

Mitigation:

Regular monitoring of consumer trends and market demand, together with product innovation, introduction of new SKUs and development of differentiated and value-added offerings, can help address changing consumer preferences. Maintaining a diversified product portfolio may also enable greater responsiveness to evolving market requirements.

3. INITIATIVES

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1. Focus on Distribution Excellence

A key strategic focus is to strengthen distribution capabilities by ensuring prompt and reliable delivery while expanding market reach across new regions. Emphasis is being placed on developing an efficient and streamlined supply chain to enhance service levels, improve distribution efficiency and support sustainable business growth.

2. Expansion of Product Portfolio

The product portfolio is being evaluated for further expansion, particularly across the retail segment, with opportunities to introduce complementary products such as chips, dips and sauces. Such diversification is intended to broaden the product offering, address evolving consumer preferences and create additional avenues for growth, subject to operational feasibility, profitability and market conditions.

3. Supporting National Initiatives and Employment Generation

The business strategy also seeks to contribute towards broader national development objectives through employment generation and participation in the growth of the organised food and retail sector. The planned expansion of retail activities is expected to support employment opportunities while contributing to initiatives aligned with Aatmanirbhar Bharat and the Make in India vision.

4. RISKS AND CONCERNS

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- RAW MATERIAL & PRICE RISK: Changes in availability and prices of raw materials, global market conditions and import-related factors may impact our costs and margins.

- WORKING CAPITAL & LIQUIDITY RISK: Our business is working-capital intensive. Any increase in working capital needs or delay in realisation of receivables may affect our liquidity and financial position.

- OPERATIONAL & SUPPLY CHAIN RISK: Disruptions in sourcing, processing, packaging, logistics or infrastructure may impact our operations and timely fulfilment of orders.

- FOREIGN EXCHANGE & OVERSEAS OPERATIONS RISK: Exposure to foreign exchange fluctuations, international market conditions and risks relating to our overseas subsidiary and global trade.

- REGULATORY & COMPLIANCE RISK: Our operations are subject to various laws and regulations. Changes in regulations or non-compliance may adversely affect our business and reputation.

- QUALITY, FOOD SAFETY & BRAND RISK: Maintaining high product quality, food safety standards and protecting our brand are critical for our continued growth and customer trust.

- CUSTOMER CONCENTRATION RISK: A significant portion of our revenue is derived from a limited number of customers. Loss of key customers or reduction in orders may impact our financial performance.

The Companys business operations are subject to various risks and uncertainties arising from market conditions, availability and prices of raw materials, competition, regulatory requirements, working capital requirements and other operational and external factors. The Company continuously monitors such risks and undertakes appropriate measures to minimise their potential impact on its business and financial performance. The key risks and concerns relevant to the Company are discussed below:

(a) Customer Concentration Risk

The Company is dependent on the availability and prices of dry fruits, nuts, seeds and other raw materials sourced from domestic and international markets. Fluctuations in commodity prices, supply conditions, import-related costs and logistics expenses may affect the Companys operating costs and margins.

(b) Working Capital Risk

The Companys operations are working-capital intensive due to procurement and maintenance of inventory, processing activities and credit extended to customers. Any increase in working capital requirements or delay in realisation of receivables may impact the Companys liquidity and financial performance.

(c) Customer Concentration Risk

A portion of the Companys revenues has historically been derived from a limited number of customers. Loss of significant customers or a reduction in orders may adversely affect the Companys revenues and profitability. The Company continues to expand its customer base and distribution channels.

(d) Competition Risk

The Company operates in a competitive industry with the presence of organised players, established brands and other market participants. Increased competition may result in pricing pressure, higher marketing costs and pressure on margins. The Company seeks to address this through product diversification, quality, branding and expansion of its distribution network.

(e) Quality, Food Safety and Regulatory Risk

The Company is required to comply with various food safety, quality, packaging, labelling, import-export and other applicable regulatory requirements. Any failure to maintain product quality or comply with applicable regulations may adversely affect the Companys operations, reputation and financial performance.

(f) Operational and Supply Chain Risk

The Companys operations involve sourcing, importing, processing, packaging, warehousing and distribution. Disruptions in procurement, transportation, logistics, processing or availability of adequate infrastructure may affect the timely fulfilment of customer requirements and overall business operations.

(g) Economic and Foreign Exchange Risk

Changes in economic conditions, consumer demand, commodity prices and international market conditions may affect the Companys business. Further, the Companys international sourcing and overseas operations expose it to foreign exchange fluctuations and other risks associated with international trade.

5. INTERNAL CONTROL SYSTEM

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INTERNAL FINANCIAL CONTROL

Strong Controls. Reliable Information. Better Decisions. Sustainable Growth.

- CONTROL ENVIRONMENT: A strong foundation through policies, ethics and accountability.

- RISK ASSESSMENT: Identifying and evaluating risks that may impact our objectives.

- CONTROL ACTIVITIES: Effective processes and approvals to ensure operational efficiency.

- INFORMATION & COMMUNICATION: Timely, accurate and relevant information flow across the organization.

- MONITORING ACTIVITIES: Continuous evaluation to ensure controls remain effective.

The Company has established internal control systems commensurate with the size, scale and nature of its operations. The internal control framework is designed to support effective and efficient conduct of business, ensure adherence to applicable policies and regulatory requirements, safeguard the Companys assets, and ensure reliability of financial and operational information.

The Companys internal audit functions evaluate the adequacy and effectiveness of its internal systems on an ongoing basis. The internal processes and systems are periodically reviewed and updated to address the evolving requirements of the business and to strengthen internal checks and balances.

The Audit Committee reviews the adequacy of the internal control systems, internal audit function and relevant internal audit findings. The Audit Committee also evaluates internal financial controls and risk management systems and reviews any significant matters relating to internal control weaknesses.

The Company continues to strengthen its internal control, financial reporting and compliance processes in line with the growth and evolving requirements of its business.

6. PERFORMANCE SNAPSHOT

7. HUMAN RESOURCES

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Human resources constitute an integral part of the Companys growth and operational efficiency. The Company recognises that a capable, committed and skilled workforce is essential for sustaining business growth, maintaining operational excellence and achieving its strategic objectives.

During the year under review, the Company continued to strengthen its human resource capabilities in line with the expansion of its business and operational requirements. The workforce comprises personnel across various functional areas, including business operations, management and administration, finance and accounting, marketing, sales, information technology, merchandising and other operational activities.

The Company focuses on maintaining a productive and collaborative work environment and endeavours to attract, develop and retain competent personnel. Appropriate emphasis is placed on employee engagement, skill development and effective utilisation of human resources to support the Companys evolving business requirements.

The Company also engages contract manpower, wherever required, to support its operational and processing activities and to provide flexibility in managing business and seasonal requirements.

The Company remains committed to maintaining a motivated and efficient workforce and ensuring compliance with applicable employee-related statutory and regulatory requirements.

8. FUTURE PLAN

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- GROWTH & EXPANSION: Strengthening our presence in existing markets and expanding to new opportunities.

- INNOVATION & PRODUCT DEVELOPMENT: Investing in innovation and diversifying our product portfolio to meet evolving needs.

- PEOPLE & CAPABILITIES: Building a talented, motivated and agile team to drive sustainable performance.

- OPERATIONAL EXCELLENCE & SUSTAINABILITY: Enhancing efficiency, strengthening processes and adopting sustainable practices for long-term value creation.

The Company remains focused on strengthening its market presence and creating sustainable growth by expanding its product portfolio, distribution network and geographical reach. The Company intends to leverage its processing capabilities and evolving market opportunities to cater to changing consumer preferences and strengthen its position in the dry fruits and healthy snacking segment.

- Expansion of Retail Presence

The Company intends to further strengthen its presence in the retail segment by expanding its retail network and increasing its presence across hypermarkets, supermarkets and other retail channels. The Company aims to improve its reach among end consumers and enhance its market presence through wider distribution.

- Geographical Expansion

The Company plans to expand its presence across additional states and markets. Geographic diversification is expected to enable the Company to broaden its customer base, reduce dependence on specific markets and create opportunities for sustainable business growth.

- Expansion of Export Presence

The Company intends to expand its export presence by entering new international markets and strengthening relationships with overseas customers. The Company aims to leverage its sourcing and processing capabilities to cater to international demand and gradually increase its presence in overseas markets.

- Product Portfolio Expansion

The Company plans to further diversify its product portfolio by introducing additional snacks and other products, including opportunities in the retail segment for products such as chips, dips and sauces. Such additions are intended to address evolving consumer preferences, strengthen the Companys product offering and capture emerging market opportunities.

- Strengthening Processing and Supply Chain Capabilities

The Company intends to scale up its dry fruit processing operations and strengthen its procurement, inventory, packaging and supply-chain capabilities. The Company will continue to focus on product innovation, quality enhancement and packaging solutions to cater to the growing demand for healthy snacking and gifting products.

Overall, the Company remains focused on expanding its customer base, strengthening its retail and institutional presence, exploring new domestic and international markets and broadening its product portfolio, while maintaining emphasis on quality, operational efficiency and sustainable growth.

9. SEGMENT AND PRODUCT WISE PERFORMANCE

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- BUSINESS SEGMENT:

o SINGLE BUSINESS SEGMENT: The Company operates in a single business segment, namely trading and processing of dry fruits, nuts, seeds and berries. All products are subject to substantially similar risks, returns, regulatory environment and market conditions.

o GEOGRAPHICAL PRESENCE: Export turnover is less than 10% of total revenue and the Company does not have significant assets outside India. Therefore, geographical segment reporting is not applicable.

- PRODUCT PORTFOLIO:

o DRY FRUITS & NUTS: Almonds, cashews, pistachios, walnuts, raisins, dates, apricots, anjeer and assorted mixes.

o PROCESSED & VALUE-ADDED VARIANTS: Whole, halves, roasted, salted, flavoured, powdered, shelled and mixed assortments.

o ASSORTED & CUSTOMISED OFFERINGS: Mixed packs, curated combinations, retail packs, bulk packs and gift packs.

o SNACK & READY-TO-CONSUME PRODUCTS: Select ready-to-consume snack products and chips for healthy and convenient snacking.

- DISTRIBUTION CHANNELS & END-USE SEGMENTS:

o BULK B2B SALES: To traders and wholesalers

o WHOLESALE & RETAIL: Supply to stores and distributors

o INSTITUTIONAL SALES: To corporate and bulk consumers

o DIRECT TO CONSUMER: Through physical and online channels

o CORPORATE & FESTIVE GIFTING: Curated hampers, gift packs and customised solutions

Segment Performance

In accordance with Accounting Standard (AS) – 17, Segment Reporting, the Company operates in a single business segment, namely trading and processing of dry fruits, nuts, seeds and berries. The products offered by the Company are subject to substantially similar risks, returns, regulatory environment and market conditions. Accordingly, the Company does not have separately identifiable reportable business segments.

From a geographical perspective, the Companys export turnover constitutes less than 10% of its total revenue and the Company does not have significant assets outside India. Accordingly, separate geographical segment reporting is not applicable to the Company.

Product-wise Performance

The Company operates in the dry fruits and healthy snacking segment and has a diversified product portfolio comprising dry fruits, nuts and value-added snack products. The principal product categories include almonds, cashews, pistachios, walnuts, raisins, dried dates, apricots, anjeer and assorted dry-fruit mixes.

The Company also offers processed and value-added variants in different forms, including whole, halves, quarters, broken, shelled, roasted, salted, flavoured, powdered and mixed assortments. The Company undertakes processing activities such as cleaning, grading, shelling, cracking, sorting, mixing and packaging in-house, depending on product and customer requirements.

The Company also caters to varied customer requirements through assorted and customised offerings, including mixed packs and curated combinations for retail, institutional and gifting purposes. Its product portfolio further includes selected ready-to-consume snack products and chips, catering to evolving consumer preferences for convenience and healthy snacking.

The Company serves multiple end-use segments through bulk B2B sales, wholesale and retail supply, institutional sales, direct supply to end consumers through physical and online channels, and corporate and festive gifting. The corporate and festive gifting vertical includes curated dry-fruit hampers, festive and seasonal gift packs, customised assortments and client-specific packaging solutions.

The Companys integrated business model, encompassing sourcing, trading, processing, packaging and multi-channel distribution, enables it to offer both bulk and value-added products and provides flexibility to cater to diverse customer and market requirements.

For and on behalf of the Board of Directors of

ADON AGRO COMMODITIES LIMITED

Sd/-

NARAYANSWAMY VENKITKRISHNAN

DIRECTOR

DIN: 03505998

Sd/-

SHUBHAM RATAN SHARMA

DIRECTOR

DIN: 09654409

Place: Navi Mumbai

Date: 08/09/2026