Adon Agro Commodities Ltd Management Discussions

The following discussion and analysis of our financial condition and results of operations for the Financial Years 2025, 2024 and 2023 is based on, and should be read in conjunction with, our Restated Financial Statements, including the schedules, notes and significant accounting policies thereto. Our Restated Financial Statements have been derived from our audited financial statements and restated in accordance with the SEBIICDR Regulations and the ICAI Guidance Note. Our restated financial statements are prepared in accordance with applicable Accounting Standards.

You should read the following discussion ofour financial condition and results of operations together with our restatedfinancial statements included in this Draft Red Herring Prospectus. You should also read the section titled “Risk Factors " beginning on page 39 of this Draft Red Herring Prospectus, which discusses a number offactors, risks and contingencies that could affect our financial condition and results of operations. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year are to the twelve-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to “we ”, “us ” or “our” refers to Adon Agro Commodities Limited, our Company. Unless otherwise indicated, financial information included herein are based on our “Restated Financial Statements "for the Financial Years 2025, 2024 and 2023 included in this Draft Red Herring Prospectus beginning on page 191.

BUSINESS OVERVIEW

Our Company was incorporated in 2022 and operates in the agro-commodity trading industry, primarily engaged in the sourcing and distribution of premium quality dry fruits.

We source premium quality dry fruits from Asia, the Middle East, and Africa, from certified suppliers and enforce strict quality control.

Our total revenue from operations has grown at a CAGR of 114% from Fiscals 2023 to 2025. Our EBITDA has grown at a CAGR of 1377% from Fiscals 2023 to 2025. Our restated profit for the year has grown at a CAGR of 801% from Fiscals 2023 to 2025.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST AUDITED PERIOD

After the date of last audited accounts i.e. March 31, 2025, the Directors of our Company confirm that, there have not been any significant material developments which materially and adversely affect or is likely to affect within the next twelve months for the trading or profitability of the Company, the value of its assets or its ability to pay its liability.

KEY FINANCIAL PERFORMANCE

The table below sets forth the key performance indicators of our business as of/for the periods indicated;

Key Performance Indicators#	March 31, 2025	March 31, 2024	March 31, 2023
Revenue from Operations?	10,303.55	7,256.71	2,233.48
Total Revenue (2)	10,304.02	7,291.6	2,233.48
Gross Profit?	1,274.71	787.67	117.09
Gross Margin?	12.37%	10.80%	5.24%
EBITDA?	1,043.79	289.06	47.38
EBITDA Margin?	10.13%	3.98%	2.12%
Profit After Tax for the Year("PAT")	723.31	181.10	8.19
PAT Margin?	7.02%	2.50%	0.37%
ROE(7)*	84.32%	69.48%	38.96%
roce(4)(8) *	59.19%	38.33%	52.67%
Net Debt/ EBITDA(9)	0.45	2.41	0.00

Notes:

(1) Revenue from operation means revenue from sale of our products

(2) EBITDA is calculated as Profit before tax + Depreciation + Finance Costs — Other Income

(3) EBITDA Margin is calculated as EBITDA divided by Revenue from Operations

(4) PAT Margin is calculated as PATfor the period/year divided by revenue from operations

(5) Return on Equity is calculated by comparing the proportion of net income against the amount of average shareholder equity

(6) Return on Capital Employed is calculated as follows: Profit before tax + Finance Costs — Other Income (EBIT) divided by (Tangible Net Worth + Total Debt + Deferred Tax Liabilities)

(7) Debt to Equity ratio is calculated as Total Debt divided by equity

(8) Current Ratio is calculated by dividing Current Assets to Current Liabilities

(9) Net profit ratio is calculated by dividing Net Profit to Revenue from Operations

(10) Earnings per share = Profit available to equity shareholders / Weighted No. of shares outstanding at the end of the year.

(11) Net Fixed asset turnover ratio: Net fixed asset divided by revenue from operations

Key Financial Performance	Explanations
Financial KPIs
Revenue from Operations	Revenue from Operations is used by our management to track the revenue profile of the business and in turn helps to assess the overall financial performance of our Company and volume of our business
EBITDA	EBITDA provides information regarding the operational efficiency of the business
EBITDA Margin	EBITDA Margin (%) is an indicator of the operational profitability and financial performance of our business
PAT	Profit after tax provides information regarding the overall profitability of the business
PAT Margin (%)	PAT Margin (%) is an indicator of the overall profitability and financial performance of the business
Return on equity (%)	Return on equity (ROE) is a measure of financial performance
Return on capital employed (%)	Return on capital employed is a financial ratio that measures our companys profitability in terms of all of its capital
Debt-Equity Ratio (times)	Debt / Equity Ratio is used to measure the financial leverage of the Company and provides comparison benchmark against peers
Net fixed asset turnover ratio (times)	Net fixed asset turnover ratio is indicator of the efficiency with which our company is able to leverage its assets to generate revenue from operations
Current Ratio (times)	The current ratio is a liquidity ratio that measures our to pay short-term obligations or those due within one year
Net profit ratio (%)	Net Profit Margin (also known as “Profit Margin” or “Net Profit Margin Ratio”) is a financial ratio used to calculate the percentage of profit our company produces from its total revenue

As certified by Kheria and Company, Chartered Accountants vide their certificate dated June 02, 2025.

For more information refer to the certificate on KPI Indicators which is part of the material documents

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, in the section titled “Financial Information” on page 191 of this Draft Red Herring Prospectus.

RESULTS OF KEY OPERATIONS

Particulars	31 March 2025	% of Total Income	31 March 2024	% of Total Income	31 March 2023	% of Total Income
Revenue from Operations	10,303.55	100.00%	7,256.71	99.52%	2,233.48	100.00%
Other Income	0.47	0.00%	34.89	0.48%	-	0.00%
Total Income	10,304.02	100.00%	7,291.60	100.00%	2,233.48	100.00%
Expenses
Purchases of Stock in Trade	9,081.37	88.13%	6,503.93	89.20%	2,116.39	94.76%
Change in Inventories of work in progress and finished goods	(52.06)	-0.51%		0.00%		0.00%
Employee Benefit Expenses	104.85	1.02%	224.45	3.08%	35.49	1.59%
Finance Costs	12.78	0.12%	3.71	0.05%	0.16	0.01%
Depreciation and Amortization Expenses	41.17	0.40%	24.49	0.34%	34.16	1.53%
Other Expenses	126.07	1.22%	274.16	3.76%	34.22	1.53%
Total expenses	9,314.18	90.39%	7,030.74	96.42%	2,220.42	99.42%
Profit/(Loss) before Exceptional and Extraordinary Item and Tax	989.84	9.61%	260.86	3.58%	13.07	0.58%
Exceptional Item	-		-		-
Profit/(Loss) before Extraordinary Item and Tax	989.84	9.61%	260.86	3.58%	13.07	0.58%
Extraordinary Item	-		-		-
Profit/(Loss) before Tax	989.84	9.61%	260.86	3.58%	13.07	0.58%
Tax Expenses
Current Tax	264.83	2.57%	82.51	1.13%	8.43	0.38%
Deferred Tax	1.70	0.02%	(2.75)	-0.04%	(3.55)	-0.16%
Profit/(Loss) after Tax	723.31	7.02%	181.10	2.48%	8.19	0.37%

MAIN COMPONENTS OF OUR RESTATED FINANCIAL STATEMENT

Main Components of our Restated Financial Statement are as follows;

Income

Our total income comprises of revenue from Sale of Products and other income. Revenue from Operations .Our revenue from operations as a percentage of total income was 100%, 99.52% and 100%, for the F.Y. 2024-2025, 2023-2024 and 2022- 2023 respectively.

Other Income

Our other income comprises of interest income, Foreign Exchange Gain etc.

Expenditure

Our total expenditure primarily consists of raw material consumed, employee benefit expenses, finance cost, depreciation expenses, other expenses and prior period expenses.

Cost of material consumed

It consists of cost of good purchased during the period, other direct expenses and change in inventory of raw materials.

Change in inventory

It consists of change in inventory of finished goods.

Employee Benefit Expenses

Employee benefit expenses comprise of salaries and director remuneration and employee welfare expenses.

Depreciation and Amortization Cost

Depreciation and Amortization Expenses consist of depreciation on the Tangible assets of our company i.e. Building, Furniture & Fixtures, Vehicles, Computer and Office Equipment.

Finance costs

Finance cost includes Interest on Borrowings and other borrowing cost.

Other Expenses

Other expenses include Advertisement, Commission, Legal & professional expenses, Rent, Insurance expense, Telephone and Internet charges, Rates and taxes, Auditor ‘s fees and Miscellaneous expenses.

Provision for Tax

The provision for current tax is computed in accordance with relevant tax regulation. Deferred tax is recognized on timing differences between the accounting and the taxable income for the year and quantified using the tax rates and laws enacted or subsequently enacted as on balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized in future.

F.Y. 2024-2025 COMPARED TO F.Y. 2023-24 Total revenue Revenue from operations

Revenue from operation has increased by 41.99% to ?10,303.55 lakhs inF.Y. 2024-2025 from ? 7,256.71 lakhs in F.Y.2023-2024. Such increase was primarily attributable to an introduction of new products.

Other income

Other income decreased by 98.65% to ?0.47 lakhs in F.Y. 2024-2025 from ?34.89 lakhs in F.Y. 20232024. Such decreased was primarily attributable to a decreased in interest income and Foreign Exchange Gain.

Total expenses

Raw materials consumed

Cost of materials consumed increased by 39.63% to ? 9,081.37 lakhs in F.Y. 2024-2025 from ? 6,503.93 lakhs in F.Y.2022-2023. Such increase was predominantly due to increase in purchases of finished goods during the period.

Changes in inventories of finished goods, stock in trade and work-in-progress

Changes in inventories of finished goods was t (52.06) lakhs in F.Y. 2024-2025 and ? Nil lakhs in F.Y. 2023-2024.

Employee benefit expenses

Employee benefits expenses decreased by 53.29 % to ?104.85 lakhs in F.Y. 2024-2025 from ?224.45 in F.Y.2023-2024. The decline in employee benefit expenses is primarily due to the directors are drawing less remuneration during the current year, in contrast to the previous year. Additionally, the reduction in director remuneration is attributed to the redistribution of responsibilities. Last year, Mr. Narayanswamy Venkitkrihnan was solely overseeing the entire operations of the company. However, with the recent appointments of Mr. Shubham Ratan Sharma and Ms. Jigisha Narayanswamy, his operational responsibilities have decreased, resulting in a lower remuneration requirement.

Finance cost

Finance cost expense increased by 244.47% to ? 12.78 lakhs in F.Y. 2024-2025 from ? 3.71 lakhs in F.Y. 2023-2024 due to increase in interest cost and other borrowing cost.

Depreciation and amortization expense

Depreciation and amortization expense increased by 68.11% to ? 41.17 lakhs in F.Y.2024-2025 from ? 24.49 lakhs in F.Y. 2023-2024. This was predominantly due to addition in tangible assets during the year 2024-25 and the resultant depreciation of Building, Furniture & Fixtures, Vehicles, Computer and Office Equipment during the year.

Other Expenses

Other expenses decreased by 54.02% to ? 126.07 lakhs in F.Y. 2024-2025 from ? 274.16 lakhs in F.Y.2023-2024. This reduction is due to the company shifting to direct customer transactions, eliminating intermediary commissions and support charges.

Particulars	FY 24-25	FY 23-24	Variation
Commission	33.23	157.75	(124.52)
Business Support Charges	-	30.50	(30.50)
Total	33.23	188.25	(155.02)

Profit/ (Loss) before Tax

The increase in scale of operations has led to increase in our Profit before tax by 279.45% from 1989.84 lakhs in F.Y. 2024-2025 to 260.86 lakhs in F.Y. 2023-2024.

Tax expenses

Our tax expenses increased to ?266.53 lakhs in 2024-2025 from ?79.76 lakhs in 2023-2024.

Profit for the year

Our profit - -

2022.With the increase in revenue for more than 41.99%, The margin has increased primarily due to the introduction of new high-margin products this year, which were not part of the product mix in the previous year.

F.Y. 2023-24 COMPARED TO F.Y. 2022-2023 Total revenue Revenue from operations

-

2,233.48 lakhs in F.Y. 2022-2023, predominantly due to an increase as primarily driven by a significant rise in the volume of imported goods. This strategic increase in imports enabled us to better meet local market demand, resulting in higher sales.

Other income

Other income increased to ? 34.89 lakhs in F.Y. 2023-2024 from ? Nil in F.Y. 2022-2023. This increase was predominantly due to increase in interest income & Foreign Exchange Gain.

Raw materials consumed

2023-

lakhs in F.Y. 2022-2023. Such increase was predominantly due to increase in purchase of finished goods in line with increase in revenue.

Employee benefit expenses

F.Y. 2023-

lakhs in F.Y. 2022-2023.This was predominantly due to an increase in salary and director remuneration. Finance cost

Finance cost expense increased by 2238.04 % to ? 3.71 lakhs in F.Y. 2023-2024 from ? 0.16 lakhs in F.Y. 2022-2023 due to increase in interest expense and Other borrowing costs.

Depreciation and amortization expense

Depreciation and amortization expense decreased by 28.31% to ? 24.49 lakhs in F.Y. 2023-2024 from ? 34.16 lakhs in F.Y. 2022-2023.

Other Expenses

Other -

2022-2023. Our other expenses significantly increased due to increase in commission expenses, consultancy fees and Legal & Professional Fees. Such increase was in-line with an increase in the revenue as described above, which required an increase in other expenses.

Profit/ (Loss) before Tax

The increase in scale of operations has led to increase in our Profit before tax by 1896.53 % from ? 260.86 lakhs in F.Y. 2023-2024 to 13.07 lakhs in F.Y. 2022-2023.

Tax expenses

Our tax expenses increased to ? 79.76 lakhs in F.Y. 2023-2024 from ? 4.88 lakhs in F.Y. 2022-2023. Profit for the year

The profit after tax was ? 181.10 lakhs in F.Y. 2023-2024 and ? 8.19 lakhs in F.Y. 2022-2023.

DISCUSSION ON THE STATEMENT OF CASH FLOWS

The following table sets forth certain information relating to our Companys statement of cash flows for the periods indicated:

Particulars	F.Y.
	2024-25	2023-24	2022-23
Net cash flows generated from operating activities	457.9	(156.69)	152.43
Net cash flows (used in) investing activities	(891.18)	23.4	(35.23)
Net cash flows (used in)/generated from financing activities	(234.28)	982.13	(96.26)

Financing activities

In F.Y.2024-2025, net cash from financing activities was (? 234.28) lakhs due to repayment of short term borrowing, Proceeds from Long Term Borrowings and payment of interest cost.

In F.Y.2023-2024, net cash used in financing activities was ? 982.13 lakhs due to Proceeds from Issue of Share Capital, Proceeds from Long Term Borrowings and payment of interest cost.

In F.Y.2022-2023, net cash from financing activities was (? 96.26) lakhs due to repayment of borrowing and payment of interest cost.

Contingent Liabilities

As on March 31, 2025 and March 31, 2024 the Company having Nil contingent liabilities.

INFORMATION REQUIRED AS PER ITEM 11 (II) (C) (IV) OF PART A OF SCHEDULE VI TO THE SEBI REGULATIONS

1. Unusual or infrequent events or transactions

Except as described in this Draft Red Herring Prospectus, during the period/ years under review there have been no transactions or events, which in our best judgment, would be considered unusual or infrequent.

2. Significant economic changes that materially affected or are likely to affect income from continuing operations.

Other than as described in the Section titled “Financial Information” and chapter titled “Managements Discussion and Analysis of Financial Conditions and Results of Operations” on page no. 237 respectively of this Draft Red Herring Prospectus respectively, to our knowledge there are no significant economic changes that materially affected or are likely to affect income from continuing Operations.

3. Income and Sales on account of major sectors

Our Revenue from operations is bifurcated into two sectors: wholesale sector and retail sector, with the wholesale sector dealing with import of premium quality dry fruits and selling it to the end customers and retail sector functions under our brand name “HUNGER NUTS” For details, please refer to chapter “Our Business” on page 131 of this Draft Red Herring Prospectus.

4. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.

Other than as described in the chapter titled “Risk Factors¹ and “Managements Discussion and Analysis of Financial Conditions and Result of Operations” on page no 39 and 237 respectively of this Prospectus respectively, best to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our company from continuing operations.

5. Extent to which material increases in net sales or revenue are due to increase in services

Changes in revenue in the last three financial years are as explained in the part “Financial Year 202425 compared with financial year 2023-24 and Financial Year 2023-24 Compared with Financial Year 2022-23” above.

6. Significant dependence on a single or few Suppliers or Customers

As we deal with the general public, there are no key customers or we do not have long agreements with suppliers or customers through whom a significant portion of the revenue is generated.

7. Status of any publicly announced new products or business segment.

Please refer to the chapter titled “Our Business” beginning on page 131 of this Draft Red Herring Prospectus for new products or business segments.

8. Competitive conditions.

We face competition from various domestic and international players in the market. Most of our competitors are at domestic level. We intend to continue competing rigorously to capture more market share and manage our growth in an optimal way. We expect that our commitment to quality, pricing and transparency will provide us with an edge over our competitors. Further we believe that our competition also depends on several factors which include changing business framework, competitive price, delivery at given timeline and established relationship with suppliers, brand recognition etc.

9. Issuance of Bonus Shares and Impact on EPS

The company recently issued bonus shares, which may, on the surface, appear to reduce Earnings Per Share (EPS). However, this is offset by increased business volumes. As evidenced, the companys turnover for the first two months of the current financial year has shown significant growth. Based on this performance, it is reasonably assumed that EPS will remain unaffected in the longer term. Additionally, the proposed fund raising through this IPO is expected to further bolster profitability and enhance shareholder value.