Aelea Commodities Ltd Management Discussions

The future depends on what we do in the present.

- Mahatma Gandhi

Industry Overview

Global Economic Overview

The global economy demonstrated resilience during FY2025-26 despite continued geopolitical uncertainties, elevated interest rates in several developed economies, supply chain realignments, and inflationary pressures.

Consumer spending remained stable across major markets, while demand for food products and agricultural commodities continued to benefit from increasing population, rising disposable incomes, and growing health consciousness.

The agricultural processing industry continued to witness significant investments in automation, traceability, sustainability, and value-added product development. Governments and businesses increasingly focused on food security, climate-resilient supply chains, and circular economy initiatives, creating long-term opportunities for integrated agri-processing companies.

The global transition towards sustainable manufacturing, renewable energy, resource optimisation, and circular economy practices is also reshaping the food processing sector. Companies capable of maximising value from agricultural resources while reducing waste and environmental impact are expected to benefit from evolving consumer preferences, regulatory support, and increasing ESG-focused investments.

Global Cashew Industry

The global cashew industry continues to benefit from rising consumer preference for healthy snacks, plant-based nutrition, premium food ingredients, and functional foods. Cashews are increasingly utilized across bakery, confectionery, dairy alternatives, ready-to-eat snacks, and nutraceutical applications.

Growing adoption of vegan diets, expansion of organized retail, and increasing penetration of premium packaged foods continue to support industry growth. At the same time, processors worldwide are focusing on improving automation, reducing processing losses, enhancing traceability, and developing higher-margin value-added products.

Beyond traditional kernel processing, the global industry is increasingly exploring the commercial utilisation of cashew by-products including Cashew Nut Shell Liquid (CNSL), biofuels, industrial oils, activated carbon, biochar, renewable energy solutions, and animal nutrition products. This evolution is creating opportunities for integrated processors capable of building diversified and sustainable value chains.

However, the industry continues to face challenges including climatic uncertainties affecting raw cashew production, freight volatility, labour shortages, foreign exchange fluctuations, and increasing quality compliance requirements in export markets.

Indian Industry Overview

India continues to remain one of the worlds largest processors and consumers of cashew kernels with a well-established processing ecosystem supported by experienced processors, skilled workforce, and growing domestic demand.

Increasing urbanisation, rising disposable income, growing awareness regarding healthy eating habits, and expanding modern retail have significantly strengthened domestic consumption. The rapid growth of organized food brands, premium gifting, institutional buyers, and food processing companies has further expanded opportunities for value-added cashew products.

The Government s emphasis on food processing, agricultural value addition, exports, manufacturing competitiveness, renewable energy, and sustainable industrial development continues to provide a supportive policy environment for the sector. Simultaneously, technological advancements, automated processing lines, improved grading systems, and digital supply chain management are enabling Indian processors to enhance operational efficiency and global competitiveness.

The industry is also witnessing growing interest in integrated processing models that maximise the economic value of agricultural by-products through renewable fuels, industrial applications, sustainable packaging, and circular resource utilisation, thereby supporting long-term competitiveness and environmental sustainability.

Excellence is never an accident. It is always the result of high intention, sincere effort, intelligent direction and skillful execution.

- Aristotle

Business Overview

Aelea Commodities Limited has evolved into an integrated agri-processing company focused on transforming Raw Cashew Nuts (RCN) into premium-quality kernels, branded consumer products and value-added downstream applications.

The Company operates a vertically integrated B2B and B2C business model encompassing procurement, processing, grading, packaging, distribution, branding and value addition, enabling greater control over quality, margins and customer experience. Beyond conventional processing, Aelea views the cashew ecosystem as a circular value chain where every agricultural input represents an opportunity to create economic, environmental and social value through food, industrial and renewable energy applications.

Guided by its Strategy 2037 vision, Aelea aims to progressively build a diversified Feed, Food, Fuel and into value-added food products, renewable energy, industrial applications, animal nutrition, and sustainable agricultural inputs. This long-term strategy seeks to maximise resource utilisation, minimise waste generation, and create multiple revenue streams while strengthening environmental and economic sustainability.

The successful commissioning of the Companys advanced processing facility in Surat has significantly strengthened its manufacturing capabilities. The facility, spread across approximately 238,454 square feet with an installed processing capacity of 140 metric tonnes per day, represents an important milestone in Aelea s growth journey.

The Companys successful listing on the BSE SME platform has further strengthened governance standards, enhanced market visibility, and improved access to growth capital required for future expansion initiatives.

Purpose in Every Process, Prosperity in Every Outcome: Operational Performance

During FY2025-26, the Company continued strengthening its operational capabilities by enhancing processing efficiency, improving procurement systems, expanding manufacturing infrastructure, and increasing automation across its facilities.

Key operational developments during the year included:

The Company also continued investing in operational excellence by adopting improved production planning, inventory management, quality monitoring, and supply chain optimization initiatives. These efforts are expected to strengthen operational resilience while laying the foundation for future downstream integration and value-added processing opportunities.

Global Kernel Demand: Where the Market Is Absorbing Supply

Global cashew kernel demand currently falls in the range of 1.2-1.3 million tons, broadly in line with available supply.

Growth is never by mere chance; it is the result of forces working together.

- James Cash Penney

Financial Performance

The Company s financial performance during FY2025-26 reflected higher processing capacities, increasing customer engagement, and disciplined execution.

Revenue growth was supported by improved processing throughput, stronger customer demand, efficient procurement practices, and expansion across domestic as well as international markets.

The Company maintained focus on cost optimisation through efficient raw material sourcing, improved production planning, better inventory management, and enhanced operational efficiencies.

As the Company progresses towards its long-term Strategy 2037 roadmap, management expects value-added processing, integrated resource utilisation, and diversified product offerings to gradually strengthen operating margins, improve resource productivity, and create sustainable long-term value.

Strong financial discipline, prudent working capital management, and improved governance continue to remain key priorities as the Company scales its operations.

Significant Changes in Key Financial Ratios

operational expansion supported by

Particulars	FY 2025-26	FY 2024-25	Change in % compared to previous year	Remarks
Current ratio	1.40	1.68	-17%	Below +/- 25%
Debt- Equity Ratio	0.88	0.49	80%	On account of additional term loans/ working capital facilities obtained during the year for Expansion.
Debt Service Coverage ratio	0.57	0.17	229%	Improved during the year primarily due to higher operating profitability and improved cash accruals.
Return on Equity ratio	19%	2%	835%	Significant increase in profitability during the year.
Inventory Turnover ratio	3.71	2.31	60%	Higher Sales Volume during the FY 2025-26.
Trade Receivable Turnover Ratio	11.23	5.45	106%	Improved collection efficiency from customers.in FY 2025-26.
Trade Payable Turnover Ratio	208.98	79.35	163%	Timely settlement of vendor obligations
Net Capital Turnover Ratio	7.86	4.76	65%	Increase in working capital during year
Net Profit ratio	5.59%	0.64%	778%	Higher profitability achieved during the year 2025-26.
Return on Capital Employed	33%	58%	-43%	Increase in capital employed and lower operating returns.
Return on Investment	35%	0%	100%	Investment made during the FY 2025-26.

Your brand is what people say about you when youre not in the room.

- James Cash Penney

The financial performance during the year reflects the Company s continued focus on disciplined execution, capacity utilisation, value-added products, and prudent financial management, providing a strong foundation for sustainable long-term growth.

The Company has established a diversified marketing and distribution network serving both Business-to-Business (B2B) and Business-to-Consumer (B2C) markets.

Its customer base includes leading food companies, retail chains, institutional buyers, exporters, and FMCG brands. The Company continues to strengthen long-term customer relationships through consistent product quality, reliable deliveries, competitive pricing, and responsive customer service.

The Company s premium retail offerings under its proprietary brands are gradually expanding their market presence, while exports continue to provide opportunities across the other international markets.

Going forward, the Company intends to strengthen its presence in organised retail, private label manufacturing, premium gifting, institutional ingredients, and global distribution channels.

As part of Strategy 2037, the Company also intends to progressively expand its portfolio of value-added food products, including premium processed cashew-based offerings for retail and institutional customers. The long-term vision includes strengthening branded products, increasing institutional ingredient supplies, expanding exports, and evaluating the development of premium gourmet retail formats to enhance market reach and customer engagement.

Cultivating Prosperity for All:

Strategy & Growth Roadmap

The Company continues to pursue a long-term strategy centred on vertical integration, value addition, sustainability, innovation, and operational excellence.

Under Strategy 2037, Aelea envisions transforming itself into an integrated Feed, Food, Fuel and Fertility enterprise by maximising value from every component of the cashew ecosystem. Rather than viewing Raw Cashew

Nuts solely as a source of edible kernels, the Company seeks to establish a circular business model where each component contributes towards creating economic, environmental, and social value. The Company s strategic roadmap is structured across multiple phases.

Phase I - Strengthening Core Processing Business

The Company will continue expanding its processing capacity, improving operational efficiencies, strengthening procurement capabilities through local and global farm-gate sourcing, increasing automation, and expanding customer relationships across domestic and international markets.

Phase II - Building Integrated Value Chains

The Company plans to develop downstream processing capabilities that maximise utilisation of cashew byproducts while diversifying its revenue streams.

Phase III Renewable Energy & Circular Economy

The Company The final phase of Strategy 2037 focuses on creating an integrated circular economy model where agricultural waste becomes a valuable economic resource.

Vision without action is merely a dream. Action without vision merely passes the time. Vision with action can change the world.

- Joel A. Barker

Long-Term Growth Vision

Beyond cashew processing, Strategy 2037 also outlines a broader aspiration of building an integrated agri-processing platform. The Company intends to evaluate opportunities across complementary agricultural commodities, value-added processing, renewable energy, and sustainable industrial applications while remaining focused on operational excellence, disciplined capital allocation, and responsible growth.

The Companys long-term strategy is supported by four guiding principles:

We do not inherit the Earth from our ancestors; we borrow it from our children.

- Native American Proverb

These initiatives are expected to improve resource utilisation, reduce waste generation, lower environmental impact, diversify earnings, strengthen ESG performance, and create long-term shareholder value.

Sustainability & ESG

Sustainability remains integral to the Company s long-term business strategy and future growth vision. The Company actively promotes responsible sourcing, efficient resource utilisation, waste minimisation, energy conservation, and environmentally responsible manufacturing practices.

Strategy 2037 places sustainability at the core of the Company s value creation model by promoting circular utilisation of agricultural resources. The Company aims to maximise the productive use of cashew shells, husk, and other biomass by converting them into renewable fuels, industrial oils, biochar, activated carbon, soil amendments, and other sustainable products, thereby reducing waste while improving resource efficiency.

The Company also plans to progressively increase the adoption of green energy solutions including biomass, bio-diesel, bio-ethanol, green thermal energy, biogas, and green steam systems. Additional focus areas include reducing carbon emissions through optimised logistics, minimising packaging materials, improving water conservation through closed-loop systems, and producing certified sustainable industrial products.

Beyond environmental initiatives, the Company remains committed to creating meaningful social and economic impact by generating rural employment opportunities, collaborating with Farmer Producer Organisations (FPOs), strengthening agricultural supply chains, supporting women employment, and contributing to Indias food security and export competitiveness.

These initiatives support the Companys vision of creating long-term value while contributing positively to society, the environment, and the broader economy.

In preparing for battle, I have always found that plans are useless, but planning is indispensable.

- Dwight D. Eisenhower

Risk Management

The Company operates in a dynamic business environment and proactively manages risks through comprehensive monitoring and mitigation frameworks.

Major risks include:

Risk mitigation measures include diversified sourcing, long-term supplier relationships, inventory optimisation, disciplined procurement practices, quality assurance systems, robust internal controls, prudent financial management, phased capital deployment, continuous monitoring of market developments, and regular evaluation of emerging business opportunities.

Internal Control Systems

The Company has established adequate internal financial controls commensurate with the size, nature, and complexity of its operations.

The internal control framework covers financial reporting, procurement, inventory management, production processes, statutory compliance, information systems, environmental practices, and operational governance. Periodic internal audits, management reviews, and oversight by the Audit Committee ensure the effectiveness of these controls and facilitate continuous improvement across business functions. As the Company expands into integrated value-added processing under Strategy 2037, it will continue strengthening governance frameworks, operational controls, risk management systems, and compliance mechanisms to support sustainable long-term growth.

Take care of your employees and they ll take care of your business.

Richard Branson

Human Resources

The Company considers its employees to be a key driver of sustainable growth and operational excellence. Employee benefit expenses increased to 577.03 Lakhs in FY2025-26 from 369.22 Lakhs in FY2024-25, reflecting the expansion of operations and strengthening of technical and managerial capabilities.

The Company continued to invest in employee development through training, skill enhancement, workplace safety, and leadership initiatives while maintaining cordial industrial relations throughout the year. Management remains committed to fostering a collaborative, performance-driven, and inclusive work culture that supports innovation, accountability, and continuous learning.

The Company remains committed to creating employment opportunities, particularly in rural communities, while promoting diversity, inclusion, and employee well-being.

Every cashew holds more than a kernel it holds food, fuel, fertility, and the opportunity to build a circular economy.

- Hozefa S. Jawadwala

(CMD of Aelea Commodities Limited)

2037 Outlook

The outlook for the Indian and global cashew industry remains favourable, supported by rising health awareness, increasing consumption of premium food products, expanding organised retail, growing exports, and increasing adoption of plant-based foods. Simultaneously, the growing emphasis on sustainability, renewable energy, circular economy practices, and value-added agricultural processing is creating new opportunities for integrated agri-processing companies capable of maximising resource efficiency and product diversification. Aelea Commodities Limited is well positioned to capitalise on these opportunities through its integrated business model, expanded processing capabilities, strong customer relationships, robust supply chain, and long-term Strategy 2037 roadmap. The Company believes that the future of the agri-processing industry lies not only in primary processing but also in creating value across the entire agricultural ecosystem through innovation, sustainability, downstream integration, and responsible resource utilisation.

Going forward, the Company intends to continue improving processing efficiencies, increasing capacity utilisation, strengthening branded products, expanding institutional sales, and enhancing its presence across domestic and international markets. In parallel, it will progressively evaluate opportunities to develop value-added food products, industrial applications, renewable energy solutions, and sustainable agricultural inputs by leveraging every component of the cashew value chain.

Over the long term, Strategy 2037 envisages transforming the Company into an integrated Feed, Food, Fuel and Fertility enterprise by developing a diversified portfolio spanning premium food products, Cashew Nut Shell Liquid

(CNSL) derivatives, industrial oils, Cardanol-based products, biofuels, bioethanol, biodiesel, green thermal energy, biochar, soil amendments, animal feed, and other sustainable industrial and agricultural products. The Company believes that energy transition opportunities will increasingly extend beyond electricity towards green fuels, green process heat, steam and industrial energy applications, creating significant long-term growth potential As part of its long-term aspirations, the Company aims to establish processing capabilities of approximately 1,000 metric tonnes per day (MTPD) across its agri-processing businesses while simultaneously developing integrated renewable energy solutions and circular economy applications. Under its Nuts & Fruits vertical, the Company envisages increasing the share of processed and value-added products to approximately 50% of total retail sales, while building a portfolio of premium consumer products and institutional ingredients.

The Company also aspires to establish a network of approximately 100 gourmet premium retail stores, supported by franchise partnerships, to strengthen consumer engagement and expand the market for premium nuts, dried fruits and value-added products. Long-term market opportunities are supported by favourable consumption trends across key product categories, including global demand growth projections for cashews from approximately 400 thousand tonnes in 2025 to 700 thousand tonnes by 2037, almonds from 142 thousand tonnes to 320 thousand tonnes, walnuts from 35 thousand tonnes to 88 thousand tonnes, pistachios from 50 thousand tonnes to 140 thousand tonnes, dates from 526 thousand tonnes to 667 thousand tonnes, and makhana from 120 thousand tonnes to 370 thousand tonnes over the same period.

The Company intends to strengthen farm-gate sourcing capabilities, expand local and global procurement networks, including preferential sourcing relationships across Africa, increase operational automation, improve supply chain resilience, and enhance customer engagement through innovation and product development. Strategy 2037 also envisages developing export-oriented processing businesses and increasing value-added agricultural exports from India.

Beyond business growth, the Company seeks to create a broader socio-economic impact through its integrated circular economy model. The long-term strategy aims to facilitate the creation of approximately 3,000 direct employment opportunities, support up to 50,000 livelihoods through collaborations with farmers and Farmer

Producer Organisations (FPOs), and increase participation of rural women, who are expected to constitute nearly 80% of the workforce across various operations and value chains.

From an environmental perspective, the Company intends to improve resource utilisation by converting agricultural by-products into renewable fuels, industrial materials, animal feed and soil enhancement products. The use of biochar and soil amendments, production of cleaner certified biofuels and industrial oils, adoption of closed-loop water and steam systems, and reduction in logistics-related emissions through local processing are expected to strengthen the Company s ESG performance while reducing waste generation and dependence on imports.

The Companys long-term vision is guided by its broader philosophy of creating value for the environment, society and the economy through its Giving Hand approach contributing not only to business growth but also to larger societal and environmental outcomes. This integrated circular business model is expected to improve resource utilisation, diversify revenue streams, strengthen ESG performance, and create sustainable long-term value for all stakeholders.

While global economic uncertainties, commodity price volatility, climatic conditions, geopolitical developments, and changing regulatory requirements may continue to present short-term challenges, the Company remains confident that its disciplined execution, prudent financial management, strong governance framework, experienced leadership team, and long-term strategic vision will enable it to navigate these challenges effectively and deliver sustainable growth in the years ahead.

Cautionary Statement

Statements made in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, future plans, strategies, aspirations under Strategy 2037, or predictions may constitute forward-looking statements within the meaning of applicable securities laws and regulations. These statements are based on management s current expectations, assumptions, estimates, and beliefs regarding future events and business performance.

Actual results may differ materially from those expressed or implied in such forward-looking statements due to various factors, including changes in economic conditions, government policies, regulatory developments, commodity prices, foreign exchange movements, climatic conditions, availability of raw materials, technological developments, project execution risks, competitive pressures, Company s control. demand

The Companys long-term strategic initiatives outlined under Strategy 2037 represent managements current vision and growth aspirations. The implementation of these initiatives will depend upon various business, financial, regulatory, technological, and market conditions prevailing from time to time and may be modified, deferred, or revised based on changing circumstances and business requirements.

The Company undertakes no obligation to publicly update, amend, or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required under applicable laws and regulations.