Ajanta Soya Ltd Management Discussions

Cautionary Statement

The Management Discussion and Analysis sections contain the Companys objectives, projections, estimates and expectations may constitute certain statements, which are forward-looking within the meaning of applicable laws and regulations. The statements in this management discussion and analysis report could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the Government policies, tax regimes, forex markets, economic developments within India and the countries with which the Company conducts business, political factors and such other factors beyond the control of the Company.

The Company is engaged in the primary business of manufacturing of Vanaspati and various kinds of refined oil with shortening products for bakery like biscuits, puffs, pastries and other applications.

Ajanta Soya Limited (ASL) is a leading manufacturer and marketer of Vanaspati, Edible Oils and Bakery Application since two decades. The company has focused on continuous expansion, across business verticals to consolidate, and its industry leadership over the years. The company is promoted by well established group having and proven track record in the fields of edible oils.

By way of periodical expansion, ASL has increased its production capacity from time & again to cater to changing business environment & varied customer needs. The companys turnover has increased manifold over the decades and is expected to grow substantially in subsequent years. ASL also focuses on in-house research and innovation to be a low-cost manufacturer with high-quality products and innovative customer offerings.

ASL is now a Company with a strong portfolio of brands viz. "Dhruv", "Anchal", "Parv", "ASL", "ASL Pure", "ASL Fine Fingers" and "Nutri 1992" and enjoys reputed market share. ASL also offers its quality products as food ingredients to serve food manufacturers and food service industry.

ASL has strived for its commitment and promises to all the stakeholders and has valued their effort for making it a renowned brand, thereby increasing shareholder value. ASL has always been a front runner in taking all the developmental and social initiatives for its stakeholders including employees, customers, society, investors, promoters, vendors and government bodies.

Advanced technology has been the forte of AJANTA. Its state-of-the-art manufacturing plant has been following the highest standards of quality with an emphasis on sustainability. The Company after successful expansion in its refining capacity is now focusing on increasing the capacity utilization by market expansion for its different products and their variants for growing market demands.

Superior procurement and trading skills, continuous innovation, an endeavor to meet consumer needs and stringent quality control standards have enabled AJANTA to emerge as a highly-respected and admired Edible Oil Company.

Company is also investing continuously towards energy saving by adopting appropriate technologies as a measure to contribute to reduction in Industrial Pollution.

The management of the unit is very progressive by nature and the companys affairs are being managed by highly qualified/experienced professionals and the Company is promoted by well-established group having a proven track record in the field of edible oil.

In FY 2024 25, India remained one of the worlds largest edible oil markets and the largest importer, meeting over 60% of its domestic demand through imports. The sector is supported by a fragmented domestic oilseed base, with key crops including mustard, soybean, sunflower and groundnut, processed by a mix of small and large-scale crushing units and refineries. Domestic production showed gradual improvement, aided by government initiatives such as the National Mission on Edible Oils Oil Palm (NMEO-OP) and state-level programmes encouraging higher yields and better-quality seeds. Despite these efforts, import dependency remains high, with palm oil sourced mainly from Indonesia and Malaysia, soybean oil from Latin America and sunflower oil from Eastern Europe.

Global developments during the year, such as Indonesias biodiesel blending policy and disruptions in sunflower oil supplies due to the Russia Ukraine conflict, contributed to price volatility. On the demand side, steady growth was driven by urbanisation, rising incomes and the expansion of the food processing sector, further supported by Indias young demographic profile. Consumers increasingly favoured healthier choices such as mustard and sunflower oil, along with fortified and cold-pressed variants, while the appetite for packaged and branded oils continued to rise.

Industry players focused on strengthening distribution networks, expanding refining and packaging capacity and adopting technology to improve efficiency and sustainability in the supply chain. The outlook for the sector remains positive, with consumption expected to grow steadily, although prices will continue to be influenced by global market trends, weather conditions affecting crop yields, currency movements and domestic trade policies.

The Indian economy has remained resilient despite global uncertainties, supported by government reforms in infrastructure, agriculture, and business regulation. While inflation and currency fluctuations remain factors to watch, Indias economic fundamentals are strong. Globally, inflation is easing and interest rate cuts may support recovery, improving growth prospects worldwide.

At home, Indias outlook is driven by political stability, higher investments, and strong consumer demand. The Reserve Bank of Indias policies have boosted momentum, and sectoral growth remains broad-based.

In this favourable environment, the edible oil industry is expected to benefit from rising incomes, urbanisation, and shifting dietary habits. Government efforts under "Make in India" to boost oilseed self-sufficiency will further support long-term growth.

ASL achieved a turnover of Rs. 1,32,981.12 lakhs in FY 2024 25, with oil price fluctuations playing a key role. The company continued expanding its presence across digital and modern trade platforms, gaining momentum.

ASL remains committed to providing safe, affordable food products and contributing to a sustainable, resilient food ecosystem in India.

Despite global uncertainties, India maintained steady economic growth in FY 2024 25, with real GDP estimated at 6.4%, close to the decade average. Resilient domestic consumption, a growing middle class, and strong services sector performance were key contributors. According to Deloitte, Indias demographic dividend continues to fuel demand, while Morgan Stanley projects India to become the worlds third-largest economy by 2028, reaching $5.7 trillion.

Rural consumption remained robust, supported by strong agricultural output and a healthy monsoon, while services especially finance, real estate, and public administration led GDP contributions. Manufacturing, though slower due to high input costs and weaker demand in mining and industrial goods, showed strength in export-driven, high-value segments. On the other hand, infrastructure investments and capital expenditure saw some moderation.

Private consumption grew 7.6%, aided by improved farm incomes and festive demand. Urban spending softened slightly, but rural demand showed continued momentum. Food inflation rose to 7.1% due to surging vegetable and cereal prices. To support growth amid global headwinds, the Reserve Bank of India reduced the repo rate by 50 basis points during early 2025 and shifted its stance to "accommodative," highlighting risks from trade tensions and global policy shifts.

Labor market indicators improved, with unemployment slightly falling and the worker-to-population ratio rising. However, wage growth moderated, particularly in white-collar sectors like IT, reflecting a cooling post-pandemic hiring trend.

Looking ahead, the economic outlook remains positive. The Asian Development Bank (ADB) forecasts Indias GDP growth at 6.7% in FY 2026 and 6.8% in FY 2027, driven by resilient consumption, lower crude oil prices, and easing inflation. Agriculture is expected to remain strong, assuming normal weather patterns, and manufacturings role in GDP is projected to grow. Services will continue to lead, particularly in professional, healthcare, education, and business exports where India holds a global edge.

Tax relief for middle and upper-income households and rising rural incomes are expected to further boost consumption. Inflation is forecast to moderate to 4.3% in FY 2026 and 4.0% in FY 2027. However, external risks like global capital volatility or US tariff hikes remain watchpoints. That said, Indias limited export dependence on the US and ongoing trade negotiations should help cushion potential impacts.

Overall, Indias growth story remains strong underpinned by macroeconomic stability, rising domestic demand, and strategic reforms focused on self-reliance and long-term sustainability.

In FY 2024 25, the global edible oil industry experienced significant volatility, shaped by ongoing geopolitical tensions, shifting trade policies, and macroeconomic uncertainties. Conflicts in the Middle East and Black Sea regions continued to disrupt global trade routes and supply chains. Meanwhile, Indonesias move to increase its biodiesel blending target from B35 during April to December 2024 to B40 from January 2025 drove a surge in domestic palm oil demand, consuming nearly 13 million metric tonnes of the countrys total 48 million MT production. This sustained robust pricing for palm oil and kept it at a premium over soybean and sunflower oils, even as soft oil prices remained relatively competitive.

Indias edible oil imports reflected these global developments. Although palm oil imports declined by 12% year-on-year, total edible oil imports rose by nearly 5% during FY 2024 25. At ASL, we responded proactively by diversifying our sourcing across multiple geographies to minimise exposure to geopolitical risks and maintain supply continuity.

During the year, global agricultural markets, including edible oils, were increasingly influenced by macroeconomic trends such as interest rates, liquidity flows, and trade policies factors that now impact commodity markets more than they did five years ago. India remained a bright spot in terms of consumption growth, though demand moderated slightly in the latter half of FY 2024 25 after the Government of India raised import duties in September 2024. Effective duties on crude edible oils (soybean, palm, and sunflower) were increased to 27.5%, while refined oil duties rose to 35.75%. These policy shifts were aimed at boosting domestic oilseed production, but their impact on local prices especially soybean remained muted due to global oversupply of protein crops. Additionally, restrictions on diverting edible oils for biodiesel use helped safeguard food consumption demand and reduce market speculation.

Toward the end of FY 2024 25, the global economic environment appeared to stabilise after years of disruptions. However, fresh concerns emerged due to a shift in global trade priorities. The International Monetary Fund (IMF), in its updated outlook, revised global growth projections downward from 3.3% to 2.8% for 2025. The U.S. economy is expected to decelerate from 2.7% growth in 2024 to 1.8% in 2025, driven largely by tariff hikes and restrictive trade policies. The IMF noted that U.S. tariff rates have surged past levels not seen since the Great Depression, contributing to rising global inflation, which is now forecast at 4.3% for 2025. These developments have also elevated risks to global financial stability.

In China, economic growth is forecast to slow from 5.0% in 2024 to 4.0% in 2025 due to the impact of U.S. tariffs and broader trade tensions. Fiscal measures in major economies may not be enough to fully offset the drag caused by protectionist trends. According to the IMF, emerging markets like India may face increased volatility in capital flows, inflation, and currency markets, creating complex trade-offs between price stability and growth in the year ahead.

The continued expansion of Indias food and FMCG market presents significant opportunities for companies like ours to achieve steady growth in both revenue and profitability. With marketers increasingly tapping into rural India through modern retail formats such as haats, the potential for deeper market penetration is expanding rapidly.

Rising income levels have fuelled greater spending on value-added and branded products, including edible oils. Affordable innovation will be key to helping more consumers access and adopt our offerings. Additionally, growing demand for edible oils driven by a rising population and improved economic sentiment post-pandemic remains a major growth driver.

The rise in lifestyle-related health issues, especially heart and cardiovascular diseases, has sparked a shift in consumer preference toward healthier oils. This creates a strong opportunity for companies offering heart-friendly options like rice bran, canola, and sunflower oils. At the same time, increasing competition from both domestic and global players continues to be a challenge, but we are well-prepared to respond through agility and innovation.

Indias young and growing urban population projected to rise from 31% in FY 2011 to 36% by FY 2036 will further drive food consumption trends. Meanwhile, the ongoing digitization of commerce presents both opportunities and risks. It allows us to target and serve customers more efficiently but also lowers the entry barrier for smaller players leveraging digital platforms.

A consistent rise in edible oil imports to bridge the demand supply gap has contributed to trade imbalances and foreign exchange outflows. Strengthening domestic oilseed production and productivity is essential to reduce dependency on imports and achieve long-term supply sustainability.

The sector also faces direct risks from fluctuating raw material prices, which are influenced by environmental factors, crop conditions, and geopolitical issues. Monsoon patterns, global production of soybean, mustard, and palm oil, and policy changes on interest rates and import duties continue to affect input costs and margins.

Despite these challenges, the widening gap between domestic production and consumption is creating long-term demand. With thoughtful strategic planning, focus on innovation, and continued investment in brand and supply chain, the Indian edible oil industry is well-positioned to tap into its strong growth potential while managing emerging risks.

In our edible oil business, the majority of raw material is sourced through imports, making us highly susceptible to global geopolitical events, trade restrictions, and weather-related disruptions in exporting countries. Any adverse development such as export bans or poor crop output can lead to significant supply constraints. Furthermore, the Government of India may increase import duties or impose quantitative caps, which could put large companies like ours at a relative disadvantage compared to smaller players. Our profitability is also vulnerable to international commodity price movements and currency fluctuations, since domestic edible oil prices in India are closely linked to global trends and the rupees strength.

Operationally, factors such as efficiency, processing capacity, plant location, product diversification, and our ability to secure raw materials are critical to maintaining competitiveness. The overall financial health of the business also hinges on our ability to manage working capital, generate positive operational cash flows, and service debt efficiently. Additionally, the risk landscape is shaped by global and domestic policy changes particularly fluctuations in the minimum support price (MSP) of oilseeds, changes in duty differentials between crude and refined oil, and export taxes from major suppliers like Indonesia and Malaysia.

Market competition is intensifying, with new brands entering the space and adopting aggressive pricing and digital marketing tactics. This can lead to price pressures and potential brand dilution. At the same time, consumer behaviour is rapidly evolving especially in the post-pandemic era driven by increased health awareness and digital influence. Shifts in preferences, amplified through social media, can disrupt demand patterns unexpectedly.

We view risk management as a holistic and strategic function, integrating both internal and external considerations. The major categories of risks we address include strategic, compliance, financial, environmental, operational, and social risks. To navigate this environment, we continuously enhance our procurement strategy, diversify our product offerings, leverage technology for supply chain resilience, and monitor regulatory trends closely. While uncertainties persist, our proactive approach and strong fundamentals position us to effectively manage risks and continue delivering sustainable value.

Your Company continues to place a strong emphasis on the risk management and has successfully introduced and adopted various measures for hedging the price fluctuations in order to minimize its impact on profitability. Also, your Company has initiated setting-up of a framework to upgrade itself to a robust risk management system. Further Your Company is well geared with multi-processing capabilities to cater to the variances and changing consumer preferences.

We have extensive safety measures in place to regularly monitor the quality of our raw material and products at every stage of processing and delivery.

At Ajanta Soya Limited, we firmly believe that our people are our most valuable asset. The growth and success of the Company are deeply rooted in the dedication, capability, and development of our human resources. We are committed to nurturing talent and fostering a workplace culture that empowers individuals to reach their full potential.

The Company consistently strives to attract and retain top industry talent with strong expertise and relevant experience. Equal emphasis is placed on creating a positive, inclusive, and growth-oriented work environment. Our human resource initiatives are designed to build organisational capabilities, enhance technical and managerial competencies, and prepare our teams to meet future challenges.

Focused investments are being made in continuous learning and development programmes to strengthen individual and collective performance. Regular business and performance reviews help align individual contributions with strategic goals, ensuring a culture of accountability and continuous improvement.

We take pride in maintaining cordial and harmonious relations with all our employees. During the year under review, there were no instances of industrial disputes or labour-related concerns. The Company anticipates continued stability and positive employee relations in the coming year as well.

The Company has established internal control systems for ensuring optimum use of resources and safeguarding the assets. The Internal Control Systems and procedure are adequate and commensurate with the size of the Company. These are routinely tested and certified and which covered all offices, factories and key business areas. The Internal audit team reviews the quality of planning and execution of all ongoing projects and activities involving significant expenditure to ensure that management controls are adequate to yield "value for money". Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimise the impact of such risks on the operations of the Company. The Internal Control Systems and procedure are adequate and commensurate with the size of the Company. These business control procedures ensure efficient use and protection of the resources and compliance with the policies, procedures and status.

Presently the Company has been dealing in Vanaspati & Refined Oil. The details of the Vanaspati & Refined Oil business segment is as follows:

During the year under review the total income of the Company was Rs. 1,33,849.22 Lakhs as against Rs. 1,03,131.02 Lakhs in the previous year. The total expenses of the Company were Rs. 1,30,217.49 Lakhs during the year as compared to Rs. 1,02,619.40 Lakhs during the previous year. During the year the Company earned a profit after tax of Rs. 2,714.56 Lakhs against a profit after tax of Rs. 402.89 Lakhs in the previous year. Your Directors are putting in their best efforts to improve the performance of the Company by increasing the throughput of the plant.