Ambar Protein Industries Ltd Management Discussions

1. This section shall include discussion on the following matters within the limits set by the listed entitys competitive position:

A. INDUSTRY STRUCTURE AND DEVELOPMENTS:

India is a vast country and inhabitants of several of its regions have developed specific preference for certain oils largely depending upon the oils available in the region. For example, people in the South and West prefer groundnut oil while those in the East and North use mustard / rapeseed oil. Likewise several pockets in the South have a preference for coconut and sesame oil. Inhabitants of northern plain are basically consumers of fats and therefore prefer Vanaspati, a term used to denote a partially hydrogenated edible oil mixture of oils like Soyabean, Sunflower, Rice bran and Cottonseed oils. Many new oils from oilseeds of tree and forest origin have found their way to the edible pool largely through Vanaspati route. Of late, things have changed. Through modern technological means such as physical refining, bleaching and de-odorization, all oils have been rendered practically colorless, odorless and tasteless and therefore, have become easily interchangeable in the kitchen.

The global edible oil market size was valued at approximately USD 205 billion in 2023 and is expected to grow to approximately USD 218 billion by 2024. With an estimated compound annual growth rate (CAGR) of 6.79% between 2024-2032, the market is projected to reach USD 369 billion by 2032. In the trading year (TY) 2024, global oilseed production is expected to reach a record 657 million metric tonnes (MMT), with production forecasted to rise to 682 MMT by TY 2025. This continued growth is due to higher soybean oilseed production and a recovery in sunflower seed output. In TY 2024, global soybean seed production is expected to reach 395 MMT, an increase from 378 MMT in TY 2023. This is attributable to improved yields in Argentina, the worlds leading exporter of soybean oil. While sunflower seed production in Ukraine has recovered slightly following the Russia-Ukraine conflict, growth is expected to remain subdued in TY 2025.

Global primary and specialty oil production in TY 2024 is set to reach an unprecedented level of 224 MMT, an increase of 2.5% from 218 MMT in TY 2023. This growth is driven by increased production of soybean and canola oils, with canola oil output rising in Canada and China due to improved crush rates. Over the past decade, Indonesia and Malaysia have been the predominant producers of palm oil, together accounting for 84% of total production. Indonesia has contributed an average of 40 MMT, while Malaysia has produced an average of 19 MMT. Both countries benefit from optimal conditions for palm oil cultivation, making them key producing regions. Conversely, China and the United States have been major sources of soybean oil, together representing 48% of global production. Over the same period, China has averaged 16 MMT of soybean oil, with the US producing an average of 11 MMT. Over the past decade, the European Union (EU) and China have been leading producers of canola oil, accounting for 56% of the global production with an average output of 10 MMT and 7 MMT, respectively. Similarly, Russia and Ukraine have been the major producers of sunflower oil representing 57% of the global production with an average output of 5 MMT and 6 MMT, respectively.

In 2024, oilseed prices have been influenced by several key factors. Soybean prices experienced a slight decline due to favourable weather conditions in major producing regions like the U.S., and higher-than-expected crop forecasts. However, towards the end of the year, prices showed some recovery due to increasing demand from China and concerns about dry conditions in Brazil. Canola oil prices have also slightly weakened despite lower production forecasts in the EU and China, driven by seasonal harvest pressures. Sunflower oil prices remained stable, supported by concerns over drought-impacted production in key regions like the Black Sea. While oil prices have begun to stabilize after volatility in previous years, there are still upward pressures, especially due to biofuel demand and geopolitical uncertainties.

India edible oils market is projected to witness a CAGR of 3.52% during the forecast period FY2025-FY2032, growing from USD 19.86 billion in FY2024 to USD 26.19 billion in FY2032.

B. OPPORTUNITIES AND THREATS.

India currently represents the worlds largest importer of edible oil in the world. Increasing disposable incomes, rising urbanization rates, changing dietary habits and the growth of the food processing sector represent some of the key factors driving the demand of edible oil in India.

In India, the rising consumer health concerns towards the high prevalence of coronary heart diseases, diabetes, obesity, gastrointestinal disorders, etc., are primarily driving the demand for healthy edible oil. Additionally, the market is further catalyzed by the growing awareness towards several health benefits of organic and low-cholesterol edible oil. As a result, various regional manufacturers are launching healthy product variants enriched with omega-3, vitamins, and natural antioxidants. Moreover, the changing consumer dietary patterns and their hectic work schedules have led to the increasing consumption of processed food items. The rising demand for edible oil in the food processing sector as food preservatives and flavoring agents is also catalyzing the market growth in the country. Additionally, the elevating consumer living standards coupled with the increasing penetration of international culinary trends are further augmenting the demand for high-quality product variants, such as olive oil, sesame oil, flaxseed oil, etc. Apart from this, the expanding agriculture sector along with the launch of several initiatives for enhancing the production of oilseeds in the country is also propelling the market. Furthermore, the Indian government is making continuous efforts to increase the domestic availability of edible oil and reduce import dependency. For instance, the government has proposed the National Mission on Edible Oil (NMEO) for meeting the countrys consumption need for edible oil, such as sesame oil, groundnut oil, safflower oil, palm oil, etc.

The growing popularity of low calorie content oils is one of the market factors for Indias edible oil industry. Indian consumer becomes more health-conscious and they stared preferring edible oil with low cholesterol content such as canola oil, olive oil, and rice bran oil in order to prevent the high risk of coronary heart disease, brain stroke and type- 2 diabetes, associated with the trans-fat consumption. To capitalize on the increasing need for "balanced oils," all of the big oil companies have launched healthier versions of their standard offerings. In addition, edible oil is mostly used for cooking, and increasing customer health consciousness has raised the market for high-quality edible oils. Since they are pressed at a lower temperature, cold-pressed oils are considered high-quality oils because the oils taste and characteristics are preserved, which is likely to fuel the market. Furthermore, the changing dietary patterns along with hectic lifestyle among working people is expected to change the consumer preference and will boost the demand for olive and coconut oil for cooking. Olive oil, which is a staple of the Mediterranean diet, is the healthiest and easiest oil to use. The antioxidant content of extra virgin olive oil is high, and it is completely natural. MUFA are the main fat found in olive oil and are considered a healthy dietary fat. It also helps to avoid heart disease, and as a result, they have become common in Indian markets. Olive oil has attracted significant demand despite its high price, and it is expected to rise exponentially once the domestically produced variant reaches the market.

The Russia-Ukraine war, Israel War and war alerts in middle east has had an immense impact on the edible oil market and once again highlighted Indias vulnerability to the global edible market vagaries. Even before the war, global vegetable oil supplies had tightened due to a drought in South America which resulted in the reduction of soybean yield. The global oilseed supply pattern will remain ample in 2025, but it is difficult for the increase in oilseeds in the crushing field to increase synchronously, resulting in the increase in vegetable oil supply to be less than that of oilseeds. The industrial consumption of vegetable oil will continue to increase, further tightening the supply and demand pattern of vegetable oil, and the center of gravity of vegetable oil prices is expected to remain at a high level.

The global soybean production has increased significantly, making the global oilseed supply pattern ample in 2025. However, due to production capacity constraints, it is difficult for the increase in oilseeds in the crushing field to increase synchronously, resulting in the increase in vegetable oil supply to be less than that of oilseeds. And under the influence of biodiesel policies such as Indonesia and the European Union, the industrial consumption of vegetable oil will continue to increase, further tightening its supply and demand pattern, and the center of gravity of vegetable oil prices is expected to remain at a high level. In terms of soybean oil, the global soybean supply and demand has further turned to easing, but there is still uncertainty in Sino-US trade in the later period. Given that the concentrated sales period of US soybeans has passed, the impact on my countrys imported soybean supply in the first half of 2025 is relatively weak, and the overall supply of soybean oil is relatively ample.

As for rapeseed and sunflower oil, China has launched an anti-dumping investigation on Canadian rapeseed, and the risk point is the Sino-Canadian trade issue. Putting aside this risk factor, the decline in rapeseed production in the European Union and sunflower seeds in the Black Sea region may increase the demand for rapeseed oil, and the center of gravity of international rapeseed prices is expected to rise, and rapeseed oil prices are strongly supported. As for palm oil, there is a supply growth bottleneck caused by aging trees in the long run, and low inventory support brought by El Ni?o in 2024 in the near future. There is also uncertainty on the demand side due to Indonesias B40 plan, and the supply and demand themes are diverse. In the future, we will focus on the inventory rhythm of the production area. As long as the accumulation of inventory in the production area is not obvious, the price of palm oil is expected to remain high. PET packaging of edible oil is preferred by consumers due to various significant reasons. The volume of a PET bottle is light, making them easy to handle and carry, offering convenience to the consumers. Also, PET packaging is resistant to breakage and is durable, thus eliminating possibilities of spillage and loss of the product, reducing wastage, and enhancing the consumers experience by avoiding leakage of oil.

We can see over last 25 years, how the land area under oilseed production has not grown meaningfully. So, whatever increase in our oilseed production has occurred in India is mainly because of our improvement in the crop yields (kg/ha or tons/ha). However, our yields are still nowhere close to the world average yields, leave aside the world best yields.

C. SEGMENT WISE OR PRODUCT-WISE PERFORMANCE.

Presently the company has dealing in segment of refining cotton seed oil and trading and also purchased & packed Refined Cottonseed, Groundnut Oil, Refined Sunflower, Refined Maize Oil and Soybean Oil for resale.

Processing of Cottonseed for Edible Oil

We are purchasing Raw Material i.e Cotton Raw Oil. Crude oil we are purchasing by tanker from crushing oil mill and we offload after checking quality Parameter we are offloading in storage tank. (Crude oil Storage tank)

Our Finished Product Refined Edible oil Derived after processing different stage after Crude Edible oil. Processing derived in three stage Alkyl Refining, Bleaching & Filtration & Deodorization.

Alkyl Refining: Crude oil feeding and heating by heat exchanger get desired temperature that stage we are addition Phosphoric acid & causticiye for removing impurities like gums, coloring matter, foreign matter & fatty acid with become metal soap. Finally get we call product Neural oil.

Bleaching & Filtration: Neutral oil heat through heat exchanger by applied steam, that stage on desired temp can addition Activated Clay & Activated Carbon for removing Coloring impurities and Excess metal soap. Finally get after Filtration clear oil called as a bleached oil.

Deodorization: Bleached oil passing through deodorization process there removing odoriferous material by distillation column with different stage heating by steam. Finally after filtration get refined oil thats oil cool down by heat exchanger and transfer to storage tank where we are storing refined oil.

The Company has achieved total revenue of Rs. 42162.30 lakhs, as compared to total revenue of Rs. 33722.57 lakhs recorded in the previous year. Further Company has achieved the Profit before Tax of Rs. 1303.11 lakhs as compared to Rs. 411.95 lakhs in the previous year. Your directors are hopeful towards increasing the revenue and profit during this financial year.

D. OUTLOOK

India edible oil has been witnessing rapid growth in the historical period and is expected to follow a similar growth trajectory in the forecast period as well. Consumers are increasingly switching to healthier oil and demanding pure and virgin oils that have been extracted and processed ethically.

Moreover, consumers prefer multi-purpose oils that are odorless and can be used in cooking and baking, expanding the utility of such edible oils. For instance, sunflower oil is less pungent and can be used in both baking and cooking different culinary dishes.

The government initiatives and its various subsidies and programs are driving the growth of edible oil market in India. It is because the government schemes are formulated to increase the consumption of Indian produced edible oil in India and increase the exports of oilseeds at the same time, reducing the potential imports of edible oils from foreign countries. For instance, in March 2024, the Government of India launched initiatives to promote oilseed production and reduce the imports of cooking oils. The government allocated a total amount of USD 1.32 million to reduce the edible oils import and help the country in becoming self-reliant in the oilseeds.

The increase in spending on research and development to improve edible oil farming techniques and oil extraction processes has further helped to enhance the production quality and efficiency of edible oils. The government launches various schemes for farmers and processors for encouraging higher production and efficient supply chain in the India edible oil market.

E. RISKS AND CONCERNS

Owing to high import dependence, the edible oil prices in India are directly correlated to Despite decades of policy shifts, Indias edible oil sector has struggled to achieve self-sufficiency, largely due to a growing reliance on imports. The Union Budget 2025 has renewed the governments push towards reducing this dependency, reaffirming the vision of Aatmanirbhar Bharat. A key proposal in the budget involves developing over 600 value chain clusters across 347 districts, covering more than 10 lakh hectares annually. These clusters will be managed through partnerships involving Farmer Producer Organisations (FPOs), cooperatives, and a mix of public and private entities. They will provide quality seeds, training on Good Agricultural Practices (GAP), and advisory support on weather and pest management.

Indias journey towards self-sufficiency in edible oils began in the mid-1980s with the launch of the National Oilseed Development Project. This initiative, later restructured as the Technology Mission on Oilseeds in 1986, led to a near self-sufficient status by the early 1990s. However, the liberalisation of trade in 1994 marked a turning point. As import duties on edible oils were gradually reduced, cheaper foreign oils flooded the market, and domestic support systems were scaled back. Today, India imports 55 60% of its edible oil needs, mainly from Indonesia, Malaysia, Argentina, and Brazil.

This dependency has been exacerbated by population growth, rising incomes, and evolving dietary preferences, pushing demand far beyond what domestic production can meet. With annual edible oil imports valued at around $20 billion, the country remains vulnerable to global price volatility, trade restrictions, and geopolitical tensions.

To counter this, the government launched the National Mission on Edible Oils Oilseeds (NMEO-Oilseeds) in October 2024, with an allocation of 10,103 crore. Running from 2024 25 to 2030 31, the mission aims to boost domestic oilseed production from 39 million tonnes to nearly 70 million tonnes. It targets key crops such as mustard, groundnut, soybean, sunflower, and sesame, and promotes oil extraction from secondary sources. The goal: to meet 72% of the nations edible oil demand domestically by 2030 31.

However, increasing oilseed cultivation presents a double-edged sword. Unlike staple crops like wheat and rice, oilseeds are resource-intensive and often drive monoculture farming. This depletes soil nutrients, increases dependence on chemical inputs, and reduces biodiversity. In ecologically sensitive regions, such as Meghalaya, the expansion of oilseed cultivation could accelerate deforestation, disrupt fragile ecosystems, and place additional stress on water resources.

The environmental implications extend further. Crops like soybean, mustard, groundnut, and sunflower are linked to large-scale land conversion, often involving forest clearance and biodiversity loss. The introduction of oil palm cultivation under the edible oil programme is particularly concerning. Palm plantations have long been associated with soil degradation and destruction of wildlife habitats across Southeast Asia. Replicating this model in India could have irreversible consequences in ecologically vulnerable zones.

Moreover, many oilseed crops require high water inputs and are grown in unsuitable regions, worsening groundwater depletion. Their susceptibility to pests demands heavy pesticide use, contributing to soil erosion, water pollution, and a decline in pollinators critical for crops like mustard and sunflower. Without established crop rotation systems, oilseed farming can reduce long-term soil fertility and increase vulnerability to climate shocks.

To avoid these pitfalls, region-specific, climate-smart solutions must be central to the mission. Agroforestry-based oilseed farming is one such strategy. Mustard, groundnut, and sesame can be intercropped with fruit trees like mango and guava or nitrogen-fixing species such as moringa and acacia. In Rajasthan and Gujarat, integrating hardy trees with mustard cultivation can combat desertification and enrich soil health. In Tamil Nadu and Karnataka, groundnut intercropped with coconut plantations can reduce evaporation and enhance biodiversity.

Precision agriculture must also be part of the toolkit. AI-driven soil health monitoring, drip irrigation, and the use of bio-fertilizers can drastically cut water and chemical use critical in states like Maharashtra and Madhya Pradesh, where water-intensive soybean and sunflower cultivation is already straining local resources. Installing sensor-based irrigation systems in such regions could reduce water usage by up to 40%.

Developing climate-resilient oilseed varieties tailored to local conditions can further reduce environmental stress. Drought-tolerant mustard in Rajasthan and Haryana, flood-resistant soybean in Assam and West Bengal, and salinity-tolerant groundnut in coastal Andhra Pradesh and Odisha are essential innovations. Similarly, promoting oilseed farming on wastelands and degraded areas such as bund farming of sesame in Bundelkhand or castor intercropping in semi-arid Gujarat can boost production without deforestation.

Incentivising organic oilseed farming and implementing bee-friendly policies are also critical for ecological sustainability. Protecting pollinator populations in key cultivation states like Punjab, Haryana, and Uttar Pradesh can be achieved through integrated pest management (IPM) and restrictions on bee-toxic pesticides. A holistic approach combining agroforestry, precision farming, resilient varieties, sustainable processing, and pollinator protection can enhance yields without compromising the environment.

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. The key determinants of business risk profile of the company are their ability to overcome the regulatory risk and agro-climatic conditions. Other operational factors include operating efficiency, product diversity, market position, and ability to secure raw material as well as the commodity price and forex-risk management systems.

Thus, your Directors are optimistic in utilizing the production capacities and to overcome the Global and domestic risks and issues, to ensure better working results in the ensuing years.

F. EDIBLE OIL INDUSTRY OVERVIEW IN GUJARAT

The state of Gujarat is one of the leading Processors of cotton in the country and as such the availability of raw material i.e. cottonseeds availability will be very good.

G. OVERALL BUSINESS ACTIVITY AND FINANCIAL PERFORMANCE OF YOUR COMPANY:

The Company has achieved total revenue of Rs. 42162.30 lakhs, as compared to total revenue of Rs. 33722.57 lakhs recorded in the previous year. Further Company has achieved the Profit before Tax of Rs. 1303.11 lakhs as compared to Rs. 411.95 lakhs in the previous year. Your directors are hopeful towards increasing the revenue and profit during this financial year.

H. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has well-established processes and defined the roles and responsibilities for people at various levels. The control mechanism also involves well documented policies, authorization guidelines commensurate with the level of responsibility specific to the respective businesses. Adherence to these processes is ensured through frequent internal audits. The internal audits conducted are reviewed by the Audit Committee and requisite guidelines and procedures augment the internal controls. The internal control system is designed to ensure that financial and other records are reliable for preparing financial statements and other information which ensures that all transactions are properly reported and classified in the financial records.

I. CAUTIONARY STATEMENT

Statements in the Boards Report and Management Discussion and Analysis describing the Companies objectives, projections, estimates, expectations may be "forward looking statements" within the meaning of applicable security laws and regulations.

Actual results could differ materially from those expressed or implied. Important factors that could make difference to the companys operations include, among others, economic conditions effecting demand / supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.