Apex Frozen Foods Ltd Management Discussions

1. Economic Review

1.1 Global Economy

The global economy in FY2026 remained resilient but uneven, shaped by moderating inflation across several markets and continued uncertainty arising from geopolitical tensions and trade developments. Consumer demand for everyday staples stayed stable, while discretionary spending reflected selective premiumisation alongside an increasing focus on value. Input cost fluctuations across key raw materials and commodities, along with disruptions in the supply of oil, gas, and shipping networks, increased operational uncertainties and supply chain challenges, prompting companies to strengthen supply chain resilience, enhance productivity, and accelerate digital adoption to improve agility and speed-to-market.

GDP Growth

	2025	2026 (Projections)	2027 (Projections)
World	3.4%	3.1%	3.2%
Advanced Economies	1.9%	1.8%	1.7%
Euro Area	1.4%	1.1%	1.2%
Emerging Markets and Developing Economies	4.4%	3.9%	4.2%
Emerging and Developing Asia	5.5%	4.9%	4.8%
Latin America and the Caribbean	2.4%	2.3%	2.7%
Middle East and Central Asia	3.6%	1.9%	4.5%

Source: International Monetary Fund (IMF)

Outlook

Global risks remain tilted to the downside amid ongoing geopolitical tensions, potential trade disruptions and climate- related risks affecting commodity supply chains. According to the IMF World Economic Outlook (April 2026), global growth is projected at 3.1% in 2026 and 3.2% in 2027, with emerging markets and developing economies expected to experience a sharper impact from slowing growth and inflationary pressures.

1.2 Indian Economy

Indias economy continues to demonstrate resilience, supported by robust domestic demand, a stable financial system and strengthening macroeconomic fundamentals, despite a challenging global environment. The Reserve Bank of India has kept FY 2026 growth projection unchanged at 7.6% but pencilled in a slower 6.9% expansion for FY 2027, indicating lower growth in the first half as it warned that the war in the Middle East, higher oil prices and geopolitical tensions could weigh on the outlook. These factors, along with tighter global financial conditions, continue to exert pressure on inflation, currency stability and trade balances. Nevertheless, Indias strong economic fundamentals, including healthy foreign exchange reserves, a strengthened banking sector and ongoing structural reforms, continue to provide resilience and support long -term growth prospects.

Indian Economy GDP Growth Rate (in %)

Year	FY 2021-22	FY 2022-23	FY 2023-24	FY 2024-25	FY 2025-26
GDP Growth Rate	8.7	7.0	8.2	6.5	7.6*

Source: www.pib.gov.in *= Estimated timesofindia.indiatimes.com

Outlook

Indias economic growth in 2027 is expected to remain supported by strong domestic consumption and sustained public investment, despite an uncertain global environment. Elevated energy prices and ongoing global volatility have increased inflationary pressures, prompting a more cautious monetary policy stance and moderating growth in real incomes. Continued focus on productivity enhancement, trade facilitation and structural reforms will remain important to sustaining balanced and long-term economic growth.

2. Industry Review

2.1 Global

According to Grand View Research, the global shrimp market was valued at approximately USD 79.2 billion in 2025 and is projected to reach USD 121.4 billion by 2033, registering a CAGR of 5.5% during 2026-2033. Growth in the sector is being supported by rising consumer preference for high-protein, low-fat seafood, increasing demand for ready-to-cook and frozen shrimp products, and greater awareness of the nutritional and health benefits associated with shrimp consumption.

Shrimp Market

Market Size (USD Billion)

\u2022 L. vannamei	Trachypenaeus curvirostris	P. chinensis
\u2022 P. monodon	Pandalus borealis	Others
\u2022 Acetes japonicus	Pleoticus muelleri

Key Growth Drivers

• Rising Health Consciousness: Growing

consumer focus on protein-rich and healthier dietary choices continues to drive global shrimp consumption.

• Advancements in Aquaculture Technology: Adoption of technologies such as Al-enabled monitoring, biofloc systems and Recirculating Aquaculture Systems (RAS) are improving productivity,efficiency anddiseasemanagement.

• Expanding Middle-Class Consumption: Rising disposable incomes across emerging markets are supporting higher seafood consumption and demand for premium protein products.

• Growth in E-commerce and Modern Retail: Expansion of online grocery platforms and ready- to-cook formats is enhancing accessibility and convenience for consumers.

• Expansion of Foodservice Channels: Continued growth across HoReCa and quick-service restaurant (QSR) segments is contributing to increasing global shrimp demand.

Outlook

According to S&P Global, the global shrimp industry is expected to witness mixed trends in 2026, influenced by evolving trade dynamics and regional production shifts. Ecuador is likely to maintain strong export momentum, supported by robust demand from China. Demand in Europe is expected to remain stable,

driven by increasing preference for semi-processed and value-added shrimp products. Amid changing market conditions, seafood-exporting nations are also increasingly focusing on market expansion and product diversification to strengthen competitiveness and enhance resilience.

2.2 India

Despite geopolitical disruptions in West Asia, tariff pressures in the United States and continued volatility in global trade, Indias marine product exports reached an all-time high of US$ 8.5 bn (C 739 bn) in FY2026, with a ~13% rise in value despite a 2% fall in average per unit value. Export volumes also touched a record 19,72,019 metric tons (MT), resulting in ~16% rise in a quantity, reflecting the resilience and adaptability of Indias seafood sector amid a challenging global environment.

Frozen shrimp continued to be the major export item, accounting for ~40% of exports by quantity and ~66% of total $ earnings. Shrimp export volumes grew by ~7% to 7,92,647 MT, while export value increased by ~9% in USD terms during the year, contributing US$ 5.6 bn (C 490 bn) in FY26

Coming to the key geographies, below is an update on how the frozen shrimp industry performed across major markets during the year:

• The United States remained Indias largest export destination during FY26 accounting for ~32% of the total frozen shrimp exports from

India, importing 256,128 MT. However, export volumes to the market declined by approximately 18% year-on-year, primarily impacted by reciprocal tariff measures and the resulting trade uncertainties.

• Exporters successfully offset this slowdown through market diversification and stronger penetration into regions such as China, the European Union and Southeast Asia. Exports to China, the second-largest destination, recorded strong growth, increasing by ~24% in volume to 1,69,505 MT, accounting for ~21% of total exports. Shipments to the European Union also witnessed healthy growth, rising by ~37% in volume to 135,599 MT, accounting for ~17% of total exports, supported by improving demand for Indian seafood products. Southeast Asia emerged as another key growth region, with exports increasing by ~11% in volume to 83,810 MT, accounting for ~11% of total exports.

Source: Marine Products Export Development Authority (MPEDA)

Industry participants attributed this performance to diversified market strategies, alternate logistics routes and resilient supply chain execution despite disruptions in global shipping corridors and freight movement.

The sector also benefited from strengthening logistics and port infrastructure, with ports such as Visakhapatnam, JNPT, Kochi, Kolkata and Chennai collectively accounting for a significant share of export value. Efficient cold chain capabilities and improved reefer handling infrastructure helped sustain export momentum through the year.

3. Company Overview

Established in 1995, Apex Frozen Foods Limited is one of Indias leading integrated producers and exporters of premium Vannamei shrimp and shelf- stable aquaculture products. The Company caters to a diversified global customer base comprising foodservice companies, retail chains, restaurants, club stores and distributors across key international markets, including the U.S.A., U.K., China and the European Union.

Apex operates an integrated business model in key areas of the shrimp value chain, encompassing hatcheries, processing, and logistics/cold storage. Its infrastructure includes three hatcheries with a combined capacity of 1.2-1.4 billion SPF seeds, two processing facilities with an aggregate installed capacity of 34,240 MTPA, and cold storage capacity

of approximately 3,500 MT. Strategically located near the ports of Kakinada and Visakhapatnam, the Companys facilities enable efficient export operations and global distribution.

SWOT Analysis Strengths

• More than 30 years of experience in the shrimp industry, backed by a proven track record in delivering quality products to international markets.

• Fully integrated shrimp processing and export business with presence across hatchery, processing, logistics/cold storage, and exports

• Strong presence in key export markets such as the U.S.A., EU (European Union)

• Established customer relationships with global food companies, retail chains, and distributors

• Diversified portfolio of higher value-added shrimp products, including ready-to-cook and ready-to-eat offerings, enabling participation in premium segments of the value chain.

• Healthy balance sheet with relatively low debt levels and strong operational infrastructure

Weaknesses

• High dependence on the shrimp export segment, exposing the business to sector-specific risks

• Revenue concentration in overseas markets, particularly the U.S.A., with ongoing efforts to diversify the geographic revenue mix

• Sensitive to fluctuations in raw material prices and foreign exchange rates.

Opportunities

• Rising global demand for seafood and ready-to- cook frozen products

• Increasing preference for value-added shrimp products with higher margins

• Expansion into newer international markets and retail channels

• Growing aquaculture industry in India supported by government initiatives and export incentives

• Capacity utilization headroom providing scope for future growth

Threats

• Disease outbreaks in shrimp farming and climate- related risks impacting aquaculture production

• Competitive domestic and global seafood market

• Evolving international food safety and

import regulations

• Currency fluctuations and evolving global trade dynamics

• Rising logistics and energy costs impacting margins

4. Performance and Outlook

Our continued focus on market diversification played a pivotal role in sustaining volumes and reducing dependency on a single market. While total shrimp sales stood at 10,286 MT in FY26, compared to 10,534 MT in FY25, the impact of tariff-related uncertainties in the U.S. market was largely mitigated through stronger penetration in Europe. The EU continued to be a key growth driver, with shrimp sales volumes increasing by 19% Y-o-Y in FY26. Consequently, the EUs contribution to total sales rose significantly to 47% in FY26, compared to 39% in FY25 and 26% in FY24, underscoring the success of the Companys diversification strategy. The increasing contribution from non-U.S. markets has strengthened the revenue mix and enhanced resilience against region-specific demand fluctuations.

In FY26, the Company reported Net Revenue of C 9,311 million, registering a growth of 14% over C 8,136 million in FY25. Improved operating performance, supported by stable farm-gate shrimp prices, favourable global shrimp prices, a better product mix, and ongoing cost-efficiency initiatives, drove a significant improvement in profitability during FY26. EBITDA increased to ?729 million from ?297 million in FY25, while EBITDA margin expanded to 7.7% from 3.6% in the previous year. Profit After Tax rose substantially to ?388 million from ?39 million in FY25, reflecting the Companys ability to navigate tariff-related uncertainties in the USA, capitalise on growth opportunities in the EU market, and enhance operational efficiencies.

The Company continued to maintain a prudent approach to capital allocation and balance sheet management. Supported by strong cash generation and disciplined working capital management, debt levels remained low, providing financial flexibility while maintaining a healthy capital structure. Total debt reduced to approximately ?57 million as of March 31, 2026, resulting in a Debt-to-Equity ratio

of 0.01x compared to 0.15x in the previous year. This continued deleveraging reflects the Companys focus on financial discipline and long-term value creation.

5. Financial Performance

Particulars	For Year ended March 31, 2026	For Year ended March 31, 2025
Total Income (? in million)	9,484	8,181
EBITDA (? in million)	729	297
PBT (? in million)	530	56
Tax Expenses	142	17
PAT	388	39
Key Financial Ratios
Financial Ratio	Fiscal 2026	Fiscal 2025
Operating Profit Margin (%)	7.7%	3.6%
Net Profit Margin (%)	4.1%	0.5%
Debtors Turnover (times)	7.9	7.0
Inventory Turnover (times)	5.3	4.3
Current Ratio (times)	6.0	3.4
Interest Coverage Ratio (times)	12.8	1.6
Debt-Equity Ratio (times)	0.01	0.15
Return on Net-worth (%)	7.6%	0.8%

Notes:

1. Stable farm-gate prices Y-o-Y, along with ongoing cost- efficiency initiatives, supported profitability in FY26.

2. Current Ratio improved during the year primarily due to a reduction in short-term borrowings

3. Interest Coverage Ratio improved on a Y-o-Y basis due to higher operating profitability and lower finance costs

4. Debt-Equity Ratio improved on a Y-o-Y basis due to lower borrowings and higher net worth

5. Return on Net-worth on a Y-o-Y basis due to higher profitability

6. Risk Management

In an increasingly dynamic and interconnected business environment, effective risk management remains integral to sustaining growth and protecting long-term value. Our approach extends beyond risk mitigation to proactively identifying, assessing and managing emerging challenges, while also enabling opportunities. By embedding risk considerations into strategic and operational decision-making, we seek to safeguard stakeholder interests, maintain financial

Management Discussion and Analysis

stability and strengthen operational resilience amid evolving market, currency and liquidity conditions.

Given that a significant portion of the Companys revenues is denominated in foreign currencies and operations require substantial working capital investments, disciplined liquidity management and prudent foreign exchange risk mitigation remain critical to maintaining financial resilience.

Key Risks	Mitigation Measures
Foreign Exchange Risk Volatility in INR/USD and other currency exchange rates may impact export realizations and profitability.	\u2022 Undertake partial hedging strategies to reduce currency exposure
	\u2022 Continuously monitor forex movements and market trends
	\u2022 Improve operational efficiencies and cost optimization to offset currency fluctuations
Liquidity Risk Delays in receivables or inadequate cash flows could impact the Companys ability to meet operational and financial obligations.	\u2022 Maintain adequate liquidity buffers and working capital management practices
	\u2022 Maintain strong relationships with customers, suppliers, and financial institutions
	\u2022 Ensure access to diversified funding sources and credit facilities
Geopolitical & Trade Risk Global conflicts, trade restrictions, sanctions, or supply chain disruptions may impact exports and logistics.	\u2022 Diversify export markets and customer base
	\u2022 Build resilient supply chain networks
	\u2022 Maintain strategic inventory and logistics planning
Climate & Environmental Risk Extreme weather events, water availability issues, and climate-related disruptions may impact operations and supply chains.	\u2022 Invest in sustainable practices
	\u2022 Strengthen environmental monitoring and risk assessment
	\u2022 Enhance resilience through diversified operations and contingency measures

6. Internal Control and Systems

The Companys independent and robust Internal Audit processes provide assurance on the adequacy and effectiveness of internal controls, compliance with operating systems, internal policies, and regulatory requirements. The Company has in place an adequate system of internal control commensurate with its size and nature of its business. These has been designed to provide reasonable assurance that all assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded, and reported correctly and the business operations are conducted as per the prescribed policies and procedures of the Company. The Audit Committee and the management have at periodic intervals, reviewed the adequacy of the internal control systems and suitable steps are taken to improve the same.

7. Cautionary Statement

Certain statements in the Management Discussion and Analysis describing the Companys objectives, and predictions may be forward-looking statements within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward - looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and Government policies that may impact the Companys business as well as its ability to implement the strategy. The Company does not undertake to update these statements.