Aveer Foods Ltd Management Discussions

INDUSTRY STRUCTURE, DEVELOPMENT:

• Industry Overview:

The food processing and packaged food industry remains one of the largest segments of the consumer goods sector, driven by rising urbanization, changing consumer lifestyles, increasing disposable incomes, and evolving dietary preferences. The industry comprises both organized and unorganized players across a wide range of categories, including staples, processed foods, dairy products, beverages, snacks, condiments, meal accompaniments, ready-to-eat products, and other value-added food offerings. Growing consumer demand for convenience, authentic regional flavours, product consistency and branded offerings continues to support industry growth.

The Meal Accompaniments segment, comprising products such as pickles, chutneys, thecha, papad, sauces, ketchup, and other specialty accompaniments, represents an important category within the packaged foods industry. These products form an integral part of everyday meals across India and are widely consumed across households, food service establishments, and institutional channels. The segment is characterized by a combination of established national brands, regional players and local manufacturers, reflecting the diverse culinary preferences of Indian consumers.

The industry has witnessed increasing consumer preference for hygienically manufactured, branded, and packaged meal accompaniments, driven by rising awareness of food safety, quality standards, and convenience. Manufacturers are focusing on product innovation, premiumisation, packaging improvements, and expansion of distribution networks to address evolving consumer tastes. The growing popularity of regional flavours, health-conscious variants, and international cuisines has further expanded opportunities within the category.

Increasing urbanization, growth in modern retail and e-commerce channels, rising disposable incomes, and changing consumption patterns are expected to continue supporting the growth of the meal accompaniments segment.

The regulatory landscape for the pickles and meal accompaniments industry continues to evolve, with increasing emphasis on food safety, quality standards, packaging, labelling, traceability, and consumer awareness. The Food Safety and Standards Authority of India (FSSAI) has strengthened its focus on ensuring compliance across processed food categories, including pickles, chutneys, sauces and other meal accompaniments with the objective of enhancing consumer protection and product quality.

The industry is witnessing attention towards quality and sourcing of materials, adherence to prescribed standards for ingredients, use of permitted additives and preservatives and maintenance of hygienic processing and storage practices. Compliance with updated packaging and labelling requirements has become increasingly important, requires manufacturers to provide clear and accurate information on ingredients, nutritional content, allergen declarations, shelf life, storage conditions and other mandatory disclosures.

Regulatory authorities are also encouraging greater traceability across the supply chain through improved record keeping and monitoring systems, enabling effective quality control and product recall processes where necessary. The adoption of Good Manufacturing Practices [GMP] and Good Hygiene Practices [GHP] and robust food safety management systems is becoming increasingly common as manufacturers seek to align with evolving regulatory expectations.

Growing consumer awareness regarding food quality, ingredient transparency, health considerations and product safety is further driving the industry towards higher standards of compliance and accountability. Consequently, companies operating in the pickles and meal accompaniments segment are increasingly investing in quality assurance infrastructure, laboratory testing, process controls, employee training and compliance monitoring mechanisms.

These regulatory developments are expected to strengthen consumer confidence, improve product quality, enhance industry standards and support the sustainable growth of the pickles and meal accompaniments sector by encouraging continuous improvement in food safety and quality management practices.

The pickle and meal accompaniments industry continues to present significant growth opportunities driven by changing consumer lifestyles, increasing demand for convenience foods, and growing preference for authentic and regional and traditional food products. Rising urbanization, higher disposable incomes and expanding retail networks have contributed to increased consumption of packaged pickles, chutneys, sauces and related products across both domestic and international markets.

Growing consumer interest in ethnic and homemade style food products offers manufacturers an opportunity to introduce flavours, premium offerings and region- specific variants. The expansion of e-commerce platforms and modern trade channels has further enhanced market accessibility, enabling companies to reach a wider customer base and strengthen brand visibility.

Increasing awareness of food quality and safety encouraging organized players to differentiate themselves through superior quality standards, hygienic manufacturing practices, attractive packaging and transparent labelling.

The industry faces challenges arising from fluctuations in prices and availability of key agricultural raw materials such as mangoes, lemons, chillies garlic and other ingredients due to climatic variations, changing crop patterns and supply chain disruptions. Such fluctuations can impact production costs and profitability.

Intense competition from organized and unorganized market participants, including regional and local brands may exert pressure on pricing and market share. Additionally evolving regulatory requirements relating to food safety, packaging, labelling and quality compliance may necessitate continuous investments in systems, processes and infrastructure.

The industry is also exposed to changing consumer preferences, increasing health consciousness regarding salt, oil and preservative content and rising expectations for clean label and natural products. Failure to adopt these market practices could impact demand and competitive positioning. Furthermore economic uncertainties, inflationary pressures and logistic related challenges may influence consumer spending patterns and business performance across the sector.

Sales performance for Aveer Foods Limited (AFL) remained resilient during FY2026, with the Company delivering healthy growth in value sales supported by stable and steady volume growth across key product categories. Growth was broad-based across traditional Indian meal accompaniment categories such as Indian Chutney, Ketchup, and Papad.

Non-traditional meal accompaniments, including Chinese sauces, also continued to perform well, reflecting the sustained popularity of Chinese cuisine and evolving consumer preferences. The largest category for AFL - Pickles - maintained steady growth during the year, supported by ongoing initiatives in sales, distribution, and marketing. The Company continued to strengthen its market presence through portfolio expansion, deeper distribution reach, and focused brand-building efforts, positioning itself for sustainable long-term growth.

During the year under review, the Company continued to strengthen its presence in the meal accompaniments segment through focused sales and distribution efforts, product portfolio enhancement, and improved market reach. The Companys operations benefited from stable consumer demand across key product categories and an expanding distribution network.

Revenue from Operations for FY 2025-2026 stood at Rs. 14,324.60 Lakh, as compared to Rs. 10,851.89 Lakh in FY 2024-25, reflecting healthy growth during the year. The increase in revenue was supported by improved market penetration, wider product availability, and steady performance across the Companys product portfolio.

The Company reported a PAT of Rs. 365.73 lakh in FY 2025-2026, compared to Rs. 396.75 lakh in the previous year.

The Company continued to focus on operational efficiencies through effective cost management, supply chain improvements, and prudent resource utilization. These efforts helped maintain healthy financial performance while supporting future growth objectives.

Details of significant changes, (i.e., change of 25 percent or more, as compared to the previous Financial Year) in Key Financial Ratio, along with detailed explanation thereof: -

1) Debt Equity Ratio: The Debt-Equity Ratio has increased during the year due to increase in borrowings in the current financial year compared to the previous year wherein the Company had no outstanding debt. Since the previous year ratio was nil, percentage variance is not ascertainable and hence shown as "NA"

2) Debt Service Coverage Ratio: The debt service coverage ratio is favorable in current year due to increase in EBITDA.

3) Return on equity ratio: The return on equity ratio is unfavorable in current year due to decrease in profit after tax and also increase in equity in current year.

4) Net profit ratio: The net profit ratio is unfavorable in current year due to decrease in profit after tax.

Aveer Foods Limited is exposed to various business risks that could impact its operational and financial performance. The Company has established appropriate risk management and internal control mechanisms to identify, assess, monitor, and mitigate such risks. Through continuous focus on product quality, supply chain efficiency, innovation, compliance, and governance, the Company strives to minimize potential adverse impacts and pursue sustainable growth opportunities.

The Company has established adequate internal control systems commensurate with the size, scale, and complexity of its operations. These systems are designed to ensure the safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, compliance with applicable laws and regulations, and the timely preparation of reliable financial information.

The Companys internal control framework covers key business processes including procurement, inventory management, production, sales, finance, and statutory compliance. Defined policies, standard operating procedures, authorization limits, and segregation of duties are implemented across functions to ensure operational efficiency and effective risk management.

The Company regularly reviews its internal control mechanisms to align them with changing business requirements and regulatory developments. Internal audits are conducted periodically to evaluate the adequacy and effectiveness of internal controls, identify improvement opportunities, and strengthen governance practices. The observations and recommendations arising from such audits are reviewed by the management, and corrective actions are implemented wherever necessary.

The Audit Committee of the Board periodically reviews the findings of internal audits, compliance status, risk management measures, and the effectiveness of the internal control environment. Based on such reviews, the management believes that the internal control systems are adequate and operating effectively during the year under review.

The Company remains committed to continuously strengthening its internal control framework through process improvements, technology adoption, enhanced monitoring mechanisms, and employee awareness initiatives to support sustainable business growth and operational excellence.

Human Resources continued to remain a key focus area for the Company during FY 2025-2026. The Company is committed to fostering a positive work environment that promotes employee engagement, productivity, learning, and professional development. Various initiatives were undertaken during the year to strengthen workforce capabilities, improve employee wellbeing, and enhance organizational effectiveness.

Industrial relations across all locations remained cordial and harmonious throughout the year. The Company continued to maintain constructive engagement with employees and workers, ensuring smooth operations without any significant industrial disputes or disruptions.

The Company continues to monitor the phased implementation and operationalization of the Indias new labour law framework comprising the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020, which seek to simplify and consolidate existing labour laws.

The Company has been reviewing its human resource policies, employment practices, payroll processes, and compliance framework to align with the evolving regulatory requirements under the new labour codes. Necessary preparatory measures, including policy reviews, process assessments, employee awareness, and compliance evaluations, have been undertaken to facilitate a smooth transition and ensure continued adherence to applicable labour regulations.

The Company remains optimistic about the long-term growth prospects of the pickle industry in India, supported by increasing consumer preference for authentic and traditional food products, rising demand for branded and hygienically packaged pickles, changing dietary habits, rapid urbanization, and growing acceptance of regional flavors across domestic and international markets.

With a diverse portfolio comprising traditional pickles, specialty regional variants, chutneys, and other value-added products, the Company is well positioned to capitalize on these emerging opportunities and strengthen its presence in the market.

Going forward, the Company will continue to focus on strengthening its brand equity, expanding its distribution network, deepening market penetration across urban and rural regions, and introducing innovative products that cater to evolving consumer tastes and preferences. The Company will also emphasize improving manufacturing efficiencies, maintaining high quality and food safety standards, optimizing costs, and leveraging technology and digital platforms to enhance operational effectiveness and customer engagement.