BKV Industries Ltd Management Discussions

A. INDUSTRY, STRUCTURE, DEVELOPMENT AND OUTLOOK

The Indian seafood export industry holds a significant position in the global market, showcasing the countrys diverse aquatic resources and culinary heritage.

During the financial year 2024-25, despite various challenges in significant export markets, India shipped 16.85 MT of seafood worth (US$7.20 billion) marine products. The growth trajectory is continuing into FY 2025-26, despite concerns around proposed tariff hikes by the United States, Indias largest Seafood market.

Frozen shrimp remains the top exported product, accounting for over 40 percent of the total quantity and 66.12 % of export value. Frozen shrimp remained the major export item in quantity and value, while the USA and China became the major importers of Indias seafood.

Indias competitiveness and higher price realisation in seafood exports are being supported by the Pradhan Mantri Matsya Sampada Yojana (PMMSY). This central scheme promotes a wide range of activities across the fisheries value chain. These include improved fish quality, expansion and intensification of brackish water aquaculture, and promotion of export-oriented species. The scheme also focuses on the infusion of modern technology, disease management, traceability, and training. Additionally, the development of post-harvest infrastructure, coldchain systems, fishing harbours, and landing centres has significantly boosted seafood production and export capabilities.

India is now aiming for an export turnover of $18 billion (Rs 1.57 lakh crore) by 2030. This target is outlined in the Vision Document - 2030 for Indias seafood exports, formulated by the Marine Products Export Development Authority (MPEDA), which operates under the Ministry of Commerce.

B. OPPORTUNITIES& THREATS

India ranks as one of the top seafood exporters, contributing substantially to the nations economy and providing ample livelihood opportunities for coastal communities. In recent years, the industry has witnessed considerable growth, propelled by increasing demand for seafood across international markets.

Driving Factors behind Indias Marine Export Growth:

The key contributors to the rise in marine export volume and value in 2025 include:

- High Demand for India shrimp, Cuttlefish in US and EU markets

- Expansion of aqua culture farms in Andhra Pradesh, Gujarat & Odissa.

- New Trade Agreements Signed with Asian and Middle East Countries.

- Government Incentives under Marine Export Policy 2025.

- Sustainable and traceable fishing practises adopted by Indian fisheries.

These factors are positioning India as a reliable source of high quality marine products, especially in the face of supply disruptions from other countries. The countrys competitive pricing, high-quality produce, and compliance with international food safety standards have positioned it favorably in the global market, driving sustained export growth and contributing significantly to the overall expansion of the shrimp market in India.

The growing awareness of the health benefits of fish and sea food consumption, coupled with the rise in demand for sustainable and ethically sourced food, has led to a shift towards locally sourced and eco-friendly sea food options. Additionally, the popularity of e- commerce channels for purchasing food products has made it easier for consumers to access a wider variety of fish and seafood options, including premium and exotic varieties. As a result the sea food companies are investing sustainable practices and certifications to meet consumer demands. This trend is expected to continue, with potential competition and the need to adopt to changing consumer preferences. Furthermore, the rising government support through favourable policies, subsidies, and research and development (R&D) initiatives that improves production efficiency and ensures adherence to environmental regulations is contributing to the market growth.

Shrimp is known for its quality, competitive pricing, and compliance with international standards, making it a preferred choice in the global market. Moreover, the increasing demand of shrimp-based cuisine and the growing consumer preference for protein-rich seafood within India has accelerated the product growth. Apart from this, the widespread adoption of shrimp in various dishes and the countrys diverse culinary traditions have augmented the demand for shrimp among Indian consumers.

Despite the positive forecast, Indias Marine Export Industry faces several challenges exclusive of diseases and pollution:

- Rising Operational Costs due to fuel prices and packaging expenses

- Delays in port logistics due to global supply chain bottlenecks

- Need for better training of workers in processing units to meet export standards.

Indias seafood industry, particularly its shrimp export sector, is facing significant headwinds in FY 2024-25 due to a combination of global competition, regulatory pressures, and the proposal for imposition of steep U.S. tariffs. This move threatens to reduce export volumes by 7-9% and compress operating margins by up to 100 basis points, puffing pressure on exporters and shrimp farmers alike. With nearly half of Indias shrimp exports going to the U.S., the industry is grappling with suspended orders, renegotiated contracts, and fears of losses on shipments already in transit.

Compounding the tariff shock is intense competition from countries like Ecuador, Indonesia, and Vietnam. Indian exporters also face logistical bottlenecks, limited cold chain infrastructure, and rising compliance costs due to stricter sustainability and residue standards. While the government has responded with infrastructure investments under PMMSY and is pursuing trade negotiations to ease tariff burdens, the industrys over dependence on the U.S. market and slow diversification efforts leave it vulnerable. The livelihoods of over 20 million people tied to the seafood value chain are at stake, making this a critical moment for strategic intervention and policy recalibration.

C. RISKS AND CONCERNS:

Pursuant to SEBI Listing Regulations, the Company had since constituted a Risk Management Committee. The details of the Committee, its terms of reference are given in the corporate governance report. The methodology for risk management primarily involves mapping of risks with strategy, assessing the risks on its importance, identifying de- risking measures, and assigning it to risk owners and continuously monitoring the status of the risks. The risks were categorized into strategy and planning, operations and compliance and the risks associated with each risk category was further classified and identified as critical, major and moderate.The company does not foresee any critical / major risk, as it had given its farm on long term lease by another seven years from July 2020. The lessee had been meeting their commitments as per the lease agreement. The maintenance and compliance expenses of the company are taken care through the lease income; hence, the company does not foresee any major risk for its operations in the short and medium term, except in the event of costs for additional regulatory measures.

The management periodically reviews the risk management framework to identify the major business risks as applicable to the Company and works out their mitigation strategy.

D. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Given the operations, 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 con- trolls. 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. The Company had given its farm on seven years long term lease and did not carry any other business operations during the financial year 2024-25.

E. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The financial statements are prepared in compliance with the requirements of the Companies Act, 2013 and Generally Accepted Accounting Principles in India including Ind AS. The management accepts the responsibility of integrity and objectivity of the financial statements and the basis for various estimates and the judgments used in preparing the financial statements.

The company extended the lease agreement of its Farm for a period of 84 months with effect from July, 2020, as the promoters have decided to meet with lease income, the fixed expenses and statutory compliance costs. Lessee is paying the lease amount in advance every year and hence the company could meet its fixed and compliance costs.

With various financial measures, the company could perform reasonably and ended up with a net profit from operations Rs.1.10 Lakhs after providing the depreciation for Rs.0.20 Lakhs, including gains on re-measurement of employee benefits of Rs.0.67 lakhs during the year ended 31st March 2025.

Material Developments in human resources / industrial relations, including number of people employed:

The company gave its farm on long term lease and except the lease income, the company has not been carrying any other commercial operations. It had employed only five employees during the year, which includes the Managing Director. During the year ended 31st March 2025, the relations with Lessee and Employees are cordial.

A. DEVELOPMENTS IN HUMAN RESOURCES:

In a challenging and competitive environment, the Company believes that people are the key to success and continues to focus on people capabilities. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

B. CAUTIONARY STATEMENT:

The management discussion and analysis report containing your Companys objectives, projections, estimates and expectation may constitute certain statements, which are forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied in the statement. As the company had given its farm assets on long term lease and that being the only source of income for the company only the changes in the government regulations, compliance framework, tax laws and other factors, may affect the future earnings of the company.

C. DISCLOSURE OF ACCOUNTING TREATMENT:

Financial Statements during the year have been prepared, based on the prescriptions in accounting standards issued by the Government from time to time.

ANNEXURE - I

REMUNERATION POLICY

1. Preamble

This Remuneration Policy provides the framework for remuneration of members of the Board of Directors, Key Managerial Personnel, and other employees of the Company.

This Policy is guided by the principles and objectives as enumerated in Section 178 of the Companies Act, 2013 to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company. This policy reflects the remuneration philosophy and principles of the company and considers the pay and employment conditions with peers/competitive market to ensure that pay structures are appropriately aligned.

2. Remuneration of Non - Executive Directors

As the company had earlier incurred substantial losses and do not have any operations other than the lease Income, siffing fees is paid to the Non-Executive Directors("NEDs") during the year 2024-25.

3. Remuneration of Managing Director

The compensation paid to the Managing Director is within the scale approved by the Shareholders. The elements of the total compensation are approved by the N&R Committee within the overall limits specified under the Companies Act,2013.

The elements of compensation of the Managing Director are as follows:

The company do not have adequacy of profit in any financial year, the remuneration payable to the Managing Director shall be subject to the relevant provisions of the Companies Act, 2013 and the same is paid with in the limit specified.

Remuneration includes Salary, Perquisites not exceeding the salary amount per annum viz. Medical Expenses, Leave Travel Assistance, Club Fees and Personal Accident Insurance Charges. Further, transport charges, telephone expenses, provident fund, superannuation fund and encashment of leave (if applicable to the company) are provided or reimbursed on actual basis.

During the year ended 31-03-2025 Managing Director remuneration incurred was Rs. 36.00 Lakhs.

4. Remuneration to Key Managerial Personnel/Other Employees:

The Companys total compensation for Key Managerial Personnel/other employees consists of fixed compensation as the company incurred substantial losses in the earlier years and earning only lease income from the farm and earned marginal profits during the year.

Fixed compensation is determined on the basis of size and scope of the job typically as reflected by the level or grade of the job, trends in the market value of the job and the skills, experience and performance of the employee. Fixed compensation includes Basic Salary, Housing Allowance, Leave Travel Allowance and other cash allowance.

Overall compensation shall be subject to periodic reviews which considers factors such as affordability based on the Companys performance and the economic environment.

5. Adoption, Changes and Disclosure of Information:

This Remuneration Policy and any changes thereof are approved by the Board of Directors based on the recommendation(s) of the HR, N&R Committee. The policy may be reviewed at such intervals as the Board or the Committee may deem necessary. Such disclosures of this Remuneration Policy as may be required under the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

Annexure -II

Criteria for Board Nominations

The Nomination and Remuneration Committee (N&R Committee) of the Board is responsible for identifying persons for initial nomination as directors and evaluating incumbent directors for their continued service. The following are the qualifications, positive attributes and independence criteria laid down by the Committee of BKV Industries Ltd., in terms of section 178(3) of the Companies Act, 2013 to be considered for nominating candidates for Board positions/re- appointment of directors..

QUALIFICATIONS:

Personal Traits.

• Highest personal and professional ethics, integrity and values.

• Shares the values and beliefs of the Company.

• Inquisitive and objective perspective, practical wisdom and mature judgment.

• Demonstrates intelligence, maturity, wisdom and independent judgment.

• Self-confidence to contribute to board deliberations has a stature that other board members will respect his or her views.

Experience and Background:

• Well accomplished in his/ her respective field.

• Demonstrated success at policy-seffing and strategy development levels in a medium sized organization (such as corporation, government, academic institution or profession).

• Leadership role at the time a potential directors initial candidacy is evaluated must either be current or very fresh and recent, and incumbent directors should continue to demonstrate a sophisticated understanding and current knowledge of business issues.

• Absence of adverse events (e.g., bankruptcy, affiliations, securities law sanctions, disqualifications under Companies Act 2013 or other applicable laws etc.) that either disqualify or require adverse disclosures.

Fit and proper:

With respect to Directors being nominated for independent position, the candidate should comply with the "Independence qualifications" as defined by applicable laws.

• Willingness to devote sufficient time to carry out the duties and responsibilities effectively, including attendance at meetings.

• Commitment to representing the long-term interests of the shareholders and balancing the interests of stake holders.

• Adhere to the code of conduct of the Company.

• Absence of unfair obstruction in the functioning of the Board/Committees.

POSITIVE ATTRIBUTES:

• The positive attributes for a director would encompass:

• Ethical Integrity & transparency.

• He/ She acquires sufficient knowledge in the Companys business and operations.

• Demonstrate sound judgment gained through experience & expertise in management/ technical/ financial governance or regulatory matters.

• Foresight - ability to see and prepare for future, anticipate needs, opportunities, and threats.

• Managerial abilities required to lead and guide the management such as effective communication skills, cultural sensitivity, flexibility, team player, strategic thinking, and balancing risk with opportunity, ability to juggle several variables and make complicated decisions etc.

INDEPENDENCE STANDARDS:

• A Director is independent if the Board affirmatively determines that he meets the Independence criteria provided under the applicable laws. In addition to applying these guidelines, the Board will consider all relevant facts and circumstances in making its determination relating to a directors independence.

• Two core objectives in selecting board members and continued board service are that the skills, experience and perspectives of the Board as a whole should be broad and diverse, and the collective talent should blend together to be as effective as possible.

M/s K. Srinivasa Rao & Co., Company Secretaries have certified none of the Directors on the Board of the Company as stated for the financial year ending on 31st March, 2025 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs, or any such other Statutory Authority.

	For and on behalf of the Board of Directors
	BOMMIDALA RAMA KRISHNA	BOMMIDALA ANITHA
Place : Guntur	Managing Director	Director
Date : 28.05.2025	DIN:00105030	DIN:00112766