Chamanlal Setia Exports Ltd Management Discussions

Management Discussion and Analysis Report

According to the latest projections of International Monetary Fund, in the near term, global growth is projected to fall from an estimated 3.3% in 2024 to 2.8% in 2025, before recovering to 3% in 2026. This is lower than the projections in the January 2025 of World Economic Outlook Update by 0.5% point for 2025 and 0.3% point for 2026, with downward revisions for nearly all countries. For advanced economies, growth forecast is projected to drop from an estimated 1.8% in 2024 to 1.4% in 2025 and 1.5% in 2026.

This reflects a steep rise in tariff rates, policy uncertainty, and slowing progress in international cooperation. Global inflation is expected to decline, although at a slower pace than previously anticipated, and downside risks such as trade tensions and volatile financial markets continue to weigh on the outlook. Inflation is likely to slow in most countries, except in the U.S., where tariffs may increase consumer prices to a peak in the third quarter. Central banks could react to lower growth and inflation with rate cuts, except for the U.S., where rates are likely to remain steady until March 2026. Governments in the U.S, Europe and China may spend more to stimulate growth, increasing their deficits.

At this critical juncture, countries should work constructively to promote a stable and predictable trade environment and to facilitate international cooperation, while addressing policy gaps and structural imbalances at home. This will help secure both internal and external economic stability. To stimulate growth and ease fiscal pressures, policies that promote healthy aging and enhance labor force participation among older individuals and women could be implemented. Additionally, productivity growth can be fostered with better integration of migrants and refugees and mitigation of skill mismatches,

I. INDIAN ECONOMY OVERVIEW

Despite a challenging global landscape, Indias economy demonstrated remarkable resilience. The country solidified its position as the worlds fifth-largest economy, showcasing its significant economic strength and establishing itself as one of the fastest-growing major economies. While this represents a moderation from the previous years high base, the outlook remains robust India is set to maintain its leadership in global economic growth. Supported by strong fundamentals and strategic government initiatives, the country is well-positioned to navigate the challenges ahead. With reforms in infrastructure, innovation, and financial inclusion, India continues to enhance its role as a key driver of global economic activity.

As per Ministry of Finance, despite global uncertainty, India has displayed steady economic growth. Indias from an aggregate demand perspective, private final consumption expenditure at constant prices is estimated to grow by 73 per cent, driven by a rebound in rural demand. On the supply side, the real gross value added (GVA) is estimated to grow by 6.4 per cent. The agriculture sector is expected to rebound to a growth of 3.8 percent in FY25. The industrial sector is estimated to grow by 6.2 per cent in FY25. Strong growth rates in construction activities and electricity, gas, water supply and other utility services are expected to support industrial expansion. Growth in the services sector is expected to remain robust at 72 per cent, driven by healthy activity in financial, real estate, professional services, public administration, defence, and other services.

Looking ahead, Indias economic prospects for FY26 are balanced. The countrys economy is projected to expand by 6.4 to 6.5 per cent in FY25, as reported by the National Statistical Office and other independent agencies. While this represents a moderation from the previous years high base, the outlook remains robust. The resilience is underpinned by strong domestic demand, healthy government expenditure, and steady momentum across key sectors. Construction activity has sustained high levels of growth, agriculture is expected to perform better following favourable monsoon conditions, and manufacturing is regaining traction after a period of subdued performance. The services sector continues to anchor the economy with consistent contributions to both output and employment.

Indian agriculture sector

The Indian agriculture sector in 2024-2025 showed significant growth and transformation, characterized by increased food grain and horticulture production, high wheat and rice reserves, and a strong government focus on digital innovation and farmer empowerment through initiatives including AI and machine learning for data analysis, satellite monitoring for crop health, and drones for field management and pest detection and funding agri-startups. Despite ongoing challenges such as climate change and resource constraints, the sector is becoming more resilient and productive, with a forecasted growth of 3.8% in FY25 according to the Economic Survey 2025. Indias total exports have touched an all-time high of US$824.9 billion in the financial year 2024-25, as per the latest data released by the Reserve Bank of India on services trade for March 2025. This marks a growth of 6.01% over the previous years export figure of US$778.1 billion, setting a new milestone in the countrys trade trajectory.

India exported 198.65 lakh tonnes (19.86 million tonnes) of rice between April 1, 2024, and March 31st , 2025, surpassing 163.58 lakh tonnes approx in FY24. Minister of State, Ministry of Consumer Affairs, Food and Public Distribution, Ms. Nimuben Jayantibhai Bambhaniya, informed the Rajya Sabha that rice exports were closely monitored, considering domestic food security and market stability. Out of the total exports in FY25, basmati rice shipments accounted for 59.44 lakh tonnes, while parboiled rice stood at 90.44 lakh tonnes. Non-basmati white rice exports totaled 33.23 lakh tonnes, broken rice at 795 lakh tonnes and other rice varieties at 759 lakh tonnes.

INDIAN RICE INDUSTRY

Rice is one of the most crucial food crops in the world and a staple diet for nearly half the global population. Over 90% of the global rice output and consumption is centered in Asia, where in the worlds largest rice producers, China and India, are also the worlds largest rice consumers. India accounts for more than 22% of the worlds rice production through its 48 million hectares of rice plantation area. Due to the favourable climatic condition prevailing in India, the nation has emerged as the second largest rice-growing country worldwide. India also contributes 25 percent of global rice production and 40 percent of global rice exports, exporting 16 percent of its domestic rice. India is set to dominate the global rice market in 2025-26, exporting 24 million tonnes and capturing 40% of the market.

With vast agro-climatic diversity and soil types in India, our farmers cultivate a large variety of quality rice suitable for different tastes, and markets. India has emerged as the worlds largest producer of rice surpassing China, with total estimated production of over 149 million MT during 2024-25 season. With self-sufficiency in food security, Indias rice sector now enjoys leadership in export in both Basmati and Non -Basmati Categories. With export of over 20.19 million tons of rice in 2024-25, India continues to be the largest exporter of rice in the world, contributing over 40 percent of global rice trade. This year export of basmati rice is expected to be record high over 6 million tons. Indias rice export footprints covers more than 170 countries, with major markets in the Middle East, Europe, Africa, U.S.A. and southeast Asia.

Indias rice production prospects are further buoyed by a positive weather forecast. The India Meteorological Department (IMD) has predicted a strong monsoon season for 2025, which is expected to enhance paddy cultivation. The 2024-25 Kharif season already demonstrated strong momentum, with rice production estimated at 121 million tonnes, marking a nearly 7% increase compared to the previous year. This surge in production would represent a record ten consecutive years of growth in rice output, although the report notes that the expansion has been tempered by a slight reduction in harvested acreage. Despite this, Indias competitive pricing and abundant supplies are likely to bolster its position as a global rice export leader.

The leading rice-producing states were West Bengal, Uttar Pradesh, Andhra Pradesh, Punjab, Tamil Nadu, Bihar, Chhattisgarh, and Odisha. Over 3,000 varieties of rice are grown across the country, some of which take as less as 60 to 75 days to be grown Rice is grown in India throughout the year heaving region-wise favourable rice growing seasons. Eastern, North- eastern and Southern are major rice-producing region because of a pleasant climate throughout the year.

Throughout history as per the Archeological evidence,rice has been one of mans most important foods for more than 5000 years. Today, this unique grain helps sustain two- thirds of the worlds population. Mainly the two major varieties of rice that dominate the Indian Market are basmati and non-basmati rice.

Rice is grown in India throughout the year heaving region-wise favourable rice growing seasons. Eastern, North- eastern and Southern are major rice-producing region because of a pleasant climate throughout the year.

India is a major supplier to rice to several important markets in Asia and Sub-Saharan Africa , making their populations vulnerable to rice market disruptions. Forty two countries get more than 50% percent of their total rice imports from India.

The 2024-25 global rice production forecast is raised 3.1 million tons, to a record 535.8 million (milled basis), nearly 3 percent larger than a year earlier. India accounts for the bulk of the upward revision, followed by Indonesia, Cambodia, Brazil, Taiwan, and Venezuela. Global domestic and residual use is raised 1.4 million tons to a record 532.1 million tons, mostly driven by increases for several Sub-Saharan countries.

In 2024-25, Indias non-basmati rice exports were robust, with a particular focus on parboiled rice exports, which reached approximately 19.86 million tonnes of rice with non-basmati rice accounting for a substantial portion, including 90.44 million tonnes of parboiled rice, 33.23 million tonnes of non-basmati white rice, and 7.95 million tonnes of broken rice. in September 2024, the government changed the export policy for non-basmati white rice from prohibited to free with a minimum export price (MEP) of $490/tonne However, specific data for non-basmati white rice exports were 3.32 million tonnes.

Indias total food grain production for 2024-25 is estimated to be a record 3539.59 Lakh Metric Tonnes (LMT), which is higher by 216.61 LMT than the foodgrain production of 3322.98 LMT in 2023-24 registering approx. 6.5% increase from the previous year, according to the Ministry of Agriculture & Farmers Welfares Third Advance Estimates released in May 2025. This record production, which includes bumper harvests of rice, wheat, and maize, is attributed to favorable monsoon conditions and robust government support for the agricultural sector.

Further Total Rice production is estimated at 1490.74 LMT as compared to 1378.25 LMT in 2023-2024 showing an increase of 112.49 LMT.

INDIAN BASMATI RICE INDUSTRY

Indian Basmati rice is a unique long-grain aromatic rice, cultivated for centuries in the specific geographical region of the Himalayan foothills in the Indian subcontinent. Known for its extra-long, slender grains that elongate to at least twice their original size when cooked,

Among the several varieties of rice, Basmati is considered the most superior in terms of product characteristics and therefore, the most premium."Basmati"is long grain aromatic rice grown for many centuries in the specific geographical are , at the Himalayan foothills of Indian sub-continent, blessed with character is tics extra-longs lender grains that elongate at least twice of their original size with a characteristics soft and fluffy texture upon cooking, delicious taste, superior aroma, and distinct flavor, Basmati rice is unique among other aromatic long-grain rice varieties. Despite its popularity, basmati rice is not easy to come by outside of its native region. The grain is delicate and requires a specific climate to grow properly. As a result, basmati rice is expensive and difficult to find in most parts of the world.

Basmati is unique to the region. It can be grown where precise climatic conditions, soil quality and temperature exist and this only occurs in the Indo-Gangetic area of the Himalayas.

Grown in the specific regions in India Haryana, Punjab, Himachal Pradesh, Jammu and Kashmir, Western Uttar Pradesh, Uttarakhand and Delhi are the major basmati rice producing states in India. India exports basmati rice in the world to Iran, Saudi Arabia, Iraq, UAE, Kuwait, Iraq, the UK, Yemen Republic, USA, Canada and Oman.

Basmati rice is majorly produced in India, with balance quantity from Pakistan. Indian Basmati rice has got Geographic Indication (GI) recognition. India has strong dominance in the export of basmati rice (154+ countries) especially to the Middle East.

Despite the shadow of tensions between Iran and Israel, the export of Indian basmati rice surged by Rs 1,923 crore in 2024-25 fiscal year (April-March) compared with the previous fiscal year, according to the data available with the Agricultural and Processed Food Products Export Development Authority (APEDA).

In terms of value in rupees, the exports were about 3.97% higher than the 2023-24 fiscal year. According to DGCIS data, India exported basmati rice worth Rs 50,312 crore (about $5.87 billion) in 2024-2025 fiscal year. The value of exports of in the 2023-24 FY was about Rs 48,389 crore (nearly $5.74 billion).

Introduction of higher yielding and shorter duration varieties has supported strong growth in Basmati production in the last two decades. New variety is increasingly adopted by farmers due to shorter growth cycle, lower irrigation requirements and higher yields compared to other traditional varieties..

In the 2024-25 fiscal year, Indias basmati rice exports reached approximately 60.65 lakh metric tonnes (LMT), a 15.7% increase in volume from the previous year, with Saudi Arabia being the largest importer. The total export value grew by 1,923 crore, with the total value reaching approximately USD 12.95 billion. Major buyers included Saudi Arabia, Iraq, the United Arab Emirates, and the United States, with the Middle East being a primary export destination. The overall strong performance was supported by stable monsoons and increased output, though the last quarter saw challenges due to regional conflicts and potential trade setbacks, such as the announced 25% tariff on Indian goods by former U.S. President Donald Trump. Despite challenges from regional conflicts, India maintained its position as the worlds leading Basmati rice exporter, expanding its global reach to 154+ countries. Saudi Arabia was the biggest importer of the Indian basmati rice in the year 2024-2025 fiscal year by both value and volume. The country imported 11.73 lakh metric tonnes of basmati rice and paid 10,190.73 crore for it.

Accounting for nearly 85% of the global Basmati exports are from India. In India the Basmati exports is about 37% of the total rice exports by quantity and 60% by value. Exporting basmati rice to nearly 90 countries, nearly 60% of Indias basmati rice production is exported.

Currently, 45 varieties of Basmati rice have been notified under the seeds Act, 1966. These are Basmati 217, Punjab Basmati 1 (Bauni Basmati), Basmati 386, Punjab Basmati 2, Punjab Basmati 3, Basmati 370, Haryana Basmati 1, Taraori Basmati (HBC 19), Type 3 (Dehraduni Basmati), Pant Basmati 1 (IET 21665), Pant Basmati 2 (IET 21953), Kasturi, Mahi Sugandha, Basmati CSR 30 (After amendment), Malviya Basmati Dhan 10-9 (IET 21669), Ranbir Basmati, Basmati 564, Pusa Basmati 1, Pusa Basmati 1121 (After amendment), Pusa Basmati 1509 (IET 21960), Pusa Basmati 6 (Pusa 1401), Pusa Basmati 1609, Pusa Basmati 1637 Pusa Basmati 1728, Vallabh Basmati 22, Vallabh Basmati 21 (IET 19493), Vallabh Basmati 23, Vallabh Basmati 24, Pusa Basmati 1718, Punjab Basmati 4, Punjab Basmati 5, Haryana Basmati 2, Pusa Basmati 1692, Jammu Basmati 118, Jammu Basmati 138, Jammu Basmati 129, Jammu Basmati 123, Pusa Basmati 1847, Pusa Basmati 1885, Pusa Basmati 1886, Pusa Basmati 1985, Pusa Basmati 1979, Pusa Basmati 1882, Punjab Basmati 7.

Despite pandemic challenges in the short-term, the outlook for the Indian Basmati rice industry remains stable. In, the medium term, demand prospects from key destinations such as Iran and Saudi Arabia will play a significant role and determine trade prospects. Availability of a secure payment mechanism for exports to Iran, easing/ removal of sanctions by the US and response to pandemic in the destination country would be the factors underscoring the Basmati rice trade.

Business Comparatives are given below:-

Ratios	F.Y. 2024-2025	F.Y. 2023-2024
1. Trade receivables turnover ratio	6.81	753
2. Inventory Turnover Ratio	2.99	2.91
3. Current Ratio	4.70	3.80
4. Debt. Equity Ratio	0.17	0.25
5. Net Profit ratio	726	8.68
6. Return on capital employed	18.35	21.31
7 Trade payable turnover ratio	121.66	142.86
8 Net Capital Turnover Ratio	1.99	1.87
9 Return on equity ratio	18.61	21.64

(1) The Debt Equity Ratio has come down From 0.25 in F.Y 2023-24 to 0.17 in F.Y 2024-25 which is better sign for a Business as a Company has Reduce Its Bank Borrowings From Rs 118.80 Cr to Rs 61.10 Cr

OUR BUSINESS COMPANY OVERVIEW

Chaman Lal Setia Exports Limited was founded back in 1974 by Late Mr. Chaman Lal Setia, later on, it was incorporated as a partnership firm in 1983 and then reconstituted as a public limited company in 1994. The company got listed on the Bombay Stock Exchange in 1995 and further on the National Stock Exchange on the 12.05.2021. The company is engaged in the business of milling and processing of basmati rice. The company has been involved in export operations since 1982 and was recognized as an export house by the Ministry of Commerce in 1989, at present the company is a ‘Star Export House. Currently the company exports to more than 90 countries around the world, which included European, Middle-eastern, American, Asian and many other markets.

As of FY 25, the company derived 84 % of its revenue from operations from exports, as compared to 89% in FY24.

The company has a manufacturing unit located in Karnal (Haryana) which has an installed capacity of 12 metric tonnes per hour, this facility is a state of art and automated rice processing unit.

The company also has grading and sorting facilities in Karnal (Haryana) and Kandla (Gujarat). The company processes rice in-house and use parboiled, raw, steam process using the finest equipment to ensure physical, aromatic and taste qualities remain intact. The flagship brand of Chaman Lal Setia Exports Limited is ‘Maharani rice, along with ‘Mithas and ‘Begum as other basmati brands. The company is also involved in selling non-basmati rice - under its brand ‘Green World Aromatic Rice. The company also sells other innovative products such as ‘Maharani Diabetics Rice, ‘Basmati Rice Plus and organic products such as ‘Maharani - Brown Basmati Rice.

key strengths and weaknesses

I. Experienced Management Team

With over 40 decades of experience, the Company has developed resilience to industry challenges and has established strong market position across global markets while maintaining healthy relationships with international customers and suppliers. The management team has an experience of more than 4 decades in the rice industry and are supported by strong and competent 3rd generation promoters. Mr. Vijay Kumar Setia is a Chairman & Managing Director of the Company.

II. Favorable Manufacturing Locations

Company has manufacturing units in close proximity to paddy producing regions, as well as port to support its export business.

III. Diversified Client Base

The company has a loyal client base of more than 900 buyers spread across more than 90 countries.

HEALTH & SAFETY

The Company continuously focuses on the health and safety of all its workers and staff. Adequate safety measures have been taken at the plant for the prevention of accidents or other untoward incident. The necessary medical facilities are available for the workers and staff to maintain good health. During the pandemic worldwide, the Company ensures proper sanitisation and safety measures. During the worldwide pandemic situation the Company followed all the worldwide pandemic situation the Company followed all the norms and advisory issued by the Government of India/State Government.

statutory compliance

All the statutory compliance with respect to Securities and Exchange Board of India (Listing obligations and Disclosure Requirements) Regulations, 2015, Income Tax Act, GST, Companies Act, 2013 and all other applicable Acts, and Rules & Regulations are complied with.

internal controls and adequacy

The Company has in place an adequate system of internal control commensurate with the size and nature of its business. These have been designed to provide reasonable assurance that all assets are safe guarded 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. authorized and recorded correctly. The Internal Auditors are submitting reports to the Company on a Quarterly basis.

The Audit Committee and the management have reviewed the adequacy of the internal control systems and suitable steps are taken to improve the same.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS

The Company has always valued its workforce as their biggest asset. The Company has pool of competitive, dedicated and enthusiastic personnel which is the driving force behind its accelerated growth. The Companys policies and practices ensure a favourable working environment with innovation and motivation.

Employee relations during the period under review continued to be healthy, cordial and harmonious at all levels and your Company is committed to maintaining good relations with the employees.

CAUTIONERY STATEMENT

Statements in the Management Discussion and Analysis, describing the Companys objective, projections, estimates, expectations, may be forward-looking statements. Actual results may differ materially from those expressed or implied due to various risks and uncertainties. Important factors that could make a difference to the Companys operations include economic and political conditions in India and other countries in which the Company operates, volatility in interest rates, changes in government regulations and policies, tax laws, statutes, and other incidental factors. Company disclaims any duty to update or amend any forward-looking statements to represent events or circumstances that might occur in the future.