Chandrima Mercantiles Ltd Management Discussions

A. Overview of the Indian Economy:

This year began with concerns around moderating global demand, cautious investment, and residual inflationary pressures. But halfway through F.Y. 2024 25, India continued its Goldilocks run, GDP growth in F.Y. 2024 25 was a solid 6.4%, a notch down from the previous year, but resilient amid worldwide sluggishness. Quarter Four pulled ahead, with a surprise strong quarter driven by higher indirect tax receipts, signaling robust economic activity.

High-frequency indicators suggest ongoing health in domestic demand. After RBI projections of 6.3 6.8% for F.Y. 2025 26, private consumption showed strength (urban demand up to 7.4% in Quarter One). The RBI has also taken a measured easing stance, cutting the repo rate by 75 bps so far to 5.50% and releasing bank reserves, aiming to support credit and investment while inflation subsides.

Inflation has edged down headline CPI averaged around 4.9% for much of F.Y. 2024 25, easing toward the RBI?s 4% target; food inflation remained slightly elevated, but the overall trend allowed room for monetary relief. By June 2025, CPI tumbled to just 2.1% the lowest in over six years thanks largely to easing food prices. Core inflation, however, remains around mid - 4% levels, drawing cautious attention.

Overall, India is on a steady climb. With GDP at 6.4 6.5% and inflation comfortably within target, theres scope for further policy support. RBI expects around 6.5% growth in F.Y. 2025 26 alongside easing inflation. If global headwinds ease, growth could accelerate toward 7% in the coming years.

B. Global Economic Outlook:

Global growth is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024 and 2.8 percent in 2025. While the forecast for 2025 shows a slight slowdown compared to previous years, it continues to reflect a subdued global economic environment by historical standards. According to the latest projections, global growth is expected to decline modestly to 2.8 percent in 2025, down from 3.0 percent in 2023 and 2024. The lingering effects of tight monetary policies implemented globally to curb inflation continue to weigh on investment and consumption. Global headline inflation is projected to decline further from 5.2 percent in 2024 to around 4.6 percent in 2025, marking continued progress in price stability. However, underlying inflation is expected to ease at a slower pace, remaining sticky due to elevated services prices and wage pressures in several advanced economies. In fact, forecasts for core inflation in 2025 have been adjusted slightly upward compared to earlier estimates, reflecting the persistence of structural inflationary drivers in labor and housing markets.

Compared with projections in the April 2023 World Economic Outlook (WEO), global growth was upgraded by 0.2 percentage point for 2023, held steady for 2024, and is now projected to moderate slightly to 2.8 percent in 2025, reflecting persistent headwinds. While this trajectory shows some resilience, the forecast for 2023 2025 remains well below the historical average of 3.8 percent (2000 2019), both in terms of overall GDP and per capita growth across income groups. Advanced economies continue to account for much of the slowdown, with tight monetary conditions and soft manufacturing activity outweighing gains in services and consumer demand. Emerging market and developing economies, on the other hand, show a broadly stable growth outlook across the three years, averaging around 3.7 4.0 percent, though with considerable regional variation. In 2025, momentum in South and East Asia, particularly India and parts of ASEAN, is expected to support global output, even as global trade uncertainties and geopolitical risks continue to restrain a stronger recovery.

For advanced economies, the growth slowdown projected for 2023 remains significant: from 2.7 percent in 2022 to 1.5 percent in 2023, with a 0.2 percentage point upward revision from the April 2023 World Economic Outlook (WEO). About 93 percent of advanced economies were projected to have lower growth in 2023, and growth in 2024 among this group of economies was expected to remain subdued at 1.4 percent. Looking ahead to 2025, the growth outlook remains essentially unchanged, with advanced economies projected to expand by 1.4 percent, reflecting persistent weakness in manufacturing, the lagged effects of monetary tightening, and structural headwinds such as aging populations and slowing productivity. While services sectors have shown resilience, overall growth in advanced economies continues to fall well short of pre-pandemic averages.

C. Industry structure and development:

India remains one of the leading players in the global agriculture sector, and in 2024 25, agriculture and allied activities continue to serve as the primary source of livelihood for around 45 46% of the country?s population, reflecting a gradual shift as other sectors grow. The country holds the distinction of having the world?s largest cattle herd (primarily buffaloes) and the largest area under cultivation for rice and wheat. India is the largest producer of milk, contributing approximately 24 25% of global milk output, as well as the top producer of pulses and spices. Additionally, India ranks as the second-largest producer of fruits, vegetables, tea, farmed fish, sugarcane, wheat, rice, cotton, and sugar, solidifying its pivotal role in global food security. With over 195 million hectares of agricultural land, India possesses the second-largest arable land area globally. Agriculture not only sustains the economy but also continues to be a crucial employment generator, especially in rural areas. Hence, farmers remain the backbone of this vital sector, ensuring the nation?s sustenance and contributing significantly to food production and economic stability.

The Indian food industry is poised for huge growth, increasing its contribution to world food trade every year due to its immense potential for value addition, particularly within the food processing industry. The Indian food processing industry accounts for 33% of the country?s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.

D. Opportunities and Threats:

Opportunities:

With rising population, demand for food will continue to drive the need for better seeds.

Improved varieties of seed will be required to meet the changing needs of climate, processing industry and modern retail. The government?s focus and various subsidy and incentive schemes for the farmers will also add to the requirement of better quality seeds.

With shifting educational reforms and government regulations aimed at educating investors and raising trading awareness among the general public, there is a growing opportunity for stock brokerage firms.

Number of modern techniques and tools along with awareness created by Agri-tech start-ups is helping farmers get into precision farming. This has in turn increased the appreciation of the farming community towards the value of inputs like seeds, bio fertilizers etc.

Government thrust for infrastructure development will boost in rise in demand.

Threats:

Agriculture continues to be dependent on the vagaries of temperature and rainfall. Not only is quantity of rain important, but timing is even more critical. Rapidly changing climatic conditions and impact of global climate change is having a drastic effect on the performance of crops as well as cropping patterns.

The competition has increased from Domestic and other developed countries.

Because firms can enter and quit an industry with few limitations, the number of substitutes in the same product line at different prices poses a risk of losing the investor base.

Threats for this Industry are very common and every person is aware of the threats and the risks involved with this Industry.

E. Segment-wise or Product-wise performance:

The Company is primarily engaged in single segment i.e. Agriculture Products.

The Turnover of the Company for the Financial Year 2024-25 is Rs. 2,919.30 Lakhs.

F. Future Outlook:

The Company presents the analysis of the Company for the year 2024-25 & its outlook for the future. This outlook is based on assessment of the current business environment. It may vary due to future economic & other developments, both in India and abroad.

G. Internal control systems and their adequacy:

The Company has taken adequate preventive and precautionary measures to overcome all negative factors responsible for low trend to ensure steady growth.

Internal Control Systems are the foundation for ensuring achievement of organizations objectives of operational efficiencies, reliable financial reporting and compliance with laws, regulations & policies. The Company has in place Internal Control Systems commensurate with the nature of its business, size and complexity of its operations. These systems are regularly tested for their effectiveness by Statutory as well as Internal Auditor and were found to be operating effectively during the year. Based on the Internal Audit Programme approved by the Audit Committee of the Board, the Internal Auditor carry out regular internal audits covering all offices, factory and key areas of business. Reports of the Internal Auditor are placed before the Audit Committee on quarterly basis for review. The Audit Committee regularly reviews the reports and discusses the actions taken with the management in addition to reviewing the effectiveness of the internal control systems and monitoring the implementation of audit recommendations. There are adequate checks & balances in place, wherein deviation from the systems laid-out are clearly identified and corrective actions are taken in the respective areas, wherever required.

H. Discussion on financial performance with respect to operational performance:

The financial performance of the Company for the Financial Year 2024-25 is described in the Directors? Report of the Company.

I. Material developments in Human Resources / Industrial Relations front including number of people employed:

The cordial employer - employee relationship also continued during the year under the review. The Company has continued to give special attention to human resources.

J. MATERIAL FINANCIAL AND COMMERCIAL TRANSACTIONS:

During the year there were no material financial or commercial transactions.

K. KEY FINANCIAL RATIOS:

In accordance with the SEBI (Listing Obligations and Disclosures Requirements) Regulations 2018 (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in Key sector-specific financial ratios. In this regard, the Company has no significant changes in any key sector-specific financial ratios to report.

L. HUMAN RESOURCES:

These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company operations include global and domestic demand supply conditions, Government regulations, tax regimes, economic developments and other factors such as litigation and business relations.

M. CAUTION STATEMENT:

Statements made in the Management Discussion and Analysis describing the various parts may be “forward looking statement” within the meaning of applicable securities laws and regulations. The actual results may differ from those expectations depending upon the economic conditions, changes in Government. Regulations and amendments in tax laws and other internal and external factors.