Charms Industries Ltd Management Discussions

INDIAN ECONOMIC OVERVIEW

Global economies which were impacted by uncertainties and volatility on account of Covid-19 fallout, prolonged geopolitical conflicts and monetary tightening by central banks amidst inflationary trends are witnessing gradual resurgence, marked by waning fears of recession and rebounding growth in major economies. However, there are some regional incongruences, with some regions experiencing subdued economic activity on account of geopolitical tensions. Globally, inflation management continues to remain a key priority. Despite these challenges, leading indicators suggest an overall expansion in economic activity driven by both manufacturing and service sectors. India remains a bright spot in the revival of the global economy. The Indian economy continued to exhibit robust economic performance with broad-based growth across sectors. RBI also, in its recent MPC meeting, noted the strong growth momentum in the economy and projected real GDP growth for 2025-26 at 7 percent, driven by a pickup in rural demand and sustained momentum in the manufacturing sector. In its April 2024 WEO, IMF revised upwards its estimate of Indias GDP growth for FY 2024-25 to 7.8 percent and of estimated a growth rate 6.8 percent in 2024-25 based on its assessment of strength in domestic demand and demographic advantage. In March 2024, India witnessed a surge across multiple economic indicators, reflecting robust and resilient business activity. The month marked significant milestones, from record-breaking performances in the stock market to remarkable advancements in tax revenue collection. Indias sponge iron production reached 55.654 million tonnes, marking a 7.9% increase over the previous fiscal year. This aligns closely with estimates from other sources like BigMint, which projected production to be around 56 million tonnes. or the period April-February 2025, production was slightly lower at 50.812 million tonnes, representing an 8.0% growth over the same period in FY 2023-24.

Official or provisional data for sponge iron production in FY 2025-26 is not yet available from the Joint Plant Committee or government publications as of now. However, there are relevant industry trends that impact sponge iron prospects: Indias iron ore output rose to 289 million tonnes in FY 2024-25, with continuing deficits expected and a growing need for high-grade ore imports. Iron ore imports are projected to grow to 8-10 million tonnes in FY 2025-26, partly due to capacity expansions by major steelmakers like JSW Steel and declining global ore prices. These developments suggest robust demand for sponge iron, especially via coal-based DRI routes, but without actual JPC data, production numbers remain speculative.

INDIAN AGRICULTURE SECTOR OVERVIEW

Agriculture and allied sectors continue to remain one of the most important sectors of the Indian economy and is the main source of livelihood for ~55% of Indias population. India has the worlds largest cattle herd, the largest area planted for wheat, rice, and cotton, and is the largest producer of milk, pulses, and spices in the world. It is the second-largest producer of fruit, vegetables, tea, farmed fish, cotton, sugarcane, wheat, rice, cotton, and sugar. The agriculture sector in India holds the record for second-largest agricultural land in the world generating employment for about half of the countrys population. Thus, farmers become an integral part of the sector to provide us with a means of sustenance.

The agriculture and allied sectors have remained resilient throughout the pandemic and geopolitical conflicts and is estimated to have grown by 0.7% in Financial Year 2024-25, as per Second Advance Estimates by Central Statistical Office (CSO). Foodgrains production declined in kharif season due to deficient and unevenly distributed rainfall (both spatially and temporally) along with depleting reservoir levels. As of March 28, 2024 reservoir levels were at 36 per cent of the full capacity, below the last years level of 43 percent. Foodgrains production for 202425 is estimated at 3,093.5 lakh tonnes, 1.3 per cent lower than the final estimates of last year (as per Second Advance Estimates). Among major crops, the output of rice declined while that of wheat rose. Pulses production dropped with a sharp decline recorded during the kharif season. Among commercial crops, the output of oilseeds, cotton and sugarcane registered a sharp decline vis-a-vis last year. As per the First Advance Estimates (FAE), the production of horticultural crops during 2024-25 was placed at 355.3 million tonnes, The agriculture sector grew by around 4.2-4.6% in FY 2024-25, reflecting recovery and robust output Foodgrain production reached a record 353.95 million tonnes, early report foodgrains at 3309.2 lakh tonnes (330.92 mt), up 4.8% YoY; horticulture output at 3620.9 lakh tonnes, a gain of 2.1%. Livestock grew (5.4%) and fisheries (5.9%), contributing significantly to allied sector gains; real agricultural GVA rose 2.7% in FY 202324.

Interim Budget Financial Year 24-25 - Highlights for the agriculture sector:

1. Sector Performance Metrics

• The steel sector exhibited robust growth in the period covered by the Interim Budget:

• Sponge Iron (DRI) production rose by 18.1%, from 43.62 million tonnes to 51.50 million tonnes.

• Crude steel production grew by 13.2%, Hot Metal by 7.2%, and Pig Iron by 24.8%.

• This significant uptick underscores the steel industrys expanding capacity and output during that fiscal window.

2. Budget Context and Strategic Intent

• The Interim Budget underscored continued emphasis on capital expenditure, which indirectly supports manufacturing and associated sectors like steel.

• Capital outlay for infrastructure was boosted by 11.1%, reaching ^11.11 lakh crore, equivalent to about 3.4% of GDP

• However, the Budget itself did not announce specific initiatives or subsidies exclusively for sponge iron or the iron & steel sector. COMPANY BUSINESS:

Earlier the Company was engaged in the Business of Full Fledged Money Changer (FFMC) in terms Of the License issued by the Reserve Bank of India. Due to outbreak of Covid in the Financial Year 2020-21 and its effect on the international tours and travels, the business of the Company effected very badly and hence there was no revenue in the Financial Year 2021-22 and the Company also failed to apply for renewal of its FFMC License with RBI within the stipulated time period and hence the RBI cancelled the FFMC License of the Company, therefore the Company stopped the business/services of FFMC. Thereafter, the Board decided to explore other business opportunity,

Currently, the company is engaged in the business of agriculture produce since January 2023 and Sponge Iron since June 2024

In Agriculture produce, the Company Deals in all or any types of products of agricultural, horticulture, herbals, industrial products, consumer products, consumer durables, building materials, pharmaceuticals, engineering, chemicals, petro-chemicals, rubber, plastics, polymers, textile, all type of precious metals, metalferrous and non-ferrous metal products, stones, semiprecious stones, precious stones of all shapes, specifications and varieties.

OPPORTUNITIES, STRENGTHS, CONCERNS Strengths

• The Indian agriculture is large, competitive and well developed, offering products at low prices. The sector experiences a constant demand, as Indians have a strong preference for fresh rather than processed foods and for local spices and ingredients.

• Provides employment for a large Indian population, living in rural territories.

• Recent advances in technology and government initiatives support the development of the sector. In pursuance of the government policy to strengthen and promote IT led govemance, the department of agriculture and cooperation has been taking various measures to promote the use and application of technology with the aim of making agriculture “online" for the use of farmers, exporters, and traders, etc.

Weakness

• One of the major weaknesses present for the agricultural sector in India is in the lack of government support. Unlike in East Asian countries, the shift of the labour force from agriculture to non-agriculture in India is peculiarly slow, largely attributable to rigid labour laws in both the agricultural and industrial sectors.

• Inadequate road linkages also remain a major constrain for the development of well- functioning agricultural markets. A continuing fragmentation of land-holdings, poor maintenance of existing irrigation systems and declining soil fertility in some areas are other factors.

• Another weakness is based on seasonality and the fact that agricultural sector output heavily depends on the annual monsoon, as less than one-third of cropland is irrigated. The main foodgrain crops, for example, and some cash crops (oilseeds, cotton, jute and sugar) depend on the south-west monsoon (This brings 80% of Indias rain, usually within a three-month period from June to mid-September. The 2002 south-west monsoon was disastrous, causing the autumn grain harvest to fall by 18% year on year. In 2004 the sector stagnated in comparison to the previous year when the best monsoon rains in a decade generated growth of around 10% in the agricultural sector. Excessive rainfall in 2005 caused severe flooding in Maharashtra (The Economist Intelligence Unit Report, 2005a)).

Opportunities

• A growing population, rapid economic development, and political and social demands exceed the mandate and capabilities of any corporation in an emerging economy, and India is no exception to this. A growing population has made industrial development one of the Indian governments highest policy priorities; it is an important element of economic development as it assists in raising national income at a more rapid pace. It is also a precondition for continued agricultural development.

• The government continues to play a major role in assisting farmers through agricultural credits, subsidies, price support schemes and extension services. Although there are no food security concems at present, better agricultural productivity will hold the key to stable growth in food production, given the limits of the resource base. There is an opportunity for the economic growth to benefit more people only if the country raises agricultural productivity, improves its system of general education to help the millions who must leave farming, and encourages labor intensive manufacturing industries.

Threats

• About one-fifth of the country is covered by forests and woodland, and one- half of this area is reserved for the production of timber and other forestry products (Varshney, 1998). However, there are increasing concerns from environmentalists and local government over the rapid depletion of forest areas, ecological factors, and scarcity of natural resources.

• As income rises, India is becoming an increasingly important market for processed foods, especially in the cities and among young people. Aware of quality and international brands, consumers are less likely to support national products, and are more vulnerable to pay premium prices for foreign products of better quality. This represents a potential substitution to the local products, impacting the production levels of agriculture sector.

• Food support prices for wheat and rice have given farmers little incentive to diversify and have filled government storage facilities to overflowing, while keeping the market price of foodgrains artificially high. Current agricultural policy, which supports cereal production, is exceedingly expensive and will be unable to deal with the likely scenario of a shift in consumption from cereal food towards non-cereal food. A lack of market infrastructure also hampers the movement of crops, leading to sudden shortages. India has considerable potential as an exporter of rice, cotton, many types of fruit and even flowers, but this has so far not been tapped.

• The introduction of high-yield crop varieties and new fertilising and irrigation techniques over recent decades the so-called Green Revolution dramatically increased productivity in some regions. India has been self-sufficient in food since the mid-1970s, maintaining buffer stocks adequate to meet demand despite failed harvests and seasonal fluctuations (Ramakrishnan, 1993; The World Bank, 1997).

FINANCIAL PERFORMANCE

This year had a very bad impact on companys financial as well as operational performance

The Company has incurred Net loss for the year ended 31^st March 2025 of 14.63/- Lakhs. Further there has been no significant changes in key financial ratios of the Company.

The company is in process to take important steps in the area of managing the business as the amount of losses in the company is increasing from last some years and unable to recover any amount.

The company have filed application for Capital reduction of the company and scheme of Capital Reduction Provides for provides for undertaking of capital reduction of CHARMS INDUSTRIES LIMITED (hereinafter referred as "CIL or "the Company"), whereby the paid-up share capital ofthe "CIL" shall be reduced from 4,10,61,000/- divided into 41,06,100 Equity Shares of 10/- each fully paid-up to 41,06,100/- divided into 41,06,100 equity shares of Re.1/-each fully paid-up and that such reduction be effected by cancelling the paid up capital amounting to 3,69,54,900/- which has lost or is unrepresented by available tangible assets. Further, the Company also propose to cancel the capital reserve account of 31,46,530/- by adjustment in debit balance of Profit & Loss Account and therefore the total amount of adjustment in debit balance of Profit & Loss Account is aggregating to 4,01,01,430/-.

Further the reduction will be to the extent of 9/- per share upon each of the 41,06,100 equity shares which have been issued by reducing the paid-up value of all the shares in the capital of the Company from 10/- per share to Re.1/- per share. The debit balance of Profit & Loss Account of the Company will be written off to the extent of amount of the aforesaid reduction of share capital and Capital Reserve.

SEGMENT WISE PERFORMANCE:

Our companys operations belong to a single segment and therefore no segment wise performance given.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES:

Your Company being part of the sector, human resources has always been the main pillar for all the activities of the Company. Customer Satisfaction being the ultimate objective of the Company, to ensure sustained business growth. Companys focus has been to improve the staffs contribution towards the various services offered. To achieve this objective Company has ensured that all its employees receive continuous update on the Companys policies as well as the regulatory framework.