Chothani Foods Ltd Management Discussions

Management Discussion and Analysis is given in a separate section forming part of the Board of Directors Report in this Annual Report.

1. Industry Structure & Development:

India is the worlds largest spice producer. It is also the largest consumer and exporter of spices. The production of different spices has been growing rapidly over the last few years. India is the largest producer, consumer, and exporter of spices globally, contributing over 11 million tonnes annually. The Indian spices market reached Rs. 2,00,643.7 Crores (approx. USD 24 billion) in 2024 and is projected to grow at a CAGR of 10.56% to reach Rs. 5,13,253.9 Crores (approx. USD 62 billion) by 2033. Spices production in India was estimated at 12 million metric tonnes in FY24, up from 11.14 million tonnes in FY23, indicating steady year-on year growth. Increased health awareness and preference for natural, chemical-free food ingredients further strengthened global demand for spices. At Chothani Foods Limited, we remain committed to offering fresh, authentic, and premium-quality spices. Our focus has been on ensuring freshness, natural flavor, and safety through stringent quality controls and modern packaging techniques. We continue to maintain a reputation for delivering products that retain seasonal freshness while being cost-effective and reliable.

In Chothani, we have sustainable fresh produce to make the best quality products for our customers. Our products are always the best of the season and retain maximum freshness, natural flavor and taste. Chothani Foods Limited commits to supply premium quality products at most reasonable price to clients no matter how vast or small quantity they require. Understanding the needs of our customers, we take special care of the products while packaging to ensure their safety and purity until cargos are parked according to customers options. Also our strong selected forwarders assure us to dispatch goods at affordable prices, on time every time.

We are engaged into manufacturing and supplying of blended spices, whole spices and grinded spices. We have been supplying the traditional and delectable range of spices. We are committed to manufacture and supply different types of spices, meeting highest quality standards in line with customer requirements.

We have two brands "APPU MASALA" & "GAYATRI MASALA" with more than 30 types of Spices and Masalas including instant mix range such as Pav Bhaji Masala, Chaat Masala, Tea Masala, Garam Masala, Sambhar Masala, Punjabi Chole Masala, Biryani/Pulav Masala, Kitchen King Masala and various Powders like Red Chilli Powder, Jeera Powder, White Pepper Powder, Turmeric Powder. We are positioned as professional and built a reliable reputation within Maharashtras spices arena.

2. Opportunities and Threats Opportunities

i. Value-Added Product Innovation: Beyond traditional spice powders, there is growing demand for ready-to-cook blends, instant mixes, and regional specialty masalas, enabling the Company to capture niche segments and premium markets.

ii. Growing Packaged Food Market: The shift from unbranded to branded packaged spices in both urban and rural areas offers a strong growth trajectory, supported by rising disposable incomes and evolving consumer lifestyles.

iii. E-commerce Growth: The rapid rise of online shopping has opened up significant opportunities for the Company to expand its reach beyond traditional retail channels. By leveraging e-commerce platforms and digital marketplaces, the Company can connect directly with a broader customer base, enhance brand visibility, and tap into new domestic as well as international markets. This growing online presence not only strengthens accessibility and convenience for consumers but also provides valuable data-driven insights to tailor products and strategies in line with evolving customer preferences.

Threats

i. The segment in which the Company operates remains highly competitive and is influenced by multiple factors such as product quality, pricing, availability, customer service, ease of interaction, and brand loyalty. Competition from low-cost suppliers, local producers, and established international brands continues to exert pressure on margins.

ii. The industry is also exposed to risks arising from seasonal variations and climate change, which directly affect crop yields of key raw materials such as pepper, ginger, and cardamom. These fluctuations often lead to volatility in raw material costs, resulting in upward revisions in packaged prices for end consumers.

iii. Evolving consumer preferences, including growing demand for gluten-free, vegan, and health- oriented alternatives, may also affect traditional spice consumption patterns, necessitating continuous innovation in product offerings.

3. Future Outlook

Spices have a long and ancient history, especially in India, where they are a part of life and heritage. In every home & in every province across the country, different spices and blends are used to create different and distinctive tastes in dishes. The Company remains bullish on its growth trajectory with an unwavering focus on building customer trust, delivering consistent quality, and enhancing value for stakeholders. Looking ahead, Chothani Foods Limited is committed to:

i. Innovating and diversifying its product portfolio with premium blends, organic spices, and health-oriented variants.

ii. Enhancing packaging solutions to ensure product freshness, appeal, and tamper resistance.

iii. Expanding ecommerce, retail and distribution reach domestically to capture untapped markets.

iv. Leveraging operational efficiencies, including improved inventory and supply chain management, to ensure timely product availability.

4. Segment Wise Performance

The Company is engaged in manufacturing of masala and spices. The turnover of the Company for the year ended 31^st March, 2025 is Rs. 800.20 Lakhs.

5. Risk & Concerns

The Company continuously works towards de-risking its business by adopting preventive measures. However, there are certain potential risks being more industry oriented and the management strongly feels the same could be mitigated by having systematic decisions and measures. These Industry Oriented risks are as listed below:

Procurement Risk: Adequate availability of key raw materials at the right prices is crucial for the Company. The major raw material being agro based, availability of same depends on the vagaries of nature. Therefore, any disruption in the supply due to a natural or other calamity or violent changes in the cost structure could adversely affect the Companys ability to reach its consumers with the right value proposition. However, the Company is adopting best possible measures to ensure constant supply at right prices.

Intense competition from unorganized sector: One of the characteristics of this industry is the presence of unorganized sector offering products in loose unbranded form which intensifies competition. The Company has invested significantly in building strong brands which helps differentiate its products.

Credit Risk: The Company has the capability of producing spices and spices products ware to suit the budget and tastes of customers and hence is optimistic of growth in domestic market. It also enjoys customer loyalty.

6. Internal Control System and their Adequacy

The Companys well defined organization structure, documented policy guidelines, predefined authority levels, and an extensive system of internal controls ensure optimal utilization and protection of resources, accurate reporting of financial transactions and compliance with applicable laws and regulations. The Companys internal auditors review business processes and controls. The Audit Committee of the Board then discusses significant findings and corrective measures initiated.

7. Financial performance and Operational Performance

The company has achieved a total income of Rs. 801.32 Lakhs and net profit is at Rs. 13.61 Lakhs during the year ended 31^st March, 2025 as compared to Rs. 801.56 Lakhs and net profit Rs. 13.51 Lakhs respectively for the last financial year.

8. Human Resources/ Industrial Relations:

Your Company considers its intellectual capital as its most valuable asset. Personnel policies of the Company are designated to ensure fairness to and growth of all individuals in the organization and aim to provide a challenging work environment. The Industrial Relations was harmonious cordial during the year under review.

9. Key Financial Ratios:

10. Details pertaining to net-worth of the company (Rs. In lakhs)

CAUTIONARY STATEMENT:

Statement made in this report in describing the companys objectives, estimates and expectations are "Forward looking Statement" within the meaning of applicable laws and regulations. They are based on certain assumptions and expectations of future events but the company, however, cannot guarantee that these assumptions are accurate or will be materialized by the company. Actual results may vary from those expressed or implied, depending upon the economic conditions, Government policies and/ or other related factors.