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 continues to be one of the worlds leading producers, consumers and exporters of spices and spice products. The Indian spice industry has a significant presence in the global market, supported by the countrys diverse agro-climatic conditions, extensive cultivation base and wide variety of spices.

According to the latest data released by the Spices Board, Ministry of Commerce and Industry, Government of India, India produced approximately 12.99 million tonnes of spices during FY 2024-25, compared with 12.48 million tonnes in FY 2023-24, reflecting continued growth in domestic spice production. The latest advance estimate for FY 2025-26 places total spice production at approximately 12.82 million tonnes.

Indias position as a major global supplier is further supported by its export performance. During FY 2025-26, India exported approximately 17.34 lakh tonnes of spices and spice products valued at 39,140.11 crore (US$4.43 billion). While export volume declined by around 4% and export value declined by around 2% in rupee terms compared with FY 2024-25, the export performance continues to demonstrate Indias strong position in the global spice trade.

The principal contributors to Indias spice export basket during FY 2025-26 were chilli (27%), cumin (12%) spice oils and oleoresins (12%), small cardamom (9%), mint products (8%), turmeric (7%), curry powder and paste (6%), ginger and pepper (3% each), and coriander (2%). Collectively, these products accounted for more than 90% of Indias total spice export earnings.

Indias major export destinations include the United States, China, the United Arab Emirates, Bangladesh, Saudi Arabia, the United Kingdom, Thailand, Malaysia and Indonesia, among others. These markets collectively account for more than 85% of Indias spice export earnings, highlighting the countrys broad international market presence.

The Indian spice industry is also witnessing increasing emphasis on quality, food safety, value addition, processing and clean/organic production, with growing opportunities in branded spices, spice blends, processed spice products, spice oils and oleoresins. The Spices Board has specifically identified quality and hygiene, processing and value addition, and the promotion of Indian spices in international markets as important areas for the industrys continued development. 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 have built a reliable reputation within the spices arena.

2. Opportunities and Threats

Opportunities

i. Product Innovation and Value Addition: The changing preferences of consumers present opportunities for the Company to broaden its product portfolio beyond conventional spices. Increased demand for blended masalas, instant mixes, specialty products and health-conscious variants provides scope to develop differentiated products and cater to emerging consumer segments.ii. Expansion of the Packaged Spices Market: The increasing preference for hygienically packed and branded spice products, coupled with rising consumer awareness and changing lifestyles, provides opportunities for the Company to strengthen its presence in both urban and semi-urban markets. The gradual shift from loose and unbranded products towards packaged offerings can support long-term business growth.iii. Digital and E-commerce Channels: The growing adoption of online purchasing and digital commerce provides the Company with an opportunity to expand its market reach beyond conventional distribution networks. Greater use of e-commerce and digital platforms can facilitate access to new customers, improve brand visibility and support expansion into newer geographic markets.

Threats

i. Competitive Market Environment: The spices and masala industry is characterized by intense competition from established brands, regional manufacturers and smaller unorganized players. Factors such as pricing, product quality, availability, customer relationships and brand recognition continue to influence market share and may put pressure on the Companys margins.ii. Raw Material and Climatic Volatility: As the Companys principal raw materials are largely agricultural commodities, their availability and pricing are susceptible to weather conditions, crop yields and other external factors. Adverse climatic conditions or supply disruptions may result in fluctuations in procurement costs and could impact the Companys profitability and pricing.iii. Changing Consumer Preferences: Consumer expectations are continuously evolving towards healthier, natural and specialized food products. Increasing preference for products perceived as clean-label, vegan, gluten-free and health-oriented may require the Company to periodically adapt and diversify its product offerings to remain relevant in the market.

3. Future Outlook

Indias long-standing association with spices, coupled with their widespread consumption across diverse regions and cuisines, provides a favourable foundation for the Companys business. The Company intends to build upon its existing product portfolio and market presence while maintaining its focus on quality, customer satisfaction and sustainable growth.

Going forward, the Company proposes to focus on the following key areas:

i. Expanding and refining its product range by introducing innovative blends, premium offerings and products aligned with emerging health and wellness preferences.ii. Strengthening packaging and presentation standards with emphasis on maintaining freshness, product quality, hygiene and consumer convenience.iii. Broadening its distribution network and increasing its presence across retail and e-commerce channels to access newer markets and customer segments.iv. Improving operational effectiveness through better procurement planning, inventory control and supply chain management, with a view to ensuring product availability and maintaining cost efficiency.

4. Segment Wise Performance

The Company is engaged in manufacturing of masala and spices. The turnover of the Company for the year ended 31st March, 2026 is Rs. 833.00 Lakhs.

5. Risk & Concerns

The Company operates in an industry that is exposed to various external and operational factors. Management continuously evaluates these risks and takes appropriate measures to minimize their potential impact on business operations. The key industry-related risks and the Companys approach towards managing them are outlined below:

Procurement Risk: The availability and cost of agricultural raw materials are critical to the Companys operations. Since several key inputs are dependent on agricultural production, fluctuations in weather conditions, crop output, supply disruptions and market prices may affect procurement costs and product margins. The Company seeks to mitigate these risks through appropriate procurement planning, maintaining supplier relationships and monitoring market conditions to secure required raw materials at competitive prices.

Intense competition from unorganized sector: The spice industry continues to have a substantial presence of small-scale and unorganized manufacturers offering loose or unbranded products, in addition to competition from established branded players. Such competition may create pricing pressure and affect market expansion. The Company seeks to differentiate itself through its established brands, product quality, consistent standards and focus on customer requirements.

Credit Risk: Credit risk may arise from delays or defaults in realization of amounts due from customers and business counterparties. The Company manages such exposure by maintaining regular monitoring of outstanding receivables, evaluating customer relationships and exercising appropriate credit and collection controls. The Companys established customer base and continued focus on timely realization of dues assist in managing this risk.

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. 835.18 Lakhs and net profit is at Rs. 11.33 Lakhs during the year ended 31st March, 2026 as compared to Rs. 801.32 Lakhs and net profit Rs. 13.61 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:

Sr. No.	Particulars	2025-26	2024-25	% Change	Explanation
A.	Debt Service Coverage Ratio	0.94	0.94	-	Not Applicable
B.	Inventory Turnover	0.69	0.73	(5.48%)	Reason is not required as movement is not more than 25%
C.	Return on Equity Ratio	0.01	0.01	-	Not Applicable
D.	Current Ratio	4.20	5.29	(20.60%)	Reason is not required as movement is not more than 25%
E.	Debt Equity Ratio	0.10	0.09	(11.11%)	Reason is not required as movement is not more than 25% Due to decrease in profit
F.	Net Capital Turnover Ratio	0.53	0.52	1.92	Reason is not required as movement is not

 

10. Details pertaining to net-worth of the company (Rs. In lakhs) more than 25%
G.	Net Profit Margin	0.01	0.02	(50%)	Due to decrease in profit
H.	Return on Capital Employed	0.02	0.02	-	Not Applicable

Particulars	31st March, 2026	31st March, 2025
Net-worth	1,562.48	1,551.14

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.