Contil India Ltd Management Discussions

1. Global and Indian Economic Overview

The global economy navigated a year of moderate but uneven growth in FY 2025-26, shaped by easing though still- elevated interest rates in major markets, volatile freight and input costs, and shifting trade-policy dynamics between key sourcing and consuming blocs. Demand for Indian food and grocery exports remained resilient, supported by steady consumption among the Indian diaspora and ethnic-food retail channels in North America and other overseas markets, even as currency volatility periodically affected order timing and realisations.

India continued to be among the fastest-growing large economies during the year, underpinned by robust domestic consumption, government thrust on agricultural and processed-food exports, and a strengthening rural economy. The agri and processed-food export basket, of which spices, pulses, snacks and allied grocery products form an important part, continued to benefit from Indias cost competitiveness, wide product base and improving quality-compliance infrastructure.

India is the worlds largest producer, consumer and exporter of spices, accounting for a dominant share of global spice trade and cultivating over 75 of the 109 spice varieties recognised internationally. During FY 2025-26, India exported spices and spice products aggregating approximately 17.34 lakh tonnes valued at approximately Rs. 39,140 crore (around US$ 4,431 million), compared with approximately 17.99 lakh tonnes valued at approximately Rs. 39,994 crore (around US$ 4,723 million) in FY 2024-25 — a moderation after a record prior year, with chilli, cumin, spice oils and oleoresins, small cardamom, mint products and turmeric together accounting for the bulk of export value. The correction is broadly viewed by the trade as a cyclical pullback in commodity prices rather than a structural decline in underlying demand. Government initiatives such as the Spices Boards SPICED scheme (outlay of approximately Rs. 422 crore through FY 202526) continued to support export promotion, quality upgradation and post-harvest infrastructure, while tightening food- safety scrutiny — including stricter Sanitary and Phytosanitary (SPS)/pesticide-residue norms in the European Union and other importing markets — continued to raise the compliance bar for exporters of Indian spices.

The Indian snacks and ready-to-eat segment — encompassing namkeens, extruded and fried snacks, papad and ethnic convenience foods — remained one of the fastest-growing sub-segments of the processed food industry, driven by rising urbanisation, a growing Indian diaspora in North America, Europe and the Gulf, and increasing global appetite for authentic, ethnic snacking formats. Export demand continued to be supported by the expansion of modern retail and independent grocery shelf space carrying Indian and South Asian brands, particularly across Canada and the United States.

Contil India Limited ("Contil" / "the Company"), incorporated in 1994 and headquartered in Vadodara, Gujarat, is a Government-recognised Star Export House engaged in the sourcing, processing, packaging and export/trading of food and grocery products. The Companys product portfolio spans Spices, Cereals & Pulses, Namkeen & Snacks, Papad, Edible

Oils, Beauty & Cosmetics, Ayurvedic items, and household articles/utensils, marketed under its own brands including "CONTIL", "Contil From the Earth" and "Gujjus", alongside private-label and third-party distribution arrangements (including brands such as HUL, Marico and select regional namkeen brands through its Canadian distribution business).

The Companys exports are concentrated primarily in Canada and, increasingly, the United States, supported by its overseas distribution arm, which has operated in Canada for over two decades supplying independent and ethnic grocery stores from Windsor to British Columbia. Contil reports its trading operations as a single reportable business segment (Trading of Food and Grocery Products) and does not currently disclose a formal product-wise or geography-wise revenue split in its public filings; management should insert the segment/geography breakup from the audited notes to accounts, if separately disclosed, for the final version of this report.

A summary of the Companys standalone financial performance for FY 2025-26 as compared with FY 2024-25, based on the audited financial results filed with BSE, is set out below.

Revenue from operations declined marginally by 2.9% during FY 2025-26, while operating profit fell by a sharper 50.4% as operating expenses rose faster than sales, compressing the operating margin from 8.23% to 4.20%. Total income was nonetheless broadly flat year-on-year, as a more than two-fold increase in other income (from Rs. 0.71 crore to Rs. 1.79 crore) partly offset the decline in core operating profitability. Profit after tax accordingly declined by a more moderate 10.5% to Rs. 2.29 crore, and earnings per share moved from Rs. 1.65 to Rs. 1.48. The Company continued to operate on a virtually debt-free basis throughout the year, and net worth grew by 19.7% on the back of retained earnings.

The Statutory Auditors have issued a qualified opinion on the Companys audited standalone financial results for the year ended March 31, 2026. Members are referred to the Independent Auditors Report forming part of this Annual Report for the specific basis of qualification and the Boards response thereto.

The Companys revenue continues to be driven by its core food and grocery trading categories — spices, cereals and pulses, namkeen and snacks, papad, and edible oils — supplemented by beauty, ayurvedic and household-article lines distributed principally through its Canadian operations. As the Company does not publish a category-wise revenue breakup, the Board may wish to include qualitative commentary here on which product categories (e.g., spices vs. namkeen/snacks) drove growth or decline during the year, and any new product launches, private-label wins, or SKU rationalisation undertaken.

Pursuant to Regulation 34(3) read with Schedule V (Part B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Companys key financial ratios for FY 2025-26 as compared with FY 2024-25, along with explanations for changes of 25% or more, are set out below:

• Continued growth of the Indian and South Asian diaspora in Canada and the United States, supporting steady underlying demand for the Companys spices, namkeen, papad and grocery lines.

• Scope to deepen penetration in the United States, a market the Company has identified for expansion beyond its established Canadian distribution base.

• Government export-promotion support for spices and processed foods (including the Spices Boards SPICED scheme) that can benefit Star Export House-recognised exporters such as the Company.

• A debt-free balance sheet, providing headroom to fund working capital growth or selective capacity/certification investments without incurring finance cost.

• Potential to grow higher-margin, branded ("CONTIL" / "Contil From the Earth") product lines relative to lower- margin trading/distribution volumes.

• Revenue and profitability concentration risk given the Companys reliance on Canada/North America as its principal export market.

• Volatility in agricultural commodity prices driven by monsoon and climate variability, affecting raw material cost for spices, pulses and cereals.

• Currency fluctuation risk on Canadian Dollar/US Dollar-denominated export and distribution revenue.

• Tightening food-safety and pesticide-residue regulations in key importing markets, increasing compliance costs and rejection risk.

• Rising freight costs and shipping-route disruptions affecting landed cost and delivery timelines.

• A meaningful share of the Companys FY 2025-26 profitability was contributed by other income rather than core operating profit; sustaining earnings growth will depend on stabilising and improving the core trading margin.

The Board believes the Companys core categories — spices, namkeen and snacks, papad and allied grocery products — continue to benefit from resilient demand among the Indian diaspora in North America and from Indias structural cost and product-range advantages as an origin market. Managements stated focus on deepening its presence in the United States, alongside its established Canadian distribution network, is expected to support the Companys medium-term growth. Given the moderation in operating margin during FY 2025-26, the Companys near-term priority will be to restore core trading profitability through disciplined procurement and cost management, while continuing to benefit from a debt- free balance sheet. [Company to add specific forward-looking plans — capacity, certifications, new markets or products — for FY 2026-27.]

The principal risks facing the Company and the Boards approach to managing them are summarised below; the Company should supplement this with the specifics of its formal Risk Management Policy, where applicable.

The Company has in place an internal control system commensurate with the size, scale and nature of its operations, designed to provide reasonable assurance regarding the reliability of financial reporting, safeguarding of assets, and compliance with applicable laws and regulations. [Company to describe its Internal Audit function/appointee, the Audit Committees oversight process, and any corrective actions arising from internal or statutory audit findings during the year, including in relation to the qualified opinion noted in Section 4.1.]

The Company recognises its employees as a key stakeholder in its growth journey. [Company to insert the number of permanent employees as on March 31, 2026, along with details of training, safety and welfare initiatives undertaken during the year.] Industrial relations across the Companys operations remained cordial throughout the year, with no material disruptions reported.

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied, due to various risks and uncertainties including, but not limited to, changes in government regulations, tax laws, economic and political conditions in India, Canada, the United States and other countries in which the Company operates, fluctuations in currency and commodity prices, and other factors beyond the Companys control. The Company assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.