Flex Foods Ltd Management Discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS REPORT</dhhead>

FORWARD-LOOKING STATEMENTS

Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company’s actual results, performance or achievements could thus di er materially from those projected in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events. MACROECONOMIC OVERVIEW

Geopolitical conditions remain challenging, with actual conflicts and serious risk scenarios creating uncertainty for businesses and entire economies throughout the year resulting the global economy continue to confront the challenges of persistent inflation is still grappling with the impact of higher interest rates and also corporates worldwide are still not able to calculate the demand and buying pattern. There is a feeling that pipelines are almost empty in supply chains and there may be a scenario where the short supplies will come into play by third quarter. The challenges are a bit softened by some demand from china though the products are facing a lot of pressure from wetern world. Additionally, increased global tensions from events like Israel’s conflict with Hamas and the situation in Ukraine pose significant risks to ongoing economic growth. The world’s challenging economic conditions are all too evident in the output results for the food and beverages industry.

GLOBAL ECONOMIC OUTLOOK

Global growth is set to increase a bit this year. The freight rates have eased a bit but still there is a lot of tension in the red sea area and that is keeping the freight still higher and more importantly the trun around time is very high at the moment. Even though investment in emerging market and developing economies (EMDEs) is likely to remain littlebuoyant,lessons (NSO) 2023-learned from episodes of investment growth acceleration over the past seven decades highlight the importance of macroeconomic and structural policy actions and their interaction with well-functioning institutions in boosting investment and thus long-term growth prospects. Commodity-exporting EMDEs face a unique set of challenges amid fiscal policy procyclicality and volatility. Another important event this year will be the elections in USA and that will determine their trade policy and also surly will impact south Asian region with china at helm.

Global growth is projected at 3.1 percent in 2024 and 3.2 percent in 2025, with the 2024 forecast 0.2 percentage point higher than that in the October 2023 World Economic Outlook (WEO) on account of greater-than expected resilience in the United States and several large emerging market and developing economies, as well as fiscal support in China. The forecast for 2024 25 is, however, below the historical (2000 19) average of 3.8 percent with elevated central bank policy rates to fight inflation, a withdrawal of fiscal support high debt weighing on economic activity, and low underlying productivity growth. Inflation is falling faster than expected most regions, in the midst of unwinding supply-side issues and restrictive monetary policy. Global headline inflation to fall to 5.8 percent in 2024 and to 4.4 percent in 2025, with the 2025 forecast revised down. With disinflation and steady growth, the likelihood of a hard landing has receded, and risks to global growth are broadly balanced. On the upside, faster disinflation could lead to further easing of financial conditions. Looser fiscal policy than necessary and assumed in the projections could imply temporarily higher growth, but at the risk of a more costly adjustment later on. Stronger structural reform momentum could bolster productivity with positive cross-border spillovers. On the downside, new commodity price spikes from geopolitical shocks including continued attacks in the Red Sea and supply disruptions or more persistent underlying inflation could prolong tight monetary conditions. Deepening property sector woes in China or, elsewhere, a disruptive turn to tax hikes and spending cuts could also cause growth disappointments. (Source: https:// www.imf.org/en/Publications/WEO/Issues/2024/01/30/world- andsubduedgrowthprospects.Theglobaleconomy economic-outlook-update-january-2024)

INDIAN ECONOMIC OVERVIEW

In a world of extreme uncertainty, India is witnessing a conducive environment of macroeconomic stability: the economy remains resilient, inflation has started moderating, fiscal consolidation is gaining traction, the current account deficit is showing signs of moderation, forex reserves have improved, and the banking sector remains healthy. In the vast landscape of global economies, India stands out with its meteoric rise and unwavering determination to reach new heights. With its rich cultural heritage and a population of over 1.4 billion people, India has emerged as an economic powerhouse, consistently showcasing its prowess on the global stage. 2023 has proven to be a turning point as India’s GDP surges, solidifying its position as a frontrunner in the global economic race. Indian economy is to grow by a robust 7.3% in FY 2023-24 over and above provisional growth rate of 7.2% during the last financial AdvanceEstimatesofNationalStatistical 24). All the economic sectors have fared well by witnessing more than 6%, except for Agriculture and Allied sector, for which the estimated growth is 1.8%. However, as per the World Bank Report "Global Economic Prospectus - 2024", India is anticipated to maintain the fastest growth rate among the world’s largest economies, but its post-pandemic recovery is expected to be slow, with estimated growth of 6.3 percent in FY 2023-24. Growth is then expected to recover gradually, edging up to 6.4 percent in FY 2024-25 and 6.5 percent in FY 2025-26 supported by higher public investment and improved corporate balance sheets, including in the banking sector. However, the long-term growth drivers of the economy remain intact, coupled with a large and fast-growing middle-class driving consumer spending. The rapidly growing domestic consumer market as well as the large industrial sector has made India an important investment destination for a wide range of multinationals across manufacturing, infrastructure, and services. Further, India is fast becoming the startup capital of the world, attractive sizeable foreign investments, driven by amid its young population and technology edge. However, a complex interplay of geopolitical events including the neighbouring countries, high inflation and consequently elevated interest rates could pose risks to future economic growth.

INDUSTRY SCENARIO AND DEVELOPMENT

The agro and food processing industry today assumes a lot of significance in driving economic growth as it links the primary producers, the majority of whom are located in rural and remote locations, to the domestic and global urban markets. The global processed food products industry is rapidly changing, with rising demographics, increased demand for branded and convenience food products and a growing consumer focus on organic food and clean label food products. Food processing ingredients are products derived from minimally processed food through refining, milling, pressing, or grinding processes. These products are not directly consumed but are used to prepare minimally processed foods. In today’s ever-evolving world, the food processing industry continues to play a pivotal role in shaping the way consumers perceive, purchase, and consume their daily meals. Driven by advancements in technology and growing consumer demand for healthier, sustainable, and convenient food options, the industry is witnessing a rapid transformation that has significant implications for both businesses and consumers.

Food Processing Industry Trends

Alternative proteins : Consumers are increasingly looking for alternatives to traditional meat products, driven by health, environmental, and ethical concerns. Alternative proteins such as plant-based meats, cultivated meat, and insect protein are all growing in popularity. Food processors are responding to this trend by developing new and innovative products using these alternative proteins.

Personalized nutrition: With the rise of wearable devices and DNA testing, consumers are becoming more aware of their individual dietary needs. Food processors are responding to this trend by developing personalized nutrition products and services. These products and services are tailored to meet the individual needs of each consumer, based on their age, gender, health status, and advancements in technology dietary preferences.

Clean labels: Consumers are increasingly demanding food products with clean labels, meaning that they are made with simple, recognizable ingredients. Food processors are responding to this trend by reducing the use of artificial ingredients, preservatives, and other additives in their products.

3D food printing: 3D food printing is a new technology that has the potential to revolutionise the food industry. It allows food processors to create custom food products with complex shapes and textures. 3D food printing is still in its early stages of development, but it has the potential to create new opportunities for food processors and consumers.

Sustainability: Food processors are increasingly focused on sustainability, both in terms of their environmental and social impact. They are working to reduce their energy and water consumption, minimise food waste, and use sustainable packaging materials. They are also working to source their ingredients from sustainable suppliers and to support fair labour practices

Food waste reduction: Food waste is a major problem in the food industry. Food processors are working to reduce food waste at all stages of the supply chain, from production to distribution to consumption. This includes using preservation methods that extend the shelf life of foods, whilst retaining the nutritional value. This is helping to reduce the environmental impact of the food industry and to save money.

The food processing sector is one of the largest sectors in India in terms of production, growth, consumption, and export. India’s food processing sector covers fruit and vegetables; spices; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa products soya-based products, mineral water, high protein foods, etc. India boasts abundant agricultural resources, with a diverse range of crops and fruits grown throughout the country. This abundance provides a steady supply of raw materials for the food processing industry, fostering its growth. The food processing industry in India holds immense potential and plays a crucial role in the country’s economy. It encompasses various stages of transforming raw agricultural products into processed and marketable food products. India’s food processing industry has witnessed significant growth over the years, transforming the landscape of the agricultural and manufacturing sectors. With its rich agricultural resources and diverse food culture, the country has become a hub for food processing activities.

India’s large and diverse population, coupled with rising disposable incomes and changing lifestyles, is fueling the demand for processed and convenience foods, which, in turn, is primarily driving the market growth. Moreover, increased urbanization and a shift towards more hectic work schedules have led to a surge in the preference for packaged and ready-to-eat (RTE) meals, creating a favorable outlook for market expansion. Concurrent with this, the government’s supportive policies and initiatives, such as the Make in India campaign and the establishment of food parks and processing units, are attracting investments and contributing to the market’s growth. Additionally, significant and innovation are enabling efficient that improve product quality and reduce post-harvest losses, which is presenting remunerative growth opportunities for the market. Furthermore, the escalating awareness of food safety and quality standards among consumers is encouraging manufacturers to maintain high production standards and comply with regulations, thus propelling the market forward. The Indian food processing market size reached INR 28,027.5 Billion in 2023. Looking forward, the market to reach INR 61,327.5 Billion by 2032, exhibiting a growth rate (CAGR) of 8.8% during 2024-2032. Rapid urbanization, the rising consumer preference for processed foods, favorable government initiatives, ongoing technological advancements in food processing, and an evolving retail landscape promoting convenient RTE food products are among the key factors driving the market growth. (Source: https://www.imarcgroup. com/indian-food-processing-market)

BUSINESS OVERVIEW

Food Processing (FP) sector emerged as an important segment of the Indian economy in terms of its contribution to GDP, employment and exports. During the last seven years ending

2021-22, FP sector has been growing at an Average Annual Growth Rate (AAGR) of around 7.26%. Gross Value Added (GVA) in FP sector has also increased from 1.30 lakh crore in 2013-14 to 2.08 lakh crore in 2021-22. (Source : https://pib. gov.in/PressReleasePage.aspx?PRID=2003092. Further, in recent years, the global demand for frozen foods has surged, driven by factors such as convenience, changing dietary habits, and advancements in food processing technology. India, with its vast agricultural resources and burgeoning food processing industry, has emerged as a significant player in the international frozen food market.

The Company is thriving in the highly favorable business environment for the Indian food processing industry, capitalizing on the increasing demand for Culinary Herbs, Mushrooms, Fruits and Vegetables and catering its products to the Domestic and International markets mainly in Europe, USA, Canada & Australia. Among its product portfolio, the Company offers a wide range of Vacuum Freeze Dried, Air-Dried, Frozen and IQF (Individually Quick Frozen) product range of mushrooms, herbs, spices and fruits / vegetables, meeting strict quality & hygiene standards. Canned button mushroom in various shapes and sizes is also available as per the customer requirement. It has two manufacturing facility in Dehradun, Uttarakhand and Krishnagiri, Tamil Nadu for freeze drying, air drying, individually quick-frozen processing cater to the growing global demand for the large variety of mushroom, fruits & vegetables. The Company provides a wide range of products including:

Freeze Dried Products

Freeze-dried products have witnessed a surge in popularity due to their convenience, extended shelf life, and nutrient retention. As the demand for these lightweight, easy-to-store items grows, certain global markets have emerged as key players in the freeze-dried product industry. The global freeze-dried product market is thriving, with key players spread across different continents. The demand for these lightweight, nutrient-dense options is driven by diverse factors, including lifestyle choices, health consciousness, and a growing interest in sustainable and convenient food solutions. As the Company continue to witness innovations in food technology and digestiveof freeze-dried products and air dried herbs in India and changing consumer preferences, the freeze-dried market is poised for further expansion. Freeze drying is the best method among all the others as it preserves products at the highest quality, keeps 70-75% nutritional value intact while offering shelf life. The rapid and full re-hydration, visually pleasing appearance and impressive flavour impact are more qualities through which freeze-dried ingredients prove their superiority over others. Freeze-dried food products by the Company preserve flavour much better than regular dehydrating, leading to brighter, fresher-tasting flavors. The Company provide a range of products including freeze dried herbs, freeze dried fruits, freeze dried vegetables and freeze dried mushrooms under this category.

Air Dried Products

Air-drying is a process that removes water from food by circulating hot air around it. This process helps to preserve the food and lock in its nutrients. The end result is a light and healthy snack that can be enjoyed at any time of the day. The popularity of air dried food is on the rise. The global air-dried food market has grown due to easy availability to a variety of packaging foods, including air-dried packaging foods, rising consumer health consciousness, and rising customer appetite to pay higher prices for air-dried foods. Air drying preserves many of the nutrients in food, whereas other methods of preservation can destroy them. People simply enjoy the taste and texture of air dried food.

Individual Quick Frozen (IQF) Products

IQF technology extends the shelf life of food products, reducing food waste and allowing for greater distribution and storage flexibility. The increasing demand for convenient and ready-to-eat food products is driving the industry growth. Consumers are seeking frozen food options that require minimal preparation and offer longer shelf life. Further, the trend towards plant-based diets and meat alternatives has led to a surge in demand for IQF frozen fruits, vegetables, and plant-based proteins to cater to the growing vegan and vegetarian consumer base.

PRODUCT CATEGORIES a) Mushroom Business

Mushrooms are one of the most versatile ingredients in the culinary world, adding a complex flavor and texture to various dishes. One fascinating innovation in the mushroom industry today is the freeze-drying method, which extends its shelf life and preserves its nutrients. Freeze-dried mushroom brings a new dimension to the culinary industry, especially for those seeking a plant-based option. The growing consumer health consciousness coupled with the escalating need for nutrient-rich and cholesterol-free food products is primarily driving the Indian mushroom market. Furthermore, the emerging trend of veganism and the widespread adoption of mushrooms as a substitute for meat on account of it’s rich umami taste is also propelling the market growth in the country. Besides this, the increasing utilization of mushrooms in dietary supplements as they contain a that promote richamountof fiber gut and immunological health is catalyzing the product demand. Moreover, the elevating requirement for processed mushroom variants, especially across western countries, is generating numerous export opportunities for India, thereby creating a positive outlook for the regional market. Apart from this, continuous advancements the longest in mushroom packaging technologies, such as the development of humidity-regulating packaging materials that prevent water condensation on mushrooms to extend their shelf-life, are also augmenting the market growth. Furthermore, the rising usage of mushrooms by the pharmaceutical industry for the treatment of several diseases, such as hypercholesterolemia and hypertension, is acting as another growth-inducing factor. In addition to this, significant investments in smart automation technologies for mushroom production to enhance the yield and decrease expenses are expected to fuel the India mushroom market.

The Company produces premium quality Champignon Mushrooms throughout the year strictly under controlled atmospheric conditions. The Company’s enhanced Freeze Dried technique ensures that the product retains the colour, shape, flavour and nutritional value better than other drying methods. World class manufacturing facilities with "state-of-the-art" technology, GMP & Quality systems make the Company a leading player in the category.

b) Fruits and Vegetables

As per the 2^nd advance estimates by Ministry of Agriculture & Farmers Welfare, Government of India for 2022-23, the total horticulture production is estimated to be 351.92 Million Tonnes, surpassing the total food grain production of 329.69 Million Tonnes during the year. At present, India is the second largest producer of vegetables and fruits in the world. Country ranks first in the production of number of crops like Banana, Lemon, Papaya, Okra, etc. Growing consumer demand for convenient, processed food, technological advancements, health awareness, urbanization, and a focus on sustainability are propelling the global fruit & vegetable processing market forward. India’s rich tapestry of fruits, blessed by diverse climates and fertile soils, is making waves on the global stage (Source: https://pib.gov.in/PressReleasePage. aspx?PRID=1985479#:~:text=As%20per%20the%20 2%20nd,and%20fruits%20in%20the%20world.) . Global Fruit & Vegetable Processing Market was valued at USD 63.49 billion in 2023 and is anticipated to project robust growth in the forecast period with a CAGR of 3.77% through 2029. The global fruit and vegetable processing market is a dynamic and expanding sector that plays a crucial role in meeting the growing demand for processed food products worldwide. This market encompasses a wide range of activities, including sorting, cleaning, packaging, and preserving fruits and vegetables to extend their shelf life and enhance convenience. (Source: https:// www.techsciresearch.com/report/fruit-and-vegetables-processing-market/2207.html)

c) Herbs and Spices

Herbs and spices are essential ingredients in cooking and other areas such as nutraceuticals, as they provide flavour, aroma and colour. However, these fresh ingredients have a short shelf life, so they need to be properly preserved to maintain their organoleptic properties. Freeze-drying is a dehydration process that allows foods to be preserved for long periods of time without altering their flavour, aroma and texture. In the case of herbs and spices, freeze-drying is an excellent option to preserve their natural flavour and aroma. Since, herbs and spices are being increasingly used in convenient food owing to their vibrant flavor and several health benefits, manufacturers are using herbs and spices to make ready-to-eat food and beverages in order to meet the rising demand among consumers. Growing awareness about the side effects of additives and preservatives has rendered consumers more health conscious. As a result, the demand for organic herbs and spices has considerably increased and the manufacturers are now expanding their product portfolio with organic herbs and spices to gain customer attraction. The Company’s product portfolio includes the herbs in Freeze Dried, IQF and Air Dried form. a considerable

PRODUCT-WISE PERFORMANCE

Sale of Finished Goods

Description	Current Year		Previous Year
	Quantity (In MTS)	Value (Rupees in Lacs)	Quantity (In MTS)	Value (Rupees in Lacs)
Processed	1888	10474.44	2188	10172.09
Foods
Other	1355	1525.24	990	1173.03
Total	3243	11999.68	3178	11345.12

OPPORTUNITIES AND STRENGTHS

Food processing industry is of enormous significance for India’s development because of the vital linkages and it promotes between the two pillars of our economy, industry and agriculture. Fast growth in the food processing sector and simultaneous improvement in the development of value chain are also of great importance to achieve favorable terms of trade for Indian agriculture both in the domestic and the international markets. The sector however has to go a long way. Even important is the crucial contribution that an efficient food processing industry could make in the nation’s food security for instance the post-harvest losses of selected Fruits and Vegetables are about 25% to 30% in our country. The scope of the food processing industry in India presents an exciting and promising landscape driven by abundant agricultural resources, changing consumer preferences, and government support. With its diverse food products, advanced technology, and growing export potential, this industry thrives and contributes significantly to the country’s economic growth. By focusing on its objectives of value addition, food safety, and waste reduction, the food processing industry ensures the availability of safe, nutritious, and innovative food products that cater to consumer’s diverse tastes and demands. By embracing the rapid technological advancements and sustainable practices, the scope of the food processing industry in India is poised to reach greater heights, becoming a vital player in the global food market. India has always been a leading producer of a wide variety of agricultural products, including cereals, fruits, vegetables, livestock, and marine products. The pandemic has increased acceptance of processed foods and customer demand for more ethical and environmentally friendly products is growing thanks to social media and digital information. In the post-Covid-19 era, India has the ability to become the centre of the world’s food supply and increase its export share. Development of scale, quality, and cost-effective export capabilities, that fulfil international certification criteria, is crucial for the industry to remain competitive. The transformation of raw ingredients into consumable food products is the core of food processing. This practice, which has been integral to human civilization, ensures the preservation, flavor enhancement, and safety of foods. In recent times, innovations like high-pressure processing, vacuum packaging, and ultrasonic processing have further elevated the quality, safety, and variety of processed food. As a result, India’s food processing business has enormous growth potential. In addition, the sector offers of job prospects as well as export opportunities. It also gives farmers the chance to boost their income by increasing their output and offering them higher prices for their crops. Both domestic and international enterprises have opportunities in the consumer foods market to gain a foothold in this fast-growing processed food market.

The food processing sector in India faces challenges like inadequate infrastructure and fragmented supply chains. However, it offers vast opportunities for economic growth, job creation, and value addition to agricultural produce. By promoting modern processing techniques, storage facilities, and market linkages, the income of farmers can significantly increase. Value addition through processing not only enhances the market value of agricultural products but also ensures reduced post-harvest losses, providing a sustainable solution for augmenting farmers’ income. Strategic government policies, investment in technology, and fostering partnerships between farmers and food processing industries are crucial for unlocking the sector’s potential and addressing agricultural income disparities.

THREATS AND MITIGATION STRATEGIES

The Indian packaged foods and beverage consumption growth story remains strong with trends in health, wellness and convenience becoming even more relevant for the consumer as a result of the pandemic. The penetration of branded products still remains low but will continue to increase due to favourable demographics, rising per capita incomes, urbanization, higher awareness and expansion of modern retailing and e-commerce. The Company is well positioned to capitalize on this opportunity with a wide range of product portfolio, focused expansion of it’s sales and distribution system in India and improvements across it’s supply chain. Premium product offerings and new market models are also being developed. The Company is exploring opportunities to expand it’s products from the Indian portfolio in the International markets where the Company have presence to, caters to both ethnic food aisles and the needs of the Indian diaspora. Key threats to the Company’s business include changing consumer preferences, volatility in commodity and currency, inflation and concentration of retailers in developed markets. Other challenges include limited awareness among farmers about necessary quality certifications, lack of adequate for quality testing, limited brand strength of Indian products in overseas markets, lack of infrastructure for processing, storage, logistics, and limited compliance with sustainability and ethical requirements.There is one more challenge which has come in the recent past of Red sea, almost closure and this has resulted in longer route for vessels from India to EU and that is creating a problem in timely supplies to the market.

FUTURE OUTLOOK

Given India’s huge and expanding population, rising urbanization, and rising disposable incomes, the nation’s food processing business has a bright future. India also has a rich agricultural sector that offers a wide range of raw materials for the food processing industry. The Indian food processing market size reached INR 28,027.5 billion in 2023 and is projected to reach INR 61,327.5 billion by 2032, exhibiting a growth rate (CAGR) of 9.1% during 2023-2032. Rapid urbanization, the rising consumer preference for processed foods, favorable government initiatives, ongoing technological advancements in food processing, and an evolving retail landscape promoting convenient RTE food products are among the key factors driving the market growth. The competitive landscape of the food processing market in India is characterized by a diverse mix of players, ranging from large multinational corporations to small and medium-sized enterprises (SMEs) and local players. The market witnesses intense competition as companies vie to capture a significant share in this rapidly growing sector.

India has great potential to become one of the top leaders in the food processing industry as it includes a rich agricultural resource and diverse raw materials. Indian food processing sector is one of the largest in the world and it is expected to reach up to US$535 billion by 2025. Since the last five the annual growth rate is 8.3% and by 2022 food processing sector received US$11.79 billion in FDI (Foreign Direct Investment). This sector generates employment of 12.32%. India’s food processing industry is primarily export oriented. India’s exports of processed food were $5,559.84 Million in 2021-22. The major share of export products was mango pulp, cucumber, processed vegetables, etc.

Food processing industry is of enormous significance for India’s development because of the vital linkages and synergies it promotes between the two pillars of our economy, industry and agriculture. Fast growth in the food processing sector and simultaneous improvement in the development of value chain are also of great importance to achieve favorable terms of trade for Indian agriculture both in the domestic and the international markets.

RISKS AND CONCERNS

Growing economies, changing consumer preferences, rising prevalence of health and wellness, and new dietary trends have transformed the need for risk assessment in the food processing industry over the past few years. The industry has grown exponentially and witnesses various challenges, drivers, trends, and risks daily. Industry players have become increasingly aware of the need for cautious and data-driven strategizing and have started investing in risk assessment and risk management strategies to decrease the impact of various factors and industry developments. The food processing industry is highly competitive and easily impacted by external factors. In this challenging industry, being aware facilities of and preparing for the current and upcoming risks can be the differentiator between industry leaders and companies on the other end of the spectrum. Raw materials used by the Company are agricultural commodities that are subject to volatility due to changes in weather and market conditions. The Company having its presence in the global food processing industry is exposed to a number of risks such as economic, regulatory, taxation, currency fluctuation and environmental risks. However, the Company has appropriate control mechanism and operating effectiveness to evaluate and mitigate these risks that arise in the natural course of business. Further, exports to specific regions may be severely impacted by protective trade barriers in the form of crippling import duties, anti-dumping duties, countervailing duties or sanctions as the case may be and our export volumes to specific markets could get majorly affected by such restrictive impositions. The ongoing crisis between Russia and Ukraine and other regional geo-political conflicts may also have crippling effect.The red sea crisis and also the elections in USA is also a perceived risk at the moment.

INTERNAL CONTROL SYSTEM, THEIR ADEQUACY AND OPERATIVE EFFECTIVENESS

The Company has devised a comprehensive internal control system effective in protecting all its assets and assuring operational excellence. The internal control framework is commensurate with the type, size, scope, and complexity of operations. The framework enables strict adherence to regulatory compliance and proper documentation of all transactional information. To ensure that transactions are properly authorised, documented and reported the Company has robust and effective internal financial mechanisms in place. To ensure robustness of operations, the Company conducts internal audits and evaluates them regularly. To guarantee smooth and effective operations, the audit committee is entrusted with the responsibility of establishing and maintaining suitable internal financial controls. The Committee reviews the various issues and material weaknesses highlighted by the Internal and Statutory Auditors, on a periodic basis. Prompt and adequate corrective actions are undertaken as deemed fit to mitigate any risks.

HUMAN RESOURCES/INDUSTRIAL RELATIONS

Human resource is considered a crucial asset in the Company. The employees have meaningfully contributed in the organizational growth journey and have strived hard to help it achieve a coveted market position. The Company duly recognizes the zest and efforts of its employees with great pride. The Company fosters a safe, productive and progressive workplace culture. The executive leadership is responsible for creating a positive work environment. The policies of the Company are focused on the core thrust areas of becoming the employer of choice, fostering an inclusive culture, developing a strong talent pipeline, and enhancing the Company’s strengths. The Company’s HR policies are aimed at providing professional growth opportunities while striving to align personal goals with organizational goals. For this, various programmes are conducted like individual training, skill upgradation, an employee friendly environment, and equal opportunities. The Company has built a diverse and inclusive work place over the years through focus on enhancing leadership skills and providing a respectful workplace. The core competencies for strong and effective leadership govern the leadership development framework. As of March 31, 2024, the Company had a permanent workforce of 493 employee. The Company’s industrial relations continued to be harmonious during the year under review.

ENVIRONMENT, OCCUPATIONAL HEALTH AND SAFETY

The Company recognises its responsibility towards the environment beyond legal and regulatory requirements and is committed to reducing its impact and continually improving its environmental performance as an integral part of its business strategy and operating methods. Further, the Company gives utmost importance to the health and safety of its workers and the environment it operates in. The Company provides a clean, hygienic and safe working environment to its employees and provides them with appropriate training to carry out their duties safely. Prevention of safety-related incidents is one of Company’s highest priorities. The Company strictly adheres to all EHS-related laws and regulations. Specialized teams are responsible for monitoring workplace safety at production facilities. Open communication enables the Company to ensure zero hazards at the workplace.

ANALYSIS OF FINANCIAL AND OPERATIONAL PERFORMANCE

The accompanying financial statements have been prepared in accordance with the requirements of the Companies Act, 2013 and Generally Accepted Accounting Principles and Accounting Standards prevailing in India.

A. FINANCIAL CONDITIONS

The composition and growth of assets was as under:

[Rs. in lacs]

Particulars	March 31, 2024	March 31, 2023	Growth %
Land & Investment Property	1397.81	1397.81	-
Buildings	8020.13	8010.16	0.12
Plant & Equipment’s	25566.57	20700.96	23.50
Electrical Fittings & Installations	1559.99	1458.67	6.95
Office Equipment’s	415.97	412.80	0.77
ERP Software	32.49	32.49	-
Furniture & Fixtures	106.46	105.34	1.06
Vehicles	239.24	204.15	17.19
Right of use assets	258.99	233.35	10.99
Total	37597.65	32555.73
Less: Acc. Depreciation	10781.88	9148.52
Add: CWIP	221.75	4873.27
Net Fixed Assets	27037.52	28280.48

B. RESULTS OF OPERATIONS

The summary of operating performance for the year under review is given below:

(Rs.in lacs)

Particulars	Year ended March 31, 2024		Year ended March 31, 2023
	Amount	%	Amount	%
INCOME	12128.15	99.67
Revenue from operations	40.54	0.33	11732.60	99.50
Other income	12168.69	100.00	58.33	0.50
Total Revenue			11790.93	100.00
EXPENDITURE
Raw Material Consumed	3637.80	29.89	2912.77	24.70
Purchase of Stock in Trade	0.73	0.01	231.30	1.96
(Increase)/Decrease in stock	(989.37)	(8.13)	(947.67)	(8.04)
Change in Inventory of Biological Assets	(8.12)	(0.07)	2.90	0.03
Gain in Change in fair value of Biological Assets	(2.67)	(0.02)	(3.08)	(0.03)
Manufacturing Exp.	4897.58	40.25	4009.18	34.00
Payment & Benefit to Emp.	2596.02	21.33	2065.40	17.52
Administrative, Selling & Other Expenses	2214.47	18.20	2349.31	19.93
OPERATING EXPENSES	12346.44	101.46	10620.11	90.07
EBDIT	(177.75)	(1.46)	1170.82	9.93

C. SIGNIFICANT CHANGES IN FINANCIAL RATIOS

During the year the significant changes in the financial ratios of the Company, which are more than 25% as compared to the previous year are summarized below:

Financial Ratio	FY 2023-24	FY 2022-23	Change	Reason for change
Debt Equity Ratio	3.49	2.31	51.1%	The significant Change in these ratios is due to the additional borrowings raised by the Company during the year for stabilization of new Project at Kirishnagiri, Tamil Nadu which was completely capitalised on 31.05.2023. Further, as the capacity was not fully utilized and due to this turnover was also less than the Expected, which resulted in net losses during the year.
Debt Service Coverage Ratio	(0.20)	0.66	-130.3%
Return on Equity	(29.3)	-9.8	198.0%	The significant Change in these ratios is due to reason, the capacity was not fully utilized in the new Project at Kirishnagiri, Tamil Nadu, due to which turnover was also less than the Expected. This has resulted in net losses during the year.
Trade Payables Turnover Ratio	1.59	2.18	-27.1%	Change is due to increase in Closing Stock which is due to Low sale Volumes in comparison to Estimations. This is because of stabilization of new Project at Kirishnagiri, Tamil Nadu during the year.
Net-Profit Ratio	(21.6)	(9.34)	131.4%	The significant Change in these ratios is due to reason, the capacity was not fully utilized in the new Project at Kirishnagiri, Tamil Nadu, due to which turnover was also less than the Expected. This has resulted in net losses during the year.
Return on Capital Employed	(6.19)	(2.49)	148.6%	a) The significant Change in these ratios is due to the additional borrowings raised by the Company during the year for stabilization of new Project at Kirishnagiri, Tamil Nadu which was completely capitalised on 31.05.2023. Further, as the capacity was not fully utilized and due to this turnover was also less than the Expected, which resulted in net losses during the year.
Net Capital Turnover ratio	(28.35)	16.45	-272.3%
				b) The significant Change in these ratios is due to reason, the capacity was not fully utilized in the new Project at Kirishnagiri, Tamil Nadu, due to which turnover was also less than the Expected. This has resulted in net losses during the year.