Freshara Agro Exports Ltd Management Discussions

(a) Industry Structure and Developments

The Indian agri-export sector remains an essential pillar of the countrys trade, contributing significantly to foreign exchange earnings. In FY2024-25, exports of agricultural and processed food products reached USD 53.1 billion, reflecting sustained year-on-year growth. This performance has been driven by robust demand across global markets and the expanding product portfolio of Indian exporters.

A noteable segment within this growth is processed vegetables, including pickled products, gherkins, and preserved items, which fall under HS Code 2001. According to trade data estimates, processed vegetable exports from India were valued at over USD 787.28 million in FY 2023-24. This figure rose to USD 897.07 million in FY 2024-25, indicating sustained momentum. In the first two months of FY 2025-26 (April- May), exports have already reached USD 173.02 million, reflecting continued strong demand across global markets.

India is also the worlds largest exporter of gherkins, contributing over 15% of global supply and exporting to more than 90 countries.

The sectors expansion is supported by several global trends:

?€? A growing preference for natural over synthetic preservatives.

?€? Increased demand from private-label food brands for reliable and certified sourcing.

?€? Enhanced focus by global QSR chains on sustainably sourced ingredients.

?€? Greater adoption of customised and retail-ready packaging formats.

India maintains a competitive edge owing to favourable agro-climatic conditions, lower production costs, a mature contract farming model, and enhanced regulatory oversight. Moreover, government initiatives like the Production Linked Incentive (PLI) scheme and export facilitation programs under APEDA have strengthened infrastructure and market access for exporters.

The outlook for the processed food export segment remains strong, with increasing opportunities across Europe, the Americas, and Southeast Asia amid evolving consumer preferences for safe, traceable, and plant-based food products.

(b) Opportunities and Threats Opportunities

1. Rising Global Demand for Processed Vegetables

The global food market is undergoing a structural shift toward natural, preservative-free, and plant- based alternatives. Consumers across North America, Europe, and Southeast Asia are increasingly favouring clean-label, minimally processed products with traceable origins. This shift directly benefits Fresharas export portfolio, especially gherkins, baby corn, jalapenos, and chillies most of which are exported in brine or vinegar-based formats without synthetic preservatives.

2. Leadership in the Gherkin Export Segment

India accounts for over 60% of global gherkin exports, and Freshara is among the few companies in the country operating with a fully integrated export model. Backed by international certifications such as IFS, BRCGS, FDA, and Star-K Kosher, the company is well-positioned to maintain its leadership in this category. This segment offers strong repeat demand and multi-year contracts with buyers, especially in Europe, which enhances revenue stability.

3. Expansion into New Geographies and Channels

Freshara is actively exploring growth in non-traditional and underpenetrated markets such as Southeast Asia (Vietnam, Thailand, Malaysia), and Eastern Europe. Furthermore, the company is moving beyond B2B bulk sales into private-label partnerships and supermarket supply chains, enabling higher per-unit realizations and long-term branding opportunities.

4. Increased Value Realisation Through Branding

The company is working toward launching Freshara-branded packaged products in global retail channels. By transitioning from a pure B2B exporter to a hybrid B2B2C model, Freshara can leverage consumer-facing branding, capture premium margins, and improve customer stickiness especially with health-conscious consumers in developed markets.

5. Government Incentives and Sectoral Push

Policy support through the Production Linked Incentive (PLI) Scheme for food processing, APEDAs export facilitation, and access to Agri Infra Fund are expected to lower cost of capital and accelerate capacity expansion. These programs also incentivize technology adoption and exports of value-added goods, aligning well with Fresharas vision.

Threats

1. Geopolitical Uncertainty and Trade Disruptions

Fresharas business is heavily dependent on smooth cross-border movement of goods. Geopolitical conflicts (e.g., Red Sea shipping route issues, EU-Russia trade blocks) and logistical delays can lead to increased transit time, spoilage risks, and delivery failures. Currency fluctuations (INR vs USD/EUR) further impact margin realization on confirmed orders.

2. Regulatory Risk from Destination Markets

Destination countries periodically revise their Maximum Residue Limit (MRL) regulations, food safety norms, and labelling guidelines. Any non-compliance whether due to farm-level practices or third-party logistics can lead to shipment rejections, penalties, and damage to reputation.

3. Climate Variability and Agricultural Risk

The company sources over 95% of its raw produce from contract farmers, making it vulnerable to climatic shocks such as unseasonal rainfall, prolonged heatwaves, and pest infestations. These risks can lower yield, reduce product quality, and affect fulfilment of volume-linked contracts. With sourcing concentrated in Southern India, regional climatic disruption poses a concentration risk.

4. Rising Input and Logistics Costs

There is sustained inflation in critical cost elements like brine, vinegar, caps, drums, packaging tins, and cold-chain logistics. Additionally, freight rates for reefer containers especially during peak demand months have escalated due to global container shortages. These input costs may not always be passthrough, thus putting pressure on operating margins.

5. Intensifying Global Competition

While India leads the gherkin market today, low-cost producers from Vietnam, Turkey, and Eastern Europe are rapidly building export capabilities. Some of these players benefit from preferential trade agreements, lower logistic lead times to Europe, or subsidised input costs.

(c) Product-wise and Geographic Performance

Freshara Agro Exports Limited is primarily engaged in the processing and export of preserved vegetables, with a core focus on gherkins and a diversified product portfolio including baby corn, jalapenos, chillies, olives, white onions, and mixed pickled vegetables. The Company operates in a single business segment processed agri-exports within which performance is internally reviewed based on product categories and destination markets, offering strategic insights and direction.

Product-wise Performance

In FY2024-25, the Company achieved 29% year-on-year revenue growth, reaching Rs.25,063.55 lakhs, up from Rs.19,378.65 lakhs in FY2023-24. This growth reflects both the consolidation of Fresharas leadership in gherkins and a structural pivot towards value-added mixed products.

?€? Gherkins continued to be the dominant contributor to Companys product portfolio, accounting for Rs.20,759.30 lakhs 82.83% of the revenue in FY25. While the revenue share has gradually balanced from 93.50% in FY23 and 84.90% in FY24, this evolution highlights the Companys successful efforts in diversifying its product mix. Demand for gherkins remains robust, supported by long-term contracts and a strong, sustained presence in key global markets.

?€? Mixed Pickled Products, comprising gherkins, chillies, and banderillas, emerged as the fastest-growing category, contributing Rs.3,247.62 lakhs, 12.96% of revenue in FY25, compared to 9.10% in FY24 and 1.20% in FY23. This remarkable growth underscores the Companys effective strategic pivot toward premium, multi-ingredient offerings that continue to gain strong traction among supermarket chains, institutional buyers, and private-label customers globally.

?€? Baby Corns contributed Rs.507.83 lakhs (2.03%) in FY25, reaffirming their steady and reliable performance within the product portfolio. The category continues to serve as a dependable revenue stream, particularly in markets across Asia and Europe where there is consistent demand for shelf-stable, brine-based vegetable products.

?€? Banderilla, while catering to a niche market, continued to perform steadily, generating Rs.353.49 lakhs (1.41%) in FY25, consistent with the previous year. The product enjoys strong acceptance among specialty food chains in Europe and Latin America, reinforcing its role as a differentiated offering within the Companys portfolio.

?€? Chillies, Bell Pepper, and Jalapenos together contributed Rs.195.31 lakhs (0.78%), While the contribution moderated from 2.10% in FY24, this reflects the Companys strategic realignment toward higher-margin and faster-moving SKUs. These products continue to hold long-term potential, especially in markets demanding spiced, brine-based ingredients, and remain part of Fresharas diversified export mix.

The rising contribution of mixed and value-added products underscores Fresharas evolving positioning from a bulk commodity exporter to a specialty ingredient and retail-pack solutions provider an approach expected to accelerate in the coming years.

Geographic Performance

Freshara exports to over 40 countries, demonstrating a broad global footprint with reduced dependency on any single geography. In FY2024-25, the top five export destinations were:

?€? Spain Emerged as the Companys top-performing market in FY25, contributing Rs.5,074.76 lakhs (20.25%) a notable increase from Rs.3,535.21 lakhs (18.24%) in FY24. This growth was driven by rising demand for both gherkins and mixed SKUs, particularly from well-established supermarket chains and food service clients, reaffirming Spains strategic importance in Fresharas global portfolio.

?€? Russia reaffirmed its position as one of Fresharas most valuable export markets, contributing Rs.4,066.25 lakhs (16.22%) in FY25. Despite broader geopolitical challenges, demand for core offerings like gherkins and jalapenos remained robust reflecting strong brand recall, enduring customer loyalty, and consistent market relevance in the region.

?€? Iraq delivered strong and consistent growth in FY25, contributing Rs.2,848.20 lakhs (11.36%), a notable rise from Rs.1,927.65 lakhs (9.95%) in FY24. This impressive performance was driven by the successful execution of bulk private-label contracts, reinforcing Fresharas growing reputation as a trusted partner in the region.

?€? Chile continued to show encouraging performance, contributing Rs.1,934.19 lakhs (7.72%) and Rs.1,686.75 lakhs (8.70%) respectively in FY25. Both markets are steadily embracing combination SKUs and smaller retail packs, aligning well with Fresharas premiumisation strategy and enhancing overall value realisation.

?€? The Other Countries contributing Rs.11,140.15 lakhs (44.45%) in FY25. This broad-based growth highlights Fresharas successful expansion into non-traditional and emerging markets, supported by rising demand from a diversified base of mid-sized buyers across the Americas, Middle East, and Asia. The segment underscores the Companys increasing global relevance and reduced dependency on a few key geographies.

This segmental performance reinforces Fresharas dual strategic focus volume growth through flagship products and margin expansion through product innovation and format diversification.

(d) Outlook

Freshara Agro Exports Limited enters FY2025-26 with strong momentum and a clear roadmap for sustained growth and value creation. Building on its robust performance in FY2024-25, the Company is well-positioned to capitalise on rising global demand for clean-label, shelf-stable, and premium preserved vegetables. The macroeconomic environment, marked by increasing consumer preference for traceable and natural food products, offers significant tailwinds for Fresharas diversified export strategy.

The Companys outlook is supported by the following strategic levers:

?€? Product Diversification and Premiumisation:

Freshara aims to further expand its high-margin product mix through value-added SKUs such as mixed pickled vegetables and customised retail formats. The focus will be on penetrating deeper into multiingredient offerings, catering to supermarkets, foodservice chains, and private-label segments in regulated markets.

?€? Geographic Expansion:

The Company is targeting newer markets in Southeast Asia, Latin America, and Africa, while strengthening its footprint in the EU and GCC regions. These geographies offer favourable demographic trends and rising demand for global flavours in retail-ready formats.

?€? Brand-Led Growth:

Plans are underway to scale Fresharas private-label and co-branded exports. The Company is also exploring pilot initiatives in select international retail chains for direct-to-shelf products under its own branding. This strategy is expected to support long-term margin expansion and customer stickiness.

?€? Capacity and Supply Chain Strengthening:

With a strong vendor base of over 4,000 contract farmers across 22 districts and two modern processing units in Tamil Nadu, the Company plans to optimise throughput while improving farmer engagement, procurement planning, and season-long supply assurance.

?€? Sustainability and Compliance:

Freshara continues to align itself with global sustainability practices by reducing food waste, using recyclable packaging materials, and maintaining rigorous food safety standards. Certifications such as IFS, BRCGS, FSSAI, FDA, Star-K Kosher, and APEDA, will support continued access to premium markets.

While global headwinds like logistical challenges and geopolitical shifts persist, Fresharas diversified market presence, flexible production infrastructure, and strategic focus on branded and value-added exports provide a solid foundation for resilience and growth.

The Company remains confident in its ability to deliver strong financial and operational performance in the coming fiscal years and remains committed to its vision of becoming a globally trusted and innovative exporter of preserved vegetables from India.

(e) Discussion on Financial Performance with Respect to Operational Performance

Freshara Agro Exports Limited delivered a strong financial performance in FY2024-25, supported by consistent operational execution, an expanded product portfolio, and deeper penetration into high-growth export markets. The results reflect the Companys ongoing transformation from a volume-led agri-exporter to a value-driven, innovation-focused global supplier of premium processed vegetables.

Revenue Growth and Product Strategy

The Company achieved revenue from operations of Rs.25,063.55 lakhs in FY25, driven by strong volume growth, product diversification, and expanding presence across global markets. This growth was underpinned by:

?€? Volume growth across core and emerging SKUs particularly in mixed pickled products and value-added formats.

?€? Strategic movement toward multi-ingredient products (e.g., gherkins + chillies + banderilla), which contributed significantly to both top-line and margin expansion.

?€? Rising share of private-label contracts and customised exports, especially in Spain, Iraq, and Chile.

?€? Broadening product mix to include high-potential items such as baby corn, bell peppers, jalapenos, and white onions, in addition to gherkins.

The Companys flagship product, gherkins, contributed 82.83% of revenue ( Rs.20,759.30 lakhs), while mixed pickled products posted standout growth up from Rs.153.34 lakhs in FY23 to Rs.3,247.62 lakhs in FY25, accounting for 12.96% of total revenue.

Operational Performance

Over the last three financial years (FY23 to FY25), Freshara Agro Exports Limited has demonstrated robust growth across all key performance indicators, production, export value, and container-wise exports.

Production surged from 21,300 MT in FY23 to 25,560 MT in FY24 and further to 30,755 MT in FY25, highlighting the companys expanding operational capacity and rising global demand.

Export Value also witnessed a steep rise, growing from Rs.126 crore in FY23 to Rs.193 crore in FY24, and reaching Rs.250 crore in FY25. This sharp increase reflects both volume growth and value addition in Fresharas export offerings.

Container-wise Exports followed a similar trend, climbing from 1,044 containers in FY23 to 1495 in FY24 and reaching 1,668 containers in FY25.

These consistent YoY increases underscore Fresharas strong execution capabilities and growing international market footprint, backed by a solid CAGR of 20.33% in production, 29.53% in export value, and 11.20% in container exports. This was enabled by:

?€? Optimal utilisation of both integrated processing units in Tamil Nadu.

?€? Seamless procurement and supply chain execution across 4,000+ contract farmers.

?€? Expanded presence in 40+ international markets, supported by robust logistics, QA, and documentation systems.

The addition of new machinery, grading systems, and improved packaging capabilities helped the Company meet specific quality parameters of European and North American clients, resulting in repeat orders and long-term contracts.

Profitability and Margins

In FY2024-25, Freshara Agro Exports Limited reported strong profitability metrics:

?€? EBITDA stood at Rs.4,612.81 lakhs, translating to an EBITDA margin of 18.45%, reflecting improved operational efficiencies and higher realisations from value-added SKUs.

?€? PAT for the year was Rs.2,878.86 lakhs, with a PAT margin of 11.49%, indicating disciplined cost management and enhanced margin profile.

Internal control systems and their adequacy:

Details relating to the Companys internal control systems and their adequacy are provided in the Boards Report, forming part of this Annual Report.

Material developments in Human Resources / Industrial Relations front, including number of people employed:

Details relating to Material developments in Human Resources are provided in the Boards Report, forming part of this Annual Report.

Financial Performance:

In accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, as well as any changes in return on net worth are as follows:

(Amount in Rs. Lakhs)

Particulars	As at March 31, 2025
Debtors Turnover	3.11
Inventory Turnover Ratio	5.94
Interest Coverage Ratio	7.521
Current Ratio	1.76
Debt Equity Ratio	0.74
Operating Profit Margin (%)	20.51%
Net Profit Margin (%)	11.49%

Note:

The Company transitioned from a Partnership Firm to a Public Limited Company on 22.11.2023 due to which the comparison is not relevant.

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof:

The Return on Net Worth of the company stood at 23.22% as on March 31, 2025, indicating optimum profitability and effective deployment of resources.

Note:

The Company transitioned from a Partnership Firm to a Public Limited Company on 22.11.2023 due to which the comparison is not relevant.

Conclusion:

Fresharas FY25 financial performance reflects the tangible outcomes of its strategic focus on value addition, market diversification, and operational excellence. The Companys ability to align procurement, processing, and export execution with high-demand SKUs has resulted in a scalable and profitable business model that remains resilient in the face of external challenges. This positions Freshara well for sustained growth in FY26 and beyond.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis and Directors Report describing the Companys strengths, strategies, projections and estimates, are forward looking statements and progressive within the meaning of applicable laws and regulations. The Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors. Readers are cautioned not to place undue reliance on the forward looking statements.

On behalf of the Board For Freshara Agro Exports Limited

	Junaid Ahmed Khudrathullah Iqbal Chairman & Managing Director DIN: 01917569
Place: Chennai Date: 22 nd May, 2025	Iqbalahmed Khudrathullah Mohammed Whole time Director DIN: 03363277