Gokul Agro Resources Ltd Management Discussions

THE ECONOMIC OVERVIEW

GLOBAL ECONOMY

The year 2024 presented a challenging yet moderately advancing global economic landscape. While demonstrating resilience against various headwinds, the overall growth remained below the pre-pandemic norm. Divergences across regions and persistent uncertainties shaped the global economic narrative.

Global GDP growth in 2024 was recorded at approximately 3.3%. While indicating continued expansion, this figure remained below the 3.6% average growth rate observed between 2000 and 2019. Growth patterns were notably desynchronised, with developed economies generally experiencing a more pronounced slowdown compared to many developing nations, particularly in East and South Asia.

Headline inflation saw a welcome moderation in 2024, easing to around 5.9% from the higher levels of previous years. This decline was largely attributed to the delayed impact of monetary policy tightening, a slowdown in global demand and a stabilisation of energy prices. However, underlying or core inflation proved stickier in many economies, particularly in the services sector, influenced by tight labour markets and, in some regions, wage increases that exceeded productivity gains.

Global trade achieved a record high of approximately US$33 trillion in 2024, marking a 3.7% expansion. This growth was propelled by a robust 9% increase in services, while trade in goods saw a more modest 2% rise. Developing economies outpaced developed nations in trade growth. However, the latter half of the year witnessed a softening trade momentum. Moreover, increasing geopolitical tensions, protectionist policies and trade disputes signalled potential disruptions for 2025.

Outlook

The global economic narrative for 2025 is one of careful navigation through a landscape characterised by both resilience and emerging vulnerabilities. We have seen a period of steady, albeit subdued, growth, but the underlying dynamics are shifting. Policy adjustments worldwide and a resurgence of uncertainty are reshaping the terrain.

The IMF projects global GDP growth to decelerate to 2.8% in 2025, down from 3.3% in 2024 and below the pre-pandemic average of 3.7%. Although inflation is showing signs of easing, it remains a key concern. While headline inflation is expected to decline, the pace of that decline is uneven across regions. Trade dynamics are also in flux. In early 2025, a temporary uptick in global trade occurred, driven partly by businesses front-loading orders in anticipation of new tariffs. However, this momentum is expected to wane and potentially reverse as these tariffs take effect.

INDIAN ECONOMY

The Indian economy experienced healthy growth at 6.5% in FY25, following a 9.2% growth recorded in FY24. It sustained its position as one of the worlds fastest-growing major economies. Vigorous consumer demand, a robust recovery in the agricultural sector and consistent service sector performance have propelled real GDP growth.

Retail inflation in India has shown a downward trend. For FY25, retail inflation dropped to 4.6%, the lowest since 2018-19. In March 2025, the year-on-year inflation rate further declined to 3.34%. This moderation in inflation is attributed to factors such as declining food prices and overall improvements in the supply side.

Indias industrial production growth eased to a four-year low of 4% in FY25 from 5.9% recorded in the previous year, dragged by poor performance of the manufacturing and mining sectors. The countrys production showed signs of improvement towards the end of the last financial year, which was supported by a rise in high-frequency indicators such as the manufacturing PMI, GST collections and e-way bill generation.

The services sector continued to be a key growth driver, supported by digital transformation and increased demand in travel, hospitality and technology.

The central government is on track to meet its fiscal deficit target of 4.8% of GDP for FY25, driven by factors such as a higher-than-expected nominal GDP growth rate, steady revenue receipts and controlled expenditure growth.

Indias exports of goods and services reached an all-time high of US$825 billion in FY25, driven by a record surge in service shipments that totalled US$386.5 billion in the last fiscal year, despite global trade headwinds.

Outlook

As Fiscal Year 2026 begins, the Indian economy is at a critical juncture. Having demonstrated notable resilience in the previous year, it now faces a global landscape marked by uncertainty, with both opportunities and challenges shaping its trajectory. Several domestic factors are expected to underpin this growth. Government-led infrastructure development and job creation efforts, a strengthening of the manufacturing sector and the continued momentum in services and agriculture are key contributors.

Moderating inflation is likely to boost consumer confidence and provide the Reserve Bank of India (RBI) with greater policy flexibility. A benign inflation outlook and tax incentives for the middle class, as outlined in the Union Budget 2025-26, are expected to support discretionary consumption and stimulate broader economic activity.

However, external risks persist. Rising protectionist measures, especially the increase in US tariffs on certain imports, may pose challenges to Indias goods exports and potentially widen the current account deficit.

INDUSTRY OVERVIEW

GLOBAL EDIBLE OIL MARKET

The global edible oils market is experiencing high growth, driven by an increasing population, rising disposable incomes and shifting dietary patterns.

Food processing, industrial applications and various forms of baking and cooking account for widespread applications in the market. Key player companies cater to the expanding demand for oils such as soybean, palm, sunflower and olive oils, thereby enhancing their footprints across both developed and emerging countries.

Market Size and Growth

The global edible oil market 2024 demonstrated steady expansion, reaching an estimated value of US$250.78 billion, with projections indicating a continued growth trajectory at a CAGR of around 4.1%, potentially reaching US$306.92 billion by 2029. This growth is fuelled by a rising global population, increasing disposable incomes and rapid urbanisation, particularly in developing economies. The Asia-Pacific region is expected to grow more rapidly in the edible oils market due to a growing population, rising disposable incomes and an increasing preference for healthy cooking oils.

Key Growth Drivers

Key market growth drivers include increasing consumer health consciousness, resulting in higher demand for healthier oil options, expansion of the food processing industry and evolving lifestyles in urban areas. Theres a growing emphasis on sustainability, traceability and innovation within the sector, with companies investing in bioengineered oils and advanced technologies to meet consumer demands and regulatory standards.

Global vegetable oil market

The global market for Vegetable Oils was sized at 236.5 Million Metric Tons in 2024 and is projected to reach 315.1 Million Metric Tons by 2030, growing at a CAGR of 4.9% from 2024 to 2030.

Dietary trends, health research and economic conditions shape the global vegetable oil market. There is a growing preference for oils high in unsaturated fats, such as olive oil and omega-3-rich oils, owing to their health bene_ts. The growth of the vegetable oil market is driven by several factors, including advancements in agricultural technology, expanding applications across various industries and evolving consumer preferences.

GLOBAL NON_EDIBLE OIL MARKET

The global non-edible oil market encompasses oils not intended for human consumption, with various applications in industries such as manufacturing, industrial chemicals and biofuel production.

The global market for non-edible oils, including neem, castor and jatropha oils, serves various industries outside the food sector. These oils are essential in applications such as biofuels, lubricants, pharmaceuticals and industrial processes. The market is shaped by factors such as the demand for biofuels, growing industrial needs and the pursuit of sustainable alternatives.

Castor Oil Market: The global castor oil derivatives market in 2024 demonstrated significant value and promising growth prospects. The market size was estimated to be around US$1.41 billion in 2024. Projections indicate a CAGR of approximately 5.8% over the forecast period of 2025-2032, with the market expected to reach a value of US$2.21 billion by the end of the forecast period. This growth is primarily driven by the increasing demand for bio-based products across various industries and the versatile properties of castor oil derivatives.

Growth Drivers and Industrial Applications

Governments worldwide are implementing strategies to encourage the use of bio-based materials, further fuelling market growth. The unique chemical structure of castor oil allows it to be processed into a wide array of derivatives with diverse industrial applications. These derivatives are used in the production of lubricants, paints, coatings, cosmetics, pharmaceuticals, plastics and more. The increasing demand for these end-use products, coupled with the growing preference for natural and eco-friendly ingredients, is a key driver for the castor oil derivatives market.

INDIAN EDIBLE OIL MARKET

The Indian edible oil sector in FY2025 is undergoing a significant transformation, driven by government policies, shifts in consumer behaviour and a push toward self-sufficiency. The market, which reached approximately 25 million metric tons in 2024, is projected to grow steadily, with estimates suggesting it could reach 28.2 million tons by 2033. In terms of value, the sector is expected to cross US$35 billion by 2025, fuelled by rising demand for branded, healthier oil options and increasing urban consumption.

A key focus of FY2025 has been reducing Indias heavy dependence on edible oil imports, which historically accounted for over 60% of its consumption. Tariff measures are intended to boost local production and protect domestic farmers from fluctuating global prices.

India remains the worlds largest importer of edible oils, fulfilling roughly 55% to 60% of its domestic demand through imports. Notably, in February 2025, edible oil imports declined by 8%, totalling 8.85 lakh tonnes compared to the same period in the previous year. However, the cumulative vegetable oil imports for the initial four months of the oil year (November 2024 – February 2025) showed a 4% increase.

Palm Oil

Palm oil constitutes the largest portion of Indias edible oil imports, accounting for around 62%. It is primarily sourced from Indonesia and Malaysia. Despite various government measures to reduce import dependency, palm oil remains dominant due to its versatile applications and competitive pricing.

Soybean Oil

Soybean oil represents approximately 22% of total edible oil imports. The majority of this oil is imported from Argentina and Brazil. Soybean oil remains a staple for many Indian households and is widely used in the food processing industry.

Sun_ower Oil

Sunflower oil makes up 15% of Indias edible oil imports and is largely sourced from Ukraine and Russia. Its popularity stems from being perceived as a healthier oil option, especially in urban and health-conscious segments of the population.

Consumer Trends and Sustainability Considerations

Consumer trends are also playing a significant role in shaping the industry. Health-conscious Indians are increasingly moving away from unbranded, loose oils and opting for packaged, fortified alternatives. This is particularly evident in urban markets, where awareness around nutrition and food safety is rising. Additionally, distribution channels are evolving, with modern retail and e-commerce platforms gaining popularity alongside traditional grocery outlets.

Sustainability has become another pressing issue. While the push for domestic self-reliance in oilseed production is crucial for food security, it raises concerns about the environmental impact of large-scale cultivation, including deforestation and groundwater depletion. As such, balancing production goals with ecological safeguards will be essential for the long-term viability of the sector.

2x THE MANDATE

Indias per capita consumption of edible oil has increased nearly threefold over the past two decades, leading to a heightened dependence on imports and exacerbating public health concerns associated with obesity and non-communicable diseases. From a mere 8.2 kg in 2001, the per capita annual consumption of edible oil has surged to 23.5 kg-almost double the recommended limit of 12 kg established by the Indian Council of Medical Research (ICMR).

Recent data provided by the Solvent Extractors Association of India (SEA) indicates that the country consumes approximately 25–26 million tonnes of edible oil annually, whilst producing only 11 million tonnes domestically, resulting in a 60% shortfall that is compensated by imports.

Source: https://www.business-standard.com/industry/agriculture/ india-edible-oil-consumption-tripled-imports-health-obesity-palm-oil-125042100484_1.html

INDIAN NON_EDIBLE OIL MARKET

Indias Castor Oil Market Position

In fiscal year 2024–25 (FY2025), the Indian castor oil and derivatives market experienced steady growth, driven by increasing domestic production, robust export demand and expanding industrial applications. India, which dominates global castor oil production and exports, continued to leverage its position as the worlds leading supplier, catering primarily to markets such as China, the United States and the European Union. Notably, China accounted for approximately 41% of Indias castor oil exports, underscoring its critical role in the global supply chain.

Industrial oils remained the largest application segment, accounting for nearly three-fourths of total castor oil use. Castor oils versatility in producing high-performance lubricants, coatings and biodiesel contributed to this dominance. In addition, its favourable properties, such as viscosity, thermal stability and biodegradability, made it especially valuable in green chemistry and bio-based product development.

Pharmaceutical and Cosmetics Sectors

The pharmaceutical and cosmetics sectors also showed increasing adoption, utilising castor oil for its anti-inflammatory, emollient and wound-healing properties.

Market Size and Growth

The castor oil market in India was valued at around 103.1 kilotons in 2024, with forecasts projecting an increase to 109 kilotons by 2033. This growth was mirrored in the castor oil derivatives segment, which was valued at US$42.08 million in FY2025. Derivatives such as hydrogenated castor oil, dehydrated castor oil and ricinoleic acid saw a CAGR of nearly 9.8%, buoyed by rising demand from sectors including lubricants, plastics, pharmaceuticals and cosmetics.

Sustainability remained a key theme in FY2025. Castor plants are uniquely suited to Indias arid and semi-arid regions, as they grow well on marginal lands with minimal inputs. This characteristic enhances castors appeal as a sustainable, non-edible oilseed that does not compete with food crops.

Despite the positive outlook, the sector faced several challenges. Price volatility remained a concern, particularly for small and medium enterprises that depend on price stability to remain competitive. Moreover, infrastructure constraints, over-dependence on rainfall in key growing states such as Gujarat and Rajasthan and logistical bottlenecks limited the sectors scalability.

ANIMAL FEED MARKET

In 2024, the global animal feed market was valued at approximately US$533.4 billion and is projected to reach US$681.8 billion by 2033, growing at a CAGR of 2.8%. Asia-Pacific leads the market, driven by its large livestock population and increasing demand for animal protein. Key trends include the adoption of sustainable feed ingredients, such as insect and plant-based proteins, advancements in feed technologies, including precision nutrition and AI integration and a shift towards antibiotic-free formulations.

The global demand for meat, dairy and poultry is driving the need for high-quality animal feed to enhance livestock productivity and meet dietary requirements. Innovations such as precision nutrition and advanced additives are improving animal health and efficiency, thereby promoting sustainable and profitable agricultural practices. Environmental concerns are stimulating the adoption of eco-friendly feed solutions and sustainable sourcing methods. Additionally, government support and investments in feed technology are further driving market growth.

COMPANY OVERVIEW

Gokul Agro Resources Limited (Referred to as ‘ Gokul Agro or the Company), a prominent Indian FMCG company with a significant global presence, excels in manufacturing a diverse range of edible and non-edible oils and meals. Holding ISO 45001:2018, FSSC 22000:2024 and ISO 9001:2015 certifications, the Company supplies a wide array of products globally, including soybean, cottonseed, palm, sunflower, groundnut oils and vanaspati.

Managing its international operations through global trade and a Singapore-based subsidiary, Gokul Agro boasts an extensive marketing and distribution network covering over 20 Indian states. The companys industrial division focuses on producing and exporting various grades of castor oil and its derivatives, operating one of the largest facilities in this sector.

Gokul Agro has cultivated a substantial and loyal customer base across continents, exporting its products to countries such as the USA, the EU, China, Singapore, Indonesia, Malaysia, Vietnam etc. Leveraging advanced technology, its state-of-the-art production facilities, such as the one in Gandhidham, Gujarat, benefit from their strategic proximity to ports and major transportation networks. This ensures an efficient and continuous supply of raw materials, facilitating extensive distribution to both domestic and international markets. Furthermore, Gokul Agros infrastructure near the Haldia and Krishnapatnam ports provides strong connectivity and streamlined logistical operations.

PRODUCT PORTFOLIO

Gokul Agro markets its refined cooking oils, including soybean, groundnut, sunflower, mustard, cottonseed, palm oils and vanaspati ghee, under the well-known consumer brands Vitalife and Mahek. These brands offer a diverse selection tailored to various consumer tastes, backed by thorough market insights and convenient packaging. Furthermore, the Company caters to industrial clients with bakery shortening products such as Puff Pride, Bisco Pride and Richfield. Gokul Agro effectively serves both the retail and industrial sectors through this comprehensive product range.

GOKUL AGROS STRENGTHS

Decades of Expertise & Strong Relationships: Gokul Agro benefits from 40 years of promoter experience in the edible oil sector, fostering deep-rooted connections with both suppliers and customers.

Strategic Geographic Advantage: The companys proximity to ports and oilseed-growing regions, particularly its integrated facility in Gandhidham, Gujarat, provides logistical benefits. This strategic location facilitates efficient procurement and distribution, enhancing overall operational effectiveness. Latest operational refinery plants in Haldia (West Bengal) and near Krishnapatnam Port (Andhra Pradesh) are also strategically positioned to streamline their supply chain and cater to broader markets.

Strong Market Presence and Diverse Clientele: Gokul Agro is a prominent player in both edible and non-edible oil manufacturing in India, with a refining capacity of 6,250 TPD. Its product portfolio includes soybean, mustard, palm, sunflower, groundnut, cottonseed, castor oils and vanaspati. To meet increasing demand, the Company has significantly expanded its production capacity. It now operates through a wide distribution network of over 823 dealers and distributors, serving 36 countries and 28 states across India.

E_cient Working Capital Management: The Company maintains healthy working capital metrics, with optimal inventory levels and an average debtor cycle of under 15 days. Gokul Agro aims to further streamline this cycle in FY 2024–25, reinforcing its disciplined financial approach.

High Operating E_ciency: With an average capacity utilisation of 75% at its refining and seed-crushing units, Gokul Agro prioritises operational excellence. The Company remains focused on enhancing productivity and optimising processes across all facilities.

FINANCIAL REVIEW

Gokul Agro delivered robust performance in FY 2024–25, demonstrating resilience and growth momentum amid a volatile global economic environment.

Revenue from operations rose from C 13,853.93 crore in FY24 to C19,550.75 crore in FY25, driven by enhanced brand visibility and growing market traction. EBITDA grew by 72%, from C 326.91 crore to C 562.31 crore, while Net Profit surged from C 135.76 crore to C 245.58 crore. The EBITDA margin improved from 2.16% to 2.83%, reflecting disciplined cost management and operational efficiency. Cash flow from operations declined due to increased working capital requirements, which aligns with the Companys expansion strategy.

Net Worth increased from C 786.29 crore as of March 31, 2024, to C 1,035.94 crore as of March 31, 2025, supported by improved profitability. Net debt stands at C 527.60 crore, primarily to fund strategic acquisitions and general capex. However, the debt-equity ratio improved from 0.68x to 0.62x, underscoring prudent capital structuring. With rising business volumes, the Company anticipates stronger cash flow generation, which will enable further deleveraging in the years ahead

Gokul Agro has effectively balanced aggressive growth with sound financial stewardship, reinforcing its position as a leading player in the agro-commodities sector. This performance lays a solid foundation for sustained value creation and long-term market leadership.

Signi_cant Changes in Key Financial Ratios (Standalone)

Particulars	FY25	FY24	% Change	Reason for Change
EBIDTA Margin (%)	2.83%	2.16%	31%	Improved operational efficiency and full-scale
PAT Margin (%)	1.17%	0.81%	44%	operationalization of all plants.
EBITDA/Net Interest (X)	3.42	3.04	13%	-
Debtors Turnover (Days)	5	8	-38%	More efficient credit management and faster customer collections.
Interest Coverage Ratio (X)	3.07	2.61	18%	-
Current Ratio (X)	1.14	1.13	1%	-
Debt Equity Ratio (X)	0.62	0.68	-9%	-
ROE (%)	26.52	17.35%	53%	Rise attributable to improved profitability and successful expansion into newer markets.
EPS (C )	13.61	7.11	91%	Significant growth due to enhanced earnings supported by improved margins and expanded market presence.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Gokul Agro prioritises operational efficiency and integrity by establishing strong internal control systems. The company emphasises integrity, accountability and ethical behaviour, with leadership setting the standard. Regular risk assessments proactively identify and address potential issues and tailored controls, such as segregation of duties and IT measures, are implemented to fit the Companys specific operations. Effective communication, thorough training and continuous monitoring ensure the efficacy of these controls. Gokul Agro cultivates a culture of compliance and accountability, empowering employees to uphold controls and report concerns promptly. Furthermore, the Company continually refines its internal control framework to adapt to evolving risks and industry best practices, to consistently deliver superior products and services.

HUMAN RESOURCES

Gokul Agro recognises its workforce as its core strength and is dedicated to cultivating an inclusive and engaging work environment. The company strategically recruits and retains top-tier talent, particularly skilled researchers and technical experts passionate about innovation.

To support professional development, Gokul Agro offers extensive training programs and actively promotes diversity and inclusion, thereby ensuring equitable opportunities for all employees. The company prioritises employee well-being and provides wellness programs, supportive initiatives and open communication platforms. Regular feedback, coaching and performance reviews constitute integral components of Gokul Agros approach to maximising employee contributions.

With 1,200+ employees as of March 31, 2025, the Companys HR practices focus on nurturing talent, fostering engagement and driving organisational success through effective workforce management.

RISK MANAGEMENT

RAW MATERIAL AVAILABILITY

The availability of raw materials and government policies could impact their availability.

Mitigation Strategies

Gokul Agro prefers to be located near raw material availability and establish long-term supply agreements with farmers and suppliers to secure a consistent supply of raw materials. Their strong relationships with suppliers and ability to widen their sourcing channels ensure a stable supply of raw materials at competitive prices. Furthermore, the Company utilises agro-commodity futures to mitigate price volatility. Additionally, it maintains adequate stocks for off-season capacity utilisation and operates across multiple oil categories.

COMPETITIVE INTENSITY

Growing competition can impact the Companys growth and profitability ambitions.

Mitigation Strategies

Gokul Agro is a reputable player in the edible and non-edible oil sector, with years of experience in the industry. The Companys brands have earned the trust and loyalty of consumers in the markets where it is present. Moreover, the focused branding and awareness initiatives undertaken each year ensure that the brand remains firmly cemented in the minds of consumers. Furthermore, the Companys extensive network continues to expand its customer base both domestically and internationally.

OPERATIONAL RISK

Disruptions in operations, due to factors such as plant breakdowns, logistical challenges, quality control issues and supply chain disruptions, can impact production and delivery schedules.

Mitigation Strategies

Gokul Agro has institutionalised the discipline of periodic maintenance schedules for plant and machinery to minimise the risk of breakdowns. The Company follows stringent quality control measures and certifications (like FSSC 22000). It also continues to invest in improving operational processes through automation solutions, ensuring that the team consistently delivers high-quality products.

REPUTATION RISK

Disruptions in operations can occur due to factors such as plant breakdowns, logistical challenges and quality control issues.

Mitigation Strategies

At Gokul Agro, sustaining high quality is the topmost priority. The Company has created SOPs for its operating processes, which allow it to align with the stringent quality control and food safety standards. The Company conducts regular audits and inspections at manufacturing facilities to ensure it delivers its brand promise to its customers.

CURRENCY RISK

Adverse fluctuation in foreign currency rates could significantly dent business profitability.

Mitigation Strategies

The Company utilises financial instrument, such as forward contracts to hedge against fluctuations in foreign exchange rates, particularly since Gokul Agro has significant foreign currency exposure.

FUNDING RISK

The Company will require adequate funds to grow its business over the medium term.

Mitigation Strategies

The Company has a relatively high debt-equity ratio. Cognizant of this reality, the team has adopted a balanced fund allocation policy of utilising its cash flow from operations to liquidate its debt portfolio. This will strengthen its financial stability and improve business profitability. Moreover, raising of bank funds is more in nature of short terms working capital needs.

CAUTIONARY STATEMENT

The statement provided in this section outlines the Companys objectives, projections, expectations and estimations, which may be deemed ‘forward-looking statements as per applicable securities laws and regulations. These forward-looking statements are based on certain assumptions and anticipations of future events. However, its important to note that the Company cannot guarantee the accuracy or realisation of these assumptions and expectations. Actual results may significantly differ from those expressed in the statement or implied due to various external factors beyond the Companys control. The Company assumes no responsibility to publicly amend, modify, or revise any forward-looking statements based on subsequent developments. Stakeholders need to exercise caution and consider the inherent uncertainties associated with forward-looking statements when making decisions based on such information.