Gourmet Gateway Ltd Management Discussions

ECONOMY OVERVIEW GLOBAL ECONOMY

The global economy, which demonstrated remarkable resilience in 2023 with a growth rate of 3.2%, continues to face a volatile and complex environment in 2025. Despite the challenges posed by escalating geopolitical tensions, persistent disruptions in global supply chains, and the ongoing effects of pandemic-related economic disruptions, many markets have shown signs of stabilization. Inflation, which peaked in 2022 and prompted aggressive tightening of monetary policies across central banks worldwide, has receded. As a result, global economic activity in 2025 is projected to exhibit consistent growth, defying earlier concerns about stagflation and a potential global recession.

However, this growth remains uneven across regions, with emerging economies like India showing a more dynamic recovery compared to developed nations, where growth prospects remain subdued.

INDIAN ECONOMY

India, the worlds most populous nation, has been an outlier in terms of economic growth over the past few years.

While many economies have struggled with high inflation and slow recoveries, India has maintained a more robust

growth trajectory, and its economic outlook for 2025 remains positive.

• Growth Rate: Indias economy is projected to grow at a rate of around 6.5% to 7% in 2025, making it one of the fastest-growing major economies globally. This is significantly higher than the global average, driven by strong domestic demand, a youthful workforce, and ongoing structural reforms. India has managed to balance its inflationary pressures while continuing to attract investments, particularly in sectors like information technology, renewable energy, and manufacturing.

• Inflation and Monetary Policy: Unlike many developed nations, India has faced relatively lower inflation rates, averaging around 5% in recent years, with projections for 2025 falling within a manageable range of 4% to 5%. The Reserve Bank of India (RBI) has cautiously managed monetary policy, tightening rates where necessary but avoiding extreme measures that could stifle growth. In comparison, developed economies like the U.S. and EU have seen inflationary pressures remain persistent, requiring ongoing interest rate hikes to manage price stability.

• Geopolitical Resilience: While India is not immune to the geopolitical risks that have affected global markets, its diversified economy, large consumer market, and growing trade relationships have helped insulate it from the worst effects of the geopolitical tensions in Europe and East Asia. Indias "Look East" policy and trade partnerships, especially with ASEAN and African nations, are expected to bolster its role as a global economic player in 2025.

Sectoral Growth and Reforms

Indias economy in 2025 will benefit from several key factors:

1. Digital Transformation and Innovation: The tech sector, particularly in information technology (IT) and software services, continues to be a key driver of growth. India remains a global hub for outsourcing and technology services, with its digital economy expanding rapidly. Startups and venture capital inflows into sectors like fintech, edtech, and healthtech are expected to contribute significantly to growth.

2. Manufacturing and "Make in India": The governments "Make in India" initiative has continued to gain momentum, especially in the production of electronics, pharmaceuticals, and automobiles. In 2025, India is likely to become a significant player in global supply chains, especially as companies look to diversify production away from China. The push towards self-reliance, coupled with labor market reforms, is expected to enhance Indias manufacturing capabilities.

3. Green Energy: Indias commitment to renewable energy expansion is on track. With increasing investment in solar, wind, and electric vehicles, India aims to meet its carbon reduction targets, opening up new growth avenues in the green energy sector. The governments push for energy transition is likely to attract significant foreign investment and innovation in clean technologies.

4. Infrastructure Development: Indias infrastructure push, particularly in transportation, logistics, and urbanization, will continue to support growth. The governments focus on improving physical and digital infrastructure is likely to have long-term economic benefits, improving efficiency and connectivity.

Source: Economic Times; Ministry of Statistics & Programme Implementation; Ministry of Commerce & Industry; Ministry of

Finance; Groww.in; Ministry of Statistics & Programme Implementation

INDUSTRY OVERVIEW & OUTLOOK Global Food Services Market

The Global Foodservice Industry is estimated at $2.6 trillion. India is currently, the ninth largest food service market in the world estimated at $51 billion. Over the last decade, excluding the covid-impacted period, the Indian food services market (Industry) has grown at CAGR of 9%, largely mirroring the nominal GDP growth of the country.

Key Drivers of Growth

• Consistent rise in per capita

income in consumption-led economic growth

• Demographic tailwinds

• Digital Democratization

• Growth in Online Ordering

The rise in dual-income households and increased disposable income have led to increased expenditure on dining out. Millennials and working professionals are the key target consumers for the market owing to their increasing preference for hassle-free food that is readily available and reduced practice of preparing home-cooked meals. Moreover, the development of e-commerce/online platforms and on-the go food service coupled with innovations in packaging, the introduction of low-fat beverages, gluten-free products, etc. are contributing to the growth of the market. The trend for veganism is also visible in the fast-food sector as consumers are demanding vegan alternatives for burgers, sandwiches, etc. Following consumer preferences for healthier and cleaner food, restaurants are now catering to this particular market by expanding their menu range to more organic and vegan friendly options amongst other amazing innovations.

In summary, the global food and restaurant industry is evolving rapidly, influenced by technological advancements, shifting consumer preferences, and economic factors. The sector is adapting to new trends, focusing on sustainability, and navigating challenges to maintain growth and profitability.

Indian Food Services Market

The India Foodservice Market is poised for healthy growth, with an estimated value of USD 90 billion in 2025, projected to skyrocket to USD 125 billion by 2029, indicating a notable CAGR of 10 %, surpassing the 6% growth recorded during 2017-2023. Currently, Full-Service restaurants hold a dominant 43% share, expected to maintain their leading position. Concurrently, Cloud Kitchens are set to experience accelerated growth at 17%, fuelled by the rising demand for food delivery through digital platforms.

Overall, the transformation of Indias economy is driving significant shifts in the Foodservice industry, with recent stringent regulations enforced by FSSAI playing a crucial role in stimulating growth within the organized sector. Moreover, technological advancements, including automation of restaurant operations and utilization of data-driven insights, are revolutionizing consumption patterns, while the adoption of pre-processed and pre-packaged ingredients is streamlining kitchen preparation processes to meet evolving consumer demands efficiently.

In summary, the Indian food and restaurant industry is a vibrant and rapidly evolving sector with substantial growth prospects. It is influenced by economic factors, technological advancements, and changing consumer preferences, while also facing challenges related to costs, regulations, and sustainability. The industrys resilience and adaptability are key to its continued success and expansion

GOVERNMENT INITIATIVES

The Indian government has implemented several initiatives to support and develop the food and restaurant industry. Here are some key initiatives:

1. Food Processing Policies

Pradhan Mantri Kisan Sampada Yojana (PMKSY): Aims to increase the value addition of agricultural produce and improve the food processing infrastructure.

National Food Processing Policy: Seeks to boost investment, improve infrastructure, and enhance value addition in the food processing sector.

2. Financial Support and Incentives

Food Processing Fund: Provides financial assistance to food processing units for setting up new projects or expanding existing ones.

Subsidies and Tax Incentives: Various subsidies and tax breaks are available for the food and restaurant industry to encourage investment and growth.

3. Skill Development

Skill Development Programs: Initiatives like the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) offer training and skill development programs for individuals working in the food and restaurant industry.

4. Hygiene and Safety Standards

Food Safety and Standards Authority of India (FSSAI): Regulates food safety standards and provides guidelines for the safe production and serving of food.

Eat Right India Movement: An initiative by FSSAI to promote healthy eating and ensure the safety and hygiene of food served in restaurants.

5. Promotional Campaigns

Incredible India: A campaign to promote Indian cuisine and dining experiences to both domestic and international tourists, boosting the restaurant industry.

Food Street Initiatives: Development of food streets in various cities to promote local cuisine and enhance the food tourism sector.

6. Support for Small and Medium Enterprises (SMEs)

MSME Support: Special programs and schemes to support small and medium-sized enterprises in the food and restaurant sector, including easier access to credit and subsidies.

7. Technology and Innovation

Digital Payment Promotion: Encouraging the adoption of digital payment methods in restaurants through incentives and support.

Principle Risk	Risk Description	Allied Opportunities	Key Mitigation Actions
Food Safety	• The Company operations involve various stages, from sourcing ingredients to food preparation and service, where potential food safety hazards may arise.	• The Company has developed sustainable systems and processes for ensuring the highest standards of food safety and hygiene that results in increased consumer satisfaction and helps in attracting & retaining our customers	To address this risk: • Periodic testing of food products & regular food safety reviews are conducted to ensure sustained compliance and effectiveness.
	• These food safety incidents may: -Impact the well-being of consumers - Erode the brand reputation leading to loss of consumer
			• Regular training and awareness sessions are carried out for restaurant staff on adherence to quality norms.
	trust and loyalty. -Result in regulatory repercussions, including fines or sanctions		• The Company is actively monitoring and reducing food related customer complaints
	-Disrupt normal business operations, causing temporary closures, product recalls or supply chain disruptions
Health, Safety & Wellbeing	Health, safety & wellbeing is considered as critical because of following reasons: - Unsafe working conditions and lack of support for employee wellbeing can lead to low morale & productivity, violation of employee rights and high attrition - Employee casualty can be subject to negative publicity and a loss of customer trust and confidence, which can impact the Companysreputation - Poor employee safety and wellbeing can lead toincreased health care costs and compensation claims, which can have a significant financial impact on the organization	• Ensuring a secure and supportive workplace environment fosters productivity & loyalty and enhances workforce smorale	To mitigate health and safety risks, several measures have been undertaken: • The Company has systematically identified potential safety hazards at SCCs & restaurants and has ensured that adequate safety measures are implemented in compliance with applicable occupational health & safety Regulations. • To enhance employee awareness and preparedness, regular safety training and communications are carried out.
Business Ethics	These ethical challenges can impact: - Culture of ethical behaviour across all levels of the organization - Compliance with evolving regulatory frameworks	Upholding the highestethical standards alsopresent an opportunity for:-Enhancement of brand reputation,- Fostering trust amongStakeholders- Reinforce commitment to longterm value creation & sustainable growth	The Company has been practicing high standards of good governance & ethics byhaving:-Clear ethical guidelines and code of conduct that outline expected behaviour for employees and vendors-Robust and effective framework for reporting of statutory compliances and review on a periodic basis- Confidential Whistle blower channels for employees to report unethical behaviour or concerns without fear of retaliation-Effective oversight mechanisms, such as independent audits, compliance committees and Board Committees to monitor adherence to ethical guidelines

SEGMENT WISE PERFORMANCE

The Company deals in only one segment i.e. Food Business. Therefore, it is not required to give segment wise performance.

Financial Overview

GGIL demonstrated strong performance across all key operational and financial metrics, in the face of a challenging macroeconomic environment that impacted consumer sentiment and demand in Financial Year 2025.

(In Lakhs)

Particulars	Financial Year 2025	Financial Year 2024
Revenue	805.16	276.81
Expense	881.97	491.07
PBT	(54.73)	183.73
Tax Expense	(69.44)	50.09
PAT	14.71	133.64

Opportunities and Challenges in the Indian food services market OPPORTUNITIES

• Rapid Urbanisation

The surge in urbanisation in India is driving demand for food services, with an increasing number of people living in urban areas seeking convenient dining options due to changing lifestyles and busy schedules. Further, urbanisation has exposed consumers to numerous cuisines. The growing inclination of millennials towards fast food consumption further supports the growth of the market.

• Increasing disposable income

Rising disposable income levels in India are leading to increased spending on eating out and exploring new culinary experiences. This presents opportunities for food service providers to cater to evolving consumer preferences and offer diverse and innovative food options.

• Technological advancements

Advancements in technology, such as online food delivery platforms and digital payment systems, are transforming the food services market in India. The increasing adoption of smartphones and internet

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penetration have made it easier for consumers to order food online, providing opportunities for food delivery and aggregator platforms to expand their reach.

• Culture of experimentation in the food segment and global cuisine trends

The middle-class population is exposed to global trends in terms of newer formats and cuisines through travelling and seamless interaction facilitated by the internet and smartphones. They are willing to spend money on dining experiences similar to those found around the world. Indian consumers are increasingly seeking out regional and global cuisine options, presenting opportunities for food service providers to diversify their offerings and cater to varied tastes and preferences

CHALLENGES

• Higher inflation

Higher inflation presented challenges for the Indian food services market in FY 2024-25 as the soaring costs of fuel, freight, energy and ingredients impacted the industry. It also drives up menu costs and decreases consumer spending.

• Intense competition

The Indian food services market is highly competitive, with a large number of players ranging from local eateries to international restaurant chains. Competition can be fierce, making it challenging for new entrants to establish their presence and gain market share.

• Quality and safety concerns

Food safety and hygiene are critical concerns for consumers, and ensuring consistent quality across multiple locations can be a challenge for food service providers. Maintaining high food safety standards, adhering to regulations, and managing supply chains to ensure quality can be a challenge in a diverse and complex market like India.

• Changing consumer preferences

Indian consumers are known for their diverse tastes and preferences, and keeping up with changing consumer preferences can be challenging for food service providers. Staying relevant and meeting the evolving demands of consumers, such as changing dietary preferences, can require constant innovation and adaptation.

• Regulatory environment

The food services industry in India is subject to various regulations and compliance requirements, including licensing, food safety, labour laws, and taxation. Companies are required to register and maintain multiple licenses and also adhere to hygiene standards laid by the Food Safety and Standards Authority of India (‘FSSAI). Navigating the regulatory landscape and ensuring compliance can be complex and time-consuming for food service providers.

HUMAN RESOURCES

The Companys focus is on making efficient and effective use of its human talent to achieve its organisational goals. The human resource team carries out various activities to ensure smooth operations and create an overall positive work environment for all its employees. Periodic employee pulse surveys are conducted in order to understand employee satisfaction levels and gather feedback from its employees, in order to identify areas for improvement and take necessary actions. The Company regards human resource as its most valuable asset. The Company undertakes training and development programmes at regular intervals to encourage a performance driven culture among its employees. The Company has been recruiting and selecting qualified individuals for diverse roles at its restaurants and Restaurant Support Centres (Corporate). Various recognition programmes and incentive schemes were introduced to recognise and reward excellent performances and motivate employees contribution towards the organisation.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an efficient and well-defined internal control system for safeguarding its financial information and assets from unauthorised use or disposition, addressing the evolving risks in the business, reliability of financial

information, timely and accurate reporting of operational and financial transactions, and stringent adherence to all the applicable regulatory laws and legislations. The Companys overall governance system including all policies and procedures is properly documented under expert supervision.

The Companys current systems of Internal Financial Controls (IFC) are aligned with the requirement of Section 134(5)(e) of the Companies Act, 2013 (Act). As stipulated under the said provisions, the IFC framework established by the Company encompasses the following elements:

• Orderly and efficient conduct of business

• Safeguarding of its assets

• Adherence to Companys policies

• Prevention and detection of frauds and errors

• Accuracy and completeness of the accounting records and timely preparation of reliable financial information

The Companys internal controls are commensurate with its size and the nature of its operations. They have been designed to provide reasonable assurance with regard to all the above stated IFC elements. To make the IFC framework robust, the Company worked on three lines of defence strategy:

First Line of Defence: Build internal controls into operating processes, which primarily include controls operated by the process owners under the overarching guidance of the Code of Conduct, Whistle-blower mechanism, budgetary controls, financial delegation of authority, accounting policies and manuals, period-end closing checklist, basis of accounting estimates and various other Company policies and procedures.

Second Line of Defence: Create an efficient review mechanism, comprising monthly business performance reviews under which each business unit and function is reviewed on its performance.

Third Line of Defence: Independent assurance through internal audits performed by audit firms of international and national repute. The Audit Committee reviews reports submitted by the internal auditors and suggestions for improvement are considered. Additionally, the statutory auditors audited Companys financial statements included in this Annual Report and have also confirmed the adequacy and operational effectiveness of the Companys internal control over financial reporting (as defined in Section 143 of the Act).

STATUTORY COMPLIANCES

The Managing Director makes a declaration to the Board of Directors every quarter regarding compliance with provisions of various statutes as applicable. The Company Secretary ensures compliance with the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and compliance with the guidelines on insider trading for prevention of the same.

OUTLOOK

The GGIL Group believes in the immense long-term potential of the food service category in the under-penetrated emerging markets. Secular trends of young population, rising urbanization, growing affluence, accelerated shifts towards digitalization and shift in favour of the organized sector, and within that for big, established, credible brands will help aid growth of Foodservice industry in these markets. The Group through its Portfolio of Brands, key- competitive advantages of having its own-commissary and delivery network, in-house technology stack is well placed to capitalize the growth opportunity, and strengthened enablers is well placed to leverage the opportunity and deliver sustained profitable growth.

CAUTIONARY STATEMENT

The Management Discussion and Analysis may contain some statements describing the Companys objectives, projections, estimates, and expectations which may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those either expressed or implied in the Statement depending on the circumstances. Therefore, the investors are requested to make their own independent assessments and judgements by considering all relevant factors before making any investment decision.