GRM Overseas Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

Theglobaleconomyremainedresilientoverthe past year despite persistent headwinds from elevatedfitrade barriers and heightened uncertainty.Thesechallengeswerepartlyoffset by supportive factors, including continued investment infitechnology,firelatively accommodative financial conditions, and ongoing fiscal and monetary policy support acrossmajoreconomies.

However,theoutbreakofconflictintheMiddle East in February 2026 hasfiresulted in a significantdisruptiontothisbalance.Theconflict hasemergedasakeydownsiderisk,impacting global commodity markets, inflation expectations, and financial conditions. Its spillovereffectsarebeingtransmittedthrough higher energy and food prices, increased volatilityinfinancialmarkets,andpressureon currencies,particularlyincommodity-importing emergingeconomies.

Global inflation has remained broadly stable, although underlyingfitrends show divergence acrossregions.IntheUnitedStates,inflationary pressuresfiremain abovefitarget, with core personal consumptionflexpenditure inflation continuingfiat elevatedfilevels. Financial conditionshavetightenedmoderatelyfollowing theonsetoftheconflict,reflectedinhigherbond yieldsandsofterequitymarkets,althoughthey remain accommodativefirelativefito historical norms. The US dollar has strengthened as a safe-haven asset, while gold prices have exhibitedincreasedvolatilityamidgeopolitical uncertainty.

Fiscal conditionsfiremain stretched across several advanced and emerging economies. Governments are facing increasing fiscal pressuresduetoconflict-relatedexpenditures andmeasuresaimedatmitigatingtheimpactof rising commodity prices on vulnerable populations.Atthesametime,higherfinancing costs and moderating economic activity are weighingonrevenues,contributingtowidening fiscaldeficitsinmajoreconomies.

Commodity markets haveflexperienced significantvolatilityinresponsetogeopolitical developments. Energy prices are expected to risesharply,withoilpricesincreasingdueto disruptionsinsupplyandtransportation.Natural gasmarketsremainparticularlyvulnerabledue tostructuralconstraints,whilefoodpricesare alsounderupwardpressurefromhigherinput costsandlogisticsdisruptions.

Global Economic Outlook

Theglobaleconomicoutlookremainscautious, withgrowthexpectedtomoderatefromrecent levels.GlobalGDPgrowthisprojectedat3.1%in 2026 and 3.2% in 2027, comparedfito approximately3.4%during2025,reflectingthe combinedeffectsofgeopoliticaltensions,tighter tradeconditions,andstructuralchallenges.

Advancedeconomiesareexpectedtogrowata modestpaceof1.8%in2026and1.7%in2027. The United States is projectedfitofiremain relativelyresilient,supportedbyfiscalmeasures andthelaggedeffectsofpriormonetaryeasing, whilegrowthintheEuroareaisexpectedto remainsubduedduetocontinuedpressurefrom highenergycostsandmanufacturingweakness. TheoverallimpactoftheMiddleEastconflicton advancedeconomiesisexpectedtobelimited, althoughnetenergy-importingeconomiesare likelytofacegreaterchallenges.

Emerging Market and Developing Economies areprojectedtogrowat3.9%in2026,witha recoveryfito 4.2% in 2027. However,fithese economiesfaceheightenedvulnerabilitydueto theirexposuretocommoditypricefluctuations, currency depreciation, and external financing conditions.TheimpactoftheMiddleEastconflict isflexpectedfito be more pronounced forfithis group, particularly for commodity-importing countries.

Globaltradegrowthisexpectedtodecelerate significantly,decliningfrom5.1%in2025to2.8% in2026,beforerecoveringto3.8%in2027.This reflectstheeffectsofongoingtradetensions, tariff measures, and adjustments in global supplychains.Whilebothgoodsandservices tradeareexpectedtosoften,servicestradeis likelytoremainrelativelymoreresilient.

Looking ahead,fithe global outlookfiremains subjecttoelevateduncertainty.Thetrajectoryof theMiddleEastconflict,particularlyitsduration andintensity,willplayacriticalroleinshaping economicoutcomes.Keyrisksincludesustained high commodity prices, afiresurgence of inflationary pressures,fitightening financial conditions, and rising fiscal vulnerabilities. Despitefithese challenges, supportive policy measures and structuralfiresilience in key economiesareexpectedtounderpinmoderate globalgrowthoverthemediumterm.

(Source: World Economic Outlook, April 2026: Global EconomyQin theKShadow of War)

INDIAN ECONOMY OVERVIEW

Indiafiremainedfithe fastest-growing major economyinFY26,withGDPgrowthaccelerating to7.6%,comparedto7.1%inFY25.Thegrowth momentum was primarily driven by a robust performance across manufacturing and services,whileagriculturesawmoderationdue toahighbaseeffect.

Onfithe supply side, manufacturing activity strengthened,ledbycontinuedexpansioninthe automobile sector and fast-moving consumer goods(FMCG).Theservicessectorremaineda keygrowthengine,supportedbystrongurban demand,reflectedinsectorssuchasretailtrade, hospitality,fitransportation, andfireal estate. Additionally,exportsoffinancialandprofessional servicesshowedsustainedbuoyancy.

However,agriculturalgrowthmoderated,mainly duetoslowergainsinfoodgrainyieldsfollowing strongoutputinthepreviousyear.

Monetaryconditionseasedsignificantlyduring theyear.TheReserveBankofIndia(RBI)reduced thepolicyreporatebyacumulative125basis pointsfito 5.25% between February and December 2025. In its February 2026 policy review, the RBI maintained a neutral stance, citingafavourablegrowthoutlookandbenign inflation conditions, while emphasizing data dependencyforfutureactions.

Inflationarypressuresremainedwell-contained duringtheyear.Headlineinflationaveraged1.9% (April2025 February2026),significantlylower than 4.7% in the previous year, supported by decliningfoodpricesduetostrongagricultural output, adequate cereal stocks, and policy measures such asfireduced import duties.

Meanwhile,wholesalepriceinflationmoderated to0.4%,reflectinglowerfoodandfuelprices.

In contrast, core inflation showed a marginal uptick,averaging4.1%duringtheyear,driven primarilybyhighercommodityprices,although other core components such as healthcare, education,andtransportationremainedstable. Encouragingly,coreinflationeasedtowardsthe endoftheperiod.

Onthedemandside,privateconsumptiongrew by7.7%,supportedbyrisingdisposableincomes, lowinflation,personalincometaxrelief,andGST rationalization measures. These factors contributed to improved consumer sentiment andspendingpatterns.

During April February FY26, merchandise exportsreachedUSD402.93billion(up1.84%), while imports rose to USD 713.53 billion (up 8.53%).Totalexports,includingservices,grew by5.8%toUSD790.86billion.Keyexportsectors included engineering goods, petroleum products,electronics,pharmaceuticals,gems& jewellery,fitextiles, and agricultural products, with major markets spanningfithe US, UAE, China,Europe,andSoutheastAsia.

However, rising geopoliticalfitensions, particularlyintheMiddleEast,disruptedglobal traderoutessuchastheRedSeaandtheStraitof Hormuz,fileadingfito increased freight costs, insurancepremiums,andtransitdelays.Despite theseheadwinds,Indiasexportsectorremained resilient, supported by diversification and competitivenessacrosssectors.

Indian Economy Outlook

Indiasgrowthisprojectedtomoderateto6.6%in FY27,reflectingemergingglobaluncertainties, particularlyduetoongoinggeopoliticaltensions intheMiddleEastandtheirimpactonglobal energymarkets.

Elevated crude oil prices and prolonged disruptionsinenergysupplychainsareexpected toincreaseinflationarypressures,whichmay weighonhouseholddisposableincomes.Asa result,privateconsumptiongrowthislikelyto moderate, although policy measures such as GST rate reductions are expected to partially cushiontheimpact.

Government consumption is also expected to slow, as higher subsidyfirequirements particularlyforcookinggasandfertilizers,may constrainfiscalspace.

Ontheexternalfront,globaltradeuncertainties andlogisticaldisruptionscouldcontinuetopose challengestoexportgrowth.However,Indias diversifiedexportbase,strongservicesexports, andongoingstructuralreformsareexpectedto supportresilience.

Overall, while short-term headwindsfiremain, Indiasmacroeconomicfundamentalssupported bystableinflation,proactivemonetarypolicy,and strongdomesticdemand,positiontheeconomy tosustainsteadygrowthmomentumoverthe mediumterm.

(Source: India Remains Among the Fastest-GrowingZEconomies(Even AsRGrowth Slows AmidQ Middle EastHConflict;WOutlookQVulnerable to RisksW andQUncertainty)

INDIAN FMCG SECTOR

Indias Fast-Moving Consumer Goods (FMCG) sectorcontinuedtodemonstratestronggrowth momentum, driven byfiresilient consumer demand, evolving consumption patterns, and rapid digitalfitransformation. The sector is projectedtoexpandataCAGRof17.33%between FY26andFY30,reachinganestimatedmarket sizeofUS$642.87billion,underscoringitslong-termgrowthpotential.

During FY26, urban demand outpaced rural consumption,withurbanFMCGvolumegrowth risingto4.6%,whileruralgrowthmoderatedto 3.6%.Thisshiftreflectsstrongerdiscretionary spendingandpremiumizationtrendsinurban centers. However, rural India continuesfito present a compelling growth opportunity, supported by rising incomes and increasing preference for both affordable and premium productcategories.Notably,ruralconsumption haswitnessedan11%CAGRoverthepastfive years,withpremiumandvalue-addedproducts gainingtraction.

The sectorsflexpansion is increasingly being shaped by modernfiretail formats and digital channels.E-commercehasemergedasakey growth driver, accounting for 17% of overall FMCGconsumptionamongaffluentconsumers, supportedbyhigherinternetpenetration,which crossed1billionsubscribersin2025.Modern tradecontinuestogrowatastrongpaceof19.5%, whileruralmarketsaregraduallyrecovering.

AkeydisruptorintheFMCGlandscapeisthe rapid rise of quick commerce (Q-commerce). The segment isflexpectedfito growfiat an exceptional pace of 75% 100% annually, potentiallyfireaching US$ 10 billion by 2029. Currently,withonly 7%marketpenetrationout of an estimated US$ 45 billion addressable market, quick commerce presents significant untapped potential. Major Quick-commerce platformsfirecorded 50 100% YoY growth in FY25,drivenbydemandinmajorurbanclusters. This trend is compelling FMCG companies to reconfigure supply chains, invest in last-mile delivery,andenhancelogisticsefficiency.

Atthesametime,emergingbusinessmodels suchasDirect-to-Consumer(D2C)anddirect sellingarereshapingmarketdynamics.Indias D2Cmarket,valuedatUS$80billionin2024,is projected to exceed US$ 100 billion in 2025, reflecting growing consumer preference for personalizedproductsanddigital-firstbrands. However, the space is becoming increasingly competitive,despitea1.8xincreaseinproduct launches, only about 4% achieve meaningful marketpenetration,highlightingtheimportance ofdifferentiationandbrandstrength.

Indias food processing industry, a critical componentoftheFMCGecosystem,continuesto expandrapidly.Accountingfor32%ofthetotal foodmarket,itreachedamarketsizeofUS$ 354.5billioninFY24andisprojectedtogrowto US$ 535 billion by FY26. Additionally, agriculturalandprocessedfoodexportsreached US$49.4billioninFY25,withprocessedfoods steadily increasingfitheir share. Government supportfithrough initiatives such asfithe Production Linked Incentive (PLI) scheme for food processing is further strengtheningfithe sectorsgrowthtrajectory.

Overall,fithe Indian FMCG sectorfiremains structurally robust, supported by favourable demographics,risingdisposableincomes,digital adoption,andpolicysupport.Whilenear-term growth may be influenced by inflationary pressuresandshiftingconsumptiontrends,the sector is well-positionedfito benefit from premiumization, innovation, andflexpanding distribution channels, both domestically and globally.

(Source: Indian FMCG Industry Analysis IBEF)

BASMATI RICE INDUSTRY

Theglobalbasmatiriceindustrycontinuesto demonstrate steady growth, driven by rising consumer preference for premium, aromatic long-grain rice and increasing penetration across international markets. The global basmatiricemarketwasvaluedatapproximately USD11.36billionin2025andisprojectedtogrow at a CAGR of around 5.0% overfithe period 2026 2035,reachinganestimatedUSD18.50 billionby2035.Thisgrowthisunderpinnedby increasingglobalappreciationforhigh-quality ricevarietiesacrossNorthAmerica,Europe,and theMiddleEast&Africa,alongwithexpanding organisedretailande-commercechannelsthat are making branded basmati rice more accessibletodiverseconsumersegments.

Thedemandoutlookforbasmatiriceremains robust,particularlyintheMiddleEastandAfrica, which areflexpectedfito growfiat a CAGR of approximately5.5%duringtheforecastperiod. Strongculturalaffinityforaromaticricevarieties incountriessuchasSaudiArabia,Iran,Iraq,and theUAE,coupledwithrisingdisposableincomes andpopulationgrowthinGCCnations,continues todriveconsumption.SaudiArabia,inparticular, remains a keyflexport destination for Indian basmatirice,accountingforasignificantshareof totalexports.

From an end-user perspective,fithe HoReCa (Hotels, Restaurants, and Catering) and institutionalsegmentsareexpectedtowitness sustained growth, supported by increasing global demand for ethnic cuisines such as biryani,pilaf,andotherbasmati-baseddishes. Additionally,growinginstitutionaldemandfrom airlinecatering,healthcare,andcorporatefood servicesisfurtherreinforcingconsumptionof premiumricevarieties.

Indiacontinuestoholdadominantpositioninthe global basmati rice market, accounting for approximately65 70%ofglobalexportvolumes. Thisfileadership position is supported by its extensive GI-certified cultivation area, establishedexportinfrastructure,andglobally recognisedbrands.Thecountrybenefitsfrom diversified product offerings, including 45 notified varieties underfithe Seeds Act, 1966, ranging fromfitraditional varieties such as Basmati 370 and Taraorifito high-yielding modernhybridslikePusaBasmati1121andPusa Basmati1509.

Production remains concentrated in northern India, particularly in states such as Punjab, Haryana,UttarPradesh,Uttarakhand,andparts ofJammu&Kashmir,whichofferfavourable agro-climaticconditions,fertilealluvialsoil,and strongagriculturalcapabilities.Well-developed irrigationinfrastructureandpolicysupporthave further enabled consistent productionfilevels, ensuringfireliable supply for both domestic consumptionandexports.

The industry is witnessing a structural shift towards branding, driven by increasing consumerpreferenceforpackagedandquality-assured products. Companies are investing significantlyinbrandbuilding,digitalmarketing, and consumer engagement strategiesfito strengthencustomerloyaltyandcapturehigher value.Thetransitionfromloosetobrandedand packagedrice,particularlyinurbanandsemi-urbanmarkets,isacceleratingdemandgrowth.

Technological advancements and digital transformationarealsoredefiningthesector. Industryparticipantsareincreasinglyadopting innovationssuchasAI-drivenretailexperiences, smartpackaging,QRcode-basedauthentication, andenhancedtraceabilitysolutionstoimprove consumertrustanddifferentiatetheirofferings. Furthermore,flexport-oriented packaging innovations, including vacuum-sealed and resealable packaging formats, are supporting product quality and shelf-life in international markets.

Onfithe production front, innovation in crop development is driving improvements in productivity,sustainability,andcostefficiency. Theintroductionofnewbasmativarietiessuchas Pusa Basmati 1979 and Pusa Basmati 1985, which are herbicide-tolerant and suitable for Direct Seeded Rice (DSR),firepresents a significantadvancement.Thesevarietiesreduce waterconsumption,lowerlaborrequirements, andimproveyieldefficiency,therebyenhancing theoveralleconomicsofbasmaticultivation.

Indian Basmati Rice Outlook

The Indian basmati rice sector continuesfito demonstratesteadygrowthsupportedbystrong export demand, increasing domestic premiumisation, and supportive government policies.Thedomesticbasmatiricemarketwas valuedatapproximatelyINR499.5billionin2025 andisprojectedtoreachINR541.8billionby 2034,reflectingsustaineddemandacrossboth domesticandglobalmarkets.

Indiasleadershipintheglobalbasmatitradeis expectedtoremainintact,drivenbyitsstrong cultivation base,flexportflexpertise, and established global supply chains. Rising internationaldemandforpremiumricevarieties, particularlyfromtheMiddleEast,Europe,and NorthAmerica,continuestoactasakeygrowth driver. Atfithe samefitime,fitheflexpansion of newer markets and diversification of export destinations areflexpectedfitofireduce concentrationrisksoverthemediumterm.

The sector is also benefiting from evolving consumerpreferences,withincreasingdemand for branded, hygienically packaged, and traceable food products. Growing disposable incomes, urbanisation, and changing consumption patterns are supportingfithe transitionfromstapleconsumptiontopremium foodchoices,therebyboostingdemandforhigh-qualitybasmatirice.

Technological advancements and digital integrationareexpectedtofurtherstrengthen theindustryoutlook.Increasedinvestmentsin supplychaindigitisation,smartpackaging,and online distribution platforms are enhancing marketfireach and operational efficiency. The continuedgrowthofe-commerceandmodern retailisexpectedtoplayapivotalroleindriving premiumbasmatisales.

Onfithe production side,fithe focus on sustainabilityandproductivityenhancementis likelyfito support long-term supply growth. Adoption of improved seed varieties, water-efficientfarmingtechniques,andmechanisation isexpectedtoenhanceyieldlevelsandreduce resource intensity. Government initiatives supportingriceexports,agriculturalinnovation, and farmer income are also contributing positivelytothesector.

Inconclusion,theIndianbasmatiriceindustryis well-positioned to capitalize on strong global demand, evolving consumptionfitrends, and technologicaladvancements.Whilechallenges suchasinputcostpressures,climatevariability, and geopolitical factorsfiremain,fithe sectors strong structural fundamentals and Indias dominantglobalpositionareexpectedtodrive continuedgrowthandvaluecreationoverthe mediumtolongterm.

(Source: Basmati RiceDMarket Size, Share,HTrends & Forecast 2035, India Basmati Rice,Market Size, Demand & Outlook, 2034, Indian OrganicDBasmatiP Rice:FVarieties, QualityO& Production Insights)

PACKAGED FOOD INDUSTRY

TheIndianpackagedfoodindustrycontinuesto exhibitstronggrowthmomentum,supportedby favourable macroeconomicfitrends, evolving consumerpreferences,andrapidexpansionof retailanddistributioninfrastructure.Themarket wasvaluedatapproximatelyUSD129.18billionin 2025 and is projectedfitofireach USD 238.83 billionby2034,registeringaCAGRof6.24%over theperiod2026 2034.Thisgrowthisprimarily driven by rising disposable incomes, rapid urbanization, increasing participation of dual-incomehouseholds,andthegrowingneedfor convenience-led food solutions. Government initiatives such asfithe Production Linked IncentiveSchemeforFoodProcessingIndustries (PLISFPI), whichfiattracted cumulative investments of about INR 9,207 crore by December2025,arefurtherstrengtheningthe ecosystemandencouragingcapacityexpansion andinnovation.

A significant structural shift is underway in consumption patterns, with packaged foods transitioning from being a metro-centric categoryfito a mainstream household staple acrossTier-2andTier-3markets.Improvedcold chaininfrastructure,betterlast-milelogistics, and widespread availabilityfithrough modern retailanddigitalchannelsareenablingdeeper penetration. Consumers are increasingly shiftingfromlooseandunbrandedproductsto branded and quality-assured packaged alternatives, driven by rising incomefilevels, growing awareness of hygiene and safety standards,andchanginglifestyles.

Urbanisationremainsakeylong-termgrowth driverforthepackagedfoodindustry,withIndias urbanpopulationprojectedtoreach 675million by2035.Thisisdrivingsustaineddemandfor branded and convenience-oriented food productsacrossmetrosandemergingcities.The expansion of supermarkets, hypermarkets, onlinegroceryplatforms,andquickcommerceis significantly improving accessibility, enabling wider product discovery and premiumisation. Organizedfiretail,filed by supermarkets and hypermarkets(52.8%sharein2025),remains centraltocategorygrowth,whileconvenience stores(17.6%)catertoimpulseandon-the-go consumption.

Therapidriseofquickcommercehasfurther transformedconsumptionpatterns,with10 30 minute delivery becoming standard in urban markets. This hasfiledfito channel-specific innovationssuchascuratedpacksizes,exclusive SKUs,bundledofferings,andlogistics-friendly packaging, enhancing consumer convenience while driving higher purchase frequency and impulsebuying.

Health and wellnessfitrends are increasingly shapingconsumerpreferences,drivingashift towardnutritiousandfunctionalpackagedfoods suchaslow-sugar,high-protein,andhigh-fibre options. This is creating strong growth opportunitiesinpremiumsegments,including fortified, plant-based, and millet-based products, with manufacturersfiresponding throughproductinnovationandhealth-focused sub-brands.

Simultaneously, portfoliofiregionalisation is gainingimportance,withcompaniesintroducing localized flavours and culturallyfirelevant offeringstocatertodiverseconsumertastesand expandmarketreach.

Technological advancements are enhancing bothproductqualityandsupplychainefficiency. ProcessinginnovationssuchasHPP,UHT,and asepticpackagingareimprovingshelflifeand enablingclean-labelproducts,whiledigitaltools likeAI-drivendemandforecastingandreal-time cold-chainmonitoringareoptimizingoperations andreducingwastage.

Packaginginnovationalsoremainsakeygrowth driver, withfiresealable and vacuum-sealed formats, improved labeling, andfitraceability features strengthening product freshness, convenience, and consumerfitrust,fithereby supportingpremiumisation.

Insummary,theIndianpackagedfoodindustryis undergoing afitransformational phase, characterizedbyexpandingconsumptionacross geographies,increasingpremiumisation,rapid channelinnovation,andstrongalignmentwith health and wellnessfitrends. Supported by favorable demographics, policy support, and technologicaladvancement,theindustryiswell-positioned for sustained long-term growth, offering significant opportunities for value creationacrossthevaluechain.

(Source: Packaged Food Market in India: Size, Industry Trends 2034, ProcessedHFoodsR APEDA)