Groarc Industries India Ltd Management Discussions

Economy Overview

The global economy is projected to grow by 3.0% in 2025, reflecting a moderation amid ongoing geopolitical tensions and supply chain disruptions. Despite these challenges, improvements in inflation outlooks and the implementation of proactive monetary policies have supported stability and consumer confidence. This resilience fosters cautious optimism, with many economies avoiding a prolonged slowdown or recession.

Growing Influence of Emerging Markets

Emerging markets within the G20 continue to play a crucial role in shaping the global economic landscape. They contribute approximately 30% to global output and trade, with their influence expanding through integration into global value chains. Over the past two decades, these economies have maintained impressive growth rates - averaging nearly 6% annually - fuelled by structural reforms, demographic advantages and technological advancements.

India remains a key growth engine for the global economy. The Reserve Bank of India projects FY25 -26 GDP growth at 6.5%, consistent with the second advance estimates from the National Statistical Office, driven largely by strong private consumption. Real Gross Value Added (GVA) is expected to grow by 6.4% y-o-y, propelled by agriculture and services sectors.

Indias resilience is underpinned by ongoing reforms in digitisation, infrastructure and a sustained investment cycle supported by increased government expenditure. Improved capacity utilisation and a resilient financial sector further bolster this trajectory. These factors position India well on its path towards becoming the worlds third-largest economy.

Inflation, projected at 4.8%2 for FY25,-26 is expected to decline further owing to favourable food prices and the impact of prior monetary policy measures. Recognising this favourable outlook, the Reserve Bank of India has begun rate cuts to stimulate growth while maintaining price stability, thus creating a conducive environment for sustained economic expansion.

Industry Overview

The Global Consumer Foodservice Industrys revenues is estimated to have surpassed $3.1trillion in CY2026 with higher transaction volume growth partially offset by a decline in revenue per transaction. This also impacted investment in outlet expansion with the global outlet count increasing only by 1.8%. While the revenue growth was distributed across most regions as services spending continue to improve an upward trajectory following the pandemic; however, cost inflation and the ability to pass on price increase to consumers led to higher value offerings impacting profitability for the industry. Delivery is expected to be the most dynamic channel within Consumer Foodservice. By 2029, Delivery is expected to account for 25% of global sales, compared to 21% in 2025-26. Consequently, the share of Takeaway is expected to stabilise. Dine-in share is expected to continue to experience a decline from 55% in 2024 to 51% by 2029, largely driven by the growth of delivery services.

The Indian foodservice Industry, at $56.1 billion in CY 2025-26, is currently the ninth largest food service market in the world. Over the last fifteen years, the Indian food services market (Industry) has grown at CAGR of 8%, largely mirroring the nominal GDP growth of the country. Within it, organised market is growing faster and its share at 33.8% is increasing at the expense of the unorganised market.

Indian Food Delivery, estimated at $7.6 billion in CY 2025, saw an unprecedented CAGR growth of 42% between CY 219-24 and the CAGR growth is estimated to be ~16% between CY 2023 and CY 2028. The growth will be spurred by increased adoption.

Digital Democratisation

The Indian economy has been digitalising at a remarkable pace over the last decade. According to the State of Indias Digital Economy Report 2024, India is the third largest digitalised country in the world in terms of economy-wide digitalisation and 12th among the G20 countries in the level of digitalisation of individual users. The improving broadband network penetration, device and services affordability has caused an increase in data usage across the country and enabled Indians to embrace digital applications. The number of internet users at 840 million, has doubled since 2016. The digital transaction volumes have grown by seven times since 2019.

Strategic Priorities

The Companys strategic priorities defines key focus areas, establishes the framework for decision- making and lays the foundation for the Company to maintain a consistent focus on driving sustained and profitable growth while creating long-term value for all stakeholders.

Operate with Excellence

The Company places inordinate focus on continuous improvement when it comes to executing with excellence. From procurement to food tech park operations to managing the logistics to kitchen operations to last mile operations, across brands and countries, the Company is developing a unique way of execution - ‘The JFL Way. Notably, with the Companys vast expanse of operations, the continuous endeavour is to manage complexity at lower cost, generate leverage while bringing in improvements in the backward-integrated sourcing supply chain with state-of-the art commissaries. One critical outcome of this priority will be marked improvement across cost lines and productivity.

Diversity and Inclusion

The Company firmly believes that focusing on diversity, equity and inclusion is not just the right thing to do, it is critical for long-term success. All the stakeholders benefit when the Company amplifies diversity, creates a platform to celebrate uniqueness and creates an environment where everyone can contribute, thrive and prosper. It brings diversity of thought, greater innovation, better understanding of customer mind-sets, better employee engagement and sets the Company on a path to excellence. During the year, the Company took concerted efforts to build a more diverse workforce and nurture an equitable and inclusive culture. The Company is committed to create an ecosystem that attracts and grows talent from all genders, backgrounds and generations.

Risk Management

Risk Management Framework

Effective risk management is integral operations and is embedded in its day-to-day business transactions and activities. The framework seeks to identify, prioritise, mitigate, monitor and appropriately report any significant threat to the organisations strategic objectives, its reputation, operational continuity, environment, compliance as well as the health and safety of its employees.

A Disciplined Approach to Managing Risks

The approach is based on assessment of several factors and associated risks through proper analysis and understanding before undertaking any business activities and implementing changes to processes and systems.

Internal Controls and their Adequacy

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