Gujarat Ambuja Exports Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

GLOBAL ECONOMIC OVERVIEW

In 2024, the global economy expanded at a moderate pace of 3.3%, reflecting relative macroeconomic stability despite persistent structural headwinds. However, 2025 has ushered in heightened volatility. The shift in trade dynamics following the imposition of near-universal tariffs by the United States in April triggered widespread retaliation. This has led to a surge in trade uncertainty, corrections in global equity markets, and rising bond yields.

As a result, global GDP growth is expected to slow to 2.8% in 2025, before recovering marginally to 3.0% in 2026. Inflation has remained more stubborn than anticipated, with headline inflation forecast at 4.3% in 2025 and 3.6% in 2026. Higher input costs from disrupted supply chains, particularly in food, energy, and raw materials, have been key contributors. Core inflation remains elevated, especially in services, complicating central banks efforts to balance price stability with growth.

E - beside the Estimated figures P - beside the Projected figures (Source: IMF World Economic Outlook, April 2025)

The United States is expected to grow by 1.8% in 2025, down from stronger performance in 2024. Tariffs are expected to add nearly one percentage point to domestic inflation Private consumption is softening, while industrial production is under pressure from rising input costs. In China, growth is forecast to slow to 4.0%, constrained by the ongoing property sector correction and muted consumer sentiment. The eurozone remains weighed down by low demand, energy insecurity, and policy fragmentation, with growth expected at just 0.8%.

Emerging markets and developing economies are projected to grow by 3.7% in 2025, compared to 4.3% in the previous year. Elevated debt levels, weaker currencies, and tighter financial conditions are limiting policy flexibility in several regions. For agriculture-driven economies and commodity exporters, fluctuating prices and logistic bottlenecks remain key concerns. Countries like Argentina, Mexico, and South Africa are experiencing intensified capital outflows and rising debt-servicing costs.

Beyond cyclical risks, structural factors are reshaping long-term economic prospects. Ageing demographics are projected to reduce global output growth by 1.1 percentage points annually through to 2050. However, better health outcomes among older populations and improved labour participation, especially among women, could partially offset this drag. Migration is also influencing growth patterns, with over 304 million migrants and refugees globally. Many developing economies are now hosting the bulk of displaced populations, adding both fiscal pressure and economic opportunity.

Outlook

As a business operating at the intersection of agri-value chains and manufacturing, GAEL recognises the impact of global inflation, trade disruptions, and currency volatility on procurement, exports, and logistics. Going forward, resilient supply chain strategies, efficient cost management, and a focus on value-added exports will be critical. Globally, renewed cooperation and targeted policy reforms will be essential to ensure inclusive, stable, and sustainable growth.

(Source: IMF World Economic Outlook, April 2025)

INDIAN ECONOMIC OVERVIEW

The Indian economy displayed strong resilience in FY 2024-25, with real GDP growth estimated at 6.5%, as projected by the National Statistical Office (NSO). This growth stemmed from robust private consumption and investment, with Private Final Consumption Expenditure (PFCE) rising 7.3%. Reviving rural demand, supported by favourable monsoons and improved agricultural output, further contributed to this expansion. However, Gross Fixed Capital Formation (GFCF) growth slowed to 6.4%, reflecting election-related disruptions and subdued private sector investments.

Agriculture saw a 3.8% expansion, benefitting from favourable climatic conditions and increased food grain production, which contributed to stable food inflation and improved rural incomes. At the same time, industrial growth stood at 6.2%, driven by strong performance in core sectors like steel and cement, despite challenges from global demand fluctuations.

The services sector, a key economic driver, rose by 7.2%. Financial services, real estate, and professional services played a crucial role in employment generation and housing market growth.

Indias trade sector faced challenges from declining global demand and commodity price volatility, affecting export revenues. However, strong services exports and steady remittance inflows offset some of these pressures, helping manage the current account deficit (CAD).

Outlook

Indias economy is anticipated to rise between 6.3% and 6.8% in FY 2025-26, fuelled by private consumption, infrastructure development, and supportive policies. Growth in agriculture, driven by favourable climatic conditions and increased food grain production, is further strengthening this momentum. Additionally, industrial and services sectors are expanding through core industries and rapid digital advancements, contributing to the overall economic progress.

Government initiatives like PLIS and PMKSY are strengthening food processing and cold chain infrastructure, enhancing exports and value-added products. Simultaneously, Investments in wind, solar, and biogas energy align with the nations sustainability goals.

Seizing these opportunities, GAEL is broadening its maize processing capabilities to serve high-potential export markets, including the UAE, Brazil, and Africa. The Company is also investing in fermentation-based speciality chemicals for functional foods and sustainable packaging, positioning itself for long-term growth in agro-processing and speciality Ingredients.

(Source: KPMG India Union Budget Economic Survey 2024-25 I Indian Economic Survey, 2024-25)

INDUSTRY OVERVIEW

Global Food Processing Industry: Growth and Trends

The global food processing industry, valued at USD 170.25 Billion in CY 2024, is expected to dock in a 7% CAGR, reaching USD 273.39 Billion by CY 2031. This growth is underpinned by urbanisation, surging demand for ready-to-eat and plant-based foods, and breakthroughs in food preservation technologies. The Asia-Pacific region leads this trajectory, contributing over 40% of global revenue, with North America and Europe remaining key markets. Parallelly, emerging economies like India and Brazil are utlising infrastructure investments and export-oriented strategies to accelerate growth.

Technological innovations such as Al-powered sorting systems, high-pressure processing (HPP), and modified atmosphere packaging (MAP) are transforming the sector, enhancing efficiency and reducing food wastage. Moreover, health-conscious consumers are driving demand for clean- label, minimally processed, and fortified foods, creating a thriving market for functional ingredients.

(Source: https://www.cognitivemarketresearch.com/food-processing-food-market-report

https://evolvebi.com/report/food-processing-market-analysis/)

Indian Food Processing Industry: A High-Growth Market

Indias food processing sector, valued at USD 307 Billion in 2023, is poised to more than double, reaching USD 700 Billion by 2030, recording an 8-10% CAGR. Despite economic disruptions, the sector has consistently strengthened the countrys GDR expanding at an annual rate of 3.9% from 2013 to 2024.

Several factors are driving this growth:

> Demographic Advantage: With 65% of Indias population under 35, rising disposable incomes and urbanisation are increasing demand for frozen foods and ready-to-eat meals.

> E-commerce and Digital Supply Chains: Online grocery sales are anticipated to rise from USD 2 Billion in 2020 to USD 12 Billion by 2025, streamlining farm- to-processor supply chains and cutting intermediation costs by 25%.

> Policy and Infrastructure Support: Government initiatives like Production Linked Incentive Scheme (PLIS) and Pradhan Mantri Kisan Sampada Yojana (PMKSY) have attracted USD 4.18 Billion in FDI, funding mega food parks and cold chain projects to reduce post-harvest losses.

For GAEL, these trends reinforce the need to expand maize processing and agro-processing capacities, while investing in value-added ingredients and export diversification.

(Source: https://www.business-standard. com/industry/ news/indian-food-processing-industry-to-reach-700-billion- by-2030-phdcci-l 25022101113_l.html https://beamstart.com/news/indian-food-processing- industry-to-17401487946528)

BUSINESS REVIEW

Gujarat Ambuja Exports Limited (also referred to as GAEL, or The Company) is a leading player in Indias agro or maize processing industry, with over four decades of expertise. The Company operates in the following key business segments:

> Agro-Processing

> Maize Processing

> Spinning

> Renewable Power

Agro-processing and maize processing form the core of GAELS business, involving the processing and export of agricultural commodities such as soybean, cottonseed, and maize. The Company offers a diverse product portfolio, including corn starch derivatives, soya derivatives, feed ingredients, and edible oils, catering to the food, pharmaceutical, and feed industries globally. Additionally GAEL has built a presence in the cotton yarn industry manufacturing high-quality yarn for various applications.

As part of its strategic transition, GAEL is expanding into Speciality Chemicals, using fermentation technology to develop high-value products for functional foods, Inutraceuticals, and industrial application.

This move aligns with the growing demand for value-added ingredients and reinforces GAELS leadership in agro-processing and speciality ingredients.

In response to industry shifts, GAEL has also diversified into renewable energy, establishing wind, biogas, and solar power plants in Gujarat, Madhya Pradesh, Karnataka, Uttrakhand, West Bengal, and Maharashtra.

With 10 manufacturing facilities across India and an extensive global footprint, the Company exports to 120+ countries. Its export portfolio includes maize starch, maize starch derivatives, soya derivatives, feed ingredients. GAELS strong product portfolio, expansive manufacturing capabilities, and global reach continue to further solidify its position as a leading agro-processing and agri-business enterprise in India.

DEVELOPMENTS OF THE YEAR

> Expanding maize processing capacity to 5,200 tonnes per day (TPD) to meet rising demand across food, pharmaceutical, and industrial sectors.

> Targeting 6,000 TPD of maize capacity by FY 2025-26 to strengthen market leadership and support growing domestic and export needs.

> Securing Environmental Clearance (EC) for a 180 kilolitres per day (KLPD) ethanol plant in Malda, West Bengal, supporting Indias ethanol blending and renewable energy goals.

> Exploring new export markets like the UAE, Brazil, and Africa to expand GAELS global footprint in agroprocessing and speciality ingredients.

Maize Processing

GAEL stands as Indias leading maize processor, commanding approximately 20% of the domestic market. The Company has significantly scaled its maize processing capacity to 5,200 TPD, with a targeted increase to 6,000 TPD by FY 2025-26. A major milestone was the establishment of a processing plant in West Bengal, boasting a 1,200 TPD capacity, now capable of operating at 90% efficiency. Further reinforcing its commitment to meeting rising demand, the Company has conceptualised a new 900 TPD maize processing unit in Himmatnagar, Gujarat.

The Company has also commenced commercial production at its greenfield 1,200 TPD maize processing unit in Sitarganj, Uttarakhand. This will strengthen its processing capabilities and make it the largest maize processing unit in India.

Particulars	FY 2024-25	FY 2023-24
Domestic Turnover (Rs. Crores)	2,290	2,197
Export Turnover (Rs. Crores)	1,086	1,238
Total Turnover (Rs. Crores)	3,376	3,434
EBIT (Rs. Crores)	320	414
Cash Profit (Rs. Crores)	428	516
Cash Profit (%)	13	15

Agro-Processing

GAELS agro-processing division remains a key revenue contributor, focussing on quality, innovation, and sustainability. The division specialises in oilseed crushing, edible oil refining, and solvent extraction. A significant share of oil cakes by this division is exported, enhancing Indias agricultural exports.

Furthermore, the agro-processing facilities uphold the highest standards of quality control and food safety protocols, with certifications such as ISO, HACCR and other international standards. These accreditations ensure proper adherence to hygiene and traceability norms.

Particulars	FY 2024-25	FY 2023-24
Domestic Turnover (Rs. Crores)	1,040	901
Export Turnover (Rs. Crores)	128	520
Total Turnover (T Crores)	1,168	1,422
EBIT (Rs. Crores)	50	(7)
Cash Profit (Rs. Crores)	56	(3)
Cash Profit (%)	5	(0.21)

Spinning

GAELS spinning division plays a smaller role in the Companys overall revenue. On this front, the Company manufactures high-quality cotton/polyester yarn, maintaining a consistent production capacity of 42 TPD.

Despite its relatively lesser contribution, the segment remains committed to sustainability, ensuring eco-friendly and pollution-free manufacturing.

Particulars	FY 2024-25	FY 2023-24
Domestic Turnover (Rs. Crores)	60	62
Export Turnover (Rs. Crores)	0	0
Total Turnover (Rs. Crores)	60	62
EBIT Crores)	(1.34)	(10)
Cash Profit (Rs. Crores)	0.48	(6)
Cash Profit (%)	1%	(10)

Renewable Energy

GAEL upholds its commitment to sustainability by investing in renewable energy, aligning with carbon reduction and green initiatives. To advance this commitment, the Company operates wind power projects across multiple states, and has established wind mill, solar and biogas power plants to strengthen its energy portfolio.

> Wind Mill: 10 MW

> Solar Plant: 10 MW

> Biogas Engine: 8 MW

> Rice Husk Boiler 16 MW

Particulars	FY 2024-25	FY 2023-24
Domestic Turnover (Rs. Crores)	8	9
Export Turnover (Rs. Crores)	0	0
Total Turnover (Rs. Crores)	8	9
EBIT (Rs. Crores)	4	5
Cash Profit (Rs. Crores)	6	7
Cash Profit (%)	75	78

FINANCIAL PERFORMANCE OVERVIEW Key Financial Metrics

			(in Rs. Crores)
Particulars	FY 2024-25	FY 2023-24	Variance (%)
Income from Operations	4,696	5,071	(7)
EBIT	359	466	(23)
EBITDA	485	587	(17)
PBT	343	448	(23)
PAT	251	346	(27)

Key Ratios

Ratios	FY 2024-25	FY 2023-24	Variance (%)
Debtors Turnover Ratio	14	16	(17)
Inventory Turnover Ratio (in Times)	6	7	(10)
Debt Service Coverage Ratio	21	27	(25)
Current Ratio	4.38	4.29	2
Gross Profit Margin (%)	26.88	27.28	(1.47)
Net Profit Margin (%)	5	7	(23)
EBIT Margin (%)	8	9	(23)
Return on Net Worth (%)	9	13	(35)
Debt-to-Equity Ratio (%)	0.07	0.07	3

Expense Breakdown

			(in Rs. Crores)
Particulars	FY 2024-25	FY 2023-24	Variance (%)
Depreciation	126	121	4
EPS (Rs.)	5.47	7.54	(27)
Material Cost	3,067	3,233	(5)
Employee Benefit Expenses	134	134	0
Other Expenses	705	768	(8)

Balance Sheet Overview

			(in Rs. Crores)
Particulars	FY 2024-25	FY 2023-24	Variance (%)
Shareholders Fund	3,004	2,769	8
Non-Current Liabilities	127	96	32
Current Liabilities	454	438	4
Non-Current Assets	1,598	1,425	12
Current Assets	1,987	1,878	6

RISKS AND MITIGATION STRATEGIES

GAEL acknowledges that a dynamic business environment presents inherent uncertainties. To sustain growth and long-term success, the Company follows a structured approach to identifying, assessing, and mitigating risks. By proactively managing risks, GAEL enhances its resilience and ensures value creation for its customers, shareholders, and other stakeholders.

Risk Category	Specific Risk	Potential Impact	Mitigation Strategies
Market	Competition	Loss of market share and reduced pricing power.	Maintain superior quality strengthen customer and supplier relationships, and invest in R&D.
	Commodity Price Fluctuations	Volatility in raw material prices affecting profitability.	Implement hedging strategies, maintain optimal inventory levels, and enhance warehousing.
Financial	Credit	Non-payment or defaults impacting cash flow and profitability.	Conduct rigorous credit assessments, enforce strong credit monitoring and collection mechanisms.
	Currency	Exchange rate fluctuations affecting revenue, especially exports.	Utilise hedging mechanisms such as forward contracts.
Operational	Technology	System failures or disruptions affecting operations.	Invest in technology infrastructure, implement disaster recovery plans, and ensure business continuity.
	Supply Chain Disruptions	Delays in logistics, transportation or warehousing affecting deliveries.	Strengthen supply chain resilience through multi-sourcing, warehouse optimisation, and advanced logistics technology.
Regulatory and Compliance	Regulatory Changes	Changes in policies, tax laws or industry regulations affecting operations.	Continuously monitorregulatory developments and maintain a strong compliance framework.
	Geopolitical Uncertainty	Political instability, trade restrictions or conflicts disrupting market access and increasing costs.	Diversify supplier and customer base and closely monitor global geopolitical trends.
Environmental and Sustainability	Environmental Challenges	Climate change, water scarcity and regulatory pressures affecting supply chains and operations.	Implement sustainable practices, including water conservation, renewable energy adoption, and waste management.
	Natural Disasters	Events like floods, droughts and earthquakes disrupting business operations.	Develop and implement a comprehensive disaster management plan and invest in resilient infrastructure.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

GAEL has established a strong internal control framework designed to assess operational efficiencies, ensure compliance with legal and regulatory reguirements, and support accurate and reliable financial reporting. These controls play a crucial role in safeguarding assets from potential losses or unauthorised use, while optimising resource allocation. They also ensure all transactions are duly authorised, recorded, and reported.

Committed to operational excellence, the Company continually reviews and strengthens its internal controls to maintain their effectiveness in line with accounting standards and regulations. Furthermore, independent Internal auditors conduct risk-based audits throughout the year, and present their findings to the Audit Committee to facilitate timely corrective measures.

HUMAN RESOURCES

GAEL values its human capital as a key driver of growth and is dedicated to nurturing a dynamic, collaborative, and performance-driven work environment. The Company invests in talent development through regular training, upskilling programmes, and performance-based rewards, ensuring employees stay ahead of evolving business demands.

A people-centric approach drives GAELS robust talent management framework, fostering a skilled and future-ready workforce. By providing continuous learning opportunities across all levels, the Company nurtures innovation and efficiency and strengthens its reputation as an employer of choice. As of 31^st March, 2025, GAELS workforce comprised 2,351 employees.

CAUTIONARY STATEMENT

The Management Discussion and Analysis Report contains statements regarding the Companys projections, estimates, and expectations, which may be considered forward-Looking under applicable securities laws. Actual results may differ from these projections due to factors such as economic conditions influencing demand and supply, price fluctuations in domestic and international markets, and changes in government regulations or tax laws. The Company assumes no obligation to update, modify, or revise any forward-looking statements in response to future developments, new information, or subsequent events.