Italian Edibles Ltd Management Discussions

1. INDUSTRIAL STRUCTURE AND DEVELOPMENTS

Fast-Moving Consumer Goods (FMCG) sales in the country were expected to grow by 5% to 6% in terms of revenue during the financial year 2024-25, reflecting steady demand and consumption patterns. Within this sector, the Indian confectionery market continues to show promising growth. The market size is projected to reach INR 550.67 billion by 2025, driven by rising consumer preferences for indulgent snacks, innovative product launches, and increasing urbanization.

Looking ahead, the market is expected to maintain a positive trajectory. According to the IMARC Group, the Indian confectionery market is anticipated to reach INR 597 billion by 2033 exhibiting a compound annual growth rate (CAGR) of 5.20% during the period 2025-2033 . This sustained growth is likely to be fueled by factors such as evolving consumer tastes, premiumization trends, and the expansion of organized retail and e-commerce channels.

Confectionery refers to a broad category of sweet-tasting food products that are primarily made from sugar and other sweeteners. These products are typically consumed as treats or desserts, offering indulgence and pleasure rather than nutritional value. The confectionery market is generally divided into two major segments: sugar confectionery and chocolate confectionery.

These products are crafted using a variety of specialized ingredients, including stabilizers, emulsifiers, gelling agents, flavorings, and thickening agents, which work together to enhance the texture, taste, appearance, and elasticity of the final offerings. Common confectionery items include chocolates, non-chocolate candies, chewing gum, ice creams, frozen desserts, sweet baked goods, and more.

Confectionery products are widely distributed and are easily accessible through multiple channels such as supermarkets, hypermarkets, retail outlets, online platforms, and bakery stores.

One of the key factors driving growth in the Indian confectionery market is the rising trend of gifting confectionery items, particularly during festivals, birthdays, anniversaries, and social gatherings. This cultural shift, with increasing disposable incomes, urbanization, and the influence of Western consumption habits, is further fueling demand for premium and innovative confectionery products.

Italian Edibles Limited was originally incorporated as Italian Edibles Private Limited vide the certificate of Incorporation dated December 16, 2009 under the Companies Act, 1956 issued by the Registrar of Companies - Gwalior. Subsequently upon approval of the members of the Company on September 06, 2023 the Company was converted from private limited to public limited and the status of the Company was changed reflecting the name of the Company to Italian Edibles Limited from Italian Edibles Private Limited pursuant to the fresh certificate of incorporation issued by the Registrar of Companies - Gwalior dated September 21, 2023.

The mission of the Company is to provide the highest quality confectionery products to the customers at competitive prices and want to keep up the reputation as the first company to make unique items, like our popular Milk Paste sweet, and spread happiness with every bite. Further the Companys vision is to be a leading innovator in the confectionery industry, recognized globally for our unique creations, uncompromising quality, and the joy we bring to every customer through every bite.

2. OUTLOOK ON OPPORTUNITIES, THREATS, RISK AND CONCERNS Opportunities

Italian Edibles Limited is currently engaged in Manufacturing of Chocolate Paste, Sweetmeats, Lollipops, flavored candies, Fruit Paste and other confectionery products. The Company intends for continuous focusing on Manufacturing and trading of various confectionery products. Currently the Company has its distributors and dealers network in the state like Madhya Pradesh, Gujrat, Maharashtra, Uttar Pradesh, Bihar, West Bengal, Chhattisgarh, Jharkhand, Odisha, Uttarakhand, Karnataka, Telangana, and Andra Pradesh At the same time the Company has plans to expand its network channels of dealers and distributors into tier 2 and tier 3 state of India and also introduce newer varieties of confectioneries such as Rajasthan, Punjab and Haryana for which the Company shall require additional working capital. In the present time the Company is striving to and in the upcoming few years, and shall be one of the top confectionery manufacturer and exporter, setting industry standards and inspiring competitors. The Company is currently striving to be among the top choice of confectionery products for customers in PAN India.

Threats, Risk and Concerns:

Italian Edibles Limited is a prominent manufacturer, supplier, and exporter of a wide range of confectionery products. Operating in a dynamic and highly competitive industry, the Company is exposed to several specific risks that can significantly impact its business operations and financial performance. These risks arise both from the internal operations of the business and the external environment in which the confectionery industry functions.

One of the key challenges the Company faces is ensuring the security and stability of its supply chain. Disruptions in the sourcing of raw materials or inefficiencies in logistics and distribution can lead to delays, increased costs, or interruptions in production. Such disruptions can adversely affect the Companys ability to meet customer demand consistently and maintain its market position.

Maintaining food safety and product quality is also a critical area of focus for the Company. As a food manufacturer, any failure to comply with safety sta ndards or lapses in quality control can have severe consequences. These may include damage to the Companys reputation, legal penalties, product recalls, or loss of consumer trust, all of which could materially impact companys financial results.

Production line performance is another operational risk area. The efficiency and reliability of manufacturing equipment are essential for ensuring consistent product quality and meeting production targets. Any equipment malfunctions, downtime, or inefficiencies can lead to increased operational costs and affect the Companys ability to deliver products on time.

The availability and sustainability of packaging materials also play an important role in the Companys business. Packaging not only preserves product quality but also influences consumer perception and brand appeal in sourcing appropriate packaging materials, or failure to innovate in packaging design, could impact both product shelf-life and market competitiveness.

In addition, the Company must continuously monitor and respond to changing consumer preferences and industry trends. The inability to anticipate or adapt to shifts in taste, dietary habits, or demand for innovative products could result in lost market share. The Company recognizes this and emphasizes the importance of ongoing product development and innovation.

Despite these risks, the Company has demonstrated resilience through its deep understanding of consumer tastes, which has enabled the development of a robust and diverse product portfolio. With over 56 confectionery items, including Rabdi Sweet, extruded snack wafers, milk chocolate, candy, fruit jellies, and fruit paste, the Company caters to a wide range of consumer segments. Continuous innovation and the introduction of new flavours and formats in the products have helped the brand stay relevant in a competitive market. This diversified portfolio positions of the Company is well to adapt to market changes and sustain its growth.

3. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has a proper and adequate system of internal control in all spheres of its activities to ensure that all its assets are safeguarded and protected against loss from unauthorized use or disposition and that the transactions are authorized, recorded and reported diligently. The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines.

4. FINANCIAL PERFORMANCE

The Companys total turnover for the financial year ended March 31, 2025 is Rs 849.78 millions in comparison to turnover of Previous Year Rs. 736.20 millions. The Company achieved a Net Profit before tax of Rs. 48.21 millions as compared to Previous Years Rs. 47.48 millions. The Company is optimistic about its proposed business ventures which are highly profitable.

5. DEVELOPMENT OF HUMAN RESOURCES

The Company has been proactive to build the requisite skill sets in the organization for its new project initiatives. The relevant industry experience of the team coupled with commitment towards adherence to the operating processes adopted by the company is as unique feature demonstrated by the Company. Employees are encouraged to upgrade their skills and knowledge through various training programs. During the year under review the Company had 308 employees.

6. OUTLOOK

The aim of the Italian Edibles is to provide the highest quality confectionery products to their customers at competitive prices. They want to keep up their reputation as the first company to make unique items, like their popular Milk Paste, and spread happiness with every bite. The vision of Company is to have recognition as the foremost confectionery manufacturer and exporter, setting industry standards and inspiring competitors. They strive to be the first choice of confectionery products for customers in PA N India .

7. KEY FINANCIAL RATIOS

Ratios	2024-2025	2023-24
Debtors Turnover	8.32	8.21
Inventory Turnover	1.83	2.24
Interest Coverage Ratio	3.35	3.15
Current Ratio	1.85	3.10
Operating Profit Margin	0.15	0.09
Debt Equity Ratio	0.47	0.42
Net Profit Margin	5.67	5.59

The Company has long-term debt as a standalone entity as on March 31, 2025.

During the year under review the Company has not changed its accounting policies .

The Cash and Bank balance for the Financial Year 2024-25 is Rs 3,970.49 thousand as compared to Rs 6734.18 thousand for the Financial Year 2023-24. The liquidity situation of the Company is good. Total Income increased by 13.24% from Rs. 737.35 millions in 2023-2024 to Rs. 849.94 millions in 2024-2025.

8. PRODUCT-WISE PERFORMANC E DETAIL S OF TH E COMPANY

The Company is engaged in the manufacture and supply of a wide range of confectionery products and also undertakes exports. During the year under review, the total value of manufacture, supply, and export of confectionery products amounted to Rs.849.94 million. Consequently, the Companys income increased from Rs.737.35 million in the previous year (2023-24) to Rs.849.94 million in the current year (2024-25).

Further, the Companys income from exports (including deemed exports) registered significant growth, rising from Rs.33.76 million in the previous year (2023-24) to Rs.67.89 million in the current year (2024-25).

The Company operates in a single line of business activity, namely the manufacture and supply of confectionery products. Its product portfolio includes Milk Rabdi Malai Mithai (Sweets), Chocolate Paste, Jelly Confectionery (Jelly Candies & Lollipops), Sugar Boiled Confectionery (Candies & Lollipops), Assorted Confectionery, Wafer Biscuits (Multi Grain Puff) and Fruit Paste (Tamarind Paste & Zuzu-be Fruit Paste).

9. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMME DIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF

For the Financial Year 2024-25, the Return on Net Worth (RONW) before tax increased to 10.98% from 10.08% in the previous year, indicating a marginal improvement in the companys pre-tax profitability. However, the RONW after tax declined to 6.94% from 7.58% in the Financial Year 202 425. This divergence is primarily due to a higher tax expense or a change in the effective tax rate, which has offset the gains made at the pre-tax level. The reduction in post-tax return suggests that, despite improved operational or financial performance before tax, the net benefit to shareholders was impacted by increased tax liabilities or reduced tax efficiencies. Other contributing factors may include changes in the companys income mix, timing differences, or adjustments related to deferred taxes.

Note:

This report contains forward-looking statements based on beliefs of the Companys management. The words anticipate, believe, estimate, forecast, expect, intend, plan, should and project are used to identify forward-looking statements. Such statements reflect the companys current views with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual result to be materially different, including amongst others, changes in the general economic and business conditions, changes in the consumer preferences, introduction of competing products, lack of acceptance of new products or services, and changes in business strategy. Actual results may vary materially from those projected here. The company does not intend to assume any obligation to update these forward-looking statements.

For Italian Edibles Limited	Akshay Makhija
(Formerly known as Italian Edibles Private Limited)	Director & CEO
Ajay Makhija	DIN: 02787252
Managing Director
DIN: 02847288
Date: September 03, 2025 Place: Indore