Jay Ambe Supermarkets Ltd Management Discussions

I. INDUSTRY STRUCTURE AND DEVELOPMENT:

Indias organized retail sector, particularly the supermarket and grocery retail format, has continued to grow steadily on the back of rising disposable incomes, rapid urbanization, changing consumer preferences and increased penetration of modern retail formats in Tier-II and Tier-III cities of Gujarat and neighboring markets. Value-driven, convenience-led supermarket formats catering to daily household needs continue to gain share from traditional unorganized retail, supported by improved supply-chain infrastructure, GST-led formalization and greater consumer preference for hygiene, assortment and price transparency.

The Company operates in this space through its chain of supermarket stores across Gujarat, offering a wide assortment of grocery, FMCG and household products under a combination of owned and franchise/leased store formats. The Company continues to expand its store network into new catchments, supported by the capital raised through its initial public offering during the year.

II. BUSINESS OVERVIEW AND DEVELOPMENTS DURING THE YEAR:

Jay Ambe Supermarkets Limited (formerly Jay Ambe Supermarkets Private Limited) is engaged in retail supermarket trading activities, operating stores across various locations in Gujarat, with plans to open new supermarkets at additional locations. The Company was converted from a private limited company to a public limited company on February 10, 2025.

The year under review was a landmark year for the Company on account of the following key developments:

Initial Public Offer: The Company successfully raised 18.45 Crore through an Initial Public Offering on the BSE SME Segment on September 17, 2025, marking its listing as a public company. Store network expansion: The Company undertook significant capital expenditure of 1,781.23 Lakhs during the year (as against 106.39 Lakhs in the previous year) towards acquisition of buildings, furniture, tools and racks, and right-of-use assets, largely directed towards setting up new stores and a mall property at Chiloda, which is held in the name of the Company. The Company added new Right-of-Use (ROU) assets of 955.69 Lakhs during the year, reflecting a substantial addition to leased store premises.

III. FINANCIAL PERFORMANCE AND ANALYSIS:

Results of Operations

The Companys financial performance for the year ended 31st March, 2026, as compared to the previous year, is summarized below ( in Lakhs):

Revenue from operations grew by 51.00% during the year, driven primarily by growth in same-store sales, the ramp-up of newly opened stores and continued franchise and store set-up income. Store set-up charges of 176.41 Lakhs (previous year: 131.92 Lakhs) reflect continued expansion of the store network.

Profit after tax grew at a faster pace than revenue (77.0% as against 51.0%), aided by operating leverage, despite a sharp increase in depreciation ( 218.13 Lakhs as against 32.67 Lakhs) and financial charges ( 161.01 Lakhs as against 71.92 Lakhs) consequent to the capital expenditure and lease additions undertaken during the year. Net profit margin improved to 6.82% from 5.82% in the previous year.

Financial Position

Key movements in the Balance Sheet as at March 31, 2026 as compared to March 31, 2025 are summarized below ( in Lakhs):

The Balance Sheet size more than doubled during the year, primarily on account of the equity capital and share premium of 1,844.54 Lakhs raised through the IPO, and consequent deployment into fixed assets, right-of-use assets and inventory to support the expanded store network. Net worth increased to 3,446.24 Lakhs from 1,357.07 Lakhs, strengthening the Companys capital base for future expansion.

Inventories increased in line with the higher number of operating stores and broader product assortment, while cash and bank balances improved to 193.03 Lakhs, reflecting healthier liquidity following the IPO.

Cash Flow

Net cash from operating activities was 307.65 Lakhs as against a net outflow of 301.94 Lakhs in the previous year, reflecting improved operating profitability, partly offset by higher working capital deployed in inventory. Net cash used in investing activities was 1,775.67 Lakhs (previous year: 101.66 Lakhs), reflecting the significant capital expenditure towards new stores, including the Chiloda property. Net cash from financing activities was 1,623.93 Lakhs (previous year: 262.26 Lakhs), primarily on account of IPO proceeds, net of IPO expenses of 212.50 Lakhs and interest payments. As a result, cash and cash equivalents increased to 193.03 Lakhs as at year-end from 37.13 Lakhs in the previous year.

Key Financial Ratios

Opportunities

Continued shift from unorganized to organized retail in Gujarats Tier-II/III towns. Availability of growth capital post-listing to fund store network expansion, including the newly acquired Chiloda mall property. Scope for margin improvement through scale, private-label expansion and operating leverage as new stores mature.

Threats

Intensifying competition from other organized retail chains and e-commerce/quick-commerce players. Exposure to input cost inflation, lease rental escalations and consumer discretionary spending cycles. Execution risk is associated with rapid store network expansion and new store ramp-up timelines.

V. SEGMENT-WISE / PRODUCT-WISE PERFORMANCE

The Company operates in a single business segment, namely retail trading of grocery and household products through its supermarket store network, and accordingly no separate segment reporting has been provided, consistent with the applicable Accounting Standards.

VI. OUTLOOK

With the capital raised through the IPO and the significant investment made during the year in store infrastructure, including the Chiloda property, the Company is well positioned to expand its store network further and consolidate its presence across existing and new catchments in Gujarat. The management expects revenue and profitability to benefit from the ramp-up of stores opened/expanded during the year, subject to prevailing market conditions.

VII. RISKS AND CONCERNS

The Companys principal risks include competitive intensity in organised retail, dependence on leased premises for the majority of its store network, working capital intensity of the retail business, exposure to inventory holding and shrinkage, and interest rate risk on borrowings. The Company continues to monitor these risks through its internal control framework and periodic management reviews. As reported by the Statutory Auditors, the Company had not implemented an accounting software with an audit trail (edit log) feature for the entire year ended 31st March, 2026, which the Company is in the process of addressing.

VIII. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place internal financial controls commensurate with the size, scale and nature of its operations. The Statutory Auditors, in their report on Internal Financial Controls over Financial Reporting under Section 143(3)(i) of the Companies Act, 2013, have expressed an opinion that the Company has adequate internal financial controls over financial reporting and that such controls were operating effectively as at 31st March, 2026. As disclosed in the Auditors Report, internal audit is presently not applicable to the Company.

IX. HUMAN RESOURCES

The Company continues to invest in its employees across store operations, corporate functions and management. Employee benefit expenses for the year stood at 248.77 Lakhs as against 222.46 Lakhs in the previous year, reflecting the increase in headcount to support the expanded store network. The Company considers its employees relations to be cordial.

X. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply, government regulations, tax laws, and other statutes and other incidental factors. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events.