Khaitan (India) Ltd Management Discussions

Forward-looking statements & Economic Data

The report may contain forward-looking statements, like plans, expects, will, anticipates, believes, intends, projects, estimates and so on. Any statements that address expectations or projections about the future, but not limited to the Companys strategy for growth, market position, expenditures, and financial results, are forward-looking statements. Since these are based on certain assumptions and expectations of future events, the Company cannot guarantee that these are accurate or will be realized. The Companys actual results, performance or achievements could thus differ from those projected in any forward-looking statements. The Company assumes no responsibility to these statements and also not liable to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events. Further, the economic data has been taken from various source and hence the correctness is based on publication made about the same and company assumes no responsibility towards the correctness of same.

INDIAN ECONOMY

During the financial year 2024-25, the Indian economy grew at around 6.5%, maintaining its position as the fastest-growing major economy. Growth was driven by strong domestic consumption and a revival in private investment, with the fiscal deficit contained at 4.8% of GDP! Inflation eased significantly, falling to about 2.1% by June 2025, which supported business and consumer confidence.

High-frequency indicators such as the PMI reflected robust activity in both manufacturing and services, pointing to sustained demand momentum. However, external headwinds, particularly the imposition of higher tariffs by the United States, pose challenges for exports. Despite this, the overall outlook remains positive, with GDP expected to grow in the range of 6.3%-6.8% in the financial year 2025-26, supported by strong fundamentals and ongoing reforms.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Khaitan (India) Limited is engaged in trading of electrical goods and has presence in agriculture and sugar sectors as well. The Companys operations are diversified across these three key sectors, each of which plays a significant role in the Indian economy. While electrical goods trading remains the core activity, the Company continues to evaluate opportunities for revival and expansion in agriculture and sugar, which hold strong long-term growth potential.

The electrical goods sector has shown remarkable growth in the financial year 2024-25. Indias electronics exports touched USD 38.57 billion, reflecting a robust 32.5% increase over the previous year. This surge was supported by higher non-smartphone exports such as solar equipment and telecom gear, along with government initiatives like Make in India and production-linked incentives. The rising domestic demand for energy-efficient and technologically advanced products has further fuelled industry expansion. This provides a favourable environment for companies engaged in electrical goods trading, including Khaitan, to strengthen their market presence.

The sugar industry in the financial year 2024-25 faced challenges due to lower output. Indias sugar production fell by nearly 15% year-on-year, estimated at around 27.27 million metric tonnes, with a significant diversion of sugarcane towards ethanol production. While this decline reflects both climatic factors and policy shifts, the ethanol blending program has opened up new revenue streams, providing stability and reducing the cyclicality of the sector. Government support through loans and cooperative financing has also played a key role in sustaining mills during this transition.

The agriculture sector recorded a growth of 3.8% in GVA during the financial year 2024-25, signalling a rebound from the previous years moderation. Certain states achieved higher growth rates of around 8.8%, reflecting improvements in productivity and policy support. The sector continues to benefit from schemes related to crop insurance, rural infrastructure development, and mechanization, though it remains sensitive to monsoon conditions and global commodity price volatility.

Against this backdrop, your Company is strategically positioned to leverage the growth in electrical goods trading while preparing for a structured revival in agriculture and sugar. The Companys diversified portfolio enables it to capture opportunities across different segments while mitigating risks associated with sectoral fluctuations. With favourable policy support and sustained demand drivers in its core business areas, Khaitan is confident of aligning its growth trajectory with that of the Indian economy.

OPPORTUNITIES AND THREATS

The business environment in which Khaitan (India) Limited operates presents both growth opportunities and inherent challenges. The Company, with its diversified presence in trading of electrical goods and interests in agriculture and sugar, continues to identify avenues to strengthen its position while remaining vigilant of emerging risks.

On the opportunities front, the Company is well-placed to capitalize on multiple growth drivers. Expansion of the product portfolio within the electrical goods segment can cater to the rising demand for energy-efficient and technologically advanced solutions in both urban and semi-urban markets. Geographical expansion, particularly into Tier-II and Tier-III cities, offers the potential to tap into underpenetrated regions where infrastructure development is accelerating. The growing adoption of e-commerce platforms also provides a scalable channel for reaching wider customer bases at relatively lower distribution costs.

In the sugar sector, the Governments emphasis on ethanol blending with petrol has created a structural shift, offering long-term revenue diversification and reducing dependence on cyclic sugar price movements. Additionally, policy support for renewable energy and bio-fuels positions the Company to explore synergies between agriculture and energy.

At the same time, the Company faces certain threats and challenges that require careful management. The sugar business remains highly dependent on the quality and availability of sugarcane, which is vulnerable to climatic fluctuations, pests, and diseases. Declining cane quality not only impacts yields but also raises processing costs. Rising fixed costs linked to compliance, energy, and logistics may put pressure on margins, particularly in years of subdued demand or poor harvests.

Intense competition in the electrical goods sector, both from established players and low-cost imports, can also affect pricing power. Furthermore, regulatory uncertainties in the sugar and agriculture sectors, coupled with volatility in global commodity prices, remain key risks that may influence operational performance.

Balancing these dynamics, the Company recognizes the need for strategic investments in technology, supply chain efficiency, and product innovation. By leveraging its established presence in electrical goods and preparing for growth in agriculture and sugar through ethanol-based opportunities, Khaitan (India) Limited aims to mitigate risks while capitalizing on the favourable long-term prospects across its business segments.

SEGMENT WISE/PRODUCT WISE PERFORMANCE

During the year under review, the Companys performance was primarily driven by its trading activities in electrical goods, while operations in the sugar and agriculture divisions continued to remain suspended. The segmental overview is as follows:

1. Electrical Goods Trading

The electrical goods segment continues to be the backbone of the Companys operations. This segment includes trading in products such as cables, wires, switchgears, lighting, and electrical accessories, which are widely used across infrastructure, industrial, housing, and commercial projects.

Revenue from this segment recorded growth of around 30% during the financial year 2024-25 on account of higher demand. Improved distribution reach, addition of new customers, and tighter control over costs contributed positively to the results. The Company is further exploring opportunities in higher-value categories such as energy-efficient and smart products, which are expected to provide better margins going forward.

2. Sugar Division

The sugar manufacturing operations of the Company have remained suspended for several years, and no revenue has been recognized from this division during the year. The suspension has been duly reflected in the financial statements and noted by the auditors. Despite this, the Company continues to regard the sugar division as a core and strategic business segment, supported by substantial land assets and infrastructure.

At present, the Company is engaged in research activities in collaboration with agricultural experts to develop improved and higher-quality sugarcane varieties. The objective is to enhance yield, reduce input costs, and strengthen profitability margins when operations recommence. Parallelly, the Company is actively exploring arrangements to mobilize the significant working capital required for restarting and sustaining large-scale operations in this division.

With increasing government policy support for ethanol blending and sugar by-products, the division holds strong potential for revival in the coming years.

3. Agriculture Division

The agriculture division of the Company has contributed only a small portion of revenue during the year under review, and this trend is expected to continue in the near term without any exceptional increase. The operations remain limited in scale, and there are no immediate prospects for a significant enhancement of revenue from this segment. While the division provides continuity of business presence in agriculture and supports diversification, its contribution to the overall performance of the Company remains modest. The Company continues to monitor developments in the sector and will explore opportunities for scaling up this business as and when favorable conditions arise.

For the financial year 2024-25, the Company reported improved overall performance, with profits being recorded after a period of losses. The positive results were largely attributable to the growth in electrical goods trading and better cost management practices. While the sugar and agriculture divisions have not contributed much to the profitability, the Company continues to retain strategic options for their revival in the future. With its established presence in the electrical trading business and ancillary income streams, the Company is well-placed to pursue new opportunities while addressing associated risks.

FINANCIAL PERFORMANCE / OPERATIONAL PERFORMANC

The financial performance of the Company during the financial year 2024-25 showed a notable turnaround, with overall revenues improving and the Company posting a profit after several challenging years. This was mainly driven by the growth in the electrical goods trading business, prudent cost management, and steady income. Strategically, the Company focused on strengthening its distribution network, improving receivable management, and exploring higher-margin product categories. Although the sugar and agriculture divisions remain majorly non-operational, the Company continues to hold valuable assets in these segments, providing scope for future revival in line with policy support for ethanol and agri-based industries. The management remains committed to maintaining financial discipline, leveraging its name, and pursuing selective opportunities that can enhance long-term shareholder value.

Financial Performance:

On a standalone basis, the Company achieved a Total Income of ?7,3.22 crores during financial year 2024-25 as against ?5,1.22 crores in the financial year 2023-24, reflecting a healthy growth of more than 35% year-on-year. Profit Before Tax stood at ?7.15 crores as compared to ?1.33 crores in the previous year, showing significant improvement driven by the trading business and better cost management. Net Profit for the year was ?7.11 crores, as against ?1.33 crores in the financial year 2023-24, indicating a strong turnaround in performance. Earnings per Share (EPS) improved to ?14.69 compared to ?2.82 in the previous year.

BUSINESS OUTLOOK

The outlook for the Company remains positive, with the electrical goods trading business expected to continue driving growth. Company has substantially increased the operation and is looking for expansion in all geographical area through its network. Further. Company is also increasing the product mix to grab larger share of electrical goods market, which is increasing substantially due to continued demand. Also, the Company is planning to have access through various online market platform for the marketing of its product.

In addition, the Company is undertaking research and feasibility studies for the revival of its agriculture and sugar businesses. The Companys significant land assets and prior operational base in sugar provide a foundation for re-entry into this sector once conditions are favourable.

Overall, with prudent financial management, strong name, and a forward-looking strategy, the Company is confident of sustaining profitability in its trading operations while preparing for future opportunities in agriculture and sugar, thereby creating long-term value for all stakeholders.

Your directors are hopeful that company would be able to maintain the growth and profitability would also increase over period of time.

Growth Strategies

The Companys growth strategy is centred around strengthening its core electrical goods trading business while laying the groundwork for revival of the agriculture and sugar divisions.

In the trading segment, the focus is on expanding the product portfolio, widening the distribution network, expansion in new geographical areas and leveraging digital platforms. The Company also continues to emphasize tight cost control, better inventory management, and improved receivable cycles to protect margins and enhance liquidity.

Parallelly, the Company is conducting research and feasibility studies to restart its sugar and agriculture operations. These initiatives are aimed at diversifying revenue streams, reducing dependence on a single business line, and positioning the Company for sustainable long-term growth.

RISKS AND CONCERNS

The Companys business is subject to various internal and external risks which may affect its operations and financial performance.

?€? Market Risks: The electrical goods trading business operates in a highly competitive market where price fluctuations, aggressive discounting by unorganized players, and changing customer preferences may impact margins.

?€? Raw Material and Currency Volatility: Fluctuations in the prices of metals, polymers, and other inputs, as well as changes in foreign exchange rates, can indirectly affect procurement costs and profitability.

?€? Working Capital Risks: The business requires significant working capital for inventory and receivables. Delays in collections or tight liquidity in the market may put pressure on cash flows.

?€? Regulatory Risks: Stricter product standards, tax changes, or new compliance requirements may increase costs and necessitate operational adjustments.

?€? Technology and Obsolescence Risks: Rapid changes in technology, especially in energy-efficient and smart product categories, may render existing stock obsolete, leading to inventory write-downs.

?€? Sugar and Agriculture Division Risks: The suspension of operations in these segments continues, and their revival depends on government policies, monsoon conditions, and substantial capital investments. Until operations resume, these assets remain underutilized.

?€? Litigation and Compliance Risks: The Company has certain outstanding statutory dues and ongoing GST-related disputes, which may have financial implications if decided against the Company.

The management continuously monitors these risks and is adopting measures such as tighter cost control, diversification of products, strengthening supplier and customer relationships, and ensuring regulatory compliance to mitigate the impact.

RISK MANAGEMENT POLICY

The Company recognizes that effective risk management is critical to achieving sustainable business growth. The Audit committee of the Board also oversees and serves as Risk Management Committee. The Committee had formulated a Risk Management policy which outlines the different kinds of risks and risk mitigating measures. The Company believes that the overall risk exposure of present and future risks remains within risk capacity.

The policy lays emphasis on :

?€? Identification of Risks across business segments, including market, financial, operational, regulatory, and environmental risks.

?€? Assessment and Prioritization of risks based on their likelihood and potential impact on business performance.

?€? Mitigation Strategies such as diversification of product portfolio, maintaining adequate liquidity, strengthening internal controls, and ensuring strict compliance with statutory and regulatory requirements.

?€? Monitoring and Reporting, whereby significant risks are periodically reviewed by the Audit Committee and the Board to ensure timely corrective actions.

INTERNAL CONTROLS AND THEIR ADEQUACY

The Company has established a system of internal controls commensurate with its size and operations. These controls are designed to safeguard assets, ensure reliability of financial reporting, maintain compliance with applicable laws, and promote operational efficiency. The framework is periodically reviewed by the management and the Audit Committee.

The Internal Audit function is carried out directly under the supervision of the management and its findings are presented to the Audit Committee for review. While the internal audit is not fully independent, the scope of work covers critical areas of operations, financial processes, and statutory compliances, and corrective actions are taken wherever required.

The Company also has a Vigil Mechanism / Whistle Blower Policy in place, providing a secure and confidential channel for employees and stakeholders to report concerns relating to unethical practices, fraud, or violation of the Companys code of conduct. The policy ensures confidentiality and protection to the whistleblower. Complaints, if any, are reviewed by the Audit Committee and dealt with appropriately.

The Board is of the opinion that the existing internal control systems, supported by management-driven internal audit and the vigil mechanism, are adequate to meet current business requirements.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS

The Company believes that its people are the key drivers of long-term growth and success. During the year, efforts were made to strengthen employee skills, improve productivity, and create a culture of accountability and teamwork. Training and development initiatives were undertaken to upgrade technical knowledge and functional competencies, with emphasis on compliance, financial discipline, and operational efficiency.

The management continues to encourage open communication, merit-based recognition, and a safe working environment. Employee engagement initiatives were also promoted to align individual goals with organizational objectives.

On the industrial relations front, the Company maintained a harmonious and cordial relationship with its employees throughout the year. No significant disputes or disruptions were reported, and the industrial climate remained stable.

The Company recognizes that continuous investment in human resources, coupled with transparent policies and employee welfare initiatives, will remain a critical enabler for achieving its business growth and sustaining competitiveness in the years ahead.

DETAILS OF SIGNIFICANT CHANGES

Ratios with Significant Change (>25%)

Debtors Turnover

FY 2024-25: 1.41, FY 2023-24: 1.03 Change: +37%

Reason: Improvement driven by higher sales and better collection efficiency compared to the previous year.

Inventory Turnover

FY 2024-25: 3.38, FY 2023-24: 5.60

Change: -40%

Reason: Decline due to higher inventory held at year-end, indicating advance stocking to support future demand, which temporarily slowed turnover.

Interest Coverage Ratio FY 2024-25: 7.21, FY 2023-24: 2.00 Change: +261%

Reason: Significant improvement due to higher operating profits and reduced finance costs, reflecting a stronger ability to service debt.

Operating Profit Margin

FY 2024-25: 11.34%, FY 2023-24: 5.23%

Change: +117%

Reason: Expansion in margins due to cost optimization, better sales mix, and efficiency in operations.

Net Profit Margin

FY 2024-25: 9.71%, FY 2023-24: 2.62%

Change: +270%

Reason: Strong turnaround from prior years of weak profitability, mainly on account of higher revenues, lower finance costs, and tighter cost control. CHANGE IN RETURN ON NET WORTH

The Return on Net Worth (RONW) of the Company has shown a significant improvement during the year under review. For financial year 2024-25, RONW stood at 26.03%, as against 6.62% in financial year 2023-24, reflecting a substantial increase of more than 290%. This sharp improvement is primarily attributable to higher profitability, with Net Profit rising to ?7.11 crores in financial year 2024-25 compared to ?1.33 crores in the previous year. The improvement in margins, coupled with efficient cost management and reduced finance costs, has contributed to the enhanced return generated for shareholders.

DISCLOSURE OF ACCOUNTING TREATMENT

The Company has duly followed the applicable accounting standard in the preparation of financial statements.

	Sd/-
	Sunay Krishna Khaltan
Place: Kolkata	Whole time Director
Date: 29th August 2025	DIN: 07585070