Khemani Distributors & Marketing Ltd Management Discussions

ANNEXURE–6

The report may contain certain statements that the Company believes are, or may be considered to be "forward looking statements" that describe our objectives, plans or goals. All these forward-looking statements are subject to certain risks and uncertainties, including but not limited to, government action, economic development and risks inherent in the Companys growth strategy and other factors that could cause the actual results to differ materially from those contemplated by the relevant forward-looking statements.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Global Economic Overview

In 2024, the global economy grew moderately but faced challenges like high inflation, political uncertainty due to major elections, and ongoing conflicts in some regions. Central banks in large economies focused on interest rate changes to control inflation. Emerging markets showed mixed results, some benefited from strong commodity prices, while others struggled with high debt. Global trade continued to suffer due to supply chain issues and rising tensions between countries.

At the same time, advances in technology especially in artificial intelligence (AI) and renewable energy offered new opportunities for growth but also raised concerns about job changes and worker reskilling.

Looking ahead, the world economy is expected to grow by about 2.8% in 2025. Inflation is slowly declining, but the pace will differ across regions. Risks like global conflicts and trade disputes still pose major concerns. To support growth, governments need to focus on structural reforms and stronger international cooperation.

Global FMCG Industry Overview (2025–2026)

The global FMCG industry is expected to grow at a steady rate, with a projected annual growth of around 5-6% through 2026. Growth is driven by increasing consumer demand in emerging markets, rising middle-class incomes, and changing lifestyles. Companies are focusing on health-conscious and eco-friendly products, while also investing in automation, AI, and sustainable packaging. E-commerce and direct-to-consumer models continue to grow, especially in developed markets. However, businesses face challenges such as fluctuating input costs, supply chain issues, and shifting consumer preferences. To stay competitive, global FMCG players are improving supply chains, expanding into new markets, and building stronger digital connections with consumers.

Indian Economic Overview

Indias economy is expected to grow by 6.5% in 2024–25, continuing its recovery after COVID-19. While slightly below earlier expectations, it still ranks among the fastest-growing major economies.

Inflation has come down from 5.4% to 4.6%, but food prices remain high, though they are starting to ease. The government invested over 11 lakh crore in capital projects, equal to 3.4% of the GDP, helping boost economic activity. The agriculture sector also saw improvements thanks to various government schemes and support.

FMCG consumption was mixed. Rural demand improved, but urban spending slowed. However, sales of premium products and online shopping grew steadily. Going forward, FMCG growth will depend on job creation, wage increases, and stable food prices. Good crop output and government efforts to support spending are likely to help the sector. India also made strong progress in digital infrastructure, focusing not only on expansion but also on making it more accessible and secure. This supports broader digital transformation and long-term growth.

Overall, India is expected to stay one of the worlds fastest-growing economies. Key drivers include government investments in infrastructure, a rising middle class, and growing digital use. Reforms to support manufacturing, ease of doing business, and higher productivity will help sustain this momentum. Managing global risks like conflicts, market changes, and currency shifts will be important for steady growth.

FMCG Sector Overview (India)

The FMCG sector is one of the most important parts of Indias economy and is the fourth-largest sector in the country. It provides jobs to a large number of people and makes a strong contribution to GDP. The market is expected to grow at a double-digit rate over the next 10 years due to several positive factors.

FMCG includes a wide variety of everyday products such as food and drinks, personal care items, and household goods, catering to both cities and villages. Most of the demand comes from non-food items, especially personal and home care products, which make up about 50% of sales. Even during tough economic times, the FMCG sector has shown strength by adapting to changing consumer needs, innovating, and building strong distribution networks. In 2024–25, demand remained soft, but rural areas grew faster than urban ones. People continued buying premium products across segments.

Raw material prices showed mixed trends items like tea, coffee, and palm oil became costlier, while crude oil, soda ash, and milk powder got cheaper. This limited the ability to raise prices for growth. Looking ahead, lower food inflation, better crop production, tax cuts, and financial support from the government are expected to help the FMCG sector grow in the short to medium term.

The long-term outlook is very positive due to:

Fast urbanisation and better infrastructure, which will boost demand for packaged and convenience products in cities and help rural growth too. A rising number of affluent households, leading to more spending on premium FMCG products. The growing use of digital platforms, which will expand consumer reach, encourage innovation, and support growth in new product categories.

Indias large and young population, which will keep demand strong across different FMCG segments.

OPPORTUNITIES AND THREATS

OPPORTUNITIES

The Company is currently in discussions with Hindustan Unilever Limited (HUL) for the expansion of its redistribution network in the Surat region, which is expected to enhance market penetration and strengthen its presence in this high-potential territory.

The Company has successfully extended its operations in the South Gujarat region within the Modern Trade segment, providing access to a wider customer base and increasing brand visibility in organized retail formats.

Strategic discussions are underway with different FMCG brands for setting up a Carry & Forward (C&F) depot, which will streamline logistics, improve supply chain efficiency, and enable faster product delivery across the operational regions.

Another area of growth is tech-enabled transformation. Using mobile ordering, and data analytics can streamline operations, cut errors and give better visibility of sales and inventory, leading to smarter decisions and higher efficiency.

There is also a promising potential in partnering with emerging brands, especially regional players and direct-to-consumer (D2C) companies looking to establish a physical presence. By diversifying the portfolio beyond established names, Khemani can reduce dependence on a few brands and cater to evolving consumer demands.

THREATS

A key threat facing FMCG distributors like Khemani is the growing shift towards quick-commerce and direct-to-consumer (D2C) models. With brands increasingly prioritizing e-commerce platforms, the traditional distributors role may be reduced, especially in urban and high-demand zones.

The rising popularity of organic and health-focused products poses a threat to traditional FMCG distribution. Many of these items are sold directly via niche retailers or online platforms, bypassing conventional channels. If major FMCG brands dont adapt quickly, distributors may face reduced relevance and demand.

OUTLOOK

Khemani Distributors and Marketing Limited, with its strong regional presence and partnership with Hindustan Unilever Limited (HUL), is well-positioned to benefit from the steady recovery and long-term growth of the Indian FMCG sector.

1. Growth Aligned with Industry Trends

As the Indian FMCG market is expected to grow at a double-digit CAGR, Khemani stands to gain from:

Rural demand recovery: KDMLs deep-rooted distribution network in Tier 2 and Tier 3 regions positions it to capture the rural growth thats currently outpacing urban demand. Premiumisation: With rising interest in premium products, Khemani can enhance its product mix by focusing on high-margin SKUs from HUL and other partner brands. Digital Commerce Synergy: As FMCG increasingly shifts online, Khemanis adaptability to digital systems and tech-enabled supply chains will be crucial.

2. Operational Strengths

Khemani has a proven track record in efficient last-mile delivery, which becomes a key differentiator in the competitive FMCG landscape.

3. Strategic Opportunities

Expansion into adjacent categories or alliances with emerging brands can diversify Khemanis portfolio. Collaborating with quick-commerce players for fulfillment partnerships can help us tap into the evolving retail model.

RISKS AND CONCERNS

The risk that goods are accidentally or maliciously contaminated throughout the supply chain or that other product defects occur due to human error, equipment failure, or other factors cannot be excluded. Ensuring employee safety and wellbeing is a key priority for us. A skilled workforce is essential for the continued success of our business. The loss of management or other key personnel or the inability to identify, attract, and retain qualified personnel could make it difficult to manage the business and could adversely affect operations and financial results. Climate change may impact our business in various ways through increased costs or reduced growth and profitability. Increased frequency of extreme weather events such as high temperatures, hurricanes, or floods could cause increased incidence of disruption to our supply chain and distribution network.

INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Company has an adequate system of internal controls in place, commensurate with the size and nature of its business for the purchase of inventory, fixed assets and for the sale of goods or services. These controls have been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls for ensuring reliability of financial reporting, monitoring of operations, protecting assets from unauthorized use or losses, compliance with regulations.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONALPERFORMANCE

The key highlights of the standalone financials are:

Amount (in Lacs)

Particulars	2024-25	2023-24
Revenue from Operations	8756.24	9793.84
Profit Before Tax	1807.80	3836.37
Net Profit	1369.65	3112.92

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

At Khemani, we believe our people are the foundation of our continued success. We are committed to fostering a positive and empowering work culture that prioritises employee wellbeing, work-life balance, and continuous professional development.

Our initiatives are designed to support not just career growth, but also personal fulfilment creating a workplace where individuals feel valued, motivated, and equipped to thrive. These efforts not only contribute to individual progress but also fuel the collective growth of the organisation, enabling us to build a strong, future-ready workforce that drives sustainable success. Our manpower is a prudent mix of the experienced and youth which gives us the dual advantage of stability and growth. Our work processes and skilled / semi-skilled / unskilled resources together with our strong management team have enabled us to successfully implement our growth plans.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

(i) Debtors Turnover

Debtors Turnover measures the efficiency at which the Company is managing the receivables. The ratio shows how well a Company uses and manages the credit it extends to customers and how quickly short-term debt is collected or is paid. It is calculated by dividing turnover by average trade receivables. FY 2023-24: 25.84 / FY 2024-25: 25.90

(ii) Inventory Turnover

Inventory Turnover measures the efficiency with which a Company utilises or manages its inventory. It establishes the relationship between sales and average inventory held during the period. It is calculated by dividing turnover by average inventory. FY 2023-24: 5.31 / FY 2024-25: 13.25

(iii) Interest Coverage Ratio

Interest Coverage Ratio measures how many times a Company can cover its current interest payment with its available earnings. It is calculated by dividing earnings available for debt service by interest payments. FY 2023-24: 191.12 / FY 2024-25: 35.23

(iv) Current Ratio

Current Ratio indicates a Companys overall liquidity position. It measures a Companys ability to pay short-term obligations or those due within one year. It is calculated by dividing the current assets by current liabilities. FY 2023-24: 10.59 / FY 2024-25: 1.94

(v) Debt Equity Ratio

Debt Equity ratio is used to evaluate a Companys financial leverage. It is a measure of the degree to which a Company is financing its operations through debt versus wholly owned funds. It is calculated by dividing total debt by shareholders equity. FY 2023-24: 0.09 / FY 2024-25: 0.10

(vi) Operating Profit Margin (%)

Operating Profit Margin is used to calculate the percentage of profit a Company produces from its operations. It is calculated by dividing EBIT by turnover. FY 2023-24: 34.26% / FY 2024-25: 19.62%

(vii) Net Profit Margin (%)

The net profit margin is equal to how much net profit is generated as a percentage of revenue. It is calculated by dividing net profit by turnover. FY 2023-24: 0.32% / FY 2024-25: 0.16%

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH

Return on Net Worth is a measure of profitability of a Company expressed in percentage. It is calculated by dividing total comprehensive income by average shareholders equity.

FY 2023-24: 39% / FY 2024-25: 14.84%

		For and on behalf of the Board
		Khemani Distributors and Marketing Limited
	Sd/-	Sd/-
	Vijaykumar Khemani	Amitkumar Khemani
	Chairman & Managing Director	Whole Time Director & CFO
	DIN: 02227389	DIN: 02227413
Place: Surat
Date: 20/08/2025