Khyati Global Ventures Ltd Management Discussions

Annexure V

1. INDUSTRY STRUCTURE AND DEVELOPMENTS:

We are an Exporter and Re-packager of variety of FMCG products which include sub-categories of Food stuff, Non food FMCG products, Household Products, Festive handicraft items and we also deal in the Pharmaceutical products. Our business approach is to sell quality goods at competitive prices. The majority of products dealt by us are everyday products forming part of basic rather than discretionary spending. Our Company purchases products from manufacturer directly while rest are purchased from vendors dealing in the product. While the local products such as flour, spices, grains, pulses of various types, etc. are procured in bulk packaging and then are re packaged in customised pack. Repackaging work is mostly done by manufactures/ vendors wherein we send the packaging materials and labels to be used for re-packaged products while few repackaging is done at our warehouse. Our Company even provides private label facility on the products as required by our customers. We endeavor to minimise our operating costs in several ways such as entering into long-term lease arrangements for a warehouse, procuring goods directly from vendors and manufacturers, employing an efficient logistics and distribution system and maintaining a strong focus on product assortment to minimise inventory buildup, supported by efficient inventory planning.

• Robust global FMCG & pharma export markets

Growing demand for Indian tea, pharmaceuticals, handicrafts, and staples across North America, the Middle East, and Europe offers expansion potential. India?s shipments of agricultural and pharma goods reached US $38.6 billion (Apr-Jan 2024) and US $25 billion (pharma, till Feb 2024), opening avenues for volume growth.

• Asset-light, scalable model

With a 20,000 sqft warehouse and outsourcing-led operations, the company can quickly scale with minimal capital expenditure.

• New market penetration & product mix expansion

Strategic focus on entering new export markets, enhancing brand presence, and introducing new FMCG and pharmaceutical categories

• Private-label customization & partnerships with leading brands

Collaborations with top Indian brands (Hindustan Unilever, Everest, Parle-G, MDH, Haldiram?s, etc.) provide a platform to leverage brand equity and grow customized offerings

• IPO-raised capital for working-capital and corporate use

Post-IPO funds earmarked for working-capital needs has reduced liquidity pressure and fueled further growth. The same is evident in better Working Capital Ratio.

THREATS

• Export dependency & foreign-exchange risk

Over 90% of revenue comes from exports (91-97%), making the company vulnerable to global demand shifts and currency volatility

• Operating cash-flow volatility and working capital strain

The company has experienced negative net operating cash flows, posing risk to liquidity and necessitating external funding for day-to-day operations.

• Competitive pressures & regulatory dependencies

Faces intense competition from domestic and international exporters in food, FMCG, and handicrafts

3. FINANCIAL PERFORMANCE ANALYSIS:

• Revenue Growth:

The company reported a 15.73% year-on-year increase in net sales, reaching ?117.55 crore in FY 25 compared to ?101.57 crore in FY 24. This reflects improved operational execution and market demand.

• Profitability:

Net profit rose to ?4.73 crore from ?3.08 crore, marking a 53.54% increase. Operating profit (PBDIT) increased by 38.27% from Rs.5.91 crore to Rs.8.17 crore, indicating better cost control and margin expansion.

• Earnings Per Share (EPS):

EPS increased to ?7.45 from ?5.96, reflecting stronger bottom-line performance and value creation for shareholders.

4. RISK FACTORS

• Market Volatility in Commodities

KGVL operates in the trading of FMCG and commodity-based products, making it highly susceptible to fluctuations in global commodity prices. Any adverse movement in raw material costs or supply chain disruptions can significantly impact margins and profitability.

• Limited Product Diversification

KGVL?s revenue is concentrated in a specific range of food and household products. A lack of diversification may expose the company to risks if demand for these products declines or if competitors introduce substitutes

• Dependency on Key Personnel

The company?s performance is closely tied to the expertise and leadership of its core management team. The loss of any key executive could disrupt strategic direction and operational efficiency

• Economic conditions in the markets in which we operate

Our results of operations are dependent on the overall economic conditions in the markets in which we operate, including India. Any change in macro-economic conditions in these markets, including changes in interest rates, government policies or taxation and political, economic or other developments could affect our business and results of operations. The FMCG sector in India may perform differently and be subject to market and regulatory developments that are dissimilar to the markets in other parts of the world. While stronger international economic conditions tend to result into higher demand for our products, weaker economic conditions tend to result into lower demand. Change in demand in the market segments we currently supply or improvement/deterioration in the market or a change in regulations, customs, taxes or other trade barriers or restrictions could affect our operations and financial condition.

• Relationship with key customers

We have historically derived, and may continue to derive, a significant portion of our income from our top 5 customers. In Fiscals 2025, our top 5 customers represented 35.62%, of our total revenues from operations in such periods. Any reduction in orders from our top five customers would adversely affect our income. The demand from our key customers, in particular our top 5 customers, determines our revenue levels and results of operations, and our sales are directly affected by the production and inventory levels of our customers. Our customers in turn are dependent on budget, economic condition of world, demand and growth in FMCG sector. Over the years, we have developed strong relationships with a number of domestic and international corporations through which we have been able to expand our product offerings and also our geographic reach. Our business depends on the continuity of our

arrangements with these customers. Our sales to such customers are typically conducted on the basis of purchase orders that they place with us from time to time.

• Our ability to successfully implement its strategy and its growth and business expansion plans

Our revenue and our business operations have grown in recent years. Although we plan to continue to expand our scale of operations, we may not be able to sustain these rates of growth in future periods due to a number of factors, including, among others, our execution capability, our ability to retain, maintain & enter into new distribution agreement, our ability to maintain customer satisfaction, our ability to mobilise sufficient working capital, macroeconomic factors beyond our control such as decline in global economic conditions, availability of cheaper imported / domestic products / brands, competition within each product category from players in the organized and unorganized segments, the greater difficulty of growing at sustained rates from a larger revenue base, our inability to control our expenses and the availability of resources for our growth. There can be no assurance that we will not suffer from capital constraints, operational difficulties or difficulties in expanding existing business operations. Our strategy and revenue plan may not work and might have adverse affect on financials.

Key Ratios