Leo Dryfruits & Spices Trading Ltd Management Discussions

Economic Overview Global Economy

The global economy in Fiscal Year FY25 navigated a complex landscape characterized by what the International Monetary Fund (IMF) describes as "tenuous resilience". While global growth forecasts saw modest upward revisions to 3.0% for 2025 and 3.1% for 2026, these figures remain below the pre-pandemic historical average of 3.7%, signalling a protracted recovery.

Persistent geopolitical disruptions, elevated policy uncertainty, and the looming threat of escalating trade restrictions continued to exert pressure on global commerce and investment sentiment. These factors particularly strained global supply chains for food and agricultural commodities, leading to elevated freight costs and increased protectionist measures by some nations. Global inflation,while on a downward trajectory and forecast to decline to 4.5% inflationin advanced economies, complicating 2025,facedheadwindsfromstickyservices monetary policy normalization and keeping interest rates higher for longer. For food processing companies with international sourcing operations, such as Leo Dryfruits & Spices, this environment presented a dual challenge: the need for agile supply chain management to mitigate cost volatility, juxtaposed with the opportunity to capitalize on enduring structural shifts in consumer demand toward health, wellness, and convenience.

Source: IMF World Economic Outlook, April 2025 : FAO Food Outlook 2025

Indian Economy

India remained among the fastest-growing major economies, recording GDP growth of 6.5% in 2025. Strong domestic consumption, robust infrastructure investments, and healthy private demand underpinned this performance, with resilience even amid global headwinds.

Food consumption trends continued to shift in favor of branded and packaged products, as urbanization, changing lifestyles, and heightened consumer focus on hygiene and traceability gained momentum. Organized retail and e-commerce accelerated their penetration, expanding access and visibility for packaged food brands. At the same time, institutional procurement from hospitality, defence, and government-linked organizations expanded strongly, reinforcing long-term growth opportunities for companies in the food processing and FMCG segments. Source: PIB Press Release : RBI Annual Report 2025

Industry Overview

The Indian food processing industry is at the forefront of a major structural transformation, with projections indicating its market size will surpass USD 1 trillion by 2030 and reach USD 1.2 trillion by 2025-26. This phenomenal growth is underpinned by a confluence of powerful, long-term socioeconomic trends that create a highly favourable operating environment for branded food companies.

Key drivers include:

- Demographics and Urbanization: Indias young and expanding population, coupled with rising disposable incomes, is increasingly migrating to urban centers. With urban areas projected to contribute 70% of the nations GDP by 2025, this shift is accelerating changes in lifestyle that favor convenience, hygiene, and the consumption of packaged food products.

- Health and Wellness: The post-pandemic consumer exhibits a heightened and sustained focus on health, immunity, and food safety. This trend is fueling a definitive shift away from loose, unorganized products towards branded and packaged goods, which are perceived as safer, more hygienic, and more trustworthy. This consciousness also drives demand for nutrient-dense categories like dry fruits, organic spices, and fortified foods.

- Channel Transformation: The rapid proliferation of organized retail formats, including supermarkets and hypermarkets, along with the explosive growth of e-commerce and quick commerce platforms, is fundamentally altering the distribution landscape. These modern channels are making branded food products more accessible to a wider consumer base, especially in high-growth Tier-2 and Tier-3 cities.

E-commerces share of Fast-Moving Consumer Goods (FMCG) sales is forecast to expand from 7-10% in 2024 to 15-18% by 2030, highlighting the importance of an omnichannel strategy.

- Policy Support: The Government of India has actively fostered a supportive ecosystem through initiatives like the Pradhan Mantri Kisan SAMPADA Yojana (PMKSY), Production Linked Incentive (PLI) schemes for the food processing industry, and the development of Mega Food Parks and integrated cold chain infrastructure.

These policies are designed to enhance scalability, improve supply chain efficiency, global competitiveness.

In this environment, consumer trust has become a paramount competitive advantage. Heightened awareness of food safety, amplified by recent high-profile quality concerns that led to international bans on certain major Indian spice brands, has created a significant market opportunity for companies that and purity. Research indicates that a vast majority of urban consumers 79% believe unpackaged spices are adulterated. For Leo Dryfruits & Spices, our ISO 22000:2018 (Food Safety Management) and ISO 9001:2015 (Quality

Management) certifications are therefore not merely operational credentials but potent marketing assets. They form the bedrock of a "Trust Premium," allowing our brands to command consumer confidence and justify their positioning against unorganized players and competitors facing quality challenges.

The Indian Spices Market: From Commodity to Brand

As the worlds largest producer, consumer, and exporter of spices, India commands a unique position in the global market, producing 75 of the 109 varieties recognized by the International Organization for Standardization (ISO) and accounting for over 70% of global spice exports. The domestic market, valued at approximately USD 17.28 billion in 2024, is projected to grow at a Compound Annual Growth Rate (CAGR) of 6-9%. The most significant trend is the accelerated consumer migration from the unorganized (loose spices) to the organized, packaged segment. This shift is driven by a desire for convenience and mounting concerns over product adulteration. Within the packaged category, demand is further evolving towards blended masalas and ready-to-use spice mixes, which cater to the needs of time-constrained urban households and the institutional Hotel/Restaurant/Catering (HoReCa) sector. The competitive landscape, while featuring legacy players like Everest and MDH, is becoming increasingly fragmented with the rise of strong regional brands and new entrants, indicating that brand loyalty can be cultivated through effective marketing, quality assurance, and robust distribution.

The Indian Dry Fruits & Nuts Market: The Healthy Indulgence

The Indian dry fruits and nuts market, valued at USD 2.1 billion in 2024, is forecast to grow at a healthy CAGR of approximately 7% to reach USD 3.8 billion by 2033. This growth is propelled by the pervasive health and wellness trend, which positions dry fruits as nutrient-dense "superfoods" rich in essential vitamins, minerals, and antioxidants. Beyond their traditional role in festive gifting, dry fruits are increasingly being integrated into daily consumption habits as healthy snacks, often in innovative roasted and flavored formats that appeal to modern palates. A key challenge for the sector remains its significant dependence on imports for popular varieties such as almonds, walnuts, and pistachios. This exposes players to global price volatility, supply chain risks, and changes in

Indias import duty structure. With current import duties on walnuts standing at 100%, industry bodies are actively advocating for policy rationalization to ensure stable supply and pricing.

The Indian Savory Snacks (Namkeen) Market: A Massive Opportunity

The Indian snacks market represents a vast and rapidly growing opportunity, with a market size of over INR 46,500 crore in 2024 projected to more than double to over INR 1,00,000 crore by 2033, expanding at a CAGR of over

8.6%. The savory snacks (namkeen) sub-segment constitutes a major portion of this market. The competitive environment is characterized by the dominance of organized national players like Haldirams and PepsiCo, the strong presence of regional powerhouses such as Balaji Wafers and Bikaji, and a large, fragmented unorganized sector. The primary consumer trend is a clear preference for branded, hygienically prepared snacks over loose alternatives. While still nascent, there is also a growing interest in healthier variants, including baked and low-oil options, creating new avenues for product innovation. The market is broadly segmented into premium, midrange, and value-for-money tiers, with the latter two accounting for the largest share of consumption volume.

The Indian Frozen & Convenience Foods Market: The Future of Urban Consumption

The frozen and semi-prepared foods category is an emerging high-growth segment in India, directly catering to the needs of a young, urban, and time-poor demographic. The rise of working women, dual-income households, the sectors and single-person households in metropolitan areas is fueling demand for convenient, ready-to-cook meal solutions. Global market trends provide a clear product development roadmap for this category, indicating strong consumer appetite for international flavors (e.g., Asian, Mexican), healthier preparation options (e.g., air fryer friendly, baked), and convenient, portion-controlled formats like "bites and minis". quality Source: Food processing India : IBEF : Ministry of Food Processing Industries

Company Overview

Incorporated in 2019, Leo Dryfruits & Spices Trading Limited has embarked on a journey of accelerated growth and strategic evolution. In a pivotal milestone, the company transitioned from a private entity to a public limited company in 2023, culminating in a successful listing on the BSE SME platform in January 2025.

The companys Initial Public Offering (IPO) of 25.12 crore was a landmark event, met with exceptional investor confidence. The issue was oversubscribed by nearly 181 times, with overwhelming demand categories, including Qualified Institutional Buyers (68x), Non-Institutional Investors

(154x). This successful listing not only provided the necessary growth capital to fuel our strategic ambitions industry but also reinforced our steadfast commitment to upholding the highest standards of corporate governance, transparency, and long-term stakeholder value creation. Our vision is to establish ourselves as the worlds most trusted brand in spices and dry fruits, celebrated globally for our unwavering commitment to quality and authenticity.

A House of Brands for Every Indian Consumer

Our multi-brand strategy is meticulously designed to address distinct consumer segments, need states, and market opportunities. This approach creates a diversified and resilient portfolio, ensuring our entire price-value spectrum of the Indian packaged food market.

Vandu: The Flagship of Authenticity and Premium Quality

- Positioning: Vandu is our flagship brand, positioned as the epitome of premium quality, authenticity, and purity in the whole spices, blended spices, and dry fruits categories. The brands core promise is to deliver

"delicious aroma, unique color, authentic taste and finger-licking flavour" by sourcing the finest from reputed global exporters.

- Target Audience: Vandu caters to discerning households, premium institutional clients such as Taj Hotels and

Trident, and the rapidly growing cohort of health-conscious consumers who prioritize quality and are willing to pay a premium for trusted, unadulterated products.

- Strategic Role: As our primary driver of brand equity and higher margins, Vandu competes in the premium segment of the market. It strategically leverages our ISO certifications to build a strong foundation of consumer trust, a critical differentiator in todays market.

FRYD: Innovating for the Modern, Convenience-Seeking Palate

- Positioning: FRYD is our specialized brand designed for the burgeoning frozen and semi-fried snacks category, offering "Flavorsome, Rich, Yummy, Delights". Its brand proposition is centered on delivering exceptional taste and convenience through high-quality ingredients and expert craftsmanship.

- Target Audience: FRYD is targeted at modern urban and semi-urban consumers, particularly millennials and Gen Z, who lead busy lifestyles and seek quick, convenient, and high-quality meal and snacking solutions.

- Strategic Role: FRYD serves as our growth engine in the nascent but rapidly expanding convenience food market. It allows us to diversify our portfolio beyond traditional categories and capture a younger, aspirational consumer demographic.

Munchin Foods: A Strategic Foray into the Mass-Market Savory Snacks Segment

- Positioning: The recent acquisition of the "Munchin Lite-bits" brand marks our strategic and immediate entry into the high-volume, value-for-money namkeen and savory snacks market. The brand has an existing portfolio of traditional Indian snacks that resonate with a broad consumer base.

- Target Audience: Munchin is aimed at the mass-market consumer across both urban and rural India who seeks traditional, flavorful snacks at an accessible and affordable price point.

- Strategic Role: Munchin is our designated vehicle for capturingsignificantmarket share in the largest snacking category in India. It perfectly complements the premium positioning of Vandu and the modern, niche positioning of FRYD, giving us a comprehensive presence across the full spectrum of the market.

A Foundation of Trust: Our Commitment to Quality

Quality is not just a standard at Leo; it is the foundation of our business strategy. Our operations are certified against globally recognized benchmarks for quality and food safety, including ISO 22000:2018 (Food Safety

Management System) and ISO 9001:2015 (Quality Management Systems). These certifications are a testament to our rigorous processes and unwavering commitment to excellence. In a market where consumers are increasingly vigilant about food safety, these credentials serve as a crucial differentiator, building trust, securing contracts with discerning institutional clients, and paving the way for our entry into quality-sensitive international markets. Performance Overview (FY25)

- Revenue: 8,735.22 lakh

- EBITDA: 1,482.13 lakh

- PAT: 816.40 lakh

Product Category wise Revenue Breakdown

In FY24, Whole Spices led the portfolio with revenue of 4,850.0 lakh and further strengthened its dominancein FY25 with 7,137.17 lakh, reflecting sustained con -sumer demand and robust distribution. Dry Fruits de-livered healthy growth in FY24 at 1,241.0 lakh, beforenormalizing to 923.50 lakh in FY25 as the categoryadjusted to price fluctuations. The companys diversi-

fication into Other Grocery Products delivered a sharpjump, expanding from 91.8 lakh in FY24 to 631.82 lakhin FY25, supported by wider acceptance and portfolioexpansion. Blended Spices continued to grow steadily,reaching 34.13 lakh in FY25, while Frozen/Semi-Fried

Products, though at a nascent stage, doubled to 4.47lakh in FY25. Overall, total product revenue rose from 6,216.6 lakh in FY24 to 8,731.11 lakh in FY25, driven by

category leadership in Whole Spices and the risingcontribution of newer product lines.

On the distribution front, Wholesale B2B remained theanchor, growing from 4,798.0 lakh in FY24 to 5,185.79lakh in FY25. However, the standout performer was theB2C channel through super stockists and distributors,which surged nearly threefold from 1,056.2 lakh inFY24 to 3,109.42 lakh in FY25, highlighting successfulretail penetration and brand visibility. The D2C chan-

nel also delivered steady growth, scaling from 362.3lakh in FY24 to 435.90 lakh in FY25, reflecting thecompanys strengthening direct engagement withconsumers. With total channel revenue expandingfrom 6,217.6 lakh in FY24 to 8,731.11 lakh in FY25, Leohas established a balanced multi-channel mix thatsupports both scale and customer reach.

Financials

Leo Dryfruits & Spices Trading Limited delivered strongfinancial performance in FY25 with total revenue of 8,735.22 lakh, registering a 40.3% year-on-yeargrowth compared to 6,226.50 lakh in FY24.

The companys EBITDA for FY25 stood at 14,82.1 lakh,reflecting a strong33% year-on-year growth com-pared to 11,13.2 lakh in FY24. This improvement wasdriven by higher sales volumes, disciplined procure-ment, and operational efficiencies that supported

margins across both trading and processing seg-ments.

The company recorded a Profit After Tax (PAT) of 8,16.4 lakh in FY25, registering a 21.3% increase from 6,72.9 lakh in FY24. The growth was supported byimproved operational efficiency, a stronger revenuebase, and effective cost management, which together

helped sustain profitability despite input price -ity

Key Financial Ratios	31-March-2024	31-March-2025
EBITDA Margin (%)	17.90%	16.98%
Net Profit ratio (%)	10.82%	9.35%
Interest service coverage ratio (In	7.78	8.79
Times)
Current ratio (x)	2.83	2.22
Debt- Equity Ratio (x)	0.27	0.33

Future Direction: Strategic Imperatives and Outlook

This section articulates our forward-looking strategy, outlining a clear roadmap for vertical integration, market expansion, brand development, and capacity enhancement designed to drive sustained growth and create long-term shareholder value.

Building an Integrated Food Ecosystem

Our long-term vision extends beyond being a product-centric company to creating a fully integrated food ecosystem. The incorporation of our wholly-owned subsidiary, Leo Catering Services Pvt. Ltd., in April 2025 represents the foundational step in this strategic direction.

This new venture will focus on vegetarian catering services and the establishment of a network of consumer-facing food service outlets, including Quick Service Restaurants (QSRs), cafes, and bakeries. This forward integration creates a powerful synergistic loop: it establishes a captive, high-volume B2B channel for the parent companys premium ingredients (Vandu spices, dry fruits), allows us to capture a larger share of the consumers food expenditure by entering the "out-of-home" consumption market, and enhances brand visibility while providing a direct channel for consumer feedback to fuel product innovation.

Expanding Our Market Horizons

Our growth strategy is predicated on a multi-pronged approach to market expansion.

- Deepening Domestic Penetration: While we currently have a presence in six states and one Union Territory, our immediate focus is on methodically expanding our distribution network, which currently comprises approximately 150 distributors, to achieve a pan-India footprint and tap into underserved markets.

- Channel Diversification(HoReCa & Defense): We are strategically targeting the high-growth HoReCa sector, which is projected to grow at a CAGR of ~6.4% in India. Our established relationships with marquee clients like Taj and Trident provide a strong foundation for this expansion. Simultaneously, the defense channel, solidified through our CSD and KPKB contracts, offers a scalable and recurring revenue opportunity with immense potential.

- A Phased Approach to Global Markets: We are actively evaluating and preparing for a phased entry into export markets, with an initial focus on the Middle East, Europe, and Asia. The strong and growing global demand for authentic Indian spices, coupled with the rising appetite for premium and health-focused foods in regions like the Middle East, presents a significant long-term growth avenue for our Vandu brand.

Driving Portfolio Innovation and Brand Equity

Our product and brand roadmap is focused on strengthening the distinct positioning of our three core brands to maximize market coverage and consumer appeal.

- Vandu: We will enhance its premium credentials by introducing new offerings such as organic and GI-tagged spices, and by expanding our popular range of customizable festive gifting hampers.

- FRYD: The innovation pipeline will focus on launching new products that align with global consumer trends, including healthier baked or air-fryer-friendly options and a wider array of ethnic flavors to cater to the modern, experimental consumer.

- Munchin: We will execute a focused turnaround strategy by integrating the brand into Leos superior distribution network, refreshing the product portfolio with contemporary flavors and formats, and optimizing packaging to drive volume growth and capture share in the mass-market segment.

Risk Management and Mitigation

This section transparently outlines the key risks facing our business and details the proactive strategies we have in place to manage and mitigate them, demonstrating prudent and forward-thinking management.

Navigating a Dynamic Marketplace

- Commodity Price Volatility: Our reliance on imported dry fruits makes us susceptible to global price fluctuations and import duty changes. Our mitigation strategy is multi-faceted, involving diversified sourcing, strategic procurement practices, and exploring long-term supply contracts. Furthermore, our strategic diversification into less import-reliant categories like spices and namkeen provides a structural hedge against this risk.

- Competitive Pressures: The Indian FMCG market is intensely competitive, with pressure from established national brands and agile regional players. We will continue to compete effectively through focused brand building, an unwavering commitment to quality underscored by our ISO certifications, continuous product innovation across our three brands, and a strategic expansion of our distribution reach into underserved markets.

- Supply Chain Complexities: To manage logistical challenges and ensure product freshness and availability, we are committed to continuously investing in strengthening our supply chain infrastructure and processes, leveraging technology for greater efficiency and visibility.

Proactive Compliance and Governance

- Evolving Regulatory Standards: The food industry operates under stringent and evolving regulations from authorities like the Food Safety and Standards Authority of India (FSSAI). We maintain a proactive and vigilant stance on regulatory compliance, ensuring our products, processes, and labeling adhere to the latest standards. This includes preparing for anticipated new regulations in 2025 concerning front-of-pack labeling, packaging materials, and food safety protocols. Our ISO certifications are a testament to our commitment to best-in-class governance and our readiness to meet and exceed regulatory requirements.

SWOT Analysis FY25 Strengths

- Diversified The companys product range covers spices, dry fruits, namkeens, and frozen foods,portfolio: which helps reduce dependency on a single category and ensures steady revenue streams across multiple segments.

- Strong brand positioning (Vandu and FRYD Foods): With Vandu recognized for authentic spices and premium dry fruits and FRYD Foods catering to the frozen snacks category, the company has built distinct consumer appeal across diverse food segments.

- Trusted supplier to hospitality and government clients: Long-term associations with leading hospitality chains and recent wins in B2G contracts highlight the companys reliability, quality focus, and ability to meet large-scale demand.

- ISO-certified operations: Compliance with ISO 22000:2018 and ISO 9001:2015 standards strengthens credibility, ensures stringent food safety, and enhances acceptance among institutional and export buyers.

Weaknesses

- Limited geographical presence: Compared to large FMCG peers with pan-India distribution, the companys presence remains concentrated, limiting reach and brand awareness in untapped markets.

- Exposure to price volatility in imported dry fruits: Heavy reliance on imports for products like almonds, pistachios, and walnuts subjects the company to global supply chain risks, price swings, and currency fluctuations.

Opportunities

- Rising domestic demand for branded packaged foods: Growing urbanization, higher disposable incomes, global and consumer preference for hygienic and branded products are creating sustained demand in Indias packaged food sector.

- Expanding B2G segment with recurring orders: Institutional procurement opportunities from defence, paramilitary, and police canteens offer high-volume, repeat business that can provide steady long-term revenue streams.

- Export growth potential in Middle East, Europe, and Asia: Global demand for Indian spices and dry fruits is increasing, giving the company chance to expand exports and capture niche premium markets abroad.

- Health-conscious consumption driving premium adoption: Rising awareness of nutrition and wellness is fueling demand for roasted dry fruits, low-oil snacks, and premium food categories, aligning with the companys product strengths.

Threats

- Intense competition from FMCG players: Both established national brands and strong regional players compete aggressively in price, distribution, and marketing, creating pressure on margins and growth.

- Commodity price fluctuations: Volatility in raw material prices, especially in imported dry fruits and spices, directly impacts profitability and requires constant supply chain management.

- Evolving regulatory standards: Frequent changes in food safety norms, labeling, and export compliance under FSSAI and international authorities can increase operational complexity and compliance costs.

Internal Control System and its Adequacy

The company has established a comprehensive internal control system, designed to provide a robust framework for operational efficiency, financial reporting integrity, and compliance with all applicable

Management holds the responsibility for establishing and maintaining an adequate internal control structure that ensures the orderly and efficient conduct of our business.

Our internal control framework is built upon key components, including a strong control environment, a continuous process of risk assessment to identify and mitigate potential risks, and a clear set of control activities such as authorization, verification, and segregation of duties. The system is subject to regular monitoring and review by our internal audit function, which independently assesses the effectiveness of these controls. The findings and