Mrs Bectors Food Specialities Ltd Management Discussions

Management Discussion and Analysis Report

Global Economic Scenario

Globaleconomic growth is projected to remain broadly stable at 3.4% in CY2025, before moderating to approximately 3.1% in CY2026 and 3.2% in CY2027. Persistent geopolitical disruptions, including the Russia- Ukraine conflict and simmering tensions in the Middle East, continue to weigh on energy markets, supply chains and inflation dynamics. Inflation is expected to ease gradually from 4.4% in CY2026 to 3.7% in CY2027, supported by softer demand and lower energy prices.

Advanced economies are projected to grow at a modest 1.7-1.9% through CY2027, while Emerging Markets and Developing Economies (EMDEs) are expected to continue outperforming, supported by domestic consumption and infrastructure investment. The IMF (International Monetary Fund) has outlined adverse scenarios in which a significant escalation of the Middle East conflict could reduce global growth to as low as 2%, while pushing headline inflation above 6% by 2027. The impact on EMDEs could be nearly twice as pronounced as that on advanced economies.

Key downside risks include trade disputes, vulnerabilities in rare earth supply chains, widening fiscal deficits, rising public debt and potentialerosion of monetary policy credibility. At the same time, accelerated AI adoption and structural reforms could provide potential upside support to global growth.

Source: IMF - World Economic Outlook, April 2026; S&P Global - Global Economic Outlook, March 2026

Indian Economic Landscape

Despite global uncertainties, the Indian economy demonstrated significant resilience in FY2025-26, with real GDP expanding by 7.6%, supported by robust private consumption, accelerated infrastructure spending and sustained momentum in the services sector. Private final consumption expenditure (PFCE) increased to 7.6% from 5.6% in the previous year, while favourable monsoon conditions supported agricultural output and rural demand.

Inflationary pressures eased considerably, with headline inflation at 1.7% and CPI inflation at 4.6%, remaining within the RBIs 2-6% target range. The central bank maintained the repo rate at 5.25%, balancing the objectives of supporting growth and preserving financial stability.

Fiscalpolicy remained growth-oriented, with capital expenditure continuing to be a key priority. Under the Finance Commission route, 416.56 lakh crore was allocated to states in the FY2026-27 Budget Estimates. Structural initiatives, including Make in India and the Production Linked Incentive (PLI) schemes, continue to strengthen domestic manufacturing and advance the Viksit Bharat by 2047 agenda.

Looking ahead, the World Bank projects GDP growth of approximately 6.6% in FY2027, supported by resilient domestic demand and steady export performance, despite external headwinds arising from elevated energy prices and geopolitical tensions. Indias recent shift in global economic rankings reflects currency movements and statistical revisions rather than any structural deterioration.

Sustained reforms, consumption growth and investment momentum are expected to support Indias progression towards becoming the worlds third-largest economy over the next decade.

Source: MoSPI - GDP Estimates; Press Information Bureau - Government of India; World Bank - India Remains Among the Fastest-Growing Economies

Industry Review

Indian Packaged Food Industry

Indias packaged food industry continues to offer significant growth opportunities, supported by rising disposable incomes, urbanisation, changing lifestyles and increasing consumer preference for branded, convenient and value-added food products. The packaged food market was estimated at 43,619 billion in FY2024 and is projected to reach 46,310 billion by FY2029, representing a CAGR of 11.8%.

The biscuits and bakery categories are particularly well- positioned to benefit from these structural changes. Increasing formalisation, wider organised retail penetration, digital commerce and premiumisation are reshaping consumer preferences and creating opportunities for established brands.

Key levers of growth

• Higher household incomes are supporting greater spending on branded, convenient and premium food products.

• Rapid urbanisation, nuclear households and busier lifestyles are boosting demand for convenient, ready- to-eat and on-the-go food products.

• Consumers are increasingly trading up to products offering superior ingredients, taste, nutrition, formats and experiences. This is particularly relevant to premium biscuits, cookies, crackers and speciality bakery products.

• Growing awareness of nutrition is driving demand for products positioned around whole grains, reduced sugar, fibre, protein and other nutritional attributes, attesting to healthier choices among consumers.

• Evolving consumer preferences are encouraging manufacturers to introduce new flavours, formats, ingredients and product propositions.

• The growing presence of supermarkets, modern trade and organised retail is increasing the visibility and availability of branded food products.

• Digital channels are widening consumer access and enabling brands to reach customers beyond traditional retail. In bakery, quick commerce is particularly relevant given the short shelf life of products.

• Branded food companies are increasingly expanding beyond metros and Tier 1 cities into Tier 2 and smaller markets, creating additional avenues for category growth.

• Within breads and buns, mid-premium and premium- plus categories are expected to grow significantly faster than the overall market, reflecting changing tastes, higher purchasing power and greater demand for speciality products.

• Biscuits and bakery products are moving beyond traditional meal and tea-time consumption into snacking, breakfast, on-the-go consumption and convenient meal solutions.

• Growth of QSRs, cafes, restaurants, cloud kitchens and organised food service is creating additional demand for branded breads, buns and bakery products.

Biscuits Industry

The Indian biscuit market was valued at 4551 billion in FY2024 and is projected to reach 4903 billion by FY2029, representing a CACR of 10.4%. The branded segment is i expected to grow from 4526 billion to 4867 billion over the same period.

The category continues to benefit from a wide consumer base, affordability, convenience and long shelf life. At the same time, changing consumer preferences are driving greater segmentation across cookies, cream biscuits, crackers, digestives and health-oriented products.

Key trends

• Continued premiumisation across cookies, crackers and speciality biscuits

• Rising interest in healthier and functional propositions

• Demand for new flavours, formats and differentiated products

• Increasing importance of brand, quality and product consistency

• Continued dominance of general trade, alongside growing modern trade and digital channels

• Increasing penetration of e-commerce and quick commerce

• Expansion of branded biscuits into smaller cities and towns

• Growing importance of packaging innovation and sustainability

The industry remains highly competitive and sensitive to inflation. Thus, maintaining competitive pricing while investing in innovation, branding and distribution remains a key challenge.

Bakery Industry

The Indian breads and buns retailmarket was valued at 462 billion in FY2024 and is projected to reach 4103 billion by FY2029, representing a CAGR of around 11%. The branded segment accounted for around 64% of the market in FY2024.

The category is experiencing increasing formalisation and premiumisation, with consumers showing higher interest in whole wheat, multigrain, nutritional, gourmet and speciality breads. While white and brown breads continue to account for the majority of consumption, higher-value categories are growing faster than the average.

Key trends

• Premiumisation towards multigrain, nutritional, gourmet and artisanal breads

• Growing demand for health-oriented products

• Increasing consumption of buns, pizza bases, sourdough breads and other speciality formats

• Greater penetration of branded products beyond metropolitan markets

• Growth of modern trade and e-commerce

• Rising relevance of quick commerce for fresh and perishable bakery products

• Increasing demand from QSR, HoReCa (hotels, restaurants and caterers) and institutional customers

• Product innovation based on regional tastes and consumption preferences

• Greater focus on freshness, quality and supply-chain efficiency

A key structural characteristic of the bakery industry is its short product shelf life, making manufacturing proximity, distribution efficiency and last-mile logistics critical competitive factors.

Source: Technopak Analysis

Industry Challenges

• Raw material price volatility, particularly wheat, sugar and edible oils

• Intense competition from national, regional and local brands

• Pricing pressure in mass-market categories

• Rising distribution and logistics costs

• Increasing investment requirements in branding and product innovation

• Changing consumer preferences requiring continuous portfolio renewal

• Challenges of short shelf life, wastage and last-mile distribution for bakery

Risks and Mitigation

The Company operates in a highly competitive consumer market and is exposed to fluctuations in key raw materials, packaging and logistics costs. Changes in consumer preferences, pricing pressure and increased competition can also affect margins and market share.

The biscuits business additionally has exposure to international markets and is therefore subject to geopolitical developments, tariffs, foreign exchange movements and changes in international trade conditions. During FY2026, tariff uncertainty and the West Asia conflict affected the operating environment, particularly for the export-oriented biscuits business.

The Company seeks to mitigate these risks through portfolio diversification, calibrated pricing, procurement efficiencies, manufacturing optimisation, geographical diversification and continued investment in brands and product innovation.

Internal Control Systems and their Adequacy

The Company maintains adequate internal control systems commensurate with the nature, scale and complexity of its operations. These systems are designed to provide reasonable assurance regarding the reliability of financial and operational information, safeguarding of assets, compliance with applicable regulations and the effectiveness of business processes.

The effectiveness of internal controls is reviewed periodically through the Companys internal control framework and statutory and internal audit processes.

Discussion on Fnancial Performance with respect to Operational Performance

In FY2026, the Company delivered a resilient financial performance backed by steady operational efficiencies and strong brand momentum. Revenue growth was supported by optimal volumes in both the branded biscuits and bakery segments, aided by expanded distribution, premiumisation and product mix. Further, operational performance benefited from cost optimisation, better procurement strategies and enhanced manufacturing efficiencies. This reflected growing institutional strength, demonstrating management focus on balancing growth with operational discipline.

Human Resource Management

Our human resource (HR) management is anchored on building a skilled, motivated and future-ready workforce that supports the Companys growth and innovation. Our focus remains on attracting and retaining top talent, enhancing employee capabilities through continuous training, and fostering a culture of collaboration and performance. Special emphasis is placed on employee engagement, workplace safety and promoting diversity across all levels. Aligning people practices with organisational goals, the Company ensures its workforce remains agile and empowered to deliver value in a competitive and rapidly evolving industry environment. As on 31 March 2026, the company had 2,495 employees on its rolls.

Details of significant changes in key financial ratios

Particulars	As at 31 Mar 2026	As at 31 Mar 2025	Variance	Reasons for Variance
Return on equity ratio (%)	10.48%	14.21%	(26.24%)	Issue of equity shares capital has resulted in decrease in the ratio

Details of any change in return on net worth as compared to the immediately previous financial year

Particulars	As at 31 Mar 2026	As at 31 Mar 2025	Variance	Reasons for Variance
Return on equity ratio (%)	10.48%	14.21%	(26.24%)	Issue of equity share capital has resulted in decrease in the ratio

Outlook

The mid to long-term outlook for the Companys biscuits and bakery businesses remains positive, supported by Indias favourable consumption trends, increasing formalisation of food markets, premiumisation and the expansion of organised and digital retail.

In biscuits, the Company sees opportunities in premium, health-focused and differentiated offerings, alongside continued expansion of its domestic and international footprint. In bakery, growth is expected to be supported by English Ovens brand strength, geographical expansion, premiumisation, modern retail, quick commerce and institutional demand.

The Companys multi-channel distribution model, diversified portfolio and manufacturing capabilities provide a strong platform to participate in these structural growth opportunities. At the same time, the Company will remain focused on managing raw material inflation, competitive intensity, logistics costs, foreign exchange movements and geopolitical uncertainties.