Mukka Proteins Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

The companys projections, estimates, and expectations outlined in the Management Discussion and Analysis section are considered forward-looking statements. These statements are subject to risks and uncertainties. Actual results may differ significantly from these projections due to various factors, including fluctuations in raw material costs, market conditions, government policies, and overall economic trends.

The Financial Statements have been prepared on a historical cost basis and on the accrual basis and are prepared in accordance with the accounting standards notified under the Companies (Accounting Standard) Rules, 2006 and other relevant provisions of the Companies Act, 2013.

GLOBAL ECONOMY OVERVIEW

The global economic outlook for 2025 projects a notable slowdown, with global growth expected to reach 2.3 percent. This forecast represents a significant downgrade from earlier expectations and indicates that the average global growth during the first seven years of the 2020s will be the slowest pace since 2008 outside of global recessions. This challenging environment is primarily driven by heightened trade tensions and persistent global policy uncertainty, which have resulted in growth forecasts being cut for nearly 70 percent of all economies across all regions and income groups. Global trade growth is projected to slow to 1.8 percent in 2025.

While a global recession is not anticipated, the outlook remains particularly subdued for many vulnerable economies, especially emerging market and developing economies (EMDEs). Growth in these economies is expected to average less than 4 percent in the 2020s, and per capita income growth in 2025, projected at 2.9 percent, is deemed insufficient to recover pre-pandemic losses or significantly reduce extreme poverty. Global inflation is expected to average 2.9 percent in 2025, remaining above prepandemic levels. Downside risks, including escalating conflicts, extreme weather events, and continued policy uncertainty, persist, underscoring the critical need for renewed global cooperation and robust domestic policy reforms to foster a more stable environment and support vulnerable nations. (Source: World Bank Group)

INDIAN ECONOMY OVERVIEW

Indias economy demonstrates resilient growth, standing as the fastest-growing major economy globally amidst uncertainties. Real GDP growth was estimated at 6.5 per cent in 2024-25, a pace the Reserve Bank of India expects to continue into 2025-26. This performance is significantly buoyed by strong domestic demand, including picked-up rural consumption, rising city spending, and robust private and public investment. The external sector is also strengthening, with total exports reaching a record USD 824.9 billion and Foreign Direct Investment inflows rising to USD 81.04 billion in FY 2024-25. Indias sound macroeconomic fundamentals position it to lead global growth.

The International Monetary Fund (IMF) projects Indias economy to grow by 6.2 per cent in 2025 and 6.3 per cent in 2026, significantly outpacing global economic growth. This robust performance is primarily driven by strong domestic demand, including firm private consumption, particularly in rural areas. The IMF has notably downgraded growth forecasts for other major global economies, such as China to 4.0 per cent for 2025 and the United States to 1.8 per cent, further highlighting Indias exceptional out performance.

Despite the growth rate being slower compared to the previous years, it is supported by strong domestic demand, increased rural consumption, and steady investment from both private and public sectors.

This stable economic trajectory creates a favourable environment for advancing the Sustainable Development Goals (SDGs), allowing for enhanced investments in health, education, and infrastructure. Nonetheless, ongoing global uncertainties and moderated growth emphasize the importance of sustained policy efforts to fully realize SDG objectives.

The sustained improvement in fiscal metrics continues to positively impact Indias credit ratings. In May 2025, Morningstar DBRS upgraded Indias sovereign rating to a ‘BBB with a stable trend, reflecting resilient economic growth, disciplined fiscal consolidation, and improved government spending composition. These factors underpin stronger economic fundamentals and enhanced investor confidence for 2025 and beyond.

Indias headline inflation has moderated further, with retail inflation falling to 2.82 per cent in May 2025, marking its lowest level since February 2019. Crucially, food inflation has also cooled significantly to just 0.99 per cent in May 2025, the lowest seen since October 2021. The current account deficit for FY 2024-25 was contained at just 0.6 per cent of GDP, even registering a surplus in Q4:2024-25. Foreign exchange reserves remain ample at USD 697.9 billion as of June 2025, covering over 11 months of imports. Both private investment and public capital expenditure continue to drive growth. (Source: pib.gov.inV2^

FISH MEAL, FISH OIL AND OTHERS CONSUMPTION

About 70% of fish and crustaceans produced in aquaculture are fed with protein-rich feed wherein fish meal act as key ingredient. Fish meal is a highly concentrated nutritious feed supplement consisting of high-quality protein, essential amino acids, vitamins, essential minerals (such as phosphorus, calcium and iron) and other growth factors. Owing to its nutritional value, it is the preferred animal protein supplement in the diets of farm animals and often the major source of protein in diets for fish and shrimp. (Source: pib.gov.in)5

OUTLOOK FOR INDIAS FISHMEAL INDUSTRY

Indias fishmeal industry continues a strong growth path, fueled by increasing demand from the expanding aquaculture and livestock sectors. Government initiatives like the Pradhan Mantri Matsya Sampada Yojana (PMMSY) are promoting sustainable fisheries and enhanced production are providing significant support to the industry. Advances in technology and processing methods are improving efficiency and product quality, while companies are focusing more on value-added products like fish oil. Despite ongoing challenges such as variability in fish catches and stringent environmental regulations, the industry is adapting through innovation and strategic collaborations. With growing private sector investment and a focus on sustainability, the outlook for Indias fishmeal industry remains positive and promising.

INDIAS AQUACULTURE AND SEAFOOD INDUSTRY: MARKET OVERVIEW

India remains the worlds second-largest fish producer, accounting for about 8% of global fish production, with total fish production reaching a record 195 lakh tonnes in 2024-25, more than double its 2013-14 level. Inland and aquaculture sectors now account for over 75% of this output, driven by increased adoption of advanced breeding methods and governmental initiatives like the Pradhan Mantri Matsya Sampada Yojana. India continues as the worlds second-largest aquaculture producer and holds a leading position in shrimp exports. Indias seafood exports reached $7.2 billion (approximately Rs.60,000 crore), reflecting a notable year-on-year increase, with export volumes standing at 16.85 lakh metric tonnes. This growth underscores the continuing expansion and strategic importance of the sector within Indias economy. (Source: Department of Fisheries/

Termed as the ‘sunrise sector of the Indian economy, with one of the highest average decadal growths of 8.9% (FY 2014-2023) amongst allied sectors under Agriculture, the sector provides sustainable livelihoods to over 30 million people, primarily from marginalized and vulnerable communities, and continues to benefit from government investments and initiatives aimed at boosting production, productivity, and exports.

The availability of fishmeal and fish oil has played a pivotal role in the success of the PMMSY scheme, which continues to drive sustainable growth in fisheries and aquaculture. The schemes impact is clear, with cultured fish production more than doubling over the past decade, underscoring fishmeals essential contribution to aquaculture expansion. By converting fish discards and unsold catches into high-value protein feed, the fishmeal industry not only reduces waste and optimizes resources but also ensures fair income opportunities for fishers and industry stakeholders, reinforcing the sectors sustainability and resilience. (Source: pib.gov. in)7

STRATEGIC EXPANSION INTO INSECT PROTEIN: MARKET OVERVIEW AND OUTLOOK

The insect meal and insect oil industry has entered a rapid growth phase driven by the need for sustainable, circular-economy protein and lipid sources in animal nutrition. Insect farming, particularly of species like the Black Soldier Fly, offers a circular economy approach by upcycling agri-food waste into high-value proteins and oils. Insect meals, predominantly produced from Black Soldier Fly larvae (BSFL), mealworms, and crickets offer protein contents ranging from 50% to 80% on a dry-matter basis, while insect oils are rich in medium-chain fatty acids (e.g., lauric acid) that support immune function and feed palatability. Regulatory momentum in key markets such as EU legislation expanding approved feedstocks and end uses and anticipated Indian notifications for insect meal in poultry and aquafeed underpins industry scale-up investments, while partnerships among feed integrators and insect producers accelerate local capacity expansions.

INDIAN INSECT PROTEIN SECTOR ECONOMY

The insect protein sector in India is poised for significant expansion, driven by the countrys growing demand for sustainable animal feed solutions and a solution to urban organic-waste management. Although still in its early stages, the Indian market is expected to see growth as regulatory frameworks evolve and production scales up. The sector is supported by increasing investments, government interest in sustainable agriculture, and the potential for insect protein to reduce reliance on traditional fishmeal and soymeal imports. As costs decrease and awareness of the nutritional and environmental benefits rises, insect protein is set to become an important component in aquafeed, poultry, and pet food markets, contributing to Indias goals of protein security, waste reduction, and rural livelihood generation.

STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS:

Strengths

Our position as a leading manufacturer and exporter of Fish Protein and Alternate Insect Protein products

We are one of the key players of the Fish Protein. Our Company is also amongst the first few Indian companies to have commercialised insect meal and insect oil as an ingredient for aqua feed, animal feed and pet food.

Focus on product innovation and research and development of Alternate Insect Protein products

While we continue to deploy resource in drive invocation in fish meal products. We have also expanded of our team with senior entomologist and other biotechnology engineers to further our research and development in Insect meal and insect oil.

Established customer base and strong relationships

We have long established relationships with our key customers who are the major producers of aqua feed, poultry feed and pet food. We believe that one of the key factors differentiating us from our competitors is the quality of our products and customer centric approach by offering products meeting the customers specifications.

Strategically located Facilities

Our strategically located facilities ensure fresh, adequate and cost-effective supply of pelagic fishes, our key raw material, as well as transportation of our finished products, thereby enabling us to secure supply of raw material maintain high product quality and optimize on the transport cost.

Entry Barriers

Our key raw material, pelagic fish is a natural resource and accordingly their availability is seasonal and subject to climatic conditions and also various regulatory restrictions. MPEDA, the regulatory authority has imposed a moratorium on registration of new fish meal and fish oil facilities and also enhancement of production capacity of the existing fish meal and oil facilities for export purposes.

Fish meal and fish oil contributes indirectly to human consumption as they are used as feed in aquaculture and livestock raising (Source: CRISIL Report8), accordingly our manufacturing facilities are subject to audit and inspection by various regulatory authorities and also by our customers. Some of the requisite approvals includes, pollution control, environment clearances, license to export including country specific license, customer validation and approvals, stringent product specifications and high-quality standards.

Strong and consistent financial performance

We believe that our financial performance, demonstrates not only the growth of our operations over the years, but also the effectiveness of our management, our well-established customer relationship and cost monitoring that we have implemented. Among other things, our strong financial position and results of operations have enabled us to enhance scale of operation and enter new geographies.

Focus on Quality, Environment, Health and Safety (QEHS)

We are committed towards quality, environment, health and safety standards because of which we have received quality certifications such as GMP+, ISO 9001:2015, ISO 22000:2018 certified by NQA, UKAS Management Systems. We believe we are one of the few Indian companies from our industry to have received EU certification and holding license from AQSIQ (Administration of Quality Supervision, Inspection and Quarantine), China. We are also accredited with certifications such as Halal, HACCP, EIA, MPEDA and is also a member of IFFO.

Experienced Promoter Directors with extensive domain knowledge

We believe that the experience, depth and diversity of our Promoter Directors have enabled our Company to scale our operations in domestic and international market. Their industry experience enables us to anticipate and address market trends, manage and grow our operations, maintain and leverage customer relationships and respond to changes in customer preferences and requirements.

Weaknesses

Seasonal and Natural resource

Our business and consequently our results of operations are affected by seasonal variations and weather conditions. For example, supply of pelagic fish, which is our key raw material is nature-dependent and is also subject to regulatory and environment conditions. In India, the peak season for fishing is August-December and the slack season is January-May (Source: CRISIL Report8). Seasonal variations and adverse weather conditions affect the availability and price of the raw materials that we require for our manufacturing operations. Further, our raw material are essential ingredients for manufacturing of aqua feed, which is also highly subject to climatic and environmental changes, accordingly our end customers may also be adversely affected due to unpredictable or unseasonal weather conditions. Any shortage in demand of our products may have a material adverse effect on our business, financial condition and results of operations.

Competition

The fish meal industry is highly competitive, both in India and overseas with many fragmented unorganised players. We expect that competition will continue to intensify both through the entry of new players and consolidation of existing players. Our competitors, especially overseas competitors, may have greater financial resources, better distribution network, technical and marketing resources and generate greater revenues, and therefore may be able to respond better to market changes than we can. Increased competition may result in our inability to differentiate our products from those of our competitors, which may lead to a loss of market share. Although, the industry in which we operate are not easy to break-into due to high entry barriers such as stringent regulatory and customers approval process.

Customer Concentration

We have a wide customer base across the aqua feed industries and have served over 70 customers for the period ended March 31, 2025. However, our top 2 (two) customers contributed around 37.60% of our revenue from operations.

Opportunities

Strengthening our foothold in our existing markets and expanding to new geographies

We sell our products domestically and also export to over 15 (fifteen) countries. Further, we believe that we share a good client relationship with our customers and we receive majority of our business from long-term customers. The long-standing relationships that we have enjoyed with our customers over the years and the repeat and increased orders received from them are an indicator of our position as a preferred source for them. With our functional Facilities and capabilities, we intend to focus on increasing our wallet share with existing customers and establish relationships with new international and domestic customers.

Expansion of our presence in alternate protein sources

Insects contribute to a circular economy by upcycling of low-value agri-food materials into high-value protein and other applications. Insect-based nutrition is emerging as a whole new category in food and feed systems. It has the potential to bring new value-added propositions based on its nutritional, functional, and environmental benefits (Source: RaboResearch Report9).

With increasing demand driven by more population opting for animal-based nutrition coupled with limitation of fish meal due to its environmental impact has raised the requirement for new source of protein in the animal feed industry. Insect based nutrition is emerging as a new source of protein in the global animal feed industry. Aquaculture industry plays a vital role in adoption of insect feed.

Our team of entomologist at Ento Proteins have successfully processed 21,995 tons of wet waste and have produced 336 tons of insect meal and 144 tons insect oil from it during the financial year. BSF Technology has contributed significantly to Indias circular economy by interlinking and converting organic waste as a nutrient rich input for animal protein industry. Going forward we expect to enhance our production by expanding our presence and footprints in other cities.

Black Soldier Fly technology in municipal waste management is emerging technology. Cities like Mangalore, Kochi have adopted BSF technology to process wet waste. Further Cuttack municipal corporation has invited tenders for selection of agency for management of solid wet waste using the BSF technology. Going forward we expect more and more Tier 2 Cities to adopt the technology to solve their wet waste management challenges in the most environmentally sustainable and circular manner.

Pursue strategic inorganic and organic growth opportunities

Our Company is engaged in the business of manufacturing of Fish Protein products where our key raw material is pelagic fish. Availability of key raw material is seasonal and also subject to climatic and environmental changes. Further, the fishing activities are also subject to various regulations. Additionally, our raw fish are perishable in nature. With an objective to minimise the risk associated with the sourcing of our key raw material, we had spread our manufacturing facilities across the western coastline in India and also in close proximity to fish landing sites in Oman.

Further, we are also evaluating opportunities for setting-up new state-of-the art manufacturing facilities in other coastal states of India as a strategy to have seamless access to raw materials i.e. pelagic fish, diversify the over dependency on a single coastal fishing catchments and regulatory exposures.

In order to grow and expand our business, we continue to evaluate strategic investment opportunities in domestic and international markets with our strategy to further secure the source of our key raw material and also to grow and develop our market share and product portfolio such as, alternative protein products. We would also as a strategy, consolidate our legal entities in the future. We will pursue opportunities where such acquisitions or arrangements will add value to our business, stakeholders and customers. These inorganic growth opportunities may include acquisitions, joint ventures, strategic partnerships as well as acquiring the production capacity and / or processing facilities.

Threats

Commodity price risk

Exposure to market risk with respect to commodity prices primarily arises from our purchases of raw materials. These are commodity products subject to various uncertainties including climate change, rainfall, breeding of fish during any particular years, the prices of which may fluctuate significantly over short periods of time. The prices of our raw materials generally fluctuate in line with fishing season and prices of other protein products such as soyabean and plant-based proteins. Commodity price risk exposure is evaluated and managed through operating procedures, sourcing policies and increasing the selling price.

Further sale price of fish meal is expected to soften during the current financial year.

Known Trends or Uncertainties

Various risks and uncertainties, such as economic trends and business requirements, competitive landscape, as well as general factors affecting our results of operations, financial condition and access to capital and including those set forth in this section, may limit or delay our efforts to achieve profitable growth in our business.

• Any exchange rate fluctuations, the imposition of currency controls and restrictions on the right to convert or repatriate currency or export assets;

• Political instability, terrorism, military conflict, epidemic or public health issues in India or in countries in the region or globally, including in Indias various neighbouring countries;

• Macroeconomic factors and central bank regulation, including in relation to interest rates movements which may in turn adversely impact our access to capital and increase our borrowing costs;

• Other significant regulatory or economic developments in or affecting India or its logistics sector.

CHALLENGES, RISKS AND CONCERNS

The Company is subject to various risks, including fluctuations in fish availability, raw material prices and global demand. To mitigate these challenges, the Company maintains a diversified sourcing strategy, optimizes production processes and invests in product innovation. As a part of its risk management framework, the Company ensures comprehensive insurance coverage and adheres to strict quality control standards. Additionally, the Company is committed to sustainable practices, including responsible sourcing and environmental stewardship.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established a robust system of internal controls to safeguard assets, ensure transactional accuracy, and maintain reliable financial records. These controls encompass authorization, recording, and reporting procedures to mitigate risks of loss, misuse, or misstatement.

To enhance the systems effectiveness, the Company employs an independent Chartered Accountant firm to conduct regular internal audits and assess compliance with statutory requirements. In collaboration with the internal auditors, the finance department undertakes periodic risk assessments across all organizational functions. Potential risks are identified and addressed through appropriate preventive measures based on their severity.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE.

Operational Performance Review

The financial statements have been prepared in compliance with the requirement of the Companies Act, 2013 and Indian Accounting Standards in India.

On a consolidated basis, the company recorded a decrease in revenue from operations by 27.06%. The revenue from operations decreased to Rs.10,064.16 million during the financial year 2024-25 compared to Rs.13,798.29 million during the previous year. The Profit Before Tax recorded a decrease of 31.09%. The profit before tax decreased to Rs.602.66 million during the financial year 2024-25 compared to Rs.874.56 million during the previous year. The company also recorded a decrease in Profit After Tax by 35.27%. The profit for the period decreased to Rs.480.97 million during the financial year 2024-25 compared to Rs.743.05 million during the previous year.

On a standalone basis, the revenue from operations of the company decreased by 30.10%. The revenue from operations decreased to Rs.8,867.43 million during the financial year 2024-25 compared to Rs.12,685.43 million during the previous year. The Profit Before Tax recorded a decrease of 26.61%. The profit before tax decreased to Rs.525.81 million during the financial year 2024-25 compared to Rs. 716.48 million during the previous year. The company also recorded a decrease in Profit After Tax by 33.58%. The profit for the period decreased to Rs.416.83 million during the financial year 2024-25 compared to Rs.627.56 million during the previous year.

KEY FINANCIAL RATIOS

Key Financial Ratios along with detailed explanation thereof for the year 2024-25 (previous year 2023-24) pursuant to Schedule V(B) to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Particulars	Unit	2025	2024
Current Ratio	times	1.52	1.58
Debt-Equity Ratio	times	1.03	0.91
Return on net worth	%	10.83	25.78
Debtors turnover ratio	times	5.95	10.09
Operating profit margin	%	7.92	5.97
Inventory turnover	times	1.94	4.22
Interest coverage ratio	times	2.53	3.96
Net profit margin	%	4.70	4.95

Notes:

1. The current ratio saw a slight decline during the financial year 2024-25.

2. The debt-equity ratio recorded an increase in financial year 2024-25.

3. The return on net worth ratio decreased due to decrease in Profit for the year and increase in average total equity in financial year 2024-25.

4. Debtors turnover ratio decreased due to sales slowdown in financial year 2024-25.

5. Operating profit margin has marginally improved.

6. Inventory turnover ratio decreased due to decrease in Revenue from operations and increase in average inventory in financial year 2024-25.

7. Interest coverage ratio decreased due to increased interest cost in financial year 2024-25.

8. Net profit margin decreased due to decrease in profit for the financial year 2024-25.

Human Resources

A skilled and motivated workforce is essential to upholding our stringent quality and safety standards. Strong employee relations are also crucial for maintaining our competitive edge. To this end, the Company invests in comprehensive training programs to develop a highly skilled workforce. Regular training, competitive compensation, and robust employee welfare initiatives foster a positive work environment and contribute to harmonious labour relations. The total number of employees as on 31st March 2025 are 314 employees.