Neelkanth Ltd Management Discussions

Your directors are pleased to present the Management Discussion and Analysis for the financial year ended March 31, 2025.

A. INDUSTRY STRUCTURE AND DEVELOPMENTS:

BUSINESS OVERVIEW

In the agricultural year 2024 25, record production has been achieved in key crops including rice, wheat, maize, groundnut, and soybean. This record production is largely due to a favourable monsoon and ideal weather conditions. Timely and well-distributed rainfall across major crop growing states significantly improved soil moisture, promoting healthy crop development and creating optimal conditions for cultivation.

Total Rice production is estimated at 1490.74 LMT as compared to 1378.25 LMT in 2023-24, showing an increase of 112.49

LMT. Production of Wheat is estimated at 1175.07 LMT which is higher by 42.15 LMT from the previous years wheat production.

According to the United States Department of Agriculture ( USDA) , Indias rice production in the coming 2025-26 crop marketing season is estimated to touch all time of 151 million tonnes.

Agriculture plays a vital role in Indias economy. 54.60% of the total workforce is engaged in agriculture and allied sector activities. Given the importance of the agriculture sector, Government of India has taken several steps for its development in a sustainable manner.

The Union Budget 2025-26 has emphasized agriculture as the foremost engine of Indias development, focusing on improving productivity, farmer incomes, rural infrastructure, and self-sufficiency in key commodities. The provisions also extend to animal husbandry, dairying, and fisheries, ensuring holistic growth in the primary sector.

Rice, being the staple food for more than half of Indias population, holds a significant place in the countrys agrarian economy. India is one of the largest producers and exporters of rice globally and its agricultural landscape is dominated by states that contribute substantially to this essential grain.

Your Company is into trading of Agri products, mainly rice. Further, your Company also does trading locally. In developing economies, the growth is powered by increasing young population, growing disposable income, life-style changes etc. In developed economies where penetration and usage are already high, new products addressing needs are emerging to expand and/or change the face of the market.

As per the Ministry of Agriculture and Farmers Welfares Second Advance Estimates for 2024 25, India has achieved record production levels across multiple key crops. Total foodgrain output is projected at 3,309.18 LMT, comprising 1,663.91 LMT from Kharif and 1,645.27 LMT from Rabi seasons.

GLOBAL SCENARIO

Geopolitical tensions remain a major risk, significantly impacting global markets and business confidence. Ongoing conflicts in key regions have disrupted trade routes, exacerbated energy and commodity price volatility, and heightened the risk of economic fragmentation.

Global grain production for the 2025-26 marketing year is expected to reach a record high, despite a slight downward revision from the previous month, the International Grains Council (IGC) has reported.

India has lifted its ban on non-basmati white rice exports. This move comes as the nation, the worlds largest rice exporter, sees an increase in rice inventories and prepares for the upcoming harvest season.

Total production of rice during 2023-24 is estimated at record 1378.25 lakh tonnes. It is higher by 20.70 lakh tonnes than previous years rice production of 1357.55.

Global rice consumption has surpassed global rice production in recent years, leading to a depletion in rice stocks and an increase in the price of rice globally.

Agriculture remains the backbone of global food security and economic stability, playing a critical role in sustaining the worlds growing population. With the global population expected to reach 9.7 billion by 2050 (United Nations), food production must increase by nearly 70% to meet future demand. The sector also contributes significantly to employment, with over 27% of the global workforce engaged in agricultural activities (World Bank)

Approximately 85% of world basmati exports are from India and therefore, countries looking to purchase basmati rice have limited alternatives

Despite global uncertainty and headwinds, the economy performed well. India remains a relatively bright spot in the global economy, as per the International Monetary Fund (IMF). It is expected to remain the fastest-growing Asian economy and one of the fastest-growing in the world. A conducive domestic policy environment, along with the governments focus on structural reforms, kept domestic economic activity in India robust

The global rice trade landscape witnessed remarkable activity, with several countries emerging as significant contributors to rice exports in 2025. Among the top 10 rice exporting countries are Vietnam, Thailand, and India, leading the pack with substantial export volumes. Each country brings its unique qualities to the table, shaping the landscape of rice production and trade globally.

The agriculture sector in India contributes around 15% to GDP while supporting nearly 42% of the population, playing a crucial role in the countrys economy.

B. OPPORTUNITIES AND THREATS

i. OUR STRENGTHS

With the consumption of rice going up year after year the use of the commodity will rise further as it becomes staple diet of more and more people all across the world.

Experienced Management: One of the key strengths is highly experienced management and management team helping the Company to source the agricultural produce at right time at competitive prices, quality and quantum. Mutually beneficial relations with contact farmers ensure consistent quality and reliable supply of paddy.

Over the years, we developed unique strengths and capabilities, such as adopted the latest technologies, efficient packaging capabilities and expertise in our supply chain that allowed us to increase our competitiveness.

ii. HUMAN CAPITAL

The Human Resources (HR) function of an organization is vital to the creation and development of good quality and dedicated human capital, essential to the Companys business and operations. The Company has Human Relations policies in place, which are reviewed and updated regularly in line with the Companys strategic plans. The Companys total employee strength as on 31st March, 2025 stood at 2. Employees are encouraged and motivated to grow across the organisation, while personal and professional growth is ensured through regular interventions. The Company maintains harmonious and friendly relations with its employees. The Company aims to develop the potential of every individual associated with it as a part of its business goal.

iii. OUR STRATEGY

With the objective to sustain growth, your Company is pursuing several strategic initiatives in all key areas of business . We seek to further strengthen our march towards a leading global Agri product trading and export house by:

Strengthening our strategic partnership with our clients

Increasing our relevance to clients by being able to work in the entire spectrum of their business

Delivering higher business value to clients through the alignment of our structure and offerings to their business objectives.

To achieve these goals, we seek to increase business from existing and new clients, continue to enhance our engagement models and offerings, expand geographically, continue to develop deep industry knowledge, pursue alliances and strategic acquisitions, enhance brand visibility and continue to invest in infrastructure and employees.

iv. OPPORTUNITIES

Rice, a staple for many Indian households, is also a cornerstone for the countrys economy. With diverse range of products in their export portfolio, including Basmati, Sona Masori and Brown rice to name a few, Indian rice exporters play critical role in feeding millions around the world.

India is poised to become the worlds largest rice producer, overtaking China for the fist time in modern history. This milestone comes on the back of a record-breaking food grain output of 353.2 million tonnes (MT) in the 2024-25 crop year (July-June).

By 2050, the worlds population is projected to reach 9.8 billion, with India accounting for 1.7 billion (Source: United Nations). To meet the growing food demands of Indias population, there is a pressing need to significantly increase the yield per hectare, especially considering the diminishing arable land in the country.

The USDA forecasts Indias rice production in 2025 to reach a record high for the tenth consecutive year, despite a slight decline in harvested area.

India is likely to export around 24 million tonnes of rice in the 2025-2026 marketing year, thus corning around 40 per cent of the market share, according to the United State Department of Agriculture ( USDA)

The Indian economy has displayed remarkable resilience and sustained growth momentum, supported by structural reforms, a strong consumption base, and increased public and private investment

v. THREATS

As an agri-based Company, the businesses are sensitive to weather conditions, including extremes such as drought and natural disasters. The availability of raw materials required for operations and the demand for products may be adversely affected by longer than usual periods of heavy rainfall in certain regions or a drought in India.

Each of the businesses depends on the availability of reasonably priced, high-quality raw materials in the quantities required by operations. Increasing private players and competition from unorganised sector pose a threat to organised rice companies

We operate in a dynamic and highly regulated environment shaped by agro-climatic trends, macroeconomic conditions, evolving global trade policies, and technological shifts.

Declining economies of major importing countries and currency fluctuations adversely impacts international/ export business.

C. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

COMPANY AND PERFORMANCE OVERVIEW

During the financial year 2024-25, your Companys revenue was Rs. 494.08 lakh whereas revenue figures for the previous year were Rs.571.85 Lakh.

Your Company follows strong customer engagement leading new business from existing and new customers. We have intensified new customer development and is hopeful to see the demand pick up as the macro- economic conditions see a turnaround helped by Government initiatives.

Sr. No. Particulars	For the financial year ended March 31, 2025	For the financial year ended March 31, 2024
Income
1 (a) Revenue from operations	494.08	571.85
(b) Other income	1.14	4.47
Total Income	495.22	576.32
2 Earnings before interest, taxes, depreciation and amortization	16.48	45.65
Less: Finance costs	4.35	5.12
Less: Depreciation	11.36	10.39
3 Profit before tax	0.77	30.14
Less: Tax Expense:
4 Current Tax	-	-
Deferred Tax	-	-
Income tax of earlier years	-	-
5 Profit / (Loss) for the year	0.77	30.14
6 Add: Other Comprehensive Income	-0.09	-0.75
Total Comprehensive Income	0.68	29.39

D. OUTLOOK

Indian Basmati Rice industry has already an established presence across different international markets thanks to its superior taste and distinctive flavour.

Backbone of the Indian economy, the Indian agriculture industry is the livelihood of over 50% of the nations population. Indian agriculture, which has done remarkably well in the past few years in terms of output growth, is set to scale up on the back of rising external demand and the sectors wider participation in the global economy.

With the climate change, continuous rising demand by consumers and the food security, rice industry is facing the challenge of producing rice without compromising on efficiency, equitability, environmentally friendly, and more resilience to climate change. It has become imperative to produce rice at lesser land, with lesser water. India is also facing lack of adequate agriculture infrastructure such as technologically advanced equipment, transportation network, and effective public private partnership. India has emerged as the worlds fourth-largest economy, with per capita income doubling since 2014, a testament to its sustained economic progress. Despite global headwinds, the way forward remains optimistic, due to enhanced domestic and foreign investments, robust manufacturing growth and improvement in trade and financial services.

E. RISKS AND CONCERNS

The Board of Directors and the Audit Committee of the Board review the business risks to which your Company is exposed and the mitigation plans. The senior management team led by the Director and CFO is entrusted to manager risks pro-actively with appropriate mitigation measures and implementation thereof.

KEY RISKS TO WHICH YOUR COMPANY IS EXPOSED INCLUDE

Lack of infrastructure in rural areas including poor means of transport, limited storage facilities, and limited access to credit acts as a key inhibitor for farmers to store and transport their produce to different markets. Indian agriculture is dominated by small and marginal farmers with limited access to resources making it difficult to compete and scale up their production. Rising stiff competition from other Indian companies operating in similar field is likely to pose threat in the short run. Agriculture being vulnerable to climate change like erratic weather patterns, droughts, floods etc., affects the production of crops and increases customer prices

With the Indian weather conditions prone to vagaries, this proves to be an inherent weakness in the Companys business structure. Plant diseases that can result in harvest and yield failures also pose a problem.

Non-timely availability of raw materials may impact the production and which in turn may have an impact on the sales and profitability of the Company.

While the positive outlook for global trade and rising integration in the global supply chain supports net external demand, headwinds from geopolitical tensions such as supply chain disruptions and higher logistics costs, volatility in international financial markets and geo-economic fragmentation pose downside risks.

a. Monsoon

Agriculture being vulnerable to climate change like erratic weather patterns, droughts, floods etc., affects the production of crops and increases customer prices.

Agriculture in India is largely dependent on the monsoon. As a result, production of food-grains fluctuates year after year. A year of abundant output is often followed by a year of acute shortage in key crops. Agriculture continues to be dependent on the vagaries of temperature and rainfall. Not only is quantity of rain important, but timing is even more critical.

b. Irrigation

Although India is the second largest irrigated country of the world after China, only one-third of the cropped area is under irrigation. Irrigation is the most important agricultural input in a tropical monsoon country like India where rainfall can be uncertain.

c. Raw Material Risk

Quality rice production necessitates smooth supply of premium paddy as the key raw material and any price or production fluctuations of this commodity can hit profitability and adversely impact the Companys business.

Strong farmer relations, built over years through a well-established contact farming system, insulates the Company from this risk.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal Control Systems are the foundation for ensuring achievement of organisations objectives of operational efficiencies, reliable financial reporting and compliance with laws, regulations & policies.

The Company has in place adequate and appropriate systems of internal controls commensurate with its size and the nature of its operations and these have broadly withstood the test of time. The systems have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorizations and ensuring compliance of corporate policies.

Internal audit findings, along with recommendations for improvement, are regularly presented to the Audit Committee of the Board.

The Audit Committee, the Statutory Auditor and the top management are regularly apprised of the internal audit findings and regular updates, if any, provided at the Audit committee meetings of the Action taken on the internal audit reports. The Audit Committee of the Board consisting of non- Executive independent Directors reviews the quarterly, half yearly and the annual financial statements of your Company.

Market Trends, Drivers, and Challenges

The future looks bright for India. Demand will be supported by an expected improvement in household consumption, while prospects for fixed investment remain bright owing to an upturn in the private capex cycle, improved business sentiments, healthy balance sheets of banks and corporates, and the governments continued thrust on capital expenditure.

Indias rice production is set to experience steady growth in the coming years.

Market expansion is further aided by the adoption of Basmati rice in the food and beverage sector to prepare biryani, desserts and pilaf, to name a few. There is a surplus of demand for Basmati rice in various regions across the globe, especially in the Middle East, giving the markets positive outlook.

Consumers are planning to focus even more on a healthy diet and to shift their spend to more sustainable products.

ECONOMIC ENVIRONMENT:

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships. Overall, despite multiple global headwinds during the year including economic and geopolitical uncertainties, Indias economy grew driven by strong domestic macroeconomic fundamentals and private consumption. This was especially reflected in sectors such as agriculture, mining, manufacturing, electricity and constructure. This was further supported by high gross tax collections

INDIAN AGRICULTURE AND ALLIED INDUSTRIES

Policy initiatives such as the Pradhan Mantri Kisan Maandhan Yojana (PM-KMY), Pradhan Mantri Kisan Samman Nidhi (PMKISAN), and Pradhan Mantri Fasal Bima Yojana (PMFBY) have been instrumental in offering financial and income assistance to farmers, increasing their resilience to weather shocks. Agricultural development stands as a pivotal instrument in eradicating extreme poverty, fostering inclusive prosperity, and addressing the nutritional needs of an estimated ten billion people by 2050. New-age technology, enhanced farming practices and government support, further propels market growth.

Despite performing well, the Indian agricultural sector still faces challenges, such as the adverse effects of climate change, fragmented landholdings, suboptimal farm mechanisation, low productivity, disguised unemployment and rising input costs. Indias economy is projected to maintain its strong growth trajectory in 2025-26, with GDP expected to expand by 6.5%, reinforcing its position as one of the fastest-growing major economies.

G. DISCUSSION ON FINANCIAL INFORMATION WITH RESPECT TO OPERATIONAL PERFORMANCE

Overview

The financial statements of the Company have been prepared in accordance with Ind AS as per the Companies (Indian Accounting Standard) Rules, 2015 as amended and notified under Section 133 of the Companies Act, 2013 (the Act) and other relevant provisions of the Act.

Income

Of the total revenues for the year ended March 31, 2025, approximately 99.77% were derived from sale of products and remaining 0.23% from other income like Interest Income, Rent received, profit on sale of flat, sundry balance written back, other receipts, etc.

Expenditure

Purchases of stock in trade includes Rice Purchase. Employee benefit expense relates to Salaries and wages and Staff welfare expenses. Finance cost relates to interest expense. Other expenses primarily represents repairs and maintenance, insurance, rate and taxes, travelling & conveyance expenses, telephone expenses, advertising expenses, legal and professional charges, etc.

Depreciation and amortization

We have provided Rs. 11.36 Lakhs and Rs. 10.39 Lakhs towards depreciation and amortization, for the financial years ended March 31, 2025 and March 31, 2024, respectively.

Sensitivity to rupee movement

Company is sensitive to change in US Dollar value change as one segment of the company is into export.

Provision for tax

We have no provided for our tax liability.

Net profit after tax and exceptional item

Net profit stood at Rs. 0.77 Lakh for the year ended March 31, 2025, in comparison with net profit of Rs. 30.14 Lakh in the previous year.

Earnings Per Share (EPS) after exceptional item

During the year, our basic EPS decreased to Rs. 0.02 per share from Rs.0.69 per share in the previous year.

Financial condition

Sources of Funds

1. Share capital

Share Capital of your Company comprises of three classes of shares equity shares having a face value Rs. 10/-each. Our authorized share capital is Rs 36.00 Crores, divided into 1,70,00,000 equity shares of Rs. 10/-each and 19,00,000 preference shares of Rs. 100/- each. The issued, subscribed and paid up capital stood at Rs. 435.90 Lakh as at March 31, 2025, divided into 43,59,000 equity shares of Rs. 10/- each.

2. Reserves and Surplus

Capital Redemption Reserve

The balance as at March 31, 2025, stood at Rs. 5.53 Lakh/- same as the previous year.

Securities premium

The balance as at March 31, 2025, stood at Rs. 355.67 Lakh /-, same as the previous year.

3. Application of funds Fixed Assest Additions to gross block

During the year under review, no fixed assets have been purchased.

Trade Receivables

Trade receivables amounted to Rs. 160.14 Lakhs as at March 31, 2025, compared to 177.43 as at March 31, 2024. These debts are considered good and realizable.

Cash and cash equivalents

Cash and cash equivalents include balance with Banks and cash in hand.

Financial Assets and other non-current assets

The following tables give the details of our Financial Assets and other non-current assets:

Financial Assets and other non-current assets. (Rs.in Lakh)

Particulars	For the financial year ended March 31, 2025	For the financial year ended March 31, 2024
Security Deposits	-	-
Loans & Advances (Related Party)	-	-
Advance Income Tax & TDS	0.70	-
Others	504.31	201.04
TOTAL	505.01	201.04

Current Liabilities and Trade Payables

Particulars	For the financial year ended March 31, 2025	For the financial year ended March 31, 2024
Trade Payables	7.39	95.95
Bank Overdraft	-	-
Others (Statutory Payments)	0.41	0.39
Others	20.60	22.86
TOTAL	28.40	119.20

H. MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED SALES AND MARKETING

The year witnessed an unprecedented move of demonetization by the government, right after the festive season got over. The Company took a hit on its trading during the year.

EXPORT

Export business of the Company did not do well during the year.

I. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR:

Key Financial Ratios:

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector specific financial ratios. The Company has identified following ratios as key financial ratios.

Sr. No Particulars	2024-25 (%)	2023-24 (%)	% of change
1. Current Ratio	12.43	6.71	85
2. Debt Equity Ratio	0.04	0.05	-25
3. Interest Coverage Ratio	1.08	3.03	-64
4. Return on Equity Ratio	0.08	3.19	-97
5. Inventory Turnover Ratio	1.26	1.02	23
6. Trade Receivables Turnover Ratio	2.93	6.45	-55
7. Trade Payables turnover Ratio	0.00	11.92	-100
8. Net capital turnover Ratio	1.52	0.84	81
9. Net Profit Ratio (%)	0.00	0.05	-97
10. Return on Capital employed	0.01	0.04	-85
11. Operating Profit Margin (%)	8.96	14.60	-38.66
12. Return on Investment	NIL	NIL	NA

Reasons for significant changes in key ratios:

1. Current Ratio Increased primarily due to decrease of trade payables.

2. Debt Equity Ratio- Decrease due to decrease in debt during the year.

3. Interest Coverage Ratio Decrease due to decrease in profit during the year.

4. Return on Equity Ratio - Decrease due to decrease in profit.

5. Inventory Turnover Ratio -Increased primarily due to decrease in average inventory.

6. Trade Receivables Turnover Ratio Decreased primarily due to decrease in turnover and increase in average trade receivables.

7. Trade Payables Turnover Ratio Decreased primarily due to no purchase during the year.

8. Net Capital Turnover Ratio Increased primarily due to decrease in working capital and decrease in Sales.

9. Net Profit Ratio- Net profit ratio decreases primarily due to decrease in profit during the year. 10. Return on Capital Employed Ratio Decreased primarily due to lower operating profit. 11. Operating Profit Margin (%)- Decreased primarily due to decrease in revenue.

J. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:

Return on Net Worth in the financial year 2024-25 is 0.08 % as compared to 3.19% in the immediately previous financial year 2023-24. During the financial year under review, return on Net Worth increased by 97% as compared to immediately previous financial year mainly because of decrease in profit.

K. CAUTIONARY STATEMENT

Statement in this Annual report, particularly those which relate to Management Discussion and Analysis, describing your Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may materially differ from those expressed or implied. The Company assumes no responsibility in respect of forward looking statements, which may be amended or modified in future on the basis of subsequent developments, information or events.