Neopolitan Pizza Ltd Management Discussions

The Management Discussion and Analysis Report has been prepared in accordance with the provisions of Regulation 34(2)(e) of Listing Regulations, with a view to provide an analysis of the business and Financial Statements of the Company for FY 2024-25 and should be read in conjunction with the respective Financial Statements and notes thereon.

1. INDUSTRY STRUCTURE, DEVELOPMENT AND OUTLOOK

Neopolitan Pizza operates in two main segments:

? Quick Service Restaurant (QSR) Business:

Operates both company-owned (COCO) and franchise-owned (FOCO) outlets, with COCO and FOCO together accounting for over 90% of revenue in this segment.

Offers Neapolitan-style pizzas, including vegetarian and gluten-free options, along with a broader Italian menu (soups, salads, pasta, desserts).

As of March 31, 2024, they operated 21 restaurants in more than 16 cities across 2 states/union territories, with a regional concentration in Gujarat and expanding into Maharashtra and Uttar Pradesh.

? Agricultural Commodities Trading:

Operates as a B2B model, trading commodities like wheat, rice, fruits, and vegetables (e.g., tomatoes, onions, apples) on a wholesale basis.

In FY24, wheat made up 41.28% and apples 50.94% of trading revenue, indicating a notable concentration in these products.

Founded in 2011 (originally under an agricultural brand), the company pivoted to pizza-focused business by 2012, launching its first outlet in Vadodara, Gujarat. After listing on the BSE-SME platform in October 2024, it has started expanding its QSR footprint, planning up to 25 new outlets and targeting a mix of company-owned and franchised models.

GLOBAL

Global pizza sales market at USD 175.9 billion, forecasted to reach USD 250 billion by 2035, at a 3.24% CAGR. According to the latest report by IMARC Group, titled "Pizza Market Report by Type (Non-vegetarian Pizza, Vegetarian Pizza), Crust Type (Thick Crust, Thin Crust, Stuffed Crust), Distribution Channel (Quick Service Restaurants (QSR), Full-Service Restaurants (FSR), and Others), and Region 2025-2033," the global pizza market size reached USD 155.2 Billion in 2024.

Factors such as inflating disposable income levels of the masses, rapid urbanization and the increasing preference for western cuisines, are also positively influencing the market. On account of the aforementioned factors, the market is anticipated to reach a value of USD 226.2 Billion by 2033, exhibiting a CAGR of 4.27% during 2025-2033.

INDIAN

In 2024, the Indian pizza market was valued at USD 5.3 billion and is anticipated to grow to USD 11.8 billion by 2033, indicating a CAGR of ~9.2%. As per the India pizza market analysis, rapid urbanization and the inflating disposable income of individuals are catalyzing the demand for convenient food options, such as pizza. Additionally, the widespread adoption of Western dietary habits among Indians is positively influencing the market in India. The India pizza market growth is benefitting from a surge in quick-service restaurant expansions, with domestic and international chains aggressively opening outlets in metropolitan areas and emerging cities.

PRODUCTS

We, at Neopolitan Pizza, offer a wide range of selection to cater to the different taste preferences of our customers, across all our owned restaurants and franchises. As of March 31, 2024, we had 21 Restaurants located in more than 16 cities, spread across 2 states and union territories in India. We opened our first restaurant in February 2012, with the launch of our Company owned Restaurants in Vadodara, Gujarat. Revenue generated from our Restaurants represented 7.25%, 13.16%, and 7.79% of our revenue from operations in Fiscals 2022, 2023 and 2024 respectively.

Quick Service Restaurant (QSR) is a restaurant that efficiently serves inexpensive meals that are always prepared in a uniform way. The meals are packaged so they can be eaten on the go; either taken away, delivered to the customer or eaten quickly in-store at the limited seating often available. Further, we operate our QSR in 3 models i.e.

- Company Owned Company Operated Outlets (COCO)

- Franchisee Owned Company Operated Outlets (FOCO)

- Franchisee Owned Franchisee Operated Stores (FOFO)

PERFORMANCE ANALYSIS

During the year under review, your Company posted a total income of Rs. 5,126.10 lacs as against Rs. 4,401.07 lacs in the previous year. The Net profit for the year was Rs. 40.64 lacs as against Rs. 216.41 lacs in the previous year.

During the year under review the Company made Initial Public Offer of 60,00,000 Equity Shares of Rs. 10/- each at a price of Rs. 20/- per share (including premium of Rs. 10/- each) aggregating to Rs. 12 Crores. Issue opened 30th September, 2024 and closed on 4th October, 2024 on SME Platform of BSE Limited.

Thereafter, 60,00,000 Equity shares of Rs. 10/- each at a price of Rs. 20/- each were allotted on 6th October, 2024. Thereafter, these shares were Listed on SME Platform of BSE Limited and Trading approval was granted on 9th October, 2024. Accordingly, your Company has become Listed Company.

COMMITMENT TO QUALITY

Quality is at the heart of everything we do at Neopolitan Pizza and Foods Limited. We will continue to use only the freshest and highest quality ingredients in our pizzas, while ensuring that our food preparation and delivery processes are efficient and consistent across all our outlets. Our commitment to quality will help us to build a loyal customer base and differentiate ourselves from our competitors.

2. OPPORTUNITIES

Expansion into new geographic regions, including suburban and rural areas

Introducing new menu items and expanding offerings to attract a wider customer base

Developing a loyalty program or other customer engagement strategies to increase customer retention and repeat business

Developing partnerships with other businesses or suppliers to expand the supply chain and reduce costs

Exploring alternative revenue streams, such as catering or delivery services

3. THREATS

Intense competition in the QSR industry, both from established players and emerging startups

Economic downturns or fluctuations in consumer spending could negatively impact sales

Changes in regulations or policies that could affect the restaurant industry, such as increases in minimum wage or changes to food safety standards

Fluctuations in commodity prices or supply chain disruptions could impact the availability or cost of key ingredients

Negative publicity or social media backlash could harm the brands reputation and sales

4. SEGMENT WISE / PRODUCT WISE PERFORMANCE

Class of Goods/Services	Value Rs (lacs)
Agricultural Commodities Trading	4,971.40
Restaurant (QSR) Business	144.15
Other income	10.55

5. RISK MANAGEMENT & CONCERNS

The Company has a reasonably workable risk management framework to identify measure and mitigate business risks and opportunities. The framework seeks to minimize adverse impact on the business objective and enhances the Companys competitive advantage.

This risk management framework helps in managing market, credit and operations risks.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate system of internal controls in place. These controls have been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliances with regulations and for ensuring reliability of financial reporting. The Company has continued its efforts to align all its processes and controls with global best practices in these areas as well.

Audit Committee of the Board of Directors, regularly reviews the audit plans, significant audit findings, adequacy of internal controls, compliance with Accounting Standards as well as reasons for changes in accounting policies and practices, if any.

M/s KR & Associates, Chartered Accountant (Firm reg. no. 131846W), Vadodara, the internal auditors of the Company carried out audits in different areas of your Companys operations. Post-audit reviews were carried out to ensure that audit recommendations were implemented. The audit committee reviews the adequacy and effectiveness of the internal control systems, significant audit observations and monitors the sustainability of remedial measures.

7. DISCUSSION ON FINANCIAL PERFORMANCE VIS-?-VIS OPERATIONAL PERFORMANCE

During the year under review, your Company posted a total income of Rs. 5,126.10 lacs as against Rs. 4,401.07 lacs in the previous year. The Net profit for the year was Rs. 40.64 lacs as against Rs. 216.41 lacs in the previous year.

The Company has posted another good year of performance. The Company continued its growth strategy by opening multiple new outlets in Gujarat, including Vadodara, Sarangpur, and Botad boosting its presence in the home state. Revenue was heavily concentrated in Gujarat ( 4,394.50 lakh), with marginal contributions from Bihar, Maharashtra, and Uttar Pradesh. These figures reflect expansion but highlight that the Quick Service Restaurant Sales business remains a smaller part of the total operations.

The Company has met all the Financial Commitments to Bank within the stipulated period as per the Audit Report.

ACCOUNTING TREATMENT

The financial statements of the Company for the financial year ended March 31, 2025 were prepared in accordance with accounting principles generally accepted in India, including the accounting standards specified under section 133 of the Companies Act, 2013.

8. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT

Human resource is an asset to any industry. We believe that our employees are the key to the success of our business and hence we have a structured organization plan to take care of the growth and motivation aspects of our team. Our manpower is a prudent mix of experienced and young personnel which gives us the dual advantage of stability and growth. Our work processes and skilled resources together with our strong management team have enabled us to successfully implement our growth plans.

9. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

Sr. no. List of Ratios	2024-25	2023- 24	% of variance	Explanation (if change in more than 25%)
1. Debtors Turnover	5 .02	5.90	-14.81%
2. Inventory Turnover	5.98	9.37	-36.15%	During the current year there is high holding of inventory in comparison of previous year, hence variance occurred.
3. Interest Coverage Ratio	11051.88	997.98	-10.06
4. Current Ratio	3.27	3.93	-16.89%
5. Debt Equity Ratio	0.02	0.04	-46.21%	As decrease in debt of the current year in comparison to previous year, variance has occurred.
6. Operating Profit Margin (%)	42.09	50.91	17.32%
7. Net Profit Margin (%)	0.79%	4.92%	-83.84%	There is decrease in profit after tax in comparison to previous year, hence variance occurred.
8. Return on Net Worth	2.46%	17.20%	-85.72%	Decrease in profit for the current year and accordingly increase in new equity shares capital, variance occurred.

CAUTIONARY STATEMENT

Statement in this management analysis detailing the Companys objectives, projections, estimates, expectations, or predictions may be "forward looking" statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that may influence your companys operations include Global and domestic supply and demand conditions affecting selling prices, input availability and prices, changes in Government policies, regulations, tax regimes, economic development within and outside the country and other allied factors. The Company assumes no responsibility to publicly amend, modify or revise the forward-looking statement on the basis of subsequent developments, information or events.