Ovobel Foods Ltd Management Discussions

a. Industry structure and developments:

The Company operates in the niche segment of egg powder and frozen egg manufacturing and exports. Currently, only a limited number of players are active in this domain in India, providing the Company with a strategic advantage in a relatively specialized market.

The Companys sustainability strategy has been focussed on strengthening its presence in profitable and attractive market segments, supported by robust brand building and a strong manufacturing foundation. Leveraging its established brand value, the management continues to undertake various initiatives to ensure steady and sustainable growth.

In line with its growth strategy, the management has implemented an expansion plan through the establishment of a new unit. This expansion is strategically focused on enhancing production capacity and broadening the Companys product offerings. The new unit is designed to leverage advanced technology and optimized processes to meet the increasing demand in both domestic and international markets.

Through this initiative, the management anticipates improved operational efficiency, enhanced scalability, and greater agility in responding to evolving customer preferences and emerging market trends.

b. Opportunities:

On account of various corrective and strategic measures undertaken by the management, the Companys products are witnessing strong demand across both domestic and international markets. This distinct advantage is expected to translate into increased business opportunities and enhanced commercial value in the coming years.

In the current global environment, there is a renewed and growing emphasis on healthy living and nutritious food consumption. The Company recognizes this shift as a significant opportunity and is well-positioned to capitalize on the rising demand for high-quality, protein-rich egg-based products. Accordingly, the Company aims to further expand its customer base across both Indian and international markets.

In addition, the Company continues to actively explore entry into new geographies and untapped markets, supported by its strong product quality, established brand reputation, and expanding production capabilities. The management remains committed to innovation, product diversification, increasing production capacity, backward integration and strengthening distribution networks to sustain long-term growth and competitiveness.

c. Threats:

The egg powder industry in India faces multiple challenges, including volatility in raw material prices due to seasonal factors and disease outbreaks, as well as supply chain disruptions impacting the availability of quality inputs. The industry is also exposed to risks arising from high export dependence, stringent international quality standards, and fluctuations in global demand and currency movements. Additionally, relatively low domestic consumption, high energy costs, and the need for continuous investment in technology and infrastructure pose constraints on growth and profitability.

While international competition continues to pose challenges to the Companys future operations, your Directors remain confident in effectively addressing such pressures by leveraging their experience, domain expertise, and strategic capabilities.

The Companys performance is also influenced by market fluctuations arising from macroeconomic factors such as inflation, currency volatility, and overall economic conditions. These factors have a direct impact on production costs and overheads, thereby affecting pricing dynamics in the egg powder market.

In order to mitigate these risks and enhance operational stability, the management has initiated a backward integration strategy through the establishment and ownership of poultry farms. This approach is aimed at ensuring a consistent and reliable supply of key raw materials, namely eggs, which are critical for production.

Backward integration is expected to significantly reduce dependence on external suppliers, minimize exposure to supply chain disruptions, and improve cost efficiencies. By exercising greater control over raw material sourcing, the Company can better manage input costs and maintain pricing competitiveness, particularly during periods of volatility in the egg market.

Further, this strategic move strengthens supply chain resilience, enhances quality control across the value chain, and supports the Companys long-term objective of sustainable and profitable growth.

d. Segment wise or product wise performance:

During the year under review, the Company continued to operate predominantly in the business of manufacture of standard egg powder. The other products included frozen egg and egg shell powder. The product wise revenue registered by the Company was as follows:

Product	Revenue IN Rs. Lakhs
	FY 2025-26	FY 2024-25
Egg Powder	24,905.77	18,241.82
Frozen Egg Products	747.87	607.93
Egg Shell Powder	21.37	8.94

e. Outlook:

The outlook for the egg and egg products industry remains dependent on various factors, including domestic and international demand, export opportunities, poultry production levels, feed costs, seasonal variations and fluctuations in the prices of raw eggs.

Egg prices are expected to remain unstable subject to periodic volatility due to changes in demand and supply conditions, seasonal factors and developments in export markets. Any disruption in exports may result in increased domestic availability and downward pressure on egg prices, while improvement in export demand and seasonal demand may support prices.

In this environment, the Company remains focused on operational efficiency, strengthening its presence in the egg-based products segment and developing value-added and specialised products. The Companys diversified product portfolio, including egg powder, frozen egg products and egg shell powder, is expected to support its ability to respond to changing market conditions and customer requirements. The Company will continue to monitor market developments and take appropriate measures to manage the impact of raw material price volatility and changing market conditions.

Further the Company has prioritized in improving its quality measures and has been successful in keeping its clients happy on the product quality front. The management looks to the future with optimism.

f. Risks and concerns:

Recent reports in India relating to egg contamination were largely confined to isolated instances such as avian influenza outbreaks and unsubstantiated claims regarding antibiotic residues. While regulatory authorities have affirmed that eggs are safe for consumption, such developments highlight the need for stringent quality control, robust biosecurity protocols, and enhanced supply chain integration. Egg prices in India are inherently volatile and subject to seasonal variations, resulting in fluctuations in raw material costs and consequent impact on production margins. The industry continues to face increasing manpower costs, which may exert pressure on operational efficiency and profitability. A slowdown in global trade may adversely impact export demand and revenue realisation. Changes in trade policies, tariff structures, and international agreements could alter global trade dynamics and restrict market access for egg powder manufacturers. Disruptions in logistics and transportation infrastructure, including port congestion, geopolitical developments, or alterations in shipping routes, may impact the cost and efficiency of export operations. Geopolitical uncertainties, including tensions and conflicts in the Gulf region, may lead to volatility in fuel prices, disruption of key shipping routes, and escalation in freight costs, thereby affecting the Companys export operations and overall cost structure. A strengthening of the US Dollar is generally beneficial to the Companys export revenues, particularly given its status as an Export-Oriented Unit (EOU). However, it may also lead to an increase in the cost of capital expenditure, especially where imports of machinery, equipment, or other inputs are involved.

Notwithstanding the above, the Company has demonstrated resilience by retaining its customer base and improving returns through its continued focus on quality, operational efficiency, and customer satisfaction.

g. Internal control systems and their adequacy:

The Company has established adequate internal control systems commensurate with the current scale and nature of its operations, and the management remains committed to continuously strengthening these controls in line with evolving business requirements.

To mitigate potential risks, the management adopts a proactive approach by diversifying export markets, maintaining strong relationships with logistics partners, closely monitoring regulatory developments, enhancing supply chain flexibility, and implementing robust risk management frameworks to ensure operational resilience and business continuity.

h. Discussion on financial performance with respect to operational performance:

Your Company prepares its financial statements in compliance with the requirements of the Companies Act, 2013 and recognized accounting policies and practices, Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act. These financial statements were prepared on a historical cost basis. Your management accepts the responsibility for the fair presentation of the additional information presented in the notes to the financial statements for the purpose of additional analysis of the financial statements. The financial statements have been prepared as per the requirements of Schedule III (Division II) notified by the Ministry of Corporate Affairs and the operating cycle has been considered as one year. This also enables in reasonably presenting the Companys state of affairs and profits and cash flows for the year ended March 31st, 2026.

i. Material developments in Human Resources/ Industrial Relations front, including number of people employed:

The Company continues to be supported by a team of experienced and committed professionals across functions such as production, sales, marketing, administration, finance, and compliance. Industrial relations remained cordial throughout the year, with a harmonious and constructive relationship prevailing between the management and employees.

The Company places strong emphasis on human capital development and takes pride in the competence, dedication, and commitment of its workforce. Structured induction programs across all levels, along with ongoing management development initiatives, have contributed to enhancing employee capabilities and overall organizational effectiveness.

j. Details of significant changes in key financial ratios

The details of signification changes in key financial ratios are as follows:

Ratio	As at 31 March 2025	As at 31 March 2026	Variance (%)	Explanation for Variance
i. Debt Service Coverage Ratio	0.06	0.15	131.25%	The Debt Service Coverage Ratio increased by 131.25% during FY 2025-26 mainly due to improvement in earnings available for debt servicing and debt repayment obligations compared to the previous year.
ii. Return on Equity Ratio	0.11	0.25	- 122.92%	In current year, the profits have increased due to higher gross profit margin compared to previous year and as a result the return on equity has also increased. Also, the average shareholders equity has decreased due to lower profits in the previous year.
iii. Return on Capital Employed	12.37%	25.68%	107.72%	The significant increase in ROCE was primarily driven by higher Earnings Before Interest and Taxes (EBIT) during the year, supported by improved operational performance and profitability, while the increase in capital employed remained comparatively moderate.
				This led to more efficient utilization of capital employed during FY 2025 26.
iv. Net Profit Margin	4.80%	9.49%	97.52%	The Net Profit Margin increased by 97.52% during FY 2025 26 primarily due to higher profitability driven by an increase in sales and improved operational efficiency compared to the previous year.
v. Return on Investment	41.44%	0.24%	-99.43%	The decrease in Return on Investment was primarily due to additional investments made during FY 2025 26.
vi. Current Ratio	1.66	2.45	47.27%	Based on the maturity profile of the fixed deposits, the fixed deposits are classified as current assets in current year. Hence significant increase in the current year as compared to previous year.
vii. Net Capital Turnover Ratio	7.45	3.35	-54.97%	The Net Capital Turnover Ratio reduced by 54.97% during FY 2025-26 primarily due to higher net sales and more efficient utilization of working capital. The reduction indicates improved operational efficiency and better management of current assets and current liabilities compared to the previous year.

Cautionary Statement:

Certain statements contained in the Management Discussion and Analysis Report may constitute “forward-looking statements” within the meaning of applicable laws and regulations. These statements are based on current expectations, estimates, and projections, and involve known and unknown risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied in such statements.

Factors that could cause such differences include, but are not limited to, changes in economic conditions affecting demand and supply, variations in government policies, regulations and taxation, natural calamities, and other external factors beyond the Companys control.

	For and on behalf of the Board of Directors
	SD/-
31 August 2026	Mysore Satish Sharad
Bangalore	Managing Director