Proventus Agrocom Ltd Management Discussions

(MDAR) - FY25

ECONOMIC OVERVIEW

The Indian economy grew by 6.5% in FY 2024-25 (Economic Times, PIB), a moderation from the strong ~9.2% growth recorded in FY 2023-24 (Deloitte). Growth momentum improved in the final quarter (January- March 2025), with GDP expanding by 7.4% (Times of India, FT, PIB), which carried into the new fiscal year, as Q1 FY 2025-26 (April-June 2025) registered a robust 7.8% growth (PIB). Despite these positive trends, external challenges such as geopolitical tensions, elevated U.S. tariffs, and global trade headwinds weighed on the economy (Reuters, MOSPI). Nevertheless, resilient domestic demand, government spending, and policy support ensured that India remained one of the worlds fastest-growing major economies.

OUTLOOK

Looking ahead, GDP growth in FY 2025-26 is expected to moderate to around 6.3%-6.8% (Reuters, PIB), as fiscal consolidation, tighter monetary policy, and global trade frictions temper demand. However, the outlook is not without positives. A normal monsoon, easing inflationary pressures, and improving rural demand could provide a boost to consumption and investment, supporting stronger-than-expected growth and reinforcing Indias position as a resilient economy amid global uncertainties.

RETAIL INDUSTRY OVERVIEW

The overall retail industry in India is estimated to have grown to approximately C10.82 lakh crore (around US$ 125 billion) in FY 2024 25, up from C10.83 lakh crore in FY 2023 24. Organized retail is estimated to comprise about 18% of the total retail market, enhancing its share from earlier levels. E retail (e commerce) continues to expand rapidly, accounting for around 8% of the retail market in 2024, with GMV reaching approximately ^.19 lakh crore (US$ 14 billion) in FY 2025. Of the organized retail industry, the food and grocery segment remain significant, though specific FY25 proportions are not explicitly reported; traditionally, it has accounted for about 20% by value of organized retail. Looking ahead, the retail sector is projected to grow at a CAGR of around 15%, aiming to reach C29.88 lakh crore (US$ 345 billion) by FY 2030, while e retail is expected to account for a growing share of overall retail, supported by rising digital adoption and favourable macroeconomic conditions.

Consumer Trends

The industry is experiencing notable shifts in consumer preferences and buying behavior. Health and wellness, convenience, and premiumisation have become key factors driving decisions. Consumers are increasingly seeking healthier and more natural products, including organic, gluten-free, and those with reduced sugar and additives.

Innovation and Product Diversification

Packaged F&B companies are actively innovating and diversifying their portfolios to address evolving demands. This involves launching new flavors, experimenting with formats, and introducing differentiated packaging designs to enhance appeal and functionality.

E-commerce, Quick Commerce and Digitalisation

The rise of E-commerce and Quick Commerce has reshaped the way consumers shop for packaged foods. Online grocery platforms and food delivery services are witnessing rapid adoption, particularly in urban areas. More than 800 successful direct-to-consumer (D2C) brands now operate in India, playing a pivotal role in educating consumers about health and wellness while building loyalty. Indian consumers are increasingly consuming large amounts of wellness-related content online, particularly around healthy eating. D2C brands have been at the forefront of this shift, leveraging social media and digital channels to drive awareness, change daily habits, and normalize wellness as a lifestyle choice.

Government Initiatives and Regulations

The government continues to strengthen the packaged F&B sector by introducing policies focused on food safety, hygiene, and quality standards. The Food Safety and Standards Authority of India (FSSAI) is central to regulating and monitoring compliance across the industry.

Supply Chain and Logistics

Efficient supply chain and distribution networks remain critical to industry growth. Cold chain infrastructure, in particular, plays an essential role in preserving product quality, especially for perishable goods, and is a key area of investment.

Competitive Landscape

The sector is highly competitive, with both domestic players and multinational corporations vying for market share. Established Indian conglomerates and global majors have a strong presence, intensifying the battle for brand visibility, consumer trust, and distribution reach.

DRY FRUITS INDUSTRY OVERVIEW - AT AN INFLECTION POINT

To understand the growth trajectory of the dry fruits industry, it is useful to look at the evolution of the packaged food sector in India. The transformation of the branded wheat flour (atta) market is a classic case in point. Once dominated by neighbourhood flour mills, the industry has scaled into a C20,000 crore behemoth by 2021 from just C600 crore in 2002 ? an astonishing 33X expansion at a CAGR of 68%. Today, over 50% of this market is consolidated under just three companies.

The dairy industry has followed a similar path. Branded liquid milk sales were approximately C4,000 crore in 2001. By 2015, this had surged to C55,000 crore, and by FY25 the market is projected to reach nearly C167,000 crore. This represents 83X growth, supported by a CAGR of 21% during 2021-2025.

Independent research indicates that the branded dry fruits category is poised for a comparable multidecadal growth trajectory. The overall dry fruits industry in India, estimated at C50,000 crore in 2022, is projected to expand to C275,000 crore by 2037, representing a CAGR of 12%. Within this, the branded dry fruits segment is expected to grow at more than double the pace, albeit from a smaller base.

Branded dry fruit sales stood at C2,000 crore in 2017 and grew to C6,000 crore by 2022. By 2027, this is projected to rise threefold to C18,000 crore, implying a CAGR of 28%. Between 2027 and 2037, the market is expected to further accelerate at a CAGR of 25% to reach nearly C95,000 crore. If these estimates materialize, the category will have achieved an impressive 48X growth over two decades.

Key Growth Drivers

The remarkable rise of the branded dry fruits segment is being driven by five megatrends:

1. Millennial Segment: Nearly 400 million young Indians represent a powerful demographic. This group is increasingly health-conscious and gravitates toward wholesome, high-quality snacks that are smartly packaged, branded, and offer value for money.

2. Economic Growth: India remains the fastest- growing large economy. Rising disposable incomes among the expanding middle class are fueling higher spending on health-focused and premium foods.

3. Low Per Capita Consumption: Indias per capita consumption of nuts, seeds, and berries remains low compared to global benchmarks, leaving significant headroom for category penetration and growth.

4. Direct-to-Consumer (D2C) & Quick Commerce: The proliferation of mobile internet and e-commerce & Q-commerce platforms has lowered barriers to entry, enabling niche startups and health food brands to scale rapidly across the country.

5. Shift from Unorganised to Organised Sector: With growing consumer preference for quality-assured, hygienically packaged, and certified products, the organised sector continues to gain share from unbranded and loose sales.

OUTLOOK

Changing Perceptions of Quality and Price

The long-held belief that Indian consumers are hesitant to spend more on superior quality ingredients is rapidly changing. This transformation is most visible against the backdrop of rising health and wellness awareness. Today, consumers are increasingly willing to allocate higher budgets towards food and beverages crafted from premium ingredients that are seen as nourishing and beneficial for long-term health.A growing share of consumers are ready to pay a premium for healthier products, marking a clear shift from earlier norms. A recent survey revealed that Indian consumers rank among the most health-conscious globally, with 40% of respondents expressing readiness to pay more for food with enhanced nutritional value ? significantly above the global average of 29%. The preference for products free from artificial additives and preservatives further reinforces this trend. This evolving consumer mindset is expected to propel the health-focused F&B sector in India to a market size of USD 30 billion by 2026, expanding at an impressive CAGR of 20%.

OPPORTUNITIES AND THREATS

In the dry fruits and agro-commodities industry, our company is strategically positioned to capitalize on rising demand for healthy snacking and branded produce. Advancements in processing and packaging technologies are extending shelf life, improving appeal, and reducing wastage ? all of which strengthen our offering. Expanding branded product lines also enhances differentiation and builds customer loyalty.

At the same time, risks remain. Volatile weather conditions can impact crop yields, while fluctuating international trade policies and tariffs may affect supply chain stability. The growth of branded dry fruits brings greater competition and the possibility of market saturation. In addition, expanding processing capacity requires careful navigation of sustainability and regulatory compliance challenges.

Proventus Agrocom aims to address these risks by leveraging innovation, maintaining a strong focus on quality, and adopting robust risk-management strategies ? ensuring sustainable and profitable growth.

BUSINESS OVERVIEW

Proventus Agrocom Limited is a holistic health food company with a comprehensive portfolio of dried fruits, nuts, seeds, berries, and a variety of nutritious snack options. The Companys strategic approach is anchored in diversification across product categories while building strength across the entire value chain ? from sourcing to distribution. This integrated model enables Proventus to function as a convenient one- stop solution for its wide consumer base.

Guided by a mission to excel in health-focused foods,

Proventus integrates sourcing, processing, packaging, and distribution into a unified model that delivers both value and reliability. Robust supply and distribution networks support this model, ensuring consistent product quality and consumer reach across the country.

Within India, a significant gap exists in the healthy snacking category, especially in dried fruits, nuts, seeds, and berries. Consumer preferences are steadily shifting from unbranded or loose goods to branded and packaged alternatives, even in Tier-2 cities and local kirana stores. As this transition gathers pace,

ProV ? the flagship retail brand of Proventus ? is well positioned to capture market share with its expansive and innovative product range.

Strategic Positioning of ProV

ProV Foods, the retail arm of Proventus Agrocom Limited (listed on NSE Emerge), is on a mission to redefine “healthy snacking” in India. Established in 2015 by Durga Prasad Jhawar, Deepak Kumar Agrawal, and Shalin Sanjiv Khanna, the leadership team brings over 100 years of cumulative expertise across the agricultural value chain.

Branded Sales

(Rs. in lakh)

	FY21	FY22	Growth YoY (%)	FY23	Growth YoY (%)	FY24	Growth YoY (%)	FY25	Growth YoY (%)
Branded sales	4,982.72	7,676.15	54%	21,187.82	176%	30,362.35	43%	41,711.42	37%

Financial Performance

	Standalone			Consolidated
Particulars	FY25	FY24	Increase/ (Decrease)%	FY25	FY24	Increase/ (Decrease)%
Revenue from operations	38,000.18	34,005.99	11.75%	58,155.96	49,702.66	17.01%
Other income	420.06	822.90	-48.95%	265.52	495.02	-46.36%
Finance cost	79.13	110.13	-28.15%	192.33	180.54	6.53%
Profit before Tax	490.33	602.23	-18.58%	938.63	890.8	5.37%
Profit after Tax	857.71	477.87	79.49%	740.13	720.74	2.69%
EPS - Basic (in C)	24.95	14.40	73.26%	21.40	21.82	-1.92%
EPS - Diluted(in C)	24.81	14.27	73.86%	21.28	21.62	-1.57%

Human Capital

Our employees are central to our growth journey and long-term success. We remain committed to attracting, nurturing, and retaining highly motivated talent across all levels of the organization. Regular workforce assessments help us identify skill gaps, which we address through targeted development initiatives, structured training programs, and continuous learning opportunities. By investing in our people, we aim to enhance both individual capabilities and organizational productivity.

We continue to foster a strong customer-centric culture across teams, ensuring employees are aligned with our service quality standards and responsive to evolving consumer needs. As of FY25, we employed 67 permanent staff members across group companies and 250 contractual employees, who together form the backbone of our operations. Going forward, we will strengthen employee engagement and talent development to build a future-ready workforce.

Information Technology (IT)

Technology remains a cornerstone of our business operations. Our strong IT infrastructure has enabled us to seamlessly manage complex processes while responding swiftly to changing consumer preferences and market demands. Equipped with advanced data management tools, our IT systems support multiple business functions including cash flow management, in-store operations, logistics, HR, project monitoring, and administration.

These systems have improved operational efficiency by minimizing product shortages, pilferage, and out-ofstock situations, while enhancing supply chain visibility and productivity. As we expand, we intend to further leverage digital tools, data analytics, and automation to support decision-making, improve customer experience, and future-proof our operations.

Internal Control Systems and Their Adequacy

We have a robust internal control framework supported by a structured internal audit mechanism to safeguard company assets and ensure accuracy of financial and operational reporting. The internal audit team reports directly to the Audit Committee of the Board, ensuring independence and oversight.

Key control measures include monthly business reviews to track performance, capital expenditure authorizations for new projects, and strict budget adherence. Findings from internal audits are regularly shared with the Audit Committee and Senior Management, with timely corrective actions implemented.

In FY25, we undertook a comprehensive review of internal financial controls, the results of which were found satisfactory. Improvements suggested during the process were implemented, and our policy guidelines and Standard Operating Procedures (SOPs) are continually updated to reflect evolving business needs.

Risks and Concerns

The Board of Directors periodically reviews risks impacting the business and formulates mitigation strategies, with the Senior Management Team responsible for execution. Some key risks and areas of concern include:

• Talent Management: The ability to attract, train, and retain skilled employees remains critical to sustaining growth.

• Inventory Management: Maintaining optimal inventory levels at factories and warehouses is essential to avoid operational disruptions.

• Consumer Insights: Anticipating and adapting to fast-changing consumer preferences is necessary for continued relevance.

• Geographical Expansion: Managing operations across new states and regions requires strong execution and localized strategies.

• Cybersecurity: Increasing reliance on technology heightens the risk of data breaches and cyberattacks, which could disrupt operations.

We mitigate these risks through structured HR programs, enhanced supply chain visibility, consumer research, phased regional expansion, and ongoing investments in cybersecurity infrastructure.

Cautionary Statement

The statements contained in this Management Discussion and Analysis Report that describe the Companys objectives, projections, estimates, expectations, or predictions may be considered “forward-looking statements” within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results may differ materially from those expressed or implied.

Key factors that could cause such differences include, but are not limited to: changes in economic conditions affecting global and domestic demand and supply, fluctuations in finished goods prices, volatility in raw material costs and availability, power availability and wheeling charges, changes in government policies and regulations, alterations in tax regimes, macroeconomic developments within India, as well as other factors such as litigation and industrial relations.

The Company undertakes no obligation to publicly update, amend, or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.