Proventus Agrocom Ltd Management Discussions

ECONOMIC OVERVIEW

The Indian economy remained resilient during FY 2025-26, supported by strong domestic demand, robust manufacturing activity, improving consumption and continued government-led infrastructure and investment spending. As per the Provisional Estimates released by the Ministry of Statistics and Programme Implementation, Indias real GDP is estimated to have grown by 7.7% in FY 2025-26, compared with 7.1% in FY 2024-25. Real GVA is estimated to have grown by 7.9%, reflecting broad-based economic activity across manufacturing and services.

The economic environment during the year remained supportive for consumer-facing businesses, although global uncertainties, commodity price volatility, geopolitical developments and changes in international trade policies continued to present challenges. For businesses operating in food and agro-commodities, fluctuations in raw material prices, currency movements and international sourcing conditions remained important considerations.

Against this backdrop, Indias resilient domestic consumption, increasing health awareness and expanding organised retail ecosystem continued to provide a favourable environment for the Companys growth.

OUTLOOK

The outlook for the Indian economy remains constructive, supported by domestic consumption, improving rural demand, infrastructure investment and increasing formalisation of the economy. For the healthy food and packaged snacking sector, structural changes in consumer behaviour are expected to remain favourable. Consumers are increasingly moving towards convenient, hygienically packaged and nutrition-oriented food products. The continued penetration of organised retail, e-commerce and Quick Commerce is also expanding the addressable market for branded food companies.

For Proventus Agrocom, the opportunity is further strengthened by the Companys transition from a predominantly dry fruits business towards a broader wholesome nutrition platform. FY26 demonstrated that this strategy is gaining traction, with Wholesome Nutrition contributing 48% of revenue compared with 41% in FY25.

The Company remains focused on scaling its branded business, strengthening distribution, expanding its product portfolio and investing in manufacturing capacity to support sustainable growth.

Industry Structure & Development

The Indian retail sector continued to undergo structural transformation during FY26, driven by rising disposable incomes, increasing urbanisation, digital adoption and a gradual shift from unorganised to organised retail. Consumers are increasingly seeking convenience, quality assurance, product variety and trusted brands.

Innovation and Product Diversification

Innovation remained a key growth driver for the packaged food industry during FY26. Companies increasingly focused on developing differentiated products, new flavours, convenient formats and nutrition-led offerings.

ProV continued to expand beyond traditional dry fruits during FY26. The Companys Wholesome Nutrition portfolio, comprising products such as makhana, seeds, mixes, premium dry fruits and other nutrition-led snacks, increased its contribution to 48% of revenue from 41% in FY25. The Company launched 25+ new SKUs during the year, strengthening its presence across emerging consumption occasions.

E-commerce, Quick Commerce and Digitalisation

E-commerce and Quick Commerce continued to transform the packaged food retail landscape. These channels have enabled consumers to access a wider range of products with greater convenience while providing brands with additional avenues for consumer acquisition and product discovery.

ProV continued to strengthen its omnichannel presence across General Trade, Modern Trade, E-commerce and Quick Commerce. The Company is also focused on increasing its Quick Commerce contribution, with a medium-term objective of generating more than 10% of revenue from the channel.

Government Initiatives and Regulations

The packaged food industry continues to operate within an evolving regulatory environment covering food safety, product quality, labelling, packaging, taxation and consumer protection.

Compliance with requirements prescribed by the Food Safety and Standards Authority of India (FSSAI), the Goods and Services Tax framework and other applicable regulations remains an important component of the Companys operating framework.

Supply Chain and Logistics

Supply chain efficiency remains critical given the Companys diverse sourcing base. During FY26, ProV strengthened its integrated value chain with the Phase 1 operationalisation of its Purnia facility, enabling backward integration into makhana sourcing, and continued development of its 2,00,000 sq. ft. Surat facility, targeted for Phase 1 commissioning in H1 FY27. Together with Mumbai operations, these investments will enhance sourcing efficiency, quality control, supply-chain resilience and manufacturing capacity

Competitive Landscape

The healthy snacking and packaged dry fruits industry remains highly competitive, driven by brand strength, innovation, pricing, quality and distribution reach. ProV differentiates itself through its integrated farm-to-home model, strong sourcing capabilities, in-house processing, diverse product portfolio and omnichannel distribution network.

DRY FRUITS INDUSTRY OVERVIEW - AT AN INFLECTION POINT

Indias dry fruits and healthy snacking market continues to undergo a structural transformation as consumers increasingly move from loose and unbranded products towards packaged, branded and quality-assured offerings. The broader opportunity is expanding beyond conventional dry fruits towards wholesome nutrition products, including makhana, seeds, trail mixes, premium dry fruits and other nutrition-led snacks.

The Companys FY26 performance demonstrates this shift. Core Dry Fruits accounted for 52% of revenue in FY26 compared with 59% in FY25, while Wholesome Nutrition increased from 41% to 48%. This change in product mix contributed to an improvement in gross margin from 19.7% in FY25 to 22.1% in FY26.

Key Growth Drivers

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

1. Increasing Health Consciousness:

Consumers are increasingly prioritising healthier food choices and looking for products that combine taste with nutritional value. This trend is expanding the consumption occasions for dry fruits, nuts, seeds and healthy snacks.

2. Shift from Unorganised to Organised:

The Indian dry fruits market remains significantly fragmented. Increasing consumer preference for branded, hygienically packed and quality-assured products creates a substantial opportunity for organised players.

3. Low Per-Capita Consumption:

Indias per-capita consumption of dry fruits and healthy snacks remains low compared with several developed and emerging markets, providing significant headroom for long-term category expansion.

4. Rise of Makhana and Wholesome Nutrition:

Makhana has emerged as one of the fastest-growing categories within healthy snacking. The Company estimates that the makhana category is growing at approximately 2530% CAGR, substantially faster than traditional core dry fruit categories.

5. E-commerce and Quick Commerce

The rapid expansion of digital commerce has lowered geographical barriers and enabled consumers to discover and purchase differentiated healthy food products conveniently.

OUTLOOK

Changing Perceptions of Quality and Price

The Companys outlook for the dry fruits and healthy snacking industry remains positive. The Indian market is witnessing a structural shift towards healthier, convenient and branded food products.

The combined dry fruits and wholesome nutrition opportunity is estimated by the Company at approximately Rs.750 crore currently and is expected to reach approximately Rs.1,100 crore by 2030. Within this opportunity, wholesome nutrition is expected to grow significantly faster than core dry fruits.

The Company believes that the combination of increasing consumer awareness, product innovation, organised retail penetration, digital commerce and manufacturing integration will create significant opportunities for ProV.

OPPORTUNITIES AND THREATS

The Companys integrated business model and strong position in dry fruits and healthy snacking provide several opportunities for sustainable growth.

Opportunities

Continued shift from unorganised to organised and branded food products.

Rapid growth in wholesome nutrition and healthy snacking categories.

Increasing adoption of makhana, seeds, trail mixes and other nutrition-led products.

Expansion of General Trade into additional geographies and Tier-2 and Tier-3 markets.

Increasing contribution from E-commerce and Quick Commerce.

Product innovation and introduction of new consumption formats.

Backward integration through the Bihar makhana facility.

Capacity expansion through the upcoming Surat facility.

Improved margins through product-mix enhancement and manufacturing efficiencies.

Increasing brand awareness and consumer acceptance of ProV.

Threats

The Company continues to operate in an environment exposed to raw material price volatility, agricultural supply fluctuations, foreign exchange movements and international trade policies.

Competition within the healthy snacking and packaged food industry is increasing, with both established FMCG companies and emerging brands investing significantly in product innovation, distribution and brand building.

Changes in consumer preferences, pricing pressure, regulatory requirements and supply-chain disruptions may also impact business performance.

The Companys growth plans additionally require effective management of manufacturing capacity, working capital, inventory and human resources as operations scale. Proventus Agrocom seeks to address these risks through diversified sourcing, backward integration, quality control, product innovation, disciplined inventory management, omnichannel distribution and structured risk-management practices.

BUSINESS OVERVIEW

Proventus Agrocom Limited is an integrated health food company with a portfolio spanning dry fruits, nuts, seeds, berries and wholesome nutrition products.

The Companys business model integrates sourcing, processing, packaging, branding and distribution, enabling greater control over quality, cost and availability.

FY26 represented an important milestone in the Companys evolution from a predominantly dry fruits business towards a broader wholesome nutrition platform. Brand revenue increased to Rs.659 crore, representing a growth of 58% over FY25, while consolidated revenue increased to approximately Rs.926 crore, representing growth of 59%.

The Companys strategy remains focused on building ProV into a leading healthy snacking brand through product innovation, distribution expansion, manufacturing integration and continued brand investment.

Strategic Positioning of ProV

ProV is positioned as a branded healthy snacking platform with a diversified product portfolio and an integrated value chain.

The Company has progressively expanded its portfolio beyond core dry fruits into higher-growth wholesome nutrition categories. During FY26, Wholesome Nutrition accounted for 48% of revenue, compared with 41% in FY25. Makhana has emerged as a key strategic growth opportunity. The Companys Bihar facility provides backward integration at the source of Indias makhana supply and is expected to support sourcing economics, quality consistency and margins as operations scale.

The Companys competitive strengths include:

Integrated sourcing and processing capabilities.

Diversified product portfolio.

Strong ProV brand presence.

Omnichannel distribution.

Growing General Trade network.

Presence across Modern Trade, E-commerce and Quick Commerce.

Product innovation capabilities.

Backward integration in makhana.

Investments in manufacturing capacity.

Branded Sales	Particulars	FY24	FY25	Growth YoY	FY26	Growth YoY
	Branded Sales (Rs. crore)	303.62	417.11	37%	659	58%

	Particulars	FY26	FY25	Increase / (Decrease
Consolidated Financial Performance	Revenue from Operations (Rs. lakh)	92,498.74	58,155.96	59.31%
	Other Income (Rs. lakh)	139.81	265.52	(47.34%)
	Total Income (Rs. lakh)	92,638.55	58,421.48	58.57%
	Profit Before Tax (Rs. lakh)	1,785.43	938.63	90.22%
	Profit After Tax (Rs. lakh)	1,425.94	740.13	92.66%
	Basic EPS (Rs.)	41.01	21.4	91.64%
	Diluted EPS (Rs.)	40.9	21.28	92.20%

FY26 represented a year of strong revenue growth accompanied by significant improvement in profitability. Consolidated revenue from operations increased by approximately 59%, while consolidated profit after tax increased by approximately 93%.

The improvement in profitability was supported by higher branded sales, a favourable shift towards the higher-margin Wholesome Nutrition portfolio and improved gross margins. Gross margin increased to 22.1% in FY26 from 19.7% in FY25. EBITDA increased to Rs.19.84 crore from Rs.12.92 crore in FY25, reflecting improved operating performance despite continued investments in brand building, sales expansion and infrastructure.

Information Technology (IT)

Technology continues to be an important enabler of the Companys growth and operational efficiency.

The Companys technology systems support multiple business functions including inventory management, sales, distribution, finance, supply chain, logistics and business reporting. As the Company expands its General Trade, Modern Trade, E-commerce and Quick Commerce presence, digital systems and data analytics will become increasingly important for demand forecasting, inventory optimisation, channel management, consumer insights and decisionmaking.

The Company intends to further leverage technology, automation and data analytics to improve operational visibility, productivity and customer experience.

Internal Control Systems and Their Adequacy

The Company maintains an internal control framework designed to safeguard assets, ensure reliability of financial and operational reporting and support compliance with applicable policies and regulations.

The internal audit mechanism provides independent review of key business processes and internal controls, with significant findings communicated to the Audit Committee and Senior Management for appropriate corrective action.

Key control measures include periodic business reviews, budget monitoring, capital expenditure authorisation, inventory controls, process-level approvals and adherence to defined policies and Standard Operating Procedures. During FY26, the Company continued to strengthen its internal processes in line with its expanding business operations and manufacturing footprint. The Company remains committed to periodically reviewing its internal financial controls and implementing improvements identified through internal audit and management reviews.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Companys financial performance during FY 2025-26 reflects a significant improvement in the scale of operations and profitability. Revenue from operations increased to Rs.924.99 crore as compared to Rs.581.56 crore in FY 2024-25, representing a growth of approximately 58.33%. Profit before tax increased from Rs.9.39 crore to Rs.17.85 crore, while Profit after tax increased from Rs.7.40 crore to Rs.14.26 crore during the year.

The key financial ratios and the significant movements therein are set out below:

Particulars	FY 2025-26	FY 2024-25	% Change
Debtors Turnover Ratio	24.56	15.81	55.35%
Inventory Turnover Ratio	15.59	13.27	17.48%
Interest Coverage Ratio	8.78	5.69	54.31%
Current Ratio	3.74	4.66	(19.75%)
Debt Equity Ratio	0.19	0.17	9.90%
Net Profit Margin (%)	1.54%	1.27%	21.68%
Return on Net Worth (%)	9.88%	5.69%	73.57%

The Debtors Turnover Ratio increased from 15.81 times in FY 2024-25 to 24.56 times in FY 2025-26, representing an increase of approximately 55.35%. The improvement was primarily attributable to the significant growth in revenue from operations, while trade receivables increased only moderately during the year. This indicates improved receivables management and collection efficiency.

Inventory Turnover Ratio:

The Interest Coverage Ratio increased substantially from 5.69 times in FY 2024-25 to 8.78 times in FY 2025-26, representing an increase of approximately 54.31%. The significant improvement was mainly attributable to higher earnings before interest and taxes coupled with a substantial reduction in finance costs during the year.

Return on Net Worth increased from 5.69% in FY 2024-25 to 9.88% in FY 2025-26, representing an improvement of approximately 73.57%. The increase was primarily attributable to the substantial growth in profit after tax during the year, which increased from Rs.7.40 crore to Rs.14.26 crore. The improvement reflects enhanced returns generated on shareholders funds.

The remaining key ratios have not undergone a change of 25% or more during the year and, accordingly, no specific explanation for such changes is considered necessary under the applicable disclosure requirements.

DISCLOSURE OF ACCOUNTING TREATMENT

The consolidated financial statements have been prepared in accordance with the applicable accounting principles generally accepted in India and the Accounting Standards notified under Section 133 of the Companies Act, 2013, together with the applicable provisions of the Companies Act, 2013.

During the year under review, no accounting treatment different from that prescribed under the applicable Accounting Standards has been followed in the preparation of the financial statements. Accordingly, there is no alternative accounting treatment requiring separate disclosure or management explanation as to its appropriateness or representation of the true and fair view of the underlying business transaction.

The significant accounting policies adopted in the preparation of the consolidated financial statements have been consistently applied, except as specifically disclosed in the financial statements.

RISKS AND CONCERNS

The Board periodically reviews risks affecting the Companys business and formulates appropriate mitigation strategies. Key risks and areas of concern include:

Raw Material and Commodity Price Risk The Companys business is exposed to fluctuations in the prices and availability of dry fruits, nuts, seeds, makhana and other agricultural commodities. Changes in crop yields, weather conditions, global supply-demand dynamics and import prices may affect margins.

Supply Chain Risk

The Companys global sourcing model exposes it to geopolitical developments, international trade policies, logistics disruptions, currency movements and changes in import regulations.

Inventory Management

As the business scales, maintaining optimal inventory levels across factories, warehouses and distribution points remains critical. Excess inventory can increase working capital requirements and product obsolescence, while inadequate inventory can result in lost sales and service-level issues. Consumer and Product Risk

Consumer preferences within the healthy snacking industry can change rapidly. Continuous innovation, consumer research and effective product development are therefore necessary to maintain relevance.

Competition Risk

The healthy snacking market is attracting increasing competition from established FMCG companies, regional players and digital-first brands. Maintaining brand differentiation, pricing competitiveness, product quality and distribution depth remains critical.

Capacity Expansion Risk

The Companys growth strategy is dependent partly on the successful commissioning and ramp-up of new manufacturing facilities. Delays in construction, commissioning, equipment installation or capacity utilisation may impact the pace of growth.

Talent Management

As the Company scales, attracting, developing and retaining skilled employees across sales, manufacturing, supply chain, technology and leadership functions remains important. Cybersecurity and Technology Risk

Increasing reliance on digital systems creates exposure to cybersecurity threats, data breaches and technology disruptions. The Company continues to strengthen technology controls and cybersecurity infrastructure.

The Company seeks to mitigate these risks through diversified sourcing, backward integration, robust quality systems, inventory and supply-chain controls, phased capacity expansion, employee development and continued investment in technology and cybersecurity.

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, foreign exchange movements, changes in international trade policies, power availability and related charges, changes in government policies and regulations, alterations in tax regimes, macroeconomic developments in India, competition, consumer preferences, capacity expansion timelines, 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

HumanCapital

Our employees remain central to the Companys growth and long-term success. As the Company expands its manufacturing footprint, distribution network and product portfolio, strengthening organisational capabilities and leadership bandwidth remains a key priority.

During FY26, the Companys sales force expanded significantly to more than 350 personnel from approximately 200 in FY25, supporting deeper market penetration and wider distribution. The Company continues to invest in talent across sales, supply chain, manufacturing, brand marketing and other critical functions.

Going forward, the Company will continue to focus on employee capability development, leadership hiring, training and engagement to create a future-ready workforce capable of supporting the Companys scale- up plans.