Rossell India Ltd Management Discussions

Management Discussion and Analysis Report

a. Industry Structure and Development

The world tea production in 2024 at 7,053 million kgs is marginally higher than the previous year, wherein approximately 6,701 million kgs was produced. Major gain in production was from China, Kenya, Turkey, Sri Lanka, Argentina and Vietnam.

Sri Lanka has started season 2025 on a higher note as compared to 2024 and is 3.61 million Kgs ahead in production till March, 2025. Kenya is lower by 15.43 million Kgs till end February, 2025.

Production in India till end March, 2025 was 107.92 million Kgs., 9.76 million kgs (9.94%) higher as compared to the previous year. The April crop is however, likely to be marginally lower.

Indian Orthodox tea production this year has increased by 1.69 million Kgs as of March 2025, while Sri Lankas production has also risen by 3.2 million Kgs during the same period. However, the price differential between Indian and Sri Lankan Orthodox is working in our favor, leading to strong demand, particularly from buyers in the Middle East and CIS regions.

The CTC leaf market has subdued demand, leading to lower prices. The CTC dust market on the other hand is firm with aggressive buying from HUL. This is driven by a higher CTC crop until March 2025-8.42 million Kgs (an increase of approximately 9.92% compared to the previous year)-along with reduced demand from quality buyers for leaf grades.

b. Opportunities and Threats Opportunities

We are recognized internationally and in the domestic market as one of the Best Assam quality tea Producer with required residue compliance, both in the CTC and Orthodox categories. Therefore, we would be able to receive premium for our quality produce, from both international and domestic buyers. Four out of our seven estates are RA certified and all are FSSC compliant.

Also, with more testing in the Domestic Market there is more demand for compliant teas.

We have the flexibility to switch from Orthodox to CTC and vice a versa to some extent depending on the market dynamics. Also, as the exchange rates are high this year, exporting tea will be to our advantage.

We have a limited production base and at times cannot meet the requirements of our foreign buyers, hence it is clearly an opportunity to acquire more estates and grow.

We are actively working toward securing the required certifications for the newly acquired Dhoedaam Tea Estate, with the intent of exporting its teas to our existing buyers next year. With an estimated crop base of 1.75 million kgs, the estate is expected to significantly boost our CTC exports in next year.

Threats

Owing to the global climatic changes, weather conditions continue to be very erratic and unpredictable. As an agricultural product, tea is dependent on weather conditions. Erratic weather can adversely affect both crop yield and quality. The climate change also brings in new pest and disease for which certain chemicals which might not be permitted by the importing countries, must be sprayed under compulsion. If such situation arises, then there would be less exportable teas available from our Company, even if we have orders / enquiries from the overseas buyers.

Strict international MRL standards and certifications are also adding complexity to exports. Discontinuation of Neonicotinoids (Thiamethoxam) the only option for controlling sucking pest will hamper exports to Germany. Thiacloprid was discontinued earlier and we do not have any alternative.

Price of Tea in the Domestic market is purely governed by supply and demand and therefore, an overproduction leads to drop in prices.

Increased imports of lower-cost teas from Kenya and other tea producing countries into India affect domestic pricing and export competitiveness.

The low prevailing prices in Kenya are also leading overseas buyers to shift their purchasing preferences to that destination.

Input costs have shot up earlier due to the pandemic and now with the ongoing Ukraine/Russia conflict. The recent conflicts in West Asia have further aggravated the situation. High inflation across the globe is leading to less demand.

Shipping via the Red- sea route is getting affected due to the conflicts, hence shipping charges are likely to increase.

Quality

The Company is committed to producing the highest quality CTC and Orthodox teas. Through consistent excellence, we have built strong brand equity, establishing ourselves as an industry benchmark in both domestic and international markets.

Compliance has been a crucial factor in maintaining our dominance in both domestic and overseas markets.

Markets

The traditional tea-drinking regions, including the UK, Germany, Japan, the Middle East, Russia, and several CIS countries, continue to be the primary market. Some positive growth has been observed in Canada and the USA. Markets such as Europe, parts of the Western countries, and the Middle East are paying a premium for high-quality and compliant teas.

Rossells commitment to producing and supplying superior-quality and compliant teas has not only helped us retain our clientele but also enabled us to expand our customer base. Our export volume reflects this success, showing a significant 46% growth in 2022- 2023, followed by 24% growth in 2024-2025.

However, the increasingly stringent and evolving MRL (Maximum Residue Level) requirements in various countries present substantial challenges for the tea industry moving forward. The recently announced reduction in the minimum residue level of Neonicotinoids by the EU is expected to significantly impact exports to Germany.

Our goal for 2025 is to navigate these challenges effectively and continue striving for excellence in the global tea market.

Fully compliant and safe teas with RA certification shall also give us an edge over the others in the industry.

c. Segment-wise Business Performance

The Tea manufactured at our estates from own leaf during the Financial Year was 50.64 lakh kgs as against 46.60 lakh kgs in the year

2023- 24, higher by 4.04 lakh kgs or 8.67%. This included Tea produced at Dhoedaam, acquired in Jan 2025, which contributed 0.44 lakh kgs.

Made tea from outsourced leaf was 4.91 lakh kgs compared to 5.07 lakh kgs in the previous year and our total tea production at 55.55 lakh kgs was the 2nd highest.

Production was impacted at Nokhroy and Nagrijuli due to major rain deficit and extreme weather conditions. Nokhroy recorded the lowest rainfall of 57.05" which is 39% lower than the 18-year average rainfall.

Exports during the year was 11.47 lakh kgs as compared to the previous years quantity of 9.22 lakh kgs, an increase of 24%. The higher exports were due to the fact that we were able to export more teas to UK, UAE, and Saudi Arabia.

Price realization for our Teas at Rs.324.14 was higher than the previous years average of Rs.274.26 per kg by 18%. This is the highest price realized for our teas and was on the backdrop of significantly higher orthodox and CTC prices prevalent and also owing to improved quality and higher export.

Our product mix, efficiencies and productivity helped in obviating the costs to some extent. The higher production also led to lower cost and we were able to absorb the increased staff salary which increased from 1st April 2024.

The Revenue of Rossell Tea at Rs.18,156.42 Lakhs is the highest ever achieved and 21% more than the Rs.14,969.69 Lakhs of the previous year.

d. Outlook

The year 2025 began with mixed growing conditions. Inadequate rainfall in the North Bank and Central Assam led to poor crop yields between January and March, while Upper Assam experienced favourable weather, resulting in better output. Production in North India stands at 60 million kgs, compared to 49 million kgs last year. April production is likely to be at par with the previous year. However, extreme and varying climatic conditions are continuing to impact crop performance and have led to increased pest activity.

In India, the Orthodox market has been buoyant since the start of the year, with strong demand from the CIS and Middle East expected to keep prices firm through the season. CTC markets have opened lower for leaf grades due to higher crop volumes, while Dusts are commanding significantly higher prices, with aggressive buying by HUL, especially for better-quality teas. Good-quality and compliant CTC teas are expected to continue selling at remunerative prices, while lower-quality teas may see price pressure as arrivals increase. Orthodox prices are projected to remain firm, with better realisations than last year and in line with 2022 levels.

We at Rossell Tea continue to be in touch with our customers in the UK, Germany, and the Middle East. We have also established new contacts with buyers in the USA and Canada. As the season progresses, we are hopeful of securing additional export orders from Germany, UAE, UK, Saudi Arabia, and potentially from the USA and Canada.

On the global front, Sri Lankas production for the January-March 2024 period is up by 3 million kgs over last year. Auction prices are marginally lower but remain Rs 40-50 higher than prevailing Orthodox prices in India. Africas production, on the other hand, is lower by 17 million kgs till end-February. Africa appears to be shifting focus toward quality and Orthodox teas. Additionally, approximately 160 million kgs of carry-forward inferior-quality teas from last year have been absorbed by various markets, including India, where imports from Kenya have increased.

Looking ahead, overall production this year is expected to be marginally higher. CTC prices may remain broadly similar to last year, with a slight improvement for compliant, high-quality teas. Orthodox prices are expected to be stronger than the previous year. The key challenge will lie in protecting the crop while reining in escalating input costs, particularly wages and fuel.

e. Risks and Concerns

The Company remains vigilant about emerging risks and is actively working to mitigate them through sustainable practices and industry collaboration.

• Geopolitical and Economic Risks: Ongoing wars (Russia-Ukraine, West Asia), recent India-Pakistan tensions, and global inflation have led to weaker demand, volatile pricing, and increased shipping costs.

• Climatic Risks: El Nino-induced weather extremes continue to impact crop yields despite mitigation efforts such as afforestation, irrigation, and flood control systems.

• Regulatory Risks: The EUs stricter Maximum Residue Limits (MRLs) for neonicotinoids and inconsistent chemical usage among small growers pose threats to export viability and domestic production.

• Market and Trade Risks: Rising imports from Kenya and Nepal, sluggish global trade, and a price imbalance between Indian and African CTC teas continue to affect export competitiveness.

To address these concerns, the Company is working closely with industry associations and regulatory bodies, focusing on sustainable practices and quality enhancement. Strategic emphasis is also being placed on producing compliant, high-quality teas that meet international standards. Additionally, the weak rupee may help offset some export challenges by enhancing earnings from foreign markets.

f. Internal Control System and their Adequacy

There are adequate Internal Control systems at all levels of Management of the Company. They are reviewed periodically and improved upon, where required.

The Internal Audit is carried out by competent professionals. The Audit Committee of the Board looks into Auditors observations, which are deliberated upon, and appropriate directives are issued for taking corrective measures forthwith.

g. Financial and Operational Performance

Besides the continuous emphasis on quality enhancement of products and services, prudent cost management has been the objective of the Company.

The Operating Profit before depreciation and interest (EBITDA) of the Company for the year was Rs.2,970.68 lakhs as against Rs.886.32 lakhs in the previous year.

With the strong financial fundamentals over the year, the financial base of your Company remains strong even after corporate restructuring as narrated above, and it shall be further strengthened with better operating and financial performance in the years ahead.

h. Human Resources Development

Human resources are the most valuable assets of the Company - at corporate level as well as at Estates.

Industrial relations of the Company remain excellent. Your Company employs 7,446 (including at the newly acquired Dhoedaam TE) personnel on its permanent roll.

i. Significant Changes in the Financial Ratios

Key Financial Ratios	FY 2024-2025	FY 2023-2024	% of Change	Reason for Change, if the change is more than 25%
Debtors Turnover Ratio	149.74	105.37	+42%	Higher Sales along with lower average debtors
Inventory Turnover Ratio	41.47	33.80	+23%	-
Interest Coverage Ratio	7.38	3.22	+129%	Higher profits for current year over previous year
Current Ratio	0.92	1.18	-22%	-
Debt Equity Ratio	0.45	0.15	+200%	Term Loan of Rs.4,500 lakhs availed for acquisition of Dhoedaam TE along with increase in current borrowings to meet higher working capital requirement arising out of new acquisition.
Operating Profit %	12.29	4.19	+193%	Higher EBITA
Net Profit Margin %	11.10	0.55	+1,918%	Higher Profits for the year
Return on Net Worth	11.26	0.46	+2,348%	Higher Profits for the year

Message from the Executive Chairman

At Rossell India Limited, our journey has been defined by a steadfast commitment to quality responsibility, and long-term value creation. Rooted deeply in the heritage of fine tea cultivation, we take pride in upholding a legacy shaped by generations of care, integrity and principled conduct.

Our identity is inseparable from the land we cultivate and the people I who bring our tea to life. Every step in our process reflects our respect for I natural ecosystems, a deep sense of accountability and a commitment to I the communities we serve.

One of the defining milestones of our sustainability journey has been the achievement of Carbon Net Negative Emission Status, certified by the Nansen Environmental Research Centre (India). Assessed in alignment with the PAS 2060:2014 standard, this certification confirms that our total annual greenhouse gas emissions of 33,397.82 tonnes CO2eq are offset by sequestration efforts totalling 39,180.68 tonnes CO2eq—resulting in a net negative balance of 5,782.86 tonnes CO2eq.

This recognition is both an honour and a responsibility. It reflects our ongoing investment in regenerative agricultural practices, conservation of biodiversity and climate-conscious operations. We continue to strengthen these efforts with the aim of enhancing environmental resilience and embedding sustainability into every layer of our work.

Yet, at the heart of Rossell are our people. We are committed to fostering a workplace built on dignity, mutual respect and opportunity. From investing in skills development to promoting employee welfare across our estates and offices, we aim to create an environment where every individual feels valued and empowered to contribute meaningfully.

As we look to the future, our focus remains clear: to deliver excellence through ethical, responsible practices and to contribute meaningfully to a more equitable and sustainable world. I am deeply grateful to our employees, customers and shareholders for their continued trust and support. Your confidence in us strengthens our resolve to move forward with care, clarity and commitment.

Harsh Mohan Gupta

Executive Chairman

Rossell India Limited

(DIN: 00065973)

Place: Delhi

Date: 28th May, 2025.