Sakuma Exports Ltd Management Discussions

Indian Agriculture and Sugar Sector Overview: FY 2024-25 Agriculture Sector: Growth & Structure

• Largest Livelihood Source: Agriculture continues to be the backbone of the Indian economy, supporting nearly half the population and contributing about 16% to national GDP, according to the Economic Survey for FY24.

• Growth Rate: The Agri sector demonstrated resilience, recording a growth rate of 3.8% in FY 2024-25. This marks a rebound from the previous year (3.5% in FY24 and 3.0% in FY23), buoyed by robust production, government support, and favourable monsoon conditions.

• Key Initiatives: Enhanced productivity and farmer income were supported by reforms such as increased Minimum Support Price (MSP) for key crops, crop insurance, expanded irrigation, digital platforms (e-NAM), and income support programs (PM-

KISAN).

• Major Crops: India remains among the worlds largest producers of rice, wheat, pulses, oilseeds, sugarcane, fruits, vegetables, and dairy products. Kharif foodgrain production in 2024 is projected at 1,647 LMT up 89 LMT YoY.

Top Crop-Producing States

• Wheat: Uttar Pradesh, Punjab, Haryana, Madhya Pradesh, Rajasthan, Bihar, Gujarat.

• Sugarcane: Uttar Pradesh (top, ~48% of production), Maharashtra (~22%), Karnataka (~9%) remain the key contributors, together supplying a major share of Indias output.

Sugar Sector: Latest Data & Trends (2024-25)

• 2024-25 Sugar Production: Indias net sugar production is projected between 254 262 lakh tonnes after accounting for diversion to ethanol, lower rainfall, and decreased planted area.

• State-Wise Output (as of April 2025):

Maharashtra: 8.07 million tonnes (down from 10.94mn in previous year)

Uttar Pradesh: 9.11 million tonnes (vs. 10.18mn)

Karnataka: 4.04 million tonnes (vs. 5.06mn)

• Ethanol Diversion: About 3.5 million tonnes of sugar are estimated to be diverted to ethanol production in 2024-25, up from

2.15mn last year.

Stocks & Consumption

Opening Stock (Oct 2024): Around 8.0m tonnes

Projected Domestic Consumption: 28.0m tonnes

Closing Stock (Sept 2025): Est. at 5.0m tonnes. India has a comfortable buffer to meet domestic sugar demand.

Sugar Exports 2024-25

Government Policy: India authorized the export of 1 million tonnes of sugar for the 2024-25 season (Oct-Sept), ending a two-year export ban to help mill liquidity and cane payments.

Policy Environment & Outlook

MSP Increases: The government raised MSPs for key crops by 59 77% for FY25 (e.g., arhar, bajra) to enhance farmer incomes.

Monsoon Impact: The outlook for 2025-26 is optimistic, with forecasts for a robust southwest monsoon expected to boost next years production.

Challenges: Despite rebound, risks remain from erratic rainfall, global price volatility (notably tariffs and export curbs), and rising inventory costs.

Conclusion Indias agricultural sector, supported by policy reforms and favorable weather, posted stable growth in FY 2024-25. : The sugar sector saw lower output but maintained adequate stock levels and resumed limited exports, balancing local supply and mill liquidity amidst global uncertainties.

Global Business Environment

The current global environment is characterized by rising trade barriers, such as tariffs and non-tariff restrictions, along with shifting global policies that emphasize sustainability and technology adoption in agriculture. These changes have led to increased input costs, disrupted supply chains, and heightened market volatility, all of which significantly impact Indian agricultural trading companies. Specifically, Indian agriculture faces challenges such as the imposition of US and other global tariffs on key commodities like pulses, edible oils, and soybeans, which raise input costs and limit export competitiveness. Retaliatory tariffs and stricter compliance requirements add further uncertainty, affecting margins for companies involved in exports, imports, and agrochemicals. Additionally, inflation and fluctuating currency exchange rates influenced by global policy shifts also affect profitability and stock market volatility for these firms.

On the policy front, Indias new agricultural reforms promote sustainable farming, climate resilience, and market reforms that encourage better farmer empowerment through strengthened farmer producer organizations, contract farming, and improved digital market infrastructure. These reforms aim to mitigate some global trade pressures by improving supply chain efficiency, price realization, and reducing dependencies on volatile global markets. Furthermore, Indias engagement in strategic trade agreements like India-UAE Comprehensive Economic Partnership Agreement (CEPA) and India-Australia Economic Cooperation and Trade Agreement (ECTA) helps enhance market access and reduce tariff burdens, supporting agricultural exports despite global trade tensions.

Overall, Indian agricultural trading companies are navigating this complex environment by adapting to higher costs, leveraging technology for supply chain resilience, and capitalizing on government reforms and free trade agreements. However, continued global trade uncertainties and policy fluctuations will require ongoing strategic responses to maintain competitiveness and growth.

Indian Economic Overview

The Indian economy in 2025 is showing strong resilience and growth momentum amid global uncertainties. Indias GDP grew by 6.5% in fiscal year 2024-25 and is projected to maintain a similar growth rate of about 6.4% to 6.7% for fiscal year 2025-26, supported by robust domestic demand, rising consumer spending, expanding private investments, and significant government capital expenditures. Inflation has eased considerably, with CPI inflation dropping to around 2.8% in mid-2025, providing confidence for further economic expansion.

Indias economy benefits from a young, digitally skilled workforce and ongoing reforms that boost infrastructure and innovation. Major urban centres, a growing middle class, and favourable fiscal policies contribute to a vibrant consumption-driven growth.

Despite global trade tensions and geopolitical uncertainties, India is viewed as a bright spot in the global economy, progressing toward becoming the 4th largest global economy by 2025, with nominal GDP having nearly tripled in a decade.

In case of urban markets, key drivers include expanding market access through strategic trade agreements, improving trade dynamics, and the governments push for a self-reliant and innovation-led economy. Indias demographic advantage and rapid urbanization position it as one of the fastest-growing consumer markets worldwide.

To support rural growth, Government schemes aimed at improving farmer incomes, promoting farmer producer organizations

(FPOs), and expanding agro-processing infrastructure, support sugarcane farmers through better market access and value addition. Ethanol blending targets have increased demand for sugarcane beyond sugar, stabilizing prices and providing diversified revenue streams to farmers.

In summary, India in 2025 is on a path of sustained economic growth, driven by internal demand, investment, technological adoption, and policy support, while navigating global challenges with strengthened fundamentals and a positive outlook

Company Business Structure & Analysis:

Our company operates across three primary verticals Sugar, Soft Oil, Grains, Paddy & Pulses each responding uniquely to the evolving global trade landscape. The domestic sugar sector has experienced a significant uptick, fuelled by Indias restrictive export policies aimed at stabilizing local prices and managing food inflation. Despite global market volatility, the company has maintained its market share domestically, leveraging its robust supply chain and strategic positioning. Other verticals, like grains- Maize & Soyabean seed have also seen profitable contributions, although they face challenges like price mismatches, sluggish demand, tight liquidity, and geopolitical uncertainties, including trade tensions and tariff barriers.

In the current climate marked by heightened protectionism, trade restrictions, and tariffs in major economies, Indian agricultural exports often encounter hurdles such as quota limitations, export bans, and non-tariff barriers. Consequently, our focus has shifted towards expanding domestic markets and diversifying into new commodities to sustain growth momentum. These efforts are complemented by exploring opportunities in new product development, capacity expansion, and strengthening geographical reach, thereby reducing dependency on volatile global markets.

Opportunities and Threats:

Opportunities:

Favourable government policies on Sugar and Ethanol, bolstered by global demand, create a conducive environment for higher prices and margins.

Rising demand for Edible Oils and Grains offers prospects for increased trade opportunities and diversified revenue streams.

Capacity enhancement and technological upgrades can improve production efficiency amidst rising input costs.

Strategic investments in new product development can fill market gaps and cater to evolving consumer preferences.

Expanding geographical footprint reduces dependence on specific regions, enhancing resilience against regional trade disruptions.

• Developing direct trade channels and strengthening relationships with international suppliers and buyers to mitigate tariff-related barriers.

Threats:

Escalating tariffs, trade wars, and sanctions globally threaten the free flow of commodities, leading to increased costs and market uncertainties.

• Rising logistics and supply chain costs, driven by geopolitical tensions and pandemic-induced disruptions, diminish margins.

Fluctuations in foreign exchange rates and inflationary pressures further complicate pricing and profitability.

Unpredictable monsoon patterns and climate change threaten crop yields, impacting domestic supply and exports.

Labour shortages, especially in agricultural sectors, are exacerbated by migration, border restrictions, and labor laws.

Global trade restrictions and protective tariffs can limit market access, requiring proactive risk management strategies.

The company remains committed to navigating these risks through diligent risk assessment, strategic hedging, diversified sourcing, and operational flexibility, aiming for sustainable growth in a volatile environment.

Segment wise and Product wise Performance with a Global Trade Perspective:

Our core trading activities importing and exporting Sugar, Edible Oil, Pulses, and Lentils are influenced heavily by global trade policies. Recent restrictions on sugar exports aimed at controlling domestic inflation have shifted our focus toward building domestic markets, establishing strategic depots, and creating a resilient supply chain. While these measures protect local farmers and stabilize prices, they restrict export volumes, compelling us to diversify into related sectors such as maize for ethanol, pulses, and other agri commodities.

Our global trade strategies include acting as reliable re-export partners, leveraging relationships with international suppliers from Australia, Canada, and other markets where trade barriers may affect market access. Additionally, to offset the impacts of trade restrictions, weve invested in expanding our international footprint through subsidiaries (e.g., in the UK), aiming to capitalize on global demand and maintain supply chain agility amidst geopolitical uncertainties.

Outlook and Strategic Response:

In response to the current global trade tensions, the company has recalibrated its strategy to strengthen domestic trading networks establishing depots in strategic regions and boosting sales of sugar, pulses, and maize for ethanol. Simultaneously, the company is investing in international trading capabilities to diversify supply sources and markets, thus mitigating tariff and quota risks. Our proactive risk management includes currency hedging to combat foreign exchange volatility, securin flexible contractual arrangements with suppliers and buyers, and ensuring cargo insurance coverage. These measures safeguard our operations against physical, financial, and geopolitical risks associated with global trade.

Risks and Concerns in a Global Trade and Tariff Environment:

• Foreign Exchange Risk: Currency fluctuations are accentuated by global trade disputes and sanctions, which can impact profitability.

• Commodity Price Volatility: Trade barriers and tariffs influence the international pricing landscape, requiring dynamic sourcing and pricing strategies.

• Trade Transaction Risks: Due diligence and financial instruments such as letters of credit are crucial to navigate global trade complexities.

• Physical Cargo Risks: Insured storage and transportation mitigate losses due to geopolitical conflicts, tariffs, and supply chain disruptions.

Internal Controls and Human Resources:

The companys internal controls are designed to swiftly adapt to fluctuating trade policies and tariffs, ensuring operational integrity and open and professional satisfying work environment to its employees. The company also encourages its employees to continuously upgrade ad improve skills and competencies.

	For and on behalf of the Board of Directors
	Of Sakuma Exports Limited
Place: Mumbai	Saurabh Malhotra
Date: 26.08.2025	Chairman & Managing Director
	DIN:00214500