Sampre Nutritions Ltd Management Discussions

This Management Discussion and Analysisreport provides an in-depth review of Sampre Nutritions Limiteds {‘the Company") performance, strategic initiatives, and market positioning for the fiscal year 2025-26. This report addresses key aspects of our operating environment, including the prevailing macroeconomic conditions, industry dynamics, and business performance metrics.

Indian Economy

The Indian economy continued to demonstrate resilience during the financial year 2025-26 despite heightened geopolitical uncertainties, evolving global trade dynamics and volatility in commodity prices. Strong domestic consumption, continued public investment in infrastructure, improving manufacturing activity and a resilient services sector supported economic growth during the year. Inflation remained broadly within the Reserve Bank of Indias target range for a significant part of the year, supported by easing food prices and prudent monetary policy.

Looking ahead. Indias medium-term growth prospects remain favourable, supported by favourable demographics, digital transformation, expanding infrastructure, manufacturing initiatives and policy reforms. Nevertheless, global trade developments, commodity price volatility, exchange rate movements and geopolitical uncertainties continue to pose risks to the overall economic outlook.

Industry Structure and Developments

The Indian confectionery industry continues to be one of the significant segments of the fast-moving consumer goods sector, supported by favourable demographics, rising disposable incomes, urbanisation and changing consumer preferences. The industry comprises chocolate confectionery, sugar confectionery, chewing gum, functional confectionery and other value-added product categories.

Consumer preferences continue to evolve towards premium offerings, innovative flavours, healthier alternatives and convenience-based consumption. At the same time, value-priced products continue to account for a significant portion of industry volumes, particularly in semi-urban and rural markets.

The industry continued to face challenges arising from fluctuations in prices of key raw materials such as cocoa, sugar, edible oils and packaging materials, together with increasing logistics costs and evolving food safety and labelling requirements. Competitive intensity remained high with established multinational manufacturers, organised domestic players and regional brands continuing to compete across product categories.

Opportunities and Threats

The Indian confectionery industry continues to offer significant growth opportunities driven by favourable demographic trends, increasing urbanisation, rising disposable incomes and changing consumer preferences. Growing penetration of organised retail, e-commerce and quick-commerce platforms has expanded consumer access to confectionery products across both metropolitan and emerging markets.

Consumers are increasingly seeking product innovation, premium offerings, healthier alternatives and value-added confectionery products. These evolving consumption patterns provide opportunities for companies to diversify their product portfolio, strengthen brand positioning and enhance customer engagement.

The Company continues to focus on improving operational efficiencies, strengthening its product portfolio, optimising manufacturing capabilities and identifying opportunities for sustainable long-term growth while maintaining financial discipline.

The confectionery industry continues to face challenges arising from volatility in prices of key raw materials, including sugar, cocoa, edible oils and packaging materials, which may adversely impact operating margins. Inflationary pressures, changes in consumer spending patterns, evolving regulatory requirements relating to food safety, labelling and packaging, and intense competition from multinational as well as domestic manufacturers continue to influence the operating environment.

Further, geopolitical developments, global supply chain disruptions, fluctuations in foreign exchange rates and changes in international trade policies may have an indirect impact on input costs and overall business operations. The Company continuously monitors these risks and adopts appropriate mitigation measures through prudent procurement practices, efficient inventory management and disciplined financial planning.

Product Performance

During the financial year under review, the Company continued to focus on strengthening its presence in the confectionery segment through its existing product portfolio while pursuing operational efficiencies and prudent cost management. Management remained focused on improving production efficiencies, optimising product mix and maintaining quality standards to meet evolving customer requirements.

The Company continues to evaluate opportunities for expanding its product offerings and strengthening market presence while maintaining a balanced approach towards cost optimisation, quality assurance and sustainable business growth.

Outlook

The long-term outlook for the Indian confectionery industry remains positive, supported by favourable demographic trends, rising disposable incomes, increasing consumption, expanding organised retail and continued growth of digital commerce channels.

The Companys strategic focus remains on strengthening operational efficiency, improving working capital management, optimising manufacturing operations, maintaining financial discipline and enhancing customer satisfaction. The Company will continue to evaluate opportunities for product innovation, market expansion and operational improvements while maintaining a prudent approach towards capital allocation and risk management.

Management remains committed to creating sustainable long-term value for all stakeholders through responsible corporate governance, disciplined execution and continuous improvement across business operations.

Risks and Concerns

The Company operates in a competitive business environment and is exposed to various business risks, including fluctuations in raw material prices, changes in consumer preferences, evolving regulatory requirements, macroeconomic uncertainties and competitive pressures.

The Company has established appropriate systems for identifying, monitoring and mitigating key business risks. Regular reviews are undertaken by the management and the Board to evaluate the effectiveness of risk mitigation measures and to ensure that significant business risks are addressed in a timely manner.

The Company continues to strengthen its internal processes, operational controls and governance framework to minimise the impact of business uncertainties and to support sustainable business operations.

Internal Control Systems and their Adequacy

The Company has established an adequate system of internal controls commensurate with the nature, size and complexity of its business operations. The internal control framework is designed to ensure the orderly and efficient conduct of business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information.

The effectiveness of the internal control systems is reviewed periodically by the management. Internal Auditors and the Audit Committee. The observations arising from internal audits are reviewed by the Audit Committee, and corrective actions are implemented wherever considered necessary.

The Statutory Auditors also evaluate the adequacy of internal financial controls over financial reporting as part of their audit. Based on such reviews, the Board is of the opinion that the Companys internal control systems are adequate and operating effectively.

Discussion on Financial Performance

During the financial year under review, the Companys financial performance reflected the impact of prevailing market conditions, input cost fluctuations and the overall operating environment. Management continued to focus on improving operational efficiency, optimising costs and maintaining financial discipline while pursuing sustainable long-term growth.

During the year, the Company undertook significant capital restructuring initiatives, including conversion of Convertible Warrants and Foreign Currency Convertible Bonds into equity shares, subdivision of equity shares and issue of bonus equity shares. These measures strengthened the Companys capital base, improved its capital structure and supported its long-term growth strategy.

The Company continued its focus on prudent working capital management, efficient utilisation of resources and optimisation of borrowing levels. Management remains committed to improving operating performance through better capacity utilisation, disciplined cost management, enhanced operational efficiencies and strengthening of internal processes.

The financial statements provide a detailed analysis of the Companys financial performance, cash flows and financial position for the financial year ended 31 March 2026.

Material Developments in Human Resources and Industrial Relations

The Companys employees continue to be its most valuable resource and play a vital role in achieving its strategic objectives. The Company remains committed to providing a safe, inclusive and performance- oriented work environment that encourages continuous learning, professional development and employee engagement.

The Company continues to invest in employee development through various training initiatives aimed at improving technical capabilities, operational efficiency, quality awareness, safety standards and leadership skills.

Industrial relations during the financial year remained cordial and harmonious. There were no material industrial disputes or work stoppages during the year under review. The Company continues to maintain constructive relationships with its employees and remains committed to promoting a culture of integrity, teamwork, accountability and mutual respect.

Key Financial Ratios

The financial year 2025-26 was characterised by a challenging operating environment, which impacted the Companys profitability during the year. The Company continued to focus on strengthening its capital structure through reduction in borrowings, prudent working capital management and efficient utilisation of resources. While profitability remained under pressure during the year, the Companys balance sheet was strengthened through capital restructuring initiatives, positioning it for sustainable long-term growth.

Pursuant to Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, explanations are provided only for those financial ratios where the change is 25% or more compared to the previous financial year.

• Debt-Equity Ratio: The Debt-Equity Ratio improved significantly primarily due to reduction in borrowings during the financial year and strengthening of the Companys net worth following conversion of Convertible Warrants and Foreign Currency Convertible Bonds into equity shares.

• Debt Service Coverage Ratio: The Debt Service Coverage Ratio declined primarily due to lower operating profitability during the financial year resulting in reduced debt servicing capacity despite the Companys improved capital structure.

• Return on Equity: Return on Equity declined primarily on account of the loss incurred during the financial year, coupled with an increase in shareholders funds following the conversion of convertible securities and issue of bonus equity shares.

• Net Capital Turnover Ratio: The Net Capital Turnover Ratio improved primarily due to more efficient utilisation of working capital during the financial year.

• Net Profit Ratio: The Net Profit Ratio declined primarily due to higher input costs, finance costs and the resultant pressure on operating margins during the financial year.

• Return on Capital Employed: Return on Capital Employed declined primarily due to lower earnings before interest and tax during the financial year.

Overall, the financial ratios for the year reflect a transitional phase for the Company. While profitability remained under pressure owing to the challenging operating environment, the Company made significant progress in strengthening its balance sheet through reduction in borrowings and conversion of

convertible securities into equity, resulting in a healthier capital structure. The Management remains focused on improving operational performance, optimising costs, enhancing working capital efficiency and strengthening cash flows. With a stronger equity base and continued emphasis on prudent financial management, the Company is well-positioned to improve its financial performance and create sustainable long-term value for its stakeholders.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied due to economic conditions, changes in government policies, tariff structures, regulatory developments, competitive dynamics, and other incidental factors. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements based on subsequent developments, information or events.