Sat Kartar Shopping Ltd Management Discussions

Global Economy¹

The global economy demonstrates resilience despite headwinds, with GDP growth stabilizing at 3.2% in 2024 and projected at 3.3% in 2025, according to the International Monetary Fund. While below historical averages, this growth trajectory supports stable international trade flows crucial for Indian Ayurveda exports. Global inflation is declining from 6.8% in 2023 to a projected 4.2% in 2025, with central banks transitioning from aggressive tightening to measured easing cycles.

The global Ayurveda market presents exceptional opportunities, growing from USD 14.4 billion in 2023 to a projected USD 76.91 billion by 2030 at 27.2% CAGR. Europe commands over 30% of the global market share, followed by North America at 40% of global consumption, while Asia-Pacific emerges as the fastest-growing region at 30.5% CAGR.

Trade dynamics favor Indian exporters, with global trade value reaching $33 trillion in 2024, growing 3.7%. Services trade leads with 9% growth contributing $700 billion, particularly benefiting Indias wellness tourism sector valued at USD 19.43 billion in 2024. However, trade policy uncertainties, particularly US-China tensions creating bilateral deficits exceeding $355 billion, may create both challenges and opportunities for Indian companies seeking to diversify global supply chains.

Supply chain evolution accelerates toward nearshoring and regional networks, with Asia export volumes surging 7.4% in 2024, highest globally. This trend positions India favorably as companies seek alternatives to traditional manufacturing centers while maintaining quality and cost competitiveness.

Indian Economy:

Indias economic performance significantly outpaces global averages, with GDP growth projected at 6.4% for FY25, making it the fastest-growing major economy. The Reserve Bank of India maintains a slightly more optimistic 6.6% projection, while international agencies including the IMF forecast 6.5% growth for both FY25 and FY26.

Rural consumption recovery emerges as a critical growth driver, with 78.5% of rural households reporting increased consumption expenditure. Rural food spendings share declined to 46.4% from 53% previously, while non-food consumption increased to 53.6%, indicating improving discretionary spending power. This trend particularly benefits Ayurveda companies as rural consumers increasingly prioritize health and wellness products.

Digital infrastructure expansion creates unprecedented market access, with 881 million internet users projected to reach 900 million by 2025. UPI transactions exceeded 16,996 crore worth INR 23.48 lakh crore in January 2025 alone, demonstrating the digital payment ecosystems maturity essential for D2C operations.

The governments budget allocation demonstrates strong healthcare commitment, with health expenditure growing from INR 3.2 lakh crore in 2020-21 to INR 6.1 lakh crore in 2024-25 at 18% CAGR. Governments share of total health expenditure increased from 29% to 48% between 2015-2022, while out-of-pocket expenditure declined from 62.6% to 39.4%.

Consumer behavior shifts support premium positioning strategies, with premiumization trends evident across sectors - vehicles above INR 10 lakh now account for 48% of sales. The urban-rural consumption gap narrowed significantly, with the MPCE ratio declining from 84% to 71%, expanding addressable markets for quality Ayurveda products.

Indian Ayurveda industry¹

The Indian Ayurveda industry demonstrates explosive growth, with market valuation reaching INR 875.9 billion in 2024 and projected to achieve INR 3,605 billion by 2033 at 16.17% CAGR. This growth trajectory significantly exceeds broader economic expansion, indicating structural market evolution and increasing consumer acceptance.

Government support through the AYUSH Ministry has intensified, with budget allocation increasing to INR 3,992.9 crore for FY26, representing a 14.2% year- over-year increase. The establishment of WHOs Global Centre for Traditional Medicine in Jamnagar with USD 250 million investment underscores international recognition of Indias traditional medicine leadership. Manufacturing capabilities have expanded remarkably, with the sector reaching USD 24 billion in 2024 from USD 2.85 billion in 2014, representing 8x growth over the decade. Export performance remains robust at USD 651.17 million in FY24, growing 3.6% despite global economic uncertainties.

Consumer behavior transformation drives market expansion, with over 70% of urban consumers preferring Ayurvedic products for perceived safety and efficacy. Post-COVID immunity focus created sustained demand for natural immunity boosters, while 58% of consumers express uncertainty about chemical ingredients in conventional products, driving demand for transparency and natural alternatives.

Market structure evolution favors organized players, with personal care products emerging as the fastest- growing segment within the 50% market share of total Ayurvedic products. Distribution channels diversify rapidly, with e-commerce representing the fastest- growing channel while supermarkets and retail chains maintain dominant market share.

Regional market dynamics reveal North India leading in market share driven by higher disposable incomes, while South India grows rapidly leveraging traditional knowledge centers. Price segmentation shows premium segments growing fastest, supported by quality consciousness among consumers willing to pay for authenticated, quality products.

Indian healthcare:

The Indian healthcare market demonstrates robust expansion, valued at $372 billion in 2023 and projected to reach $638 billion by 2025 at 22% CAGR. This growth creates substantial opportunities for Ayurveda companies as traditional medicine increasingly integrates with mainstream healthcare delivery.

Preventive healthcare emerges as a key growth driver, with the market expected to reach $197 billion by 2025 growing at 22% CAGR. Over 150 million in funding was raised by 40+ preventive healthcare startups in the last three years, while 40% of surveyed individuals show high inclination toward preventive health post-COVID. This trend aligns perfectly with Ayurvedas preventive care philosophy.

Digital health adoption accelerates transformation, with the digital health market valued at $8.79 billion in 2024, projected to reach $47.8 billion by 2033 at 17.67% CAGR. Telemedicine specifically grows from $4.6 billion to a projected $11.2 billion by 2033 at 24.7% CAGR. The National Digital Health Mission created over 73 crore ABHA accounts, while eSanjeevani platform handled over 1.2 million consultations.

Wellness and consumer health segments experience exceptional growth, with the functional foods and supplements market growing at 16% CAGR to reach $12 billion by 2027. The fitness and wellness industry projects 27% CAGR, reaching $12 billion by 2025, creating multiple touchpoints for Ayurveda product integration.

Government initiatives strengthen traditional medicine integration through Ayushman Bharats inclusion of 170 AYUSH treatment packages in the insurance scheme. Kerala invested INR 1,000 crore in AYUSH infrastructure over three years, while the WHO collaboration involves multi-million, five-year agreements for traditional medicine development.

The Complementary and Alternative Medicine (CAM) market presents significant opportunities, valued at $5.60 billion in 2024 and projected to reach $21.78 billion by 2033 at 16.40% CAGR. Currently, 6.9% of outpatient care utilizes AYUSH services, indicating substantial room for market penetration growth.

Risk (actors require strategic mitigation approaches

Regulatory risks intensify across domestic and international markets. Domestically, stricter AYUSH Ministry enforcement prohibits companies from claiming "100% safe,” "guaranteed treatment,” or "Ministry of AYUSH approved” status. Multiple regulatory bodies including CDSCO, State Drug Licensing Authorities, FSSAI, and AYUSH Ministry create complex compliance requirements with mandatory GMP certification increasing operational costs.

International regulatory challenges center on FDA heavy metal contamination concerns affecting US market access, where the US represents 25% of Indian Ayurvedic exports. Different classification systems across markets - dietary supplements in the US versus traditional medicines in India - require extensive documentation of product composition, safety assessments, and manufacturing practices.

Quality control and authentication challenges threaten consumer trust, with 58% of consumers uncertain whether Ayurvedic products contain chemical ingredients. Counterfeit products and lack of clinical evidence for some traditional claims affect credibility, while standardization difficulties in complex formulations create consistent quality control challenges.

Supply chain risks emerge from raw material dependencies and climate vulnerabilities. Quality consistency varies across different geographical and commercial sources, while seasonal dependencies for herbs like Ashwagandha require precise harvest timing for potency maintenance. Spiraling raw material price increases impact quality control budgets, while storage requirements for specific temperature and humidity conditions increase operational complexity.

Competition intensifies from both established players and new entrants, with market leaders Dabur, Patanjali, and Himalaya maintaining strong distribution networks. Over 800 D2C players create intense competition, while multinational companies bring higher quality standards, scientific validation, and advanced technology integration including AI/ML for personalized treatments.

Marketing landscape evolution creates both opportunities and challenges, with digital marketing now accounting for 42% of total advertising spend growing at 14% compared to televisions 5% growth rate. However, healthcare sector paid search ads achieve only 2.6% conversion rates, requiring sophisticated digital marketing strategies to achieve effective customer acquisition costs.

SWOT Analysis

Strengths

- The companys market leadership position is evident through its extensive geographic reach covering over 11,600 pincodes across India, with ambitious plans to expand to 19,000 pincodes in the coming months. This reach is supported by a massive customer database of over 30 million consumers, providing a strong foundation for data analytics and targeted marketing. The company has successfully established itself as a market leader with NO DIRECT COMPETITORS offering a similar comprehensive Direct-to- Consumer model. The brand has achieved strong recognition in the Ayurvedic wellness space and maintains a unique positioning in its current market segment with premium pricing power.

- From an operational standpoint, Sat Kartar Shopping Limitedoperates an asset-light business model that maximizes capital efficiency through strategic contract manufacturing partnerships. The companys current infrastructure has the scalable capacity to handle turnover of up to Rs210 crores, providing significant room for growth without major capital investments. The operations are supported by over 750+ multilingual customer care personnel who provide service in more than 10 Indian languages, enabling deep customer engagement across diverse markets. Quality assurance is maintained through regulatory approvals from the Ministry of AYUSH and comprehensive quality certifications. The company is also advancing its technology integration with AI implementation for customer interaction and personalization.

- The product portfolio demonstrates both depth and innovation with over 60+ SKUs spanning 16 therapeutic categories. All formulations are scientifically grounded, rooted in the ancient Charak Samhita text, and approved by the AYUSH Ministry. The company maintains a continuous innovation pipeline supported by an R&D team that includes BAMS doctors and research professionals. The therapeutic expertise covers specialized focus areas including sexual wellness, diabetes management, and immunity building. Strong product efficacy is evidenced through positive customer testimonials and improving repeat purchase rates.

- Leadership strength comes from an experienced promoter team with over 30 years of combined experience across finance, digital marketing, and healthcare sectors. The management team brings proven digital marketing expertise from successful tenures with major brands including Flipkart,Zydus, and CRED. The companymaintains strong corporate governance standards following its public listing, with transparent reporting and compliance frameworks. Strategic vision is clearly articulated with defined growth milestones and achievable targets.

- Customer relationship management has shown continuous improvement with repeat rates increasing from 22% to 25%. The company employs hyper-personalized customer journeys with segmentation based on ailments, age, demographics, and behavior patterns. The human-centric approach emphasizes language- specific customer interactions, setting it apart from automated systems. Proactive wellness support includes regular follow-up calls every 30-60 days, ensuring ongoing customer engagement and satisfaction.

Weakness

- Our commitment to premium quality products utilizing premium and organic raw materials results in higher average selling price values, naturally limiting accessibility to price-sensitive segments. However, this positioning strategy enables sustainable profit margins from initial sales and the company has already taken steps to increase its share in price-sensitive markets too.

- The rapidly changing digital marketing algorithms present ongoing challenges in maintaining optimal audience reach, a common issue faced by all digital commerce businesses. We are actively diversifying our marketing channels and building in-house digital expertise to ensure sustained market visibility and adaptation to this dynamic environment.

Opportunities

- The Indian Ayurvedic products market presents tremendous growth potential, expanding at a compound annual growth rate of 16.06% from Rs4 billion in 2018 to Rs9.5 billion by 2024. This growth trajectory provides a favorable backdrop for sustained business expansion. Geographic expansion opportunities are substantial, with untapped tier-2 markets in Gujarat, Maharashtra, North East regions, and Jammu & Kashmir offering significant potential. The rural and semiurban segments remain largely underserved, presenting opportunities for market penetration. The planned expansion from 11,600 to 19,000 pincodes represents immediate growth potential, while future international markets like the USA offer long-term expansion possibilities because of their market size.

- Product development opportunities are extensive across multiple dimensions. The company will expand into new therapeutic categories including nutraceuticals and spiritual wellness products, areas showing strong consumer interest. Development of sub-SKUs within existing successful categories can capture additional market share while leveraging established brand recognition. Introduction of shorter treatment cycle products, such as 15- day formulations, can appeal to price-sensitive consumer segments. Premium product lines offer opportunities to increase average order values, while personalized medicine based on individual health profiles represents a cutting- edge opportunity.

- Technology and digital transformation present significant value creation opportunities. Advanced AI integration can expand beyond current customer interaction automation to include predictive models for health outcomes and product recommendations. The extensive customer database of 30 million+ consumers can be monetized through advanced data analytics and insights. Development of a comprehensive digital health platform encompassing consultations, health tracking, and wellness programs could create a complete ecosystem. E-commerce innovation through enhanced user experience and conversion optimization can improve customer acquisition and retention. Integration of telemedicine services with Ayurvedic practitioners would provide additional revenue streams and customer value.

- Strategic growth initiatives offer multiple pathways for expansion. Acquisition opportunities exist with companies like Ajooni Life Sciences and PlantoMed, providing access to their specialized expertise and customer bases. Partnership development with healthcare providers, wellness centers, and complementary service providers can expand market reach. Brand ambassador strategies also significantly enhance brand visibility and credibility in the respective zones in India.

- Industry trends strongly favor the companys positioning. Post-COVID health consciousness has dramatically increased demand for immunity and wellness products, creating sustained market tailwinds. Government AYUSH initiatives provide strong policy support for traditional medicine companies. Rising healthcare costs are driving consumers toward preventive and natural healthcare solutions.

Threats

- The Ayurvedic wellness space is experiencing increasing competition as more players recognize the market opportunity and enter the sector. This competitive intensity could potentially create price competition pressures, particularly from low-cost competitors seeking to gain market share through aggressive pricing strategies.

- Regulatory and compliance considerations include potential changes in AYUSH sector regulations and compliance requirements that could impact operations. The evolution of quality standards toward increasing stringency in quality control and product standards requires ongoing attention and investment.

- Operational risks encompass potential supply chain disruptions due to geopolitical tensions or natural factors, as evidenced by recent border tensions affecting northern state deliveries. Raw material availability and pricing fluctuations for herbal ingredients could impact cost structures and product availability.

- Economic factors present moderate concerns, including potential impacts of economic volatility on discretionary health spending patterns. Rising digital marketing costs and customer acquisition expenses through

Strategic Outlook

- Sat Kartar Shopping Limited stands at a juncture with exceptional positioning for sustained growth and market leadership. The companys clear trajectory toward achieving Rs500 crores revenue within three years is underpinned by strong operational fundamentals, expanding market opportunities, and a proven management team. The unique combination of human-centric customer engagement, multilingual capabilities, and deep Ayurvedic expertise creates a sustainable competitive moat in the rapidly expanding wellness market.

- The companys competitive positioning is further strengthened by its asset-light business model, negative working capital cycle, and scalable infrastructure. These operational advantages, combined with improving customer retention rates and expanding geographic reach, provide multiple drivers for sustained growth. The strategic focus on margin expansion, with targets of 12% PAT margin and 15-20% EBITDA margin, demonstrates managements commitment to profitable growth rather than growth at any cost.

- Value creation potential is substantial given the companys current market position and growth trajectory. The expanding customer base, enhanced through AI-driven personalization and proactive wellness support, provides a strong foundation for increased customer lifetime value. Strategic technology investments are expected to drive operational efficiency while improving customer experience, creating a virtuous cycle of growth and profitability.

- The companys vision to become a leader in the Indian Ayurvedic wellness market is well-supported by market dynamics, operational capabilities, and strategic execution. With manageable risks, extensive opportunities, and strong leadership, Sat Kartar Shopping Limited is positioned to deliver superior shareholder returns while making meaningful contributions to Indias wellness ecosystem. The combination of traditional Ayurvedic wisdom with modern technology and business practices creates a unique value proposition that resonates strongly with contemporary consumer preferences for natural, effective health solutions.