Shanthala FMCG Products Ltd Management Discussions

ANNEXURE- I

GLOBAL ECONOMIC OVERVIEW

The global economy in 2024 experienced moderate growth, contending with ongoing inflationary pressures and heightened geopolitical uncertainty. A wave of significant elections around the world added further complexity — while their immediate impacts are already visible, the long-term consequences remain uncertain. Monetary policy, especially interest rate decisions in key economies, continued to play a pivotal role. Meanwhile, emerging markets showed varied outcomes, shaped by fluctuations in commodity prices and underlying debt challenges.

Looking forward to 2025, the global economy is expected to expand at a modest yet stable pace of 2.8%. While global inflation is projected to continue easing, the rate of decline will likely be uneven across regions. Geopolitical tensions and trade-related uncertainties persist as key risks. Navigating these challenges will require a balanced policy mix, with an emphasis on structural reforms and deeper multilateral cooperation to support sustainable medium-term growth.

INDIAN ECONOMIC OVERVIEW

Although the pace of expansion was slightly below earlier projections, India remains one of the fastest-growing major economies globally. On the inflation front, retail headline inflation has eased in line with global disinflationary trends, declining from 5.4% in FY 2023-24 to an estimated 4.6% in FY 2024-25. This deceleration became more pronounced in the latter half of the fiscal year, reflecting stabilizing prices and improved supply-side dynamics.

FMCG consumption remained muted over the year. While rural demand showed signs of recovery, urban consumption continued to soften. Despite this, growth was largely driven by higher-end consumption, reflecting increased interest in premium products and rising demand through digital commerce channels. Looking ahead, the pace of consumption recovery will largely depend on factors such as real wage growth, employment trends, and food inflation. A strong agricultural output, coupled with supportive government measures aimed at stimulating demand, is expected to provide a near-term boost to the FMCG sector. Moreover, evolving consumer preferences, increased digitization, and innovation in product offerings could further catalyze growth in the industry.

FINANCIAL AND OPERATIONAL PERFORMANCE:

The key highlights of the financials are:		( In Lakhs)
Particulars	2024-25	2023-24
Revenue from Operations	5274.62	4133.06
Profit after Tax	96.53	29.42

FUTURE OUTLOOK:

Indias FMCG market is poised for sustained double-digit CAGR growth over the next decade, driven by a confluence of structural and demographic factors. The sector encompasses a broad spectrum of products — ranging from food and beverages to personal care and household essentials — serving a vast and diverse consumer base across both urban and rural regions. Notably, non-food categories continue to lead demand, with personal and household care segments accounting for nearly half of the sectors total sales, underscoring their central role in consumption patterns.

Looking ahead, India is well-positioned to remain one of the fastest-growing major economies, supported by continued government investment in infrastructure, the expansion of a dynamic middle class, and accelerating digital adoption across sectors.

Your Company has proactively undertaken strategic initiatives to navigate emerging challenges and accelerate growth. Core focus areas include enhancing supply chain efficiency, scaling operational and production capacities, and strengthening marketing and execution capabilities. Through targeted interventions in these key domains, the Company is well-positioned to overcome headwinds and capitalize on opportunities in the dynamic business environment of FY 2025-26.

CHANGES IN KEY FINANCIAL RATIOS:

Pursuant to provisions of Regulation 34 (3) of SEBI (LODR) Regulation, 2015 read with Schedule V part B(1) details of changes in Key Financial Ratios is given hereunder:

Sr. No.	Key Financial Ratios	F.Y 2024-25	F.Y 2023-24
1	Debtors Turnover Ratio	0.01%	0.01%
2	Inventory Turnover Ratio	22.50%	22.53%
3	Interest Coverage Ratio	49.69	2.77%
4	Current Ratio	4.71%	8.24%
5	Debt Equity Ratio	0.01%	0.01%
6	Operation Profit Margin	0.64%	0.25%
7	Net Profit Margin	1.83%	0,007%

Previous years Figures have been regrouped / rearranged wherever necessary.

RISKS AND CONCERNS:

Risk comprises of various aspects of the business-spanning customer, competition, regulatory environment, business operations, technology finances, environmental factors etc. The impact of unprecedented events is significantly higher now.

Risks arising due to market and economy related factors, such as internal or external political uncertainty, global slowdown, taxation-regulatory changes etc. Market and economy related risks which can be further classified as Inflation Taxation, Regulatory risks, Foreign exchange risks, Geo- political tensions, Competitive Risk, etc.

Despite these challenges, the FMCG sector in India demonstrated resilience by embracing innovation, sustainability, and digital transformation. Companies that adapted to changing consumer demands, regulatory shifts, and supply chain complexities were better positioned for long-term success. Moving forward, ongoing investments in AI, eco-friendly practices, and regulatory compliance will be essential for sustaining growth in the dynamic FMCG market.

CAUTIONARY STATEMENT:

Statements in this Management Discussion and Analysis Report, Describing the Companys objectives, expectations and estimates may constitute Forward-Looking Statements within the meaning of applicable laws or regulations. Actual results might differ materially from those either expressed or implied.

ON BEHALF OF THE BOARD OF DIRECTORS SHANTHALA FMCG PRODUCTS LIMITED

Sd/- Sd/-

Ravikant Mhatre Shobitha Malya

Director Director

(DIN:06362676) (DIN:06793259)

Date: 23/08/2025

Registered Address:

7 th Block, Gandhinagar Bye Pass Road,

Virajpet, Kodagu - 571218,

Karnataka, India.

Annexure V

Form No. MR-3