Shreeoswal Seeds & Chemicals Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENT

The global seed industry forms an integral part of the agricultural value chain and plays a critical role in supporting food security, agricultural productivity and sustainable farming. The industry continues to evolve on account of advancements in plant breeding, biotechnology, hybridisation, seed treatment technologies, climate-resilient varieties, precision agriculture and digital farming solutions.

The long-term demand for quality seeds remains supported by population growth, increasing food consumption, limited availability of arable land, changing climatic conditions and the need to improve agricultural productivity. The increasing adoption of hybrid and improved varieties is also contributing to the development of the organised seed industry.

India continues to be one of the important agricultural markets globally, with the seed industry benefiting from increasing awareness among farmers regarding the advantages of quality seeds, improvement in seed replacement rates, expansion of irrigation facilities, increasing mechanisation and adoption of scientific farming practices.

The Indian agricultural sector remained resilient during FY 2025-26. As per the First Advance Estimates released by the Ministry of Agriculture & Farmers Welfare, Kharif foodgrain production for 2025-26 was estimated at approximately 1,733.30 lakh metric tonnes, higher than the corresponding estimate for the previous year. Rice and maize also recorded encouraging production estimates, reflecting the resilience of Indian agriculture.

The Government continues to support the agricultural sector through various initiatives relating to agricultural modernisation, irrigation, crop insurance, digital agriculture, farmer welfare, rural infrastructure and productivity enhancement. Such initiatives, together with increasing private-sector participation in research and development, are expected to support the long-term development of the Indian seed industry.

The Companys principal business is seasonal agricultural seeds and the Company caters to the requirements of farmers across various crop segments and geographical markets. Demand for the Companys products is influenced by agricultural acreage, monsoon and weather conditions, irrigation availability, cropping patterns, commodity prices and farmer purchasing behaviour.

The Company continues to focus on quality improvement, strengthening its distribution network, increasing farmer outreach, expanding its geographical presence and developing products suited to diverse agro-climatic conditions. The Company believes that the long-term prospects of the seed industry remain positive, supported by the growing need for higher agricultural productivity and efficient utilisation of available agricultural resources.

2. OPPORTUNITIES AND OUTLOOK

The Indian agricultural sector continues to present substantial opportunities for growth, creating a favorable environment for the seed industry. Rising population levels, increasing food consumption, shrinking cultivable land availability, and growing pressure on agricultural productivity are expected to drive long-term demand for quality seeds.

By 2050, the world will have 10 billion people, with Indian accounting for 1.73 billion (Source: United Nations). To feed Indias growing population, the yield per hectare needs to increase significantly, especially keeping in mind the declining arable land in India. Further, Indias agricultural yield is far lower as compared to global averages. Extreme weather coupled with low penetration of high-yielding hybrid seeds, lack of awareness of modern agricultural technologies and inefficient use of agrochemicals are some of the factors behind the low yield. This presents a significant opportunity for the Companys Crop Protection and Hybrid Seeds business along with opportunities for expanding crop advisory and digital offerings.

Innovations in seeds, crop protection and digital farming solutions can go long way in addressing the productivity problems affecting Indian agriculture. It will also help farmers get good commodity prices, encouraging them to spend on qualitative inputs for achieving higher yields.

Seed is the first and best hope a farmer has and forms the foundation of “Socio-Economic Empowerment and Development.” Over the last decade, the Indian seed industry has grown significantly, driven by both private and public sector participation. Valued at $6.3 billion in 2022, the market is projected to reach $16.5 billion by 2030, expanding at a compound annual growth rate (CAGR) of approximately 12.4%.

During the year The Company has started In-House Research and Development of new Researched variety that is Better in production Quantity, and saving farmers various fertilizer Expenses.

Further, during the year The Company has awarded as “Madhya Pradesh Brand Leadership Award 2025” as “The Oswal seeds is a best agriculture seeds Product Manufacturer” Brand in Seeds Category That shows Board and Management Efforts for Company As well as Farmers Growth.

Further, during the Last year The Company received, first right of refusal for Distillers Dried Grains with Solubles (DDGS) from Oswal Ethanol and Feed Industry Private Limited (Group Company), effective from FY 2026-27.

Together, these accomplishments highlight Shreeoswals commitment to innovation, farmer empowerment, and long-term growth in Indias agricultural sector.

The seed companies cannot rely only on in-house, R&D for the most promising innovations, especially in the areas outside their traditional purview. Instead, they need to enrich their innovation pipelines by collaborating with digital startups and other specialized companies in biotech and Agri Tech space on the lines of pharmaceutical industry. This will not only help in sharing the costs, and risks of innovation allowing them to leverage the expertise and innovation capabilities that they lack. These collaborative models can be co-development partnerships with equals, deals to help smaller companies fund their research in specific fields, and collaborations with universities, government institutions and NGOs Digitization is the now the reality for the agriculture industry. If the seed companies need to meet the changing demands of farmers, regulators and consumers, they need to focus on developing cross-functional capabilities in data, analytics, and digital technologies.

The Companys growth opportunities are supported by several structural factors, including:

Increasing Adoption of Quality Seeds

Farmers are increasingly recognizing the economic benefits of certified and improved seed varieties. Higher germination rates, better crop stand establishment, disease resistance, improved yield potential, and enhanced profitability continue to encourage seed replacement and adoption of quality seeds.

Expansion of Irrigation Infrastructure

Government investment in irrigation projects, micro-irrigation systems, watershed development programs, and rural infrastructure is expected to reduce dependence on monsoon rainfall and improve agricultural productivity. Enhanced irrigation coverage creates greater demand for quality seed varieties capable of maximizing crop output.

Government Support for Agriculture

The Government of India continues to prioritize agricultural development through various initiatives aimed at increasing farm income, improving productivity, promoting sustainable agriculture, and strengthening food security. Programs relating to crop insurance, agricultural credit, digital agriculture, farmer welfare, and rural development are expected to support long-term growth in seed demand.

Technological Advancements

Advancements in plant breeding, seed treatment technologies, biotechnology, digital farming Solutions, weather forecasting tools, and precision agriculture are creating opportunities for Seed companies to develop superior products that meet evolving farmer requirements.

Growing Demand for Climate-Resilient Varieties

Changing climatic conditions have increased demand for drought-tolerant, disease-resistant, heat-tolerant, and stress-resistant crop varieties. Companies capable of developing such varieties are expected to benefit from increasing market acceptance.

Distribution Network Expansion

The Company continues to strengthen its dealer network, distributor relationships, and farmer outreach programs. Expansion into new geographical markets provides opportunities for increasing market penetration and enhancing brand recognition.

Research and Product Development

The Company remains focused on introducing improved seed varieties tailored to regional agricultural requirements. Continuous investment in product development and quality enhancement is expected to strengthen competitive positioning and support sustainable growth.

Considering these favorable industry dynamics, the long-term outlook for the Companys seed business remains positive. The Company is well-positioned to benefit from increasing demand for quality seeds and evolving agricultural practices across India.

3. THREATS

Despite favorable long-term prospects, the seed industry remains exposed to various external and internal risks that may influence business performance.

Climatic and Weather Risks

Since agricultural production is heavily dependent upon climatic conditions, adverse weather events such as delayed monsoons, deficient rainfall, droughts, floods, hailstorms, cyclones, heat waves, and unseasonal rainfall can significantly affect sowing activities and seed demand.

Agricultural Commodity Price Volatility

Farmers purchasing decisions are directly influenced by prevailing crop prices. Significant fluctuations in commodity prices may alter cropping patterns and reduce investment in quality seeds.

Competitive Intensity

The seed industry is highly competitive with participation from multinational corporations, established domestic companies, regional players, and unorganized sector participants. Intense competition may result in pricing pressures and margin challenges.

Regulatory Changes

The industry is subject to various regulations governing seed certification, quality standards, labeling requirements, intellectual property rights, environmental regulations, and agricultural policies. Changes in regulatory frameworks may affect business operations and compliance costs.

Pest and Disease Outbreaks

Large-scale pest infestations, crop diseases, and biological threats can adversely impact crop cultivation and influence demand patterns for specific seed varieties.

Input Cost Inflation

Increases in procurement, processing, packaging, logistics, labour, energy and other operating costs may affect margins if such increases cannot be adequately absorbed or passed on to customers.

Supply Chain Disruptions

Any disruption in procurement, transportation, storage, processing, or distribution activities may impact operational efficiency and customer service levels.

The Company continuously monitors these risks and undertakes proactive measures through geographical diversification, inventory planning, quality management systems, product portfolio expansion, and strong farmer engagement programs.

4. SEGMENT WISE/PRODUCT-WISE PERFORMANCE

In accordance with Ind AS 108 Operating Segments, the Company operates through two reportable segments on a consolidated basis, namely:

Seeds Segment

The Seeds segment remains the primary contributor to the Companys revenue and profitability. The segment caters to seasonal agricultural requirements and derives demand from various crop categories cultivated across different agricultural regions.

Performance of the Seeds segment during the year was influenced by factors such as monsoon conditions, crop acreage, and farmer purchasing behavior, agricultural commodity prices, and regional demand patterns. The Company continued to focus on quality enhancement, market penetration, distribution network strengthening, and customer engagement initiatives.

Psyllium Segment

The Psyllium segment contributes additional revenue streams and enhances diversification of the Companys business portfolio. Demand in this segment is influenced by domestic consumption trends, export opportunities, agricultural production levels, and market conditions.

The presence of multiple business segments enables the Company to diversify its revenue base and reduce dependence on a single product category.

Detailed segment information regarding revenue, profitability, assets, liabilities, and related disclosures forms part of the Notes to the Consolidated Financial Statements.

5. INDUSTRY OUTLOOK

The medium- and long-term outlook for the Indian seed industry remains positive.

The principal factors supporting the industry include:- Rising food requirements. Increasing adoption of improved and hybrid seed varieties. Growing awareness regarding agricultural productivity. Improvement in irrigation and agricultural infrastructure. Increasing adoption of scientific farming practices. Government support for agricultural development. Growing demand for climate-resilient varieties. Advancements in plant breeding and seed technologies. Expansion of organised seed distribution networks. Increasing focus on sustainable agricultural productivity.

The agricultural sector is expected to remain an important contributor to Indias economic and rural development. Quality seeds form the foundation of agricultural productivity and therefore the seed industry is expected to remain an important component of the broader agricultural value chain.

The Company intends to leverage these opportunities through continued focus on product quality, research and development, farmer engagement, distribution network expansion and operational efficiency.

6. RISKS AND CONCERNS

The Companys business is closely linked to seasonal agricultural activity and is consequently exposed to operational, financial, market, climatic and regulatory risks.

The principal risks include:

Variability in rainfall and monsoon patterns. Changes in cultivated acreage and cropping patterns.

Changes in farmer purchasing behaviour. Product quality, germination and seed viability risks. Inventory carrying and storage risks. Logistics and transportation challenges. Regulatory and statutory compliance requirements. Competition and pricing pressure. Customer and distributor credit risk. Changes in agricultural commodity prices.

The Companys seed processing facility located at Neemuch, Madhya Pradesh, is exposed to operational risks such as equipment breakdown, power interruption, availability of labour, industrial accidents, natural calamities and supply-chain disruptions.

The Company seeks to mitigate these risks through preventive maintenance, quality assurance procedures, appropriate insurance coverage, inventory monitoring, internal controls, compliance systems and periodic review of operational processes.

7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established an internal control framework commensurate with the size, nature and complexity of its operations.

The internal control framework covers, inter alia: Procurement and purchase controls. Production and seed-processing controls. Inventory management. Quality assurance and testing. Financial reporting and accounting controls. Information technology controls. Statutory and regulatory compliance. Risk identification and mitigation. Authorisation and approval mechanisms.

The Internal Auditor periodically reviews business processes and evaluates the adequacy and effectiveness of internal controls. Internal Audit Reports are placed before the Audit Committee for review. The Audit Committee considers the observations and recommendations and monitors corrective actions, wherever required.

The management is of the opinion that the Companys internal control systems are adequate and commensurate with the size and nature of its business and provide reasonable assurance regarding the safeguarding of assets, reliability of financial reporting, operational efficiency and compliance with applicable laws and regulations.

8. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Companys financial performance during the year was influenced by a combination of operational and market-related factors.

Revenue performance was driven by seed demand across different crop categories, seasonal agricultural activities, geographical market penetration, product mix, and prevailing industry conditions.

Profitability was impacted by factors including raw material procurement costs, processing efficiency, logistics expenses, employee costs, inventory management, and overall market conditions.

The Company continued to focus on operational efficiency, cost optimization, quality improvement, and working capital management to strengthen financial performance and enhance shareholder value.

A detailed analysis of financial results is provided in the Boards Report and the audited Financial Statements forming part of the Annual Report.

9. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

Human resources continue to be a key driver of the Companys long-term success. The Company recognizes that employee competence, commitment, and productivity are critical factors in achieving sustainable growth.

The Company follows a strategy of attracting and retaining the best talent and keep employees engaged, motivated and innovative. The Company continues to have cordial relations with its employees and provide personnel development opportunities for all round exposure to them. As on 31st March, 2026, the Company had 34 employees.

The Companys human resource strategy focuses on:

Talent acquisition and retention. Employee training and development. Performance management systems. Leadership development initiatives. Employee engagement programs. Workplace health and safety. Ethical business conduct and compliance.

10. DETAILS OF SIGNIFICANT CHANGES IN FINANCIAL RATIOS:

Pursuant to applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company provides details of significant changes in key financial ratios along with explanations thereof in the Annual Report.

	F.Y.	F.Y.	Change	Variance
	2025-26	2024-25	In Ratio
Debtors Turnover	19.11	16.07	3.04	18.93%
Inventory Turnover	3.33	4.51	-1.18	-26.16%
Interest Coverage Ratio	3.91	5.11	-1.20	-23.48%
Current Ratio	1.64	1.50	0.14	9.33%
Debt Equity Ratio	0.0112	0.0042	0.0070	166.67%
Operating Profit Margin (%)	3.82%	3.04%	0.78	25.66%
Net Profit Margin (%)	3.65%	4.10%	-0.45	-10.98%

Reason for changes more than 25% in financial ratio

Inventory Turnover: The Inventory Turnover Ratio decreased from 4.51 times in FY 2024-25 to 3.33 times in FY 2025-26, representing a decrease of approximately 26.16%.

The decrease was primarily attributable to a higher level of inventory maintained during the year in anticipation of seasonal demand and to ensure adequate availability of seed products. The increase in inventory levels, relative to the corresponding movement in cost of goods sold, resulted in a lower inventory turnover ratio during the year.

Debt-Equity Ratio: The Debt-Equity Ratio increased from 0.0042 in FY 2024-25 to 0.0112 in FY 2025-26. The increase was primarily due to an increase in borrowings during the year in comparison with the previous year, while the Companys equity base remained relatively stable. Notwithstanding the increase in the ratio, the overall level of financial leverage of the Company remained low.

Operating Profit Margin: The Operating Profit Margin increased from 3.04% in FY 2024-25 to 3.82% in FY 2025-26, representing an improvement of approximately 25.66%. The improvement was primarily attributable to better operating efficiency, improved cost management and optimisation of operating expenses during the year. The Company continued to focus on operational efficiencies and effective management of its procurement, processing and other operating costs, which contributed to the improvement in operating margins.

The remaining ratios did not undergo variations exceeding the prescribed threshold requiring specific explanation, except where otherwise disclosed in the Financial Statements.

The Company continuously monitors key financial and operational indicators to ensure effective utilisation of resources and sustainable financial performance.

11. RETURN ON NET WORTH

Return on Net Worth (“RONW”) is an important measure of the Companys ability to generate earnings from shareholders funds.

The RONW of the Company for FY 2025-26 was 6.42%, as compared with 6.64% during FY 2024-25.

The marginal reduction in RONW reflects the movement in profitability and shareholders funds during the year. The Company continues to focus on improving operational performance, efficient capital utilisation and sustainable value creation for its shareholders.

Detailed financial information and relevant calculations are provided in the Financial Statements and Notes forming part of this Annual Report.

12. CAUTIONARY STATEMENT

Statements made in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations, plans, strategies, or future outlook may constitute forward-looking statements within the meaning of applicable laws and regulations.

These statements are based on managements current assumptions, expectations, estimates, and perceptions regarding future events and business conditions. Actual results may differ materially from those expressed or implied in such statements due to various factors including, but not limited to:

Changes in economic conditions. Variations in agricultural output. Weather and climatic conditions. Government policy changes. Regulatory developments. Competitive pressures. Market demand fluctuations. Input cost movements. Technological changes.

Other risks and uncertainties beyond the Companys control.

Readers are cautioned not to place undue reliance on forward-looking statements. The Company undertakes no obligation to publicly update, amend, or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required under applicable law.