Shri Ahimsa Naturals Ltd Management Discussions

Global Economy

The global economy in 2025 remained resilient despite geopolitical tensions, rising trade restrictions, and changing policy frameworks. Ongoing conflicts in West Asia, continued to disrupt supply chains, energy markets, and investor sentiment, causing volatility in commodity prices and financial conditions. Rising tariffs and trade policy uncertainty also created a more fragmented global trade environment.

Despite these challenges, economies adapted through diversified trade routes, stronger energy security measures, and targeted policy support, helping maintain stability. According to the International Monetary Fund, global growth is estimated at 3.4% in 2025, compared to 3.3% in 2024, supported by technology-led investments such as artificial intelligence, improving trade activity, and relatively accommodative financial conditions. Advanced economies are expected to grow by 1.9%, while emerging market and developing economies are projected to expand by 4.4%, driven by domestic demand, infrastructure spending, and manufacturing growth.

Global headline inflation is estimated to ease to 4.1% in 2025 due to softer commodity prices and earlier monetary tightening, though inflation remains uneven across regions.

In 2026, renewed tensions in West Asia involving the United States, Israel, and Iran may increase inflation and weaken growth. Global growth is projected at 3.1% in 2026 and 3.2% in 2027, with the United States remaining a key growth driver.

Indian Economy

Indias growth continues to be supported by strong domestic demand, infrastructure-led investment and structural reforms, including the evolution of GST frameworks, which are improving efficiency, formalisation and ease of doing business. Supported by increased public infrastructure spending, focussed manufacturing initiatives and the Governments vision of Viksit Bharat, the economy remains on a strong growth trajectory while reducing vulnerability to external shocks and strengthening long-term growth drivers.

India continues to remain among the worlds largest economies, currently ranking among the top six economies globally in nominal GDP terms, with its position subject to short-term currency movements and methodological revisions. These shifts, however, do not alter the underlying strength of Indias domestic growth story or its long-term economic trajectory. According to the Provisional Estimates released by the Ministry of Statistics and Programme Implementation (MoSPI), real GDP grew by 7.7% in FY 2025-26, while real Gross Value Added (GVA) increased by 7.9% to 294.91 lakh crore, supported by robust performance across manufacturing, services and construction sectors. For FY 2026-27, GDP growth is expected to remain strong in the range of 6.8% to 7.2%, reflecting continued momentum despite global uncertainties and external risks.

Manufacturing activity also remained robust, with the HSBC India Manufacturing PMI rising to 55.0 in May 2026, supported by growth in domestic orders, output and purchasing activity. Government initiatives such as Make in India 2.0, the PLI scheme, and increased capital expenditure of 12.2 lakh crore in the Union Budget FY 2026-27 are strengthening infrastructure, domestic manufacturing and export competitiveness.

The conflict in West Asia has introduced fresh uncertainty through volatile energy prices, supply chain disruptions and shifting trade dynamics. As an import-dependent economy for crude oil and critical industrial inputs, India remains exposed to these external pressures. However, its diversified trade base, stronger alignment with emerging markets and ongoing supply chain realignment are helping mitigate the impact of global protectionism and tariff-related challenges, supporting continuity in trade flows and industrial activity.

While external headwinds may create near-term moderation in growth and inflationary pressures, Indias medium- to long-term outlook remains positive. Favourable demographics, urbanisation and expanding access to essential services, including healthcare, are expected to support sustainable economic growth and create strong long-term opportunities for the pharmaceutical sector.

(Source: PIB)

Caffeine Anhydrous Market

The global anhydrous caffeine market is growing steadily, supported by rising demand from food and beverages, pharmaceuticals, and nutraceuticals. Growth is mainly driven by the increasing use of anhydrous caffeine in energy drinks, pre-workout supplements, over-the-counter medicines, and functional beverages. Consumers are increasingly looking for products that improve energy, focus, and physical performance, supporting demand across both developed and emerging markets. The rise in fitness culture, active lifestyles, and online retail channels is also contributing to market expansion. Powder form remains the most widely used due to its high solubility and ease of use in supplements and beverages.

Natural caffeine is gaining preference over synthetic caffeine because it offers both functional and branding advantages. It provides a smoother and more sustained energy release, reducing the sudden spikes and crashes often linked with synthetic caffeine. Since it is sourced from coffee beans, tea leaves, guarana, and other plant-based ingredients, it also contains antioxidants and other beneficial compounds that improve product value. It also supports premium positioning, as manufacturers can label products as "natural", helping them meet clean-label demand and attract health-conscious consumers. Although natural caffeine is slightly more expensive, its low usage in final products keeps the overall cost impact limited.

Region-wise, North America holds a major share of the global market due to high consumption of energy drinks, dietary supplements, and over-the-counter medicines, especially in the United States. Europe is also growing steadily, led by Germany, the United Kingdom, and France, where demand for naturally sourced and clean-label caffeine products is rising. Asia Pacific is expected to grow the fastest due to urbanisation, rising incomes, and stronger health awareness in China, India, and Japan. South America, the Middle East and Africa are also showing gradual growth, supported by increasing demand for functional beverages and wellness products.

(Source: Verywellhealth)

Fast-Moving Consumer Goods (FMCG) Industry

Global

The global FMCG market continues to grow steadily, supported by strong demand for daily-use products such as food, beverages, personal care, and household essentials. The market is expected to expand by US$ 480.6 billion during 2026–2030 at a CAGR of 3.2%, with food and beverages remaining the largest segment. Growth is driven by rising demand for packaged food, health-focussed products, and convenience-led consumption. While traditional retail stores still hold the largest share, online sales and quick commerce are growing rapidly as consumers prefer faster delivery and easier access to products. Companies are also adopting artificial intelligence, cloud-based systems, and digital supply chains to improve planning, customer engagement, demand forecasting, and inventory management.

Consumer preferences are shifting towards sustainable packaging, clean-label products, and personalised offerings, with greater focus on transparency and ingredient quality. Asia-Pacific remains the largest growth region and is expected to contribute 42.6% of global market growth, led by China, India, and Japan. North America and Europe continue stable growth, while the Middle East, Africa, and South America are improving with expanding retail networks and rising household consumption.

(Source: Technavio)

Indian

The FMCG sector, Indias fourth-largest industry, remains one of the countrys most important sectors, driven by rising disposable incomes, a young population, stronger brand awareness, and wider access to organised retail and digital platforms. The Indian FMCG market was valued at US$ 287.91 billion in 2025 and is projected to reach US$ 1,150.21 billion_by 2034, growing at a_16.64%_CAGR from 2026-2034. Household and personal care products continue to account for the largest share of the FMCG market, contributing nearly half of industry sales, reflecting the sectors strong role in daily consumption. Government initiatives focussed on financial inclusion and rural development continue to support growth.

FMCG products form a significant part of rural household spending, especially in essential and affordable premium categories. Rural markets outperformed urban demand for the eighth consecutive quarter, highlighting the strength of rural consumption. Modern trade and e-commerce also remained strong, with e-commerce reaching an 18% share in the top eight metros, showing the growing importance of organised retail and digital channels.

The transition to Goods and Services Tax 2.0 and tax rate changes influenced buying patterns across the sector. Quick commerce and e-commerce platforms are also changing consumer habits, especially in urban markets where convenience-led shopping is rising.

The food processing industry remains a key part of the FMCG sector, supported by demand for packaged food, ready-to-eat products, and health-focussed items. The Production Linked Incentive scheme for food processing, with an outlay of 10,900 crore is supporting capacity expansion, product diversification, and exports, strengthening supply chains and the overall value chain.

Consumer demand is also shifting towards health-focussed products, clean-label offerings, sustainable packaging, and premium brands. Direct-to-consumer and digital-first brands are expanding rapidly, with the market projected to reach

5.58 lakh crore (US$ 60 billion) by 2030. Tier II and Tier III cities are driving this growth, contributing 66% of new orders in FY 2025-26.

(Source: MOFPI, IMARC)

Nutraceuticals Industry

The nutraceuticals industry is becoming an important part of everyday healthcare as consumers focus more on preventive wellness rather than treatment alone. Products such as functional foods, fortified beverages, protein supplements, probiotics, and immunity boosters are seeing strong demand as people pay more attention to immunity, digestion, fitness, and long-term health management.

Globally, the nutraceuticals market continues to grow steadily, supported by ageing populations, rising lifestyle-related diseases, and higher healthcare costs. The market was valued at US$ 626.19 billion in 2025 and is projected to grow from US$ 672.29 billion in 2026 to around US$ 1,102.94 billion by 2035, at a CAGR of 5.82% from 2026 to 2035. North America held the largest market share of 36.11% in 2025, supported by strong healthcare spending and high consumer awareness. Asia-Pacific is expected to witness the highest growth during 2026–2035, while functional beverages are likely to remain the leading growth segment due to rising demand for convenient health-focussed products.

India is emerging as one of the fastest-growing nutraceutical markets globally. The Indian nutraceuticals market is expected to reach US$ 84.99 billion by 2033, growing at a CAGR of 10.3% from 2026 to 2033. Demand is rising across immunity, sports nutrition, diabetic care, womens health, and healthy ageing. Functional foods and beverages continue to lead the market as consumers prefer daily nutrition-based wellness solutions.

Digital-first and direct-to-consumer brands are expanding rapidly, supported by e-commerce platforms, pharmacy chains, and organised retail. Large healthcare companies are also increasing investments through acquisitions and new launches. USVs acquisition of Wellbeing Nutrition for 1,583 crore in 2026 reflects strong confidence in the sector. Stronger Food Safety and Standards Authority of India regulations, product standardisation, and transparent labelling are expected to further improve consumer trust. (Source: Pharma, Precedenceresearch, Grandviewresearch)

Opportunities and Challenges

Opportunities

The global anhydrous caffeine market continues to create growth potential across multiple end-use industries, supported by evolving consumer preferences and application areas.

Rise of Functional Beverages and Supplements: Growing consumer focus on health, fitness, and active lifestyles is increasing demand for energy drinks, pre-workout products, and functional beverages. Anhydrous caffeine is widely used in these products because of its quick absorption and high concentration.

Natural and Clean-Label Preference: Consumers are increasingly shifting towards natural and plant-based caffeine sources such as coffee beans, tea leaves. This supports premium product positioning and helps manufacturers meet clean-label demand.

Personal Care and Cosmetics: Natural caffeine is also finding wider use in skincare and cosmetic products such as eye creams and anti-ageing solutions due to its antioxidant properties and benefits in reducing puffiness.

E-commerce Expansion: The growth of online retail and digital platforms has improved access to supplements, wellness products, and functional beverages, supporting wider consumer reach and faster market growth.

Government Support and Regulatory Focus: Government initiatives supporting food processing, nutraceuticals, and pharmaceutical manufacturing, along with stronger quality and compliance standards, are creating better growth opportunities for caffeine-based products across industries.

Challenges

The global anhydrous caffeine market also faces several operational and market-related challenges that may affect growth and profitability.

Regulatory Compliance: Strict quality standards and regulations in the food, pharmaceutical, and nutraceutical industries increase compliance costs and approval timelines for manufacturers.

Supply Chain Disruptions: Global trade disruptions, logistics costs, and delays in sourcing raw materials can impact timely production and product availability.

Raw Material Supply Risk: The availability and cost of caffeine-bearing raw materials are critical to the Companys operations. Any disruption arising from adverse climatic conditions, changes and in agricultural output may adversely affect production schedules, operating costs, and margins.

Company Overview

Shri Ahimsa Naturals Limited (referred to as "Ahimsa" or "the Company"), established in 1990, is engaged in the extraction and manufacturing of Natural Caffeine Anhydrous, Green Coffee Bean Extract (GCE), and Crude Caffeine, along with a range of other botanical extracts. The Company is among the leading global manufacturers of Natural Caffeine and is recognised as the largest Natural Caffeine manufacturer in Asia. These products cater to industries such as food and beverages, nutraceuticals and cosmetics, where they are valued for their functional and health-related benefits.

• Largest Natural Caffeine Manufacturer in Asia

• 35+ Years of Industry Experience

The Companys key raw material is crude caffeine, which is obtained as a by-product from various decaffeination plants located in countries such as Vietnam and Mexico. This crude caffeine is further processed by Ahimsa to manufacture both Green Coffee Bean Extract and Natural Caffeine Anhydrous. The Company has developed its extraction and purification process in-house through more than three decades of research and development, enabling high extraction efficiency, product consistency and compliance with global quality standards.

At the initial stage, the Companys operations were mainly centred on the extraction, manufacturing, and sale of Natural Caffeine Anhydrous. In 2018, after continuous research and development efforts, Ahimsa identified that the crude caffeine sourced from some supplier also contained Green Coffee Bean Extract. To utilise this opportunity, the Company developed its own extraction process for GCE and added it to its product portfolio.

Leadership in Natural Caffeine

The Company has established itself as a key player in the natural caffeine industry, with a significant presence in global markets. Ahimsa is among the foremost manufacturers of natural caffeine worldwide and the largest producer in Asia. The Companys strong market position is supported by long-standing customer relationships, extensive export operations, and a diversified international customer base.

Proprietary Extraction Process

Over 35 years of research and development have helped the Company build its own solvent extraction and purification process. This ensures high yield, consistent quality, compliance with global standards, and supports the extraction of multiple natural products. The Company has achieved an extraction efficiency of approximately 97% and produces food-grade Natural Caffeine with purity levels of up to 99.9%.

• ~97% Extraction Efficiency.

• Up to 99.9% Product Purity.

• Proprietary Extraction Technology.

In 2021, Ahimsa further diversified its offerings by introducing different Botanical extracts in response to increasing customer demand. The Company currently offers botanical extracts such as Ashwagandha, Bacopa Monnieri, Boswellia, Curcumin, Garcinia, Senna, Shilajit and other botanical extracts catering to the nutraceutical and wellness segments. Since 2022, the Company has also started manufacturing Crude Caffeine from tea and coffee waste.

AsanExport-OrientedUnit(EOU),Ahimsasbusinessremains largely focussed on international markets. The Company currently serves more than 50 customers across over 14 countries, including the United States, Germany, South Korea, and the United Kingdom. Ahimsa follows a dual sales approach by supplying directly to large-scale customers while also working through resellers to cater to smaller consumers across its export markets.

Waste-to-Value Capability

The Company has developed strong waste-to-value solutions by extracting Green Coffee Bean Extract as a by-product of natural caffeine production and manufacturing crude caffeine from tea and coffee waste. The Companys ability to convert low-value waste streams into high-value ingredients supports sustainability, profitability and resource efficiency.

Global Cost Advantage

Efficient self-developed and regularly updated processes and technology have made the Company one of the lowest-cost producers of Natural Caffeine and Green Coffee Bean Extracts in the world, improving competitiveness and margins. Ahimsas scale, process efficiencies and continuous process improvement initiatives have enabled it to establish a global cost leadership position.

Experienced Management

The promoters and senior management bring strong industry knowledge and experience, helping the Company manage operations efficiently and identify new growth opportunities.

Technology-Driven Manufacturing

The Company operates manufacturing facility in Jaipur, Rajasthan. The Companys Jaipur facility has an installed capacity of 270 MTPA for Natural Caffeine Anhydrous and

200 MTPA for Green Coffee Bean Extracts. It is supported by an in-house Research and Development and Quality Lab for process improvement and product innovation. Upcoming facility at Sawarda, Rajasthan will have 700 MTPA capacity of Natural Caffeine Anhydrous, 300 MTPA for Green Coffee Bean Extracts, 200 MTPA capacity of Crude Caffeine for backward integration and fungible capacities for Botanical Extracts.

Quality and Service Focus: The Company has maintained a strong reputation for quality and timely delivery for over three decades. Strong internal systems help ensure customer satisfaction, repeat business, and long-term retention. Ahimsas products are approved by leading international certification agencies, including FSSC, Kosher and BIQS, supporting acceptance across global markets.

Strong Customer Relationships: Ahimsa serves more than 50 customers across over 14 countries. The Companys customer-focussed approach and customised solutions support business growth and market expansion.

Healthy Supplier Relationships: Strong relationships with crude caffeine suppliers ensure stable raw material availability, timely procurement, and cost-effective sourcing, supporting smooth operations.

Financial Performance FY 2025-26

During FY 2025-26, the consolidated revenue increased 28.72% YoY to 12,332.05 Lakhs from 9,580.61 Lakhs in FY 2024-25. The growth was mainly contributed by higher volume growth of manufactured products, EBITDA growth of 17.86% YoY to 3,584.54 Lakhs in FY 2025-26 from 3,041.25 Lakhs in FY 2024-25. Profit after tax (PAT) grew 32.91% YoY to 2,910.71 Lakhs in FY 2025-26 from

2,189.91 Lakhs in FY 2024-25.

Total net worth as on March 31, 2026, stood at 19,332.89 Lakhs against 15,455.33 Lakhs as on March 31, 2025.

Expanding Manufacturing Capacity

The Company is undertaking a significant greenfield expansion at Sawarda Jaipur, through its subsidiary, Shri Ahimsa Healthcare Private Limited, to support rising demand and growth. The expansion is expected to increase the Companys production capacity by approximately three times and add capacities of 700 MTPA of Natural Caffeine, 300 MTPA of Green Coffee Bean Extract and 200 MTPA of Crude Caffeine. The project is also designed to support diversification into botanical extracts, enrichment of Green Coffee Bean Extract, and enhanced manufacturing flexibility with greater degree of automation.

Backward Integration and Decaffeination Capability

The Company is establishing in-house decaffeination capabilities to manufacture crude caffeine from multiple sources, including tea waste, reducing dependence on external suppliers and strengthening raw material security. This initiative is expected to improve cost competitiveness, capacity utilisation, and strengthen the Companys position across the natural caffeine value chain. The proposed expansion is expected to transform the Company into a more integrated natural caffeine player with much larger production capacity and improved control over key raw material inputs.

Strengthening Global Presence

As an export-focussed business, the Company aims to deepen its presence in existing markets and enter new geographies. Building a stronger local presence and adding new customers will support long-term global growth. The Company also intends to expand its customer base across both developed and emerging markets while exploring opportunities in the domestic market.

Focus on Research and Development

Continuous investment in research, development, and technology will help improve product quality, operational efficiency, and cost competitiveness while supporting process innovation. The Company will continue focussing on improving extraction efficiency, product purity, process automation and the development of new value-added products across botanical extracts and related segments.

Driving Sales Volume Growth

Increasing sales volume remains a key priority through capacity expansion, better utilisation of resources, and entry into new markets. The Company also aims to increase wallet share with existing customers through cross-selling opportunities in Green Coffee Bean Extracts and botanical extracts, while expanding its presence across multiple end-use industries.

Expansion of Botanical Extract Portfolio

The Company is strengthening its presence in botanical extracts through the development and marketing of higher-value botanical products. This initiative is expected to diversify revenue streams, improve product mix and create additional cross-selling opportunities with existing customers.

Human Resources

The Company places strong focus on treating all employees with dignity and respect and remains committed to their overall welfare. It provides a safe and supportive work environment equipped with modern technology, ensuring employees feel valued, heard, and included. The Company also offers training and development opportunities to support employee growth and skill enhancement.

As of the date, the Company has 77 permanent employees. In addition to its permanent workforce, Shri Ahimsa engages contractual labour as required based on operational needs.

Their Adequacy

The Company has a well-defined internal control system in place to ensure that (a) its financial reports are reliable, (b) its operations are effective and efficient, and (c) its activities comply with applicable laws and regulations. For FY 2025-26, the Company appointed an Internal Auditor to conduct the internal audit process, which is designed to assess the adequacy of internal control checks across all significant areas of operations in line with regulatory requirements. The Audit Committee of the Board regularly reviews the adequacy and effectiveness of these internal control systems and monitors the implementation of corrective actions. Significant audit observations and the corrective measures taken by the Management are placed before the Audit Committee for review.

The Management Discussion and Analysis includes statements outlining the Companys goals, forecasts, estimates, and expectations, which may be considered "forward-looking statements" under applicable laws and regulations. These statements are based on informed judgments and estimates. The Companys past performance is not necessarily a predictor of future outcomes, and actual results may vary significantly from those stated or implied. These forward-looking statements are subject to various risks and uncertainties, including economic conditions affecting supply and demand, market price fluctuations domestically and internationally, changes in government regulations and policies, tax laws, the availability and costs of raw materials, and other legal factors. The Company does not undertake any obligation to publicly update, amend, or revise any forward-looking statements in light of new developments, information, or events.