Shri Ahimsa Naturals Ltd Management Discussions

Global Economy

In 2024, the global economy remained steady and managed to navigate a backdrop of ongoing macroeconomic pressures and geopolitical turmoil. Heightened tensions from the conflict in Ukraine and disruptions along the Red Sea continued to affect international shipping and strained supply networks. Trade disagreements between leading economies persisted and added to the external challenges faced by manufacturers and consumers worldwide.

According to the International Monetary Funds World Economic Outlook, global GDP growth reached 3.3% during the year. Regional performance was uneven, with advanced economies seeing a slowdown in activity while many developing regions, particularly across Asia, sustained more consistent levels of expansion.

(Source: World Economic Outlook, IMF, Reuters)

The global economy is expected to uphold a steady growth trajectory, with projections indicating expansion of 2.8% in 2025 and 3.0% in 2026. This outlook reflects a generally favourable environment supported by ongoing progress in major advanced economies as well as key emerging markets.

Growth prospects for the United States are forecast at 1.8% for 2025 and 1.7% in 2026. These figures take into account anticipated changes in the labour market and a possible slowdown in consumer expenditure as policy and market conditions evolve.

(Source: World Economic Outlook, IMF)

Indian Economy

Indias economy exhibited steady expansion and resilience during FY 2024-25, maintaining its standing as a leading global economy with strong growth momentum. According to the Second Advanced Estimate (SAE), Indias real GDP growth stood at 6.5% in FY 2024-25, reflecting a moderation from the 9.2% recorded in the First Revised Estimates for FY 2023-24. This consistent performance demonstrates the nations firm economic foundation, effective policy measures, a vibrant services sector, and robust domestic consumption, all supports a positive outlook for Indias long-term economic trajectory.

Indias economic profile continues to strengthen, as the country now ranks as the worlds fourth-largest economy by nominal GDP and third-largest by purchasing power parity (PPP). Ambitious national milestones have been set with a goal of reaching a $5 Trillion economy by FY 2027-28 and $30 Trillion by 2047. Achieving these targets will depend on ongoing infrastructure development, continued government reforms, and broader technological adoption. The FY 2025-

26 Budget reflects this approach with capital expenditure increasing to 11.21 Lakhs crore, accounting for 3.1% of GDP.

Major policy initiatives and increased investment in both physical and digital infrastructure are central to Indias accelerated growth and economic self-reliance. Key programmes such as Make in India and the Production-Linked Incentive (PLI) scheme have provided important impetus to this progress.

(Source:PressInformationBureau,WorldEconomicOutlook,IMF,PIB)

GDP Growth (units in %)

Indias economy is projected to expand by 6.5% in FY 2025-26 as well, according to the Reserve Bank of India. It is forecasted that by 2030, the country is set to become the worlds third-largest economy, supported by investment in infrastructure, higher private sector capital spending, and growth in financial services. Ongoing reforms are expected to help sustain this progress over the longer term.

Initiatives such as Make in India 2.0, ongoing measures to improve the business environment, and the Production-Linked Incentive (PLI) scheme are focussed on strengthening infrastructure, manufacturing, and exports, positioning India as a key participant in global manufacturing. Inflation is anticipated to align with targets by the end of 2025, which could allow for a more supportive monetary policy. Capital formation is likely to benefit from infrastructure projects and government support, while rural demand should rise due to schemes like the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

The Union Budget 2025-26 adopts a strategy intended to foster both immediate and long-term growth. Prioritising infrastructure, boosting domestic manufacturing, and increasing disposable income, the budget is designed to sustain economic expansion whilst maintaining fiscal prudence.

A notable provision is the raised income tax exemption limit to 12.75 Lakhs per year, set to improve disposable income for middle-class households and encourage greater consumer spending. Substantial infrastructure investment, particularly in roads and railways, aims to enhance connectivity and support job creation. The budget also reinforces the PLI scheme in fields such as electronics and textiles, while continuing to endorse the Make in India vision for strengthening Indias presence in global manufacturing.

(Source: Press Information Bureau)

Industrial Overview

Caffeine Anhydrous Market

The global Caffeine Anhydrous market was valued at $622.4 Million in 2023 and is projected to reach $881.5 Million by 2030, with a Compound Annual Growth Rate (CAGR) of 6.88% during this period. The growth is primarily driven by the increasing use of Caffeine Anhydrous in beverages and dietary supplements across various industries.

Natural caffeine is gaining preference over its synthetic counterpart due to several key advantages. It offers a more gradual and long-lasting stimulating effect, avoiding the sudden jitters and crashes often associated with synthetic caffeine. Furthermore, it presents no risk of discolouration in the final product. For manufacturers, natural caffeine supports premiumisation, as it allows for products to be labelled as "natural". While the cost may be marginally higher, its minimal usage in end products means the increase in overall product cost is negligible, making natural caffeine a highly beneficial and preferred choice.

North America was the dominant market for Caffeine Anhydrous in 2022 and is expected to maintain this trend. This is attributed to high consumer awareness, the presence of major pharmaceutical and dietary supplement industries, and a growing trend of consuming energy drinks for performance enhancement. The United States and Canada, in particular, have seen a rise in demand for dietary supplements and energy drinks containing Caffeine Anhydrous. The US imports a significant amount of Caffeine Anhydrous products, used in the production of soft drinks and energy drinks and nutraceuticals industry.

The Asia Pacific market is forecasted to grow at a faster rate due to increasing health awareness and the consumption of energy drinks. Asia Pacific is expected to become the most lucrative market for Caffeine Anhydrous by 2032. The growing use of caffeine in beverages and personal care products in countries like India, China, Indonesia, and Vietnam is also a key growth factor.

Fast-Moving Consumer Goods (FMCG) Industry

Global

The global Fast-Moving Consumer Goods (FMCG) market was valued at approximately $12.93 Trillion in 2024. This market, characterised by products with high turnover and low prices, is a cornerstone of the global economy. Its recent growth has been driven by several key factors, including a rising global health consciousness, the ongoing trend of urbanisation, the rapid expansion of digital retail, and a persistent demand for convenience and essential goods. Looking ahead, the market is poised for significant expansion. It is projected to grow at a compound annual growth rate (CAGR) of 5.40% from 2025 to 2034, with a forecasted market size of $21.88 Trillion.

Key trends are expected to shape the markets trajectory over the next decade. There is a growing emphasis on sustainable packaging solutions as consumers become more environmentally aware. The demand for clean-label products and personalised offerings is also increasing, reflecting a shift in consumer preferences towards transparency and customisation. Furthermore, the markets growth will be fuelled by deeper penetration into emerging markets and continued evolution of e-commerce channels, which are changing how consumers access and purchase these goods.

Indian

The Fast-Moving Consumer Goods (FMCG) sector, also known as consumer-packaged goods, is Indias fourth-largest industry. It has experienced consistent growth over the years, driven by rising disposable incomes, a growing youth population, and increased brand awareness. The industry is a significant contributor to Indias GDP, with the household and personal care segments alone accounting for 50% of total FMCG sales. With a median age of just 27, Indias population is becoming more consumerist, which, combined with government initiatives aimed at increasing financial inclusion, further aids the sectors expansion. The Indian FMCG market is projected to reach nearly $615.87 Billion, growing at a CAGR of 27.9% through 2027.

Growing awareness, increased access to products, and shifting lifestyles are key drivers of growth for the sector. While the urban segment remains the largest contributor to revenue, accounting for a 55% share, the rural and semi-urban segments are experiencing rapid growth. FMCG products constitute 50% of total rural spending. The sectors annual revenue grew by 8.5% and volumes by 2.5% in the last fiscal year. In 2024, the Indian FMCG industry is anticipated to grow by 4.5-6.5%, underpinned by the strength of the sector and the overall Indian economy.

The food processing market is a crucial part of the FMCG sector. In 2022, the Indian food processing market size reached $307.2 Billion and is expected to grow at a CAGR of 9.5% Billion by 2028. To boost the sector, the Union government has approved a new Production Linked Incentive (PLI) scheme for food processing with a budget of 109 Billion ($1.46 Billion) to be disbursed over six years until 2026-27. The FMCG industry is also a major driver of digital advertising, contributing $9.92 Billion by 2023.

Nutraceuticals Industry

The nutraceuticals industry, encompassing food products that offer health benefits beyond basic nutrition ?€“ including disease prevention and management ?€“ has experienced rapid growth, particularly in the wake of the global pandemic and strengthened focus on preventive healthcare.

Globally, the nutraceuticals market was valued at $317.22 Billion in 2023 and is expected to expand at a CAGR of 9.6% from 2024 through 2030. Key drivers include increased adoption of health-promoting diets, a rising incidence of lifestyle-related disorders, and greater consumer spending power in high-growth markets, all fuelling growing demand for nutraceutical products.

The Indian nutraceuticals market is positioned as an emerging global leader, currently valued at approximately $4?€“5 Billion and forecast to reach around $18 Billion by 2025. Rapid urbanisation and heightened health consciousness are underpinning strong growth, with consumers in India increasingly seeking preventative solutions in health and wellness.

Indian manufacturers and marketers in the nutraceutical space are actively raising consumer awareness about product benefits and their role in both preventive healthcare and medical treatment. The industrys credibility is being strengthened through a renewed emphasis on quality standards, enhanced transparency, and competitive pricing strategies for innovative products. Notably, nutraceuticals occupy a significant 67% share of the health supplement market, surpassing more traditional, pharma-driven supplements.

Looking ahead, the Food Safety and Standards Authority of India (FSSAI) is preparing to implement regulations for nutraceuticals that align with global standards. This regulatory framework is projected to encourage greater foreign investment and attract new entrants, potentially doubling industry valuations in a short period and further accelerating the sectors evolution.

Pharmaceutical Industry

India is globally recognised as the "pharmacy of the world" owing to its ability to produce high-quality medicines at low cost. The country currently ranks third internationally in pharmaceutical production by volume, having grown at a CAGR of 9.43% over the past nine years. India possesses the largest number of USFDA-compliant pharmaceutical manufacturing facilities and hosts around 500 active pharmaceutical ingredient (API) producers, representing approximately 8% of the worldwide API market.

Indian pharmaceutical exports play a crucial role in global healthcare, supplying over 50% of the worlds vaccines, 40% of generic drug demand in the United States, and 25% of all medicines in the United Kingdom. The industry comprises a robust network of 3,000 drug companies and approximately

10,500 manufacturing units. By volume, India is the worlds largest supplier of generic medications, making up 20% of the global supply and providing about 60% of worldwide vaccine demand. The sectors estimated global value is $42 Billion.

Domestically, the pharmaceutical industry is well-established, especially in generic drugs and affordable vaccines. The sector currently ranks third globally by volume and 14th by value, contributing nearly 1.72% to the countrys GDP. The Indian pharmaceutical market size is projected to reach $65 Billion by 2024, around $130 Billion by 2030, and an impressive $450 Billion by 2047. Present valuations put the industry at about $50 Billion, of which exports account for over $25 Billion and approximately 20% of global generic drug exports.

India also holds a significant position in biotechnology, ranking among the top 12 global destinations and standing as the third-largest in the Asia-Pacific region. The country commands a 3-5% share of the worldwide biotechnology industry. In 2022, Indias bioeconomy was valued at $137 Billion, with aims to reach $300 Billion by 2030.

Opportunities and Challenges

Opportunities

The global caffeine anhydrous market presents several promising growth opportunities:

?€? Rising Demand for Natural Caffeine: Consumers are increasingly seeking natural sources of caffeine as an alternative to traditional methods, which is a major factor fuelling market growth.

?€? Functional Food and Beverages: The growing popularity of functional foods and beverages, along with rising disposable incomes in developing countries, has created a greater demand for convenience beverages fortified with natural ingredients like caffeine anhydrous.

?€? Growing Health and Wellness Trend: The increasing focus on health and wellness, coupled with the rising popularity of sports and fitness activities, is driving the demand for energy drinks and dietary supplements containing caffeine anhydrous.

?€? Government Initiatives: Government efforts to promote healthy foods and beverages are also expected to propel market growth.

Challenges

The caffeine anhydrous market faces a number of significant challenges:

?€? Regulatory Hurdles: Stringent regulations governing the production, distribution, and labelling of caffeine-based products pose a major obstacle. Manufacturers must continuously adapt to remain compliant with evolving policies, particularly those related to health claims and dosages.

?€? Economic Factors: Fluctuating raw material prices can affect production costs, making it challenging for manufacturers to maintain competitive pricing while ensuring profitability.

?€? Supply Chain Disruptions: The market is vulnerable to disruptions caused by natural disasters, geopolitical tensions, or other global crises, which can lead to shortages or delays in production and distribution.

Company Overview

Shri Ahimsa Naturals Limited (referred to as Ahimsa or the Company), which began its operations in 1990, specialises in the extraction and manufacturing of Caffeine Anhydrous Natural and Green Coffee Bean Extracts (GCE), along with Crude Caffeine. The Company also deals in a variety of other herbal extracts. Its products are used in the food & beverage, nutraceuticals, cosmetics, and pharmaceutical industries, valued for their health benefits.

The Companys primary raw material is crude caffeine, a by-product sourced from multiple decaffeination plants, including those in Vietnam and Mexico. Ahimsa processes this crude caffeine to produce both GCE and Caffeine Anhydrous Natural.

Initially, Ahimsas business was solely focussed on the extraction, manufacturing, and sale of Caffeine Anhydrous Natural. In 2018, following extensive research and development, the Company discovered that the crude caffeine it sourced also contained GCE. To capitalise on this, Ahimsa developed a process to extract GCE and added it to its product portfolio. The Company further expanded its product offerings in 2021 to include various herbal extracts, responding to growing customer demand. Since 2022, Ahimsa has also been manufacturing Crude Caffeine from tea and coffee waste, which is sold in the open market and used for captive consumption.

As an Export-Oriented Unit (EOU), Ahimsas operations are primarily focussed on the international market. The Company currently supplies its products to over 14 countries, including the USA, Germany, South Korea, and the UK. Ahimsa employs a dual sales strategy, making direct sales to large-scale consumers while also working with resellers to reach smaller consumers in its export markets.

Key Strengths

?€? Global Leadership in Natural Caffeine: The company is a leading player in the natural caffeine market and is recognised as one of the worlds and Indias largest natural caffeine manufacturers.

?€? Proprietary Solvent Extraction Process: The company has evolved its caffeine purification process over 30 years of research and development. This self-developed process ensures high yield, consistent quality that meets stringent standards, and allows for the extraction of a diverse range of natural products.

?€? Pioneer in Waste-to-Value Technology: The company has pioneered innovative technology to transform waste into valuable products. This includes the extraction of Green Coffee Bean Extracts (GCE) as a by-product of natural caffeine extraction and the manufacturing of caffeine from tea and coffee waste.

?€? GlobalCostLeadership: Throughitsefficientprocesses and technologies, the company has established itself as the lowest-cost producer of both Natural Caffeine and Green Coffee Bean Extracts (GCE) in the world.

?€? Experienced Promoters and Management: Our promoters and senior management bring extensive experience and industry acumen to the Company. Their long-term exposure to the sectors dynamics allows us to effectively manage operations, identify new growth avenues, and maintain a competitive edge.

?€? Technology-Driven Manufacturing and R&D: Our manufacturing facility in Jaipur, Rajasthan, has a total installed capacity of 270 MTPA for Caffeine Anhydrous Natural and 200 MTPA for Green Coffee Bean Extracts.

The facility is supported by an in-house R&D and Quality Lab, which focusses on process improvements and product innovation to ensure consistent quality and cost-effective production.

?€? Commitment to Quality Service: We have maintained a strong reputation for quality and timely service over the last three decades. Our internal procedures for checking orders at every stage, from placement to delivery, help to minimise errors and ensure customer satisfaction, leading to high customer retention and repeat business.

?€? Strong Client Relationships: We have built long-term relationships with a diverse clientele across more than 14 countries, including the USA, Germany, South Korea, and the UK. Our customer-centric approach, which includes offering products that meet specific client requirements, has been a key factor in growing our business and expanding our market presence.

?€? Healthy Supplier Relationships: Maintaining strong relationships with our crude caffeine suppliers is crucial for ensuring a stable and uninterrupted supply of raw materials. We leverage the experience of our management team to maintain these relationships, which helps us to secure timely and cost-effective procurement.

Financial Overview

Financial Performance FY 2024-25

		( in Lakhs)
Particulars	FY 2024-25	FY 2023-24
Revenue from Operations	9,580.61	7,808.16
EBITDA	3,226.74	2,746.03
EBITDA Margin (in %)	33.68%	35.17%
Net Profit after Tax	2,189.91	1,870.08
Net Profit Margin (in %)	22.86%	23.95%
Return on Net Worth (in %)	14.17%	22.28%
Return on Capital Employed (in %)	19.22%	25.73%
Net Debt/EBITDA (in %)	-	21.26%

During FY 2024-25, the consolidated revenue increased 22.7%YoYto9,580.61Lakhsfrom 7,808.16lakhsinFY2023-24.Thegrowthwasmajorlycontributedbyhighervolumegrowth of manufactured products, EBITDA growth of 17.5% YoY to

3,226.74 Lakhs from 2,746.03 Lakhs in FY 2023-24. Profit after tax (PAT) grew 17.1% YoY to 2,189.91 Lakhs in FY 2024-25 from 1,870.08 Lakhs in FY 2023-24. Total net worth as on March 31, 2025 stood at 15,455.33 Lakhs against 8,392.55 Lakhs as on March 31, 2024.

Key Strategical Outlook

Expanding Manufacturing Capacity: The Company plans to significantly expand its production facilities to meet growing demand. This expansion, to be undertaken by its subsidiary,

Shri Ahimsa Healthcare Private Limited, will increase the installed capacity for its core products, allowing it to serve larger customers and capture additional market share.

Increasing Global Footprint: As a primary exporter, the Company aims to further penetrate existing key markets while expanding into new geographies. The strategy involves building a strong local presence and continuously acquiring new customers to augment sales and solidify its position globally.

Continuous Research & Development: The Company will continue to invest in R&D and technology to improve operational efficiency and product quality. This focus on process excellence will help increase production output, drive down costs, and maintain a competitive edge.

Expanding Supplier Base: By broadening its network of crude caffeine suppliers, the Company intends to reduce dependency on a limited number of sources. This strategy is aimed at improving margins, shortening product time-to-market, and mitigating supply chain risks.

Focus on Sales Volume Growth: A core growth strategy is to increase sales volume by scaling up operational capacities and optimising their utilisation. This will involve strategic investments to broaden the production base and expand into new markets, ultimately leading to enhanced profitability.

Human Resources

The Company places strong emphasis on treating all employees with dignity and respect. It is committed to the welfare of its personnel, providing them with exceptional working environments that are equipped with cutting-edge technology. Shri Ahimsa is focussed on cultivating a secure workplace that promotes a sense of belonging, ensuring that every employee feels valued and heard. To facilitate the growth of its workforce, the Company offers an array of training and development opportunities.

As of the date, the Company has 76 permanent employees. The Company does not have any permanent contractual employees.

In addition to its permanent staff, Shri Ahimsa also engages a varying number of contractual labourers as needed for its operational requirements.

Risk Management

Key Risk	Description	Mitigation
Market Risk	The global economic slowdown	Shri Ahimsa supplied its materials to more
	and trade disruptions caused	than 14+ countries, providing a degree of
	by geopolitical tensions may	geographical diversification that reduces
	negatively impact the Company\u2019s	concentrated risk in any single region.
	export performance.	Continuous monitoring of country-specific
		risk profiles informs market engagement
		decisions. On the supply side, the company
		implements strategic sourcing and vendor
		diversification initiatives to enhance resilience
		against potential disruptions
Quality Risk	The risk of products failing to meet	To ensure business continuity and maintain
	quality standards could result in	a positive brand image, the Company
	customer dissatisfaction and harm	prioritises delivering high-quality products.
	the Company\u2019s reputation.	This dedication is supported by various
		quality certifications received from premier
		organisations worldwide, which confirms
		its commitment to rigorous quality control
		processes and alignment with international
		quality standards
Raw Material Risk	The risk of unavailability or limited	Long-lasting relationships with our suppliers
	availability of raw materials and/or	and multiple vendors help us to ensure
	price fluctuations of important raw	uninterrupted flow of inventory at competitive
	materials.	rates.
Technological Risk	Shri Ahimsa may encounter	The Company prioritises technology,
	challenges and disruptions due to	consistently investing in the latest innovations
	rapid technological advancements	to maintain the superior quality of its products,
	or difficulties in adopting new	enhance its product range, and support
	technologies. This risk could stem	business growth.
	from outdated technology or an
	inability to keep pace with evolving
	industry trends

Internal Financial Control Systems and their Adequacy

The Company has an internal control system, which ensures that (a) its financial reports are reliable, (b) its operations are effective and efficient, and (c) its activities comply with applicable laws and regulations. Further, for FY 25-26, the Company has appointed an Internal Auditor to carry out the Internal Audit process which is designed to review the adequacy of internal control checks in the system and covers all the significant areas of the Companys operations as per regulatory requirement. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of the internal control systems and tracks the implementation of corrective actions. Significant audit observations and corrective actions will be taken by the Management and will be presented to the Audit Committee.

Cautionary Statement

The Management Discussion and Analysis includes statements that outline 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 judgements 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, such as economic conditions impacting supply and demand, market price fluctuations both domestically and internationally, changes in government regulations and policies, tax laws, 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.