Sikko Industries Ltd Management Discussions

The discussion hereunder covers Companys performance and its business outlook for the future. This outlook is based on assessment of the current business environment and Government policies. The change in future economic and other developments are likely to cause variation in this outlook.

GLOBAL ECONOMY:

Global growth is projected to stabilize at 2.6 percent this year, holding steady for the first time in three years despite flaring geopolitical tensions and high interest rates. It is then expected to edge up to 2.7 percent in 2025-26 amid modest growth in trade and investment. Global inflation is projected to moderate - but at a slower clip than previously assumed, averaging 3.5 percent this year. Given continued inflationary pressures, central banks in both advanced economies and emerging market and developing economies (EMDEs) will likely remain cautious in easing monetary policy. As such, average benchmark policy interest rates over the next few years are expected to remain about double the 2000-19 average. Global GDP growth is expected to moderate from 3.2% in 2024 to 3.1% in 2025 and 3.0% in 2026, with higher trade barriers in several G20 economies and increased policy uncertainty weighing on investment and household spending. Annual real GDP growth in the United States is projected to slow from its very strong recent pace, to 2.2% in 2025 and 1.6% in 2026. Euro area real GDP growth is projected to be 1.0% in 2025 and 1.2% in 2026, as heightened uncertainty keeps growth subdued. Growth in China is projected to slow from 4.8% this year to 4.4% in 2026. Despite an improvement in near-term growth prospects, the outlook remains subdued by historical standards in advanced economies and EMDEs alike. Global growth over the forecast horizon is expected to be nearly half a percentage point below its 2010-19 average pace. In 2024-25, growth is set to underperform its 2010s average in nearly 60 percent of economies, representing more than 80 percent of global population and world output. EMDE growth is forecast to moderate from 4.2 percent in 2023 to 4 percent in both 2024 and 2025. Prospects remain especially lackluster in many vulnerable economies - over half of economies facing fragile- and conflict-affected situations will still be poorer by the end of this year than on the eve of the pandemic.

Medium-term risks to the baseline are tilted to the downside, while the near-term outlook is characterized by divergent risks. Upside risks could lift already-robust growth in the United States in the short run, whereas risks in other countries are on the downside amid elevated policy uncertainty. Policy-generated disruptions to the ongoing disinflation process could interrupt the pivot to easing monetary policy, with implications for fiscal sustainability and financial stability. Managing these risks requires a keen policy focus on balancing trade-offs between inflation and real activity, rebuilding buffers, and lifting medium-term growth prospects through stepped-up structural reforms as well as stronger multilateral rules and cooperation. Global disinflation continues, but there are signs that progress is stalling in some countries and that elevated inflation is persistent in a few cases. The global median of sequential core inflation has been just slightly above 2 percent for the past few months. Nominal wage growth is showing signs of moderation, alongside indications of continuing normalization in labor markets. Public investment can be a powerful policy lever in EMDEs to help ignite growth, including by catalyzing private investment. However, public investment in these economies has experienced a significant slowdown in the past decade. In EMDEs with ample fiscal space and a record of efficient government spending, scaling up of public investment by one percent of GDP can increase output by up to 1.6 percent over the medium term. Public investment also crowds in private investment and boosts productivity, promoting long-run growth in these economies. Although core goods price inflation has fallen back to or below trend, services price inflation is still running above pre COVID-19 averages in many economies, most notably the United States and the euro area. Pockets of elevated inflation, reflecting a range of idiosyncratic factors, also persist in some emerging market and developing economies in Europe and Latin America. Inflationary pressures persist in many economies, with headline inflation recently turning up again in an increasing share of economies. Services price inflation has stayed elevated, with a median rate of 3.6% across OECD economies. Over 2025-26 inflation is projected to be higher than previously expected, although still moderating as economic growth softens. Headline inflation is projected to fall from 3.8% in 2025 to 3.2% in 2026 in the G20 economies. Underlying inflation is now projected to remain above central bank targets in many countries in 2026. Expecting steady decline of inflation from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025. Stronger global growth can be expected in case of faster deflation, slower withdrawal of fiscal support, faster economic recovery in China and artificial intelligence driven supply-side reforms. The down-side risk to the growth are commodity price spikes amid geopolitical and weather shocks, slower than expected decline in core inflation requiring tighter monetary policy stance, faltering growth in China and disruptive action on fiscal consolidation. On the policy front, central banks focus will be on managing the decline of inflation and carrying out calibrated fiscal consolidation to support durable medium-term growth. Global financial conditions remain largely accommodative, again with some differentiation across jurisdictions (see Box 1). Equities in advanced economies have rallied on expectations of more business-friendly policies in the United States. In emerging market and developing economies, equity valuations have been more subdued, and a broad-based strengthening of the US dollar, driven primarily by expectations of new tariffs and higher interest rates in the United States, has kept financial conditions tighter.

Economic policy uncertainty has increased sharply, especially on the trade and fiscal fronts, with some differentiation across countries (Figure 1). Expectations of policy shifts under newly elected governments in 2024 have shaped financial market pricing in recent months. Bouts of political instability in some Asian and European countries have rattled markets and injected additional uncertainty regarding stalled progress on fiscal and structural policies. Geopolitical tensions, including those in the Middle East, and global trade frictions remain elevated.

Global growth is expected to remain stable, albeit lackluster. At 3.3 percent in both 2025 and 2026, the forecasts for growth are below the historical (2000 19) average of 3.7 percent and broadly unchanged from October (Table 1; see also Annex Table 1). The overall picture, however, hides divergent paths across economies and a precarious global growth profile (Figure 2).

They incorporate recent market developments and the impact of heightened trade policy uncertainty, which is assumed to be temporary, with the effects unwinding after about a year, but refrain from making any assumptions about potential policy changes that are currently under public debate. Energy commodity prices are expected to decline by 2.6 percent in 2025, more than assumed in October. This reflects a decline in oil prices driven by weak Chinese demand and strong supply from countries outside of OPEC+ (Organization of the Petroleum Exporting Countries plus selected nonmember countries, including Russia), partly offset by increases in gas prices as a result of colder-than-expected weather and supply disruptions, including the ongoing conflict in the Middle East and outages in gas fields. Nonfuel commodity prices are expected to increase by 2.5 percent in 2025, on account of upward revisions to food and beverage prices relative to the October 2024 WEO, driven by bad weather affecting large producers. Monetary policy rates of major central banks are expected to continue to decline, though at different paces, reflecting variations in growth and inflation outlooks. The fiscal policy stance is expected to tighten during 2025 26 in advanced economies including the United States and, to a lesser extent, in emerging market and developing economies.

Global growth is expected to remain stable, albeit lackluster. At 3.3 percent in both 2025 and 2026, the forecasts for growth are below the historical (2000 19) average of 3.7 percent and broadly unchanged from October (Table 1; see also Annex Table 1). The overall picture, however, hides divergent paths across economies and a precarious global growth profile (Figure 2).

The Index of Industrial Production (IIP) for February 2024 brought forth encouraging insights into Indias industrial landscape.

INDIAN ECONOMY:

India is the worlds 5th largest economy and expected to be in the top 3 by FY 28

India ranked fifth in the world in terms of nominal gross domestic product (GDP) for FY 22 and is the third largest economy in the world in terms of purchasing power parity (PPP). India is expected to be USD ~5.2 trillion economy by FY 28 and is estimated to be the third largest economy surpassing Germany and Japan.

Indias nominal GDP at current prices (In USD Tn) and GDP Growth rate (%) (FY)

Indias nominal GDP has grown at a CAGR of 9.6% between FY 17 and FY 22 and is expected to continue the trend by registering an expected CAGR of 8.9% for 5-year time period from FY 23 to FY 28. Since FY 05, the Indian economys growth rate had been twice as that of the world economy and it is expected to sustain this growth momentum in the long term. From FY 23 to FY 28, Indias nominal GDP is expected to grow at a CAGR of 8.9%, which compares favorably to the world average (4.9%) and with other major economies, including China (6.5%), UK (4.6%), Japan (0.4%), Germany (2.1%) and the USA (4.1%) for the similar period of CY 22 to CY 27. It is also expected that the growth trajectory of Indian economy will enable India to be among the top 3 global economies by FY 28. Several factors are likely to contribute to economic growth in the long run. These include favourable demographics, reducing dependency ratio, rapidly rising education levels, steady urbanization, growing young & working population, IT revolution, increasing penetration of mobile & internet infrastructure, government policies, increasing aspirations and affordability etc. Strong economic growth in the first quarter of FY23 helped India overcome the UK to become the fifth-largest economy after it recovered from the COVID-19 pandemic shock. Nominal GDP or GDP at Current Prices in the year 2023-24 is estimated at 293.90 lakh crores (US$ 3.52 trillion), against the First Revised Estimates (FRE) of GDP for the year 2022- 23 of 269.50 lakh crores (US$ 3.23 trillion). The growth in nominal GDP during 2023-24 is estimated at 9.1% as compared to 14.2% in 2022-23. Strong domestic demand for consumption and investment, along with Governments continued emphasis on capital expenditure are seen as among the key driver of the GDP in the first half of FY24. During the period January-March 2024, Indias exports stood at US$ 119.10 billion, with Engineering Goods (25.01%), Petroleum Products (17.88%) and Organic and Inorganic Chemicals (7.65%) being the top three exported commodity. Rising employment and increasing private consumption, supported by rising consumer sentiment, will support GDP growth in the coming months.

Indias large domestic economy coupled with the governments enormous public spending, both in the form of planned outlays and direct benefit transfers, led to liquidity infusion into the economy, and helped the country consistently grow. Indias inflation trajectory is expected to be significantly impacted by extreme weather conditions like heat waves and the potential for an El Niño year, volatility in international commodity prices and the possibility of a pass-through of input costs to output prices.

Despite these challenges, Indias economic fundamentals remain strong. The Governments commitment to increase capital expenditure in the coming year signifies its dedication to sustaining growth. The next few months will be critical in determining the future trajectory of the Indian.

OUTLOOK:

Indias economy recovered quickly from the pandemic and further growth is expected to be supported by solid domestic demand and increase in capital investments. The global economy is expected to witness a synchronous rebound in 2025 as major election uncertainties are out of the way and central banks in the West are likely announce a couple of rate cuts later in 2024. India will likely see improved capital flows boosting private investment and a rebound in exports. Inflation concerns remain, however, which we believe may ease only in the latter half of the next fiscal year barring any surprises from rising oil or food prices The International Monetary Fund (IMF) and Reserve Bank of India (RBI) estimate real GDP growth of 6.8% in 2022-23 and 6.1% in 2023-24. The agriculture sector has been growing at an average annual rate of 4.6% over the past six years, and the industrial sector is estimated to grow at 4.5% in FY 2022-23. The services sector saw quick recovery in FY 2021-22, growing 8.4% Y-o-Y, and continued to grow in FY 2022-23. Global agro chemical market after two consecutive years of record growth is estimated to have degrown in 2023 driven by prolonged destocking and heightened pricing pressure. Crop commodity prices have declined from the recent peak levels though remains high by historical standards. High channel inventory level impacted North and South American markets. Chinese agrochemical industry witnessed over capacity and price drop during 2023. Declining agrochemical prices and variable weather conditions dented agrochemical demand in most of the Asia Pacific countries. Agrochemical prices and demand were stable in Europe, though adverse weather conditions in some of the countries impacted overall consumption. Currency crunch also impacted supplies to certain African and Asian countries.

RBIs enterprise surveys point to some softening of input cost and output price pressures in manufacturing. Considering these factors, and assuming an average crude oil price (Indian basket) of US$ 95 per barrel, inflation is projected at 6.5% in FY 2022-23, with Q4 at 5.7%. On the assumption of a normal monsoon, CPI inflation is projected at 5.3% for FY 2023-24, with Q1 at 5.0%, Q2 at 5.4%, Q3 at 5.4% and Q4 at 5.6%, and the risks evenly balanced. Indian government has accelerated its reforms initiatives like Production Linked Incentives (PLI) schemes and increased infrastructure spending to support the industry. This will provide resilient demand in economy and its ripple effect on other aspects of the economy, such as employment and productivity, will bring India back on track in its medium- to long-term economic objective.

MARKET SIZE

Indias nominal GDP at current prices was estimated at 232.15 trillion (US$ 3.12 trillion) in FY22. With more than 100 unicorns valued at US$ 332.7 billion, India has the third-largest unicorn base in the world. The government is also focusing on renewable sources to generate energy, and is planning to achieve 40% of its energy from non-fossil sources by 2030. According to the McKinsey Global Institute, India needs to boost its rate of employment growth and create 90 million non-farm jobs between 2023 to 2030 in order to increase productivity and economic growth. The net employment rate needs to grow by 1.5% per annum from 2023 to 2030 to achieve 8-8.5% GDP growth between same time period. Indias current account deficit (CAD) narrowed to 1.2% of GDP in the October-December quarter. The CAD stood at US$ 10.5 billion for the third quarter of 2023-24 compared to US$ 11.4 billion or 1.3% of GDP in the preceding quarter. This was largely due to higher service exports. Exports fared remarkably well during the pandemic and aided recovery when all other growth engines were losing steam in terms of their contribution to GDP. Going forward, the contribution of merchandise exports may waver as several of Indias trade partners witness an economic slowdown. According to Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles Mr. Piyush Goyal, Indian exports are expected to reach US$ 1 trillion by 2030. (Source: https://www.ibef.org/economy/indian-economy-overview)

INDIAN AGROCHEMICAL SECTOR:

Driven largely by government support, expanding production capacities, a flourishing domestic and export market, and a steady stream of innovative products, the Indian agrochemicals industry is projected to clock a robust compound annual growth rate (CAGR) of nine per cent from FY2025 to FY2028, says a report by Rubix Data Sciences, a leading risk management and monitoring company. This steady growth will propel the market size of the Indian agrochemical industry to $14.5 billion by FY28 from the current levels of around $10.3 billion, the report said, adding that Indias agrochemicals exports registered a strong 14 per cent CAGR from FY2019 to FY2023, reaching $5.4 billion in FY2023.

The top five countries (Brazil, USA, Vietnam, China, and Japan) now account for nearly 65 per cent of Indias agrochemical exports, up from 48 per cent in FY2019. Indias domestic agrochemicals usage currently totals a mere 0.6 kg per hectare, which is a fraction compared to the Asian average (3.6 kg/ha) and a mere quarter of the global average (2.4 kg/ha).

This low utilisation signifies immense potential for market expansion in the coming years, presenting a fertile ground for industry growth, the report said. It, however, added that the road ahead for the sector is not without its fair share of challenges.

Global economic uncertainties pose a risk, as do intensifying competitive pressures from established players like China. Climate change further complicates the equation, with unpredictable monsoons disrupting agricultural patterns and impacting crop yields, the report added. (Source: https://eng.ruralvoice.in/agribusiness/indian-agrochemical-sector-poised-for-9pc-cagr-growth-by-fy28.html) The Indian agrochemicals industry is projected to grow strongly at a compound annual growth rate (CAGR) of 9% from FY25 to FY28. This growth will be driven by several factors: Government support for the industry, expansion of production capacities by companies, Increasing demand in both the domestic and export markets, Introduction of new innovative products. This steady growth is expected to increase the size of the Indian agrochemicals market to US$ 14.5 billion by FY28, up from the current level of around US$ 10.3 billion. The report also found that Indias agrochemicals exports have seen impressive growth, registering a strong 14% CAGR from FY19 to FY23, reaching US$ 5.4 billion in FY23. In contrast, imports grew at a more moderate 6% CAGR during the same period, solidifying Indias position as a net exporter of agrochemicals. Within the agrochemicals sector, herbicides have emerged as the fastest growing export segment, with a 23% CAGR from FY19 to FY23. The share of herbicides in total agrochemical exports has increased from 31% to 41% during this period. Globally, India is the fourth-largest producer of agrochemicals after the United States, Japan and China. India accounts for 16-18% of the worlds production of dyestuffs and dye intermediates. Indian colourants industry has emerged as a key player with a global market share of ~15%. The countrys chemicals industry is de-licensed, except for a few hazardous chemicals.

According to Inc42, the Indian agricultural sector is predicted to increase to US$ 24 billion by 2025. Indian food and grocery market is the worlds sixth largest, with retail contributing 70% of the sales. The first advance estimate for FY25 indicated a food grain production of around 165 million metric tons. In FY24, India produced over 332 million metric tons of food grains. The Indian agrochemical industry is experiencing strong growth, driven by increasing domestic and export demand, supportive government policies, and a focus on sustainable solutions. The industry is projected to reach a market value of $14.5 billion by FY2027-28. Key factors include the rising awareness among farmers about the benefits of agrochemicals, government initiatives like the Make in India campaign, and a growing emphasis on eco-friendly products. Interim Union Budget 2024-25, focusses on key trends like EV ecosystem adoption, scaling up renewable power installations, promoting chemical manufacturing for import substitution, fostering green chemical production, and encouraging decarbonisation. Tax reforms, PLI initiatives, and government expenditure align with these goals. (Source: Interim Union Budget 2024-25, IBEF, Ministry of Commerce, Expert Market Research)

INDIAN FERTILISER SECTOR

Indias fertilizer industry has transformed, ensuring food security for over half a century. Despite challenges like geopolitical tensions and climate change, innovations and policy support drive sustainable agricultural growth.

Introduction

Unlike other periods in contemporary Indian history there has been no famine in India during the past half a century. Agricultural production witnessed a steady increase from the 1970s to the present (2023), which now stands at 329.7 million tons of grain production. In India, several factors contributed to this big achievement, the foremost among them being the use of mineral fertilizers in the farmlands. Globally, India is the second largest producer and consumer of fertilizers only after China. As of now, the fertilizer manufacturing industry in India is a robust venture, utilization of installed capacities is good and the profitability of the business is also better. The situation was different just five years back when government subsidy was inadequate and that too not available to the manufacturing units in time resulting in heavy financial strains to maintain operations of the unit. Some major players left the scene as they found other investment options more lucrative.

Domestic Production

Urea, DAP, NP and NPK complex fertilizers, ammonium sulphate, potash and single super phosphate (SSP) are the major fertilizer products used in Indian agriculture. India has a high dependency on imported fertilizer raw materials, intermediate and products.

IMPORT OF FERTILIZERS

The highest import dependence is for potash for which no domestic sources are available. Efforts are underway to recover potash from spent lye from the sugar industry and from seawater bittern. In the case of phosphatic fertilizers for which raw material (phosphate rock), intermediate (phosphoric acid) and finished products (DAP and NPK complex fertilizers) need to be imported from other countries. Available phosphate deposits in Jhamarkotra in Rajasthan contain only a lower P2O5 content suitable for making SSP only. Around 30% of the countrys urea requirement is met by imports. Every year the government earmarks a sizable quantum of foreign exchange for the above imports.

FERTILIZER SUBSIDY

Under the Indian fertilizer subsidy regime, producers are asked to sell fertilizer materials (especially urea under the Retention Pricing Scheme RPS) to the farmers at a price fixed by the government that is affordable to them. The price differential between cost of production together with a reasonable return on investment and the market realisation for every ton of product dispatched from the plants is paid to the manufacturer as a fertilizer subsidy. Urea is the largest volume fertilizer consumed in India and it comes under the subsidy regime. Phosphate, complex and potash fertilizers have been partly decontrolled from pricing in 1992 and placed under a nutrient based subsidy (NBS) scheme since 2010. A fixed subsidy amount depending on its nutrient content (N, P, K, and S) is allowed for these products. It is revised by the Department of Fertilizers in the government from time to time and thus the government still has a say in fixing the prices of complex and potassic fertilizers. Following the shift in the geopolitical situationi n Europe the cost of domestic production increased heavily and so also the subsidy burden on the government. To sustain production, the government absorbed all price rice and thus during 2022-23 the subsidy bill went as high as 2.51 trillion rupees.

NUTRIENT EFFICIENCY

Even though per hectare consumption of fertilizer nutrients in India is much lower than compared to Japan, China, Egypt, Korea etc., the fertilizer use is still lower. Serious efforts were made to scientifically analyse the nutrient demand of the soil and administer the requisite quantum of nutrients to the crops. The government has issued soil health cards to farmers to promote integrated nutrient management for improving soil fertility and increase productivity.Farmers are advised to use a judicial mix of chemical, organic, bio fertilisers and other innovative fertilisers as recommended by the soil health card. Together with fertigation, drip irrigation, proactive soil nutrient and water management, the fertilizer use efficiency is being improved and wastage of valuable crop inputs is reduced to some extent. Farmers are also encouraged to use coated, modified, and fortified fertilizer materials for better nutrient administration and to reduce pollution from leaching of nutrients to the environment. Thrust was also given to the use of secondary and micronutrients. Water soluble fertilizers (WSFs) are also produced and marketed by several producers. It dissolves completely in water and the nutrients are more efficiently absorbed by the plant through fertigation. Additional subsidy is provided under the NBS scheme for fertilizers fortified with boron and zinc.

NANO UREA AND DAP

A major turning point in the Indian fertilizer sector is the development of Nano urea and DAP by agriculture scientists. These are nano technology products in liquid form which can be used as foliar spray for top-dressing instead of conventional soil based application of urea and

DAP. The countrys major fertilizer producer in the cooperative sector IFFCO started industry scale manufacturing of the nano-products and that is made available to the farmers. Initial results indicate promising gains from the foliar application of nano-products to the crops and its long term implications are being studied. Being an agrarian country India has a large reserve of biomass. Use of biomass for fertilizer application is being promoted in a big way. Composted municipal waste is also being used widely by Indian farmers. Of late, gasification of biomass to produce ammonia is also being explored by manufacturers.

GOVERNMENT INITIATIVES

Over the years, the Indian government has introduced many initiatives to strengthen the nations economy. The Indian government has been effective in developing policies and programmes that are not only beneficial for citizens to improve their financial stability but also for the overall growth of the economy. Over recent decades, Indias rapid economic growth has led to a substantial increase in its demand for exports. Besides this, a number of the governments flagship programmes, including Make in India, Start-up India, Digital India, the Smart City Mission, and the Atal Mission for Rejuvenation and Urban Transformation, is aimed at creating immense opportunities in India. In this regard, some of the initiatives taken by the government to improve the economic condition of the country are mentioned below:

On July 5, 2025, the Union Cabinet approved the Rs. 1,00,000 crore (US$ 11.72 billion) Research, Development and Innovation (RDI)

Scheme, launching long term, low or zero interest funding via a special purpose fund under the ANRF to jump start Indias R&D ecosystem and support deep tech and startup innovation.

On March 27, 2025, the Reserve Bank of India proposed doubling the investment cap for individual foreign investors in listed firms from 5% to 10%, with a combined foreign individual limit increasing to 24%, to counter Foreign Portfolio Investment (FPI) outflows.

According to a report by Wood Mackenzie in January 2025, India, the US, and West Asia are expected to collectively add 100 Gigawatts (GW) of solar capacity by 2025, while China is anticipated to continue its leadership in the solar industry.

In July 2024, the Ministry of Finance held the Union Budget and announced that for 2024-25, the total receipts other than borrowings and the total expenditure are estimated at Rs. 32,07,000 crore (US$ 375 billion) and Rs. 48,21,000 crore (US$ 564 billion), respectively.

In February 2024, the Finance Ministry announced the total expenditure in Interim 2024-25 estimated at Rs. 47,65,768 crore (US$ 571.64 billion) of which total capital expenditure is Rs. 11,11,111 crore (US$ 133.27 billion).

On January 22, 2024, Prime Minister Mr. Narendra Modi announced the Pradhan Mantri Suryodaya Yojana. Under this scheme, one crore households will receive rooftop solar installations.

On September 17, 2023, Prime Minister Mr. Narendra Modi launched the Central Sector Scheme PM-VISHWAKARMA in New Delhi. The new scheme aims to provide recognition and comprehensive support to traditional artisans & craftsmen who work with their hands and basic tools. This initiative is designed to enhance the quality, scale, and reach of their products, as well as to integrate them with Micro, Small and Medium Enterprises (MSME) value chains.

On August 6, 2023, Amrit Bharat Station Scheme was launched to transform and revitalize 1,309 railway stations across the nation. This scheme envisages development of stations on a continuous basis with a long-term vision.

On June 28, 2023, the Ministry of Environment, Forests, and Climate Change introduced the Draft Carbon Credit Trading Scheme, 2023.

From April 1, 2023, Foreign Trade Policy 2023 was unveiled to create an enabling ecosystem to support the philosophy of

Aatmanirbhar Bharat and Local goes Global.

To enhance Indias manufacturing capabilities by increasing investment and production in the sector, the government of India has introduced the Production Linked Incentive Scheme (PLI) for Pharmaceuticals.

Prime Ministers Development Initiative for North-East Region (PM-DevINE) was announced in the Union Budget 2022-23 with a financial outlay of Rs. 1,500 crore (US$ 182.35 million).

Prime Minister Mr Narendra Modi has inaugurated a new food security scheme for providing free food grains to Antyodaya Ann Yojna (AAY) & Primary Household (PHH) beneficiaries, called Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY) from January 1, 2023.

ROAD AHEAD

Indias economic story during the first half of the current financial year highlighted the unwavering support the government gave to its capital expenditure, which, in 2023-24, stood 37.4% higher than the same period last year. In the budget of 2023-24, capital expenditure took lead by steeply increasing the capital expenditure outlay by 37.4 % in BE 2023-24 to 10 lakh crore (US$ 120.12 billion) over 7.28 lakh crore (US$ 87.45 billion) in RE 2022-23. The ratio of revenue expenditure to capital outlay increased by 1.2% in the current year, signalling a clear change in favour of higher-quality spending. Stronger revenue generation because of improved tax compliance, increased profitability of the company, and increasing economic activity also contributed to rising capital spending levels. In February 2024, the Finance Ministry announced the total expenditure in Interim 2024-25 estimated at 47,65,768 crore (US$ 571.64 billion) of which total capital expenditure is 11,11,111 crore (US$ 133.27 billion).

Since Indias resilient growth despite the global pandemic, Indias exports climbed at the second-highest rate with a year-over-year (YoY) growth of 8.39% in merchandise exports and a 29.82% growth in service exports till April 2023. With a reduction in port congestion, supply networks are being restored. The CPI-C inflation reduction from June 2022 already reflects the impact. In September 2023 (Provisional), CPI-C inflation was 5.02%, down from 7.01% in June 2022. With a proactive set of administrative actions by the government, flexible monetary policy, and a softening of global commodity prices and supply-chain bottlenecks, inflationary pressures in India look to be on the decline overall.

(Source: https://www.ibef.org/economy/indian-economy-overview)

INDUSTRY DRIVERS:

The key factors of driving the agrochemical industry are:

With the growing population there is an increase in the need to fulfil the demand for food sufficiency and food security. This continues to drive the growth of agrochemicals industry.

With fewer arable acres per capita, agrochemicals are becoming more important in maximizing farmer yields; arable land is projected to shrink from half an acre per person now to less than one-third of an acre per person by 2050.

Plant diseases and pests have become more common as a result of changing environmental conditions. Also, climate fluctuations have a substantial impact on crop productivity

COMPANY OVERVIEW:

Established in 2000, Sikko Industries Limited (SIL or the Company) is a leading Agrochemical Company in India. The Companys strength lies in manufacturing formulations. The Company has two manufacturing unit i.e. Fertilizer and Pesticide unit is located at the outskirts of the Ahmedabad city on Sanand Highway and thus enjoys the good connectivity with different parts of the states, which makes the movements of the raw-material as well as our products easy and comfortable. Thus, it helps in procurement of raw material and dispatch of our products to the various clients. We have well equipped research and Development facility to improve quality of the products and to produce high performance growth promoters, pesticides and fertilizer. Company has in house sound R&D Department backed by technical expertise of our Managing Director Mr. Jayantibhai Kumbhani which helps the company to enhance our product range. We offer special and exclusive range of agrochemicals including organic pesticides, organic fertilizers and others. Such diverse product mix helps us to cater the diverse customer segments and to various sectors of Industry. The product mix helps us to sustain the growth level. Over the years we have developed various products which is used by farmer in agriculture. All products that dispatch from the factory premises are inspected by the packing and dispatch department. Further, quality check is done at every stage of manufacturing to ensure the adherence to desired specifications. Since, our Company is dedicated towards quality of products, processes and inputs; we get repetitive orders from our buyers, as we are capable of meeting their quality standards, which enables them to maintain their brand image in the market.

OPPORTUNITIES AND THREATS: Opportunities: o Government initiative to promote agriculture industry will help our industry to grow o Continues development in R&D work resulting into yielding of new product o Abundant water, electricity and subsidies to farmer by government will help the agriculture industry to grow o Technological Advancements makes Precision in agriculture, AI, and drone applications allow better chemical application efficiency. o Recognition of agrochemicals as one of the top 12 sectors poised for Indias global leadership adds strategic weight o Biological agrochemicals are expected to grow at around 15% annually through 2030 significantly higher than overall agrochemical growth (5 6%). This opens doors for bio-based, sustainable products.

Threats: o Change in Government policies o Scarcity of critical raw materials (e.g., yellow phosphorus) and absence of large mega production plants limits scale and cost efficiency o Demand remains heavily tied to monsoons; poor rains can depress sales, though subsidies are expected to cushion cycles but dependency on such variables introduces volatility o New entrants in the market and intense competition by existing players o Technology may become obsolete due to Innovation in Technology o The generic threat of economic slowdown exits, which may subdue the domestic demand for the products o Unfavourable weather conditions

RISK AND CONCERNS:

A well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process is in place. The objective of the mechanism is to minimize the impact of risks identified and taking advance actions to mitigate it. The mechanism works on the principles of probability of occurrence and impact, if triggered. A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and non-business risks.

SEGMENT WISE OR PRODUCT-WISE PERFORMANCE:

The Companys operation predominantly comprises of only one segment. In view of the same, separate segmental information is not required to be disclosed as per the requirement of Indian Accounting Standard 108 Operating Segment.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

FINANCIAL HIGHLIGHTS: (INR in Lakhs)

Particulars	Standalone		Consolidated
	F.Y. 2024-25	F.Y. 2023-24	F.Y. 2024-25	F.Y. 2023-24
Revenue from operations	6,174.80	6,128.72	6,174.80	6,128.72
Other income	75.22	341.87	75.22	341.87
Total Income	6,250.02	6,470.59	6,250.02	6,470.59
Less: Total Expenses before Depreciation, Finance Cost and Tax	5,540.05	5,716.77	5,540.05	5,716.77
Operating Profits before Depreciation, Finance Cost and Tax	709.97	753.82	709.97	753.82
Less: Finance cost	39.9	78.84	39.9	78.84
Less: Depreciation	68.65	71.55	68.65	71.55
Profit / (Loss) Before Tax	603.72	605.81	603.72	605.81
Less: Current Tax	181.94	180.76	181.94	180.76
Less: Deferred Tax Liabilities/ (Assets)	(5.31)	18.62	(5.31)	18.62
Profit/ (Loss) after tax (PAT)	427.10	406.43	426.66	406.43

FINANCIAL PERFORMANCE On Standalone Basis

During the year under review, the revenue from operation of the Company was stood at 6,174.80 Lakhs as against that of 6,128.72 Lakhs for previous year. Revenue from operation of the Company was increased by 0.75% over previous year. Profit before Tax for the financial year 2024-25 stood at 603.72 Lakhs as against that of 605.81 Lakhs for last year which state 0.34% decrease in Profit before tax and the net profit after tax stood of 427.10 Lakhs for the financial year 2024-25 as against the net profit of 406.44 Lakhs for the financial year 2023-24 which state 5.08% increase in profit of the Company.

On Consolidated Basis

Being the first year of consolidation of accounts, the consolidated revenue from operation of the Company for financial year 2024-25 stood at

6,174.80 Lakhs. The consolidated net profit after tax for the financial year 2024-25 was stood at 426.66 Lakhs.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has a proper and adequate system of Internal Controls to commensurate with the size and nature of its operations to ensure that all assets are safeguarded against unauthorized use or disposal, safeguarding true and fair reporting and compliance with all applicable regulatory laws and company policies. Internal Audit Reports are reviewed by the Audit Committee of the Board.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

The Company believes that human resource is the most important assets of the organization. It is not shown in the corporate balance sheet, but influences appreciably the growth, progress, profits and the shareholders values. During the year your company continued its efforts aimed at improving the HR policies and processes to enhance its performance. The vision and mission of the company is to create culture and value system and behavioral skills to insure achievement of its short- and long-term objectives. As on March 31, 2025, the Company had total 115 full time employees. The industrial relations have remained harmonious throughout the year.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS (STANDALONE BASIS):

Key Ratios	Units	F.Y. 2024-25	F.Y. 2023-24	% of Change in Ratio	Explanations
Debtors Turnover	Times	2.24	2.59	(13.00%)	Improved debtors collection
Inventory Turnover	Times	3.39	4.51	(25.00%)	Increased inventory holdings or slower sales cycle; possibly due to freight delays and market conditions.
Interest Coverage Ratio	Times	18.88	9.86	0.92%	Better operating performance and lower interest outflow due to low debt; funded via equity
Current Ratio	Times	3.43	2.10	64.00%	Increase due to Rights Issue proceeds added to Current Assets, improving liquidity.
Debt Equity Ratio	Times	0.05	0.21	(76.00%)	Equity increased significantly due to Rights Issue, reducing the ratio.
Operating Profit Margin	%	0.09	0.09	0.06%	Stable operating performance in terms of margin
Net Profit Margin	%	0.07	0.07	4.00%	Marginal improvement in profitability relative to sales.
Return on Net Worth	%	0.05	0.15	(0.64%)	Networth increases due to right issue; Profit did not grow at the same rate

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS (CONSOLIDATED BASIS):

Key Ratios	Units	F.Y. 2024-25	F.Y. 2023-24	% of Change in Ratio	Explanations
Debtors Turnover	Times	2.24	2.59	(13.00%)	Improved debtors collection
Inventory Turnover	Times	3.39	4.51	(25.00%)	Increased inventory holdings or slower sales cycle; possibly due to freight delays and market conditions.
Interest Coverage Ratio	Times	18.88	9.86	0.92%	Better operating performance and lower interest outflow due to low debt; funded via equity
Current Ratio	Times	3.43	2.10	64.00%	Increase due to Rights Issue proceeds added to Current Assets, improving liquidity.
Debt Equity Ratio	Times	0.05	0.21	(76.00%)	Equity increased significantly due to Rights Issue, reducing the ratio.
Operating Profit Margin	%	0.09	0.09	0.06%	Stable operating performance in terms of margin
Net Profit Margin	%	0.07	0.07	4.00%	Marginal improvement in profitability relative to sales.
Return on Net Worth	%	0.05	0.15	(0.64%)	Networth increases due to right issue; Profit did not grow at the same rate

CAUTIONARY STATEMENT:

Statement made in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations may be Forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand supply and price conditions in the markets in which the company operates changes in the government regulations, tax laws & other statutes and other incidental factors.