Simran Farms Ltd Management Discussions

(a) Industry structure and developments

The Indian poultry industry continues to be one of the fastest-growing segments of the agricultural sector, driven by increasing demand for protein-rich diets, changing consumer preferences, urbanization and rising health consciousness. Poultry meat, particularly broiler chicken, continues to remain one of the most affordable sources of animal protein. India is among the worlds leading producers of eggs and broiler meat.

The Indian poultry industry recorded steady growth during FY 2025-26, supported by healthy consumer demand for poultry products, increasing per capita protein consumption, rising rural demand and expanding organized retail and food service channels. During FY 2025-26, the industry demonstrated resilience despite challenges arising from fluctuations in feed ingredient prices, particularly maize and soybean meal, disease management concerns and changing market dynamics. Nevertheless, the industrys overall financial health remained stable, supported by prudent capacity expansion and sustained demand.

Looking ahead to FY 2026-27, the Indian poultry industry is expected to maintain steady growth, supported by robust demand fundamentals, improving realizations and continued expansion of organized poultry farming. Operating margins may improve moderately, subject to feed cost movements, market realizations and demand conditions. Volatility in feed prices and other disease outbreaks will continue to remain key monitorable factors for industry.

The Indian poultry industry continues to offer significant growth opportunities, driven by increasing consumer preference for affordable and protein-rich food, rising per capita poultry consumption, growing population, increasing urbanization and greater awareness of the nutritional value of poultry products. Advancements in breeding practices, feed management, biosecurity measures, and farm automation continue to improve productivity, operational efficiency, and overall industry performance. The increasing adoption of contract farming and integrated poultry farming models also presents opportunities for sustainable growth and better resource utilization.

However, the industry continues to face several challenges, including volatility in the prices of key feed raw materials such as maize and soybean meal, disease outbreaks, adverse climatic conditions, increasing input costs, and fluctuations in market realizations of broilers. These factors have a direct bearing on production costs and profitability. Accordingly, effective cost management, robust biosecurity practices, efficient farm management, and prudent risk mitigation strategies remain critical for ensuring sustainable growth.

The Company operates in a single business segment, namely poultry and poultry farming, and primarily deals in broilers. Accordingly, there are no separate reportable segments under this head. The financial performance of the Company is discussed in detail under Point (g) of this Management Discussion and Analysis Report.

The long-term outlook for the Indian poultry industry continues to remain positive, supported by favourable demographic trends, increasing consumption of poultry products, rising income levels, and growing awareness regarding nutritional diets. The industry may, however, continue to experience short-term volatility in feed prices and seasonal demand patterns, disease-related risks and fluctuations in market realizations.

Over the medium to long term, the industry is expected to benefit from improved production efficiencies, increasing organized farming practises, modernization of infrastructure, and stronger supply chain networks. Continuous technological advancements, better disease management practices and increasing integration across the poultry value chain are expected to support the industrys growth prospects.

The poultry industry remains exposed to several operational and business risks. Disease outbreaks, volatility in feed raw material prices, adverse climatic conditions, fluctuations in poultry realizations and changes in government policies may adversely impact on Companys operations and profitability. Feed cost continues to constitute a significant portion of overall production expenses, making the business sensitive to changes in prices of feed ingredients such as maize and soybean meal. The Company is also exposed to regulatory changes, environmental compliance requirements and potential disruptions in the supply chain.

The Company continuously monitors these risks and has implemented appropriate mitigation measures, including stringent biosecurity protocols, vaccination programmes, prudent procurement practices, efficient feed management, insurance coverage, and continuous monitoring of market conditions to minimize operational disruptions and mitigate the potential impact of identified risks.

The Company has established adequate internal control systems commensurate with the size, nature and complexity of its business operations. These controls are designed to safeguard assets, ensure the accuracy and completeness of accounting records, promote operational efficiency, and ensure compliance with applicable laws and regulations.

The internal audit function periodically reviews the adequacy and effectiveness of internal controls and identify areas requiring improvement. The Audit Committee periodically reviews the adequacy and effectiveness of the internal control framework and monitors the implementation of audit recommendations. The Board is of the opinion that the Companys Internal Financial Controls are adequate and were operating effectively during FY 2025-26.

The Standalone and Consolidated Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) prescribed under the Companies (Indian Accounting Standards) Rules, 2015, read with the applicable provisions of the Companies Act, 2013 and the Regulations issued by the Securities and Exchange Board of India (SEBI).

The highlights on Companys financial performance for the FY 2025-26 are as follows:

During the year ended March 31, 2026, the Company achieved a total income of INR 87,718.38 Lakhs as against INR 83,624.22 Lakhs in the previous year, registering a steady growth in revenue. The Company earned a net profit (before Comprehensive Income) of INR 494.55 Lakhs as compared to INR 579.50 Lakhs in the previous year.

The increase in total income reflects sustained demand for the Companys products and continued growth in business operations. However, higher feed input costs, primarily on account of increased prices of maize and soybean meal, compressed operating margins during the year, resulting in lower profitability despite higher revenues. The Company continued to focus on operational efficiency, prudent cost management, improved farm productivity and effective resource utilization to mitigate the impact of rising input costs and maintain stable operations. The management remains committed to strengthening operational processes, enhancing productivity and pursuing sustainable long-term growth while effectively managing market and cost-related challenges.

The Company firmly believes that its employees are its most valuable asset and continues to focus on developing a skilled, motivated, and performance-oriented workforce. Regular training programmes covering farm management, biosecurity, health and safety, operational efficiency, and technical competencies were conducted during the year to enhance employee capabilities.

Industrial relations remained cordial and harmonious throughout FY 2025-26. The Company continued to maintain a healthy work environment by fostering employee engagement, ensuring compliance with applicable labour laws and promoting a culture of continuous learning and teamwork. As at March 31, 2026, the Company had 792 employees on its payroll.

As per the amendment made under Schedule V to the Listing Regulations read with Regulation 34(3) of the Listing Regulations, details of key financial ratios and any changes in return on net worth of the Company are given below:

Reason for change in Return on Net Worth: Return on Net Worth declined from 14.52% in FY 2024-25 to 8.71% in FY 2025-26 primarily due to a reduction in profit after tax during the year and a significant increase in shareholders equity arising from the conversion of share warrants into equity shares, which also resulted in an increase in the securities premium account. Consequently, the increase in average net worth outpaced the earnings generated during the year, leading to a lower Return on Net Worth.

Some of the Statements in Management discussion and Analysis describing companys objective may be"forward looking statement" within the meaning of applicable Securities law and Regulations. Actual results may differ substantially or materially from those expressed or implied. Important factors that could influence companys operation include various global and domestic economic factor.