Sinnar Bidi Udyog Ltd Management Discussions

1. Industry Structure and Developments

The Company is engaged in the business of processing tobacco and supplying the same on a wholesale basis to bidi manufacturers. The Companys principal business activity involves procurement and processing of tobacco (Gavran) into finished tobacco suitable for use by bidi manufacturers.

The Company operates its tobacco plant at Nippani, Belagavi, Karnataka, where the tobacco is processed and prepared in accordance with the requirements of its customers.

A. Tobacco Procurement and Processing

1. Procurement of raw tobacco leaf from farmers.

2. Processing of raw tobacco leaf at the Companys plant.

3. Preparation and packing of processed tobacco to Bidi manufacturers.

B. Wholesale Supply

4. Sale of processed tobacco on a wholesale basis.

5. Supply of tobacco primarily to bidi manufacturers.

6. Servicing customer requirements through established wholesale channels.

The Company focuses on efficient procurement and processing of tobacco and maintaining consistent quality to meet the requirements of its customers

2. Opportunities and Threats

Opportunities

- Growing demand for premium quality processed tobacco in markets.

- Increased focus on sustainable and traceable agricultural supply chains.

- Technological advancements in threshing, redrying and storage facilities.

Threats

- Stringent regulations on tobacco products.

- Increasing health awareness resulting in reduced tobacco consumption in certain markets.

- Volatility in agricultural production due to climatic conditions.

- Changes in taxation and government policies impacting industry growth.

3. Segment-wise / Product-wise Performance

The Company primarily operates in the tobacco processing and supply to Bidi industries.

Processing Operations

During the year, the Company continued to strengthen procurement and processing capabilities through improved quality management systems and enhanced operational efficiencies. Processing volumes remained aligned with customer requirements and market demand.

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Value-added Tobacco Products

The Company continued to focus on higher-value processed tobacco products that enable improved realization, customer retention and long-term business sustainability.

4. Outlook

The medium to long-term outlook for the tobacco processing industry remains cautiously positive; although industry participants must adapt to evolving regulatory requirements and sustainability expectations.

The Companys strategy includes:

- Strengthening procurement networks.

- Improving operational efficiencies.

- Enhancing product quality and consistency.

- Increasing focus on sustainability and responsible sourcing.

- Optimizin g working capital and cost structures.

5. Risks and Concerns

Regulatory Risk

The tobacco industry remains subjected to extensive domestic regulations. Any significant regulatory changes may impact demand patterns and operating conditions.

Agricultural Risk

Tobacco production depends on weather conditions, water availability and crop productivity. Adverse climatic events may affect raw material availability and quality.

Market Risk

Demand fluctuations in domestic markets may impact sales volumes and profit margins.

Credit Risk

The Company continuously monitors customer creditworthiness and follows prudent credit management practices.

Operational Risk

Breakdowns, disruptions in supply chain activities or logistics challenges could adversely affect business operations.

The Company has established appropriate risk assessment and mitigation mechanisms to address these risks.

6. Internal Control Systems and Their Adequacy

The Company maintains adequate internal control systems commensurate with the size and nature of its operations.

Key features include:

- Well-defined organizational structure.

- Delegation of authority framework.

- Standard operating procedures across functions.

- Periodic internal audits.

- Budgetary controls and performance monitoring.

- Inventory and procurement controls.

- Information technology controls and cybersecurity measures.

- Audit Committee oversight of internal audit findings and corrective actions.

Management believes that the internal control framework provides reasonable assurance regarding operational effectiveness, safeguarding of assets, prevention and detection of fraud, reliability of financial reporting and compliance with applicable laws and regulations.

7. Discussion on Financial Performance with Respect to Operational Performance

During the year, the Company recorded stable operational performance supported by efficient procurement, processing activities and customer demand.

Key factors influencing financial performance included:

- Procurement prices of raw tobacco.

- Processing efficiencies and yield improvements.

- Logistics and freight costs.

- Energy and utility expenses.

- Working capital management.

The Company continued its focus on cost optimization, productivity enhancement and margin improvement initiatives.

Financial Highlights

(in Lakh)

Particulars	FY 2025-26	FY 2024-25
Revenue from Operations	497.53	473.19
EBITDA	(11.67)	(12.03)
Profit Before Tax	(13.73)	(14.04)
Profit After Tax	(13.38)	(12.42)

8. Material Developments in Human Resources / Industrial Relations

Human resources remain a key driver of the Companys operational excellence and growth strategy.

During the year, the Company focused on:

- Employee skill development and training.

- Occupational health and safety initiatives.

- Process improvement and productivity enhancement.

- Employee engagement and welfare activities.

Total number of employees as on 31 March 2026: 32

The Company remains committed to maintaining a safe, inclusive and performance-oriented work environment.

9. Significant Changes in Key Financial Ratios

Pursuant to Schedule V of SEBI LODR Regulations, details of significant changes (25% or more compared to the previous financial year) in key financial ratios are provided below:

Ratio	FY 2025-26	FY 2024-25	Reasons for significant change
Inventory Turnover	0.71	0.82	-
Debt Service Coverage Ratio	-	-
Current Ratio	3.40	5.25	Increase in Inventory & Trade receivables, increase in trade payables also
Debt Equity Ratio	-	-	-
Net Profit Margin (%)	(0.03)	(0.03)	-

10. Return on Net Worth

Particulars	FY 2025-26	FY 2024-25
Return on Net Worth (%)	(2.07)	(1.91)

The change in Return on Net Worth was mainly attributable to changes in profitability, operating margins and shareholder funds during the year. Detailed explanations for material variations, if any, are provided in the notes above.

Cautionary Statement

Statements in this Management Discussion and Analysis Report describing the Companys objectives, expectations, projections, estimates and predictions may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to various economic, regulatory, competitive and other factors beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements based on subsequent developments.