Sumuka Agro Industries Ltd Management Discussions

ANNEXURE - B TO THE DIRECTORS REPORT

Management is pleased to inform that Your Company has successfully navigate post COVID challenging circumstances and had delivered strong performance through focused efforts, finest quality, robust cost efficiency program and brand marketing. The FMCG sectors revenue reached US$ 110 billion in 2020 and expected to reach to US $ 220 billion by 2025.

Only 19% of market of FMCG represents f & b items which is expected to grow to US$ 70 Billion by 2025. Of the above US $ 70B, 96% of market in Packaged food is still Unorganized.

Khakhra & Bhakhri is a food which is still not recognized at a national level. We want to bring this healthy segment range and build a strong position in National & International market. Sumuka wants to capture 0.25% market share of unorganized segment by 2027. (i.e. Approx. US$ 0.2B)

The Management of the Company is pleased to present its analysis on the Companys performance and its outlook, opportunities and challenges prepared in compliance with the Corporate Governance requirement as laid down in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

(a) Industry structure and developments

Your Company is dealing in FMCG Segment. Currently, the Company is engaged in the business of Trading and Retailing of a wide array of Dry Fruits Products and ready to cook items, nankeen/ snacks products, sweet and spices, selling of packaged foods online, etc.

(b) Strength, Opportunities and Threats

Strengths & Opportunities

i. As Indian consumer are constantly expanding wallet and higher aspiration constitutes the largest opportunity for your Company.

ii. Our products is having availability and demand in all the Seasons.

iii. Our Products are health and nutritional foods, which are suitable for Changing lifestyle.

iv. The demand of dry fruits is rising because of a combination of factors such as increasing awareness of health needs, increasing disposable income levels, better availability, right packaging, consistent quality, adequate product communication (labelling), newer products such as hazelnuts, pecan nuts, etc, are leading to a healthy growth of more than 10 per cent year on year for the nuts and dry fruits industry in volume terms.

Threats

1. Changes in Regulatory Policies.

2. Increase in raw material prices,

3. Change in weather conditions

4. Unexpected market factor (possible changes in customer preference)

5. Impact of currency fluctuation.

6. Competition from domestic as well as international front

One of the most important issue is taking into consideration the needs & requirement of the customer & developing the services according to them.

(c) Segment-wise or product-wise performance

The Company is operating in single primary business segment of FMCG Products. We have a wide and resilient portfolio that spans across more than 53 Varieties of Dry fruits Products, ready to cook items, nankeen/ snacks products, sweet and spices, selling of packaged foods online, etc.

(d) Outlook

In the backdrop of a challenging operating environment, we delivered another strong all-round performance led by our focus on growing General Trad and Modern Trades. The Company is striving to improve the quality and productivity especially in the promising sectors and considering the current economic trends and also barring unforeseen circumstances is confident of achieving gross revenues and operating margins. We take great pride in importing quality products from virtually every corner of the world. Our essence lies in providing quality products at reasonable prices.

Further, We are having strong General and Modern Trade Partners. :

(e) Risks and concerns

Primary risk to the business will be on account of adverse changes to the economy. Volatility in commodity prices is the other risk. More demand of the products would be Seasonal / Festival demand. A possible change in customer preference is also a Risk factor.

(f) Internal control systems and their adequacy

Internal Control Systems has been designed to provide reasonable assurance that assets are safeguarded, transactions are executed in accordances with managements authorization and properly recorded and accounting records are adequate for preparation of financial statements and other financial information. Internal check is conducted on a periodical basis to ascertain the adequacy and effectiveness of internal control systems.

(g) Discussion on financial performance with respect to operational performance

During the year under review, the Company earned total revenue of Rs. 27,88,03,996/- as against Rs. 13,885,638 /- in the previous year. A profit of Rs. 2,32,01,770 /- (8.31% of Total Revenue) was reported during the financial year under review, as compared to a profit of Rs. 23,58,336 /- (16.98% of previous years Total Revenue) for the previous financial year.

Amount in Lakhs

(h) Material developments in Human Resources / Industrial Relations front, including number of people Employed

Human resource has the key role in the growth and development of our organization. The Company aims to develop the potential of every individual associated with the Company as a part of its business goal. Respecting the experienced and mentoring the young talent has been the bedrock for Sumukas successful growth. we upskill our workforce to equip them with digital and non-digital skills, which further helps honing their existing set of skills.

We believe that our human capital is our greatest strength and is the driver of growth, efficiency and productivity. Constant efforts are made to create a working environment that encourages initiative, provides challenges and opportunities and recognizes the performance and potential of employees. The Companys performance on the Industrial Relations front continues to be quite satisfactory.