Univa Foods Ltd Management Discussions

Global Economy

According to the International Monetary Funds World Economic Outlook (April 2025), global GDP is estimated to have grown by 3.3% in 2024. Despite tight monetary conditions and geopolitical uncertainty, 2024 surprised on the upside. In advanced economies, labor markets remained tight, real wages recovered, and services demand supported output. Meanwhile, emerging and developing economies continued to be engines of global growth. Though challenges persisted such as lingering inflation and diverging national conditions, the year marked a turning point from crisis management to recovery and rebalancing. The United States emerged as a growth leader among advanced economies, registering a projected 2.8% expansion, supported by strong consumer spending and business investment. Emerging markets, particularly India (6.5%) and China (5.0%), remained key drivers of global momentum.

Indias Economy

In FY 2025, the Indian economy registered a robust growth of 6.5%, despite facing global economic uncertainties and persistent geopolitical challenges. A key contributor to this performance was the Government of Indias targeted efforts to accelerate economic progress through expansive infrastructure development. The Union

Budget earmarked 11.21 lakh crore for capital expenditure, with particular emphasis on enhancing rural connectivity and infrastructure, thereby sustaining the momentum of economic growth.

This major investment in capital assets was undertaken while exercising strong fiscal control, keeping the fiscal deficit limited to 4.4% of GDP. Judicious fiscal management gave the government increased leeway to boost public expenditure and support domestic demand without jeopardizing overall economic stability. The infrastructure push not only spurred job creation but also generated a multiplier effect across numerous sectors of the economy.

Furthermore, a decline in prices lifted consumer sentiment, resulting in higher consumption levels in both urban and rural areas. With inflationary pressures easing, the Reserve Bank of India (RBI) responded by injecting 1.5 trillion into the banking sector to further energize economic activity.

India remained among the fastest-growing major economies globally, retaining its position as the worlds fifth-largest economy in nominal GDP terms and the third largest in purchasing power parity (PPP). As per the Second Advance Estimates of National Income released by the National Statistical Office (NSO) in February 2025, Indias real GDP is projected to grow by 6.5% in FY 2024 25 as compared to 9.2% in FY 2023 24. This growth is supported by strong momentum in industry and construction with an estimated growth rate of 8.6% resulting from an infrastructure-led growth strategy. Services is expected to grow by 7.3% led by the ‘Financial, Real Estate and Professional Services sector estimated to grow by 7.2% and ‘Trade, Hotels, Transport, Communication and Services Related to Broadcasting sector expected to grow by 6.4%. Other sectors of agriculture is estimated to grow by 4.6% while manufacturing is expected to grow by 4.3%

(Source: NSO Second Advance Estimates, February 2025).

Indias Outlook for the FY 2025-26

Indias economic outlook for FY 2025 26 remains optimistic, underpinned by strong domestic fundamentals and supportive policy frameworks. The Reserve Bank of India (RBI), in its April 2025 Monetary Policy Statement, projects real GDP growth at 6.5% for FY 2025 26. Manufacturing activity is expected to retain its momentum, bolstered by global demand recovery, the Production-linked Incentive (PLI) schemes, and a conducive investment environment. Services are expected to grow above trend, supported by sustained demand in contact-intensive segments and digital services exports.

The governments continued focus on infrastructure, clean energy transition and digital public infrastructure is poised to drive medium-term growth. However, risks remain from global trade owing to rising protectionist measures, persistent geopolitical tensions, rising supply chain pressures, and volatile global financial conditions.

(Source: RBI Monetary Policy Statement, April 2025)

Industry Insight and trends

The Indian hotel industry enters 2025 on a strong footing, supported by sustained domestic travel, infrastructure upgrades, and rising interest from international markets. Continued economic growth, rising disposable incomes, and evolving travel aspirations especially among millennials and Gen Z are fueling demand for both leisure and business stays. The sector is witnessing increased traction in tier-2 and tier-3 cities, driven by improved air connectivity, the rise of hybrid work models, and state-level initiatives promoting tourism circuits. The continued advent of spiritual tourism, weddings in India, and strong M.I.C.E activity (Meetings, Incentives, Conferences and Exhibitions) surrounding large state of the art conventions centers are providing a strong impetus to growth.

While heightened trade tensions and global geopolitical risks weigh strongly on the economy, the governments continued support through tourism-friendly policies, infrastructure spending, and ease-of-travel initiatives are expected to keep the sector on a stable growth trajectory. Backed by robust fundamentals, favorable supply-demand dynamics, and a maturing hospitality ecosystem, the Indian hotel industry is well-positioned for a strong and sustainable performance in 2025 and beyond.

Indian Hospitality and Tourism Industry

FY 2024-25: A New Milestone for Indian Tourism

FY 2024-25 marked another landmark year for Indian tourism, driven by strong fundamentals such as a youthful population, rising employment, growing disposable incomes, and solid domestic demand. Improved infrastructure, greater connectivity, and increased investments have further accelerated the sectors momentum.

The Union Budget 2025 26 allocated Rs. 2,541 crore ($291 million) for the tourism sector, with a focus on infrastructure upgrades, skill development, and easing travel. Key initiatives include the development of 50 leading tourist destinations, improved transport connectivity, and expanding the e-visa programme. As of December 2024, e-visas are available to citizens from 167 countries under 9 categories making travel to India simpler and more accessible.

Opportunities and threats

Opportunities

Increasing Disposable Income:

Rising disposable incomes in India are driving higher expenditures on dining out and the exploration of new culinary experiences. This trend creates opportunities for food service providers to meet changing consumer preferences by introducing diverse and innovative food choices.

Adoption of technology and automation:

The food service industry is increasingly adopting technologies like self-ordering kiosks, app ordering, kitchen automation, order management systems, and digital marketing to improve efficiency and enhance customer experience. This presents opportunities for restaurants to streamline their operations, reduce costs, and improve customer satisfaction and engagement through technological innovations.

Prominence of online food delivery platforms:

Technological advancements, including online food delivery platforms and digital payment systems, are revolutionizing Indias food services market. The widespread use of smartphones and internet access has simplified the process of ordering food online, creating growth opportunities for food delivery services and aggregator platforms to broaden their customer base.

Potential for consolidation and organized growth:

The organized food service segment is expected to surpass the unorganized segment by 2025-26, driven by expansion of domestic and international chains. This trend could lead to consolidation opportunities and increased investment in the organized food service space. Larger players may look to acquire smaller, successful brands to diversify their portfolios, while smaller players might seek partnerships to compete more effectively in an increasingly organized market.

Threats

Natural Disasters and Health Crises:

Natural disasters and health crises are significant threats to the hotel industry, often causing sudden and severe disruptions. Events like floods, earthquakes, or cyclones can damage hotel infrastructure, displace staff, and deter tourists from visiting affected regions. Similarly, health crises such as pandemics lead to travel restrictions, fear among travelers, and strict hygiene protocols, resulting in low occupancy rates and financial strain. Both types of crises can severely impact guest confidence, supply chains, and operational stability. Recovery is often slow and costly, making it essential for hotels to invest in disaster preparedness, flexible operations, and health safety measures to ensure long-term resilience.

Regulatory Changes:

Regulatory changes pose a significant threat to businesses in India, often creating uncertainty and disrupting long-term planning. Sudden shifts in tax policies, labor laws, environmental regulations, or industry-specific compliance requirements can increase operational costs, delay projects, and deter investment. As a result, regulatory unpredictability remains a key concern for both domestic and foreign investors in India.

Competition:

Competition is a major threat to the hotel industry in India, driven by rapid growth in both domestic and international tourism. With an increasing number of players entering the market ranging from luxury chains to budget hotels and homestays the pressure to offer better services at competitive prices has intensified. Online travel platforms and aggregators have further empowered consumers to compare rates and reviews instantly, making customer loyalty harder to maintain. Additionally, the rise of alternative accommodations like Airbnb has disrupted traditional business models, especially in urban and tourist-heavy areas. This intense competition can lead to price wars, reduced profit margins, and the need for constant innovation to stay relevant.

Cybersecurity Risks:

Cybersecurity risks pose a growing threat to the hotel industry in India, as hotels increasingly rely on digital systems for reservations, payments, and guest data management. The sensitive personal and financial information collected from guests makes hotels attractive targets for cybercriminals. Data breaches, ransomware attacks, and phishing scams can lead to significant financial losses, reputational damage, and legal consequences under data protection laws.

Supply Chain Disruptions:

Supply chain disruptions are a significant threat to the hotel industry, as hotels rely heavily on the timely delivery of food, beverages, cleaning supplies, linens, and other essential goods to maintain service standards. Any interruption whether due to transportation delays, labor shortages, geopolitical tensions, or natural disasters can lead to increased costs, reduced quality of service, and customer dissatisfaction. The impact is especially severe for luxury and large-scale hotels that operate on tight schedules and high guest expectations. Inconsistent supply chains can also hinder the implementation of sustainability practices and seasonal offerings, affecting overall brand reputation and profitability.

Challenges

Intense Competition:

The Indian food services market is characterized by intense competition with a vast array of players ranging from local eateries to international restaurant chains. Most organized players have also expanded at a rapid pace. This intense competition makes it challenging for existing players to gain significant market share.

Cloud Kitchens:

Cloud kitchens, also referred to as virtual or dark kitchens, are dedicated entirely to fulfilling online food delivery orders and operate without dine-in options. Cloud kitchens can become increasingly significant in the Indian food services sector, as they are favored for their cost- efficiency, particularly in urban areas characterized by high real estate expenses.

Changing Consumer Preferences:

Meeting the evolving needs of consumers, such as shifts in dietary preferences, often necessitates ongoing innovation. For example, customers are become more discerning about the nutritional value of their meals which requires restaurants to adapt and keep up with customer preferences.

Higher Inflation:

Increasing costs of food, fuel, freight, utilities and real estate can drive up menu costs and decrease consumer spending and footfalls. Moreover, in an inflationary environment, consumer sentiment is dampened leading to lower demand in the food services industry.

Maintaining Consistent Quality and Food Safety Standards:

Quality and food safety are paramount concerns for consumers in the Indian food services market. Ensuring consistent quality across multiple locations and maintaining stringent food safety and hygiene standards can be a formidable challenge. Adhering to regulations, managing complex supply chains, and implementing robust quality control measures are crucial for food service providers to maintain consumer trust and mitigate potential health risks. The diverse and complex nature of the Indian market, coupled with varying regional preferences and regulatory frameworks, further exacerbates the challenges associated with maintaining consistent quality and food safety standards across different regions and locations.

Companys Outlook for the FY 2025-26

The Company sees promising growth opportunities in the medium to long term, driven by economic advancements and the expanding organized QSR sector in India and Indonesia as we expect increase in consumer spendings from current levels, improvement in macroeconomic and geopolitical environment. Despite the strong competition within the segment, the Company remains confident in its ability to lead through its expertise, strong brand reputation, commitment to quality, and focus on offering healthier products. Continuing to fortify its position, the company is investing in enhancing its brands, bolstering sales infrastructure, advancing technology, and nurturing talent crucial for sustained growth. Emphasizing margin improvement, it remains dedicated to maintaining a robust presence in both the Indian and Indonesian markets.

Risk Management

At Univa Foods Limited, the process of risk identification is guided by the Companys objectives, external environment, and stakeholders, among others. Once the risks are identified, it devises plans outlining mitigation actions for the assigned risks. The objective of its risk management framework is to ensure that various risks are identified, measured, and mitigated and that policies, procedures and standards are established to address these risks and ensure a systematic response in the case of crystallization of such risks.

Types of risks:

FRAUD RISK:

We may face fraud risks such as identity theft, internal fraud, and cyber fraud. These risks pose the threat of financial loss and reputation loss, resulting from intentional deception or misrepresentation by individuals or entities, internally or externally.

Mitigation:

Your Company maintains a zero-tolerance policy towards fraud, actively raising awareness and implementing robust controls to prevent any occurrence.

SUPPLY CHAIN RISK:

Disruptions in the Companys supply chain can adversely affect its operations and profitability, leading to product shortages, increased costs, and potential revenue loss.

Mitigation:

Your Company has implemented a diversified sourcing strategy, maintaining multiple suppliers for key ingredients and materials. It has optimized its distribution network and inventory management systems to ensure efficient and uninterrupted supply.

CONSUMER RETENTION:

Failure to retain and attract customers in the competitive QSR landscape could result in market share erosion and impact the Companys growth and financial performance.

Mitigation:

Your Company continuously innovates its menu offerings, strengthens its value proposition, and enhances guest experiences through technology driven initiatives and superior service quality. Its strong brand equity and customer loyalty programs further fortify its competitive position.

REGULATORY RISK:

Any non-compliance with regulations could result in monetary losses and has the capability to damage the Companys reputation.

Mitigation:

Your Company ensures strict adherence to applicable rules and regulations owing to a strong internal control framework.

OPERATIONAL RISK:

This risk is about the failure of processes and controls in business operations, which can also have an adverse impact on the business continuity, reputation, and profitability of the Company.

Mitigation:

A robust control and assurance mechanism has been implemented to identify and mitigate operational risks.

Performance of the Company

Financial and operational:

The Company provide hospitality, catering and distribution of different types of food products and services which is its core activity. The performance of the Company is as under:

Segment-wise performance or product-wise performance:

During the year under review, since company is being working in a single segment therefore the specific performance does not stand eligible.

Internal control systems and adequacy

The Company boasts an efficient and clearly outlined internal control framework designed to protect its financial data and assets from unauthorized use or disposal. This system addresses evolving business risks, ensures the reliability of financial information and facilitates timely and accurate reporting of operational and financial transactions, all while rigorously adhering to applicable regulatory laws and regulations. The Company meticulously documents its overall governance system, including policies and procedures, under expert supervision. The internal control team is tasked with continuously monitoring these controls, supplemented by an external team to ensure the systems adequacy and effectiveness. The Audit Committee conducts regular reviews of audit reports provided by the internal audit team. Key observations and audit findings are thoroughly discussed and communicated to management, which then implements corrective measures to enhance business processes and internal control mechanisms.

Human Resource (HR) and Industrial relations

The company believes in developing a strong and motivated workforce. Univa Foods is in the process of establishing adequate HR controls and strengthening its internal people management systems. This includes recruitment planning, performance management, policy updates, and employee engagement to ensure alignment with the companys renewed vision and growth strategy.

Details of significant changes in Key Ratios

The financial data is mentioned in the financial statements annexed to the Report herewith.

Cautionary Statement

This management discussion and analysis contains forward-looking statements that reflect the Companys current views with respect to future events and financial performance. The actual results may differ materially from those anticipated in the forward-looking statements as a result of many factors.