Vijay Solvex Ltd Management Discussions

1. This section shall include discussion on the following matters within the limits set by the listed entitys competitive position:

i. INDUSTRY STRUCTURE AND DEVELOPMENTS

Oilseeds and edible oils are two of the most sensitive essential commodities. India is one of the largest producers of oilseeds in the world and this sector occupies an important position in the agricultural economy, accounting for the estimated production of 41.66 million tons of nine cultivated oilseeds during the year 2024-25 (November-October) as per Second Advance Estimates released by the Ministry of Agriculture on 10.03.2025. India contributes about 5-6% of the world oilseeds production. Export of oil meals, oilseeds and minor oils was about 5.44 million tons in the financial year 2023-24 valued at Rs 29,587 crores.

The Country has to rely on imports to meet the gap between demand and supply. Import of edible oil is under Open General License. Indian edible oil imports grew nearly 5% year-on-year from April 2024 to March 2025, despite a 12% decline in palm oil imports, reflecting these global dynamics.

Import duty on edible oils is one of the important factors that impacted landed cost of edible oils and thereby domestic prices. In September 2024, the Government of India raised import duties on crude edible oils (soya, palm, sunflower) to an effective 27.5% and refined oils to 35.75%, aiming to boost local production. While these measures led to higher edible oil prices, their impact on domestic oilseed prices was limited, with soybean prices facing pressure due to a global protein surplus.

Recently on May 30, 2025, the Central Government has cut basic custom duty for Crude Edible oils. By lowering the import duty on crude oils, the government aims to reduce the landed cost and retail prices of edible oils, providing relief to consumers and helping to cool overall inflation. The reduced duty will also encourage domestic refining and maintain fair compensation for farmers.

India Edible Oil Market was valued at USD 4.39 billion in 2024 and is anticipated to grow USD 6.49 billion by 2030 with a CAGR of 6.79% during forecast period. Indias edible oil market is one of the largest globally, driven by high consumption, heavy reliance on imports, and evolving consumer preferences. Growing health awareness is increasing demand for cold-pressed, organic, and fortified oils. Urbanization, rising disposable incomes, and expanding retail channels further drive growth. Government initiatives, such as the National Mission on Edible Oils, aim to boost domestic production and reduce import dependence. The market is also witnessing innovation in packaging and branding, with a shift toward healthier and premium edible oil variants. The report underscores a significant rise in per capita edible oil consumption in India over the past decades, reaching 19.7 kg per year. This surge in demand has outstripped domestic production, resulting in a heavy dependence on imports to cater to both household and industrial needs.

Indias growing population is a major driver of the edible oil market, leading to a steady rise in domestic consumption. With a population exceeding 1.4 billion, edible oil is a staple in Indian households, used daily for cooking and food preparation. As the middle class expands and disposable incomes rise, people are consuming more diverse and processed foods, further driving oil demand. The increasing shift towards urbanization and fast-paced lifestyles has led to a surge in demand for ready-to-eat and packaged food products, which require edible oils as a key ingredient. According to the Industry reports published in Jan 2025, highlight that Indias per capita annual edible oil consumption has exceeded 20 kg, surpassing the recommended limits of 12 kg set by the Indian Council of Medical Research (ICMR) and 13 kg by the World Health Organization (WHO). These factors, along with changing dietary habits, urbanization, and rising disposable incomes, are key drivers of market demand, influencing purchasing patterns and shaping the growth trajectory of Indias edible oil industry.

India imported 11.75 Lakh Tonnes (LT) of edible oil in May 2025 against 14.98 LT in May 2024, a decline of 21.56 per cent. Indias edible oil imports decreased during the November-May period of the 2024-25 seasons, totaling 76.77 Lakh Tonnes (LT) compared to 85.67 LT during the same period in the previous year.

During the first seven months of the oil year 2024-25, Indias refined, bleached and deodorised (RBD) palmolein import decreased to 8.19 LT (12.36 LT in November-May of 2023-24), and crude palm oil (CPO) to 24.70 LT (36.65 LT). The total palm oil imports decreased to 33.29 LT during November-May 2024-25 from 49.77 LT in the corresponding period of the previous oil year. However, palm oil imports increased due to the pipeline lacking ample stocks and palm oil being offered at a discount to rival soya oil and sunflower oil.

Indias edible oil industry is on the verge of a big change, with a focus on becoming more self-sufficient and less dependent on imports, which currently make up about 57% of the countrys demand. Thanks to its diverse farming conditions, India has the potential to grow key oilseeds like sunflower, soybean, and peanuts. By encouraging crop diversity, adopting modern farming techniques, and expanding oil palm cultivation, India can build a more sustainable future. Programs like the National Mission on Edible Oils are already helping farmers increase local production and processing. This shift will strengthen food security, boost rural incomes, and build a stronger edible oil sector for Indias future.

ii. OPPORTUNITIES AND THREATS

The Indian edible oil industry presents a mix of opportunities and challenges. Strengths include a large domestic market and growing demand, while weaknesses involve reliance on imports and fluctuating prices. Opportunities lie in expanding into rural markets and developing innovative products. Threats include intense competition and potential policy changes.

India currently represents the worlds largest importer of edible oil in the world. Increasing disposable incomes, rising urbanization rates, changing dietary habits and the growth of the food processing sector represent some of the key factors driving the demand of edible oil in India.

In India, the rising consumer health concerns towards the high prevalence of coronary heart diseases, diabetes, obesity, gastrointestinal disorders, etc., are primarily driving the demand for healthy edible oil. Additionally, the market is further catalyzed by the growing awareness towards several health benefits of organic and low-cholesterol edible oil. As a result, various regional manufacturers are launching healthy product variants enriched with omega-3, vitamins, and natural antioxidants. Moreover, the changing consumer dietary patterns and their hectic work schedules have led to the increasing consumption of processed food items. The rising demand for edible oil in the food processing sector as food preservatives and flavoring agents is also catalyzing the market growth in the country. Additionally, the elevating consumer living standards coupled with the increasing penetration of international culinary trends are further augmenting the demand for high-quality product variants, such as olive oil, sesame oil, flaxseed oil, etc. Apart from this, the expanding agriculture sector along with the launch of several initiatives for enhancing the production of oilseeds in the country is also propelling the market. Furthermore, the Indian government is making continuous efforts to increase the domestic availability of edible oil and reduce import dependency. For instance, the government has proposed the National Mission on Edible Oil (NMEO) for meeting the countrys consumption need for edible oil, such as sesame oil, groundnut oil, safflower oil, palm oil, etc.

There is a major opportunity to increase edible oil production in India by addressing the gap between current farming practices and advanced agricultural technologies. Researches have shown that adopting improved methods can lead to higher yields in oilseed crops. Key strategies include using better seed varieties, modern machinery, and effective management practices such as crop rotation, timely planting, and balanced fertilisation. Implementing efficient crop management techniques can greatly enhance productivity. In addition, enhanced pest and disease management are critical because several oilseed crops are subjected to considerable threats. Finally, careful fertiliser management, especially in intercropping systems, is necessary to ensure that all crops receive nutrients, ultimately boosting productivity and sustainability.

The food processing industry and the hotel, restaurant, and catering (HoReCa) sector are rapidly growing in India, significantly contributing to edible oil demand. The expansion of quick-service restaurants (QSRs), cloud kitchens, and food delivery services has increased bulk purchasing of oils, particularly palm oil, soybean oil, and sunflower oil, which are widely used for frying and cooking. Major food chains, including McDonalds, Dominos, and KFC, rely on edible oils for large-scale food preparation. Additionally, the growth of food exports and processed food manufacturing such as snacks, bakery products, and confectionery items has further boosted the need for different varieties of edible oils. The HoReCa sector is also witnessing a rising demand for premium and healthier oils, as consumers increasingly prefer nutritious food options, leading to a shift toward cold-pressed and organic edible oils in restaurants and cafes.

One of the most significant challenges in the Indian edible oil market is its heavy reliance on imports. India imports nearly 60-70% of its total edible oil consumption, mainly from countries like Indonesia, Malaysia, Argentina, and Brazil. Palm oil, soybean oil, and sunflower oil constitute the majority of these imports. This dependence makes India highly vulnerable to global price fluctuations, trade restrictions, and geopolitical tensions. For example, the Russia-Ukraine conflict severely impacted sunflower oil supplies, leading to price surges.

Additionally, changes in international tariffs, export bans, and climate-related disruptions in major producing countries further contribute to unstable pricing. The fluctuating cost of crude edible oils directly affects consumer prices, making it difficult for households and businesses to manage their budgets. The Indian government frequently intervenes by adjusting import duties and stock limits, but long-term sustainability requires increased domestic production and diversification of sources.

Edible Oil Division

The Edible Oil business continues to account major part of the Companys turnover. The market environment continuous to be very competitive. The Companys products are well accepted in national market under the various brand names. Your company is leading regional player in edible oil and Vanaspati, backed up with strong distribution network. Your Company faces intense competition from low priced and unscrupulous brands. The outlook of the industry is positive looking to the size of opportunity. The Company is hopeful that there would be healthy market growth over the next few years.

Ceramic Division

Your Companys ceramic division sale performance during the year is Rs. 1911.10 lacs. Companys ceramic products are well accepted in India. Your Company is hopeful of a healthy growth both in volume and value over next few years.

Wind Power Division

During the period under review, Wind Power Generation plant of the Company located at Village Hansua, District Jaisalmer, Rajasthan was not in operation as the segment is not financially viable to run. However, the effect of this segment is very marginal on overall revenue of the Company.

iv. OUTLOOK

Agriculture has long been the backbone of Indias economy, employing 46.1 per cent of the workforce and feeding a population of 1.45 billion. Yet, its contribution to GDP lags at just 16 per cent, often overshadowed by manufacturing and services. However, recent policy shifts signal a renewed focus on agriculture as a primary growth driver. The Economic Survey 2024-25 and Union Budget 2025-26 reinforce this narrative, with agricultural allocations modestly rising to 1,71,437 crores. For decades, self-sufficiency was synonymous with food grain production, with wheat and rice surpluses making India a net food exporter. However, as consumption patterns evolve, the definition of self-sufficiency must expand to include oilseeds and pulses, which are critical for food security and price stability.

As global awareness of environmental issues grows, sustainability has become a key trend in the Indian edible oil market. The palm oil industry, in particular, faces criticism due to its association with deforestation, loss of biodiversity, and high carbon emissions in producing countries. As a result, there is increasing demand for sustainably sourced palm oil, with organizations and brands committing to Certified Sustainable Palm Oil (CSPO). Consumers, especially in tier-1 cities, are showing interest in eco-friendly and responsibly sourced edible oils, prompting companies to adopt green packaging, ethical sourcing policies, and transparent supply chains. Brands are also exploring alternative oil sources, such as rice bran, algae-based oils, and indigenous oils like safflower and sesame, which have a lower environmental impact. The push for sustainable farming practices, waste reduction, and carbon footprint minimization is expected to shape the future of edible oil production in India.

India ranks fourth in the world after the United States, China, and Brazil in the edible vegetable oil market. India accounts for 15-20% of the worlds oilseed market, 6 7% of global vegetable oil production, and 9 10% of overall world consumption. After food grains, oilseeds are the second most important crop group in Indias agricultural landscape. Groundnut, rapeseed-mustard, soybean, and sunflower are among the nine major oilseed crops that can be grown in the nation given its varied agro-ecological conditions. India is the worlds top producer of castor, safflower, sesame, and niger, while it comes in second for groundnuts and third for rapeseed-mustard. However, India still finds it difficult to supply its local demand for edible oils and currently imports 57% of its edible oil demand.

Recognizing these challenges, the government has implemented a series of targeted interventions. To protect domestic farmers, import duties on crude edible oils to encourage local production while preventing excessive price volatility. However, with domestic demand growing annually, import restrictions alone cannot bridge the self-sufficiency gap.

To strengthen domestic capacity, the National Mission on Edible Oils Oil Palm (NMEO-OP) was launched in 2021 with an outlay of 11,040 crore. The government aim to increase domestic edible oil production to 25.45 million tonnes, covering 72 per cent of Indias projected demand by 2030-31. Alongside NMEO-OP, the Union Cabinet also approved the National Mission on Edible Oils Oilseeds (NMEO-Oilseeds). This is a seven-year initiative (2024-25 to 2030-31) with an outlay of

10,103 crore. The mission aims to increase oilseed production from 39 million tonnes in 2022-23 to 69.7 million tonnes by 2030-31. The policy emphasizes expanding oilseed cultivation by 40 lakh hectares through better utilization of rice and potato fallow lands, promoting intercropping, and encouraging high-oil-content seed varieties. The mission focuses on rapeseed-mustard, groundnut, soybean, sunflower, and sesame, alongside improving extraction from secondary sources - cottonseed, rice bran, and tree-borne oils (TBOs).

To ensure the timely availability of quality seeds, the Mission will introduce an Online 5-year rolling seed plan through the ‘Seed Authentication, Traceability & Holistic Inventory (SATHI) Portal, enabling states to establish advance tie-ups with seed-producing agencies, including cooperatives, Farmer Producer Organizations (FPOs), and government or private seed corporations. 65 new seed hubs and 50 seed storage units will be set up in public sector to improve the seed production infrastructure.

In addition, the Minimum Support Price (MSP) for mandated edible oilseeds has been significantly increased to ensure remunerative prices to the oilseed farmers. The continuation of the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) ensures that oilseed farmers receive MSP through price support scheme and price deficiency payment scheme. Besides time to time import duty on edible oils imposed to protect domestic producers from cheap imports and encourage local cultivation.

v. RISK AND CONCERNS

The Indian edible oil market faces significant risks and concerns including high import dependency, price volatility, and potential health issues. India relies on imports for a large portion of its edible oil supply, making it vulnerable to global price fluctuations and trade disruptions. Additionally, the market grapples with concerns about adulteration, quality control, and the environmental impact of palm oil production.

vi. INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

Companys internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These systems are designed to ensure that all the assets of the company are safeguarded and protected against any loss and that all the transactions are properly authorized recorded and reported.

The company has an internal audit function, which is empowered to examine the adequacy and compliance with policies, plans and statutory requirements. It is also responsible for assessing and improving the effectiveness of risk management, control and governance process.

PERFORMANCE

During the period under review, on standalone basis, your Company has achieved a Total Revenue from Operations of Rs. 1,83,073.01 Lakhs as against Rs. 1,82,923.28 Lakhs in the previous financial year. The Profit before Finance Cost, Depreciation and Tax is Rs. 2,853.46 Lakhs, Profit after Tax is

Rs. 1,837.23 Lakhs and Total Comprehensive Income is Rs. 1,833.79 Lakhs as compare to Rs. 703.03 Lakhs, Rs. 235.39 Lakhs and Rs. 273.88 Lakhs respectively in the previous financial year. During the year the Total Revenue from Operations and Profit after Tax of the Company has increased by 0.08% and 680.50% respectively due to favourable market conditions and growth in overall edible oil sector.

FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Company considers its human resources as the cornerstone. Congenial and safe work atmosphere, appropriate recognition and rewards, constant communication, focus on meeting customer needs and change management through training are the hallmarks for development of human resources of the company. Every employee is aware of the challenges posed by the current economic environment. Employee morale has remained high even during difficult times. The employees have co-opted fully with the management in implementing changes as required in the market. There were 138 permanent employees on the rolls of the Company as on 31^st March 2025.

DETAILS EXPLANATIONS

*Increase in Debtors Turnover Ratio was primarily on account of reduction in debtors due to on time realization of sales proceeds.

**Increase in Interest Covergae Ratio was due to reduction in Interest Expenses and significant increase in Profit before Tax.

#Debt Equity Ratio increased due to increase in debts / borrowings during the financial year.

##Increase in Operating Profit Margin was due to significant increase in Operating Profit of the Company.

^ Increase in Net Profit Margin was due to significant increase in net profit after tax of the Company.

DETAILS OF CHANGES IN RETURN ON NET WORTH

During the financial year Net Profit after Tax of the Company has increased due to favourable market conditions and growth in overall edible oil sector. Hence, due to increase in Net Profit, the Return on Net Worth has increased by 654.22% during the current financial year.

2. DISCLOSURE OF ACCOUNTING TREATMENT

The Financial Statements of the Company for the financial year ended March 31, 2025 were prepared in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other accounting principles generally accepted in India.

CAUTIONARY STATEMENT

It may please be noted that the statements in the Management Discussion and Analysis Report describing the companys objectives and predictions may be forward looking within the meaning of applicable rules and regulations. Actual results may differ materially from those either expressed or implied in the statement depending on circumstances.