Waterbase Ltd Management Discussions

Report 2024-25 ECONOMIC SCENARIO

Global Economic Review

The global economy is facing a marked slowdown, weighed down by rising trade barriers, geopolitical tensions, inflationary pressures, and an uncertain policy environment. Growth is projected to weaken to 2.3% in 2025, the slowest pace since 2008 outside of full recessions. A modest and uneven recovery is expected in 2026–27, though output will remain materially below earlier projections.

The weakening outlook reflects multiple headwinds. Many developed economies, including the US and Europe, are experiencing a sharp deceleration, while trade restrictions and heightened policy uncertainty continue to constrain investment and dampen consumer sentiment. Global growth projections have been revised downwards across international agencies, with nearly all major economies facing downgrades.

Inflation remains a mixed picture. While headline inflation is easing, trade disruptions and tariff escalations could exert upward pressure on prices. Policy divergence among major economies risks tightening global financial conditions, potentially triggering capital outflows from emerging markets. The reduced fiscal space in many countries further constrains the ability to support growth.

Outlook

Despite near-term challenges, cautious optimism is supported by selective growth enablers. Ongoing digital transformation, renewable energy investments, and rising health-driven consumption patterns are creating new avenues of expansion. However, the outlook remains fragile and highly contingent on de-escalation of trade tensions, policy cooperation, and effective macroeconomic calibration. Absent these, global growth is expected to remain subdued at levels well below historical averages.

Indian Economic Review

Against a difficult global backdrop, India continues to shine as a bright spot, reaffirming its position as the fastest-growing major economy, with growth in the 6–7% range over the medium term. The country has recently emerged as the worlds fourth-largest economy, surpassing Japan, underpinned by strong domestic demand and public investment momentum.

Key structural drivers remain intact. Robust private consumption, a healthy pipeline of public infrastructure projects, and sustained services growth continue to support momentum. Industrial activity is showing gradual improvement, while digital transactions—particularly through UPI have scaled to unprecedented levels, further formalising the economy. Exports of engineering goods, electronics, pharmaceuticals, and marine products have grown steadily, while inflation has been effectively contained through proactive fiscal and monetary measures.

Outlook

The Reserve Bank of India expects growth to remain steady at 6.5% in FY 2025–26, supported by benign inflationary trends and improving rural and urban demand. Inflation has moderated significantly, aided by abundant agricultural production and easing food price pressures, with CPI expected to remain well-anchored in the sub-4% range.

Indias medium-term prospects are anchored in continued capital expenditure, healthier corporate and banking sector balance sheets, and strategic government reforms. With its combination of scale, domestic demand resilience, and digital transformation, India is positioned to remain a key driver of global growth. However, policymakers remain cautious of external spillovers from geopolitical tensions, weather-related uncertainties, and global trade disruptions.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Aquaculture Industry Overview

After a challenging 2024 marked by weak consumer demand in major markets, the global aquaculture industry is poised for stronger production growth in 2025. According to Rabo Bank and the Global Seafood Alliance, aquaculture production is expected to expand steadily, with species such as Atlantic Salmon, Seabass, Seabream, and Pangasius leading the growth trajectory. Global shrimp aquaculture production is projected to increase by 2% in 2025, with output reaching around 6.1 million metric tonnes. Asia, which continues to dominate the sector, is anticipated to grow by 2% during the year, supported by incremental capacity expansion and productivity improvements.

The global aquaculture market was valued at USD 310.6 billion in 2024 and is forecast to grow at a 5.1% CAGR through 2030, reaching nearly USD 417.8 billion. Growth is being driven by rising health consciousness, sustained demand for sustainable protein, and advances in aquaculture technologies.

Global Seafood Market Overview

The seafood sector is undergoing structural transformation. Global aquaculture output of aquatic animals has overtaken capture fisheries, underscoring the sectors rising contribution to global food systems. Shrimp demand, however, has plateaued around 4 million MT in recent years and is expected to remain subdued during FY25 due to muted economic growth and weaker consumer spending in key importing regions like the US, EU, and China.

Despite near-term challenges, the longer-term seafood outlook remains favorable. The industry is expected to benefit from rising global protein consumption, health awareness, and technological advances in farming and processing methods.

Regional Market Dynamics

• Asia-Pacific remains the worlds aquaculture hub, with countries like India, China, Indonesia, and Vietnam driving expansion. Asia accounts for the majority of incremental shrimp output, while India continues to be one of the leading producers and exporters.

• In contrast, developed markets such as the US and EU are grappling with slower consumption growth due to inflationary pressures and shifting trade policies. Still, demand for premium frozen and value-added seafood remains strong.

• Trade disruptions, including the reciprocal tariffs announced by the US in April 2025, have created uncertainty for major exporters. Countries are now seeking diversification into East Asia, the Middle East, and Europe to mitigate over-dependence on single geographies.

Product Segment Analysis

Frozen seafood continues to dominate consumption in developed markets, but the real growth opportunity lies in value-added products. Globally, processors are moving toward ready-to-cook, marinated, and pre-seasoned seafood products to tap into convenience-driven consumer demand.

Technological innovations spanning feed efficiency, disease management, and cold chain logistics are enhancing yields and product quality. These improvements are expected to drive higher realizations and margin stability, particularly for exporters focusing on premium and branded categories.

Sustainability and Consumer Trends

Sustainability has become central to the seafood value chain. With leading retailers and QSR chains adopting certified sustainable seafood, producers are under increasing pressure to comply with traceability and environmental standards.

Consumer health consciousness is another structural driver. Rising awareness of the nutritional benefits of seafood including omega-3 fatty acids and high-quality protein continues to lift per capita consumption globally. The FAO projects that global food fish consumption will rise further, strengthening the long-term demand outlook.

Outlook

While short-term headwinds persist in the form of trade barriers, freight costs, and geopolitical tensions, the global aquaculture and seafood industry remains on a long-term growth path. Rising health-driven consumption, sustainability imperatives, and product innovation are expected to reshape the industry over the next decade.

With demand for responsibly farmed, high-protein food accelerating worldwide, the sector is positioned for continued expansion—though its resilience will depend on how effectively players navigate climate risks, trade uncertainties, and evolving consumer preferences.

Indian Aquaculture and Seafood Industry

India continues to cement its position as a global leader in aquaculture, driven by strong domestic capabilities and export competitiveness. Aquaculture remains central to food security, employment, and foreign exchange earnings, with the government extending support through initiatives such as the Pradhan Mantri Matsya Sampada Yojana (PMMSY).

In FY 2023–24, India exported 1.78 million metric tonnes of seafood, valued at 60,523.89 crore (USD 7.38 billion). Frozen shrimp accounted for 716,004 metric tonnes, contributing 40,013.54 crore, which is nearly 66% of export revenues.

Production and Market Milestones

• India holds approximately 20% of the global shrimp market share, with production expected to remain flat at 1.2 million tonnes in FY25.

• Nearly 48% of Indian shrimp exports are destined for the US market, leaving exporters vulnerable to policy shocks.

• Despite headwinds, Indian shrimp exporters are expected to post 2–3% revenue growth in FY25, aided by higher realisations and favourable currency trends, even as export volumes remain flat.

Policy Initiatives and Infrastructure

The government is actively promoting market diversification to East Asia, the Middle East, and Europe. At the same time, the PMMSY is targeting 22 million tonnes of fish production by FY25 and aims to double export earnings through infrastructure upgrades and farmer support. State-level programs, such as Jharkhands inland fisheries roadmap, are further decentralising growth and creating new opportunities.

Indian Shrimp Industry

India remains the second-largest farmed-shrimp producer and the largest exporter of frozen shrimp globally. The domestic industry is transitioning through a phase of resilience, balancing export headwinds with structural reforms and technological upgrades.

• Species dynamics: Whiteleg shrimp (L. vannamei) continues to dominate, though production has plateaued. Meanwhile, Black Tiger (P. monodon) cultivation is gaining renewed interest, supported by strong overseas demand and premium pricing.

• Export performance: Shrimp exports form the backbone of Indias seafood earnings, with 40% of export volume and 66% of value in FY24 linked to this single product.

• Margins: Global price stabilisation since late 2024 has improved farm-gate prices, restoring profitability for Indian growers.

Challenges

Disease outbreaks, high raw material costs, and exposure to tariff volatility remain significant risks. The Countervailing Duty of 5.77% and the newly announced US reciprocal tariffs could pose additional burdens if fully enforced. Rising logistics costs and climatic disruptions further compound sectoral challenges.

Outlook

Industry growth is expected to remain modest in the short term, but investments in disease control, value-added processing, and digital farm management are set to improve resilience. Policy support, including subsidies and infrastructure under PMMSY, is expected to sustain Indias global leadership in shrimp exports.

Global Aquafeed Industry

The aquafeed sector is a vital backbone of global aquaculture, supporting the growth of shrimp, fish, and other farmed species. In 2024, the global aquafeed market was valued at over USD 70 billion, with strong growth projected through 2030. Asia-Pacific dominates the market, supported by its leading role in aquaculture production and seafood consumption.

Key trends include:

• Transition from fishmeal/fish oil dependence to plant-based and alternative proteins such as insect meal and algae.

• Expansion of functional feeds with probiotics and immune-enhancing additives.

• Increased adoption of precision feeding technologies to reduce waste and improve conversion ratios.

Sustainability considerations are reshaping feed production strategies globally, aligning with traceability and eco-labelling requirements across key markets.

Indian Aquafeed Industry

Indias aquafeed industry has grown in parallel with its shrimp sector. The country has developed a strong commercial feed ecosystem, moving away from traditional practices to modern, efficient formulations.

• Shrimp feed remains the largest and fastest-growing segment, supported by the dominance of vannamei culture.

• Policy support under PMMSY and customs duty reductions on critical inputs have reduced feed costs and improved margins for farmers.

Outlook

With Indias shrimp industry expected to sustain its global leadership, aquafeed demand will remain on a strong upward trajectory. Efficiency gains, R&D in sustainable feed formulations, and farmer education will drive the next phase of growth. Backed by supportive policies and market demand, India is positioned to become a key innovator in global aquafeed development.

BUSINESS AND FINANCIAL OVERVIEW

The Waterbase Limited continues to reinforce its leadership in Indias aquaculture sector, offering an integrated platform spanning hatchery operations, shrimp feed manufacturing, farm care solutions, contract farming, and value-added processing and exports. A part of the respected Karam Chand Thapar (KCT) Group, the Company benefits from a legacy of ethical business practices and strategic foresight across sectors such as aquaculture, coal logistics, and real estate.

Over the past year, Waterbase has strengthened its capabilities across the value chain, driven by innovation, customer-centricity, and operational discipline. The shrimp feed division remains a cornerstone of the business, with continuous innovation and sustained customer trust. Meanwhile, the processing and export facility built with cutting-edge technology and global compliance standards has begun contributing meaningfully to revenues and elevating Waterbases presence in international markets.

The Companys financial statements have been prepared in compliance with the Indian Accounting Standards (Ind AS), in accordance with the notification issued by the Ministry of Corporate Affairs under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other applicable provisions of the Act.

Its brief financial performance for 2024-25 is given below:

(Amount in Rs. Lakhs)

Particulars	For Year ended March 31, 2025	For Year ended March 31, 2024
Revenue from Operations	27,770.66	33,925.31
EBITDA	(1396.21)	(183.39)
Depreciation and interest on borrowings	992.68	1,140.83
Profit before tax	2,388.89	1,324.22
Tax expenses	(573.57)	(280.61)
Net Profit	(1,815.32)	(1,043.61)

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in Key Financial Ratios, alongwith detailed explanations thereof including:

Ratios	2024-25	2023-24	% Change	Reason (if more than 25% change)
Debtors Turnover	7.11	5.12	39%	Reduction in Trade Receivable is less than the reduction in sales, which leads to increase in Trade receivable turnover ratio
Inventory Turnover	3.12	4.18	-25%	Due to drop in feed sales and higher inventory in process plant
Net capital turnover ratio (in times)	5.19	3.72	39%	Lower working capital
Current Ratio	1.60	2.33	-31%	Due to increase in borrowings during the year compared to last year resulted in decrease in Current Ratio.
Debt-Equity Ratio	0.28	0.15	85%	Due to increase in borrowings during the year compared to last year resulted in increase in Debt Equity Ratio.
Net Profit Margin (%)	-6.74%	-3.15%	114%	Increase in net loss due to lower sales during the year, resulted in lower Net Profit ratio.

RISK MANAGEMENT

The Company recognizes that risk is an inherent aspect of any enterprise and that effective risk management is critical to sustaining performance, protecting stakeholder interests, and achieving long-term strategic goals. Waterbase has established a formal Risk Management framework that is actively overseen by a dedicated Risk Management Committee, comprising senior leadership and Board representation. This Committee meets periodically to identify, assess, and monitor key risks that could potentially impact the Companys operations, financial performance, reputation, and regulatory compliance.

The risk management process is comprehensive and embedded across all levels of the organization. Risks are systematically identified, categorized such as operational, financial, strategic, regulatory, environmental, and reputational and prioritized based on their potential impact and likelihood. Key focus areas include disease outbreaks in aquaculture, volatility in raw material prices, climate-related disruptions, biosecurity compliance, export regulation changes, forex fluctuations, and geopolitical factors affecting trade. For each identified risk, detailed mitigation strategies are developed and implemented, such as insurance coverage, supplier diversification, biosecurity upgrades, digital monitoring tools, and currency hedging mechanisms. The internal audit and control systems also play a key role in tracking risk indicators and evaluating the effectiveness of mitigation actions. The Risk Management Committee regularly updates the Board on emerging risks and ensures that contingency plans are agile and responsive to dynamic external environments. Through this proactive and structured approach, the Company aims to safeguard its assets, reputation, and business continuity while maintaining stakeholder confidence.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company continues to maintain a robust internal control framework that ensures operational efficiency, accuracy in financial reporting, and strict compliance with applicable laws and regulations. These internal controls, including internal financial controls, are regularly reviewed and upgraded to align with evolving business requirements and risk landscapes.

An independent Internal Audit function, operating under the guidance of the Audit Committee, evaluates the design and effectiveness of the internal control mechanisms. Audit findings and recommendations are reviewed periodically, and necessary corrective actions are implemented in a timely manner. The Audit Committee maintains active engagement with both internal and statutory auditors to ensure that the control environment remains strong, responsive, and aligned with the Companys growth objectives.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

As of 31st March, 2025, the Company employed a committed workforce comprising 226 officers and workmen across its operations. During the year, Waterbase continued to view its human capital as a key enabler of long-term value creation. Strategic investments were made in strengthening employee capabilities through structured training, on-the-job learning, and functional upskilling. The focus remained on aligning individual competencies with evolving business needs while fostering a culture of ownership, agility, and collaboration across departments.

To ensure continuous development and engagement, the Company conducted multiple knowledge-sharing sessions and encouraged employees to participate in industry forums and external learning programs. Several employee-driven initiatives and suggestions were recognized and implemented, contributing to improvements in process efficiency, product quality, and cost control. Industrial relations remained cordial throughout the year, underscoring the mutual respect and open communication between the management and workforce.

CAUTIONARY STATEMENT

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Forward–looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend,