Zeal Aqua Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian aquaculture and seafood processing industry continues to play an important role in the countrys agricultural and export economy. Shrimp farming, processing and exports remain significant contributors to Indias marine products sector, supported by increasing global demand for quality seafood products.

During the financial year 2025-26, the Indian aquaculture sector continued to demonstrate resilience and growth. As per data published by the Marine Products Export Development Authority (MPEDA), production of Pacific Whiteleg Shrimp (Litopenaeus vannamei) increased to approximately 1.30 million metric tonnes during FY 2025-26, representing growth of about 10% over the previous year. This reflects continued expansion in shrimp farming and the importance of aquaculture to Indias seafood industry.

India continues to be an important supplier of shrimp to major international markets. Demand from markets including China, the European Union, Japan, South East Asia and other international destinations continues to provide opportunities for Indian seafood processors and exporters. Frozen shrimp remains one of the principal marine products exported from India.

At the same time, the industry remains exposed to fluctuations in international shrimp prices, exchange rates, feed and raw material costs, disease-related risks, climatic conditions, quality requirements and changes in import regulations in overseas markets. Increasing emphasis on traceability, food safety, antibiotic residue control and sustainable aquaculture is also influencing the operating environment.

The Company continues to monitor developments in domestic and international seafood markets and remains focused on maintaining product quality, improving operational efficiency and strengthening its presence in domestic as well as export markets.

2. INDIAN ECONOMY

India continued to maintain its position as one of the worlds leading producers and exporters of shrimp during FY 2025-26. The shrimp processing and export industry is characterized by an integrated value chain comprising hatcheries, aquaculture farms, feed manufacturers, processors, cold chain logistics providers, and exporters, catering to major international markets such as the United States, Europe, Japan, China, and the Middle East.

During the year, the industry operated in a dynamic environment influenced by changing global trade policies, evolving consumer preferences, and fluctuating international demand. Despite these challenges, the demand for value-added and high-quality seafood products remained resilient. The industry continued to focus on product diversification, operational efficiency, traceability, food safety, sustainability, and compliance with stringent international quality standards. Indias strong aquaculture base, modern processing infrastructure, and competitive production capabilities continue to position the sector for long-term growth in the global seafood market.

A total of 7,92,647 MT of frozen shrimp was exported during the year. The United States remained the largest market for frozen shrimp imports from India, importing 2,56,128 MT, followed by China (1,69,505 MT), the European Union (1,35,599 MT), Southeast Asia (83,810 MT), Japan (40,776 MT), the Middle East (30,478 MT), and other countries combined (76,351 MT). Exports of Litopenaeus vannamei (L vannamei) and Black Tiger shrimp recorded growth in both volume and value.

The table below presents Indias seafood and frozen shrimp exports over the last five financial years.

Year	Total Seafoods (Qty in MT)	Value (Rs. Crore)	Frozen Shrimp (Qty in MT)	Value (Rs. Crore)
2024-25	1,698,170	62408.45	7,41,529	43,334.25
2023-24	1,781,602	60,523.89	7,16,004	40,013.54
2022-23	1,735,286	63,969.14	7,11,099	43,135.58
2021-22	1,369,264	57,586.48	7,28,123	42,706.04
2020-21	1,149,510	43,720.98	5,90,275	32,520.29

Source: Marine Products Export Development Authority (MPEDA)

3. GLOBAL SCENARIO

The global seafood industry continued to experience significant shifts during FY 2025-26, driven by changing trade policies, geopolitical developments, evolving consumer preferences, and increasing demand for value-added seafood products. India continued to maintain its position among the worlds leading shrimp exporters, supported by its robust aquaculture ecosystem, advanced processing infrastructure, and strong quality standards.

During the year, the industry experienced challenges arising from reciprocal tariff measures imposed by the U.S. Government. However, the subsequent reduction of reciprocal tariffs to 10% provided considerable relief to Indian exporters. Furthermore, the order directing the refund of reciprocal tariffs paid by Indian companies has significantly improved the outlook for exporters with substantial exposure to the U.S. market.

Despite continued competition from Ecuador and other low-cost producing countries, Indias strength in value-added shrimp processing, stringent quality systems, and diversified product portfolio continues to provide a sustainable competitive advantage. Increasing consumer preference for ready-to-cook and convenience seafood products across developed markets is creating attractive opportunities for Indian processors to improve product realization and operating margins.

In terms of overseas markets, the United States remained the leading importer of Indian seafood in value terms, with imports worth Rs. 20,263.27 crore (USD 2,328.74 million) and a total volume of 2,79,193 MT. Exports to the United States declined by 10.82 per cent in rupee value, 14.22 per cent in dollar value, and 19.51 per cent in volume. Frozen shrimp accounted for 93.55 per cent of the value of Indias seafood exports to the United States.

China emerged as the largest destination for Indian seafood exports in terms of quantity, importing 4,90,369 MT worth USD 1,611.32 million.

The European Union remained the third-largest destination in value terms, importing 2,97,518 MT worth USD 1,592.09 million. It was followed by Southeast Asia, which imported 4,51,756 MT valued at USD 1,348.97 million. Japan continued to be the fifth largest importer, with imports of 1,05,228 MT worth USD 452.91 million. The Middle East ranked sixth, importing 76,743 MT valued at USD 283 million. (Source: Marine Products Export Development Authority (MPEDA)

4. COMPANY OVERVIEW AND BUSINESS PERFORMANCE

Zeal Aqua Limited is engaged in the business of aquaculture, shrimp farming, processing and marketing of seafood products. The Company has developed its operations around aquaculture farming and seafood processing and continues to focus on strengthening its production and processing capabilities.

During FY 2025-26, the Company continued its operations in aquaculture and seafood processing and remained focused on improving production efficiency, product quality and market reach.

The Company has been developing its farming and processing infrastructure and has continued to focus on value addition through modern processing and freezing facilities. The Companys processing infrastructure includes IQF technology, plate freezers, blast freezers and brine freezing facilities, which support the production and preservation of frozen seafood products.

The Company also continues to work with its farming network and satellite farming activities with the objective of ensuring regular availability of quality raw material for processing.

FINANCIAL PERFORMANCE

The financial performance of the Company during FY 2025-26 remained satisfactory, with substantial growth in revenue from operations and improvement in profitability.

The key financial highlights are as follows:

Particulars	FY 2025-26	FY 2024-25	Change
Revenue from Operations (? Lakhs)	66,750.92	51,132.02	Increase of approx. 30.55%
Total Revenue / Income (? Lakhs)	68,595.94	52,100.52	Increase of approx. 31.66%
Profit Before Tax (? Lakhs)	1961.92	1488.91	Increase
Profit After Tax (? Lakhs)	1411.12	1005.99	Increase of approx. 39.70%
Basic EPS (?)	1.12	0.80	Increase

The above financial information is based on the Companys standalone financial results for the respective financial years.

Revenue from operations increased from ?51132.02 Lakhs in FY 2024-25 to approximately ?66,750.922 Lakhs in FY 2025-26. The increase reflects higher business activity and improved volumes during the year.

1005.993 Lakhs in FY 2024-25 to approximately 1411.127 Lakhs in FY 2025-26. Earnings per equity share increased from 0.80 to 1.12 during the year.

The improvement in profitability reflects the Companys continued focus on operational efficiency, processing activities, market opportunities and effective management of its resources.

Despite a challenging year marked by global trade uncertainties and temporary disruptions arising from the increase in U.S. tariff rates, the Company successfully maintained its profitability through effective inventory management, prudent cost optimization, and disciplined operational execution.

5. STRATEGIC INITIATIVES

The Company continues to strengthen its seafood processing operations through modern facilities, advanced technology, and internationally recognized quality and food safety standards. The diversification into renewable energy and biofuels through Zeal Aqua Limited, along with the solar power plant, reflects the Companys commitment to sustainable growth and operational efficiency. Going forward, the Company will focus on expanding value-added products, improving operational efficiencies, strengthening its global market presence, and creating long-term value for all stakeholders.

6. OUTLOOK FOR FY 2026-27

The outlook for Zeal Aqua Limited remains positive despite continuing global uncertainties. Improving demand for value-added seafood products, expanding opportunities in international markets, and expected to support sustainable growth and enhance the Companys overall financial performance. The Company will continue to focus on:

Expanding value-added seafood exports and strengthening its presence in key international markets.
Improving operational efficiencies through technology and process optimization.
Maintaining the highest standards of quality, food safety, and regulatory compliance.
Promoting sustainability through responsible sourcing and energy-efficient operations.
Maintaining prudent financial discipline and delivering long-term value to shareholders.

With its strong operational capabilities, diversified business portfolio, experienced management team, and established customer relationships, Zeal Aqua Limited is well positioned to capitalize on future growth opportunities in the seafood processing business.

Indias aquaculture and seafood sector continues to offer strong long-term growth prospects, supported by favorable government policies, increasing global demand for high-quality seafood, and the countrys competitive advantage in aquaculture and seafood exports.

The Company remains committed to strengthening its market position through operational excellence, value-added products, sustainable sourcing, and customer-focused growth initiatives. With its integrated business model and experienced management team, the Company is well positioned to capitalize on emerging opportunities and create long-term value for its stakeholders.

7. RISKS AND CONCERNS

Zeal Aqua Limited operates in the aquaculture and seafood processing and export industry, which is subject to various operational, market, environmental and regulatory risks. The Company continuously monitors these risks and takes appropriate measures to mitigate their potential impact on its operations and financial performance.

1. Aquaculture and Biological Risks:

The Companys operations are exposed to risks arising from disease outbreaks, mortality, water quality, weather conditions, changes in climatic conditions and other biological factors affecting shrimp cultivation. Such factors may adversely affect production volumes, quality and profitability.

2. Climate and Environmental Risks: Aquaculture activities are sensitive to changes in temperature, rainfall, salinity, water quality and other environmental conditions. Natural calamities, floods, cyclones and other extreme weather events may affect production and infrastructure.

3. Raw Material and Supply Chain Risks:

Availability, quality and prices of raw materials, including shrimp and other inputs, may fluctuate depending upon production conditions, demand-supply dynamics and market conditions. Disruptions in the supply chain, logistics or transportation may also impact the Companys operations.

4. Export and International Market Risks:

The Company is engaged in the export of processed seafood and is therefore exposed to changes in international demand, customer preferences, import regulations, tariffs, trade restrictions and geopolitical developments in various export markets. Any adverse changes in these factors may affect export volumes and margins.

5. Foreign Exchange Risk:

As a part of its business involves exports, fluctuations in foreign currency exchange rates may affect the Companys revenues, margins and profitability. The Company monitors its foreign exchange exposure and takes appropriate measures, where considered necessary, to mitigate such risks.

6. Price and Market Risk:

Prices of shrimp and processed seafood are influenced by global supply and demand, competition, consumer preferences, production levels and international market conditions. Significant fluctuations in selling prices may affect the Companys operating margins.

7. Regulatory and Compliance Risk:

The Companys operations are subject to various laws, regulations and standards relating to aquaculture, food safety, environmental protection, exports, labour and other applicable matters. Changes in regulatory requirements or non-compliance with applicable regulations may adversely affect the Companys operations.

8. Food Safety and Quality Risk:

The seafood processing and export business requires strict adherence to quality, hygiene and food safety standards. Any failure to maintain prescribed quality standards or contamination of products could adversely affect the Companys reputation, customer relationships and financial performance.

9. Logistics and Infrastructure Risk:

The Companys export operations depend on the availability of transportation, cold-chain facilities, refrigeration and other logistics infrastructure. Any disruption in these facilities may result in delays, additional costs or loss of inventory.

10. Customer and Concentration Risk:

The Company is exposed to risks associated with changes in customer demand,

8. OPPORTUNITIES & THREATS

Opportunities

Indias long coastline, favorable climate, and rich natural resources provide a strong base for aquaculture. The success of L. Vannamei farming demonstrates the potential to replicate similar models for other fish species. At the same time, Indias relatively low presence in value-added seafood presents significant opportunities to expand into high-margin, premium international markets.

The Company benefits from modern seafood processing facilities, strong quality and food safety standards, established customer relationships across key international markets, and a growing portfolio of value-added seafood products. Its diversification into renewable energy and biofuels further strengthens business resilience and supports sustainable growth. Rising global demand for value-added seafood products, expansion into new export markets, supportive government initiatives for the aquaculture sector, and continued investments in technology and sustainability provide significant growth opportunities.

Globally, seafood consumption continues to rise, driven by increasing health awareness and its positioning as a healthier alternative to red meat. Rising purchasing power, especially among the growing middle class, along with shifting dietary preferences, is further fueling demand for shrimp and diverse seafood options.

Threats

The aquaculture industry, including shrimp farming, faces several challenges that must be addressed to ensure sustainable growth. These are

Disease Related

Highly susceptible to outbreaks of diseases, which can significantly affect the availability of raw material (shrimp). To mitigate, the strategy is to strengthen traceability systems and adopt advanced pond management practices to enhance productivity, minimise disease risks, and ensure compliance with international food safety standards, thereby reinforcing consumer confidence.

Volatile Pricing

Global demand-supply imbalances can impact pricing, while exchange rate fluctuations can further amplify this volatility. To mitigate, the company practices proactive foreign exchange risk management to reduce the impact of currency fluctuations and demand-supply imbalances on realizations.

Global Headwinds

Rising inflation, geopolitical tensions, trade tariffs, higher freight costs, and dependence on imported SPF brood stock pose risks, while any demand slowdown in key markets like the USA, EU, and South-East Asia could significantly impact Indias shrimp exports. To mitigate, Zeal is diversifying across geographies, customer segments, and products, while placing greater emphasis on value added products to improve margins and strengthen resilience.

Conclusion

While the long-term outlook for the shrimp industry remains promising, caution is warranted. The business remains exposed to changes in global trade policies and tariffs, increasing competition from other seafood exporting countries, disease outbreaks in aquaculture, climate-related risks, and volatility in international demand and currency markets.

9. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Your company has three business segment trading Shrimp medicines and feeds, Shrimp Farming and Shrimp processing during the financial year 2025-26. The company was engaged in Shrimp Farming with allied activities. The performances are reflected in the balance sheet.

10. INTERNAL CONTROL SYSTEM

The Company has in place an adequate system of internal control commensurate with its size and nature of its business. These have been designed to provide reasonable assurance that all assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly and the business operations are conducted as per the prescribed policies and procedures of the Company. The Audit committee and the management have reviewed the adequacy of the internal control systems and suitable steps are taken to improve the same.

11. MATERIAL DEVELOPMENT IN HUMAN RESOURCES

The Companys shrimp processing and export operations require specialized expertise in the procurement of high-quality raw shrimp, processing, quality assurance, packaging, cold chain management, and compliance with stringent international food safety and regulatory standards. These critical functions are carried out by a team of qualified, skilled, and experienced professionals.

The Companys procurement and technical teams work closely with shrimp farmers and suppliers to ensure consistent quality, traceability, and adherence to global customer requirements.

The Company places significant emphasis on developing its human resources through regular technical training, food safety and hygiene programmes, skill enhancement initiatives, and awareness sessions on quality and regulatory compliance.

Performance-based incentives, periodic increments, and comprehensive employee welfare measures contribute to a motivated workforce and foster healthy industrial relations.

12. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Key Financial Ratios:

Pursuant to Schedule V(B) to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Particulars	FY 2025-26	FY 2024-25
Current Ratio	1.297	1.282
Debt-Equity Ratio	1.803	1.926
Total Outside Liability to Net Worth	2.300	2.717
Debt Service Coverage Ratio	2.178	2.036
Return on Equity	14.671%	11.965%
Inventory Turnover Ratio	4.096	3.319
Trade Receivables Turnover Ratio	6.499	5.477
Trade Payables Turnover Ratio	12.418	7.882
Net Capital Turnover Ratio	10.544	8.219
Net Profit Ratio	2.114%	1.967%
Return on Capital Employed	33.971%	32.868%
Return on Investment	6.197%	7.541%

The Companys Current Ratio improved marginally, while the Debt-Equity Ratio and Total Outside Liability to Net Worth improved during the year.

The Debt Service Coverage Ratio increased from 2.036 times to 2.178 times, indicating improved debt servicing capacity.

Return on Equity increased from 11.965% to 14.671%, while the Net Profit Ratio improved from 1.967% to 2.114%.

Inventory Turnover Ratio, Trade Receivables Turnover Ratio and Net Capital Turnover Ratio also improved during the year, indicating better utilisation of working capital and operating resources.

Interest Coverage Ratio

The companys Interest Coverage ratio of 1.92 during the current financial year (FY2026) which indicates that the Company has more than enough earnings to cover interest payments. This further indicates a sound financial health of the company.

Current Ratio

The company is well able to maintain its Current Ratio above 1 which it intended to in order to make sure it has enough resources to meet its short-term obligations.

In Lakhs (INR)	Current Assets	Current Liabilities	Current Ratio
FY2024	24,573.66	18,277.54	1.344
FY2025	27932.35	21786.56	1.282
FY2026	28476.13	21960.18	1.297

Debtors and Inventory Turnover Ratio

Debtors Turnover Ratio measures how many times a business can turn its accounts receivable into cash during a period. The company has been able to maintain a ratio of more than 3 in the past couple of years, indicating good liquidity. The inventory turnover ratio is an important measure as well which measures how well a company generates sales from its inventory.

Year	Debtor Turnover Ratio (Sales/ Receivable)	Inventory Turnover Ratio (Sales/ Inventory)
FY2024	5.299	2.683
FY2025	5.477	3.319
FY2026	6.499	4.096

Debt to Equity

The Debt Equity Ratio for the current financial year (FY 2026) is 1.803. The FY2024 Debt-to Equity ratio of the company is indicating that it is gradually moving to a stable capital structure, and is able to maintain its ratio well below the Industry average.

Operating Profit Margin (%)

The Company is moving towards a stable Operating Margin Ratio; after witnessing a couple of years of fluctuating margins.

In Lakhs (INR)	EBIT	Revenue from Operations	EBIT Margin
FY2024	1,025.41	39,780.42	2.58%
FY2025	1,754.51	51,132.02	3.43%
FY2026	2,250.94	66,750.92	3.37%

Net Profit Margin (%)

The companys FY2026 Net Profit increased by 40.28% as compared to the previous year, with satisfactory increase in the margin.

In Lakhs (INR)	Net Profit	Revenue From Operations	Net Profit Margin
FY2024	827.19	39,780.42	2%
FY2025	1005.93	51,132.02	1.98%
FY2026	1411.13	66,750.92	2.11%

Return on Net Worth

The company has maintained positive Return on Equity since long years. During the year company has attained positive return on equity of 14.67% which shows that the company is efficient to utilize the capital and investments so as to maximize the shareholders wealth.

In Lakhs (INR)	PAT	NET WORTH	RETURN ON NET WORTH
FY2024	827.19	7488.52	11%
FY2025	1005.93	8912.00	12%
FY2026	1411.13	10325.54	14.67%

13. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, expectations, estimates, projections and outlook 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 factors, including changes in economic conditions, market demand, prices, availability and cost of raw materials, aquaculture and biological risks, climatic and environmental conditions, changes in government policies and regulations, interest rates, competition and other risks and uncertainties.

The Company does not undertake to update or revise any forward-looking statements in light of future developments, except as may be required under applicable laws and regulations.

14. CONCLUSION

FY 2025-26 was a year of improved financial performance for the Company. Revenue from operations increased by approximately 30.55% while Profit after Tax increased by approximately 40.28%. The Companys EPS also improved from 0.798 to 1.119.

The improvement in profitability, return on equity, debt service coverage and working capital-related ratios reflects the Companys continued focus on operational performance and financial discipline.

The Management remains committed to sustainable growth, efficient utilisation of resources, prudent financial management and creation of long-term value for the Companys shareholders and other stakeholders.

By order of the Board of Directors For, Zeal Aqua Limited

Sd/- Sd/-

Pradipkumar Ratilal Navik Chairman and Managing Director (DIN: 01067716)

Shantilal Ishwarlal Patel Whole-Time Director (DIN:01362109)