Chamanlal Setia Exports Ltd Management Discussions

The global economy is again disrupted, this time with the outbreak of war in the Middle East. Rising commodity prices, firmer inflation expectations, and tighter financial conditions are testing the recent resilience.

Assuming that the conflict remains limited in duration and scope, global growth is projected at 3.1 percent in 2026 and 3.2 percent in 2027 reflecting the impact of supply-side constraints and evolving financial conditions.

Advanced economies grew by 1.9%, while emerging market and developing economies (EMDEs) grew at a stronger pace of 4.4%. Global trade continued to be influenced by persistent frictions and ongoing supply chain realignments. Concurrently, regional conflicts disrupted commodity markets. Rising energy prices created supply chain bottlenecks, exerting pressure on global cost structures. Overall, the global economy shifted from a phase of steady, technology- supported growth to an environment defined by heightened geopolitical uncertainty, supply-side disruptions and renewed inflationary prices.

The outlook remains exposed to downside risks, particularly from ongoing geopolitical tensions and continued regional conflicts, which are contributing to disruptions in energy markets and supply chains. Under adverse scenarios, global growth could weaken to around 2.5%, with inflation rising to approximately 5.4%. In more severe scenarios, growth could decline further to near 2%. Overall, the global economy is expected to maintain a relatively stable growth trajectory, albeit under heightened uncertainty and persistent inflationary pressures.

At this critical juncture, countries need to strengthen macroeconomics stability while promoting sustainable and inclusive growth. Governments should focus on prudent fiscal management, price stability, investment in infrastructure, digital transformation and innovation. Strengthening global trade cooperation, diversifying supply chains, accelerating the transition to clean energy, enhancing food and energy security and implementing structural reforms to improve productivity and resilience will be essential. Continued international cooperation and coordinated policy actions will help mitigate geopolitical risks, support financial stability and foster long-term economic growth.

INDIAN ECONOMY OVERVIEW

The Indian economy demonstrated strong resilience during FY 2025-26, supported by robust macroeconomic fundamentals, sustained by policy support and broadbased sectoral performance. Real GDP growth stood at 77%, higher than 71% in FY 2024-25, reflecting sustained economic momentum.

Growth was driven by strong domestic demand, with private consumption and investment remaining key contributors. This was further supported by favourable financial conditions and continued infrastructure spending. The services sector continued to lead growth, while manufacturing recorded robust expansion, indicating improving industrial activity and capacity utilisation.

As per Ministry of Finance, despite global uncertainty, India has displayed steady economic growth. India has moderated in many economies. Central banks are gradually easing monetary policy. Further digitalisation and AI adoption continue to accelerate and investment in renewable energy is also strong factor for growth. Agriculture & allied sectors growth supported by favourable monsoon conditions, higher food grain production and government support. Manufacturing sector has also shown expansion due to improvement in domestic demand and improving exports and production linked incentives. Due to expansion in renewable energy sector, urbanisation, rising industrial activity slow growth occurred in electricity, gas, water supply and utilities. High consumer spending, increasing travel, logistics expansions and recovery in tourism has shown growth in hotels & travel industry too. Services sector has also shown growth due to factors like telecommunication, financial services IT, healthcare and retail.

The Indian economy is expected to sustain steady growth in FY 2026-27, reflecting resilience amid global uncertainties. Domestic demand is likely to remain the primary growth driver, supported by stable consumption trends and continued infrastructure-led capital expenditure.

INDIAN AGRICULTURE SECTOR

The Indian agriculture sector is one of the largest in the world and remains a key pillar of the economy. It provides livelihood to about 45-46% of Indias workforce. The Indian Agriculture sector remained resilient during FY 2025-2026, supported by favourable monsoon conditions, improved crop productivity, strong government support and increasing adoption of modern farming practices.

Agriculture continued to play a vital role in ensuring food security, rural employment and overall economic stability despite global economics uncertainties and climate-related challenges.

In 2025-2026 showed significant growth and transformation, characterized by increased food grain and horticulture production, high wheat and rice reserves, and a strong government focus on digital innovation and farmer empowerment through initiatives including AI and machine learning for data analysis, satellite etc.

India achieved an estimated record foodgrain production of 376.56 million tonnes during the 2025-2026 crop year as per third advance estimates, reflecting robust growth in rice, wheat, maize, pulses and oilseeds. Agriculture and allied activities contribute approximately 18% of Indias Gross Value Added (GVA) and continue to support livelihoods for nearly half of the countrys workforce.

Likewise, India maintained its leadership in global rice exports, supported by abundant production and strong government stocks.

India is estimated to have exported around 20.1 million MT of rice during the year 2025-2026, reinforcing its position as the worlds largest rice exporter with an estimated 40% share of global rice trade, supported by record production and ample domestic supplies. Record production, improved domestic availability and easing of export restrictions strengthened Indias position as the worlds largest rice exporter.

Certain challenges persist in parallel, including fragmented landholdings, limited access to irrigation and quality inputs, low levels of mechanisation and investment, and stagnating yields across several crops and regions, which continue to limit productivity gains and farmer incomes. The GoI is undertaking several interventions to improve productivity in agriculture and allied sectors through a mix of policy measures, including programmes for technology, input and income support, strengthening infrastructure, and improvements in market linkages. Measures to improve diversification and sustainability have also positively impacted productivity.

While India remains comfortable in staple crops such as rice and wheat due to surplus stocks from previous seasons, fruits, vegetables, and rain-dependent crops may face production challenges if rainfall remains deficient. The countrys proactive planning and contingency measures aim to limit the impact of adverse weather conditions, helping safeguard farm output and farmer incomes despite monsoon-related uncertainties.

INDIAN RICE INDUSTRY

Rice is one of the most crucial food crops in the world and a staple diet for nearly half the global population. India accounts for more than 27% of the worlds rice production through its 48 million hectares of rice plantation area. Due to the favourable climatic condition prevailing in and with a record rice production of 154 million tonnes, India emerged as the largest producer of rice in the world in 2025-26 for the second consecutive year, accounting for a little over one- fourth of global rice production. India also contributes 25 percent of global rice production and 40 percent of global rice exports, exporting 13 to 14 percent of its domestic rice.

With vast agro-climatic diversity and soil types in India, our farmers cultivate a large variety of quality rice suitable for different tastes, and markets. India has emerged as the worlds largest producer of rice surpassing China. With self-sufficiency in food security, Indias rice sector now enjoys leadership in export in both Basmati and Non -Basmati Categories.

During the FY 2025-2026, Indian rice is exported to more than 170 countries, with major destination include Asia, Africa, Europe, the middle east and the Americas, reinforcing its position as the worlds leading rice exporter. Indias rice export value increased by about 17% in rupee terms compared with FY 2025-2026.The rise was driven by higher export volumes after the removal of export restrictions and continued strong global demand.

The Indian rice sector benefited from favourable weather conditions during 2025-2026. The southwest monsoon was above normal at around 105% of the Long Period Average (LPA) as forecast by the India Meteorological Department (IMD). The timely onset and widespread distribution of rainfall supported robust kharif sowing, improved water availability and contributed to record rice production during the year.

The leading rice-producing states were Uttar Pradesh, Telangana, West Bengal, Punjab, Chhattisgarh, Odisha, Madhya Pradesh, Bihar, Andhra Pradesh and Tamilnadu. Eastern, North- eastern and Southern are major rice-producing region because of a pleasant climate throughout the year.

Throughout history as per the Archeological evidence, rice has been one of mans most important foods for more than 5000 years. Today, this unique grain helps sustain two- thirds of the worlds population. Mainly the two major varieties of rice that dominate the Indian Market are basmati and non-basmati rice.

Rice is grown in India throughout the year heaving region-wise favourable rice growing seasons. Eastern, North- eastern and Southern are major rice-producing region because of a pleasant climate throughout the year.

During 2025-26 global rice production increased to 544.7 million metric tonnes, as compare to 535.4 million metric tonnes in previous year. The increase was driven primarily by India another favourable monsoon conditions and expanded planting, further by improved yields and higher output from Bangladesh, increased production from Thailand supported by better water availability and further due to improved growing conditions production gains from Cambodia.

The 2025-2026 season recorded the highest non-basmati rice volume as compared to previous years. During 20252026 export volume increased further to about 15.01 MMT , but export value declined to US$5.86 billion because of lower international rice prices despite higher shipments as per data from the Agricultural and processed Food Products Export Development Authority (APEDA).

INDIAN BASMATI RICE INDUSTRY

Indian Basmati rice is a unique long-grain aromatic rice, cultivated for centuries in the specific geographical region of the Himalayan foothills in the Indian subcontinent. Known for its extra-long, slender grains that elongate to at least twice their original size when cooked.

Among the several varieties of rice, Basmati is considered the most superior in terms of product characteristics and therefore, the most premium."Basmati"is long grain aromatic rice grown for many centuries in the specific geographical are , at the Himalayan foothills of Indian sub-continent, blessed with character is tics extra-longs lender grains that elongate at least twice of their original size with a characteristics soft and fluffy texture upon cooking, delicious taste, superior aroma, and distinct flavor, Basmati rice is unique among other aromatic long-grain rice varieties. Despite its popularity, basmati rice is not easy to come by outside of its native region. The grain is delicate and requires a specific climate to grow properly. As a result, basmati rice is expensive and difficult to find in most parts of the world.

Basmati is unique to the region. It can be grown where precise climatic conditions, soil quality and temperature exist and this only occurs in the Indo-Gangetic area of the Himalayas.

Grown in the specific regions in India Haryana, Punjab, Himachal Pradesh, Jammu and Kashmir, Western Uttar Pradesh, Uttarakhand and Delhi are the major basmati rice producing states in India. India exports basmati rice in the world to Iran, Saudi Arabia, Iraq, UAE, Kuwait, Iraq, the UK, Yemen Republic, USA, Canada and Oman.

India remains the worlds largest producer and exporter of basmati rice in 2026, maintaining a dominant position in premium rice exports despite geopolitical and logistics related challenges.

Basmati rice is majorly produced in India, with balance quantity from Pakistan. Indian Basmati rice has got Geographic Indication (GI) recognition. India has strong dominance in the export of basmati rice especially to the Middle East and accounting for about 85% of global basmati exports.

Introduction of higher yielding and shorter duration varieties has supported strong growth in Basmati production in the last two decades. New variety is increasingly adopted by farmers due to shorter growth cycle, lower irrigation requirements and higher yields compared to other traditional varieties.

During FY 2025-2026, India produced around 13.5 million tonnes of basmati rice and of that about 6.52 million metric tonnes of basmati rice, representing an increase of about 8% in export volume compared with previous year. Total export volume grew as compared to previous year because of strong production, competitive pricing and sustained demand from the Middle East and other international markets. Saudi Arabia, Iran, United Arab Emirates, Iraq and Yemen remained the principal buyers in 2025/2026.

Despite geopolitical challenges and logistical distruption in some markets, in the short-term, the outlook for the Indian Basmati rice industry remains stable. In, the medium term, demand prospects from key destinations such as Iraq, UAE, Yemen and Saudi Arabia will play a significant role and determine trade prospects.

Business Comparatives are given below:-

Ratios	F.Y. 2025-2026	F.Y. 2024-2025
1. Trade receivables turnover ratio	6.06	6.81
2. Inventory Turnover Ratio	2.99	2.99
3. Current Ratio	6.94	4.70
4. Debt. Equity Ratio	0.10	0.17
5. Net Profit ratio	8.20	726
6. Return on capital employed	17.81	18.35
7 Trade payable turnover ratio	111.13	121.66
8 Net Capital Turnover Ratio	1.67	1.99
9 Return on equity ratio	18.35	18.61

(1) The Debt Equity Ratio has come down to 0.10 in F.Y 2025-26 from 0.17 in F.Y 2024-25 which is better sign for a Business as a Company has Reduce Its Bank Borrowings From Rs 6110.69 Lakhs to Rs885.64 Lakhs.

OUR BUSINESS COMPANY OVERVIEW

Chaman Lal Setia Exports Limited was founded back in 1974 by Late Mr. Chaman Lal Setia, later on, it was incorporated as a partnership firm in 1983 and then reconstituted as a public limited company in 1994. The company got listed on the Bombay Stock Exchange in 1995 and further on the National Stock Exchange on the 12.05.2021. The company is engaged in the business of milling and processing of basmati rice. The company has been involved in export operations since 1982 and was recognized as an export house by the Ministry of Commerce in 1989, at present the company is a Star Export House. Currently the company exports to more than 95 countries around the world, which included European, Middle-eastern, American, Asian and many other markets.

As of FY 26, the company derived 88 % of its revenue from operations from exports, as compared to 84 % in FY25.

The company has a manufacturing unit located in Karnal (Haryana) which has an installed capacity of 12 metric tonnes per hour, this facility is a state of art and automated rice processing unit.

The company also has grading and sorting facilities in Karnal (Haryana) and Kandla (Gujarat). The company processes rice in-house and use parboiled, raw, steam process using the finest equipment to ensure physical, aromatic and taste qualities remain intact. The flagship brand of Chaman Lal Setia Exports Limited is Maharani rice, along with Mithas and Begum as other basmati brands. The company is also involved in selling non-basmati rice - under its brand Green World Aromatic Rice. The company also sells other innovative products such as Maharani Diabetics Rice, Basmati Rice Plus and organic products such as Maharani - Brown Basmati Rice.

KEY STRENGTHS AND WEAKNESSES

I. Experienced Management Team

With over 40 years of experience, the Company has developed resilience to industry challenges and has established strong market position across global markets while maintaining healthy relationships with international customers and suppliers. The management team has an experience of more than 4 decades in the rice industry and are supported by strong and competent 3rd generation promoters. Mr. Vijay Kumar Setia is a Chairman & Managing Director of the Company.

II. Favorable Manufacturing Locations

Company has manufacturing units in close proximity to paddy producing regions, as well as port to support its export business..

III. Diversified Client Base

The company has a loyal client base of more than 900 buyers spread across more than 95 countries.

HEALTH & SAFETY

The Company continuously focuses on the health and safety of all its workers and staff. Adequate safety measures have been taken at the plant for the prevention of accidents or other untoward incident. The necessary medical facilities are available for the workers and staff to maintain good health. During the pandemic worldwide, the Company ensures proper sanitization and safety measures. During the worldwide pandemic situation, the Company followed all the worldwide pandemic situation the Company followed all the norms and advisory issued by the Government of India/State Government..

STATUTORY COMPLIANCE

All the statutory compliance with respect to Securities and Exchange Board of India (Listing obligations and Disclosure Requirements) Regulations, 2015, Income Tax Act, GST, Companies Act, 2013 and all other applicable Acts, and Rules & Regulations are complied withh.

INTERNAL CONTROLS AND ADEQUACY

The Company has in place an adequate system of internal control commensurate with the size and nature of its business. These have been designed to provide reasonable assurance that all assets are safe guarded 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. authorized and recorded correctly. The Internal Auditors are submitting reports to the Company on a Quarterly basis.

The Audit Committee and the management have reviewed the adequacy of the internal control systems and suitable steps are taken to improve the same.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS

The Company has always valued its workforce as their biggest asset. The Company has pool of competitive, dedicated and enthusiastic personnel which is the driving force behind its accelerated growth. The Companys policies and practices ensure a favourable working environment with innovation and motivation.

Employee relations during the period under review continued to be healthy, cordial and harmonious at all levels and your Company is committed to maintaining good relations with the employees.

CAUTIONERY STATEMENT

Statements in the Management Discussion and Analysis, describing the Companys objective, projections, estimates, expectations, may be forward-looking statements. Actual results may differ materially from those expressed or implied due to various risks and uncertainties. Important factors that could make a difference to the Companys operations include economic and political conditions in India and other countries in which the Company operates, volatility in interest rates, changes in government regulations and policies, tax laws, statutes, and other incidental factors. Company disclaims any duty to update or amend any forward-looking statements to represent events or circumstances that might occur in the future.