GRM Overseas Ltd Management Discussions

INDUSTRY OVERVIEW

Economic Scenario

Global Economy

In 2020, the Covid-19 pandemic caused a ma or disruption to the global economy. Months of uncertainty and fear paralysed economic activity across sectors. Trade and tourism were halted, while ob and productivity losses increased dramatically. The world s economies endured an unparalleled slump as overnments around the world enacted lockdowns to tackle the rising Covid-19 outbreaks. iscal and monetary stimulus programmes were swiftly implemented to help rescue the economy.

ne year into the pandemic, economic recoveries are varying across nations and sectors, reflecting adoption of the new normal and the extent of policy support. The global growth is predicted to reach in 2021, before moderating to 4.4 in 2022. Source: orld Economic utlook . The future is uncertain and it will depend on the direction the pandemic takes, the effectiveness of policy support, and the pace of the vaccine-powered normalisation.

Indian Economy

In the pre-Covid-19 scenario, the Indian Economy continued the mid-single digit growth path. D growth has shown negative signs during current period post Covid-19 outbreak in the country. irst few cases of Covid-19 infection emerged in India in ebruary 2020. Travel restrictions and testing norms were put in place from 1st week of March and these intensified further in the following week leading to a complete lockdown of entire country on 24th March 2020.

M also announced a production shutdown across all its manufacturing units initially while, production resumed at some of our manufacturing units, after securing permissions for producing essential products.

Changing Dynamics of the Food and FMCG Sector

The MC landscape is undergoing a sea change with the emergence of Covid-19, which is also impacting consumer behavior across markets and geographies. e expect the following consumer trends to pick up in the post-Covid-19 world:

1. Increased consumer focus on health and hygiene, particularly on agri and food products, with a preference for packaged branded products

2. Discretionary spending would be curtailed due to shift of priorities towards essentials

3. Movement towards financial security to gain momentum

4. Technology to act as a catalyst for convenient, safe and enhanced consumer experiences

e also expect the industry to undergo recalibration of the supply chain and distribution network, with channels like e-commerce and Direct to Consumer gaining salience. ocal kirana grocery stores have seen a resurgence as proximity and availability of products came into prominence. These retail outlets may become more organi ed, digitally enabled, and serviced directly.

The Indian ood sector, which contributes to of the overall MC market, witnessed growth of -9 . hile the ood sector, riding on demand for consumer staples, has been growing at a good pace. Due to the extended lockdown in India, cooking at home was a big theme due to which convenience foods and cooking ingredients were in high demand.

Internal Control Systems and Their Adequacy:

M has an Internal Control System corresponding with the si e, scale and complexity of its operations. The scope and authority of the Internal Audit function are defined in the Internal Audit Manual. The Internal Audit function reports directly to the Chairman of the Audit Committee of the oard to the Chairman Managing Director to maintain its ob ectivity and independence.

The Internal Audit Department also monitors and evaluates the efficacy and ade uacy of the internal control system, its compliance with operating systems, accounting procedures and policies all across. ased on the internal audit function report, the committee undertakes corrective action in their respective areas, thereby strengthening the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the oard s Audit Committee.

Material Developments in Human Resources/ Industrial Relations, Including Number of the Employed

M as an organisation recognises human capital as an essential and strategic resource and honours the dignity of each employee irrespective of position, and highly values the cultural diversities of its employees. It believes in employee empowerment across the organisation to achieve organisational effectiveness. Special efforts are made to identify specific training needs to update the skills of the employees. uman esources continue to get the primary focus of the management and regard its human resources amongst its most valuable assets. It always has and will continue to invest in people during the year through the various training programme to keep its employees competent. As of the financial year ended 31st March 2021, M has employed a total of 430 employees inclusive of indirect employees.

Discussion on Financial Performance with respect to Operational Performance.

The Company recorded Consolidated operational revenue of 99.3 crores as compared to .1 crores during the previous financial year. The Company achieved E IDTA margin of .3 in 2020-2021 against .13 in 2019-2020.

The Company achieved Consolidated Earnings before Interest, Depreciation and Tax E IDTA of crores for the 2020-2021 against that of 4 crores for the 2019-2020.

The E S for the year increased to 121.92 per share as compared to .92 of last year.

BUSINESS OVERVIEW - GRM 2.0

GRM 2.0 is all about the company moving up the value chain. Its an evolution of the company for a sustainable future business model. Under GRM 2.0 we would be identifying, organizing and simplifying our entire business into two separate operating groups.

GRM Global Agri would solely focus on Contract Research Manufacturing Services CRAMS in asmati Rice, globally.

GRM oods would initiate new avenues for their rands into foods staple, globally.

oth these segments will have crystal clear focus, and the result would be beneficial for our global customers, communities and our businesses. Our years of experience and hard word have laid the perfect platform for GRM 2.0. Its centred on building on our brand laurels and pressing the full throttle to unlock the immense potential that brand GRM possesses. All this would happen smoothly while our brand continues to grow our core business.

5E Strategy For GRM 2.0

GRM Overseas has experience of over decades and is the rd largest exporter of asmati Rice to Gulf Region and th largest globally. Previous GRM had framed strategies and accordingly new brands were launched. The brand were launched initially in UK and followed by the Gulf region.

Under GRM 2.0 the company has decided to enter the ever-attractive and ever-growing Indian market with its own brand. Our focus would be to enter not only the rice segment but also the entire food staple space. Our extensive R D team will keep on its hard work and we would keep launching various products in the MCG space. Over the coming time we would like to leverage ourselves from just a company in the rice segment to a key organisation in the Indian MCG space. And to penetrate in this space we have formulated E strategy that would help us in steering into the MCG space.

SWOT Analysis

Strengths

More than years of experience in the agri-food industry

Exporting to countries. Leading exporter to gulf region, with a global footprint expanding rapidly

State-of-the-art facilities with collective capacity of 2,000 MT per day to cater growing domestic and international demand

ell established distribution network

Tie-up with reputed customers like ASDA almart U , T. . Morris and B M in the U Albert Heign in Holland and Metro in oland and Carrefour in the UAE

Superior product quality, consistent supply and competitive pricing

Weakness

Rice production is strongly dependent on weather conditions, rainfall and other climatic conditions

eather, disease and pests affect both the quantity and quality of rice produced

Due to required ageing of rice to enhance and maintain quality, the working capital cycle requirement is higher.

Opportunities

RM making increasing efforts towards its own brand development, as it allows for differentiation in a rice industry, makes way for greater market acceptance, and imparts ability to develop a pricing premium in the long term. The Company has launched own branded products in European retailers and is focused on expanding sales of own branded products to newer geographies

Acquired manufacturing facility in andhidham, which is in proximity to the Mundra port, provides opportunity to focus on operationally efficient export oriented production and helps to supports to augment exports

The future of Basmati is very bright in India. Indian consumption is only around 20% of basmati production in the country. As per capita income in India grows, domestic market will further see growth in Indian market. It offers an opportunityof growth in sales by double digits for next 10 years

There are a very few nation-wide playersand being in a niche segment like basmati rice and have other speciality rice like red rice, organic rice,, brown rice etc., we find a good opportunity therein. RM is expanding business in India to serve eneral Trade, Modern Trade and Horeca. Our tie-up with MA consumers, Dubai to promote in-house brands makes the growth coming from everywhere

Threats

Recessionary trend in the global economy and increasing trade barriers in the international markets impacts demand adversely

In Basmati rice exports, India only competes with akistan. ith increasing competition from akistan may impact India s dominance in the global Basmati market

Competition from domestic unorganized sector players who accounting for nearly half of the Basmati market, pose a threat to the large organized players like RM, particularly in general trade.

Cautionary Statement

The document contains statements about expected future events, financial and operating results of RM Overseas Limited, which are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the management s discussion and analysis of RM Overseas Limited s Annual Report, FY20-21.