Prospect Commodities Ltd Management Discussions

Pursuant to Schedule V of the Listing Regulations, the Management Discussion and Analysis Report is given below:

1. ECONOMIC OVERVIEW

Indias Economic Performance in FY 2024-25

Indias GDP growth of approximately 6.5-7.2% in FY 2024-25 positioned it as one of the worlds fastest-growing major economies, demonstrating remarkable resilience amid global economic headwinds. While advanced economies grappled with persistent inflation, supply chain disruptions, and geopolitical tensions that moderated their growth, Indias robust domestic demand, strategic government-led capital expenditure, and focus on manufacturing self-reliance provided strong economic momentum. Prudent government efforts, changing consumer patterns, and strong capital markets drove Indias growth story through deep, structural transformation rather than just numerical expansion.

The FMCG sector emerged as a key beneficiary of this economic dynamism, powered by rising rural incomes from improved agricultural productivity and welfare schemes, accelerating urbanization that expanded consumer markets, and enhanced retail infrastructure including e-commerce penetration. This created a virtuous cycle where increased domestic consumption supported manufacturing growth, which in turn generated employment and further boosted consumer spending. Indias achievement of becoming a $4 trillion economy in 2025 underscores the scale and significance of this growth trajectory.

Looking ahead, Indias economic model of balancing self-reliance with global integration appears well-positioned to sustain growth momentum. With GDP expected to grow between 6.3 and 6.8 percent in FY26, the economys fundamental strengths - strong domestic markets, infrastructure investment, and manufacturing capabilities - suggest continued out performance relative to global peers facing more challenging economic conditions.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS Global Dry Fruits & Cashew Industry

The global dry fruits and nuts market is a fast-expanding segment of the broader packaged foods industry. According to IMARC Group, the global dry fruit market was valued at approximately USD 9.8 billion in 2023 and is projected to grow at a CAGR of 4.5% between 2024-2030, driven by rising health consciousness, premium snacking trends, and demand for plant-based protein sources. Within this space, cashews form a high-value niche due to their premium positioning, taste profile, and versatility in food processing.

The global cashew market alone was valued at USD 6.2 billion in 2023 and is forecasted to reach USD 8.9 billion by 2030, growing at a CAGR of 5.2%. Major consumption markets include the US, Europe, China, and the Middle East, with India and Vietnam being the largest processors and exporters globally. Increasing applications in confectionery, bakery, plant-based dairy alternatives, and ready-to-eat snacks are further boosting demand.

Indian Dry Fruits & Cashew Industry

India is the largest consumer and second-largest producer of cashews in the world, accounting for over 20% of global production. The Indian cashew processing industry handles around 1.8 million tons annually, with major production states being Kerala, Karnataka, Goa, Maharashtra, Andhra Pradesh, and Odisha. The domestic market for dry fruits in India was valued at Rs. 30,000 crore in 2023, and is expected to grow at a CAGR of 10-12% over the next five years, aided by rising disposable incomes, urbanization, and health-focused consumption patterns.

Cashews dominate the premium segment of the Indian dry fruit category, with retail prices ranging between Rs. 800- Rs. 1,200 per kg depending on grade and quality. The Indian cashew kernel market is projected to grow at a CAGR of 8% between 2024-2030, supported by both rising domestic demand and export opportunities.

Export Potential and Policy Support

India exports cashew kernels worth approximately USD 400-500 million annually, with major markets being the UAE, USA, Netherlands, Japan, and Saudi Arabia. Export growth is supported by APEDA (Agricultural and Processed Food Products Export Development Authority) through branding, quality certification, and market access initiatives.

Government policies are enabling further expansion:

Production Linked Incentive (PLI) Scheme for Food Processing - Offers financial incentives for value-added processing and branding of cashews and other dry fruits.

PM Formalisation of Micro Food Processing Enterprises (PM-FME) Scheme - Provides grants and credit-linked support for modernisation, technology upgrades, and capacity expansion.

APEDA Export Promotion Programs - Focused on promoting "Brand India" cashews in overseas markets.

Reduction in Import Duties for raw cashew nuts to support domestic processors.

Emerging Trends in Dry Fruit FMCG

Premiumization: Growth of flavored, roasted, and gourmet cashew variants, with exotic seasonings like peri-peri, masala, and chocolate-coated offerings.

Health & Wellness Positioning: Cashews marketed as rich in plant protein, healthy fats, and micronutrients.

E-commerce & D2C Growth: Online dry fruit sales are growing at 20%+ CAGR, creating opportunities for branded players to reach pan-India audiences.

Portfolio Diversification: Players expanding from cashews into almonds, pistachios, walnuts, and blended dry fruit packs to capture a larger share of consumer spend.

3. BUSINESS OVERVIEW

Company Profile

Prospect Consumer Limited is a leading player in the cashew processing and premium dry fruits industry in India. The Company specializes in sourcing, processing, and distribution of high-quality cashew kernels and other premium dry fruits across domestic and international markets. With a focus on quality, innovation, and customer satisfaction, the Company has established itself as a trusted brand in the organized dry fruits segment.

Business Model

The Company operates an integrated business model that encompasses:

Sourcing & Processing: Direct sourcing of raw cashews through strategic partnerships, including the joint venture with Africa Negoce for West African cashew procurement, ensuring quality control and cost optimization.

Product Portfolio: Premium cashew kernels, almonds, pistachios, and innovative flavored variants catering to evolving consumer preferences in the healthy snacking segment.

Distribution Network: Multi-channel distribution strategy covering traditional trade through a robust distributor network, modern retail partnerships with leading supermarket chains, and growing presence in e-commerce platforms including Amazon, Jio Mart, and ONDC.

Operational Performance

1. Manufacturing & Capacity

• Successfully ramped up from a legacy ~500 MTPA cashew-processing setup to a modern, automated facility exceeding 2,500 MTPA by end of FY 2024-25.

• Infrastructure is scalable: plans are underway to expand to around 4,800 MTPA in the next 12- 18 months, with potential further growth to 6,000+ MTPA as demand strengthens.

• Automation investments have significantly improved throughput, consistency, and operational efficiency.

2. Sourcing & Supply Chain

• Direct procurement from Africa, including a strategic JV/partnership structure, streamlined the supply chain. This approach helped control costs and secure steady raw-material inflows with weekly shipments.

• These efforts strengthened working-capital efficiency and reduced dependency on intermediaries.

3. Product Portfolio & Packaging

• Expanded the product range to over 35 SKUs, covering multiple kernel grades and value-added by-products.

• Entered the premium segment with six flavoured variants, both in kernel and value- added forms.

• Launched high-quality packaging — including nitrogen-flushed tins (100 g, 250 g, 400 g) and convenient 35 g on-the-go pouches — optimized for freshness, taste, and consumer convenience.

4. Market Access & Sales Channels

• Continued strong presence in traditional B2B channels, while B2C/D2C business gained traction via Amazon, Jio Mart, and ONDC. Additional rollouts are planned on Flipkart, Big Basket, and quick-commerce platforms.

• Retail SKUs are designed for the premium consumer segment, helping differentiate the brand and attract higher engagement.

• Early-stage exports (primarily to the U.S.) are emerging and expected to grow as capacity and brand awareness improve.

7. Outlook

• The company is targeting robust growth driven by capacity expansion to ~4,800 MTPA, enhanced sourcing efficiencies, and broader retail reach.

• A focus on product innovation, premium packaging, and multi-channel distribution is expected to enhance market penetration and brand equity.

4. FINANCIAL PERFORMANCE

• For the financial year ended March 31, 2025, the Company recorded revenues of Rs. 30.99 crore, reflecting a 27.7% increase over FY24. Total expenditure stood at Rs. 26.86 crore, resulting in an EBITDA of Rs. 4.25 crore, up 40.7% from Rs. 3.02 crore in FY24. Profit Before Tax rose to Rs. 2.79 crore, while Profit After Tax stood at Rs. 2.14 crore, representing 23.7% growth compared to Rs. 1.73 crore in FY24. The Company reported an EPS of Rs. 4.03 for the year.

• On the balance sheet front, net worth nearly doubled to Rs. 23.95 crore, compared to Rs. 12.61 crore in FY24, supported by strong reserves growth. Total assets expanded to Rs. 31.48 crore, a 78% increase over FY24, with healthy contributions from inventories, trade receivables, and cash balances, underscoring improved scale and financial strength.

Key Competitive Advantages

Supply Chain Integration: The joint venture with Africa Negoce has delivered up to 20% savings in procurement costs while ensuring reliable supply chain operations and quality consistency.

Quality Focus: Stringent quality control measures and certifications position the Company as a premium player in the organized cashew processing industry.

Innovation Pipeline: Continuous product development with six new flavored cashew variants launched in FY25, addressing the premiumization trend in dry fruits consumption.

Market Access: Strong relationships with distributors, modern trade partners, and e- commerce platforms providing pan-India reach and market penetration capabilities.

5. OPPORTUNITIES AND OUTLOOK Market Opportunity

The Total Addressable Market (TAM) for Prospect Consumer spans the Rs. 30,000 crore domestic dry fruits market, the USD 6.2 billion global cashew segment, and a share of the larger USD 9.8 billion global dry fruits industry. The shift toward branded, value-added, and flavored dry fruits offers significant room for scale in both domestic and export markets.

Indias packaged dry fruits market is expected to grow at a CAGR of over 12% in the next five years, driven by rising disposable incomes, urbanization, and increasing preference for healthy snacking. As one of the most organized and quality-focused players in the cashew processing and distribution industry, Prospect Consumer is well-positioned to capitalize on this opportunity.

Strategic Focus Areas

With the FMCG sector expected to grow at a CAGR of 8-10% over the next five years, Prospect Consumer is well-positioned to leverage its strong distribution network, brand portfolio, and innovation pipeline. Our focus areas include:

Product Portfolio Expansion: Expanding product range in health, wellness, and convenience foods beyond core cashew offerings

Market Penetration: Increasing rural penetration through micro-distribution and affordable SKUs

Channel Development: Scaling presence in modern retail and e-commerce channels while strengthening traditional trade

Technology Integration: Leveraging data analytics for consumer insights and targeted marketing

Supply Chain Optimization: Further enhancing procurement efficiency and quality control through strategic partnerships

Long-term Vision

Our long-term vision is to become a leading FMCG player with a presence across all major consumption categories in the premium dry fruits and healthy snacking segment, driving value for both consumers and shareholders through consistent innovation, quality excellence, and market expansion.

6. THE DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

During the financial year, the details of significant change in the key financial ratios i.e. change of more than 25% as compared to the previous year along with the detailed explanation is summarized below on standalone basis:

Particulars	2024-25(%)	2023-24(%)	Change in Ratio (%)	Explanation if deviation is more than 25%
Current Ratio	3.77	4.12	-8.55%	NA
Debt-Equity Ratio	0.22	0.22	-1.03%	NA
Debt Service Coverage Ratio	3.04	6.62	-54.13%	Companies debt services increase but simultaneously profit not increase in same line so the ratio has decrease
Return on Equity Ratio	9%	14%	-34.55%	Company has issued new share capital through preferential allotment so the ratio has decreased
Inventory turnover ratio	4.17	6.66	-37.37%	Company operation and efficiency has been increased because of which sales has been increased and accodinly investory ratio has decreased
Trade Receivables turnover ratio	4.34	4.23	2.57%	NA
Trade payables turnover ratio	17.37	18.22	-4.67%	NA
Net capital turnover ratio	1.56	1.97	-21.03%	NA
Net profit ratio	7%	7%	-1.00%	NA
Return on Capital employed	13%	21%	-34.28%	Company operation and efficiency has been increased because of which sales and profit has been increased.
Return on investment	0.89%	0.98%	-8.64%	NA

7. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT INCLUDING NUMBER OF PEOPLE EMPLOYED

The Company gives utmost importance to the capacity-building and well-being of its employees. The Industrial Relations in the Company continued to be on a cordial note. There are regular interactions between the management and Employees. The Company has an atmosphere of trust and cooperation, which results in a motivated work force and consistent growth in the performance. The total employee strength as on March 31, 2024 is Nine.

8. CAUTIONARY STATEMENT

Statements in this management discussion and analysis describing the Companys objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable laws and regulations. Actual results may differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in the industry - global or domestic or both, significant changes in political and economic environment in India, applicable statues, litigations etc.