Basant Agro Tech (India) Ltd Management Discussions

Company Profile

The company holds a prominent position in the agriculture sector and is recognized as one of Maharashtras leading manufacturers of a wide range of agricultural inputs. Our product portfolio includes SSP Fertilizer, various hybrid seeds and NPK mixture granulated fertilizers. Most recently the Company has diversified into Warehousing, Cold Storage and LABSA manufacturing. The companys trademark, "Krishi Sanjivani," stands as a symbol of quality and is highly regarded by the farming community and customers.

Our production facilities are strategically located in different states, including Maharashtra, Karnataka, and Madhya Pradesh. In addition to our core agricultural operations, the company is actively involved in the generation of power through wind turbines and the operation and maintenance of warehousing and cold storage facilities.

Furthermore, the successful establishment of a pipe manufacturing plant in Akola, Maharashtra, positions us to meet the growing demand for drip irrigation systems, sprinklers, and HDPE portal water pipes. This expansion aligns naturally with our commitment to serving the burgeoning rural markets.

Economic Overview

Agriculture is the third largest sector of Indian Economy, which contributes around 17% of total GDP of the Country. Fertilizer Industry, with the emerging scenario, plays a vital role in the growth of Agriculture Sector. The balanced use of chemical fertilizer is important not only for increasing agricultural productivity but also for sustaining soil fertility. Single Super Phosphate is a multi-nutrient fertilizer containing phosphate (16%) and sulphur (11%) as primary nutrients. SSP is applied as a basal fertilizer being rich in secondary nutrients like calcium and magnesium oxide and several micro nutrients. It is an essential Fertilizer for crops likes Oilseeds, Pulses, Sugarcane, Fruits and Vegetables, Tea etc. and for sulphur deficient soils. Growth of Industries and openings of MNCs have not yet declined the importance of agriculture in India. Economic development is not a sole function of Industrial development; it also includes development of agriculture. Sustainable development is the need of the time and it can only be achieved through balanced growth of both agriculture and Industrial sector. There is a popular saying Countries are known for their greenery, and India is one of those countries. Growth of agriculture and growth of fertilizer Industry supplement each other. Both go hand in hand.

To feed the population there is a need to increase food grain production. To increase agricultural production and diversify the agricultural base, the government focuses on irrigation, adoption of new agricultural technologies, credit facilities to farmers and the use of various agriculture input like better quality seeds, efficient and balanced use of fertilizers and insecticides. Fertiliser is one of the main agricultural input for increasing food grain production. It strengthens the soil and enhances its fertility. The productivity of agricultural land has to be necessarily improved with increased use of agricultural inputs like quality seeds, fertilisers, water, agro-chemicals etc., for better crop yields. Among the different agricultural inputs and practices required for good production, the use of the fertilisers together with quality seeds and water are the most important. Fertilizers provide plants with the food they need for their growth and development. India needs to increase its yield in comparison to developed countries keeping in mind the growing population. Yeild can be improved with proper use of fertilisers.

The Government has been consistently pursuing policies conducive to increase the consumption of fertilizers containing all types of nutrients by the farmers at affordable prices in the country to increase the food grain production. Every year the demand for the SSP fertilizers increases as it is the poor farmers choice of fertilizer. It also helps to treat sulphur deficiency in soil (40% Indian soil is sulphur deficient) as well as for further enhancement of yields at the least cost. Governments continuous thrust to encourage SSP to substitute imports of DAP and NPK is an indicator of upward trend in the Industrys future.

The Company is producing SSP, which contains Phosphate, Sulphur, Calcium and other micro nutrients and could be said to be a ‘Multi Nutrient Fertilizer. The fertilizer industry including SSP is a working capital intensive industry. Therefore interest rates and delay in disbursement of subsidy are always matters of concern to the Company. The agriculture industries are totally depending on the monsoon conditions.

Current and Future Outlook

The year 2022-23 saw the operations begin in a global uncertainty following the Russia Ukraine conflict. This geo political situation led to an unprecedented rise in prices of rock phosphate which is the major raw material for the Company. This conflict also led to closure of several businesses in Europe due to high energy costs and subsequently there was a acute shortage of raw material in prices of Sulphuric acid and related chemicals.

Every year, the company continues to enhance its performance, consistently surpassing its previous records, even in the face of challenging environments and difficult periods. In the fiscal year 2022-23, the Company achieved remarkable milestones. The companys performance was exceptional, as evidenced by a significant increase in its operational revenue, reaching a new pinnacle of Rs. 549.26 Cr.

The fertilizer division, in particular, exhibited outstanding performance, with operational revenue hitting a record high of Rs. 314.03 Cr. The seed division also excelled, achieving a new high of Rs. 150.12Cr. The exceptional performance of the fertilizer division was especially noteworthy in light of the challenging conditions in the 2022-23 fiscal year. Steep increases in commodity prices, particularly Rock Phosphate and sulfur, which are essential raw materials for SSP fertilizer production, posed unprecedented challenges. Additionally, the governments decision to cap subsidy rates within the Nutrient-Based Subsidy Policy for the year further pushed up SSP fertilizer prices, making it less competitive compared to other phosphatic fertilizers benefiting from full subsidy rates.

The GOI has recently initiated the pilot project for the final stage of Direct Benefit Transfer to the farmers. Hopefully in a few years this may also be fully implemented. The GOI has now created a separate division within the Ministry of Fertilizers for SSP to encourage production and address issues of the industry.

The plants of the Company are located at the Consumption center thereby the Company is in advantageous position over its competitors as agriculture produce can be made available to the farmers without delay at reasonable prices. The Company is continuously and gradually expanding all its activities especially in terms of its product range, volume of seed handled, level of seed distribution and have developed adequate level of specialization and competence in handling and managing various segments of seed improvement on scientifically sound and commercially viable terms. Emphasis has been given by the Company to develop seeds having traits such as insect / pest resistance, herbicide tolerance, disease resistance, etc. so that crop yields can be increased, farm costs can be reduced. The consistent, stable, and sustainable growth, improving its operational efficiencies and achieving better profitability along with the highest standard of quality, safety and productivity are the prime objectives of the Company. With a view to educate the farmers about the improved and modern techniques of cultivations, the Company arranges the ‘krishi melas at different locations wherein on field demonstrations has been given to the farmers about the output per acre of land by using the Hybrid seeds and appropriate fertilizers. The advantages of seeds replacement, soil improvements, efficient use of water and fertilizers, beneficial cropping pattern etc. are explained to the farmers in the said melas. By launching technologically superior seeds with less disease vulnerability, at reasonable prices, the Company has gained the confidence of the farming communities over the years. The Company has developed hybrid seeds for high yielding and pest resistant varieties of crops suitable for different agro-climatic zones. Land and water resources being limited, increased agricultural production by using advanced agronomical practices like use of Micro-irrigation technologies and also by using Balanced Chemical fertilizers and hybrid seeds is of immense importance to meet the requirement of the increasing population. Hence timely availability of quality seeds at affordable prices to farmers is necessary for achieving higher agricultural productivity

Opportunities and threats

The raw material prices of Rock Phosphate remained high throughout the year mainly due to global sentiment and demand from new industry constraints in domestic and global situations has led to a acute shortage of material from suppliers leading to increase in prices. SSP fertilizers are based on imported raw-materials which can face severe volatility in prices and foreign currency exchange rates, affecting the profitability of the Company. Agro-Climatic conditions also have a large effect on the performance of the Company. Delay in subsidy payments, uncertainty of monsoon, volatile international market of raw material, seasonal consumption of fertilizer mainly in two months each in Kharif and Rabi, lack of awareness of benefits of SSP consumption amongst farmer fraternity, clubbed with logistics availability/ cost and higher requirement of working capital shall remain concerns for the Industry & of the Company.

A good monsoon which has been forecasted will greatly help the company to achieve its target. The Government has been consistently pursuing policies conducive to increase consumption of fertilizers containing all types of nutrient by the farmers at affordable prices in the country to increase the food grain production. The Government is taking positive steps to boost SSP Production with "Make in India" initiatives and discouraging DAP imports which will revive SSP industry. The coming year is with the prediction of a favourable monsoon and the company is ready to capitalize this opportunity.

The plants of the Company are located at the consumption center thereby the Company is in an advantageous position over its competitors as agriculture produce can be made available to the farmers without delay at reasonable prices

Human Resources / Safety Management System

Human Resources are one of the most important ingredients for growth. The Company considers its highly motivated and well-maintained employees its most valuable assets of the Company. Company strongly believes in continuously taking steps towards the talent growth , leadership development, and employee engagement.

The Company therefore strives to align human resource policy and initiatives to meet business plans. Training of employees to maintain high level of motivation is an ongoing process. Industrial relations at all the units remained cordial during the year. Health & safety Management system in the Company aims at to reduce, eliminate or control workplace hazards and associated risks of accidents or injuries to the workers. We provide sufficient information, instructions, training and supervision to enable all workers to identify, minimize and manage hazards and contribute positively to safety at works

Cautionary Statement

This Management Discussion and Analysis Report contains statement about the Companys future plans, projections, estimates, expectations may be forward looking statements within the meaning of applicable laws and regulation. Actual result could however differ materially from those expressed or implied in this statement due to factors beyond control of the Company like, monsoon condition, economic condition, government policies and regulations etc.