Nirman Agri Genetics Ltd Management Discussions

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Prospectus. You should also read the section entitled "Risk Factors" on page

18, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources.

Our financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the ICDR Regulations and restated as described in the report of our auditor dated January 04, 2023 which is included in this Draft Prospectus under "Financial Statements". The Restated Financial Information has been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. Our financial year ends on March 31 of each year, and all references to a particular financial year are to the twelvemonth period ended March 31 of that year.

Business Overview

We are one of the organized Agri-Input Company in India engaged in the business of production, processing and marketing of high-quality hybrid seeds, Pesticides, Bio-organic for different crops like corn, sunflower, cotton, paddy, grain sorghum, etc. and have recently forayed into micronutrients and bioproducts. We also produce non-hybrid seeds, primarily for paddy.

Our Promoter and Managing Director, Pranav Kailas Bagal, is a Diploma holder in Agriculture from National Backward Krushi Vidhyapeeth, Solapur, Maharashtra. He has around six years of experience in the field of Marketing of Agriculture inputs, managing customer relations and trade terms, managing manufacturing and supply chain strategies, managing costs and establish strategic partnerships with farmers, vendors and service providers etc. He has been associated with our Company as Director since incorporation. Prior to starting our Company, he has done Agri-inputs business in Proprietary concern M/s. Nirman Agri Genetics from 2018 till the time same is taken over by our Company and before that he has worked as Marketing Manager with Shivam Krushi Sheti Udhyog Kendra engaged in whole sale and retail distribution of seeds, pesticides, fertilisers and agriculture related equipments.

We have attained over four years of experience in this seed business through our Company and Proprietary concern of our Promoter and are working towards our objective of developing seeds having superior yield potential, drought tolerance, tolerance to pests and diseases etc.

We currently have production, processing and R&D facilities in Maharashtra at Nashik and Nimgul. Our research mainly focuses on developing superior hybrids in different crops like corn, cotton, sunflower, paddy, bajra, etc. All the seed varieties developed by our R&D team are marketed under the brand name of ‘Nirman Agri Genetics. We expect our R&D facilities to drive the future growth of our Company.

In the year 2022, we began to market bio-pesticides, bio-fertilizers, micronutrients, fertilizer mixtures & plant growth regulators under the name and style of "Nirman Agri Genetics". Seeds, bio-fertilizers, micronutrients etc. are related products having the same end user i.e. the farmer, and are usually sold through similar dealer networks. With a view of achieving the benefit of synergy in marketing the aforesaid products we have recently added them to our products portfolio. We believe that this addition of products would enable us to address the needs of the farmers like plant protection and nourishment. We started a processing unit at Nashik and are marketing its products in some parts of southern India and Maharashtra. We have marketing network with loyal and committed distributors / dealers in Maharashtra Madhya Pradesh & Gujarat.

Our focus is to become a leading crop solutions provider to the farmer by supplying high yielding hybrid seeds and crop management through micronutrients, bioproducts etc. For achieving this, we are engaging in research and development efforts in the areas of superior breeding programmes and biotechnology tools that will enable us to develop highly effective and differentiated hybrid seeds, micronutrients and bioproducts.

OUR STRENGTHS

1. Hybrid Seeds for wide range of Crops

2. Founder-led experienced management team

3. Established Brand

4. Research & Development capabilities

5. Marketing and Distribution of synergistic products

OUR BUSINESS STRATEGIES

1. Venturing in to high value segments

2. Venturing in to new Crops

3. Expansion in to new geographies

4. Expansion of marketing and distribution network

Significant Developments Subsequent to the Last Financial Period

In the opinion of the Board of Directors of our Company, other than as mentioned below, since the date of the last financial statements disclosed in this Draft Prospectus, there have not arisen any circumstance that materially or adversely affect or are likely to affect the business or profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months.

Allotment of Equity Shares:

Following Equity Shares were issued by our Company after the date of last financial statements i.e. October 31, 2022:

Date of Allotment	No. of Equity Shares	Face Value ( )	Issue Price ( )	Nature / Reason of Allotment	Nature of Consideration
December 02, 2022	11,00,000	10	10	Allotment pursuant to acquisition of Proprietary Concern	Other than Cash
December 02, 2022	2,50,000	10	10	Rights Issue	Cash

COVID 19 Pandemic:

An outbreak of COVID-19 was notified as a pandemic by the WHO on March 11, 2020. In response to the COVID-19 outbreak, the governments of many countries, including India, have taken preventive or protective actions such as imposing country-wide lockdowns, as well as restrictions on travel and business operations. Since May 2020 many of these measures have been lifted. Due to a government mandated lockdown in India, we had to temporarily shut down our operations from mid-March 2020 to April 2020. We have resumed operations slowly from May 2020. We proactively engaged with our clients to reassure them and to demonstrate our commitment to restart our operations and to build confidence in the safety protocols deployed at our office. As a result, we have since experienced a gradual increase in business.

Key factors affecting the results of operation:

Our Companys future results of operations could be affected potentially by the following factors:

Competition

Our Company faces significant competition from other companies operating in the markets in India as well as overseas in which we operate. Some of these firms have greater resources and/or a more widely known brand than we have, which may give them a competitive advantage. Our ability to grow revenues will depend on demand for our services in preference to those of its competitors.

Growth in the Indian economy

General economic conditions in India have a significant impact on our results of operations. The Indian economy has grown rapidly over the past decade and is expected to continue to grow in the future. We believe growth in the overall economy has driven, and will drive, the underlying demand for our products

Regulatory developments

Our Company is regulated by the Companies Act and some of its activities are subject to supervision and regulation by statutory and regulatory authorities. It is therefore subject to changes in Indian law, as well as to changes in regulation and government policies and accounting principles.

Fluctuations in demand for our services

Supply and demand market conditions are affected by various factors outside our control, including: prevailing local economic, income and demographic conditions; changes in applicable regulatory schemes; and competition from other players.

Other factors

1. Company‘s ability to successfully implement our strategy, our growth and expansion, technological changes;

2. Failure to comply with regulations prescribed by authorities of the jurisdictions in which we operate;

3. Changes in laws and regulations relating to the segments in which we operate;

4. Our ability to attract, retain and manage qualified personnel;

5. Failure to adapt to the changing technology in our industry of operation may adversely affect our business and financial condition;

DISCUSSION ON RESULTS OF OPERATIONS:

The following discussion on results of operations should be read in conjunction with the audited financial results of our Company for the period ended October 31, 2022 and financial years ended March 31, 2022 and 2021.

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, "Annexure IV" beginning under "Auditors Report and Financial Information of our Company" on page 101.

RESULTS OF OUR OPERATION

7 months period ended October 31, 2022

		(Rs lakhs)
Particulars	31.10.22	% of Total Income
Income
Revenue from Operations	1,804.28	100.00
Other Income	0.00	0.00
Total Revenue	1,804.28	100.00
Expenditure
Cost of Material consumed	1,434.17	79.49
Employee Benefit Expenses	40.56	2.25
Other Expenses	16.62	0.92
Total (B)	1,491.35	82.66
Profit Before Interest, Depreciation and Tax	312.93	17.34
Depreciation and Amortisation Expenses	3.42	0.19
Profit Before Interest and Tax	309.51	17.15
Financial Charges	0.62	0.03
Profit before Taxation	308.89	17.12
Taxes	78.45	4.35
Extra-ordinary Items	0.00	0.00
Profit After Tax and Extra-ordinary Items	230.44	12.77

Revenue from operations

The Revenue from operations was 1804.28 lakhs for the 7 months period ended October 31, 2022. The entire revenue was attributed to Sale of Agri inputs.

Other income was Nil lakhs the 7 months period ended October 31, 2022.

Hence the Total Income for the 7 months period ended October 31, 2022 was 1804.28 lakhs same as Revenue from Operations.

Expenditure:

The total operating expenditure aggregated to 1491.35 lakhs which was 82.66% of the Total Income. Cost of Material consumed was 1434.17 lakhs which was 79.49% of the Total Income Employee Benefit Expenses stood at 40.56 lakhs which was 2.25% of the Total Income. Other Expenses stood at 16.62 lakhs which was 0.92% of the Total Income. Financial Charges: We incurred Financial Charges of 0.62 lakhs, which is 0.03% of our Total Income. Depreciation: We incurred Depreciation cost of 3.42 lakhs, which is 0.19% of our Total Income.

Tax Expenses: Tax Expenses for the period ended October 31, 2022 is 78.45 lakhs, which is 4.35% of our Total Income and

Profits

Our EBITDA stood at 312.93 lakhs for the 7 months period ended October 31, 2022 with the EBITDA margin of 17.34%. We recorded PBT of 308.89 lakhs and PBT margin stood at 17.12%. We recorded Net Profit after Tax of 230.44 lakhs. Our Net Profit Margin stood at 12.77%.

Comparison of Financial Years ended March 31, 2022 and 2021

Particulars	31.03.22	31.03.21
Income
Revenue from Operations	1,348.91	382.21
Increase/Decrease (%)	252.92%
Other Income	0.00	0.00
Total Income	1,348.91	382.21
Increase/Decrease (%)	252.92%
Expenditure
Cost of Material Consumed	942.71	348.02
Increase/Decrease (%)	170.88%
% to Total Income	69.89%	91.05%
Employee Benefit Expenses	50.24	16.47
Increase/Decrease (%)	205.04%
% to Total Income	3.72%	4.31%
Other Expenses	13.53	10.32
Increase/Decrease (%)	31.10%
% to Total Income	1.00%	2.70%
Total Operating Expenditure	1,006.48	374.81
Increase/Decrease (%)	168.53%
% to Total Income	74.61%	98.06%
PBIDT	342.43	7.40
Increase/Decrease (%)	4527.43%
% to Total Income	25.39%	1.94%
Depreciation	0.19	0.00
Increase/Decrease (%)	100.00%
% to Total Income	0.01%	0.00%
Profit Before Interest and Tax	342.24	7.40
Increase/Decrease (%)	4524.86%
% to Total Income	25.37%	1.94%
Financial Charges	0.11	0.01
Increase/Decrease (%)	1000.00%
% to Total Income	0.01%	0.00%
Profit before Taxation	342.13	7.39
Increase/Decrease (%)	4529.63%
% to Total Income	25.36%	1.93%
Tax Effect	86.11	1.92
Increase/Decrease (%)	4384.90%
% to Total Income	6.38%	0.50%
Profit After Tax but Before Extra ordinary Items	256.02	5.47
Increase/Decrease (%)	4580.44%
% to Total Income	18.98%	1.43%
Extraordinary Item	0.00	0.00
Increase/Decrease (%)	100.00%	0.00%
% to Total Income	0.00%	0.00%
	Nirman Agri Genetics Limited Draft Prospectus
Profit After Tax and after Extra ordinary Items	256.02	5.47
Increase/Decrease (%)	4580.44%
% to Total Income	18.98%	1.43%

Comparison of FY 2022 with FY 2021:

Our Company is incorporated on August 19, 2020 and accordingly FY 2021 was our first year and was comprises of appx. 8 months of operations from the date of incorporation. Due to the above most of our activities have shown jump in FY 2022 primarily due to 12 months of operations and increase in activities of the Company. This reason is common across all below heads apart from the specific reasons listed under all this heads from hereon.

Revenue from operations

The Revenue from operations for the FY 2022 is 1348.91 lakhs as compared to 382.21 lakhs during the FY 2021 showing an increase of 252.92%. This increase was primarily due to increase in activities of the Company as FY 2021 was our first year and was comprises of appx. 8 months of operations from the date of incorporation.

Other Income for the FY 2022 and FY 2021 was Nil lakhs. Hence the Total Income for the FY 2022 and FY 2021 was 1348.91 lakhs as compared to 382.21 lakhs respectively same as Revenue from Operations.

Expenditure:

Cost of Material consumed

Cost of Material consumed increased to 942.71 lakhs for FY 2022 from 348.02 lakhs for FY 2021. This increase was mainly due to increase in volume of Sales.

Employee Benefit Expenses

Employee Benefit Expenses increased from 16.47 lakhs for the year ended March 31, 2021 to 50.24 lakhs for FY 2022 showing a increase of 205.04%. This increase was mainly due to increase in staff, staff salary and directors remuneration. Employee Benefit Expenses stood at 4.31% and 3.72% of Total income for FY 2021 and FY 2022, respectively.

Other Expenses

Other Expenses increased to 13.53 lakhs for FY 2022 from 10.32 lakhs for FY 2021 showing an increase of 31.10%. Other Expenses was 2.70% of Total income during FY 2021 as against 1.00% during FY 2022.

EBIDTA

EBIDTA increased from 7.40 lakhs for FY 2021 to 342.43 lakhs for FY 2022. During FY 2021, our Company recorded EBIDTA margin of 1.94%% of the Total income as against 25.39% during FY 2022. The increase in EBIDTA is mainly due to the economies of scale, as higher activities have helped to absorb fixed and semi variable cost in a better way.

Depreciation

Depreciation on fixed assets was 0.01% of Total income during FY 2022 as compared to 0.00% during FY 2021. The total depreciation during FY 2021 was Nil lakhs and during FY 2022 it was 0.19 lakhs.

Financial Charges

Financial Charges increased from 0.01 lakhs for the year ended March 31, 2021 to 0.11 lakhs for FY 2022 showing a increase of 1000%. This increase was mainly due to increase in Bank charges. Financial Charges stood at 0.00% and 0.01% of Total income for FY 2021 and FY 2022, respectively.

Profit after Tax and restatement adjustment (PAT)

PAT increased from 5.47 lakhs for the FY 2021 to 256.02 lakhs in FY 2022. This increase was mainly on account of increase in revenue from operations and other reasons as detailed above. During FY 2022, our Company recorded PAT margin of 18.98% as against 1.43% for FY 2021.

Cash Flows

The following table sets forth certain information concerning our cash flows for the periods indicated:

			(Rs in Lakhs)
Particulars	Period ended October 30, 3021	Fiscal 2022	Fiscal 2021
Net cash flow from operating activities	(50.22)	(4.60)	(26.73)
Net cash flow from investing activities	(39.31)	(0.73)	0.00
Net cash flow from financing activities	46.12	25.37	100.18
Net increase in cash and cash equivalents	(43.41)	20.04	73.45
Add: Balance at the beginning of the year	93.49	73.45	0.00
Cash and cash equivalents at the end of the year	50.08	93.49	73.45

FACTORS THAT MAY AFFECT THE RESULTS OF THE OPERATIONS:

1. Unusual or infrequent events or transactions

An outbreak of COVID-19 was notified as a pandemic by the WHO on March 11, 2020. In response to the COVID-19 outbreak, the governments of many countries, including India, have taken preventive or protective actions such as imposing country-wide lockdowns, as well as restrictions on travel and business operations. Since May 2020 many of these measures have been lifted. Due to a government mandated lockdown in India, we had to temporarily shut down our operations from mid-March 2020 to April 2020. We have resumed operations slowly from May 2020. We proactively engaged with our clients to reassure them and to demonstrate our commitment to restart our operations and to build confidence in the safety protocols deployed at our office. As a result, we have since experienced a gradual increase in business. As a result, we have experienced a gradual increase in business in the last quarter of the fiscal 2021.

2. Significant economic changes that materially affected or are likely to affect income from continuing operations.

Our business has been subject, and we expect it to continue to be subject, to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled ‘Risk Factors beginning on page 18 of the Draft Prospectus. To our knowledge, except as we have described in the Draft Prospectus, there are no known factors which we expect to bring about significant economic changes.

3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue, or income from continuing operations.

Apart from the risks as disclosed under Section titled "Risk Factors" on page 18 in the Draft Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

4. Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known.

Our Companys future costs and revenues will be determined by demand/supply situation, government policies and prices quoted by service providers.

5. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices.

Changes in revenues during the period covered above are explained in "Managements Discussion and Analysis of Financial Condition & Results of Operations" under the subsection "Comparison of Financial Years ended March 31, 2022 and 2021" under the respective paragraphs titled "Operating Revenue".

6. Total turnover of each major industry segment in which the issuer company operated.

For details on the total turnover of the industry please refer to "Industry Overview" on page 69.

7. Status of any publicly announced new products or business segment.

Our Company has not announced any new product or business segment.

8. The extent to which business is seasonal.

Our business is not seasonal in nature.

9. Any significant dependence on a single or few suppliers or customers.

Particulars	Period ended October 31, 2022	Financial Year ended March 31, 2022
Customers contribution Top 5 (%)	26.44%	30.68%
Suppliers contribution Top 5 (%)	45.97%	65.21%

10. Competitive conditions.

Competitive conditions are as described under "Industry Overview" and "Our Business" on pages 69 and 87, respectively.