Rama Phosphates Ltd Management Discussions

MANAGEMENT DISCUSSION & ANALYSIS INDIAN ECONOMY

GDP growth forecast is updated to 7% from earlier projection of 6.7% made by Asian Development Bank (ADB) for 2024-25. At the same time GDP growth in the current fiscal is expected to grow by 7.2%, according to ADB. The increase in GST collection, the strong generation of e-way bills and the growth in e-toll collection reaffirms the resilience of projected economic activity.

RBI forecasts a 7% real GDP growth for FY 2025, with the prospects of robust rabi harvesting, manufacturing profitability, and resilient services in spite of persisting risks such as geopolitical tensions and supply chain disruptions. However, lower input prices and moderated food inflation are expected to positively impact output growth and resultant export prospects.

As per the report of Principal Economist of India Ratings and Research (IRR), the Indian economy grew 8.2% in the June quarter, 8.1% in the September quarter and 8.4% in the December quarter of 2023-24 and that the fourth quarter growth to be 6.7% with the overall GDP growth for FY 2024 to be around 6.9%-7%, However, the provisional estimates for the 2023-24 fiscal are scheduled to be released by the government on May 31.

INDIAN AGRICULTURE

Over the past year, the Indian agricultural landscape has faced diverse pressures and weather uncertainties underscoring the importance of adaptability and forward-thinking strategies. India has a geographical area of 328.73 million hectares (m ha) spread over climatic regions. India has the second-largest agricultural land in the world and provides livelihood to 58% of the total population. With the worlds largest cattle herd (buffaloes), India is the largest milk producer in the world. Also, it has the largest area planted for wheat, rice and cotton and is the largest producer of pulses and spices in the world. It is the second-largest producer of fruit, vegetables, tea, farmed fish, cotton, sugarcane, wheat, rice and sugar and for India to become a fully industrialised and developed nation, agriculture is an essential component.

With increased investments in agricultural infras such as irrigation facilities, warehousing and cold storage, it is expected that the agriculture sector will reap benefits in the next few years.

Indias agricultural GDP growth was merely 0.7% in 2023-24, a drastic reduction from 4.7% reported in 2022-23. During April-February 2023-24 period, agricultural exports declined 8.8% to US$ 43.7 billion, due to various factors including the Red Sea crisis, the Russia-Ukraine conflict and export restrictions on key commodities like rice, wheat, sugar and onions to meet domestic requirements.

INDIAN FERTILIZER INDUSTRY OUTLOOK

Fertilizer is an integral component of agricultural

development and India is progressing in both. The fertilizer industry is facing several challenges currently despite demonstrating consistent positive growth since 2014. The foremost challenge is weather conditions followed by heavy dependence on imported raw materials and Government subsidies. Hence, industry is pinning greater hopes on monsoon to lift their morale and boost sales.

Year 2023-24 of Indian fertilizer scenario was mix of government inventories, low monsoon, market dynamics situations and various sustainability initiative aimed at supporting agricultural sector.

Most populous nation:

In April 2023, the United Nations (UN) Population Division announced that according to its estimates, India had overtaken China as the worlds most populous country, reaching 1.42 billion people. While the population is growing rapidly, the per capita size of arable land in the country is decreasing stagnant and to derive maximum output and achieve higher yield of produce from the available land, judicious use of nutrients in tandem with controlled and selective use of desired minerals must be practiced so as to achieve food security.

As per IMARC report, currently the Indian Fertilizer market reached Rs 942.1 billion in 2023 and expected to reach Rs 1383.8 billion by 2032 with CAGR of 4.2% during 2024-2032. The growing population, rapid urbanization and increasing food consumption are prime movers with emerging technological advancements and precision farming.

The SSP fertilizer market valued at USD 3.30 billion in 2023 is anticipated to reach USD 40.4 billion by 2030 with projected CAGR of 4.2% during the period.

Global market size of Fertilizers is on increasing trend from USD 197.75 Billion in 2021 to USD 230.29 Billion in 2028-

optimistic due to favourable monsoon in this year and also various market driven forces viz., increase in agriculture investments, technology advancements coupled with initiatives from authorities for maintaining sustainable agricultural activities.

India is an agricultural country. Agriculture has been practiced for thousands of years and two-thirds, i.e. 60-70% of Indias population depend on agriculture for their livelihood. Out of 140 million farmers in the country, around 78% have small holdings of less than two hectare.

However, to achieve self-reliance in food production, fertilizers consumption needs to be optimized. The lopsided consumption of fertilizer by majority of farmers pose great threat to fertility and degeneration of soil. This warrants extensive education and creation of awareness for use of right type and optimum quantity of fertilizer for different type of soils. Apart from this, other challenges include stagnation in crop yield, low nutrient use efficiency, declining soil organic matter, multinutrient deficiencies, shrinking arable land and water availability.

Major Initiative undertaken by authorities:

Climate change poses a signific nt challenge, with projections suggesting a potential 19.3% reduction in wheat yields by 2050 and 4% by 2080. To address this, the National Mission for Sustainable Agriculture (NMSA) is implementing strategies to make Indian agriculture more re lient to climate change.

The Government has adopted and implemented several policies, reforms, developmental programmes and schemes for improving the agricultural growth prospects and incomes of the farmers. Supplementary income transfers under PM-KISAN yojna, increase in Minimum Support Price (MSP) for all kharif & rabi crops.

As per govt. authorities, the objective of establishing DD Kisan Channel was to always keep the farmers informed about the changes in weather, global and local markets etc., so that farmers can make appropriate plans in advance and take right decisions on time. DD Kisan Channel is meeting these standards for the last 9 years.

Additionally, the Department of Agriculture & Cooperation, Ministry of Agriculture and Farmers Welfare has developed Kisan Suvidha, an omnibus mobile app to help farmers by quickly providing relevant information about weather, dealers, market

prices, plant protection, agro advisories, soil health cards, cold storage and godowns, etc. The app is available in multiple Indian languages.

Various promotional activities are undertaken by Govt. of India for use of balanced nutrients by the farmers and SSP is given prominent place due to its "S" content. Moreover, fortified SSP fertilizers are introduced in the market as approved by Fertilizer Control Order policy. Whilst demand of other phosphatic fertilizers are met through imports, SSP is home-grown and thus saves precious foreign exchange of the country.

Soil health cards to the extent of 23.58 crore were provided to farmers depicting the nutrient status of their soil and its composition.

The introduction of 100% neem-coated Urea has led to substantial rise in Urea consumption for agricultural purposes.

Pradhan Mantri Kisan Samruddhi Kendras (PM- KSK) were established in the country as a model Stockists/Dealers to provide one-stop solution for all agricultural needs.

In the interim budget 2024-25, several initiatives were undertaken aimed at cultivating a more robust and sustainable agricultural ecosystem.

In line with the Atmanirbhar Bharat initiative, the Government is also focused on reviving closed fertilizer plants in Talcher, Ramagundam, Gorakhpur, Sindri, and Barauni and educating farmers about balanced fertilizer use, crop productivity, and the benefits of cost-effective subsidized fertilizers. Continuous research and innovation are essential for developing new types of fertilizers and improving existing ones.

This augurs well to achieve "Atmanirbhar Bharat" of our country.

Experts opinion on Equal distribution of fertilizers:

According to Mr. PG Medhe, sugar industry analyst and former MD of Shri Chhatrapti Rajaram Sahakari Sakhar Kakhana Ltd., by distributing fertilizers based on the land under cultivation in each state, the Govt. can tailor its support to meet the specific needs of different regions, crops and farming practices, thereby optimizing agricultural output and contributing overall economic growth. With this initiative would improve agricultural productivity nationwide, address regional disparities, promote balanced agricultural development and ensure food security for the entire nation.

Comparison of different type of production of fertilizer for FY 2023 v/s FY 2024

As per latest data published by Dept. of Fertilizer, the production data is as below:

Comparison of overall sale of fertilizer for the FY 2023 v/s FY 2024

It is pertinent to note that lower imports in 2023-24 did not reduce the overall fertilizer subsidy which touched Rs 2.00 lac cr., higher than a revised budgetary allocation of Rs 1.89 lac cr. due to higher cost of raw materials.

STATUS OF SUBSIDY PMT BASIS (

With increase in subsidy rates for P&K fertilizers coupled with above normal monsoon predictions, industry expects better margin in this financial year.

STATUS OF SSP FERTILIZER INDUSTRY

Single Super Phosphate (SSP) is the oldest known commercial fertilizer that has been supplying important nutrient of Phosphorous. Over and above, it also provides two important secondary nutrients viz. Sulphur and Calcium the deficiency of which are quite rampant in Indias field. Moreover, SSP also acts as a carrier for other secondary and micro nutrients like magnesium, boron, zinc, iron etc.

The spread of SSP plants all across the country has provided distinct advantage of effectively meeting the demand of these vital nutrients in a very short span of time at competitive prices.

The overall production during the current year as published by FAI stands at 44.44 lac MT against 56.46 lac MT achieved in Apr-Mar. 23.

SSP industry can also help in reducing import dependence to some extent which will help in stabilizing the international prices of rock phosphate, phosphoric acid, DAP and NP/NPK complex fertilizers in the long run.

MONSOON

It may be noted that as per Union Ministry of water resources, India receives an average rainfall of about 1170 MM which corresponds to an annual precipitation of about 4000 BCM (Billion cubic meters) including snowfall.

Agriculture in India is mainly depends on rain and about 48% of 142 million hectares of land is cultivated on rains water. Around 60% of net sown agricultural area of the country is dependent on rainfall. Apart from agriculture, there are more than a dozen sectors either directly or indirectly depend on monsoon. Hence, monsoon plays a major role in countrys economy.

South-west (SW) monsoon, spanning from June to September is the predominant contributor to more than 70% of our Countrys total annual precipitation. This rainfall season coincides with the Kharif crop growing period during which major crops like rice, pulses, oilseeds, cotton, jute and sugarcane are cultivated. Adequate rainfall during the monsoon season leads to increased soil moisture and promotes the growth of crops resulting in higher agriculture output and conservation and rejuvenation of water resources in earth. Any ^delayed monsoons result in shorter growing seasons and reduced yields for farmers leading to below- normal agricultural production affecting food prices and farmer income.

India is expected to receive above average monsoon in 2024 as per latest IMD forecast. This comes as a positive news for farm production as well as a relief to many regions that are currently reeling under heat wave.

Sowing took its momentum in this Kharif despite slow progress of rain in June-24 as depicted in the following chart:

OIL DIVISION - SOYBEAN MARKET SCENARIO

The production of soybean oil in India is quite low as compared to the world leaders like USA. India imports significant quantities of vegetable oil including soybean oil and palm oil to meet domestic demand. At the same time, India is topmost import of soybean oil in the world. Indians consumed about five million tons of soybean oil and a large portion of this volume was imported by us. On the other hand, China, the leading producer of soybean oil in the world, consumes about 17 million tons.

Top Soya oil Producing Countries -

In India, the salient driving forces for increasing consumption of soybean include health conscious dietary habits and also its neutral taste, high smoke point, and low saturated fat content. Also, soy variant products are introduced in the market which are used for controlling cholesterol. At the same time, the high penetration of international food trends in India has led to the increasing utilization of soybean oil in preparing condiments, dressings, mayonnaise, non-dairy creamers, margarine, shortenings, whipped toppings, etc. Moreover, the rising consumer sedentary lifestyles are also augmenting the demand for soybean oil in processed food items.

Industrial use:

Soybean oil also finds usage in the personal care industry based on its high content of vitamin E that prevents skin inflammation and helps in retaining skin moisture. Western and Central India currently represent the biggest markets for soybean oil in the country as they also represent the key regions where the domestic soybean crop is grown. Additionally, there is also a strong household demand for soybean oil in Western and Central India.

Core team of Management - Strategic policy decisions of business nature are deliberated amongst the members of Management and timely actions are taken for implementation of the same. Committed dealers network - We have built a long standing business relations with dealers / stockist totaling to 1800+ of all our four units who are the backbone of the company by extending invaluable support at all times.

Marketing tie-up - With the leading PSU in Urea sector - Hindustan Urvarak & Rasayan Ltd., for sale

of our SSP fertilizers for penetrating eastern markets.

Brands - Both our "Girnar" and "Suryaphool" brands are the most-sought-after fertilizers in the area of operations as we have built a very good reputation over a period of time by giving quality product and timely support.

Innovative products - To rejuvenate soil fertility so as to increase the yield of produce to farmers, we introduce crop specific and field specific fortified Micronutrients fertilizers viz., Magnesium, Calcium etc.

Green energy generation - To meet partial electricity power requirements in the plant premises, we generate solar power at our Udaipur unit.

Similarly, Turbo Generation power during the production of Sulphuric Acid is achieved at Pune and Indore units.

Process integration - Sulphuric Acid, the basic raw material for fertilizers production is manufactured at our Pune and Indore units which is

backward integration whilst spent acid generated in the process LABSA as forward integration. Thus, our both Fertilizer and Chemicals manufacturing process is inter-linked and inseparable.

Meeting Marketing requirements and keeping ears to the ground - We changed design aspect of bags for all our products and introduced QR codes so as to gain customers trust and for easy access to our product information and to know about various initiatives taken by the company.

OPPORTUNITIES & THREATS Availability of higher disposal income at the hands of farmers due to reformative policies of central and state govt. initiatives would induce farmers for higher consumption and thus steer growth of agriinputs industry.

The vagaries of monsoon is bane of this fertilizer industry and for the entire farming community.

Raw material (Rock Phosphate) limited availability from indigenous sources is compelling the industry to search overseas suppliers whose whimsical demands are to be met during the time of crisis.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

INDUSTRIAL SAFETY, ECOLOGY & POLLUTION CONTROL

• Requisite approvals from respective authorities are well in place for operations of all plants.

• Safety trainings, mock-drill activities are regularly conducted and basic trainings are imparted to all workmen and staff at all plants.

• On-line monitoring as per the directives of pollution control authorities are installed and thus complying with the requirements.

OUTLOOK

Looking ahead, we remain optimistic about the ^future growth prospects. We are committed to

maintain our focus on innovation, customer

satisfaction and operational excellence.

• Continuous innovation with R&D: We will continue to allocate resources towards R&D to drive innovation and bring forth new and improved product / services. This will ensure our long term competitiveness and relevance in market

• Market expansion diversification: We will actively explore new market opportunities and aim to expand our presence in existing and emerging markets. We plan to leverage our strong brand reputation, customer relationships and operational capabilities to capture additional market share.

• Operational Efficiency: We are committed to sustainability and will intensify our efforts to reduce our carbon foot print on environment. We will explore renewable energy options, improve resource utilization and implement responsible business practices to contribute positively to the communities we operate in.

• Government is focusing on "Atmanirbhar Bharat" for which indigenously produced SSP fertilizer is the prime contender. Without compromising on nutrients content, SSP fertilizer, termed as a "Poor mans fertilizer" is available at one third cost of imported phosphatic fertilizers.

• The doubling of farmers income initiatives of the Government, augurs well for the industry.

• The authorities are mulling to transfer subsidy amount directly to farmers account.

• The authorities are in view of restoring "freight subsidy" for supply of SSP fertilizers in each nook and corner of the country which will encourage the company to tap for new markets. Industry pro-active intervention and financial stimuli provided by the Government on regular basis by way of hike in subsidy allocation, signing of agreements for supply of raw material on government to government basis etc. will give

booster shot to the industry.

Reduction in Website Carbon emission - Our

website runs on premium Google Cloud infrastructure, matching 100% of its consumption with renewal sources. Our service provider has customized the PHP and MySQL setup their servers to make our pages load 30% faster on average and bring down the number of slow queries between 10 and 20 times. They have also enabled powerful static and dynamic caching technology, which results in up to 5 times faster page loading for lower carbon footprint. RISK MANAGEMENT POLICY Your Company operates in a dynamic business environment which have a bearing on day-to-day operations and thus has adequate internal financial control systems to monitor processes, financial reporting and compliance with applicable regulations viz., legislative changes, financial market volatility etc. Moreover, Risk Management is an integral part of the business process. It is pertinent to note that existing systems are reviewed by Statutory / Internal Auditors and due reporting is made to the Audit Committee for identification of deficiencies and necessary time bound actions to be taken. The Committee constituted as per statutory requirements reviews the risk management periodically and ensure suitable policies / actions are taken to create sustainable value to all stakeholders. CORPORATE SOCIAL RESPONSIBILITY Our Corporate Social Responsibility is based on conviction rather than obligation. We extend our helping hands to fulfill ambition of deprived humans in our factory vicinity through direct or indirect monetary contribution and other requisite assistance as per the need.

HUMAN RESOURCE MANAGEMENT Cordial relations are maintained at all levels by Key personnel in all plants so as to achieve optimum production.

CAUTIONARY STATEMENT

The Companys performance is mainly dependent on several external factors which are beyond the control such as monsoon, Government policies, fluctuation in prices of raw material, foreign exchange risk and other internal factors which could adversely affect the operations of the Company. Some of the foregoing statements in the report may be forward looking and are stated as required by applicable laws & regulations. Many external and internal factors may affect the actual results which could be different from the projections made by the Directors with respect to future performance and outlook of the Company.