MANAGEMENT DISCUSSION AND ANALYSIS
a. Macro Economic Overview
During the year under review, inflation continued to be an area of concern and the realearnings of the farmers and other rural population continued to be under pressure. Thisresulted in their having to cut back on their expenses, particularly the input expensesfor their agriculture.
b. Industry Structure and Developments
The seed business of the country continues to be very competitive. However, manyindustry leaders who were major producers of GM seeds are facing pressure as the pestsseem to have developed resistance to the bt genes transferred in the seeds. Hence there isa renewed thrust on R&D to develop next generation of bt genes. The government hasexpressed its concern to the seed industry to ensure quality of seeds in the wake of newsof suicides by farmers.
c. Opportunities and Threats
The entry barriers to the seed business have become high as the market is now dominatedby propriety brands of seeds and technology of public bred seeds is unable to compete. Onthe other hand, with competition intensifying there may be new opportunities in thebusiness of providing services such as extension services to large players.
d. Business opportunities under examination
In view of the high technology barriers for entry in seed industry, your company hasbeen examining other opportunities in the agriculture space. The company started sometrials for production of specialty crops for extraction of valuable derivatives toascertain the suitability of the agro climatic conditions for their high yields. Otherbusiness opportunities are also under examination.
e. Resources and liquidity
The company has invested its liquid resources mostly in debt based Mutual Funds with aview to use the income so earned to meet the day to day expenses of the company. Inaddition, to keep the R&D farms in good order, the land is being used for productionof seeds and selling them in the nearby market.
f. Risks and concerns
The main risk of seed business continues to be the dependence of business on monsoon.Lack or excess of rainfall has the effect of changing the sowing pattern and crops sownwith an immediate impact on seed demand. This can result in shortages or in carry over,both of which have an impact on the business.
g. Internal Control Systems and Adequacy
The Company has adequate internal control procedures commensurate with its size andnature of the business. These business control procedures ensure deficient use andprotection of the resources and compliance with the policies, procedures and statutes.
h. Human Resources
The company currently has no employees and the executive director of the Company islooking after the various statutory and other requirements as also looking at thepossibilities of starting the business once again. However in view of reverses suffered inthe past it is proposed to be cautious in undertaking any new venture.
i. Future outlook
As mentioned earlier, the business is quite dependant on monsoon and its progress. Atthe time of writing this review, there are reports that many districts of the country arefacing drought and sowings have been adversely affected. From this we may surmise that thebusiness outlook of the seed industry for the coming year is somewhat bearish.
|For and on behalf of the Board || |
|Pritam Kapur ||C.P.Rajendran |
|(Chairman and ManagingDirector) ||(Director) |