Agro Phos India Ltd Management Discussions.

OVERVIEW

Incorporated in 2002, our Company M/s. Agro Phos (India) Limited is an ISO 9001:2008 certified Company engaged in the manufacturing of fertilisers such as Single Super Phosphate (SSP), Nitrogen Phosphate and Potassium (NPK), Zinc Sulphate, Organic manure and Calcium Sulphate commonly known as soil conditioner or gypsum. Our Company also undertakes trading of Diammoium Phosphate (DAP), Urea, Ammonium Sulphate and other fertiliz-ers depending upon the demand of the customer.

Our manufacturing facilities are located at Dewas and Meghnagar, Madhya Pradesh Our Company is well equipped with in-house testing laboratory to test the products as per quality standards and relevant chemical composition. In our quest to maintain high standards of quality for our products, we have imported testing machine to test the product in real time basis. The final product has to pass special quality test to ensure that it is of the requisite quality and contains the requisite chemical composition. We use gazette bags for packing of our products. These bags are very easy to handle and facilitates easy stacking as well. Apart from providing quality products at an affordable cost, our company also emphasizes on the product reach through its distribution network. We have over 200 dealers and distributors.

The company has built Market capabilities and Distribution network to meet out the requirement in domestic markets & continually strives to enhance market presence as well as explore new markets & territories for growth.

INDIAN ECONOMY OVERVIEW

In India, agriculture is the largest sector of economic activity. It provides food, raw materials and above all, the employment to a very large proportion of population. The national output depends on the output in agriculture, as it is one of the most dominating sectors in India. For the same reason, it has to provide the capital required for its own development and make available surplus for national economic development. At the same time, the exports of primary produce earn valuable foreign exchange which can be used to import capital goods for the development of industry and infrastructure. Because of all these reasons, an improved and efficient agriculture is a dire necessity in our economy. The vital role of agriculture arises out of the position the agrarian sector occupies in the overall economy of the country. 80 percent per cent of the population resides in the rural areas and 72 per cent of the work force depends on agriculture for their livelihood. Agriculture is the back-bone of the Indian economy, and hence, the very existence of economic activities of entire people in the country is dependent on the state and health of its agriculture sector. Since last 40 years, the fertilizer industry in India has grown tremendously. The Government is keen to see that fertilizer reaches the farmers in the distant and hilly areas. This is the reason why it has been decided to decontrol the prices, distribution and movement of phosphatic and potassic fertilizers. Some steps are implemented to assure an increase in the supply of chemical fertilizers at reasonable prices. In India. Fertilizer Industry is the push on accelerating fertilizer consumption by fixing, on the one hand, low and similar price for fertilizers, and on the other hand providing the manufacturers ample compensation through the retention price and subsidy scheme. Due to such corrective steps, the fertilizer nutrient demand has gone up.

OUTLOOK AND PROSPECTS

Fertilizer is a substance to soil to improve plants growth and yield. First used by ancient farmers fertilizer technology developed significantly as the chemical needs of growing plants were discovered. Modern synthetic fertilizers are composed mainly of nitrogen, phosphorous and potassium compounds us the secondary nutrients added. The use of synthetic fertilizers has significantly improved the quality and quantity at the food available today and Governments ambitious target towards doubling the farmer income by 2022 so demand of the fertilizer will also increase in future.

Industry structure and developments:

The fertilizer industry in India consists of three major players; The Government owned Public Sector undertakings, Cooperative Societies like KRIBHCO, IFFCO and units from Private sector. There are about 33 major producers producing N, NP and NPK fertilizers in the country at present. The fertilizer industry of India had made constructive use of the fertilizer subsidy provided by the Government of India to ensure that the country achieved reasonable self-sufficiency in food grain production. The fertilizer industry has organized itself through Fertilizer Association of India to coordinate with the Government of India to achieve the macro-economic objectives related to agricultural sector and to provide other services. Indian fertilizer industry has succeeded in meeting almost fully the demand of all chemical fertilizers.

CONCERNS:

Our Company‘s future costs and revenues will be determined by demand/supply situation, government, policies, subsidies available and prices of raw material. Risk and Government policy risk, competition risk: In the fertilizer industry and pretty much any other commod-ity companies—revenue depends on fertilizer prices and the quantity of fertilizer companies sell. Fertilizer prices are driven by industry capacity, rivalry (competition among firms), marginal producers cost, proximity to cus-tomers, inventory, and demand. Demand, in turn, is driven by fertilizer prices, crop economics, currencies, cycles, economic activity, and macro factors like subsidy programmes of government. Crop economics consist of factors like crop inventory, crop demand and supply, and crop prices, which depend on economic activity, food consump-tion, diet patterns, crop yields, nutrient application, weather, plantation, and energy consumption.

OUTLOOK:

Its universally accepted that the use of chemical fertilizer in an integral of the package of practice for raising the agricultural production to a higher place. Studies continued by the Food and Agricultural Organization of the United Nations (FAO) have established beyond about that there is a close relationship between the Gerry crop yields and fertilizer consumption level. More over the nutritional requirement of different crops could not be fully met with the use of organic manures like FYM and other bulky organic manures like neem cack, castor cack, groundnut cack etc. for want of their availability in adequate quantities And Increasing agriculture production in Indian by area increasing process is no longer possible as cultivable and left over is only marginal. Further a considerable cultivable land is being diverted year after year for housing and industrial etc. Hence self sufficiency in food lies in increasing the field per unit area per unit time through adoption of modern agricultural technology. Fertilizer have the advantages of smaller bulk easy transport relatively quick in an availability at plan- food constituents and the facility of their application in proportion suited to the actual requirements of crops and soils and to improve our agriculture output India needs more fertilizers.

Internal Control Systems and their adequacy:

The Company has clearly laid down policies, guidelines and procedures that form a part of the internal control system which provide for automatic checks and balances. The Audit committee reviews the effectiveness and efficiency of these systems to ensure that all the assets are protected against loss and that the financial and operational information is complete and accurate.

Audits are finalized and conducted based on the internal risk assessment. Significant findings are brought to the notice of the Audit committee of the Board and corrective measures recommended for implementation. Our work opportunities and competitive compensation policy helps us in attracting and retaining our personnel.

Human relations:

The company lays special emphasis to the human resources function in our organization and believes.

The company has an elaborate performance evaluation system in place involving goal setting, and periodic re-views involving confirmation and annual reviews. The review sessions impress upon several aspects of the profes-sionals careers such as career and competency development, financial rewards and recognition. We endeavor to link careers to competencies, individual preferences and organizational needs.

The compensation package has a fixed component and a variable component linked to the corporate and individual performance.

Safety:

Safety management is integrated with the Companys overall environment, health and safety (EHS) management system and zero accident is taken up as the Companys goal. The following measures have been taken by the Company:

• Identification of hazard and risk present in work environment and its rectification.

• Continuous monitoring of unsafe condition and unsafe acts through safety inspection.

• Safety induction training for all employees and specific job safety awareness programs on a continuous basis.

Our factory are well equipped with required facilities including machinery, crane, conveyor belt, other handling equipments to facilitate smooth manufacturing process and easy logistics. We endeavor to maintain safety in our premises by adhering to key safety norms. Our manufacturing process is completely integrated from procurement of raw materials and final testing and packing of fertilisers for direct use of our customers.

Environment friendly operations:

Environmental protection is a prime concern for us and we are aware of our core responsibility to the society in this regard

Cautionary Statement:

Statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among other things, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in Government regulations, tax laws and other statutes and incidental factors.