Ajooni Biotech Ltd Management Discussions.

Your Directors have pleasure in presenting the Management Discussion and Analysis report for the year ended on 31st March 2018.

INDUSTRY STRUCTURE, DEVELOPMENT:

The Company has been established with the object financing. 2017-18 was a year of mixed growth for the domestic economy, which had, over the previous three years witnessed a series of domestic and external headwinds. The industry is showing some improvement as a result of shrinking current account and fiscal deficit and stabilization in the rupee. Going ahead your Directors are expecting better industrial development in the coming years.

SEGMENT-WISE PERFORMANCE:

The Company trades in a single business segment.

OPPORTUNITIES AND THREATS:

The Company is taking maximum efforts to capitalize on business opportunities & further expect a better outlook in the coming years. The outlook for 2019 will depend, largely, on the quality of policy and on the effective implementation of various reform initiatives. In order to enhance long-term growth, capital flows and development. Also deserving of mention is the Economic Recovery and Growth Plan that was recently launched by the Government. Effective implementation of this commendable plan will help to tackle the constraints to growth and improve the overall business environment. Focusing more specifically on your Company, in 2019 we will be consolidating the initiatives that we started in 2017, support growth and working capital through equity calls, unlock value through the realization of under-performing assets and restructuring of the route-to-market architecture across the group.

Industry Outlook and Possible Future Developments

The Ajooni Biotech Limited operates its business in an industry which is one of the fastest growing and most promising industries. Feed mill plays an important role in the supply of commercial feed to poultry livestock and sh farming. Feed mills generally distribute their products as complete feed to live stock industry. In the immediate past, livestock farming expanded at a faster rate resulting in a large scale demand for commercial feed round the year. Though the feed industry is increasing but it is unable to meet the demand of feed supplies which the farms presently require.

Keeping the above in mine, Ajooni is focused agri Business Company dedicated to improving the productivity of Indian farmers by sustainability of live stock yield and health. Ajooni Biotech is presently engaged in manufacturing, producing, processing and supplying of quality cattle feed, nutrients related to cattle feed and animal health care supplements. Our feed offerings are formulated with a deep understanding of the nutritional requirements of different breeds, different geographical climate and different age of cattle. Ajooni Biotechnology Limited has a long term business plan to expand its facilities to produce Poultry feed, Aqua feed, Horse feed and sheep feed.

We believe that the principal factors affecting competition in our line of business include client relationships, reputation, the abilities of employees, market focus and the relative quality and price of the services and products.

Our industry is highly competitive while being unorganized and fragmented. This market is not governed directly by any regulations or any governmental authority. The players in the informal education market are mostly small and unrecognized.

Opportunities also Includes:

Growing acceptance by consumers;

Opportunities in the Asian market;

Rise in the demand for Quality Feed & Feed Supplements worldwide

Animal Population

In India, the largest milch animal (in-milk and dry) population comprising of cows and buffaloes, has increased from 111.09 million to 118.59 million (growth of 6.75%) and the number of animals in milk, cows and buffaloes, has increased from 77.04 million to 80.52 million (growth of 4.51%) and the total number of female cattle count is 122.9 million.

ALL INDIA LIVESTOCK CENSUS (in thousands)

CATEGORY 2012 (all India)
Cattle
Exotic/Crossbredv
Male 5,971
Female 33,760
Total Exotic/Crossbredy 39,732
Indigenousy
Male 61,949
Female 89,224
Total Indigenousy 1,51,172
Total Cattle 1,90,904
Buffalo
Male 16,103
Female 92,599
Total Buffalo 1,08,702

INDIAN LIVESTOCK CENSUS - 2012 Punjab

District Cow Buffaloes
Gurdaspur 222018 321603
Amritsar 178084 352886
Tarn Taran 125771 343360
Kapurthala 67866 127611
Jalandhar 138123 249433
Nawan Shahar 51388 118452
Hoshiarpur 160162 248632
Ropar 60631 148553
Mohali 38403 148437
Ludhiana 203980 467439
Firozpur 278817 472677
Faridkot 69367 124006
Moga 108267 225310
Muktsar 114535 160123
Bathinda 122361 259111
Mansa 78943 249688
Patiala 115637 335164
Fatehgarh Sahib 65232 144368
Sangrur 167385 490491
Barnala 60744 172390
Cattle Census 2012 2427714 5159734
final as per GOI 2427714 5159734

As from the above mentioned census report it is clear that:

Livestock population has increased substantially in Gujarat (15.36%), Uttar Pradesh (14.01%), Assam (10.77%), Punjab (9.57%) Bihar (8.56%); Sikkim (7.96%), Meghalaya (7.41%), and Chhattisgarh (4.34%).

The number of milch animals (in-milk and dry), cows and buffaloes, has increased from 111.09 million to 118.59 million, an increase of 6.75%.

The number of animals in milk, cows and buffaloes, has increased from 77.04 million to 80.52 million showing a growth of 4.51%.

The Female Cattle (Cows) Population has increased by 6.52% over the previous census (2007) and the total number of female cattle in 2012 is 122.9 million numbers.

The Female Buffalo population has increased by 7.99% over the previous census and the total number of female buffalo is 92.5 million numbers in 2012.

The exotic/crossbred milch cattle increased from 14.4 million to 19.42 million, an increase of 34.78%.

Indigenous milch cattle increased from 48.04 million to 48.12 million, an increase of 0.17%.

The milch buffaloes increased from 48.64 million to 51.05 million with an increase of 4.95% over previous census.

Feeding Scenario in the Country

Though India has succeeded in attaining number one position in milk production, traditional feeding to milch animals needs to be replaced by feeding of scientifically compounded feeds to further improve milk production and profitability. Unfortunately, Indian feed industry is able to fulfill only 10-15% of the total requirement as the sector comes under unorganised sector. For nutritional growth and maintenance of quality food standard, the fast growing Dairy industry in the country should be ideally complimented with a growing feed industry. Extensive efforts are needed to educate the farmers to minimize cost of milk production through ration balancing, use of TMR, bypass proteins and bypass fats. Like organized farms and progressive farmers, small and marginal farmers also need to adopt these practices for better profitability.

As the present level of feed manufacture in India is quite lesser than its market potential. While a few countries (viz.US, Japan, Canada, France, Spain, Germany, Australia and Netherlands) have high level of feed production vis--vis their market potential, a few other countries (China, Brazil, Mexico, Russia, India and Ukraine) have very lower level of production vis--vis demand.India is a very glaring:

Production by Feed Industry (Million MT) :

Country Production
US 147.0
Spain 19.2
China 63.1
Germany 19.0
Brazil 43.4
Australia 18.0
Japan 23.9
Russia 16.5
Mexico 23.8
India 14.3
Canada 22.1
Netherlands 12.4
France 21.8
Ukraine 01.6

Primarily India remains as an agrarian economy. India has got a large livestock population which makes animal husbandry a major subsidiary occupation of the farmers of this country. Animal husbandry contributes immensely to the rural economy of the country as it provides milk, meat, draught power and manure. With the basic objective of rural upliftment, successive Governments in India have been introducing many rural development schemes in the country over the years. Among these schemes, dairying occupies a prominent role. It was in the above situation that the National Commission on Agriculture (1976) pointed out, "there is a growing realization that promotion of dairying not only contributes towards national health building but also creates substantial employment opportunities. Properly organised and developed dairying could be effectively used as an instrument of social justice." (Government of India) (1976). An important feature of dairying in our country is that while most of the milk is produced in rural area, market for milk exists mainly in urban areas. So dairy farmers face several problems in marketing their milk.

In spite of a vast cattle population the milk production in India is only 95 million MTs while the projected requirement is180 million MTs by 2020. India is the largest milk producer in the whole world. As of 2014-15, India accounts for about 17 per cent of the world production of milk. During 2014-15, the milk production in the country peaked to 137.7 MT. In fact, about 90 per cent of the total milk produced in the country comes from rural areas.

Hence, dairying provides income and opportunities to rural population and ensures high level social equity. Dairying is an im portant secondary source of income for 70 million rural households in India. Besides, 70 per cent of the total workforce engaged in dairying comprise of women. It is worth pointing out that the growth rate of milk production in India is 4.04 per cent as against the world average of just 2.2 per cent. The trend of milk production in the post-independence India shows a gradual and constant growth

In spite of the constant growth in milk production in India throughout the last 65 years or more and also the enviable positi on as the world s largest producer of milk, the fact remains that the productivity (yield) of cattle is very low and is one of the lowest in the whole world. Likewise, in spite of the largest cattle population in the world, the per-farmer holding of cattle is very low at the level of about 2-3 animals. Traditional feeding and cattle management practices continue in India which affects the productivity and health of cattle. There is vital need for improving the feeding practices by way of providing feeds with enhanced nutrient-content, for the purpose of better productivity and health of cattle, comparable to cattle of advanced countries like the US. It is in this context that the need for providing scientifically designed cattle feed products to cattle assumes crucial significance in the Indian context. It may be noted that the productivity of Indian cattle is just one-eighth (1/8th) as that of its US counterpart. Though India s total milk production is the largest in the world, the per-cow production is one of the least.

The concept of branded animal feed as a packaged commodity, though not a very recent concept, is gaining popularity in the rural folks in the recent past. The packaged feed, as a product possesses, various factors such as hygiene, quality, convenience to handle, etc. to its advantage. The age old feeding pattern practiced in India is a mixed variety consisting of green grass, dry grass, cotton seed cake, coconut cake, rice bran etc. From the time immemorial, the cows were fed by grazing in open areas. But, as time elapsed, due to changes both environmental and social, there has been gradual shift from the age-old pattern to Compounded Cattle Feed (CCF). The Indian milk scenario witnessed a total metamorphosis by the advent of Operation Flood; thus greatly increasing the per capita consumption of milk and sparking of high demand for feed.

On analyzing the factors related to the cattle feed demand, it is seen that there can be a positive change in the market demand for feeds.

The major factors contributing to this are:

(i) Shrinkage of open land for cattle grazing, urbanization and resultant shortage of conventionally used cattle feeds,

(ii) Introduction of high yield cattle requires specialized feeds. The way the rural farmers makes their purchases of feed and have their buying priorities is quite different from those of their urban counterparts.

In short, there is high growth prospects for cattle feed industry in India. Meticulously planned and carefully designed strategies are essential for tapping the huge potential for this product. Equally important is the need for properly educating the customers viz. farmers regarding the need to switch over from the traditional feed.

In average 5 kg of cattle feed is consumed by cattle per day and the production capacity of our company is 100 MT/day cattle feed. According to the livestock population and requirements of feed availability there is requirement of an increase in cattle feed production to serve the increasing demand. Our company will focus on achieving the same by providing the quality cattle feed in near future and also to expand the marketing areas and also to enlarge the scope of activities.

Nutritional Advances

Biotechnology is proved beneficial to livestock producers through breed improvement like use of alkali biotechnology to enhance digestibility of fibrous feed and maximize the utilization of crop residues. Use of bypass feed technology to facilitate fermentative digestion and inclusion of bypass nutrients to balance fermentative digestion is also getting popular.

Genetic manipulation & balance of rumen microbes is in vogue as a tool to improve digestion of low quality feeds.

For better nutrient availability of feeds, feed additives like enzymes, probiotics, single-cell proteins and antibiotics are widely used in production systems worldwide.

Economy

Currently, India is self-sufficient in livestock feeds and does not depend on imports. Instead, the country exports solvent extracted meals. The Indian economy growing at the rate of 6-8 percent per annum & livestock industry is the second largest contributor to gross domestic product (GDP), after agriculture which accounts to 9 percent of the total.

Considering the need of balanced feed and its supply, the feed industry has better opportunities and scope to perform well in near future. India had a considerable increase in feed production, up to 29.4 million tons (a 10 percent increase over 2013), owing mainly to favorable weather conditions and consistently-improving farming methods and technology.

Conclusion

In view of the foregoing, it may be noted that there is excellent potential for feed products in India, particularly cattle f eed. Compounded Cattle Feed (CCF), though a relatively new entrant in the market, is fast gaining momentum in the recent past, it may be reasonably assumed that the demand for CCF will grow in the future.

Today the livestock industry is seen as the principal factor to improve the livelihood of people and bring extra income to the family. Globally Indian feed production stands at only 3%, which is approximately 29.43 MMT of total 980 MMT (2014). Among which Catt le feed is 7.5 MMT. It is been estimated that by 2025 the country would require more than thrice the quantity of feed it produces today, including a double increase in cattle feed. To meet the growing demand, it is essential to identify the challenges of the sector. As ment ioned above, not only an aggressive promotion of educating the farmer is essential to promote the usage of feed, but strengthening the link between feed industry and the farmer is equally important. There also needs to be formulated an approachable cost factor for the small & marginal farmers to avail the same to increase the per capita consumption of protein feed, thereby increasing and improving quantity and quality of milk. There has been a slow but steady change in the feed sector of the country with international standard feed plants being established. Production of safe and hygienic feed, along with biogenetically modified is the current and upcoming trend to improve the quality of nutritionally balanced compounded feed. Thus supporting millions of farmers with added income and benefiting over 1.3 billion population with availability of quality and affordable milk

STRENGTH:

The existing management has a strong technical, finance and administrative expertise in various industries and corporate sect ors including the business of the Company. Our Strengths includes: Cordial relations with Customers; In depth knowledge of Industry Commercial & Technical; Established manufacturing facility; Experienced management team

We have installed a modern technique Plant and machinery for manufacturing of high quality cattle feed.

There are 4 types of cattle feed: 1 Pellet form 2. Mash Form 3. Cotton Seed Cake 4. Feed Chips

Our cattle feed products are prepared with a deep understanding of different feeding practices on the basis of milk production and level of cows and buffalos. Our product contains Protein, Energy, minerals and vitamins in adequate quantity and proportion to meet the nutritional requirement of dairy cattles.

We offer a variety of Cattle feed and feed supplements to enhance milk production, reproductive ability and health of cattle and try to be one of the first 5 companies engaged in the business of manufacturing and providing cattle feed and feed supplements