Bohra Industries Ltd Management Discussions

<dhhead-MANAGEMENT DISCUSSION AND ANALYSIS REPORT</dhhead-

OVERVIEW:

Incorporated in 1996, Bohra Industries Limited is a publicly listed company engaged in the manufacture, processing and trading of fertilizers, agro-chemicals and industrial chemicals, including SSP and GSSP. The Company also undertakes trading, import and export of minerals, ores, metals, industrial materials and related products. Its objects further include engineering, procurement, construction and consultancy services for industrial and infrastructure projects. The Company is also authorised to undertake activities in the power and renewable energy sector, including wind, solar and captive power projects. Overall, the Company has a diversified business profile spanning fertilizers, chemicals, industrial materials, engineering and energy-related activities.

INDIAN ECONOMY OVERVIEW:

Agriculture, in India, 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 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 population 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 phosphate and other fertilizers. Some steps are implemented to assure an increase in the supply of chemical fertilizers at reasonable prices. In India, Fertilizer Industry is accelerating fertilizer consumption by fixing, on the one hand, low and similar price for identical nutrient in fertilizers, and on the other hand providing the manufacturers ample compensation through the retention price and subsidy scheme through NBS. Due to such corrective steps, the fertilizer nutrient demand has gone up. Govt. has initiated DBT for farmers which would further push the consumption in long run and ease up blocked funds of manufacturers with government and improve working of the fertilizer sector.

OUTLOOK AND PROSPECTS:

The Company has a diversified business outlook, with its objects covering fertilizers, agrochemicals, industrial chemicals, minerals, metals, engineering and infrastructure services, consultancy and renewable energy. The Company can leverage opportunities in the fertilizer and chemical sector through manufacturing, processing, trading, import and export of related products. Its engineering and consultancy capabilities provide scope for undertaking industrial and infrastructure projects, including turnkey and EPC activities. Overall, the broad scope of its business objects provides the Company with opportunities to diversify its operations and pursue growth across multiple industrial segments.

(1) Industry structure and developments:

The fertilizer industry in India consists of three major players: Government-owned Public Sector Undertakings, Cooperative Societies like KRIBHCO and IFFCO, and Private sector units. There are 33 major producers producing N, NP, and NPK fertilizers in the country. Over 100 SSP fertilizer manufacturers produce over 4400K MT annually. The fertilizer industry of India continues to make constructive use of the government fertilizer subsidy to ensure the country maintains self-sufficiency in food grain production. The fertilizer industry organizes itself through the Fertilizer Association of India to coordinate with the Government of India to achieve macroeconomic agricultural objectives. The Indian fertilizer industry succeeds in meeting almost fully the demand for key chemical fertilizers through domestic output and calibrated imports.

CONCERNS:

Our Companys 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 commodity. Companies revenue depends on fertilizer prices and the quantity of fertilizer companies sell. Fertilizer prices are driven by industry capacity, rivalry (competition among firms), and marginal producers cost, proximity to customers, 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 consumption, diet patterns, crop yields, nutrient application, weather, plantation, and energy consumption.

OUTLOOK:

Its universally accepted that the use of chemical fertilizer is an integral part for raising the agricultural production to a higher level. Studies conducted by the Food and Agricultural Organization of the United Nations (FAO) have established beyond doubt that there is a close relationship between the crop yields and fertilizer consumption. 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 cake, castor cake, groundnut cake etc. for want of their availability in adequate quantities. And increasing agriculture production by increasing cultivation area is no longer possible as cultivable and left over is only marginal and decreasing. 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 yield per hectare through adoption of modern agricultural technology. Fertilizers have the advantages of fast movement in bulk and need based.

SEGMENT WISE PERFORMANCE

During the period under review, the total revenue earned was ^0.20 lakh, compared to nil revenue in the previous year. The Company has incurred a net loss of ^297.03 lakhs as against a net loss of ^368.33 lakhs in the previous year.

The operations of the Company have remained temporarily suspended during the year resulting in nil operational revenue however, the Directors remain hopeful of resuming operations and reviving growth in the near future.

OPPORTUNITIES

There is a compelling need for alternate fertilizers which will have lesser wastage and reduced fertilizer usage while keeping the same or more yield. This opens up for new investment with better return while ensuring food security. Business diversification like Trading of fertilizer products will improve the bottom line of the company.

THREATS

High volatility in the prices of raw material resulting in an adverse impact on production and marketing plans which eventually affects the bottom line of the company.

RISK AND CONCERNS

The fertilizer sector still depends on subsidies from the government. Notwithstanding a timely pay-out of outstanding amount to all fertilizer manufacturers by the government in the wake of a global commodity Price-hike, any delay in subsidy disbursement in future may affect fertilizer manufactures.

INTERNAL CONTROL SYSTEMS

The Company has built adequate systems on Internal Financial Controls towards achieving efficiency and effectiveness in operations, optimum utilization of resources, and effective monitoring thereof as well as compliance with all applicable laws The internal control mechanism comprises a well-defined organisation structure, documented policy guidelines, predetermined authority levels and processes commensurate with the level of responsibility and that same are adequate and operating effectively.

FINANCIAL PERFORMANCE

The annexed Balance Sheet has given the members, the Companys performance in the year under review.

HUMAN RESOURCES MANAGEMENT

The Companys belief in trust, transparency and teamwork improved employee efficiency at all levels. The Companys commitment to harmonious industrial relations resulted in enhancing effectiveness of operations and enabled the achievement of international benchmarks in tourism business The companys ongoing objective is to create an inspirational work climate where talented employees engaged in creating sustained value for the stakeholders. Training and orientation programs are being arranged periodically, to update the employees in the work techniques. The overall human resources are positive and we would be able to effectively achieve the desired objectives. The Company has developed an environment of harmonious and cordial relations with its employees.

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.