Dhyaani Tradeventtures Ltd Management Discussions

GLOBAL ECONOMY OVERVIEW

The global economy exhibited steady yet uneven growth across regions in 2024. A notable trend was the slowdown in global manufacturing, especially in Europe and parts of Asia, due to supply chain disruptions and weak external demand. In contrast, the services sector performed better, supporting growth in many economies. Inflationary pressures eased in most economies. However, services inflation has remained persistent. Although commodity prices have stabilised, the risk of synchronised price increases persists. With growth varying across economies and last-mile disinflation proving sticky, central banks may chart varying paths of monetary easing. This will lead to uncertainty over future policy rates and inflation trajectories. This apart, geopolitical tensions, ongoing conflicts, and trade policy risks continue to pose significant challenges to global economic stability.

INDIAN ECONOMY IN CONTEXT OF THE GLOBAL ECONOMY

India displayed steady economic growth. As per the first advance estimates of national accounts, Indias real GDP is estimated to grow by 6.4 per cent in FY25. Growth in the first half of FY25 was supported by agriculture and services, with rural demand improving on the back of record Kharif production and favourable agricultural conditions. The manufacturing sector faced pressures due to weak global demand and domestic seasonal conditions. Private consumption remained stable, reflecting steady domestic demand. Fiscal discipline and strong external balance supported by a services trade surplus and healthy remittance growth contributed to macroeconomic stability. Together, these factors provided a solid foundation for sustained growth amid external uncertainties.

INDIAN ECONOMY OVERIVEW WITH FOCUS ON AGRICULTURE & ALLIED SECTORS

The domestic economy remains steady amidst global uncertainties. As per the first advance estimates released by the National Statistical Office, Ministry of Statistics & Programme Implementation (MoSPI), the real gross domestic product (GDP) growth for FY25 is estimated to be 6.4 per cent. From the angle of aggregate demand in the economy, private final consumption expenditure at constant prices is estimated to grow by 7.3 per cent, driven by a rebound in rural demand. PFCE as a share of GDP (at current prices) is estimated to increase from 60.3 per cent in FY24 to 61.8 per cent in FY25. This share is the highest since FY03. Gross fixed capital formation (GFCF) (at constant prices) is estimated to grow by 6.4 per cent. On the supply side, real gross value added (GVA) is also estimated to grow by 6.4 per cent. The agriculture sector is expected to rebound to a growth of 3.8 per cent in FY25. The industrial sector is estimated to grow by 6.2 per cent in FY25. Strong growth rates in construction activities and electricity, gas, water supply and other utility services are expected to support industrial expansion. Growth in the services sector is expected to remain robust at 7.2 per cent, driven by healthy activity in financial, real estate, professional services, public administration, defence, and other services. The analysis of growth trends in this chapter, hereinafter, is mostly based on the trends in the first half (H1) of FY25, on which the information base is more comprehensive.

Growth in H1 FY25 driven by agriculture and services sector 1.28 The real GVA grew by 6.2 per cent in H1 FY25. A strong growth momentum in Q1 FY25 was followed by a subdued performance in Q2 FY25. The agriculture and services sectors emerged as key growth drivers during this period. However, the overall growth was tempered by moderation in industrial growth, particularly in manufacturing, which faced challenges from slowing global demand and supply chain disruptions. Improved agricultural prospects in FY25 1.29 Agriculture growth remained steady in H1 FY25, with Q2 recording a growth rate of 3.5 per cent, marking an improvement over the previous four quarters. Healthy Kharif production, above-normal monsoons, and an adequate reservoir level supported agricultural growth. As per the first advanced estimates of agricultural production for 2024-25, total Kharif food grain production is estimated at a record 1647.05 lakh metric tonnes (LMT), higher by 5.7 per cent compared to 2023-24 and 8.2 per cent higher than the average food grain production in the past five years. The estimated increase is mainly on account of the rise in rice, maize, coarse grains and oilseeds output. A normal southwest monsoon in 2024 has improved the water levels in reservoirs, ensuring sufficient water for irrigation during the rabi crop production. As of 10 January 2025, rabi sowing of wheat and gram was 1.4 per cent and 0.8 per cent higher, respectively, compared to the previous year. Improved agricultural prospects also bode well for softening of food inflation pressures over the course of the year.

AGRICULTURAL SECTOR

Indias agriculture sector is a high-growth investment opportunity with increasing exports, technological advancements, and government support, offering potential for sustainable and profitable returns. Agriculture, with its allied sectors, is unquestionably the largest livelihood provider in India, more so in the vast rural areas. It also contributes a significant figure to the Gross Domestic Product (GDP). Sustainable agriculture, in terms of food security, rural employment, and environmentally sustainable technologies such as soil conservation, sustainable natural resource management and biodiversity protection, are essential for holistic rural development. Indian agriculture and allied activities have witnessed a green revolution, a white revolution, a yellow revolution and a blue revolution. Indias agricultural sector has demonstrated remarkable resilience in recent years, marked by consistent growth rates. This stability can be largely attributed to various government initiatives to enhance productivity, promote crop diversification, and increase farmers income. A crucial factor influencing agricultural performance is the impact of weather conditions. Climate variability can present significant challenges; however, farmers with diverse income streams are better positioned to navigate these uncertainties. Allied activities such as animal husbandry, fisheries or agroforestry, can enable the farmers to mitigate the risks effectively. Various government initiatives are specifically designed to address these challenges. The ‘Agriculture and Allied Activities sector has long been the backbone of the Indian economy, playing a vital role in national income and employment. This sector contributes approximately 16 per cent of the countrys GDP for FY241 (PE) at current prices and supports about 46.1 per cent of the population. Not only does its performance directly impact food security, but it also influences other sectors, sustaining livelihoods and supporting economic growth. 9.2 In recent years, the agriculture sector in India has shown robust growth, averaging 5 per cent2 annually from FY17 to FY23, demonstrating resilience despite challenges. 9.3 In the second quarter of the FY25 year, the agriculture sector recorded a growth rate of 3.5 per cent3. This performance represents a recovery compared to the previous four quarters, during which growth rates varied from a modest 0.4 per cent to 2.0 per cent. The recent rise in growth rate can be attributed to improved conditions, potentially driven by favourable weather patterns, advancements in agricultural practices, and government initiatives to enhance productivity and sustainability within the sector. Assured remunerative prices, improved access to institutional credit, crop diversification, support for sustainable practices, and enhancement in productivity have played a crucial role in the sustained growth observed. Riding on good monsoon, kharif food grain production in 2024 is projected at 1647.05 Lakh Metric Tonnes (LMT), suggesting an increase of 89.37 LMT compared to the previous year and 124.59 LMT above the average kharif food grain output4 bodes well for food security. Agricultural income has increased at 5.23 per cent annually over the past decade, compared to 6.24 per cent for non-agricultural income and 5.80 per cent for the overall economy.

The Union Budget 2025-26 reflected the governments continued commitment to bolstering agricultural sector and improving the livelihoods of farmers across India. The budget includes several significant allocations aimed at enhancing agricultural productivity and supporting farmers.

With agricultural output poised to rise due to the factors discussed, we remain confident in the sectors growth trajectory and the new opportunities it will unlock.

OPPORTUNITIES AND STRENGTHS

1) Indias expanding population is driving a substantial demand for food and agricultural products. Meeting this demand requires enhanced agricultural productivity and a more efficient supply chain. 2) The countrys diverse agro-climatic zones enable the cultivation of a wide variety of crops, offering farmers opportunities to boost their income through crop diversification. 3) The rising interest in organic farming and sustainable agriculture positions India to become a global leader in this space, tapping into the increasing international demand for organic products. 4) Agro-forestry and agro-tourism present promising avenues for supplementary farmer income. With proper investment, these sectors can promote sustainable land use and rural development. 5) Government initiatives such as the Pradhan Mantri Fasal Bima Yojana, Pradhan Mantri Krishi Sinchai Yojana, and e-NAM are transforming the agricultural landscape. These programs provide farmers with access to crop insurance, irrigation infrastructure, and digital market platforms, helping improve productivity and profitability. 6) Robust Research & Development (R&D) Capabilities: The Companys strong emphasis on research and development has been instrumental in driving innovation and maintaining a competitive edge. R&D efforts are primarily focused on enhancing existing products by improving yields and optimizing process efficiencies. Additionally, the Company actively explores high-growth areas to expand its innovation pipeline. Through its subsidiary, Astec LifeSciences Limited, the Company leverages advanced R&D capabilities in agrochemical active ingredients. Strategic investments are also being made in developing cutting-edge technologies to broaden the product portfolio across various business segments.

THREATS, RISKS & CONCERNS

1) Climate and Environmental Risks: Unpredictable weather patterns (droughts, floods, heatwaves) due to climate change, Soil degradation and loss of fertility from overuse of chemical fertilizers and poor land management. Water scarcity and inefficient irrigation practices. Declining biodiversity due to monoculture farming and habitat loss. 2. Economic and Market Risks: Price volatility of agricultural commodities, dependence on middlemen, leading to reduced profit margins for farmers. Limited access to formal credit and financial services. High input costs (seeds, fertilizers, machinery) with fluctuating returns. 3. Infrastructure and Supply Chain Challenges: Inadequate storage and cold chain facilities, leading to post-harvest losses. Poor rural connectivity and logistics infrastructure. Limited access to modern technology and mechanization. Fragmented land holdings, making large-scale farming inefficient. 4. Policy and Regulatory Risks: Inconsistent agricultural policies across states. Delays in subsidy disbursement and insurance claims. Lack of awareness and access to government schemes. Trade restrictions and export bans affecting market access.

5. Social and Demographic Concerns: Aging farming population and youth migration to urban areas. Low levels of education and training among farmers. Gender disparities in land ownership and access to resources. Farmer distress and mental health issues, sometimes leading to suicides. 6. Technological and Innovation Gaps: Slow adoption of precision agriculture, AI, and data analytics. Limited R&D in certain crop categories and allied sectors. Digital divide in rural areas affecting access to agri-tech solutions.

INTERNAL CONTROL SYSTEMS

The Company does not have any formal internal audit system. The internal policies of the Company ensure efficient use and protection of assets and resources, compliance with policies and reliability of the financial and operational reports. The management is taking steps to introduce the internal audit system commensurate with the size and nature of the business of the company. The Audit Committee of the Board of Directors deals with the adequacy of internal controls and budgeting functions.

FINANCIAL PERFOMANCE

During the year, your Company recorded a turnover of 1,228.12 million. While the Company reported a loss for the financial year, it continued to make operational improvements aimed at long-term value creation. The Board remains committed to driving revenue growth and enhancing operational efficiency. With focused efforts on market expansion, and cost optimization, the Company is well-positioned to capitalize on future opportunities and strengthen its financial performance in the coming years.

HUMAN RESOURCES

The Company continued to have cordial and harmonious relations with its employees during the year under review.

FOREIGN CURRENCY RISKS

Volatility in global economies have become the new common in recent times and since company has less exposure to foreign revenue, risk is low in our case. However, the company has a defined policy for managing its foreign exchange exposure minimizing the currency risk which results in stable earnings.

FINANCIAL RATIOS