Elegant Floriculture & Agrotech (India) Ltd Management Discussions

Overall Review

Floriculture or flower farming is the study of growing and marketing flowers and foliage plants. Floriculture includes cultivation of flowering and ornamental plants for direct sale or for use as raw materials in cosmetic and perfume industry and in the pharmaceutical sector. It also includes production of planting materials through seeds, cuttings, budding and grafting. Worldwide more than 140 countries are involved in commercial Floriculture. The leading flower producing country in the world is Netherlands and Germany is the biggest importer of flowers. Countries involved in the import of flowers are Netherlands, Germany, France, Italy and Japan while those involved in export are Colombia, Israel, Spain and Kenya. USA and Japan continue to be the highest consumers. The floriculture industry in India is still at its nascent stage and a large portion of its potential remains untapped. The Indian floriculture industry has shifted from traditional flowers to cut flowers, mainly for export purposes. Modernization and growing western cultural influences resulted in the growth in demand for flowers amongst the consumers in India, especially the young. Apart from this, there is also a huge spurt in the demand for flowers during festivals. This growth in demand for flowers has impacted its retailing in India. The report states that in terms of rupee value, the industry has grown at a CAGR of nearly 20% in the last five years. Currently, most of the flower cultivators entering the business seek to create a niche in the global market. Fresh flowers from India are being exported to several countries such as the USA, UK, Netherlands, Japan, Germany, and United Arab Emirates etc. The credit for the growth in exports goes to the various initiatives introduced by the government. The floriculture industry has been identified as a priority sector by the government and has accorded it 100% ‘export oriented unit (EOU) status. It has also facilitated 100% foreign direct investment, encouraging joint ventures, a steady flow of capital and the establishment of state-of-the-art technologies for its cultivation, storage and transportation.

Industry Structure and Development

In the recent years it has emerged as a profitable agri-business in India and worldwide has led to an increase in the demand of floriculture products in the developed as well as in the developing countries worldwide. The production and trade of floriculture has increased consistently over the last 10 years.

In India, Floriculture industry comprises flower trade, production of nursery plants and potted plants, seed and bulb production, micro propagation and extraction of essential oils. Though the annual domestic demand for flowers is growing at a tremendous rate and international demand are increasing at a very high note, Indias share in international market of flowers is negligible. The country has exported 19677.94 MT of floriculture products to the world for the worth of Rs. 71782.86 Lakhs in FY 2023-24 which is 1.42% higher than the value in FY 2022-23.

Opportunities and Threats/Risk and concern

A growing market for flowers at domestic, national and international level in which demand exceeds the supply, and the world demand is estimated to grow anywhere between 15% and 25% per annum. The high production costs in developed countries provide opportunity as they rely largely on imports. Threats to the industry include unavailability of proper logistic partner and flowers are highly perishable, high rate of import duty on Indian cut flowers, unavailability of cold storage units at airports etc.

Segment-wise/Product-wise Performance

Your Company has only one reporting segment. The revenue from operations for the year is Rs. 60.12146 lakhs and the net profit is Rs.1.70 lakhs.

Internal Control System

Your Company has a planned internal control system through internal checks and reviews it periodically to strengthen it and safeguard Companys assets. Management Information System is given upmost importance.

Financial Performance w.r.t. Operational Performance

During the year under review, the Company has earned total revenue of Rs.113.71 lakhs in comparison to Rs. 129.30 lakhs during the previous year. The Company has earned net profit of Rs.1.70 lakhs in comparison to net loss of Rs. 12.49 lakhs during the previous year.

Safety, Health and Environment

Your Company as a matter of policy gives greater importance to safety, health and environment and also ensures compliance with applicable legislative requirements.

Human Resources

Your Company recognizes the importance of Human Resource in achieving its objectives and strategies as human resource plays an important role in the success and growth of any Company. Your company gives priority in honing and utilizing their skills through in house training programs.

Key Financial Ratios

In accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in Key sector-specific financial ratios. The Company has identified the following ratios as key financial ratios:

Particulars	F.Y. 2023-24	F.Y. 2022-23
Current Ratio1	234.59	282.93
Return on Equity Ratio2	0.08	-0.59
Trade Receivables Turnover Ratio3	2.99	2.71
Trade Payables Turnover Ratio4	3.77	4.06
Net Capital Turnover Ratio5	0.04	0.05
Net Profit Ratio6	2.82	-16.03
Return on Capital Employed7	0.11	-0.83

1Decrease in current ratio due to increase in Current Liabilities.

2The Return on Equity Ratio is increased, as there was increase in Net Profit after tax due to the decrease in the cost of materials expenses during the year into consideration. ³Trade Receivable Turnover Ratio is increased, as there was increase in companys turnover during the year into consideration. ⁴The Trade Payable Turnover Ratio is decreased, as there was decrease in total purchases during the year into consideration. ⁵The decrease in Net Capital Turnover Ratio was because of increase in working capital requirement during the preceding year. ⁶The Net Profit Ratio is increased, as there was profit during the year into consideration. ⁷The Return on Capital Employed Ratio is increased as there was profit during the year into consideration.