Indo US Bio-Tech Ltd Management Discussions

Indian economic overview:

The Indian economy has exhibited remarkable resilience in overcoming challenges during FY 2023. An analysis of various sectors indicates that the predominant growth has been driven by strong domestic demand and increased construction activity, facilitated by substantial infrastructure investments from both the central and state governments.

These investments have stimulated economic growth and created numerous employment opportunities. While still in the early stages of recovery, there are promising signs that private investment may rise in the post-pandemic period, particularly in the manufacturing and services sectors. The manufacturing sector, in particular, has witnessed a gradual increase in private investment, indicating a favourable investment cycle.

The Reserve Bank of India (RBI) reports that retail inflation in India declined below 6% in March 2023, leading to a certain degree of stability in commodity prices.1 This, coupled with a resurgence in consumer demand, can be attributed to the governments implementation of favourable policies that help mitigate risks to the Indian economy. A range of high-frequency indicators, such as GST collections, railway and air traffic growth, electronic toll collections and E-Way bill volumes, all point to a robust economic recovery.

Moreover, Indias consistent growth momentum has bolstered confidence and created a conducive environment for attracting investments. India is projected to be the fastest-growing economy among the G-20 nations in the coming years. Moreover, Indias leadership of the G20 Summit in 2023 presents a significant opportunity to foster global coordination for economic stability and prosperity.

With measures in place to curb inflation, manage the depreciation of the Indian currency and mitigate the immediate effects of the fiscal deficit on the economy, there is an expectation of substantial improvement in business prospects. This, combined with a favourable policy environment and reduced risks that could adversely impact the economy, is anticipated to enhance consumer confidence, offering some relief to the Indian economy.

Industry overview:

Indian agricultural industry Indias agricultural sector has experienced substantial progress, exhibiting an average annual growth rate of 4.6% over the past six years. It represents 18.3% of Indias Gross Value Added (GVA) at current prices for FY 2022-23. This commendable performance has played a pivotal role in fostering the nations overall advancement and development and ensuring food security. Additionally, India has recently emerged as a net exporter of agricultural commodities, achieving an export value of USD 40.37 billion from April 2022 to January 2023.

The Government has implemented a policy of progressively raising the Minimum Support Price (MSP) for all 22 Kharif, Rabi and other commercial crops. The MSP is set at a minimum of 50% above the all-India weighted average cost of production, starting from the agricultural year 2018-19. Notably, higher MSPs have been allocated to pulses and oilseeds to align with evolving dietary preferences and foster self-sufficiency in their production.

Indo-US

The agricultural sector in India has witnessed significant growth in the production of major crops, including rice, wheat, maize, cereals and lentils. The estimated food grain production is projected to reach 3305.34 lakh tones. Additionally, the United Nations has designated the year 2023-24 as the International Year of Millets. This substantial surge in agricultural output contributes to enhancing food security and plays a vital role in supporting the economic stability and prosperity of farmers.

The augmentation in the production of coarse grains underscores the significance of promoting nutrient-rich grains within the nation. Supported by the farmer-friendly policies of the Government and the efforts of farmers and scientists, the agricultural sector in India is poised for sustained advancement and further expansion in the upcoming years. These estimations serve as a pivotal gauge of the progress and potential of Indias agricultural industry, accentuating the countrys commitment towards attaining self-reliance in agricultural production and the goal of doubling farmers income.

Improved access to agricultural credit:

The Government has established a goal of achieving agricultural credit flows amounting to H 18.5 lakh crore in FY 2022-23. Demonstrating a consistent pattern, the Government has consistently raised this target annually and has successfully surpassed the set target for several consecutive years. Notably, in FY 2021-22, the actual credit flow exceeded the target of Rs. 16.5 lakh crore by approximately 13%.

This accomplishment was facilitated by the Governments implementation of various initiatives aimed at facilitating convenient access to credit for farmers at competitive interest rates. Noteworthy, among these initiatives are the Kisan Credit Card (KCC) Scheme, which enables farmers to obtain credit at any time and the Modified Interest Subvention Scheme, which offers subsidised interest rates on short-term agricultural loans of up to Rs. 3 lakhs.

As of December 2022, Kisan Credit Cards have been issued to approximately 3.89 crore eligible farmers, amounting to a total KCC limit of Rs. 4,51,672 crore. Moreover, in FY 201819, the Government of India extended the KCC facility to include farmers in the fisheries and animal husbandry sectors. As of October 17, 2022, over 1.0 lakh KCCs had been sanctioned for the fisheries sector, while forthe animal husbandry sector, the number stood at 9.5 lakh as of November 4, 2022.

Organic and natural farming:

India has the highest count of organic farmers globally, standing at 44.3 lakh. Also, an impressive 59.1 lakh hectares of land have been dedicated to organic farming as of FY 2021-22. The adoption of organic and natural farming practices ensures the production of food grains and crops free from chemical and pesticide residues. Additionally, it contributes to the enhancement of soil health and the mitigation of pollution. The Government has facilitated the advancement of organic farming through the implementation of two dedicated schemes, namely the Paramparagat Krishi Vikas Yojana (PKVY) and the Mission Organic Value Chain Development for Northeastern Region (MOVCDNER). These schemes primarily focus on the establishment of clusters and the formation of Farmer Producer Organisations (FPOs) to promote organic farming practices. As of November 2022, PKVY has successfully encompassed 32,384 clusters, covering a total area of 6.4 lakh hectares, benefiting 16.1 lakh farmers. Similarly, under MOVCDNER, 177 FPOs/FPCs have been established,

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benefiting 1.5 lakh farmers and facilitating organic farming of niche crops across 1.7 lakh hectares in the Northeast Region. Under the initiative known as Bhartiya Prakratik Krishi Paddhati (BPKP), a programme has been implemented to facilitate the adoption of diverse traditional and ecological farming practices, notably Zero-Budget Natural Farming (ZBNF). As a result of this scheme, a total of 4.09 lakh hectares of agricultural land have been successfully transitioned to natural farming across eight states.

Government initiatives:

Policies such as the implementation of Soil Health Cards, the establishment of the Micro Irrigation Fund and the promotion of organic and natural farming practices have proven effective in assisting farmers in optimizing their use of resources and reducing cultivation costs. Additionally, the encouragement of Farmer Producer Organizations (FPOs) and the implementation of the National Agriculture Market (e-NAM) extension platform have empowered farmers, bolstered their resources and yielded favorable returns on their investments. Moreover, the Agri Infrastructure Fund (AIF) has provided support for the establishment of diverse agricultural infrastructure. The introduction of the Kisan Rail, a dedicated transportation service for perishable agrihorticultural commodities, has catered exclusively to the transportation needs of such goods. The Cluster Development Programme (CDP) has successfully encouraged the integrated and marketoriented growth of horticulture clusters. Also, efforts have been made to foster a start-up ecosystem in agriculture and allied sectors by providing support and resources to farmers. These collective measures aim to bolster agricultural productivity, ensuring its sustained contribution to overall economic growth in the medium term.

Outlook:

The competition in crop production, particularly concerning value-added traits, is expected to intensify. This trend is driven by the need to address climate change and shifts, which contribute to the increasing complexity of diseases and their impact on the durability of agricultural products. To meet these challenges, there is a growing emphasis on fast-track breeding using new genetic technologies. The expansion of protected and organic cultivation, along with specialised products, is anticipated. Additionally, there is an increasing focus on seed enhancement technologies, which involve the utilisation of counted seeds of high value. This shift is driven by the rising demand from professional vegetable growers, who require high-performing seeds. Another significant development is the consolidation of vegetable seed companies. Multinational corporations (MNCs) are expected to invest more in breeding and technologies to gain a competitive edge in the market. Also, it is projected that the majority of crops will undergo more than 80% hybridisation. Over the course of ten years, the vegetable seed market is forecast to grow by 50%. This growth is likely to be accompanied by an increase in the area dedicated to vegetable cultivation, estimated to rise from 9.8 million hectares to 12 million hectares. This expansion is driven by rising demand and market trends. To keep pace with the evolving industry, a more sustainable seed business model is necessary, characterised by robust systems, processes, and well-defined business plans, as adopted by many MNCs. Additionally, the export of vegetable seeds is witnessing an increasing trend, indicating potential opportunities for market expansion and international trade.

INDOUS:

INDO US BIO-TECH LIMITED is involved in production and marketing of various types of agriculture crop seeds like vegetable seeds, pulses, cereals, oil seeds and spice seeds. The Company holds its

own R&D Unit registered and recognized by DSIR, Govt, of India, New Delhi. Company holds sound marketing network with its dealers/distributors in the country through its well qualified, experienced & efficient employees The Company holds rate contract to supply seeds to Govt, of MP State and Chhattisgarh State. It also holds rate contract with NAFED. The holds its own seed processing Unit with Latest Technology.

A. BUSINESS HIGHLIGHTS Turnover:

Indo Us Bio-Tech Limited has turnover of Rs. 72, 83,62,968.00 in 2023-2024 and Rs. 1,03,83,84,012 in 2024-2025.

Administrative and Selling Expenses:

Major components of administrative and other expenses include Bank Charges & Commission, Sales Promotion & Presentation, Brokerage & Commission, Site Exp.,

Legal and Professional Tax, Rent, listing fees, insurance premium, Sundry Exp., Bad Debts written off, etc.

Depreciation:

Depreciation charge for the current year came to Rs. 1,09,77,618.00 as against Rs. 80,04,623.00 of the previous year.

Provision for Tax:

The Company has made provision towards Current Tax of Rs. 31,67,348.00 deferred taxes of Rs. (3,67,701.00) & short provision of Rs. (1,68,143.00) and as against Current Tax of Rs. 36,94,052.00 deferred taxes of Rs. (7,41,394.00) & short provision of Rs. 25,77,196.00 of the previous year.

Profit/Loss after Tax:

The Company has made profit after tax for the current year is Rs. 1 6,26,74,252.00 as against profit of Rs. 8,25,13,815.00 during the previous year. The Directors are hopeful for the better performance in the future.

Earnings per Share:

Basic and diluted earnings per share for the current year worked out to Rs. 8.12 as against Rs. 4.11 of the previous year.

B. SEGMENT WISE PERFORMANCE:

The company is an ISO 9001-2015 Company involved in crop Research and Development through breeding, Production of seeds, processing, packing and marketing of high performing hybrid and open pollinated varieties of agricultural crops. Your company has adopted various marketing strategies for sustained growth including increase in number of clients / customers to reduce the dependency on any single client / customer.

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C. BUSINESS OVERVIEW: Industries overview:

The management is confident of improvement in the companys working in the near future with fast growth.

The seed industry has witnessed a substantial change in the past century, with farmers re- lying on purchasing seeds from market with better traits rather than relying on seeds from previous seasons harvest. Developments in seed technology have increased the momentum of the industrys growth, and the introduction of genetically modified crops has further boosted the seed market.

Diversified Product Portfolio:

Companys Product Portfolio includes diversified variety of agriculture seeds namely vegetable seeds, oil seeds, pulses seeds, cereals seeds, spices seeds used in cultivating all kinds vegetables, pulses, crops like Tomato, Okra, Brinjal, Onion, Bit Root, cucumber, Bottle gourd, groundnut, mustard, Bajra, Wheat, Cumin, Coriander etc. Wide range of products allows the existing customers to source most of their product requirements from a single vendor and also enables the company to expand the business from existing customers, as well as address a larger base of potential new customers.

Well Equipped Research and Development facility:

Company has a well-equipped Research and Development facility to improve quality of the products and to produce high performance of agriculture seeds. The R&D team includes plant breeders, crop protection specialists, agronomists, seed technologists, biotechnologists and physiologists.

Well Established in Domestic as well as Export Market:

Company is catering the customers needs both in domestic market as well as overseas market.

Broad base Distribution Network:

Company is having wide distribution network in the state of Gujarat, Maharashtra, Madhya Pradesh, Chhattisgarh, Rajasthan, Himanchal Pradesh, Punjab, Bihar, Uttar Pradesh, Karnataka, Jharkhand etc.

They also export to many countries namely USA, New Jersey, Palestine, Maimi USA, Cameroon, Kuwait, Srilanka and Mauritius etc through direct or Merchant Export.

D. SWOT ANALYSIS OF THE COMPANY

Strengths:

• Huge collection of Germplasm

• Indepth knowledge of industry

• In-house Research and Development (R&D) unit

• Broadbase Distribution Network

Weaknesses:

• Dependency upon external factors like climate, weather conditions

• Hybrid seeds are costlier than natural seeds, farmer prefers natural seeds rather than Hybrid seeds

• No Intellectual protection of all our products

• Time period for developing product is long

Opportunities:

• Government initiative to promote agriculture industry will help our industry to grow

• Continues development in R&D work resulting into yielding of new product (seed)

• Abundant water, electricity and subsidies to farmer by government will help the agriculture industry to grow

Threats:

• Competition from producer of certified seed

• Industry is prone to changes in government policies

• No entry barriers in our industry which puts us to the threat of competition from new entrants

• Fluctuations in the market prices

E. RISKS AND CONCERNS:

Your company is mainly focusing on manpower and the intelligence. Apart from the risk on account of governmental policies and regulatory changes, business of the company is exposed to certain operating business risks, which is mitigated by regular monitoring and corrective actions. The company has taken necessary measures to safe guard its assets and interest etc.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The company has proper and adequate system of internal controls commensurate with its size and nature of operations to provide reasonable assurance that all assets are safeguarded, transactions are authorized, recorded and reported properly and to monitor internal business process, financial reporting and compliance with applicable laws.

The internal control system has been designed so as to ensure that the financial and other records are reliable and reflects a true and fair view of the state of the Companys business. A qualified and independent committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests improvements for strengthening them.

G. HUMAN RESOURCE MANAGEMENT:

The Company believes that human resource is the most important assets of the organization. It is not shown in the corporate balance sheet, but influences appreciably the growth, progress, profits and the shareholders values. During the year your company continued its efforts aimed at improving the HR policies and processes to enhance its performance. The vision and mission of the company is to create culture and value system and behavioral skills to insure achievement of its short- and long-term objectives.

Cautionary Statement:

Statement made in the Management Discussion and Analysis Report describing the companys objectives, projections, estimates, expectations may be "Forwardlooking statements" within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand supply and price conditions in the markets in which the company operates changes in the government regulations, tax laws & other statutes and other incidental factors.