JK Agri Genetics Management Discussions


TO THE MEMBERS

Your Directors have pleasure in presenting the Annual Report together with the Audited Financial Statements of the Company for the Financial Year ended 31st March 2022.

FINANCIAL RESULTS

(Rs in Crore)

Sales & Other Income 249.90
Profit before Finance Cost & 19.26
Depreciation (PBIDT)
Profit after Tax 7.73
Surplus brought forward 41.92
Surplus carried to Balance Sheet 48.96

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs 1.50/- per Equity Share of Rs 10/- each (15%) for the Financial Year ended 31st March 2022. The Dividend outgo subject to approval at the ensuing Annual General Meeting will be Rs 69.55 Lacs.

OPERATIONS

During the year 2021-22, your Company has delivered 10% revenue growth compared to the last year. Vegetable business and field crops delivered 19% and 9% growth, respectively. However, Cotton seed business continues to be challenging in the backdrop of spread of unapproved Cotton seeds, resulting degrowth from last year.

On the export front, your Company continues to carefully expand its geographical and product footprints and diversifying into new crops like Chilli and Cucumber. During the year, the export revenue registered 24% growth. However, export segment continues to face headwinds due to political instability and forex availability in importing countries, currency depreciations & high trade logistics costs.

The year 2021-22 was one of the toughest years for agriculture companies especially in the seed sector. Covid second wave hit during peak season (April - May 2021) impacting rural economy severely. Operations and logistics activities were grossly disrupted. However, the operation team stood up to challenge and delivered as per market demand.

As a part of the growth strategy, the sales teams were realigned to focus on different verticals of business. The realigned growth strategy and strategic business plan is based on six priorities as outlined earlier as well

(1) Portfolio Strengthening

(2) Demand Generation

(3) Effective Channel Management

(4) Branding & Effective use of Digital Media

(5) High Operation Efficiency and

(6) Talent Acquisition & People Development.

To strengthen portfolio, your Company now follows strict product lifecycle management principles. Portfolio renewal has been fundamental for Companys growth and in last 2 years, 24 new Hybrids were introduced and most of them are performing well & the actual volume growth will be visible in the coming years. Robust product advancement processes have been put in place. Demand generation is another key driver for growth, we are working on focused village approach and investing on the specific geographies to create high demand for our products.

New packing design and over all appearance of market communication tools have been well accepted by the customers and channel partners. With the help of social media and digital tools, customer connect and visibility have been enhanced. The work that was started last year to improve the performance of vegetable seed business has started delivering positive outcomes.

As a part of broader digitisation initiative, your Company implemented Track & Trace solution, which provides serialisation of each product pack and end to end visibility amongst the various inventory stages of the products including establishing linkage of ‘Batch Genealogy. The initiative helps to meet the compliance requirement of uniquely serialising product packs, establish end to end inventory traceability and support several CRM initiatives.

Untimely and sustained rains in the month of September to December 2021 negatively impacted seed field production activities, however, the operation team developed and implemented appropriate mitigation plans to minimise the impact.

INDUSTRY OVERVIEW AND OUTLOOK

In the current situation the world is facing high agricultural prices across the segments and most of it is linked to the high demand post covid and ongoing conflict in the eastern Europe. High commodity prices are certainly good for the farmers but not for the consumers. Initial indicators for the upcoming season are good as farmers had a good harvest, IMD forecast for the rains is normal and all demand factors are positive. We also understand that government will do all in their control to ensure timely availability of fertilisers especially Phosphorus and Potash at affordable rate to the farmers. The Indian seed market has witnessed a major restructuring because of the implementation of some progressive policies by the government. This includes launching initiatives to promote the use of hybrid seeds among the farmers who had earlier used outmoded open pollinated varieties. Some other growth-inducing forces, such as growth in income levels, commercialisation of agriculture, patent protection systems and intellectual rights over plant varieties, have given a great push to the market. Owing to these factors, the Indian seed market is expected to exhibit strong growth in future.

During the year 2021-22, few crop segments like Hybrid rice, vegetable seeds and Cotton faced major challenges due to multiple factors at different times of the year including prolonged rains in North & East markets. The extended rainy season impacted the cropping of Cauliflower, Cabbages & Tomatoes. Whereas Covid 3rd wave in October to January put farmers in ambiguity of which crop to be cultivate so that they can sell their produce profitably. The above factors impacted overall business. From 4th quarter of the year, positive sentiments are building owing to good commodity prices for vegetables. This gives us a hope that the business will come back to normal and can grow further in 2022-23.

RESEARCH AND DEVELOPMENT

The Company continues to sharpen focus on developing products for multiple climatic regions, biotic and abiotic stress to fulfil customer needs in domestic, African and ASEAN market. Your Company has prioritised R&D efforts and allocated the resources to focus on highest value opportunities.

Your Company has strengthened pre-breeding in field crops, cotton and vegetables using molecular marker assisted breeding, shifted from traditional marker to single nucleotide polymorphism and using latest biotechnology tools to develop product in shortest possible time. New breeding software has been introduced and improved strategic field trials with stringent product advancement procedure have been put in place. Your Company has strengthened production research for cost effectiveness and improved quality.

OPPORTUNITIES, THREATS, RISK AND CONCERNS

Opportunities

In India, agriculture is the dominant occupation, which secures abundant opportunities for the seed market. Awareness of healthy food habits and increase in general consumption of vegetables & fruits is driving the growth of vegetable seeds business in India. Farmers are adopting the cultivation of Hybrids with value added traits, ex. transportability, quality and disease tolerance traits resulting into increase in the value of the business. Acceptance of high value seeds cultivation is growing. Commodity prices are also giving a bigger opportunity for the growth of Vegetable seed business in India. The prolonged Covid-19 pandemic has provided both challenges and opportunities for seed companies to place more emphasis on sustainable innovative approaches for long-term profitability.

We are hopeful that the above-mentioned factors will help in fuelling the growth of the Seed Industry. There could also be an opportunity to improve our basket of input offerings to the farmers in future.

Threats, Risk and Concerns

While demand side of agriculture remains strong, external climatic factors continues to impact the production cycle. We have seen increased focus of the Government to deal with such challenges by especially strengthening Irrigation and Crop Insurance. Emerging global challenges like climate change, pest resistance, herbicide tolerance, higher costs to R&D and supply chain disruptions have made the seed industry facing challenging future. Changing consumer behaviours due to Covid-19 could also have an impact on cropping patterns. Increase in labour cost is also posing challenges to business.

More innovative approaches are required to feed the worlds increasing population and also to meet the challenges of reducing arable land and increasing demand for more sustainably grown food. For agribusiness companies to remain competitive they need to move out of the traditional innovation models and focus on attention to customer needs, dynamic R&D programs, rapid digitisation, increased internal and external collaboration and an innovation culture across the organisation. On the policy side, India needs better enabling environment that protects intellectual property and allows introduction of modern technologies in agriculture.

HUMAN RESOURCE DEVELOPMENT

Future of Work: A New Era in Human Resources

Future of Work represents a fundamental change in the working world. The Covid-19 pandemic casts a new light on people at work and society. Trends such as digitalisation, globalisation, global networking and demographic change have added a fair amount of complexity to how we work.

Our journey - Third successive certification of "Great Place to Work" recognition has given us lot of insights and confirms that with your support we are making slow but steady progress on the people front. Winning runner-up award for the inter-company UDAAN competition is a great example of Creativity & Innovation and fostering Cross Functional Team Working. All our actions are aimed at transforming our business and provide opportunities to developing talent. On people side, we continue to make policy changes to align with the best practices in gradual manner without ignoring the rapidly changing work environment.

Effective people policies covering all the aspects of the business that are important to the employees are in place. When transparency is part of workplace culture, it comes along with trust, communication and greater levels of employee engagement. The people policy changes implemented in alignment with the best industry practices had enhanced motivation amongst the employees, in-turn reflecting a positive surge in short, medium and long-term growth opportunities. Improved workplace ergonomics has upped the morale and increased employee involvement at locations.

At JKAGL, employee engagements are very important to us, events such as festivals, employee birthdays, achievements are celebrated in a unique manner. Strategies to promote inclusiveness are highly valued. Recently conducted Women day event, commemorating the culture of thanking all the women staff including front line seasonal staff for their support and contribution, has been a memorable event. These milestones will sharpen our objectives further in the journey to build a High-Trust, High-Performance Culture.

KEY CHANGES IN FINANCIAL INDICATORS

Key Changes in financial indicators, are given in the Notes to Financial Statements.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company believes that a strong Internal Control framework is an important pillar of Corporate Governance. The Company has in place Internal Control Systems commensurate with the nature of its business, size and complexity of its operations. These systems are regularly tested for their effectiveness by Statutory as well as Internal Auditor and were found to be operating effectively during the year. The Internal Auditor reviews on regular basis to check its adequacy and also to verify all statutory compliances. Based on the Internal Audit Programme approved by the Audit Committee of the Board, the Internal Auditor carry out regular internal audits covering all offices, factory and key areas of business. Reports of the Internal Auditor are placed before the Audit Committee on quarterly basis for review. The Audit Committee regularly reviews the reports and discusses the actions taken with the management in addition to reviewing the effectiveness of the internal control systems and monitoring the implementation of audit recommendations. There are adequate checks & balances in place, wherein deviation from the systems laid-out are clearly identified and corrective actions are taken in the respective areas, wherever required.

INTERNAL FINANCIAL CONTROLS

The Company has laid down Internal Financial Controls Systems, Policies and Procedures with reference to Financial Statements. The systems, policies and procedures are reviewed from time to time and are updated. These are designed to ensure adherence to the Companys policies, safeguarding of its assets & interests, prevention & detection of frauds & errors, accuracy & completeness of financial records and proper conduct of business of the Company. The Company also has a robust Management Information System which not only facilitates speedy business decisions but also helps in timely preparation and sharing of reliable financial information across various levels in the Company. The transactional controls built in SAP ERP systems ensures appropriate segregation of duties, appropriate level of approval mechanisms and maintenance of various records. All such controls are assessed during the year. Regular audits and review processes ensure that such systems are reinforced on on-going basis. Based on the review of the Internal Financial Control Systems during the year by the Management, Audit Committee and the Auditors of the Company, no material reportable weakness was observed in the Internal Financial Control Systems during the financial year.

ANNUAL RETURN

The Annual Return as required under Section 92 and Section 134 of the Companies Act, 2013 read with Rules made thereunder is available on the website of the Company at www.jkagri.com

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans given, guarantees or securities provided and investments made as required under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to Financial Statements.

RELATED PARTY TRANSACTIONS

During the Financial Year ended 31st March 2022, all the contracts or arrangements or transactions entered into by the Company with the Related Parties were in the ordinary course of business and on arms length basis and were in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Further, the Company has not entered into any contract or arrangement or transaction with the related parties which could be considered material in accordance with the policy of the Company on materiality of Related Party Transactions.

In view of the above, disclosure in Form AOC-2 is not applicable. The Related Party Transaction Policy as approved by the Board is available on the website of the Company.

COST RECORDS

Maintenance of cost records, as specified by the Central Government under sub-section (1) of section 148 of the Companies Act 2013, is not required by the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Dr. Gyanendra Shukla (DIN: 02922133), President & Director of the Company retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting (AGM). The Board recommends his re-appointment.

During the year, the Members have approved the appointment of Shri Raj Kumar Jain (DIN: 01741527) as an Independent Director of the Company for a period of 3 (three) consecutive years, commencing 26th November 2021, by way of Postal Ballot. The Board of Directors of the Company has also appointed Shri Jain as member of Nomination and Remuneration Committee and Stakeholders Relationship Committee w.e.f., 26th November 2021.

Shri Amar Singh Mehta (DIN: 00030694), Independent Director of the Company resigned from the directorship w.e.f. the closing of business hours of 30th December 2021. Shri A.S. Mehta was also Chairman of Stakeholders Relationship Committee and member of Audit Committee and Nomination and Remuneration Committee.

The first term of office of Shri Ajay Srivastava (DIN:00049912) as Independent Director of the Company shall determine on 23rd October 2022. Shri Ajay Srivastava is eligible for re-appointment as Independent Director of the Company for second term. The Board of Directors of the Company, on recommendation of the Nomination and Remuneration Committee, re-appointed Shri Ajay Srivastava as Independent Director of the Company for second term of 3 years, commencing 24th October 2022, subject to requisite approval of Members of the Company at the ensuing AGM. In the opinion of the Board, he possesses requisite expertise, integrity, proficiency and experience. Accordingly, the Board recommends his re-appointment.

The Board of Directors of the Company, on recommendation of the Nomination and Remuneration Committee, re-appointed Dr. Gyanendra Shukla as Whole-time Director of the Company with the designation "President & Director", for a term of 3 years, commencing 23rd May 2022, subject to requisite approval of Members of the Company at the ensuing AGM. The Board recommends his re-appointment.

All Independent Directors of the Company have given declarations that they meet the criteria of independence as provided in Section 149 of the Companies Act, 2013 and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

There were no other changes in the Directors/ Key Managerial Personnel of the Company in terms of the provisions of the Companies Act, 2013, during the period under review.

CONSERVATION OF ENERGY, ETC.

The details as required under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are annexed to this Report as Annexure - 1 and forms part of it.

DEPOSITS

The Company has neither invited nor accepted any deposits from the public.

AUDITORS

(a) Statutory Auditors and their Report

M/s BGJC & Associates LLP, Chartered Accountants (ICAI Firm Registration Number- 003304N), were appointed as Statutory Auditors of the Company for a second term of five consecutive years, commenced from the conclusion of 19th AGM held on 27th August 2019 till the conclusion of 24th AGM to be held in the year 2024.

The observations of the Auditors in their Report on Accounts and the Financial Statements read with relevant notes are self-explanatory. The Auditors Report does not contain any qualifications, reservations or adverse remarks. Further, no fraud has been reported by the auditors to the Audit Committee or the Board.

(b) Secretarial Auditor and Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors appointed Shri Namo Narain Agarwal, Company Secretary in Practice as Secretarial Auditor to carry out Secretarial Audit of the Company for the Financial Year 2021-22.

The Report given by him for the said Financial Year in the prescribed format is annexed to this Report as Annexure - 2. The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks.

PARTICULARS OF REMUNERATION

Disclosure of the ratio of the remuneration of each director to the median employees remuneration and other requisite details pursuant to Section 197(12) of the Companies Act, 2013 (Act) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this Report as Annexure - 3. Further, Particulars of Employees pursuant to Rule 5(2) & (3) of the above Rules forms part of this Report. However, in terms of provisions of Section 136 of the Act, the Report and Accounts are being sent to all the Members of the Company and others entitled thereto, excluding the said Particulars of Employees. The said information is available for inspection at the Registered Office of the Company during business hours on working days of the Company up to the ensuing AGM. Any member interested in obtaining such particulars may write to the Company Secretary.

CORPORATE SOCIAL RESPONSIBILITY

Your Company believes in the process of giving back to the society and aims to contribute to sustainable growth of the society at large. Besides undertaking projects for overall development and welfare of the society, your Company has been working closely with the farming community in areas of imparting agricultural knowledge, promoting preventive healthcare, skill development and livelihood enhancement projects.

The Company has requisite Corporate Social Responsibility (CSR) Policy in accordance with the provisions of the Companies Act, 2013 and rules made thereunder. The CSR Policy is disclosed on the website of the Company at www.jkagri.com. As per the CSR provisions disclosure requirements, a brief description of CSR projects is uploaded on the Companys website. Web-link of the same is https://jkagri.com/wp-content/uploads/2022/05/CSR- Policy-2022.pdf

The Annual Report on the CSR activities undertaken by the Company during the Financial Year under review, in the prescribed format, is annexed to this Report as Annexure - 4.

CHANGE IN THE NATURE OF BUSINESS

During the Financial Year under review, there was no change in the nature of business of the Company.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the Financial Year under review, there were no significant and material orders passed by the Regulators or Courts or Tribunals which could impact the going concern status of the Company and its future operations.

DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE

During the Financial Year under review, no application is made or any proceeding is pending under the Insolvency and Bankruptcy Code, 2016.

COMPLIANCE OF SECRETARIAL STANDARDS

Based on the Secretarial Audit Report of the Secretarial Auditor, the Company has duly complied with the applicable Secretarial Standards on Meetings of Board of Directors and General Meetings issued by the Institute of Company Secretaries of India.

CORPORATE GOVERNANCE

Your Company reaffirms its commitment to best corporate governance practices. Pursuant to

Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, a Management Discussion and Analysis, Corporate Governance Report and Auditors Certificate regarding compliance of conditions of Corporate Governance are made a part of this Report. The Corporate Governance Report also covers the following:

(a) Particulars of the five Board Meetings held during the Financial Year under review.

(b) Salient features of the Nomination and Remuneration Policy.

(c) The manner in which formal annual evaluation of the performance of the Board of Directors, of its Committees and of individual Directors has been made.

(d) The details with respect to Composition of Audit Committee and establishment of Vigil Mechanism.

(e) Details regarding Risk Management.

(f) Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 134(3)(c) of the Companies Act, 2013, your Directors state that-

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) the internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and

(f) the proper systems to ensure compliance with the provisions of all applicable laws have been devised and that such systems were adequate and operating effectively.

CAUTIONARY STATEMENT

"Managements Discussion & Analysis Report" contains forward looking statements, which may be identified by the use of the words in that direction or connoting the same. All statements that address expectation or projections about the future, including but not limited to statements about the Companys strategy for growth, product development, market position, expenditures and financial results are forward looking statements. The Companys actual results, performance or achievements could thus differ materially from those projected in such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward - looking statements on the basis of any subsequent development, information or events.

ACKNOWLEDGEMENTS

Your Directors wish to acknowledge and place on record the commitment and dedication on the part of the employees of your Company in achieving good results.

Your Directors would also like to acknowledge and record their appreciation of the continued support and assistance received by the Company from its valued Customers, Dealers, Suppliers, Shareholders, Banks and various Central and State Government Agencies.

On behalf of the Board of Directors
Date: 26th April 2022 Bharat Hari Singhania
Place: New Delhi Chairman