Krishana Phoschem Ltd Management Discussions

INDUSTRY SCENARIO AND DEVELOPMENTS

The Company is engaged in the manufacturing of Beneficiated Rock Phosphate (BRP), Single Super Phosphate (SSP), and Dyes Intermediates mainly H-Acid & Chemical products i.e., Sulphuric Acid (SA), Oleum, Coloro Sulphonic Acid & Liquid SO3. The company has also started manufacturing of Di-ammonium Phosphate (DAP), Nitrogen, Phosphorus and Potassium (NPK) complex fertilizer and Phosphoric Acid in month of Feb 2023. Beneficiated Rock Phosphate and Sulphuric Acid are basic raw materials for production of SSP, Sulphur is basic raw material for production of Sulphuric Acid, Ammonia and Phosphoric acid are basic raw material for production of DAP/ NPK complex fertilizers.

Out of three primary nutrients viz N,P & K, which every soil requires, we are dealing in N and P nutrients through SSP and DAP/ NPK complex fertilizers.

OPPORTUNITIES

KPL having backward integration plants of Rock beneficiation, Sulphuric Acid and Phosphoric Acid, has advantage over others in production of SSP and DAP/ NPK complex fertilizers. In addition to above skill manpower, good transport facility with rake point and easy availability of raw material provides opportunities for KPL:

1. Governments focus on Agriculture and Agri reforms.

2. India has less production against demand of fertilizer, creating good scope for marketing.

3. KPL has started production of DAP/NPK/Complex Fertilizer which good demand of our product.

4. Enhanced focus on digital platform for better connectivity with end consumers via social media and mobile applications.

THREATS

1. Competition from other Fertilizer manufacturing companies and imports.

2. The main threat to the industry is vagaries of monsoon.

3. Changes in government policies or regulations may have an adverse impact on the business.

4. Volatility in the price of raw material and variation in the foreign exchange rates may affect business.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

Detail of segment wise performance is furnished separately in the Annual Report.

FUTURE OUTLOOK

The demand for both Nitrogenous & Phosphatic fertilizers in India is increasing steadily, with the domestic production almost stagnant and the demand increase.

To meet this challenge, the group has entered into an agreement with Jordan Phosphate Mines company (JPMC), Jordan (A government undertaking ) to import substantial quantity of Raw material to meet the growing demand and has also finalized supply arrangements with certain local manufacturers of fertilizers , to augment total fertilizer availability in our marketing territory through our own marketing channel.

Further, Company has started manufacturing of its rich value-added highly demanding products DAP & NPK complex fertilizer variants regions in India with installed capacity of 330000 MTPA. The Financial Year 2025 would be full-fledged year of functioning of this new project.

RISK & CONCERN

Our business is mostly dependent upon the growth of agriculture and Agri-products which are subject to substantial risks faced by the weather condition in India. Delayed monsoon or less rainfall does affect our business, the dependence on Government policies in general and subsidy component in particular ultimately impact the profitability and demand in the industry. These are the factors which are beyond the control of the private enterprise and would continue to be a challenge but fertilizer being a segment affecting farmers, Govt will always have farmer friendly policies.

Chemical business exposed to cut throat global market completion from cheaper import.

INTERNAL CONTROL SYSTEM

Your Company remains committed to improve the effectiveness of internal control systems for business processes with regard to its operations, financial reporting and compliance within the applicable laws and regulations. Your Company has a proper system of internal controls to ensure that all its assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly

OPERATIONAL PERFORMANCE

During the year under review, your company has achieved turnover of Rs. 32281.76 Lakhs as against last year turnover of Rs 31936.42 Lakhs and the net profit after tax for the current year stands at Rs. 2673.60 Lakhs as against Rs. 2,946.33 lakhs in the previous year. Net profit ratio decreases from 9.23% to 8.28% in the current year due to steep rise in input cost which could not be passed on to buyers fully and H- Acid chemical plant operate only three months during the year.

KEY FINANCIAL RATIOS

DETAILS PERTAINING TO RETURN ON NET-WORTH OF THE COMPANY

HUMAN RESOURCE DEVELOPMENT

As a part of ongoing review of the Companys business, the Company undertakes periodic comprehensive reviews of its HR policies and amends the same suitably from time to time, to meet the emerging business requirements and as per market trends. We have had cordial relations with the workers and staff throughout the year.

CAUTIONARY STATEMENT

There are certain statements in this report which the Company believes are forward looking. The forward-looking statements stated in this report could significantly differ from the actual results due to certain risks and uncertainties, including but not limited to economic developments, Government actions, etc.