m b agro prod Management discussions

Annexure VIII

INDUSTRY SCENARIO AND DEVELOPMENTS

The Company is mainly engaged in the manufacturing of fertilizer and chemical products. 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 Fertilizer. The winner in this field is those manufacturers who have integrated facilities and we are one among them. Demand of P has regularly increased and the same is ever growing with additional land coming under cultivation. The product being a part of agriculture revolution, received always Govt. support.

India still has capacity less than the demand and the deficit is met by imports. In India Less than 10% of total phosphate consumption fulfilled through indigenous rock.

OPPORTUNITIES

MBAPL to increase its market share in Fertilizer and chemical industries and thus enhanced its competitive strength with efficient operations. After commissioning of its DAP/NPK Plant, the Company has started focusing on strengthening its reach in the existing territories and expansion in new geographies in India through a concerted brand building approach, which offers an opportunity to the Company to enhance its sales volumes and market share. Following opportunities are also available for MBAPL:

• Governments focus on agriculture and agri reforms.

• Huge demand and import dependency in case of phosphoric fertilizers in the Country provides an opportunity to Company for expanding its NPK fertilizer base.

• MBAPL has completed another Backward integration plant to produce in-house Phosphoric Acid, sulphuric acid for its DAP/NPK/Complex Fertilizer.

• Growing area under micro irrigation and demand for nutrient based fertiliser.

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

THREATS

• The demand variation due to change in monsoon pattern.

• Large scale variations in input costs and inability/delay of Government to synchronise such changes in their policies for fertilizer industry.

• Government regulation. Though for betterment of farmers but many time cause of anxiety.

• Potential threat of new entrants which could adversely impact leading market position in several products.

• Volatility in the prices of Raw material and variation in the foreign exchange rates may affect business.

FUTURE OUTLOOK

The demand for both Nitrogenous & Phosphatic fertilizers in India is increasing steadily, With the domestic production almost stagnant and the demand increasing, the supply deficit of final as well as raw material has to be met from imports.

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 in various regions in India with installed capacity of 2,40,000 MTPA. The Financial Year 2024 would be full-fledged year of functioning of this new project.

RISK & CONCERN

Changes in Government policy, currency risk, fluctuation in input prices may have an impact on Companys profitability.

The Fertiliser industry is subject to Government regulations and dependent upon subsidy policies of the Government of India. The changes in such policies and higher dependence on subsidy may sometimes adversely affect the Company.

Possible non-availability of indigenous raw materials & fertilizers and their rising prices for non-urea fertilizers are matters of concern. Considering the Companys plans for higher imports. Increase in operating costs, mainly finance costs on working capital etc. may adversely affect profitability.

Our business is mostly dependent upon the growth of agriculture and Agri-products which are subject to substantial risks faced by the Monsoon in India. Weather condition such as delayed monsoon or less rainfall may affect our business. These are all factors which are beyond the control of the private enterprise and would continue to be a challenge.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The company has in place an adequate internal control system, which is commensurate with the size, scale and complexity of the company. The internal auditors independently evaluate the adequacy of internal controls and concurrently audit the majority of the transactions in value terms. Independence of the audit compliance is ensured by the direct reporting of Internal Audit Division and Internal Auditors to the Audit Committee of the Board.

During the period under review the Internal Financial Control were tested and no reportable material weakness in the design or operation were observed.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

Based on the management approach as defined in Ind AS 108

- Operating Segments, the Chief Operating Decision Maker (CODM) evaluates the companys performance and allocates resources based on an analysis of various performance indicators of business segment/s in which the company operates. The Company is primarily engaged in the business of Fertilizer manufacturing and other products are backward integration therefore management and CODM recognise Fertilizer segment as the sole business segment. Hence, disclosure of segment-wise information is not required and accordingly not provided.

OPERATIONAL PERFORMANCE

During the year under review, company has reported a turnover of H 982.05 Crore as against of H 491.49 Crore growing by 99.81% over last Financial Year and similarly Profit after tax at H 124.20 Crore as against 57.02 crores in previous year was up by 117.82%.

KEY FINANCIAL RATIOS

Sr. No	Particulars of Ratio	31.03.2023	31.03.2022	change in Ratios %	Explanation for change in Ratios
1	Debtors Turnover	5.75	8.82	(34.81%)	i) Debtors turnover ratio decreased due to trading debtor arising on account of import of DAP.
					ii) Increasing PMT subsidy on NPK leading to disproportionate increase the level of subsidy outstanding.
2	Inventory Turnover	4.57	4.14	10.39%	due to better inventory management.
3	Interest Coverage Ratio	11.72	11.77	(0.42%)	No major change
4	Current Ratio	1.58	1.51	4.64%	No major change.
5	Debt Equity Ratio	0.98	0.80	22.5%	Debt-Equity Ratio increased due to higher availment of working capital limits to meet increased turnover, and availment of term loan to fund expansion.
6	Operating Profit Margin (%)	19.61%	18.05%	1.56%	No major change.
7	Net Profit Margin (%)	12.65%	11.60%	1.05%	No major change.

DETAILS PERTAINING TO RETURN ON NET-WORTH OF THE COMPANY

Sr. No	Particulars of Ratio	31.03.2023	31.03.2022	change in Ratios %	Explanation for change in Return on Net Worth
1	Return on Net Worth (%)	37.82%	27.77%	10.05%	Improved due to better performance

HUMAN RESOURCE DEVELOPMENT

As a part of ongoing exercise of the restructuring and re-organisation 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. We have had cordial relations with the 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.

For and on behalf of the Board of Directors

	(Pankaj Ostwal)	(Sourabh Gupta)
	Managing Director	Whole Time Director &
Date 24.04.2023	DIN 02586806	Chief Financial Officer
Place Bhilwara (Raj)		DIN 07177647