Mangalam Seeds Ltd Management Discussions

Indian Economic OverView

The agriculture sector in India is a critica! component of the countrys economy, with a substantial impact on employment, food security, and rural development.

Agriculture contributes approximately 17-20% to Indias Gross Domestic Product (GDP). While this share has been gradually declining due to the growth of other sectors, agriculture remains a significant part of the economy.

About 40-45% of the Indian workforce is employed in agriculture. This sector is a major source of livelihood for rural populations, though many are underemployed or work in subsistence farming.

India has around 159 million hectares of net sown area. The land is primarily used for crops like rice, wheat, sugarcane, and pulses. However, land productivity varies widely across regions.

Major food crops include rice, wheat, maize, and pulses. India is one of the worlds largest producers of rice and wheat.

Important cash crops include sugarcane, cotton, tea, and spices. India is also a leading producer of various fruits and vegetables.

While India has made significant strides in improving agricultural productivity, there is still considerable variation in yields between different regions. Efforts are ongoing to enhance productivity through improved technology and practices.

Approximately 45% of the total cropped area is irrigated. The sector relies heavily on monsoon rains, and variability in rainfall can impact agricultural output. There are ongoing efforts to improve irrigation infrastructure and water management. The Indian government implements various schemes and policies to support agriculture, such as the Minimum Support Price (MSP) system, subsidies on fertilizers, and crop insurance schemes. Initiatives like the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) aim to improve irrigation facilities.

Agriculture is highly vulnerable to climate change, with unpredictable weather patterns, droughts, and floods affecting productivity. Issues such as soil erosion, salinization, and nutrient depletion are significant challenges. Farmers often face challenges related to access to markets, fair pricing, and storage facilities, which can impact their income.

The sector is seeing advancements in agricultura! technology, including precisi?n farming, genetic modification, and digital tools for better resource management. Efforts are being made to promote these technologies among farmers to increase efficiency and productivity.

Outlook

Sustainability: The focus is shifting towards sustainable practices to ensure long-term productivity and environmental health. Initiatives include organic farming, water-efficient practices, and crop diversification.

Policy Reforms: Ongoing policy reforms aim to address structural issues and improve the overall efficiency of the agricultural sector. The implementation of the National Agriculture Policy and other measures are key to shaping the future of Indian agriculture.

Indias Agriculture Sector

India is primarily an agrarian economy. While agriculture is estimated to account for just over 17 percent of the US$2.6 trillion economy, the sector employees over 60 percent of the population. India has largely achieved self-sufficiency in production of food grains, delivering strong and fast economic growth for the past several years, and this trend is projected to continue in the future. The country has unique competitive advantages with the largest arable land area (60.44 percent) of an estimated 179.8 million hectares and diverse agro-climatic conditions supporting the cultivation of various crops. The agricultural sector indeed plays a vital role in Indian economics, politics, and society.

India is among the highest-ranking countries in production volume for various commodities like rice, cotton, dairy, fruits, vegetables, meat and seafood, but the nation has access to only 60 percent of the produce due to lack of storage infrastructure, which leads to an estimated loss of up to 40 percent of the produce. In fact, these losses are estimated at $13 billion annually.

Over the past decade, agriculture and horticulture outputs have seen record growth year- after-year. Yet, crop yields are still generally lower compared to the world average. This low productivity is due to many factors such as erratic monsoons (over 50 percent of cultivated land is monsoon dependent), shrinking groundwater resources, decline in soil fertility, inefficiency in the food distribution system, lack of storage, transportation, lack of awareness in the use of modern agricultural practices and technologies among the farming community, unpredictable weather, small average farm sizes of 1.08 hectares, and agricultural subsidies that distort market signals and hamper productivity-enhancing investment.

The agricultura! sector in India is witnessing a shift from traditional farming to organic farming, horticulture, aquaculture, poultry, and dairy production. The demand for fresh and processed products of all types is increasing due to rapid urbanization, the rise in incomes, and changing consumption habits of the population. The growth of an efficient cold chain network from "farm to fork" will help curb the current spoilage rate of agricultural output while helping producers capture value as products retain quality and give extra benefit to consumers.

Farmers Income

The average income of farmers in India is relatively low compared to other professions. Estimates vary, but as of recent data, the average monthly income of a farmer is around ^10,000 to ^15,000. This figure can fluctuate based on factors like crop yields, market prices, and input costs. Income levels can differ significantly between regions. Farmers in states like Punjab, Haryana, and Maharashtra may have higher incomes due to better infrastructure and access to markets, while those in less developed states often face lower incomes. Several government programs aim to enhance farmer welfare and income, including the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) for irrigation and the National Agriculture Market (eNAM) for better price discovery.

Programs like the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) provide direct income support to farmers, aiming to alleviate financial stress and improve livelihoods.

Efforts to boost interest in farming

Enhanced curriculum in schools and universities focusing on modern agricultural practices and technology aims to spark interest among students. Institutions like the Indian Council of Agricultural Research (ICAR) offer specialized courses and research opportunities. Programs such as the Skill Development Scheme under the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) provide training in various agricultural skills, including advanced farming techniques and entrepreneurship. The introduction of technologies like precision farming, drones, and soil sensors makes farming more efficient and less labor-intensive, attracting tech-savvy individuals. Platforms like e-NAM (National Agriculture Market) and various mobile apps help farmers access real-time market information, weather forecasts, and expert advice, making farming more data-driven and attractive. Government schemes offer subsidies for purchasing modern equipment, seeds, and fertilizers. This financial support can reduce the initial investment burden and encourage interest in farming. Easy access to credit through programs like Kisan Credit Cards (KCC) helps farmers manage their finances and invest in better farming practices. Initiatives to facilitate direct marketing, such as Farmers Markets and online platforms, help farmers get better prices for their produce. Encouraging

value addition through agro-processing, packaging, and branding helps farmers diversify their income sources and improve profitability. Government programs and NGOs promote organic farming through training, certification, and marketing support, appealing to environmentally conscious individuals. Initiatives focusing on sustainable practices, such as soil conservation and water-efficient farming, attract those interested in eco-friendly agriculture. Public campaigns and educational programs aim to improve the perception of farming as a viable and rewarding career option, emphasizing its importance to national food security and rural development.

Mangalam seeds OverView

Mangalam Seeds specializes in the production of various types of seeds, including field crops (like cereals and pulses) and horticultural crops (such as vegetables and flowers). The company emphasizes the quality and reliability of its seeds, often focusing on high-yield and disease-resistant varieties. Mangalam Seeds invests in research and development to enhance seed quality and develop new varieties suited to different climatic conditions and agricultural needs. The company may collaborate with research institutions and agricultural universities to advance its seed technology.

Apart from supplying seeds, Mangalam Seeds might offer advisory services to farmers on best practices for planting and crop management. Adoption of modern agricultural technologies and practices to support farmers in maximizing their crop productivity.

Mangalam Seeds operates in various regions within India, catering to the diverse agricultural needs across different states. The companys market presence may extend to international markets depending on its export capabilities. The company likely has an extensive distribution network to ensure the availability of its seeds across various agricultural regions. Like many seed companies, Mangalam Seeds may focus on sustainable farming practices, including environmentally friendly seed production methods and promoting sustainable agriculture. The company might engage in CSR activities related to rural development, farmer welfare, and community support. Specific financial performance details are typically available in annual reports or financial statements, which provide insights into the companys revenue, profitability, and growth trajectory. The company faces challenges common to the seed industry, such as fluctuating agricultural policies, climate change impacts, and competition in the seed market. There are opportunities for growth in the form of expanding product lines, entering new markets, and adopting advanced agricultural technologies.

Learning and Development of Employees

Employees growth and learning have become a fundamental part of organizations business strategy in light of the everchanging normal. The time demands to believe in a culture of constant learning and upscaling our skills to keep up with the ever-growing dynamic world. Capability building of employees is a continuous process and is of prime importance in Mangalam. There are regular trainings which are conducted for employees as per their job-related requirements to be more effective in their current role and help them in preparing for their next role. The trainings are designed as per the learning needs of employees and in consultation with our stakeholders. The trainings are conducted through various modes, including classroom training, on-the-job learning, and training using technological platforms etc. The Company plans multiple learning interventions in partnership with its internal in-house experts and externally with the support of vendors.

Environment Safety, Health and Energy Conservation

Safety at workplaces of paramount importance to the Company. It continuously strives to ensure various training and awareness programs are conducted throughout the year. The aim is to maintain the highest standards of safety across factories and workplaces and ensure the latest best practices are implemented across the business to bring operational efficiencies and save energy.

Risk Mitigation Framework

Despite the strong growth drivers, the Indian agrochemicals industry faces challenges in terms of low awareness among a large number of end-users spread across the geography. Managing inventory and distribution costs is a challenge for the industry players in the wake of volatility in the business environment. The performance of the crop protection industry and other Agri-inputs is dependent on monsoons, pest and disease incidences on crops. Agrochemical companies face issues due to the seasonal nature of demand, the unpredictability of pest attacks and the high dependence on monsoons.

Compliance with growing regulatory norms is a continuing requirement and could lead to delays in obtaining necessary approvals. Changes in guidelines or policies in various geographies may also lead to sudden disruption of business in specified products. Many agrochemical companies have foreign exchange exposure either in the form of forex loans or exports and imports. For companies that operate largely in the domestic arena, any major forex movement may affect profitability due to fluctuating import costs. While on the one side input costs could increase, weak monsoons could reduce pricing flexibility, thereby affecting margins. To minimize the risk, a comprehensive and integrated risk management framework is followed.

Cautionary Statement

Statements in this Management Discussion and Analysis contain "Forward-Looking Statements" including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to future business developments and economic performance. While these forward-looking statements indicate our assessment and future expectations concerning the development of our business, several risks, uncertainties, and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include but are not limited to, general market, macro-economic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance. Mangalam undertakes no obligation to publicly revise any forward-looking statements to reflect future/ likely events or circumstances.