Mangalam Seeds Ltd Management Discussions.

Indian Economy

Our planet is home to 7.2 billion people; and the population is expected to touch 9.3 billion by 2050. The result is a growing demand for food. Therefore, the critical need for India is to enhance the use of high-yielding quality seeds to increase productivity. These are dynamic and changing times in the history of Indian agriculture, as the country moves towards yet another agricultural Revolution coined the ‘Evergreen revolution to address the challenges faced by the sector and the farmers. Our Honble Prime Minister Mr. Narendra Modi, has the vision of making farmers the central focus of this ‘Evergreen Revolution, with the clear objective of doubling the farmers income by 2022.

The agricultural sector plays a critical role in Indias economy. Over 58% of rural households depend on agriculture as their principal means of livelihood. India holds the 2nd largest agricultural land in the world with 157.35 million hectares under cultivation. India is the largest producer of cotton, spices, pulses, milk, tea, cashew and jute; and the 2nd largest producer of wheat, rice, sugarcane, oilseeds, fruits and vegetables.

Agriculture Sector Union Budget 2019-20

The Budget 2019-20 has historic allocation for the Ministry of Agriculture and Farmers Welfare: Rs 1,30,485 Crores the highest-ever. In 2014-15, when Narendra Modi first became Prime Minister, the agriculture ministry was allocated Rs 31,063 Crores. It received Rs 79,026 Crores, according to the revised estimates of 2018-19. The allocation proposed by Finance Minister Nirmala Sitharaman in her maiden budget speech represents a 140 per cent jump over the 18-19 budget estimate of Rs 57,600 Crores. This leap is mostly due to the staggering Rs 75,000 Crores allocated to the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan). Of the agriculture ministrys budget, 57 per cent is now for direct cash assistance to farmers.

In its interim budget just before the elections, the National Democratic Alliance government declared this income assistance scheme with retrospective effect. In the budget for 2018-19, thus, Rs 20,000 Crore was allocated. The PM-Kisan scheme provides Rs 6,000 in income support to each farmer in three installments of Rs 2,000 each.

The historic allocation, however, is still less than Rs 10,000 crore of what was proposed in the interim budget. Average annual growth rate in real terms in agricultural and allied sectors has remained around 2.88 per cent (2014-15 to 2018-19). Besides, rural wages continue to stagnate. These have led to an overall decline in rural consumption as people have less to spend.

In the Economic Survey 2018-19, boosting consumption in the country has been identified as a major pathway to increase economic growth. With rural areas accounting for 60 per cent of the consumption, it was expected that the government would declare as much as possible to kick start consumption.

In fact the Economic Survey recommended that the MP-Kisan cash assistance to all farmers would be a big boost to local income.

The 2018-19 financial years 6.8 per cent economic growth was lower than the five-year average of 7.5 per cent. The dip was majorly due to low agricultural growth in fact, a contraction in the fourth quarter. Low food inflation made farmers produce less and spend less.

Internal Control Systems and their Adequacy

The Company has laid down set of standards which enables to implement internal financial control across the organization and ensure that the same are adequate and operating effectively. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Audit Committee of the Board of Directors, Statutory Auditors and Finance Heads are periodically apprised of the internal audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence, the internal Audit function reports to the Chairman of the Audit Committee.

Mangalam Seeds World

Mangalam Seeds Limited is one of the premier seed companies in the country. The Company is backed by a strong research and development base for developing quality hybrids in key Indian crops. It has a huge network of over 421 distributors and dealers spread across the country with a strong product line of hybrids. Mangalam Seeds has a comprehensive portfolio of high yield hybrid and varietal seeds. The Companys presence in a broad spectrum of crops helps to meet different requirements of farmers, which has earned it a tremendous goodwill. The Company has purchased a land in Valad, Gandhinagar to start a Tissue Culture Laboratory.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results could differ substantially or materially from those expressed or implied. Important factors that could affect the companys operations include a downward trend in the domestic industry, monsoon, rise in input cost and significant change in political and economic environment in India, environment standards, litigations, changes in the Government regulations, tax laws, statutes and other incidental factors.