Mayank Cattle Food Ltd Management Discussions

ECONOMIC OVERVIEW GLOBAL ECONOMY

Global growth, estimated at 3.2 percent in 2023, is projected to continue at the same pace in 2024 and 2025. The forecast for 2024 is revised up by 0.1 percentage point from the January 2024 World Economic Outlook (WEO) Update, and by 0.3 percentage point from the October 2023 WEO. The pace of expansion is low by historical standards, owing to both near-term factors, such as still-high borrowing costs and withdrawal of fiscal support, and longer-term effects from the COVID-19 pandemic and Russias invasion of Ukraine; weak growth in productivity; and increasing geoeconomic fragmentation. Global headline inflation is expected to fall from an annual average of 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies.

The resilience in global economic activity was compatible with falling inflation thanks to a post pandemic expansion on the supply side. A greater-than-expected rise in the labor force amid robust employment growth supported activity and disinflation in advanced economies and several large emerging market and middle-income economies

The latest forecast for global growth five years from now at 3.1 percent is at its lowest in decades. The pace of convergence toward higher living standards for middle- and lower-income countries has slowed, implying a persistence in global economic disparities. The relatively weak medium-term outlook reflects lower growth in GDP per person stemming, notably, from persistent structural frictions preventing capital and labor from moving to productive firms.

INDIAN ECONOMY

India remains a bright spot in the revival of the global economy. The Indian economy continued to exhibit robust economic performance with broad-based growth across sectors. RBI also, in its recent MPC meeting, noted the strong growth momentum in the economy and projected real GDP growth for 2024-25 at 7 percent, driven by a pickup in rural demand and sustained momentum in the manufacturing sector. In its April 2024 WEO, IMF revised upwards its estimate of Indias GDP growth for FY 2023-24 to 7.8 percent and of estimated a growth rate 6.8 percent in 2024-25 based on its assessment of strength in domestic demand and demographic advantage. In March 2024, India witnessed a surge across multiple economic indicators, reflecting robust and resilient business activity. The month marked significant milestones, from record-breaking performances in the stock market to remarkable advancements in tax revenue collection. The buoyancy extended to the manufacturing and services sectors, as evidenced by the soaring HSBC India Manufacturing PMI and Services PMI. The gross GST collections for the month of April 2024 hit a record high of Rs. 2.10 lakh crore which is a growth of 12.4 per cent year-on-year. In March 2024, the HSBC India Manufacturing PMI surged to an impressive 59.2, a notable increase from the final figure of 56.9 recorded in the previous month. This marks the fastest growth in factory activity since February 2008.

In March, Indias services sector hit a peak, with exports surging to a fiscal year high. The HSBC India Services PMI soared to 61.2, marking one of the sectors most significant expansions in sales and business activity in nearly 14 years.

The Index of Industrial Production (IIP) for February 2024 brought forth encouraging insights into Indias industrial landscape.

High inflation though, was a key challenge for the Government and this has resulted in RBI holding on to high policy rates and rise in lending rates.

Overall, India continues to be the fastest-growing major economy with positive assessments of the growth outlook for the current financial year, for India by international organisations and RBI.

INDUSTRY OVERVIEW

GLOBAL ANIMAL FEED INDUSTRY

The global animal feed market size was valued at USD 509.64 billion in 2023. The market is anticipated to grow from USD 525.69 billion in 2024 to USD 678.45 billion by 2032, exhibiting the CAGR of 3.2% during the forecast period.

The demand for animal-derived food products such as dairy and the increasing focus on animal health and nutrition are the two key driving factors for the animal feed market. Further, various technological advancements in feed production, a growing number of feed mills, and consolidation of the industry are expected to support the market in the forecast period. The research further concluded that production growth is more in developing nations than in developed economies, which are more or less stable in the coming years.

The research study provides a comprehensive analysis of the industry, assessing the market on the basis of various segments and sub-segments. It sheds light on the competitive landscape and introduces Animal Feed Market key players from the perspective of market share, concentration ratio, etc. The study is a vital resource for understanding the growth drivers, opportunities, and challenges in the industry.

Animal feed is a type of food given to animals to provide them with the nutrients they need for growth, health, and productivity. Animal feed can bemade from various ingredients, including grains, protein meals, fats, and minerals. There are many different types of animal feed, each designed for a specific kind of animal and purpose. For example, poultry feed is formulated specifically for chickens and other poultry and contains the nutrients needed for egg production and growth. Cattle feed, on the other hand, is designed for cows and other ruminants and has high levels of fiber to aid in digestion.

Animal feed can be produced in different forms, including pellets, crumbles, and powders. Pelleted feed is one of the most common forms of animal feed, as it is easy to store, transport, and feed to animals. Crumbled feed is often used for young or small animals, as it is easier for them to consume. Powdered feed is used in some cases, such as for feeding young animals that cannot yet consume solid food.

For instance, as per International Feed Industry Federation, the annual global feed production is estimated to be more than one billion tons and generates an estimated annual turnover of over 400 billion USD. Further, the United Nations Food and Agriculture Organization (FAO) has also estimated that between 2010 and 2050, the production of animal proteins is estimated to grow by around 1.7% annually.

Growing disposable income, changing lifestyles, and increasing awareness regarding health and nutrition have resulted in increased demand for high-quality products. Increasing demand for dairy and more significant concerns regarding food safety, and economic growth in countries such as China, Japan, and India boost the demand for animal feed. The increasing inclination towards using feed produced naturally and adopting effective livestock husbandry further supports market growth. New product launches and acquisitions by major players in the market are expected to offer numerous growth opportunities during the forecast period.

Rising concerns about the environmental impact of animal agriculture and fluctuating cost of ingredients used in animal feeds are limiting the markets growth. The environmental impact of animal agriculture, including greenhouse gas emissions and water use, is a growing concern for many consumers and policymakers. As a result, there may be increased pressure on the industry to adopt more sustainable practices, which could impact the demand for animal feed and its composition.

INDIAN ANIMAL FEED INDUSTRY

The Indian animal feed sector is steadily developing amid growing domestic livestock and poultry production, which contribute to stable domestic demand for animal feed among local farmers.

According to a recent report in the Indian Economic Times, the revenue of the Indian poultry sector will grow 10% this year, as the industry shows generally good results, primarily in terms of output. At the same time, almost a similar situation is observed in livestock segment, which is also seeing its share of the Indian agriculture gross domestic product (GDP) grow. It contributes 4.11% of the Indian total GDP and 25.6% of total agriculture GDP of the country.

The ongoing growth of major consuming industries creates conditions for a further development of animal feed industry of India, although several problems continue to prevent its more active growth.

After the end of the pandemic, the development of the industry has been carrying out at generally good growth rates.

This is confirmed by statistics. According to a recent report of the research agency IMARC Group, the Indian feed market grew at 3.5% annually over the past five years and the size reached INR956.7 billion in 2022 (US$11.47 billion). According to analysts predictions, the market may reach US$19.23 billion by 2028, if it maintains its annual growth rates in the range of 5% to 7% within the next five years.

In terms of market structure, most of the market accounted for the segments of poultry and cattle feed, the major consumers of animal feed in India.

As for cattle feed, it mainly comprises grains (such as sorghum and millet) and their cakes, mustard, cotton seeds and their oil cakes, de-oiled rice and soybean. On the other hand, poultry is mainly fed corn, sorghum, wheat, soy and their concentrates.

The growth of demand will be observed from the countrys cattle sector, given the status of India as the largest milk producer in the world, contributing 24% of global milk production in 2021-22. Of these, Western India has been registering the maximum share in cattle feed production followed by the north, south and east.

As the majority of other emerging nations, India in recent years has faced less availability of raw materials for domestic animal feed sector, which forced local manufacturers to shift to other materials along with conventional sources.

OPPORTUNITIES

A. Growing Demand for Dairy Products: As the demand for dairy products increases, there is a corresponding rise in the need for high-quality cattle feed, presenting a significant market opportunity.

B. Government Support and Subsidies: Various government initiatives and subsidies aimed at improving agricultural productivity and supporting the dairy industry can provide financial and operational benefits.

C. Innovations in Animal Nutrition: Advancements in animal nutrition and feed technology can help the company develop superior products, improving cattle health and milk yield, thereby attracting more customers.

D. Expanding into New Markets: Expanding operations into emerging markets where dairy farming is growing can open new revenue streams.

E. Sustainability and Organic Products: With a growing consumer preference for organic and sustainable products, there is an opportunity to develop and market organic cattle feed.

F. Strategic Partnerships: Forming alliances with dairy cooperatives, veterinary services, and research institutions can enhance product offerings and market reach.

G. E-commerce and Digital Marketing: Leveraging e-commerce platforms and digital marketing strategies can help in reaching a broader customer base and improving sales.

H. Introducing New Product: Introducing new product will attract a different customer segment or demographic, helping to expand our customer base.

THREATS

A. Market Competition: Intense competition from established players and new entrants in the cattle feed market can impact market share and profitability.

B. Fluctuating Raw Material Prices: Volatility in the prices of raw materials used in cattle feed production can affect the cost structure and profit margins.

C. Regulatory Challenges: Changes in government policies, regulations, and compliance requirements can pose operational challenges and increase costs.

D. Technological Disruptions: Rapid technological changes and the adoption of alternative feeding solutions could render existing products less competitive.

E. Supply Chain Disruptions: Disruptions in the supply chain due to geopolitical issues, transportation problems, or natural disasters can affect the timely delivery of products and raw materials

SEGMENT WISE AND PRODUCT WISE PERFORMANCE

The Company is engage into the business of manufacturing of Maize oil (Non-edible) and Maize Cake (Cattle Feed). Since then, our Company is engaged in manufacturing of Maize Cake (Cattle Feed) & Maize Oil (Non-edible) although the company is engaged in purchase of the Maize Germ, then mechanized expelling, packaging and selling of the Maize Oil, Maize Cake and trade in Cotton cakes and Cotton Bales.

(in Lakhs)

Particular	Revenue from operations
	2023-24	2022-23
Cotton Bales	2920.86	0
Cotton Cake	262.13	0
Cotton Seeds	439.28	0
Cotton Wash Oil	37.92	0
Empty Gunny Bags	138.78	99.73
Expeller Maize Oil	13186.82	18780.65
Maize Cake	12070.18	12037.67

OUTLOOK

We believe that Indias comparatively strong position in the external sector reflects the countrys generally positive outlook for economic growth. Company is focusing on bolstering our production capacity and expanding our presence across Gujarat. We are committed to enhancing the visibility and reputation of our cattle food offerings within the Indian market. By undertaking these strategic endeavors, we aim to reinforce our foothold in the industry, ensuring that our brand becomes synonymous with excellence and reliability among our valued customers. We desire to

Reinforce our brand gratitude

Continue focus on research and development

Enlarge our dealer network

Enlarge geographical reach

Focus on manufacturing cattle food products to cater to stipulate by health-conscious consumers

RISK AND CONCERNS

Supply Chain Disruptions: Any disruptions in the supply chain, such as transportation strikes or natural disasters, can affect our ability to procure raw materials and deliver finished products to our customers.

Competitive Pressure: The cattle feed industry is highly competitive, with numerous players vying for market share. We need to continuously innovate and improve our products to stay ahead of the competition.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUECY

The Company has put in place an adequate system of internal control commensurate with its size and nature of business to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal auditor of the Company checks and verifies the internal control system and monitors them in accordance with the policy adopted by the Company. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

FINANCIAL AND OPERATIONAL PERFORMANCE

(in Lakhs)

	Financial Year
Particulars	2023-24	2022-23
Income From Operations	29,029.51	30,918.05
Other Income	33.73	40.09
Total Income	29,063.24	30,958.14
Total Expenses	28,663.14	30,786.62
Profit / (Loss) before Tax	400.10	171.52
Less: Tax Expenses	96.67	44.27
Net Profit / (Loss) for the year after Tax	303.43	127.25
Earning Per Shares (Basic in INR)	7.80	3.53

HUMAN RESOURCES/INDUSTRIAL RELATIONS

The Company had cordial and harmonious industrial relations at all levels of organizations. The company believes that the industry has the tremendous potential to impact the society, nation and the world positively. Its employees are major stakeholders and their efforts have direct stake in the business prospectus of the organization. The employees have extended a very productive cooperation in the efforts of the management to carry the company to greater heights. The Company considers employees as their biggest competitive advantages. The Company takes initiative like training and development for its people to increase the performance. The Company has taken various steps to improve and enhance skill of its people. The Company has continued to give special attention to human resources and overall development.

Policies related to Prevention of Sexual Harassment at workplace ("POSH") and vigil mechanism / Whistle-blower are also available to all employees and workers. The Company is committed to creating and maintaining an atmosphere in which all employees can work together, without fear of sexual harassment, exploitation or intimidation. Whistle Blower Policy also enables employees to raise concerns about unacceptable, improper or unethical practices being followed in the organization, without necessarily informing their supervisors

Your Company is committed to identifying, preventing, and mitigating adverse human rights issues which affect employees, suppliers, and other external stakeholders. The Company offers various safeguards to all stakeholders and maintain them with respect for their privacy and dignity.

The Company would like to sincerely appreciate the valuable contribution and support of employees towards the performance and growth of the Company. The management team comprises of professionals with a proven track record. The Company continues to remain focused and sensitive to the role of human resources in optimizing results in all its areas of working and its industrial relations also continue to be cordial.

KEY FINANCIAL RATIO

Particular	31.03.2024	31.03.2023
Debtors Turnover	20.74	45.73
Inventory Turnover	9.33	12.18
Interest Coverage Ratio	2.19	1.61
Current Ratio	1.72	1.16
Debt Equity Ratio	1.31	8.32
Operating Profit Margin	4.55	3.06
Net Profit Margin	1.05	0.41
Return on Net-worth	11.90	11.16

CAUTIONARY STATEMENT

Certain statement made in this report describing Companys Objective, Projects, estimates and expectations may be forward looking statement within the applicable laws and Regulations. Actual results may differ from such expectations and forward looking statement due to various risk and uncertainties. Several factors affecting companys operation like economic condition affecting demand and supply, Government regulations and Tax Laws, Competitions prevailing at the relevant time, natural calamities etc. The Company assumes no responsibility to publicly amend, modify or revise any of these statements on the basis of any subsequent developments, information or events.