Narmada Agrobase Ltd Management Discussions

India is one of the largest and fastest growing compound feed markets in the world. Feed manufacturing
on a commercial and scientific basis started around 1965 in India with the setting up of medium-sized
feed plants in northern and western India. Feed was produced mainly to cater to the needs of dairy cattle.
The poultry sector was not developed at that time and was restricted to backyard production, with the
desi (or native bird) kept mainly for the production of eggs. The Indian feed industry is undergoing a very
exciting phase of growth for the next decade. Indian feed industry is presently growing at a CAGR of 8
percent. Poultry, aqua and dairy industry occupies the major share in overall feed demand. While the
potential feed requirement is huge and stands at around 96 million tonnes, only 20.3 million tonnes was
produced during 2012-13. There is a huge scope for the growth in the sector, with industry becoming
more organized. With this growth rate India will soon become the largest feed market in the coming
years. The feed industry requirements that are met with the compound feed are only 11 percent for cattle,
14 percent for aqua feed and 55 percent for poultry feed.

The cattle feed market size was valued at $73.5 billion in 2019, and is projected to reach $78.3 billion by
2027, growing at a CAGR of 4.4% from 2021 to 2027.

Animal feed is the food given to domestic animals, especially those in the livestock. Cattle feed is a very
important factor in animal agriculture and it contributes to the majority cost of the raising animals.
Farmers usually try to reduce cost for this food by supplementing expensive feeds with substitutes, such
as food waste like spent grain from beer brewing. Animal wellbeing is one of the prime factors that
decide the future of livestock industry. Wellbeing of animals is highly dependent on well-balanced
nutritional feed. The cattle feed industry is expanding into the market of feed-acidifiers, feed-enzymes,
feed-antibiotics, and feed-microbial. The demand for these trends goes parallel with the increase in
consumption of meat protein and increased importance on the quality of the ingredients used in the
animal feed.

Indian Agricultural Sector Overview

Asia-Pacific is known to be the dominant region in the cattle feed market share. Asian countries have
witnessed higher rate of traction for dairy products, owing to its increased demand from vegan
consumers. Some key macroeconomic factors such as rise in social media usage and surge in per-capita
income also play an important role in contributing toward the overall growth of the cattle feed market.
However, LAMEA is expected to exhibit significant growth in the future, owing to rise in demand for
meat and dairy products in child nutrition. In addition, the region has witnessed considerable surge in
number of millennials, who are forefront consumers of new food & meat products. Therefore, rise in
millennial population is anticipated to offer remunerative cattle feed market opportunities.

Rapid population expansion in India is the main factor driving the industry. The rising income levels in
rural and urban areas, which have contributed to an increase in the demand for agricultural products
across the nation, provide additional support for this. In accordance with this, the market is being
stimulated by the growing adoption of cutting-edge techniques including blockchain, artificial
intelligence (AI), geographic information systems (GIS), drones, and remote sensing technologies, as
well as the release of various e-farming applications.

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. India
traditionally faces a shortage of fodder in the range of 20% to 25% from its overall annual needs, which
is mainly due to seasonal and regional factors. However, this year these figures are significantly higher
due to shrinking land resources of the country. Due to this, the government plans to take measures to
expand the areas of grazing lands and to ensure their more sustainable and careful use.

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. South India is a center of animal
feed production in India, accounting for the largest market share. In recent years, the biggest growth of
output was observed in Andhra Pradesh, Karnataka and Tamil Nadu, which became mainly due to the
rise in the manufacturing of poultry products.

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. Looking forward, IMARC Group expects the market value to
reach US$ 1,578.2 Billion by 2028, growing at a CAGR of 8.2% during the forecast period (2023-2028).

I. Macroeconomic condition

Feed industry in India is about 50 years old. It primarily consists of cattle feed and poultry feed segments.
Cattle feed industry in India is gradually evolving into an organized sector and the feed manufactures are
increasingly using modern and sophisticated methods that seek to incorporate best global practices.
Indian cattle feed industry has got high growth potential, given the countrys top position among the
world nations in respect of livestock population and also the high expected growth rate of about 4 per
cent. Compounded Cattle Feed (CCF) products, particularly the branded ones is fast gaining popularity
India, including in rural areas. Earlier research studies by the present author jointly with another
researcher, based on the feedback from the farmers, have revealed the high growth prospects of the
branded cattle feed industry, the feed consumption pattern based on product types, composition of cattle
feed market and the relative shares of major brands, the major factors influencing the purchasing
decisions etc. As a continuation of these studies, this macro level study analyses the growth prospects of
cattle feed industry in India and hence suggests strategies for its faster growth.

II. Economic Outlook

The Global Cattle Feed Market is segmented based on ingredients, application, and region. Based on
ingredients, the Cattle Feed Market is segmented into wheat, corn, soybean, and additives. Based on
application, the Cattle Feed Market is segmented into dairy cattle feed and beef cattle feed. Based on
region, the global Cattle Feed market is segmented into North America, Europe, Asia-Pacific, South
America, and MEA. Over 34% of worldwide sales in 2021 came from North America, making it the
dominant region globally. The regions market is predicted to grow in the coming years due to increasing
meat consumption, particularly in the US, and strict rules on meat quality. In addition, the regions
extensive and simple supply of raw materials including maize and dextrose is anticipated to boost market
expansion. The Asia Pacific is expected to have the highest CAGR during the forecast period. Due to
their large populations and increasing demand for meat, emerging economies like China and India have
seen a sharp increase in their cattle stockpiles over the past decade. Cattle feed prices have been
increasing as a result of this trend.

III. Indian Economy

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

IV. Market Trends

In the near future, nutrigenomic approaches will become standard for understanding both nutritional and
environmental factors hindering production efficiency and welfare. The Cattle Feed Market Report offers
a thorough examination of the primary competitors in the industry, incorporating previous data, SWOT
analysis, and recent worldwide advancements. Its aim is to present an in-depth overview of the Cattle
Feed market, comprising its past achievements, present status, and future potential, with specific
emphasis placed on the pandemics impact on the market.

Moreover, the report presents a dashboard summary of prominent enterprises, covering their effective
marketing tactics, market share, and recent advancements in both past and present contexts. This analysis
offers insights into how these leading companies have contributed to the market and achieved success
through their marketing strategies.

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.

Market Growth Expectations

The market is further aided by the emergence of non-traditional feed ingredients and technological
advancements as well as innovations, such as the creation of genetically modified animal feed
ingredients.

Global Cattle Feed Market size was valued at USD 76.267 billion in 2019 and is poised to grow
from USD 79.2 billion in 2023 to USD 104.18 billion by 2031, growing at a CAGR of 3.92% in the
forecast period (2024-2031).

Globally, the market has benefited from the industrialisation of cattle products including meat and dairy
products as well as the rising population. The main factor driving market expansion is the rise in
consumer knowledge of the nutritional value of food as well as the safety of meat and milk products.
Young ruminants and mature ruminants are two categories of cattle. Amino acids, vitamins, feed
acidifiers, antibiotics, feed enzymes, antioxidants, and other supplements are used depending on the age
of these ruminants. Products containing vitamin A and minerals, such as Availa-4 and 20-10 Plus
Mineral, are frequently used to boost cattles immune system, reproductive ability, and vision as well as
to fill nutritional gaps.

The challenges are:

A. Best Optimum solutions with low energy consumption and high production output with minimum
breakdowns.

B. Scarcity of raw material & alternate options of raw material as per availability and cost.

C. Awareness for bio-security & feed mill hygiene.

Projected demand and availability of fodder in India

The availability of feed and fodder remains a major area of concern; there is a gap between its demand
and supply in the country. As per the estimates of the Indian Council for Agricultural Research (ICAR)-
affiliated National Institute of Animal Nutrition and Physiology (NIANP), the deficit in the requirement
and the availability of dry fodder, green fodder and concentrates during 2015 was to the extent of 21 per

cent, 26 per cent, and 34 per cent, respectively. This is likely to increase to 23 per cent, 40 per cent, and
38 per cent, respectively, by 2025. The fodder deficit in India in terms of green fodder, dry fodder, and
concentrates was 26 million tonnes (MT), 21 MT, and 34 MT in 2015, which is expected to reach 40 MT,
21 MT, and 38 MT by 2025, respectively (Table 1).

Internal control systems and their adequacy

The company has internal financial control systems which are adequate in the opinion of board of
Directors.

The Company has a proper system of internal controls to ensure that all assets are safeguarded and
protected against loss from unauthorized use or disposition and that transactions are authorized recorded
and reported correctly.

The internal control system is supplemented by an extensive program of internal and external audits and
periodic review by the management.

This system is designed to adequately ensure that financial and other records are reliable for preparing
financial information and other data and for maintaining accountability of assets.

The Company works only in one segment i.e. manufacturing of delinted cotton seeds.

The Company believes and recognizes that its employees are important resource in its growth and to give
competitive advantage in the present business scenario. The Company takes pride in the commitment,
competence and dedication shown by its employees in all areas. The Company has always worked to give
opportunity to its people irrespective of their education background at shop floor. Subordinates
mentoring and responsible candidature goes a long way in ensuring companys success.

Professional with required amount of experience and knowledge are hired on need to need basis by the
Company. The Industrial relation of the Company with various clients, supplier, financial lenders and
employees is cordial. There are total 10 employees on the payroll of the Company.

Company has initiated three new maxim to be complied for better growth and progress of the company.
Owing to the progressive growth and the competition in the cattle feed industry, company has focused on
core business strategies for the development of business. Recently, the Company is also planning to add
some other products in near future.

The focus area of future planning has been segregated into following heads.

Poultry Feed

The cattle feed business is experiencing rapid growth as the milk
producers have started replacing the traditional cattle feed with
more nutritionally balanced compound feed, as they have realized
the tangible benefits of nutritional feed in terms of yield
improvement. In Asia, the livestock industry is the most crucial part
of agricultural development and has been growing at an
unprecedented pace in the last few decades. Livestock products
contribute for around 40% of the total agricultural output in global
sales, and are experiencing growth faster as compared to any other
agricultural sub-sector. Due to population growth and increased
living standards, rapid growth in consumption of animal products
has also forced the livestock industry to adapt and expand to satisfy
the expectations of the society by feeding nutritious animal feed to
the livestock animals. Hence, this factor proves beneficial for the
growth of the cattle feed market.

Company is planning to expand its operation and
cover Asia-Pacific region for export of its
products. At present our Company is marketing
its product through a network of commission
agents, brokers, distributors, etc. spread across
Gujarat & Rajasthan but our Company majorly
get its sales from Rajasthan.

The discussions in this section relate to the financial results pertaining to the year that ended March 31,
2024. The financial statements of Narmada Agrobase Limited (‘the Company) are prepared in
accordance with the Applicable Accounting Standards and the provisions of the Companies Act, 2013,
read with the Companies (Indian Accounting Standards) Rules, as amended from time to time.
Significant accounting policies used in the preparation of the financial statements are disclosed in the
notes to the standalone financial statements.

In the current year company has again paced with the growth prospects and streamlined its operations.

For the financial Year 2023-2024, your Company recorded net sales of Rs. 503.9 million as against Rs.
500.7 million in the previous year and thereby recording the increase in the net sales. Despite the tough
market conditions faced by the industry, Company is striving hard to achieve the better results and the
assured progressive growth in future.

Further for the Financial Year 2023-2024, the company achieved Profit of Rs. 10.19 as compared to Rs.
6.52 million in the previous financial year.

The revenue from Operations of the company is detailed below: