Raghuvansh Agrofarms Ltd Management Discussions.

INTRODUCTION

Since its inception, the Company is engaged in agricultural operations. The Company is broadly engaged in cultivation of Organic Vegetables, Organic Grains and Cereals. We have an integrated facility for cultivation, processing and distribution of agricultural produce. Apart from the above, the Company is also engaged in dairy farming, production, distribution of dairy products and manufacturing of organic manure.

INDUSTRY STRUCTURE AND DEVELOPMENT

At current scenario each and every nation was affected by global pandemic that is Covid-19. Not only at the beginning but also at the end of the financial year complete lock down was faced by the industries. Around throughout the year industries could not get the pace due to various issues caused by Covid-19. Therefore, even agricultural industries have not been untouched, all the activities got hampered across the year.

India is an agricultural nation and such agricultural activities have been traditional business which is being advanced with the use of scientific techniques, tools, equipments and machineries. The agriculture produce consumed in native place as well as exported to other countries.

Agriculture is the primary source of livelihood for about 58% of Indias population. Gross Value Added by agriculture, forestry, and fishing was estimated at Rs. 19.48 lakh crore (US$ 276.37 billion) in FY20. Share of agriculture and allied sectors in gross value added (GVA) of India at current prices stood at 17.8 % in FY20. Consumer spending in India will return to growth in 2021 post the pandemic-led contraction, expanding by as much as 6.6%.

The Indian food industry is poised for huge growth, increasing its contribution to world food trade every year due to its immense potential for value addition, particularly within the food processing industry. Indian food and grocery market is the worlds sixth largest, with retail contributing 70% of the sales. The Indian food processing industry accounts for 32% of the countrys total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. Principal agricultural commodities export for April 2020 - January 2021 was US$ 32.12 billion.

India is expected to achieve the ambitious goal of doubling farm income by 2022. The agriculture sector in India is expected to generate better momentum in the next few years due to increased investment in agricultural infrastructure such as irrigation facilities, warehousing and cold storage. Furthermore, the growing use of genetically modified crops will likely improve the yield for Indian farmers. India is expected to be self-sufficient in pulses in the coming few years due to concerted effort of scientists to get early maturing varieties of pulses and the increase in minimum support price.

 

Reference: https://www.ibef.org/industry/agriculture-india.aspx

The biomass power generation capacity in India has rapidly grown over the last few years as the Indian government focuses on increasing power generation through renewable energy sources. The share of biomass power generation capacity to total renewable power generation is just over 13 percent. Globally, the share of biomass in total renewable energy power is 14 percent, as per the latest report from the World Bioenergy Association. Industry players believe biomass power production is crucial for the country when its starring at piling municipal and agricultural waste across India.

The National Policy on Bio-fuels, approved by the Union Cabinet recently, will provide a huge impetus to the small but growing bio-energy sector in India. The policy that calls for usage and production of ethanol from damaged food grains and farm products has paved way for optimal utilization of agricultural waste to produce bio-power. The policy, for the first time, provides a viable framework for the bio-energy sector in India. It has also made provisions to convert waste/plastic and municipal solid waste to fuel.

 

Source: https://yourstory.com/2018/09/india-biomass-power-generation/amp

OPPORTUNITIES AND THREATS

There is always demand of agricultural products, dairy products and organic manures. Apart from that there is always incremental demand of power. So Companys existing business is assured to be on demand whether there are agricultural, dairy products, organic manure or power generated through biogas power plant. Company is getting ahead for its expansion in its respective business sector as determined by its board.

Though company is operating in profit making sectors still its growth dependent on climate, government policies, availability of labors, and other factors.

SEGMENTWISE PERFORMANCE

Companys business activity primarily falls within a single business and geographical segment, during the year under review production and trading of agro and related products worth Rs.5,46,53,572/- were transacted.

OUTLOOK

The Company expects that the situation will ameliorate due to favorable changes in climatic condition and government policies. The market of agricultural and dairy product is expected to grow and would be on demand.

Company is making constant efforts to improve operational efficiency to increase the earnings and making value addition in their operational activities.

RISKS & CONCERNS THE MANAGEMENT PERCEIVE

Unfavorable climatic condition, global pandemic, restrictions and lock down imposed by the central/state authorities and uncertainty in economic growth which are not favorable presently in agricultural related activity and is expected to impact the growth rate in India and consequently to the Companys operations.

The growth in the industrial sector depends on government policies, better infrastructure, favorable climate, availability of labor, open market and growth in agricultural sector.

INTERNAL CONTROL SYSTEM & THEIR ADEQUACY

Internal Control Systems are implemented: -

• To safeguard the Companys assets from loss or damage.

• To keep constant check on cost structure.

• To follow the guidelines issued by Central/State Authorities to refrain from Covid.

• To provide adequate financial and accounting controls and implement accounting standards.

The system is being improved and modified continuously to meet with changes in business condition, statutory and accounting requirements. Internal controls are adequately supported by Internal Audit and periodic review by the management.

The Audit Committee meets periodically to review

• Financial statements, with the management and statutory auditors;

• Adequacy/scope of internal audit function, significant findings and follow up thereon of any abnormal nature, with the internal auditors.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL EFFICIENCY

The details of the financial performance of the Company appear in the Balance Sheet, Statement of Profit and Loss and other financial statements appearing separately. Please refer the Directors Report for highlights.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES, INDUSTRIAL RELATIONS

The human resources received consistent attention during the year considering the growth of the organization and the need arising there from and their safety. All the safety measures as instructed by Central/State Authorities have been adopted throughout the year. The relation at all levels was cordial throughout the year and the Company has initiated many programs on enhancing the skills of its men power. As an ongoing exercise, the Company has continued to look at, identify, create and execute seamlessly, initiatives which enhance productivity and efficiency.

The Company continues to invest in people, required machines and equipments which enable the work force to meet the production requirements and challenges related thereto and to infuse positive enthusiasm towards the organization.

Company also adopted all the safety measures to refrain from Covid. Company got the office and other work place properly sanitized, distributed masks to the entire workforce on regular basis. All the work force were instructed to use the masks, sanitizing and washing hands and maintaining social distancing.

There were 08 employees on roll in an organization as on 31st March, 2021.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore, including:

Particulars 2019-20 2020-21 Change (in %)
1. Debtors Turnover Ratio 0.10 9.52 9418.11%
2. Inventory Turnover ratio 4.44 2.38 (46.46)%
3. Interest Coverage Ratio 133.09 394.93 196.74%
4. Current Ratio 40.07 42.91 7.09%
5. Debt Equity Ratio* 0.08 0.07 (15.03)%
6. Operating Profit Margin (%) 35.64 56.92 59.71%
7. Net Profit Margin (%) 38.12 70.30 84.41%

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

Particulars 2019-20 2020-21 Change (in %)
1. Return on Net Worth 15.21 8.83 (41.95)%

CAUTION

This report is based on the experience and information available to the Company in the agricultural, dairy business, manufacturing of manures and assumption in regard to domestic and global economic conditions, and government regulations etc.

The performance of the Company is dependent on these factors. It may be materially influenced by the changes therein beyond the Companys control, affecting the views expressed in or perceived from this report.

On behalf of the Board of Directors
For Raghuvansh Agrofarms Limited
-Sd-
(Subodh Agarwal)
Managing Director
DIN: 00122844