rama phosphates Management discussions

INDIAN ECONOMY

It is quite heartening to note that as per the latest announcement by World Bank, Indias growth continues to be resilient despite some signs of moderation in growth. For this fiscal 2023-24, it has revised its GDP forecast to 6.3 percent from 6.6 percent (Dec.22 forecast). World Bank report further adds although headline inflation is elevated, it is projected to decline average of 5.2 percent in this fiscal amid easing global commodity prices and some moderation in domestic demand.

INDIAN FERTILIZER INDUSTRY OUTLOOK

Out of 140 million farmers in the country, around 78% have small holdings of less than two hectare. For good growth of any crops, fertilizers are very essential. They also require nutrients similar to humans viz., Primary (consisting of N, P, K), Secondary (Sulphur, Calcium & Magnesium) and Micro (Iron, Zinc, Copper, Manganese, Boron, Molybdenum) for great yield. Given below is the chart of consumption of various fertilizers for over a decade.

DAP is the most consumed fertilizer in the country after urea. Of the estimated annual consumption of 10-12.5 million tonnes, local production is four-five million tonnes while the rest is imported.

It may be noted that there is mismatch in overall consumption ratio of fertilizers in the country and this anomaly needs to be rectified for which strenuous efforts are being made by the Government.

Studies show nitrogen temporarily helps increase yields while simultaneously taking a toll on soil health. Research has shown that for every pound of nitrogen applied to the soil, 20 pounds of beneficial carbon is lost from that soil. Unhealthy soils typically have more problems such as lower quality produce, less nutritional value, insect infestation and disease. As per market survey report by IMARC Group, the current fertilizer market size of 898.5 billion in 2022 is expected to grow at the rate of 4.85% (CAGR) to 1188.3 billion by the year 2028. The said projection is optimistic and augurs well for the industry as a whole.

The overall self-reliance in food production could be possible with the extensive consumption of fertilizers which provide nutrients needed by the plants for their optimal productivity. In India, there is a little scope of bringing in more area under cultivation; hence, it is imperative to achieve productivity enhancement to achieve desired growth of food grain production. Apart from this, other challenges include stagnation in crop yield, low nutrient use efficiency, declining soil organic matter, multi-nutrient deficiencies, shrinking arable land and water availability. However, the lopsided consumption of fertilizer by majority of farmers pose great threat to fertility and degeneration of soil. This warrants extensive education and creation of awareness for use of right type and optimum quantity of fertilizer for different type of soils.

Different type of fertilizers and production- April 2022 to March 2023:

As per latest data published by Dept. of Fertilizer, the production data is as below:

(Figures in Lac MT)

Product Name	Production	Imports
Urea	284.94	75.80
DAP	43.47	65.83
MOP	-	18.66
Complex Fertilizers	92.96	27.52
Single Super Phosphate	56.44	-

From the above, it is amplified that there is reduction in subsidy amount payable to SSP constituents.

STATUS OF SSP FERTILIZER INDUSTRY

Single Super Phosphate (SSP) was the first chemical fertilizer introduced in the country commercially in the year 1906. Currently approx. 101 SSP units are in operation across India and we are the second largest SSP consumer in the world surpassing China while Brazil is the highest consumer. This SSP fertilizer is indigenously produced and commonly known as "Poor mans fertilizer" with no compromise on nutrients. The USP of this SSP fertilizer is, it is the only fertilizer providing "S" (Sulphur) nutrient to carry out photosynthesis and aids in seed production which is essential for Soyabean.

The overall production stands at 56.44 lac MT at 50.4% capacity utilization and it is expected to grow to 100 lac MT in the coming years. In line with "Atmanirbhar Bharat" agenda, active support is extended by the Government for achieving the said target.

PROMOTIONAL ACTIVITIES

• To reduce wastage of fertilizer, a big move is taken by the Govt. to produce and sell SSP fertilizers in Granular form only instead of powder. This will improve ease of application also.

• Fortification of SSP fertilizer with Zinc and Boron is gaining big momentum amongst farming community.

• SSP based NPK : With the possible addition of Nitrogen (N), this product could become a mini-DAP to meet overall demand of medium to small farmers as an alternate to DAP

• Crop specific SSP fertilizers for major commercial crops like Sugarcane and Cotton to meet Magnesium and Iron deficiency.

• Most of the SSP Industries falls under MSME category & it generates employment

• Freight subsidy is reintroduced to expand operational areas and to reach out unrepresented locations for a short term and currently under review.

• Introduction of dedicated SSP Park

• The Government is also mulling PLI scheme for SSP fertilizer industry also to achieve "Make in India and Make for the World" It is expected that with all above initiatives, SSP fertilizer would achieve 100 lac MT production at operational capacity of85-90% in the near future. MONSOON

Agriculture in India is mainly depends on rain and about 48% of 142 million hectares of land is cultivated on rains water. It is worth to note that about 40% of our countrys food requirement including oilseeds are produced on rains water. Hence, monsoon plays a major role in countrys economy.

IMD has forecast "Normal" monsoon during this Kharif season. In light of said favourable forecast, the agriculture ministry has set ambitious target of 332 million tonnes, an all-time high which is about 8.0 million tonnes, i.e. 2.5% higher than the previous year crop output. This will boost demand for fertilizers in the country.

SOYABEAN AND MARKET SCENARIO

Soybean is known as the "GOLDEN BEAN" of the 20th Century, Though Soybean is a legume crop, yet it is widely used as oilseed. Due to very poor cook ability and digestibility on account of inherent presence of trypsin inhibitor, it cannot be utilized as a pulse. It is now the second largest oilseed in India after groundnut. It grows in varied agro-climatic conditions. It has emerged as one of the important commercial crop in many countries. Due to its worldwide popularity, the international trade of Soybean is spread globally. Several countries such as Japan, China, Indonesia, Philippines, and European countries are importing Soybean to supplement their domestic requirement for human consumption and cattle feed. Soybean has great potential as an exceptionally nutritive and very rich protein food. It can supply the much needed protein to human diets, because it contains above 40 per cent protein of superior quality and all the essential amino acids particularly glycine, tryptophan and lysine, similar to cows milk and animal proteins. Soybean also contains about 20 percent oil with an important fatty acid, lecithin and Vitamin A and D. The 4 percent mineral salts of Soybeans are fairly rich in phosphorous and calcium.

It is reported to be originated from China and gained popularity due to its unique characteristics viz., adaptability to varied agro-climatic conditions, having unmatched composition of 40 percent protein with 20 percent oil. It also has nutritional superiority on account of protein containing essential amino acids, unsaturated fatty acids, carbohydrates, vitamins and minerals. It has additional advantage and plays a significant role in preventing and treating chronic diseases such as heart ailments, osteoporosis, cancer, kidney ailments and menopausal syndromes. Soybean can be utilized for manufacturing numerous processed food products whilst it is used as a source of animal feed.

Courtesy : Indian Express 22nd May, 2023 Under the current scenario of processing and exports, SOPA has estimated that domestic production is pegged at 124.11 lakh tonnes during the year 2022-23 oil year as against 118.89 lakh tonnes in the previous year. The carry over stock is estimated higher at 25.15 lakh tonnes as against 1.83 lakh tonnes in the said period it further reported. This will boost soybean crushing during this year. Accordingly, SOPA, the apex trade body has also revised export of soybean meal to 17 lt from 14 lt as projected earlier.

Brand Image - Our brand image is well entrenched and recall amongst farmers is at its best. This led us to attain market leadership in the state of Maharashtra which is held consistently for past many years / seasons.

Locational advantage - Our Pune unit is located near ports which is convenient for movement of basic raw material, Rock Phosphate. Udaipur and Nimbahera units are in advantageous since Rock mine is situated near our factory whilst Sulphuric acid is abundantly available from Hindustan Zinc. Thus, all our plants are strategically located with total installed capacity of 6.98 lac MT.

Capacity utilization - The Company caters to the requirements in nine states where major consumption occurs. All our units operate at 60% plus capacity whilst the industry average range of 50.5% as per FAI report.

Backward and forward integration - Sulphuric Acid is manufactured in our plant which is the basic raw material for production of SSP fertilizers. Similarly spent acid generated in the process of LABSA production is used as raw material for production of SSP fertilizers. Thus, our whole complex is interlinked and thus we achieve great amount of savings in time and money towards procurement and transportation.

Green - Solar power generation - At Udaipur, we have power generation facility through Solar which takes care of 25 - 30% of our power requirement. Self-power generation through TG - In the Sulphuric Acid production process, we generate steam and power which caters to plant power requirements.

Greenfield project - At Dhule in Maharashtra, a Greenfield project for manufacture of SSP Fertilizers, chemicals and derivatives is coming up for which land acquirement is done while Environmental Clearance (EC) is already received. Professional team - The top Management is consisting of true professional leaders in their field of work who delivers on demand.

• "Sampurn" is a big-ticket fertilizer from our stable, the demand of which is growing steadily.

Loyal Dealers - The extensive dealers network of approx. 1700 numbers support the marketing strategy of the company.

OPPORTUNITIES & THREATS

Great thrust is exerted by the authorities for increasing consumption of SSP fertilizers in the minds of farmers in view of increasing cost of DAP This bode well for the industry to encash on the impetus.

Under-capacity utilization prevailing in the industry poses a good opportunity for the company to optimize production.

Monsoon is the one of the major parameters that make or mar the fortunes of this fertilizer industry in our country. Though we are fortunate to witness a favorably good monsoon in all these seasons, due weightage must be given to vagaries of monsoon. Barring this, we are placed comfortably otherwise. The present Russia-Ukraine war has posed a great threat to the general economy of the country but our SSP industry is adequately insulated to meet the challenges.

Another major point of concern is skyrocketing prices of key raw material, Rock Phosphate coupled with its availability as per the demand of SSP industry.

REVENUE

Your company has achieved Turnover of 875.49 crore during the financial year 2023 against 881.91 crore achieved in the financial year 2022. This flattened turnover is due to subdued demand of Sulphuric Acid and lesser realization coupled with lowering of SSP volumes.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Ratio Analysis	As at 31.03.2023	As at 31.03.2022	Unit
Current Ratio	1.97	2.02	Times
Debt-Equity Ratio	0.36	0.20	Times
Debt Service Coverage Ratio	5.26	15.58	Times
Return on Equity Ratio	14.15	29.56	Percentage
Inventory Turnover Ratio	73.79	61.09	Days
Trade Receivable turnover Ratio	61.63	38.26	Days
Trade Payable turnover Ratio	38.79	37.25	Days
Net Capital turnover Ratio	4.61	5.87	Times
Net Profit Ratio	4.68	7.97	Percentage
Return on Capital Employed	14.90	30.35	Percentage

PROJECTS COMPLETED / UNDERWAY

Greenfield SSP fertilizer with installed capacity of 2.16 lac MT and Chemical derivatives of 90,000 MT project at Dhule in Maharashtra is under execution. Fertilizer division commencement is expected by end of the financial year 2024 in phased manner.

INDUSTRIAL SAFETY, ECOLOGY & POLLUTION CONTROL

• As a part of visionary statement, more thrust is given for strict compliances of safety and environment requirements.

• Moreover, controlling of pollution for safe environment including for employees in operation field and general public in nearby vicinity is given priority by the Management.

OUTLOOK

Looking ahead, we remain optimistic about the future growth prospects. We are committed to maintain our focus on innovation, customer satisfaction and operational excellence.

• Continuous innovation with R&D: We will continue to allocate resources towards R&D to drive innovation and bring forth new and improved product / services. This will ensure our long term competitiveness and relevance in market

Market expansion diversification: We will actively explore new market opportunities and aim to expand our presence in existing and emerging markets. We plan to leverage our strong brand reputation, customer relationships and operational capabilities to capture additional market share.

Operational Efficiency: We are committed to sustainability and will intensify our efforts to reduce our carbon foot print on environment. We will explore renewable energy options, improve resource utilization and implement responsible business practices to contribute positively to the communities we operate in. Government is focusing on "Atmanirbhar Bharat" for which indigenously produced SSP fertilizer is the prime contender. Without compromising on nutrients content, SSP fertilizer, termed as a "Poor mans fertilizer" is available at one third cost of imported phosphatic fertilizers.

The doubling of farmers income initiatives of the Government, augurs well for the industry. The authorities are mulling to transfer subsidy amount directly to farmers account.

• The authorities are in view of restoring "freight subsidy" for supply of SSP fertilizers in each nook and corner of the country which will encourage the company to tap for new markets. Industry pro-active intervention and financial stimuli provided by the Government on regular basis by way of hike in subsidy allocation, signing of agreements for supply of raw material on government to government basis etc. will give booster shot to the industry.

• New capex investments are pouring in chemical industry which opens up great opportunity to our Sulphuric Acid division since Sulphuric Acid is the base product for all chemical formulations.

• "SSP Park" is being mooted by the Govt. to promote SSP fertilizer manufacturing in a big way

ENVIRONMENT

Reduction in Website Carbon emission - Our website runs on premium Google Cloud infrastructure, matching 100% of its consumption with renewal sources. Our service provider has customized the PHP and MySQL setup their servers to make our pages load 30% faster on average and bring down the number of slow queries between 10 and 20 times. They have also enabled powerful static and dynamic caching technology, which results in up to 5 times faster page loading for lower carbon footprint.

RISK MANAGEMENT POLICY

• Basic raw material, Rock Phosphate availability within the country is restricted from single source, i.e. RSMM, Udaipur. However, company is exploring all possible opportunities for import as per the need.

• To produce products conforming to FCO Standards with adequate self-regulatory measures at all plants.

• Continuous strict monitoring of pollution norms to meet PCB requirements through our NABL accredited QC labs.

• To mitigate Forex risk, hedging is done by the Management.

• Adequate insurance coverage is taken for men and machinery including third party liability.

• Data security measures like restricted access are in place.

• Unexpected geo-political situation shall be handled as per the prevailing situation.

• In fertilizers, value-added multi-nutrient products are in manufacturing line to feed deserving farming community and thus avoid single-product base.

• Self-power generation through TG and green- power generation through Solar ensure availability of power to meet plant utility requirements.

• Plant and machinery are adequately insured for damages and other perils.

• Avoided penalties by timely compliance of various statutory requirements.

CORPORATE SOCIAL RESPONSIBILITY

Our endeavor is to contribute our mite for well-being of the society, environment and surroundings. As a responsible corporate entity, we never shirk from our responsibilities for making ease of life to those who deserve and this CSR expenditure is not done due to compulsion but it is our conviction.

In line with this objective, we have been supporting all causes with respect to education viz., providing computers, constructing additional school blocks, distribution of notebooks, bags and supporting Sports activity etc. Over and above, girls education is given prime importance as our spends move around fulfillment of primary schools requirement.

HUMAN RESOURCE MANAGEMENT

Key personnel in respective plants ensure for cordial working atmosphere by attending requirements on daily basis. As a matter of routine, most of the time issues are resolved with foresight.

CAUTIONARY STATEMENT

The Companys performance is mainly dependent on several external factors which are beyond the control such as monsoon, Government policies, fluctuation in prices of raw material, foreign exchange risk and other internal factors which could adversely affect the operations of the Company. Some of the foregoing statements in the report may be forward looking and are stated as required by applicable laws & regulations. Many external and internal factors may affect the actual results which could be different from the projections made by the Directors with respect to future performance and outlook of the Company.

Ensuring a Safe and

Healthy Work Environment

At Rama Phosphates, we have entrenched health and safety as an ethos across our business systems and processes. We believe all accidents are preventable, and the safety and well-being of our people is important for sustainable business growth. Our focus is on nurturing a Zero Harm workplace environment and thus we are committed to create a culture of safety at all our plants