Saptarishi Agro Industries Ltd Management Discussions

A. INDUSTRY STRUCTURE AND DEVELOPMENTS

Saptarishi Agro Industries Ltd is a JV with Tamil Nadu Industrial Development Corporation (Tidco) established in 1994. It has been a Pioneer Company set up in India for manufacturing Button Mushroom with Technology tie up with Dalsem Veciap, BV of Netherland. Company is to develop a Business value chain with an end to end solution and platform for Mushroom and Exotic Horticulture Produce, for Cultivation, Packaging, Processing and Supply Chain Management for the benefit of Investor Group, Farmer Producer Group and Consumer Groups.

B. BUSINESS ANALYSIS

The global mushroom market size was valued at USD 50.3 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 9.7% from 2022 to 2030. Edible fungi are commonly known as mushrooms that have been classified as vegetables; however, technically, they are not considered plants. They are rich in riboflavin, potassium, vitamin D, selenium, and other ingredients that are beneficial for human health. Mushroom cultivation is increasingly being adopted as an agri-business enterprise in rural and urban India. A study by Allied analytics suggested that the mushroom industry is expected to reach $53.34 billion by 2027 registering a CAGR of 9 per cent from 2021-2027. A positive outlook paints a healthy picture of growth of mushroom production in India and all over the World.

C. OPPORTUNITIES AND THREATS & SEGMENT WISE ANALYSIS

Mushrooms are marketed as fresh, dried and preserved. Market for mushrooms is growing rapidly because of their nice aroma, subtle flavour, nutritious values and special taste. Many exotic preparations are made from them like soup, pickles, vegetables etc. It is also used for stuffing several food preparations and for garnishing. Growing mushrooms is easy, less cost intensive and economy is different from the linear economy in the sense that it has no open loops. These in fact are the only vegetarian unfortified food source that can provide a substantial amount of vitamin D in a single serve.

Mushroom consumption is still confined to urban and semiurban population. Further, erratic weather conditions and shortage of labour are the main threats to the industry. Mushrooms are highly perishable vegetable crop with less than two to three days of storability.

D. OUTLOOK & RISKS AND CONCERNS

By 2025 the Indian Food Processing market is estimated to reach $535 Bn and growing at a compound annual growth rate of 15.2%. The share of processed food exports in agri-exports has increased substantially from 13.7% in 2014-15 to 25.6% in 2022-23. The Ministry of Food Processing Industries (MoFPI) is making all efforts to encourage investments across the value chain. Major sectors constituting the food processing industry in India are processed fruits and vegetables, RTE/RTC, mozzarella cheese, processed marine products, edible oils, beverages, and dairy products.

Indias food processing sector faces various challenges including inadequate infrastructure, lack of proper storage and cold chain facilities, and fragmented supply chains. These problems hinder the growth of the sector and increase wastage of agricultural products. The Company continues to focus on a system-based approach to business risk management and has been able to mitigate such risks by working upon strengthening its supply chain and increasing its customer base. The Company has in place sound corporate governance structure and practices in place aligned with the food processing industry. It also has thorough understanding of regulator expectations, business processes and challenges.

E. INTERNAL CONTROL SYSTEMS AND THE ADEQUACIES

The Company has adequate system of internal control relating to purchase of stores, raw materials, including components, plant and machinery, equipment and other similar assets and for the sale of goods. The company has suitable internal control system commensurate with the size of the Company and nature of its business.

F. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE.

Discussion on financial performance with respect to operational performance has been dealt in the Directors Report. The Company has received finances from Banks for operational purposes which is been stated in the notes to the accounts and forms the part of the Report.

G. LIKELY DEVELOPMENTS IN HR/INDUSTRIALRELATIONS

With the increase of projects and operations the Company will require workforces and accordingly the Company will enhance the capacity and capability of employees that ultimately will help achieving better standards of operations. Company will be proactive to strengthen its HRD department as a perquisite to restart manufacturing.

H. CAUTIONARY STATEMENT:

"Management Discussion and Analysis" report contains forward looking statements, which may be identified by the use of the words in that direction or connoting the same. All the statements that address expectations or projections about the future, including but not limited to statements about the Companys strategy for growth, product development, market position, expenditure and financial results are forward looking statements. The Companys actual results, performance or achievements could thus differ materially from those projected in such forward-looking statements. The Company assumes no responsibility to public, to amend, modify or revise any forward-looking statements on the basis of subsequent developments, information or events.

KEY FINANCIAL RATIO

Sr. Particulars	>Numerator	FY 2023-24	F.Y. 2022-23	Change in %	Explanation
1. Current ratio	Current Assets Current Liabilities	1.49	1.18	25.80%	Due to increase in liquidity
2. Debt-equity ratios	Total Debt Shareholders Equity	0.71	0.06	1075.82%	The Company has taken new borrowing from the Bank during the year which resulted into increase in debt of the company thereby, there is major change in this ratio.
3. Debt service coverage Ratio	PBT + Depreciation + Interest + loss on sale of asset etc. Debt service	0.42	1.95	-78.44%	Increase in repayment capacity of the company

Pursuant to amendment made in Schedule V to the SEBI Listing Regulations, details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in Key Financial Ratios and any changes in Return on Net Worth of the Company (on standalone basis) including explanations therefore are given below:

4. Return on Equity	Profit After Tax (Attributable to Owners)	32.21%	11.89%	170.89%	Due to Increase in profit margin of the company
	Avg. Shareholders equity
5. Inventory Turnover Ratio	Cost of Goods Sold	1.54	1.58	51.37%	Due to overall reduction in business cycle of the company.
	Average Inventory
6. Trade Receivable Turnover Ratio	Net Credit Sales	231%	173%	33.09%	Due to reduction in turnover but increase in profit margin the company has granted more period for payment to the debtors.
	Average Accounts Receivable
7. Trade Payable Turnover Ratio	Net Credit Purchase	259%	180%	43.79%	Due to reduction in turnover and increase in trade receivable ration company has delayed payment to creditors
	Average Accounts Payable
8 Net Capital Turnover Ratio	Net Sales	8.61	12.77	-32.58%	Due to implementation of strict collection policy and reduction of business cycle of the company.
	Average Working capital
9 Net Profit Ratio	Net Profit	4.95%	1.54%	221.40%	Due to Increase in profit margin of the company
	Net Sales
10 Return on Capital Employed	Earning before interest and taxes	19.84%	10.59%	87.40%	Due to Increase in profit margin of the company
	Capital Employed
11 Return on Investment	Market Value at end of the year	1.38	1.15	19.96%	NA
	Market Value at the beginning of the Year