Shreeoswal Seeds & Chemicals Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

The global seed industry forms a crucial segment of the agricultural value chain, providing the foundation for global food security, it is undergoing rapid transformation due to the integration of biotechnology, digitization in agriculture, and increased demand for high-yielding, climate-resilient varieties. Provides more than livelihoods for 2.5 billion people, and is the largest source of income and employment for poor, rural households.

In developing countries, this sector has remained resilient, as reflected in its performance over the years. Over the last five years, it registered an average annual growth at constant prices, and According As of 2024, the global seed market is estimated at USD 70 75 billion, and is projected to grow at a CAGR of 6 7% through 2030. The major markets include North America, Europe, Latin America (notably Brazil and Argentina), and Asia-Pacific. The sector remains vital for economic growth and food security worldwide.

The total Kharif Food grain production in India for 2024-25, as per the First Advance Estimates, is projected at 1647.05 Lakh Metric Tons (LMT) which is higher by 89.37 LMT as compared to previous year kharif food grain production and 124.59 LMT higher than average kharif food grain production. Foodgrain production witnessed record increase due to good production of Rice, Jowar and Maize. The total production of Kharif Rice during 2024-25 is estimated to be 1199.34 LMT which is higher by 66.75 LMT than the previous year kharif rice production and 114.83 LMT higher than average kharif rice production. The Kharif Nutri/coarse cereals is estimated to be 378.18 LMT. Further, the total Kharif pulses production during 2024-25 is estimated to be 69.54 LMT. The total Kharif oilseeds production in the country during 2024-25 is estimated to be 257.45 LMT which is higher by 15.83 LMT than the previous year total kharif oilseeds production. The production of Sugarcane in the country during 2024-25 is estimate

India is one of the largest seed markets in the world, valued at approximately USD 4.5 5 billion in 2024. It is expected to grow at a CAGR of 7 8%, driven by government support, rising awareness among farmers, and increasing adoption of quality seeds.

KEY CROPS

The Indian seed market is dominated by cereals (paddy, maize), oilseeds (mustard, soybean, sunflower), cotton, and vegetables. Hybridization is high in cotton, maize, and vegetables, but low in pulses and oilseeds.

GOVERNMENT INITIATIVES

National Seed Policy and Seed Village Program promote production and distribution of quality seeds. PMKSY and National Mission on Seeds enhance access to certified seeds. Digital Seed Traceability and e-NAM platforms for better market linkages.

MARKET TRENDS

Growth in Vegetable and Horticultural Seeds: Driven by profitability and demand from urban markets. Focus on Hybrid Seeds: Especially in cotton, maize, and vegetables.

Increased Participation of Private Sector: Especially in research, hybrid development, and exports. Export Potential: India is emerging as a global hub for seed production and exports, especially for tropical and subtropical crops.

OPPORTUNITIES AND OUTLOOK

By2050, the world will have 10 billion people, with Indian accounting for 1.73 billion (Source: United Nations). To feed Indias growing population, the yield per hectare needs to increase significantly, especially keeping in mind the declining arable land in India. Further, Indias agricultural yield is far lower as compared to global averages. Extreme weather coupled with low penetration of high-yielding hybrid seeds, lack of awareness of modern agricultural technologies and inefficient use of agrochemicals are some of the factors behind the low yield. This presents a significant opportunity for the Companys Crop Protection and Hybrid Seeds business along with opportunities for expanding crop advisory and digital offerings.

Innovations in seeds, crop protection and digital farming solutions can go long way in addressing the productivity problems affecting Indian agriculture. It will also help farmers get good commodity prices, encouraging them to spend on qualitative inputs for achieving higher yields.

Seed is the first and best hope a farmer has and forms the foundation of “Socio-Economic Empowerment and Development.” Over the last decade, the Indian seed industry has grown significantly, driven by both private and public sector participation. Valued at $6.3 billion in 2022, the market is projected to reach $16.5 billion by 2030, expanding at a compound annual growth rate (CAGR) of approximately 12.4%.

During the year The Company received permission of In-House R&D Recognition from, the Department of Scientific and Industrial Research (DSIR), Government of India, awarded for three years.

During the year The Company received, first right of refusal for Distillers Dried Grains with Solubles (DDGS) from Oswal Ethanol and Feed Industry Private Limited (Group Company), effective from FY 2026.

Together, these accomplishments highlight Shreeoswals commitment to innovation, farmer empowerment, and long-term growth in Indias agricultural sector.

The seed companies cannot rely only on in-house, R&D for the most promising innovations, especially in the areas outside their traditional purview. Instead, they need to enrich their innovation pipelines by collaborating with digital startups and other specialized companies in biotech and Agri Tech space on the lines of pharmaceutical industry. This will not only help in sharing the costs, and risks of innovation allowing them to leverage the expertise and innovation capabilities that they lack. These collaborative models can be co-development partnerships with equals, deals to help smaller companies fund their research in specific fields, and collaborations with universities, government institutions and NGOs Digitization is the now the reality for the agriculture industry. If the seed companies need to meet the changing demands of farmers, regulators and consumers, they need to focus on developing cross-functional capabilities in data, analytics, and digital technologies.

THREATS

The continuous competition from the certified seed players and changes in government regulation provide threat to the company. These can either disrupt our operations or adversely affect our business and results of operations. We have operational risks that are Inherent to business operations including manufacturing, supply chain and distribution operations, monsoon failures and any other business activity disruptions. Further issues like weather conditions, crop diseases and pest attacks could harm the production and demand of our seed products. This may result in negative results to our business, financial condition, operations and prospects. Increasing seed replacement rate in the country and the adoption of hybrid and biotech crops are the major drivers of the market.

Agriculture is very sensitive to weather and climate. It also relies heavily on land, water, and other natural resources that climate affects. While climate changes (such as in temperature, precipitation, and frost timing) could lengthen the growing season or allow different crops to be grown in some regions, it will also make agricultural practices more difficult in others. Nature of business of the company is agro based commodities and legal cases are filed by farmer due to Non-Germination of Agro Seeds or failure of Seeds Sample and which may be happened by any of the one condition i.e. Climate changes, Soil Issue, excess or less water used while irrigation of crop, Non-Germination and farmer negligence which is not the fault of the company.

The seed companies need to be move away from a product-centric approach to product and services that can be tailored to customers needs. The development of these solutions is more important now as the expectation of customers have been shifting towards growing there food more sustainably, using less of inputs for higher productivity.

PRODUCT WISE PERFORMANCE

The Company has no reportable segment on standalone basis and on consolidated basis the Company has two reportable segments which consist of Seed and Psyllium in accordance with Ind AS-108 Operating Segment. Details of turnover and profitability along with other segment details are disclosed to Note Number 41 in consolidated financial statement of the Company.

INDUSTRY OUTLOOK

With good reservoir levels and retained soil moisture from the previous Rabi season, the sector was blessed with an above-normal monsoon for the second consecutive year. Early cropping during the Kharif season and prolonged monsoon created a very favorable climatic and soil condition for year-round cultivation of food crops, cash crops, fruits and vegetables. The higher output was well supported by the higher procurement by the Government leading to improved price realization by the farmers.

RISKS AND CONCERNS

The Company owns and operate only one processing facility situated at Neemuch, Madhya Pradesh. All our products are processed at the same facility. Our manufacturing facility is susceptible to damage or interruption or operating risks, such as human error, power loss, breakdown or failure of equipment, performance below expected levels of output or efficiency, obsolescence, break-ins, and industrial accidents and similar events. Further, our processing facility is also subject to operating risk arising from compliance with the directives of relevant government authorities. If our Company experiences delays in production or shutdowns due to any reason our Companys operations will be significantly affected, which in turn would have a material adverse effect on its business, financial condition and results of operations.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has appropriate internal control system for business processes with regards to its operations; financial reporting and compliance with applicable laws and regulations. The Audit Committee approves the internal audit plan and internal audits are conducted at regular intervals in line with the approved plan. Audit observations and follow-up actions are discussed by the Internal Audit team with the management of the Company as well as Audit Committee.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Financial and Operational performance forms are part of the Board Report separately.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

The Company follows a strategy of attracting and retaining the best talent and keep employees engaged, motivated and innovative. The Company continues to have cordial relations with its employees and provide personnel development opportunities for all round exposure to them. As on 31st March, 2025, the Company had 31 employees.

DETAILS OF SIGNIFICANT CHANGES IN FINANCIAL RATIOS:

	F.Y. 2024- 25	F.Y. 2023- 24	Change in Ratio	Variance
Debtors Turnover	16.07	17.52	-8.27	-47.20%
Inventory Turnover	4.51	3.05	1.46	47.87%
Interest Coverage Ratio	5.11	3.15	1.96	62.22%
Current Ratio	1.50	1.09	0.41	37.61%
Debt Equity Ratio	0.0042	0.00	0.0042	0
Operating Profit Margin (%)	3.04%	2.31%	0.73	31.60%
Net Profit Margin (%)	4.10%	2.82%	1.28	45.39%

Reason for changes more than 25% in financial ratio

Debtors Turnover: There has been decrease in revenue of the company during the year due to reduce the commodity price.

Inventory Turnover: There has been decrease in average inventory of the company during the current year as compared to previous year

Interest Coverage Ratio: There is a decrease in revenue during the year but profit has been increase.

Current Ratio: There is significant decline in current liabilities (on account of borrowings and advance from customers) and slight increase in current assets (due to increase in inventories and advance to suppliers)

Operating Profit Margin (%): Better cost control, such as reducing administrative or selling expenses.

Net Profit Margin: There has been substantial increase in profits for the year as compared to previous year.

RETURN ON NET WORTH

Return on net worth (RONW) is calculated by dividing the net income by shareholders equity. It explains the efficiency of the shareholders capital to generate profit.

RONW = Net Income / Shareholders Equity

The Return on Net worth (RONW) of the Company for FY 24-25 is 6.42% as compared to 4.74% during FY 23-24.

CAUTIONARY STATEMENT

Statements in this Management Discussion & Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. The company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events.

There are various factors like conditions in global financial markets, regulatory intervention and other acts of violence which may lead to situations unpredictable for any one Important factors that could make a difference to the Companys operations include economic developments in the country and improvement in the state of capital markets, changes in the Government regulations, tax laws and other status and other incidental factors.