Sirohia & Sons Ltd Management Discussions

OVERVIEW OF AGRICULTURAL SECTOR

Agriculture is of prime importance to the socio-economic fabric of India. The sector has remained the backbone of the Indian economy and presently accounts for 15% of the countrys GDP. Nearly 58% of rural households rely on agriculture as their principal means of livelihood. Being a source of livelihood and food security of the nation, higher growth in agriculture assumes great importance and is a matter of priority for the economy. Your Company’s Vision and business strategy are aligned with the needs of Indian Agricultural Economy. However, in the last year, due to certain factors, no business activity was carried out.

INDUSTRY OUTLOOK

India is the fourth largest global producer of agrochemicals after USA, Japan and China. The global agrochemical market size was valued at USD 231.0 billion in 2020 and is projected to reach USD 315.3 billion by 2030. The sector registered a 23% rise in the fiscal year ended 2022. Global population is expected to cross 9 billion by 2050. Rising population has led to increasing food demand. India ranks 1st in the list of countries by population in the world, and its population is estimated to grow further over time.

Approximately 25% of the global crop output is lost due to attacks by pests, weeds and diseases, says the FICCI report. Agrochemicals can play a major role in enhancing productivity and protection of crop post-harvest. Insecticides are the largest sub-segment of agrochemicals with 60% market share.

Indian agrochemicals market will be driven by growth in insecticides, increasing awareness towards judicious use of agrochemicals, contract manufacturing and export opportunities. Challenges such as non-genuine products, appropriate focus on R&D, inefficiencies in the supply chain etc. need to be addressed on priority. In addition to the use of crop protection chemicals, Indian agriculture needs to focus on specific solutions to enhance crop productivity. It is imperative for us to adopt efficient agronomy practices, fertilisation, seed treatment, biotechnology and integrated pest management to reduce wastage and attain self-sufficiency in agricultural output.

RISKS, CONCERNS& THREATS

Indian agriculture is still grappling with challenges such as high dependence on monsoon, unpredictable weather patterns, reduction in arable land, decreasing farm sizes, low per hectare yield and increase in pest attacks. To add to the complexity, the agricultural workforce in India is expected to reduce by 50% in the coming decade due to better remuneration and growth opportunities in other sectors. These factors pose a challenge for the Agrochemicals Industry as well.

Further, the onset of the current COVID 19 Pandemic, has created an unforeseen circumstance. This has put all the future plans in jeopardy. It will take long time for the economy to recover. Your company is no different and has borne the brunt of this Pandemic. Your Board is trying its best to safeguard the company and to not let the impact of this Pandemic affect us much.

INTERNAL CONTROL SYSTEM AND ADEQUACY

Your Company is committed to ensuring an effective internal control environment that provides reasonable assurance regarding the effectiveness and efficiency of operations, adequacy of safeguards for assets, reliability of financial controls and compliance with applicable laws and regulations. For this, the Company has laid down standard operating procedures and policies to guide the operations of the business.

The internal audit processes provide reasonable assurance on the adequacy and effectiveness of such internal controls and compliances, through the reviews of the functions and processes, as per the annual audit plan agreed with the Audit Committee. To maintain independence, the internal audit function reports to the Chairperson of the Audit Committee of the Board.

HUMAN RESOURCES

Employees are the most valuable assets and the strength of an organization in its growth, prosperity and development. Your Company, albeit a small number, but has qualified and dedicated personnel who have contributed to the growth and progress of the Company. However, most of the work is generally carried out by the Executive Directors themselves.

CAUTIONERY STATEMENT

Statements in this management discussion analysis describing the Company’s objectives, projections, Estimates, expectations may be forward looking within the meaning of applicable securities-laws and Regulations. Actual results may differ materially from those expressed in the statement. Important factors that could make difference to Company’s operations Include economic conditions affecting the domestic market and the overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other Incidental factors.