TGIF Agribusiness Ltd Management Discussions

INDUSTRY STRUCTURE & OVERVIEW:

According to Inc42¹, the Indian agricultural sector is predicted to increase to US$ 24 billion by 2025. Indian food and grocery market is the worlds sixth largest, with retail contributing 70% of the sales. Indias agricultural and processed food products exports stood at US$ 43.37 billion in FY23 (April 2022-January 2023). As per third Advance Estimates for FY23 (Kharif only), total food grain production in the country is estimated at 330.5 million tonnes. As per the Second Advance Estimates of National Income, the share of GVA of agriculture and allied sectors in the total economy in 2022-23 was 18.3%, with a growth rate of 3.3%. According to Inc42¹, the Indian agritech sector secured more than $2.4 Bn in funding in 285 deals between 2014 and February 2024. Indias farming sector has served as the bedrock of the economy since independence. Even today, it sustains the livelihoods of about two-thirds of the population. Not just this, the Indian agriculture industry accounts for 19% of the countrys GDP, highlighting its enduring significance. This growth is also a testament to the fact that the country is not only enhancing its position domestically but also in the global food trade, as evidenced by Indias push for millet exports at the G20 Leaders Declaration in New Delhi. According to the World Economic Forum², agritech activity in India has seen a dramatic surge in recent years, with the startup count rising from 43 in 2013 to more than 1,000 in 2020. This changing paradigm is further fueled by increasing internet penetration in rural India. Today, Indias agritech industry stands at the cusp of explosive growth, propelled by a convergence of factors such as increasing demand, heightened internet penetration and rising investor support. Notably, government initiatives like the Digital Agriculture Mission (DAM), launched in 2021, and the Agriculture Accelerator Fund are crucial steps towards providing vital infrastructure and support for agritech startups and allied sectors. According to an Inc42 report, the market opportunity for agriculture sector is anticipated to reach $25 Bn by 2025, signifying a transition from its nascent stages to mainstream prominence in the near future.

BUSINESS OVERVIEW:

Our Company has been incorporated on December 27, 2023 pursuant to the conversion of the limited liability partnership i.e. "TGIF Agribusiness LLP". The erstwhile LLP was previously known as "ARV Farmpro LLP" which was formed by the conversion of the partnership firm i.e. "Aarvee Farm Products". The partnership firm i.e. "Aarvee Farm Products" was formed by our current promoter Niraj Chhaganraj Gemawat and her wife Rachana Gemawat pursuant to a deed of partnership dated February 28, 2014. We are primarily a horticulture Company engaged in open farming of certain fruits and vegetables. Our farm land is spread over an area of over 110 acres and is situated in the vicinity of three villages i.e. Ajari, Kasindra and Kojra, all of which are located in the tehsil of Pindwara, district Sirohi, Rajasthan. We have obtained all our farm lands on lease basis from our Promoter, Niraj Chhaganraj Gemawat, Rachana Gemawat, Niraj Chhaganraj Gemawat HUF and Vipin Moharir vide a lease deed. Our Company is engaged in the farming of pomegranate which contribute to more than 95% of our revenue from operations. Apart from the farming of pomegranate we are also engaged in the farming and cultivation of dragon fruits and Sagwan trees. We follow different farming practices so as to produce quality fruits such as fruit thinning, wherein some portion of fruit crop from the tree is removed before its maturity, in order to improve the general size and quality of the remaining crop, leaf vegetative growth practice to reduce tolerance level of external appearance, protecting fruit with protection material, measuring soil moisture to determine the water application. Under our farming model, wherein we generally employ farmers and workers in the vicinity of our farms. We also engage ourselves in to supervision of farmers and croppers to constantly monitor the quantity and quality of crops. With the growing consumer knowledge, interest, and purchasing power the demand for the fruits have also increased. This, in turn, played an important role in increasing our product demand in the market. We maintain adherence to quality and safety standards including plant quality, product quality, use of plant nutrients, fertilizers, pesticides to safeguard the plants and produce etc. These steps ensure the fulfilment of food safety and quality control and helps us in increasing the farm produce. We use drip irrigation systems for each of our farms to ensure proper irrigation of the farms and also minimize time spent on irrigation activity. The post-harvest facility has been designed to avoid contamination and to maintain food hygiene in the process. The products are packed as per individual client requirement and delivered to the customers.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

TGIF has aligned its current systems of internal financial control with the requirement of Companies Act, 2013, The Internal Control – Integrated Framework is intended to increase transparency and accountability in an organizations process of designing and implementing a system of internal control. The framework requires a Company to identify and analyze risks and manage appropriate responses. The Company has successfully laid down the framework and ensured its effectiveness.

SEGMENTAL PERFORMANCE OR PRODUCT-WISE PERFORMANCE.

The Company operates in only single segment. Hence segment wise performance is not applicable.

OPPORTUNITIES AND THREATS, RISKS AND CONCERNS

We are an Agri-based company, our business is dependent on weather conditions, including extreme conditions such as drought and natural disasters. Further, the growth and production of the fruits and vegetables may be adversely affected by any change in the temperatures, weather patterns and the frequency and severity of extreme weather and natural disasters. The longer than usual periods of heavy rainfall in certain regions or a drought in India caused by changes in weather patterns may cause harm to the plantation and effect cultivation/harvesting of the fruits and vegetables. Further, adverse weather conditions may also cause volatility in the prices of commodities, which may affect our sales revenue. Consequently, the occurrence of any such unfavorable weather patterns may adversely affect our business, results of operations and financial condition. Our businesses are subject to seasonal variations. For example, every crop has a definite harvesting period during with the farm produce are higher compared to other parts of the year, hence the supply of the same is increased during the said period. Though, we maintain sufficient arrangements with storing facilities to store the farm produce and deliver in case of high demands during off period. However, in case we are not able to properly estimate demand and there is a shortage of farm produce and the estimated time period for which the produce can be stored without affecting its quality may have an adverse effect on our production cycle and sales. As a result of such seasonal fluctuations, our sales and results of operations may also vary by fiscal quarter, and the sales and results of operations of any given fiscal quarter may not be relied upon as indicators of the sales or results of operations of other fiscal quarters or of our future performance.

FINANCIAL HIGHLIGHTS

During the year under review, the Company has earned a net revenue from operations on a Standalone basis of 153.48 Lacs for the financial year 2023- 2024. Further, the Company has earned a Profit before tax (PBT) of 67.26 Lacs and Profit after tax (PAT) of 67.26 Lacs.

Cash and Cash equivalents as at March 31, 2024 were 112.56 Lacs. The Company continues to focus on its working capital, receivables and other parameters. The Basic and Diluted Earnings per share of the company as on 31st March, 2024 is 3.54 on a Standalone basis.

HUMAN RESOURCES

Company has good relations with its employees. Your company is focused in balance work life approach which promotes employee innovation, excellence and mutual trust between all the personnel and the company. The company also focuses on systematic training programmes and developing the technical and behavioral skills of the personnel at each level of organisation to upgrade and innovate the work culture. Your Directors acknowledge and thank employees for their constant support.

CAUTIONARY STATEMENT

Statements made in this Management Discussions and Analysis describing companys objectives and predictions may be "forward-looking Statements" involving future plans of the company within the meaning of applicable laws and regulations. Actual results may differ from those expressed herein. The company is dependent on factors that can impact the operations i.e. Government regulations, tax regimes, and economic developments within India and other countries. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates. The following discussion and analysis should be read in conjunction with the Companys financial statements included in this report and the notes thereto. Investors are also requested to note that this discussion is based on the Standalone Financial Results of the company.

KEY FINANCIAL RATIOS:

The key Financial Ratios during Financial Year 2023-24 and Financial Year 2022-23 are as below:

Sr. No Particulars	Numerator	Denominator	2023 - 2024
1 Current Ratio (In Times) Debt – Equity	Current Assets Total Debt =	Current Liabilities Shareholders Equity	5.40
2 Ratio (In Times)	Borrowings Earnings available for debt service= Net	= Total Equity	-
3 Debt Service Coverage Ratio (In Times)	Profit before taxes + Non-cash operating expenses + Interest + other adjustments	Debt Service = Interest + Principal Repayments	-
4 Return on Equity (ROE) (In %)	Net Profits after taxes – Preference Dividend (if any)	Average Shareholders Equity	26.14%
5 Inventory Turnover Ratio (In Times)	Cost of goods sold OR sales	Average Inventory	-
6 Trade receivables turnover ratio (In Times)	Net Credit Sales = Revenue from Operation	Average Accounts Receivable	0.02
7 Trade payables turnover ratio (In Times)	Net Credit Purchases = Purchase Cost	Average Trade Payables (Trade Payable related to Product Purchase)	0.51
8 Net capital turnover ratio (In Times)	Net Sales = Revenue from Operation	Average Working Capital	0.79
9 Net profit ratio (In %)	Net Profit = Profit for the period	Net Sales = Revenue from Operation	43.82
10 Return on capital employed (ROCE) (In %)	Earnings before interest and taxes	Capital Employed = Tangible Net Worth + Total Debt + Deferred Tax Liability	26.14%
11 Return on investment (In %)	Income generated from invested funds	Average invested funds in treasury investments	7.69%