Impact of Monsoon in 2022
The southwest monsoon in 2022, which spanned from June to September,
had a notable impact on various regions in India. Overall, the seasonal rainfall during
this period exceeded the Long Period Average (LPA) and provided valuable insights into the
monsoon?s performance across the country.
Specifically, the southwest monsoon rainfall for the entire country
from June 1st to September 30th, 2022, registered at 92.5 cm, surpassing the LPA of 87.0
cm based on data from 1971 to 2020. Notably, some regions experienced rainfall that
significantly deviated from the norm:
This unique monsoon season with varying regional patterns had
significant implications and regions in India.
Source: 20221001_pr_1849.pdf (imd.gov.in)
Indian Seed Industry
The Indian seed industry is undergoing significant transformation,
driven by several reshaping agricultural practices and outcomes. The demand for
genetically modified seeds, known for their capacity to increase crop yields, stands as a
primary driver for this industry evolution. Farmers are becoming increasingly aware of the
advantages of hybrid seeds over traditional open-pollinated varieties, leading to a shift
in preferences.
Hybrid seeds have gained substantial popularity in India, primarily due
to their enhanced pest-resistant properties and reduced production costs, resulting in
fewer losses. This surge in demand for hybrid seeds has stimulated the commercial seed
market, prompting farmers to transition from conventional seed sources to packaged seeds
with promises of higher yields.
In the realm of commercial seed cultivation, hybrids have taken the
lead, covering 65% of the cultivated area, while open-pollinated varieties occupy the
remaining 35% as of 2021(Source: India Seed Market Size & Share
Analysis - Industry Research Report - Growth Trends
(mordorintelligence.com).
Leading seed breeders are adapting to this evolving landscape by
integrating advanced digital technologies to combat the adverse effects of pests, climate
variations, and other environmental factors. The adoption of data science, AI tools,
advanced phenomics, genomics, patent protection systems, rising income levels among
individuals, and intellectual property rights over plant varieties are shaping the
agricultural sector?s future.
Furthermore, increased investments in research and development
activities aimed at enhancing crop production, refiningsupply chain management, and
ensuring quality assurance are expected to be driving forces propelling the Indian seed
industry forward. These initiatives are poised to usher in a new era of agricultural
innovation and productivity in India.
As per IMARC?s research findings, the seed industry in India
reached a substantial size of US$ 6.3 Billion in 2022 and is poised for significant
expansion. Projections indicate that it is anticipated to reach US$ 12.7 Billion by the
year 2028, showcasing an impressive Compound Annual Growth Rate (CAGR) of 12.43% over the
forecast period during 2019-2028 (Source: Seed Industry in India : Share, Size, Growth,
Trends and Forecast 2023-2028 (imarcgroup.com).
Several factors are contributing to this remarkable growth trajectory
within the Indian seed industry. The increasing population, combined with the abundance of
fertile arable lands and diverse agro-climatic zones, serves as a pivotal catalyst for
driving the expansion of the seed sector. These conditions provide a conducive environment
for agricultural productivity and seed-related activities to flourish.
Furthermore, the Indian government?s proactive role in fostering
the growth of the seed industry has created a positive outlook. Various initiatives and
schemes have been introduced to support and incentivize farmers and breeders. Notable
among these are schemes like the Integrated Scheme for Oilseeds, Pulses, Oil Palm, and
Maize, as well as the Rashtriya Krishi Vikas Yojana. These government-led efforts are
instrumental in promoting sustainable agriculture, enhancing crop production, and ensuring
food security, thereby bolstering the overall market prospects for the seed industry in
India.
OUTLOOK Our Business
"Tierra" has made a humble beginning in the Year 2013 as a
technology centric agriculture company. The objective is set to develop superior quality
hybrid seeds stacked with crop specific important traits that provides yield benefit and
overall cost advantages to farmers and other stake holders. Tierra is headquartered
significant at Hyderabad, the seed capital of India, founded by professionals with more
than eight decades of combined seed and agribusiness industry experience and proven
excellence in developing breakthrough products.
"Tierra" is engaged in research, development, production,
processing and commercialization of superior products in major crops like Cotton, Rice,
Corn, Mustard, Tomato and Okra. During year 2017-18, Tierra has attracted global attention
after their acquisition of Monsanto?s India cotton seed business and DuPont
Pioneers Cotton company ‘Xylem Seeds Private Limited? .
"Tierra" has established a state-of-the-art R&D unit in
Hyderabad with 10,000 sq. ft. laboratory space with several green houses, more than 50
acres of breeding farms supported with drip irrigation and other essential facilities.
Besides its Breeding and Biotechnology R&D centres in Hyderabad, Tierra has also
established three more R&D units, one in Bangalore, Karnataka, India and the two
others in Pune, Maharashtra, India and
Gurugram, Haryana, India. It has also about 30 product trailing centres
across the country.
In 2018, Tierra expanded its Cotton portfolio in the market by
acquiring Indian Cotton seed business of
Monsanto Holdings Private Limited and Xylem Seeds Private Limited (a
DuPont Pioneer company). The rich and diverse germplasm collected and developed by the
experienced breeders of Tierra and the two acquired programs has given the organization a
very strong platform in Cotton breeding. Tierra?s efforts are aimed at developing
upmarket products with big boll size, easy pick ability, earliness, good fibre qualities
with strong tolerance to pests and diseases. Our special efforts are to breed cotton for
suitability to high density planting system (HDPS), sympodial type, easy pick ability,
short stature with synchronous maturity to help harvest the crop in one or two pickings.
Specialemphasisisalsoonutilizingmalesterilitytraitforefficientseed production and very
high genetic purity. Our focus is to introduce value added - differentiated products and
technologies in the market, while protecting them under suitable Intellectual Property
(IP) and Plant Variety Protection (PVP) laws. Our business model follows strict compliance
with all regulatory guidelines including Freedom to Operate (FTOs).
"Tierra" ventured into vegetableseedssalefromthefinancialyear
2020-21, thereby spreading its portfolio from cotton, paddy, corn, mustard, maize and
vegetable seeds. The Company has an extensive marketing network with loyal and committed
distributors and dealers in Andhra Pradesh, Telangana, Orissa, Karnataka, Tamil Nadu,
Maharashtra, Bihar, Madhya Pradesh, Jharkhand, Chhattisgarh, Gujarat, Uttar Pradesh,
Punjab, Haryana, West Bengal, Assam and Rajasthan. The Company?s focus is to be a
leading provider of crop solutions to the farmers by supplying high yielding hybrid seeds
and crop management namely micronutrients and plant growth promoters. For achieving this,
the Company is engaging in R&D efforts in the areas of superior breeding programmes
and biotechnology tools that will enable it to develop highly effective and differentiated
hybrid seeds.
Research & Development
Tierra has strong Research and development infrastructure. Our research
program is well recognised by DSIR,
GOI which is supportedbyhighlyqualifiedand experienced professionals in
industry.. Tierra has technological collaboration with key institute like NBRI for unique
product development. We also carry out our research through collaborations with academic
institutions and other strategic partners. We have teams of plant breeders that have the
ability to develop new lines and hybrids. We believe our continuing efforts in research
and development provides us with a strong platform to build our market share in the seed
industry.
The company has the following R&D Activities:
1. 99 Breeding & Testing Locations across the country.
2. 175 Product Evaluation Locations across the country.
3. About 110 Acres of Leased land for Research & Development.
Product Overview:
| Crop |
Commercial Products |
Pipeline |
Lead Commercial Products |
| Cotton |
13 |
4 |
Brahma, 9121, 3609 |
| Maize |
6 |
1 |
S2-981, 2T55 |
| Paddy |
4 |
5 |
S5-927, Taapsi |
| Mustard |
1 |
2 |
S5- 630 |
| Tomato |
5 |
2 |
Mudit, Tapsi |
| Okra |
7 |
1 |
Tarla, Superkranti |
Opportunities
Tierra, being a new entrant in the business has huge potential to grow
quickly with market share gains in the existing market size as well as be part of growing
seed market. The existing opportunities size in the key crops for Tierra is about 840 Lakh
Hectare while the total cropped area of 1300 Lakh Hectares (Source: Agricoop) offers
opportunity to expand our crop & product portfolio further.
• Increasing seed replacement ratio – There has been
consistent increase in purchased seeds in each of the crop
• Favorable Govt. Policies for farmers – Better MSP and
subsidised inputs and mechanization is helping the adoption of high quality seeds in each
crop.
• More Food for growing population – With stable/ decrease in
the total arable land, the need for feeding the growing population can be met with better
traits and high yielding seeds in each crop.
• The scenario post-adoption of hybrids and improved OPVs has
resulted in many advantages, such as yield improvement, ensuring higher prices, and
availability of seeds at an affordable price. These factors will drive the growth of the
Indian seed market in the forecast period.
By 2050, the world?s population is projected to reach 10 billion,
with India accounting for 1.73 billion (Source: United Nations). To meet the growing food
demands of India?s population, there is a pressing need to significantly increase the
yield per hectare, especially considering the diminishing arable land in the country.
Furthermore, India?s agricultural yield lags behind global averages due to various
factors, including extreme weather conditions, limited adoption of high-yielding hybrid
seeds, a lack of awareness about modern agricultural technologies, and inefficient use of
agrochemicals.
These challenges present a substantial opportunity for the
Company?s Seeds business, as well as opportunities for expanding crop advisory and
digital offerings. Innovations in seed technology and digital farming solutions can play a
pivotal role in addressing the productivity issues that plague Indian agriculture. These
advancements can also empower farmers to secure better commodity prices, enabling them to
invest in high-quality inputs to achieve higher yields.
Tierra, with its comprehensive product portfolio, extensive
distribution network, and a robust team of in addition to strong over 200 field
value chain partnerships, is well-positioned to support
Indian farmers in this endeavour.
Risks Concerns and Threats
1. Fast-changing customer preferences
Customers today are more likely to experiment/ test new items in the
market, owing to increasing disposable incomes, easy access to information, and rapid
acceptance of technical products. Tierra must constantly watch out for changes - not just
in the crops business but also in the consumer/ non-cyclical sector.
2. Competitive market
Despite the fact that Tierra is working towards innovation in the crops
area, it faces severe competition from other big players in seed industry.
3. Climate change
Fast-emerging climate change and sustainability challenges are expected
to make agriculture more vulnerable and may cause severe hardship to the fragmented farmer
base of India and the rural economy.
Product development can be a complicated issue, given the diverse
climate conditions for agriculture in India.
4. Govt. Policies
Imposing of tax on agriculture can be a possible threat. Govt. Policies
regarding price control of cotton and other cropscanhampertheprofitabilityof the company.
5. Illegal Cotton seed
The unorganized illegal cotton sold in India which contributes almost
one sixth of the total cotton business in India is an emerging threat for the cotton
business.
Details of significant changes (i.e. change of 25% or more as compared
to the year) in key financial ratios, along with detailed explanation.
During the year on a standalone basis, the significant changes in the
financial ratios of more than 25% as compared to the previous year are summarized below:
| Financial Ratios |
Formula |
Consolidated |
Deviation |
Reason for Change |
|
|
|
2022-23 |
2021-22 |
(%) |
|
| Debtors Turnover Ratio (times) |
[Revenue from operations/ Average Trade receivables] |
0.42 |
0.58 |
-28% |
Improved due to better realization. |
| Inventories Turnover Ratio (times) |
[COGS/Average Inventories] |
1.20 |
0.75 |
59% |
Improved due to better liquidation of inventory. |
| Interest Coverage Ratio (times) |
[EBIT/Finance Cost] |
(2.18) |
(1.01) |
117% |
Increased due to increase in EBIT loss and borrowings. |
| Current Ratio (times) |
[Current Asset/ Current Liability] |
0.59 |
0.88 |
-33% |
Redued due to increase in current liabilities and reduction
in closing inventory. |
| Debt Equity Ratio (times) |
[Debt/Shareholders Equity] |
6.76 |
1.87 |
261% |
Increased due to increase in debts and losses in during year. |
| Operating Profit Margin Ratio (%) |
[EBIT/Revenue from Operations] |
(0.42) |
(0.16) |
168% |
Increased due to higher losses in the financial year. |
| Net Profit Margin Ratio (%) |
[Profit After Tax#/ Revenue from Operations] |
(0.47) |
(0.24) |
95% |
Increased due to higher losses in the financial year. |
| Return on Net Worth (%) |
[Profit for the year (before exceptional items and after
tax)/ Net Worth] |
-187% |
-31% |
496% |
Increased due to higher losses in the financial year. |
Internal control systems and their adequacy:
The Company has in place adequate and appropriate systems of internal
controls commensurate with its size and the nature of its operations and these have
broadly withstood the test of time. The systems have been designed to provide reasonable
assurance with regard to recording and providing reliable financial and operational
information complying with applicable statutes, safeguarding assets from unauthorized use,
executing transactions with proper authorizations and ensuring compliance of corporate
policies.
The Internal Audit team is reviewed by the Audit Committee of the Board
which monitors its performance on a periodic basis through review of audit plans, audit
findings and speed of issue resolution through ups. Through at least four meetings every
year, the audit committee reviews internal audit findings and advisory function, which is
responsible for evaluating and improving the overall effectiveness of risk management,
control and government processes. This entire process helps enhance and protect
organizational value by providing risk-based objective assurance, advice and insight.
Financial and Operational Performance
In FY 2022-23, the Company registered Revenue from Operations of Rs.
6011.46 Lakhs compared to Rs. 5656.63 Lakhs in the previous year. The Company has recorded
a net loss of Rs. 2690.96 Lakhs for the FY 2022-23 compared to Rs. 1206.09 Lakhs for the
Previous Financial Year 2021-22.
Material developments in Human Resources
The workforce strength of the Company as on March 31, 2023, stood at
215 employees across different locations. The Company maintained harmonious industrial
relations across all its units during FY 2022-23.
At the core of your Company?s Human Resource Policy emphasis on
attracting, mentoring and holding the best employees, and offering them with wide-ranging
career opportunities. The Company strives to offer a positive, supportive, open and high
performance work culture where innovation and risk taking is encouraged. The
Company continues to emphasize to be an equal opportunity employer.
Company has a Policy of Prevention of
Sexual Harassment (POSH) to ensure a harassment-free workplace for
employees. Harassment cases are dealt with as per the Company?s zero-tolerance
policy. During the year 2022-23, no case was reported on sexual harassment.
Further, your Company would like to sincerely appreciate the valuable
contribution and support of employees towards the performance and growth of the Company.
Disclosure of Accounting Treatment:
The Company has prepared financial statements which comply with Ind-AS
applicable for periods ending on
March 31, 2023, together with the comparative period data as at and for
the year ended March 31, 2022, as described in the summary of significant accounting
policies. Primarily, a treatment different from that prescribed in an Accounting Standard
has not been followed in the preparation of financial statements. However, as regards
amendments to certain accounting standards, the applicability / effect on the financial
statement has been evaluated and been treated accordingly as explained in Notes to the
standalone Financial Statements.
Cautionary 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.
|
For and on behalf of the Board of Directors
of |
|
Tierra Agrotech Limited |
|
SD/- |
|
G V Krishna Rau |
|
Chairman |
|
DIN:06775731 |
| Place: Hyderabad |
|
| Date: 04.09.2023 |
|
+91-9892691696
