Tierra Agrotech Ltd Management Discussions

Management Discussion and Analysis

Overview of the Indian Seed Industry Market Size and Growth

The Indian seed industry is on a growth trajectory, with market size projections indicating an increase from USD 3.61 billion in 2024 to USD 5.01 billion by 2030. This growth is driven by a compound annual growth rate (CAGR) of 5.61% (GII Research). This robust expansion underscores the increasing demand for quality seeds to support Indias agricultural sector, which is crucial given the countrys large population and significant dependence on agriculture.

Crop Segmentation

The seed market in India is segmented into several crop types, with a particular focus on grains & cereals, vegetables, cotton, maize, groundnut, and soybean:

1. Grains & Cereals: This segment is the largest due to Indias substantial production and consumption of grains. Rice (paddy) and wheat are particularly dominant, as rice is a staple in South India and wheat in the North (GII Research).

2. Vegetables: The vegetable seed market includes various sub-segments such as brassicas (e.g., cabbage, cauliflower), cucurbits (e.g., cucumber, pumpkin), roots & bulbs (e.g., garlic, onion), and solanaceae (e.g., tomato, eggplant) (GII Research).

3. Cotton and Maize: These crops are significant in Indias seed market, with maize and cotton seeds often being hybrid varieties due to their high productivity and resistance to pests and diseases (Research & Markets).

Regional Distribution

Uttar Pradesh leads the Indian seed market, largely due to its extensive arable land and dense population, which boosts demand for various seeds. Other key regions include Madhya Pradesh, West Bengal, Rajasthan, Punjab, Maharashtra, Andhra Pradesh, Bihar, and Karnataka (IMARC). These states have diverse agricultural practices and crop preferences, contributing to the overall growth of the seed industry.

Breeding Technologies

The Indian seed market is witnessing a shift towards hybrid seeds, which offer higher yields and better resistance to environmental stresses compared to open-pollinated varieties (OPVs). Hybrid seeds, especially in crops like cotton, maize, and vegetables, are increasingly adopted by farmers due to their superior performance and adaptability (Research & Markets).

Key Players

The competitive landscape features major players such as Advanta, DuPont, Kaveri Seeds, Syngenta, Bayer, J K Seeds, and Rallis India Limited (IMARC) (Research & Markets).

Growth Drivers

Several factors are driving the growth of the Indian seed industry:

1. Commercialization of Agriculture: Increased commercialization has led to higher demand for quality seeds that ensure better yields and resistance to pests and diseases.

2. Public-Private Collaborations: Collaborative efforts between government bodies and private companies have spurred advancements in seed technology and availability.

3. Rising Consumer Income Levels: Higher disposable incomes allow farmers to invest in better-quality seeds, thereby increasing productivity.

4. Introduction of Hybrid and Transgenic Seeds: These seeds offer improved traits such as pest resistance and higher yields, making them attractive to farmers.

5. Government Support: Initiatives such as the Rashtriya Krishi Vikas Yojana and ISOPOM (Integrated Scheme of Oilseeds, Pulses, Oil Palm, and Maize) provide essential support to farmers and the seed industry, fostering growth and innovation (IMARC) (Research & Markets)

Trends and Future Outlook

• Adoption of Advanced Technologies: The use of AI, data analytics, and biotechnology in seed development is expected to enhance seed quality and adaptability.

• Sustainability: There is a growing focus on sustainable agricultural practices, which includes the development of seeds that require fewer inputs and are environmentally friendly.

• Customization: Seeds tailored to specific regional and crop requirements will see increased demand as farmers seek to optimize their yields and adapt to changing climatic conditions (GII Research).

In summary, the Indian seed industry in 2024 is poised for continued growth driven by technological advancements, government support, and increasing demand for high-quality seeds. The industrys future looks promising, with significant opportunities for innovation and expansion.

Impact of Monsoon in 2023

The 2023 southwest monsoon season in India started late, with the initial two weeks experiencing a significant rainfall deficiency of 52.6% below the normal long-period average (LPA).

F India saw a rainfall deficit of six percent in monsoon 2023 of the long-period average of 50 years. This, however, doesnt clearly capture the erratic nature of its progression and distribution over India. Six states — Assam, Manipur, Mizoram, Jharkhand, Bihar, and Kerala — recorded major deficits. This turnaround has positively impacted kharif crop plantings.

F Around 31 per cent of India received less than normal rainfall — 221 districts out of a total 718 — in the monsoon season of June to September.

F Pulses were sown in 5.41 lakh hectare less area, compared to 2022 in the corresponding period. All pulses — urad, moong, arhar and kulthi — have less acreage this time. Similarly, oilseeds have been sown in 3.16 lakh hectare less area.

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 significant yield benefit and overall cost advantages to farmers and other stake holders. Tierra is headquartered 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 Monsantos India cotton seed business and DuPont - Pioneers Cotton company Xyiem 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 and breeding farms supported with drip irrigation and other essential facilities. Besides its Breeding and Biotechnology R&D centers in Hyderabad, Tierra has also R&D units.

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. Tierras 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. Special emphasis is also on utilizing male sterility trait for efficient seed 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 vegetable seeds sale from the financial year 2020-21, thereby spreading its portfolio from cotton, paddy, 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 and Rajasthan. The Companys 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 program 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 recognized by DSIR, GOI which is supported by highly qualified and 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. 105 Breeding & Testing Locations across the country.

2. 222 Product Evaluation Locations across the country.

3. About 125 Acres of Leased land for Research & Development.

Product Overview:

Crop	Commercial Products	Pipeline	Lead Commercial Products
Cotton	8	2	Brahma, 9121
Maize	6	1	S2-981, 2T55
Paddy	10	2	3T32, 3TH4322, Chandini & Madhul
Mustard	2	2	5T55, S5- 630
Tomato	5	2	Mudit, Yuvaan, Amaya
Okra	4	2	Tarla, Superkranti

Opportunities

Tierra, has an opportunity to grow its market share in the existing market as well as be part of growing seed market. The existing opportunities size in the key crops for Tierra is about 850 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

• Favourable 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 aerable 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 worlds population is projected to reach 9.8 billion, with India accounting for 1.7 billion (Source: United Nations). To meet the growing food demands of Indias population, there is a pressing need to significantly increase the yield per hectare, especially considering the diminishing arable land in the country. Furthermore, Indias 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 Companys 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 over 200 qualified professionals is well-positioned to support Indian farmers in this endeavor.

Risks, Concerns, and Threats

Fast-Changing Customer Preferences

Customers today are more likely to experiment with and test new items in the market due to increasing disposable incomes, easy access to information, and rapid acceptance of technological products. Tierra must constantly monitor changes not only in the crops business but also in the consumer/non-cyclical sector.

Competitive Market

Despite Tierras efforts toward innovation in the crops area, it faces severe competition from other big players in the seed industry.

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.

Government Policies

The imposition of taxes on agriculture can be a potential threat. Government policies regarding price control of cotton and other crops can hamper the companys profitability.

Illegal Cotton Seed

The unorganized illegal cotton seed market in India, which contributes almost one-sixth of the total cotton business in the country, is an emerging threat for the cotton business.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanation.

During the year on a standalone basis, the significant changes in the financial ratios of the Company, which are more than 25% as compared to the previous year are summarized below:

Financial Ratios	Formula	Consolidated		Deviation	Reason for Change
		2023-24	2022-23	(%)
Debtors Turnover Ratio (times)	[Revenue from operations/ Average Trade receivables]	3.25	3.11	5%	Due to increase in Revenue from Operations
Inventories Turnover Ratio (times)	[COGS/Average Inventories]	1.11	1.20	-8%	Reduction is due to lower COGS in Current Financial Year.
Interest Coverage Ratio (times)	[EBIT/Finance Cost]	(1.96)	(2.32)	-15%	Reduction due to lower EBIT loss and lower finance cost.
Current Ratio (times)	[Current Asset/ Current Liability]	0.91	0.59	54%	Reduced due to decrease in borrowings.
Debt Equity Ratio (times)	[Debt/Shareholders Equity]	0.22	6.81	-97%	Reduced due to reduction in borrowings and increase in share capital.
Operating Profit Margin Ratio (%)	[EBIT/Revenue from Operations]	(0.12)	(0.44)	-72%	Reduced due to reduction in EBIT loss
Net Profit Margin Ratio (%)	[Profit After Tax#/ Revenue from Operations]	(0.14)	(0.47)	-71%	Reduced due to reduction in Net loss.
Return on Net Worth (%)	[Profit for the year (before exceptional items and after tax)/ Net Worth]	-9%	-187%	-95%	Reduced due to increase in share capital & security premium.

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 followups. Through at least four meetings every year, the audit committee reviews internal audit findings assurance 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 2023-24, the Company registered Revenue from Operations of Rs. 6714.37 Lakhs compared to Rs. 6011.46 Lakhs in the previous year. The Company has recorded a net loss of Rs. 880.80 Lakhs for the FY 2023-24 compared to Rs. 2690.96 Lakhs for the Previous Financial Year 2022-23.

Material developments in Human Resources

The workforce strength of the Company as on March 31, 2024, stood at 188 employees across different locations. The Company maintained harmonious industrial relations across all its units during FY 2023-24.

At the core of your Companys 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 Companys zero-tolerance policy. During the year 2023-24, 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, 2024, together with the comparative period data as at and for the year ended March 31, 2024, 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 Companys 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 Companys 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 Board of Directors of
	Tierra Agrotech Limited
	Sd/-	Sd/-
	Vijay Kumar Deekonda	Suryanarayana Simhadri
	Wholetime Director	Director
	DIN :06991267	DIN 01951750
Place: Hyderabad
Date: 15.07.2024