welterman international ltd Management discussions

India is the second largest producer of the farms output where majority of population depends on the agricultural activities for their livelihood. Growth of Industries and MNCs have not yet declined the importance of agriculture in India. Economic development is not a sole function of Industrial development; it also includes development of agriculture. Sustainable development is the need of the time and it can only be achieved through balanced growth of both agriculture and Industrial sector. There is a popular saying "Countries are known for their greenery", and India is one of those countries. Growth of agriculture and growth of fertilizer Industry supplement each other. Both go hand in hand.

Fertilizer Industry Structure & Developments:

India is prominent country from agricultural point of view. India is agricultural economy where 80% of the people depend on agriculture. On other hand, India is the second most populous Country in the world. It has been projected to be the worlds most populous country by 2025 surpassing china. To feed the population, there is need to increase food grain production. To increase agricultural production and diversify the agricultural base, the government focuses on irrigation, adoption of new agricultural technologies, credit facilities to farmers and the use of various agricultural inputs like better quality seeds, efficient and balanced use of fertilizers and insecticides. Fertiliser is one of the main agricultural inputs for increasing food grain production. It strengthens the soil and enhances its fertility. The productivity of agricultural land can be improved with increased use of agricultural inputs like quality seeds, fertilisers, water, agro-chemicals etc., for better crop yields. Among the different agricultural inputs and practices required for good production, the use of the fertilisers together with quality seeds and water are the most important. Fertilizers provide plants with the food they need for their growth and development.

Magnesium sulphate is a naturally occurring mineral and is commercially known as Epsom salt, which is a mixture of magnesium, oxygen, and sulphur. It is also produced synthetically by reacting sulphuric acid with magnesium, and oxides. Its flavour enhancing ability has established a commercial importance in the food and beverage industry and its consumption is increasing year by year. Moreover, the importance of magnesium sulphate for human health and plant nutrition has been well-established and is prominently consumed in related applications of both of these sectors. Plant nutrition sector holds the greater importance about the magnesium sulphate due to its use as a fertilizer.

Magnesium sulphate is being used as one of the most basic ingredients for many industries including agriculture, pharmaceutical, food, personal care and others. Magnesium sulphate serves different purposes in these industries and with these industries witnessing an upward trend, the market for magnesium sulphate is also expected to witness a significant growth over the long term forecast. The major applications of magnesium sulphate include pharmaceuticals, agriculture and food & feedstock. According to a report published by the World Health Organization (WHO), the global kilocalories (kcal) per capita per day is set to reach 3050 Kcal by 2030, which was measured to be 2940 Kcal in 2015.

The agriculture industry is going under tremendous pressure imposed by the governmental bodies to increase the crop yield with good quality food. Governments across the agricultural economies have been opting for favourable policies to increase the agriculture output and are investing a huge amount in research and development for technological development. Therefore, this industry is surely heading towards the growth expansion resulting into the greater consumption of fertilizers. The agriculture industry as a whole is likely to provide higher gains for magnesium sulphate driven by increasing fertilizer growth. The market is also expecting lucrative gains from personal care industry due to the fact that magnesium sulphate is being increasingly used in a range of applications in personal care products. As per the industry experts, the

personal care applications of magnesium sulphate to grow at the highest growth rate and are likely to bring several product innovations due to the customization required from consumers. Therefore, the market may see new growth opportunities over the assessment period of 2017-2023.

Opportunities and Threats:

Opportunities:

• Rising potential in the domestic market

• Retaining customers through quality supplies

• Use of modern technology

• Customized, Fortified, Water Soluble & Liquid Fertilizers for balanced fertilization.

Threats:

Volatile revenue makes planning difficult, which could delay key investments in Fertilizer industrys business and intense competition may lower Fertilizer industrys profits, because competitors can entice consumers away with superior products.

Segment wise performance:

The Company has been operating in single segment only.

Outlook:

The Company is currently engaged in sustenance and improvement of current operations by focussing on trading and strengthening marketing activities.

Risks and concerns:

Stiff competition, rising inflation and increasing input costs have substantially affected the financial position of the Company. However, your Directors have been putting their best efforts to tide over the situation by embarking in the field of fertilizers and are optimistic for the better future.

Internal Control Systems and their adequacy:

The Companys internal control systems are commensurate to the nature of its business and the size of the Company. These systems are designed to ensure that all assets of the Company are safeguarded and protected against any loss and that all transactions are properly authorized, recorded and reported. The Company has clearly defined organizational structure and lines of authority and sufficient control is exercised through monthly, quarterly and annual business review by the Management.

The Operating Management assessed the effectiveness of the Companys Internal Control over Financial Reporting as of March 31, 2022. M/s. Rachana Chotalia & Associates, the Statutory Auditors of the Company has audited the Financial Statements (included in this Annual Report) and has issued a report on the Internal Control over financial reporting pursuant to Section 143 of the Act.

An Internal Audit system is in place. The Company has during the year engaged the services of an Independent Firm of Chartered Accountants for the services of Internal Audit of operations of the Company for better control and to ensure adequacy and efficacy of Internal Audit function.

Discussion on financial performance with respect to operational performance:

During the Year under review, the total net sales decreased from Rs. 2.09 crores to Rs. 1.87 crores. Net loss after tax amounted to Rs. 0.1828 crores as compared to profit of Rs. 0.005 crores in the previous year.

Material developments in Human Resources / Industrial Relations front, including number of people employed:

The Industrial Relations of the Company during the Financial Year 2021-2022 were peaceful and cordial. Employees have been the backbone of harmonious Industrial Relations of the Company.

Cautionary Statement:

Statement in this Management Discussion and analysis describing the Companys objective, projects, estimates and expectations may be forward looking statement within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. Several factors could make a significant difference to the Companys operations. These include economic conditions, Government regulations and Tax Laws, Political situation, natural calamities etc. over which the Company does not have any direct control.

Details of Significant Changes in Key Financial Ratios:

There is no significant changes in Key Financial Ratio during the year under review and hence not reported. Change in Return on Net worth:

During the year under review, Return on Net worth for the FY 2021-22 was (0.04%) as against 0.001% for the FY 2020-21. Due to Covid-19 crisis, the Company has faced losses and having negative return on net worth. The Company is slowly recovering from the Losses.

30TH ANNUAL REPORT

2021-2022