White Organic Agro Ltd Management Discussions.

Pursuant to Regulation 34(2) & 53(F) along with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) regulations, 2015 White Organic Agro (BSE: WHITEORG) is Mumbai based only listed entity in organic farming and retail, with a vision to empower the farmers and tap ever-expanding market for organic food. Mr. Darshak Rupani, Managing Director of White Organic Agro, who took over the Company in 2010, initially was into diamond trading activity. In the year 2016, he however realized diamond trading business was losing its sheen and soon led the Company to diversify into organic food business, being from the farming background.

Organic Food Industry Structure, Development & Opportunities:

The organic food industry in India is in the early stages of growth. Higher disposable income and greater health awareness have resulted in an increased domestic demand for organic food. There is huge premium in selling organic products, not only to export markets but also to affluent, health conscious domestic consumers. India is endowed with an abundance of labour and has diverse agro-climatic region that is well suited to year round agriculture. It still has strong traditional agricultural practices. Can India make use of this comparative advantage to introduce sustainable agriculture practices and at the same time improve incomes of small and marginal farmers on the supply side, small and marginal farmers realize that there is an opportunity to get higher net incomes even if yields are low in organic agriculture. This is because the price of pesticides and chemicals has increased significantly over the last few decades resulting in a significant increase in the cost of production. Organic farming cost could be 50% to 60% less when compared to inorganic farming practices. In addition to domestic demand side, globalized markets provide significant opportunities for Indian agriculture to capture a larger share of the global demand for organic food. This paper analyzes the growth of the organic food industry in relation to domestic and export demand. We also look at the supply side to determine if organic farming and sustainable agricultural practices could help improve farmers income. Finally, this paper analyses existing policy framework towards organic agriculture and how small and marginal farmers could possibly benefit in this niche market

The role of Organic Farming in India Rural Economy can be leveraged to mitigate the ever-increasing problem of food security in India. With rapid industrialization of rural states of India, there has been a crunch for farmland. Further, with the exponential population growth of India, the need for food sufficiency has become the need of the hour. Furthermore, the overuse of plant growth inhibitor, pesticides and fertilizers for faster growth of agricultural produce is detrimental to human health and the environment as a whole. The proposition of Organic Farming in India Rural Economy holds good, as an alternative to arrest this problem. The introduction of the process of Organic Farming in India Rural Economy is a very new concept.

The huge furor over the overuse of harmful pesticides and fertilizers to increase agricultural out put has in fact catalyzed the entry of Organic Farming in India Rural Economy. The process of organic farming involves using of naturally occurring and decomposable matter for growth and disease resistance of different crops. The concept of organic farming in India dates back to 10,000 years and it finds its reference in many Indian historical books.

Agriculture was the main source of livelihood in India and the use of naturally occurring matters for increased productivity, disease resistance and pest control was always in use, since time in memorial. The use of oil cakes, cow dungs, neem leaves, etc. is still practiced in India to ward of pests and used as preservatives. The use of chemical fertilizer for increased productivity started from late 1850s. In India, the first use of chemical fertilizer for increased agriculture productivity started from 1906.

The organic food market in India is growing at 25-30 per cent, but the awareness about organic farming is still low in India despite huge spending, the government of India said.

It released a study which projected that the domestic organic food market would touch the $1.36 billion mark by 2020.

In 2014, the size of the organic food market, which is highly unorganised, was $0.36 billion, and organic pulses and foodgrains took the lions share of the market, said the study prepared by industry body ASSOCHAM and TechSci Research.

According to the study, Indias organic food market has potential to grow more than 25 per cent annually to touch $1.36 billion by 2020, provided there is more awareness about these products and the government incentivizes region-specific organic farming to ensure consistent growth in future. Emphasizing on the need to increase awareness about certified organic food products, the study said, "The level of awareness about organic food products in India is extremely low and is limited to consumers in metro cities." The study suggested that companies in collaboration with the government should organise awareness and training programmes for farmers as well as consumers.

"This would result in optimum utilisation of resources, cultivation of better quality food products and overall increase in productivity as well as consumption," it added.

The study also recommended that organic producers should focus on pulses and foodgrains to maximise earnings, besides tapping export potential in the Middle-East and South-East Asia, which have high concentration of high net worth individuals. The current growth in the organic food market is driven by rising health consciousness, changing lifestyles, mounting disposable spending and growing availability of organic food products in shopping malls and retail outlets. More growth is expected in future as the government is increasingly supporting organic farming in the form of subsidies and is also planning to roll out a comprehensive policy in this regard.

As per the government data, organic farming is practised in 12 states in about 4.72 million hectares. In 2013-14, organic food production was 1.24 million tonnes.

Globally the organic sector continues to grow in demand. According to Market research Company Ecovia Intelligence the estimates of global market for organic food reached $ 89.7 billion in 2016 (more than 80 billion euros). The United States is the leading market with 38.9 billion euros, followed by Germany (9.5 billion euros), France (6.7 billion euros), and China (5.9 billion euros). In 2016, most of the major markets continued to show double-digit growth rates, and the French organic market reported a growth of 22%. The highest per capita spending was in Switzerland (274 Euros), and Denmark had the highest organic market share (9.7% of the total food market).

The organic products industry has shown unswerving growth over the last 25 years. The organic industry earned $35 billion in 2014, which was just $1 billion in 1990. Credited with being the primary market force drivers, food safety and health concerns have been driving the industry since the end of 2009 recession. Targeting core customers with its "eating well and living well" theme.

Global increases in the area of organic farmland, and production volumes are not keeping up with global demand, signaling the potential for even greater growth for organic producers, processors and handlers. Undersupplies of organic primary produce in many sectors, including organic grains, fruit and vegetables, livestock feeds etc.

India, the largest number of organic producers in the world, According to the World of Organic Agriculture Report 2018, there are 835,000 certified organic producers with more than 30% of total number of organic producers (2.7 million) globally. India contributes only 2.59% (1.5 million hectares) of the total area (57.8 million hectares) under certified organic cultivation. China has around 50% and India has 30% of total organic cultivable land in Asia. organic products worth $90 billion were sold globally in 2016. According to the latest data, current area under organic cultivation, which is a significant increase from just 11 million hectares in 1999, is still 1.2% of the total agriculture land

In Asia, there has been an 11% increase in the area under organic management, with especially large growth in India (64%). Asia is increasing its share of the world organic consumer market, partly driven by food scares in China. The central government in China has added organics to its national planning policies, and a number of national and provincial Asian governments have positively supported organic farming, including Bhutan, Sri Lanka, Sikkim (India), and the Philippines.

Organic sales in the USA jumped and now account for over 5% of all total food sales in the USA. Demand is expected to outstrip domestic organic production in the USA, with significant volumes of fruit and vegetables, grains, oilseeds, herbs, spices and sugar being imported.

The largest organic markets are USA, Germany and France. USA held ~47% of the global market by value, followed by the European Union (~35%) and China (~6%). Switzerland, Denmark, Luxemburg and Sweden had the highest per capita consumption of organics and Denmark, Switzerland and Luxembourg had the highest market shares. There are 87 countries with organic standards, and 17 countries are in the process of drafting legislation affecting organic production. 250 PGSs are operating in 73 countries in 2016, with strongest participation in India (43,000 producers).

Overall, organics remains a small part of the agricultural production sectors and markets. Only 1% of global agricultural land is under organic management, with the highest regional shares being less than 10%. However, land under certified organic management makes up more than 10% of agricultural land in eleven countries, and has reached even higher proportions in Liechtenstein (30.2%) and Austria (21.3%)

USA is by far the largest market of organic products with total value of $44 billion and 44% of the global organic packaged food and beverage market.

India will see strong improvement in growth driven by acceleration in construction spending and expansion in its manufacturing sector. India s prospects are bright due to low oil prices.


During this challenging time, White Organicss focus is on supporting our customers, our employees and the local communities in which we operate. We are working to avoid disruptions caused by COVID-19 coronavirus, while at the same time acting responsibly to do what we can to prevent further spread of the virus. White Organic Agro Limited is committed to delivering fresh organic residue free products taking utmost care of hygiene of the products, packaging and our employees.

As the novel coronavirus spreads across the world, The long term mandate should be being healthy by getting the right amounts of exercise and sleep, as well as consuming a balanced diet. But, even these modest, basic rules seem challenging at times. The recent Coronavirus pandemic has grappled the nation and cornered us in lockdown. The Indian government is taking all possible measures to make sure that COVID-19 does not spread in India as it did in other countries.

Amid this chaos, the health-conscious generation is doing all in their fitness routine that they think they need to keep fit and build immunity-from working out at home to meditating to going on morning walks. Given the current world health scenario due to the global Coronavirus pandemic, it has become indispensable to encourage people to gain a greater sense of control over their physical health.

Continued awareness rising of the benefits of organic production and certification is imperative, to overcome consumer confusion and the possibility of fraud. There is a need for continuous consumer education on the meaning and value of organic production and certification. This requires an ongoing explanation of the costs of producing and certifying organic products: Organically approved seed, learn to manage fertility and pests through natural methods, and locate their own market.

The main advantages of Organic Farming in India Rural Economy are as follows -

• Organic fertilizers are completely safe and does not produces harmful chemical compounds

• The consumption of chemical fertilizers in comparison to organic fertilizers is always more, especially in unused cultivable lands.

• Moreover, chemical fertilizer needs huge quantities of water to activate its molecule whereas, organic fertilizers does not need such conditions.

• Further, chemical fertilizers almost always have some harmful effects either on the farm produce or on the environment.

• Furthermore, it can also produce harmful chemical compound in combination with chemical pesticides, used to ward-off harmful pests.

• It is estimated that there is around 2.4 million hectare of certified forest area for collection of wild herbs.

• The actual available area for cultivation of organic agriculture in India is much more than that is identified and certified so far.

• India has around 1,426 certified organic farms.

• India produces approximately 14,000 tons of output annually.

• It is estimated, that around 190,000 acres of land is under organic farming in India.

• The total annual production of organic food in India in the last financial year was 120,000 tons.

Threats o Competition from local and multinational players

o Execution risk

o Regulatory changes

o Attraction and retention of farmers

o Natural calamities affecting the farms and crops

Economic Overview

India organic food market is projected to grow at a CAGR of over 23% by 2023, on account of favorable government policies supporting organic farming coupled with rising land area under organic cultivation. Online availability of organic food products and shifting consumer preference towards organic food are among the major factors expected to boost demand for organic food products in India during the forecast period. Expanding marketing and distribution channels coupled with increasing number of health-conscious people is also anticipated to fuel organic food consumption in India until 2022.

India is bestowed with lot of potential to produce all varieties of organic products due to its various agro climatic conditions. In several parts of the country, the inherited tradition of organic farming is an added advantage. This holds promise for the organic producers to tap the market which is growing steadily in the domestic and export sector.

As per the available statistics, Indias rank 8th in terms of Worlds Organic Agricultural land and 1st in terms of total number of producers as per 2020 data (Source: FIBL & IFOAM Year Book, 2020).


As on 31st March 2020 total area under organic certification process (registered under National Programme for Organic Production) is 3.67 million Hectare (2019-20).This includes 2.299 million ha cultivable area and another 1.37 million Hectare for wild harvest collection.

Among all the states, Madhya Pradesh has covered largest area under organic certification followed by Rajasthan, Maharashtra, Gujarat, Karnataka, Odhisa, Sikkim and Uttar Pradesh.

During 2016, Sikkim has achieved a remarkable distinction of converting its entire cultivable land (more than 75000 ha) under organic certification.


India produced around 2.75 million MT (2019-20) of certified organic products which includes all varieties of food products namely Oil Seeds, Sugar cane, Cereals & Millets, Cotton, Pulses, Aromatic & Medicinal Plants, Tea, Coffee, Fruits, Spices, Dry Fruits, Vegetables, Processed foods etc. The production is not limited to the edible sector but also produces organic cotton fiber, functional food products etc.

Among different states Madhya Pradesh is the largest producer followed by Maharashtra, Karnataka, Uttar Pradesh and Rajasthan. In terms of commodities Oil seeds are the single largest category followed by Sugar crops, Cereals and Millets, Tea & Coffee, Fiber crops, fodder, Pulses, Medicinal/ Herbal and Aromatic plants and Spices & Condiments.


The total volume of export during 2019-20 was 6.389 lakh MT. The organic food export realization was around INR 4,686 crore (689 million USD). Organic products are exported to USA, European Union, Canada, Switzerland, Australia, Japan, Israel, UAE, New Zealand, Vietnam etc.

In terms of export value realization Processed foods including soya meal(45.87%) lead among the products followed by Oilseeds (13.25%), Plantation crop products such as Tea and Coffee(9.61%), Cereals and millets (8.19%), Spices and condiments (5.20%), Dry fruits (4.98%,Sugar(3.91), Medicinal plants(3.84%) and others.

Product wise Performance

Our performance of the organic agro business activity has started reflecting tremendous response from the market in almost a year of our operations. We have completely migrated to a pure play organic agro activity providing our inhouse and outsourced services though the entire value chain of the organic activity (i.e. farming, cultivation, harvesting, processing, wholesale, retail and exports) following strict quality checks at each level of activity.

The Company has successfully entered into the organic segment (largely unexplored market) and has emerged as the only pure play organic agro Company in the listed space. On account of strong backend that not only enables the Company to cater to the expected explosive demand but also equips it to penetrate deeper and spread the Company s geographical reach in the coming years. We are seeing a strong traction in demand for products. Currently we have over 250 products in portfolio and planning to add more in the near future.

The Company s focus continues to remain on core organic farming activity with not more than 1,000 acres for a particular crop. Company is not only targeting the viable aspect of rapidly growing concept of organic food, but also putting great efforts to educate the larger society to understand and adapt to better and healthier ways of livelihood.

The Company s performance in last couple of quarters represents the acceptance of products. The Company is continuously working to take the brand "White Organics" to the target population. For this we have planned different promotional, marketing and advertising activities, also working towards increasing existing product portfolio and bring more niche products in product offerings. The Company has witnessed great demand for products. This gives tremendous confidence to move up the value chain and keep introducing new products.

The Company will continue to strive towards providing the best possible services through quality products and help build a stronger and healthier India. Company s efforts will always be to win over the "Trust and Loyalty" of the consumers thereby build a great brand "White Organics".


The Company constantly endeavors to increase its product portfolio so that it can cater to diverse customer needs and evolve as one stop solution. With this we can increase the presence and evoke the brand "White Organics". The motive is to serve un-adulterated organic food products and contribute considerably in the making of a healthy India which is principles and values.

The organic industry is expected to deliver exceptional growth globally. The Company s farming activity and diversified portfolio across food products and health and beauty provides a wide range of product selection for increasing client 35 engagement. As the only listed pure play organic food Company, we have first mover advantage. Reports indicate that the domestic organic food consumption pattern will grow by leaps and bounds riding on increased consumer awareness and will double in India in the next 10 years driven by Government initiatives and increased consumption.

Risks and Concerns:

The Company faces the following Risks and Concerns:

Economic Risk

Any business is in a way or other, dependent on the prevailing global economic conditions. Inflation, changes in tax, trade, fiscal and monetary policies, scarcity of credit etc. However, we do not expect to be significantly affected by this risk.

Risks in Organic Agriculture

Risks that are similar to those in conventional farming, though they may be managed in different ways in organic farming;

Risks that are different between organic farming and conventional farming, but that may only be temporary, due to the recent rapid growth in the organic sector;

Risks that greatly different from those of most conventional farmers because of the different nature of the production and marketing systems.

Production Risks

Organic farming is less restricted in their choice of crops for rotation than conventional farmers, who risk damage to certain crops from previously applied pesticides. Organic farming can be affected by the natural calamity, adverse weather conditions and climatic risks that are similar for organic and conventional farming. On account of harsh climates, bad weather such as hail or wind can destroy a crop very quickly. Any farmer without irrigation facilities faces the risk of drought, but as organic farmers investment in soil quality allows their soils to hold water and withstand drought better than those of their conventional farmers. Organic producers face less risk than conventional producers on account of chemical-free pesticides usage.

Thus, we believe we have adequate mitigation in place for trade risk.

Input Risks

Organic farming may face dearth of certified organic seeds, biological pesticides, specialized farm equipment designed for organic cultural practices and other inputs because the market they offer to suppliers may be too small to be profitably served by agribusiness. Concern about the availability of good quality compost that has not been contaminated by GMOs. The flow of credit to organic producers is limited and can be difficult to obtain.

Transition Risk

The process of transitioning from conventional to organic agriculture may also pose production and market risks that do not persist over time. During the transition process, it faces a steep learning curve as they learn to control pests biologically, manage nutrient cycles, produce different crops, and tap new markets. Crop yields may drop initially on some farms as the soil is being rebuilt and beneficial insect populations are restored. Farmers are unable to command organic premiums until after they have acquired organic certification, which usually requires a three-year waiting period and which commands high value of money.

Internal Control Systems and their adequacy

In view of the changes in the Companies Act, the Company has taken additional measures to strengthen its internal control systems. Additional measures in this regard are fraud risk assessment, mandatory leave for employees, strengthening background verification process of new joiners, whistle blower policy and strengthening the process of risk management. The Company maintains a system of internal controls designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls, and compliance with applicable laws and regulations. The organization is well structured and the policy guidelines are well documented with pre-defined authority. The Company has also implemented suitable controls to ensure that all resources are utilized optimally, financial transactions are reported with accuracy and there is strict adherence to applicable laws and regulations.

The Company has put in place adequate systems to ensure that assets are safeguarded against loss from unauthorized use or disposition and that transactions are authorized, recorded and reported. The Company also has an exhaustive budgetary control system to monitor all expenditures against approved budgets on an ongoing basis.

Recognizing the important role of internal scrutiny, the Company has an internal audit function which is empowered to examine the adequacy of, and compliance with, policies, plans and statutory requirements. It is also responsible for assessing and improving the effectiveness of risk management, control and governance process.

Periodical audit and verification of the systems enables the various business groups to plug any shortcomings in time. As stated earlier the Company has improved effectiveness of the risk management process wherein it evaluates the Company s risk management system and suggests improvement in strengthening risk mitigation measures for all key operations, controls and governance process. In addition, the top management and the Audit committee of the Board periodically review the findings and ensure corrective measures are taken.

Discussion on Consolidated Financial Performance with respect to Operational Performance

In continuation with the operational performance highlighted in the introductory paragraph and product wise performance, the consolidated performance of the Company for the financial year ended March 31, 2019, is as follows:

Total Net revenue stood at Rs. 193.54 crore for the year ended March 31, 2020, as against Rs. 339.79 crore for the corresponding previous period last year, decrease of 43%.

The EBIDTA (earnings before interest, depreciation and tax) was Rs. 0.48 crore for the year ended March 31, 2020, as against Rs. 6.94 crore for the corresponding previous period

The profit after tax for the financial year ended March 31, 2020 was Rs. 0.35 crore as against Rs. 5.11 crore for the corresponding previous period.

Material Development in Human Resources

The Company has Human Relations and Industrial Relations policies in force. These are reviewed and updated regularly in line with the Company s strategic plans. The Human Relations team continually conducts training programs for the development of employees.

The Company aims to develop the potential of every individual associated with the Company as a part of its business goal. Respecting the experienced and mentoring the young talent has been the bedrock for the Company s successful growth. The Company s employees age bracket represents a healthy mix of experienced and willing-to-experience employees.

Human resources are the principal drivers of change. They push the levers that take futuristic businesses to the next level of excellence and achievement. The Company focuses on providing individual development and growth in a work culture that enables cross- pollination of ideas, ensures high performance and remains empowering.

Details relating to top employees shall be placed at the registered office of the Company for inspection by the Members of the Company.

The Management of the Company has been diligent in drawing up the said assumptions, expectations, predictions and forecasts as on date. However, considering the dynamic business and regulatory environment, it assumes no responsibility to publicly amend, modify or revise forward looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statement.

Important factors that could influence the Companys operations include changes in government regulations, tax laws, economic developments within the country and such other factors globally

The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013, relevant Indian Accounting Standards. Please refer Directors Report in this respect.

Key Financial Ratios

In accordance with the SEBI( Listing Obligations and Disclosure Requirements 2018) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately preceding financial year) in key financial ratios. There were no significant changes in the key financial ratios as compared to previous financial year.

Return on net worth has increased from 0.069 to 0.078 in the current financial year as compared to previous financial year due to increase in profit during the current year.