zuari agro chemicals ltd Management discussions

The Board of Directors is pleased to present the business analysis and outlook of Zuari Agro Chemicals Limited (ZACL) based on the current government policies and market conditions. The company is into manufacturing and selling fertilisers as well as trading in agri inputs.

GLOBAL ECONOMIC BACKDROP:

Over the past 2 years, the world has been defending itself against the pandemic. With the reduction in COVID-19 related deaths, the world labour market began reverting to normalcy.

However, this new rigor in the manufacturing and service industries, resulted in requirement of funds already eroded by necessary higher Covid-19 related spending and lower tax revenues in 2020-21.

The resultant slowdown in global activity is visible in the fall in industrial production and Purchasing Manager Index after a brief upsurge. While the industrial production in 2021 shows an initial increment, it quickly dropped in the latter half of the year. Similarly, the manufacturing PMI and services PMI displayed an expansion in the same period but ended up with contraction eventually due to economic limitations.

As per "World Economic Outlook - Apr 2022" published by IMF, there are five principal factors that would forge the short term future of the world economy.

i. Pandemic and vaccine shortages: While the world is witnessing a decline in COVID-19 related deaths and the restrictions being eased, it is estimated that most countries will not attain the target of 70% full vaccination in 2022. Assuming the virus does not mutate into new strains, renewed outbreaks may not have similar impacts as in the past.

ii. Chinas Slowdown: Chinas zero-COVID strategy has led to more frequent lockdowns and tighter restrictions in movement. Industrial production has been direct casualty to this strategy resulting in decline in domestic production and exports.

iii. Fiscal Withdrawal: Emergency spending, in controlling the pandemic spread and welfare support to people has eroded the reserves in many countries. This, in addition to drop in tax revenues in FY2020-21 has pressed governments in raising borrowing costs and re-establish buffers.

iv. Monetary Tightening and Financial Market volatility:

Falling supplies, rising costs and declining tax revenues have mandated the central banks to tighten the monetary policies. This has resulted in rapid increase in nominal interest rates across advanced economy sovereign borrowers.

v. Russia - Ukraine Conflict: Adding fuel to fire, in the ongoing fiscal war against the ramifications of COVID-19 pandemic, the conflict in the Eurasian region has resulted in loss in trade opportunities (with USA and EU sanctions in place), steep rise in global commodity prices and labour supply, in addition to unfortunate loss of lives.

With the COVID-19 restrictions easing off, the world experienced a rapid growth in demand in 2021. This upsurge in demand put strain on the existing supply chain bottlenecks. As a result, the core inflation (excluding food and energy prices) surpassed pre-pandemic rates across most economies, rising most where recoveries have been strongest.

i) World Agriculture Outlook

The Food and Agriculture Organisation (FAO) released FAO Food Price Index (FFPI) on 6^th May Rs 22 averaging 158.5 points in April 2022, down 1.2 points (0.8 percent) from the all-time high reached in March, though still 36.4 points (29.8 percent) above its value in the corresponding month last year. The drop in the FFPI in April was led by a significant downturn in the vegetable oil sub-index, along with a slight decline in the cereal price sub-index. Meanwhile, sugar, meat and dairy price sub-indices sustained moderate increases.

The FAO Cereal Price Index averaged at 169.5 points in April, down by 0.7 points (0.4%) from the record high reached in March (since 1990). After surging to a record level in March, international coarse grain prices dropped by 1.8% in April, led by a 3.0% decline in maize prices, as seasonal supplies from ongoing harvests in Argentina and Brazil helped ease the pressure on markets. World sorghum prices also declined in April by 0.4%, while tight supplies pushed barley prices up by 2.5%. International wheat prices edged upwards in April, albeit marginally, gaining 0.2%. Continued blockage of ports in Ukraine and concerns over 2022 crop conditions in the United States of America kept prices elevated, but the price increases were moderated by larger shipments from India, higher-than expected exports from the Russian Federation, and slightly dampened global demand as a result of high prices. International rice prices in April went up 2.3% from their March levels, sustained by a combination of strong local demand in various Asian exporters, purchases by Near Eastern and Chinese buyers and weather setbacks in the Americas.

The FAO Vegetable Oil Price Index averaged 237.5 points in April, shedding 14.3 points (5.7%) from the record high registered in March, but remaining markedly above its year- earlier level. The decline was driven by lower world prices of palm, sunflower and soy oils, which more than offset higher rapeseed oil quotations. International palm oil prices dropped moderately in April, mainly weighed by subdued global import purchases amid high costs as well as a weakening demand outlook in China, Nevertheless, uncertainties about export availabilities out of Indonesia, the worlds leading palm oil exporter, contained further declines in international prices, In the meantime, world sunflower and soy oil prices also fell month-on-month, largely tied to demand-rationing following the record high prices seen lately, By contrast, rapeseed oil prices stayed firm in April, sustained by lingering global supply tightness,

The FAO Dairy Price Index averaged 147,1 points in April, up 1.3 points (0,9%) from March, marking the eighth consecutive monthly increase and lifting the index 28,0 points (23,5%) above its value a year ago, In April, the upward trend of dairy product prices continued, driven by the persistent global supply tightness, as milk output in Western Europe and Oceania continued to track below their seasonal levels. International quotations for butter rose the most, reflecting tight supplies, including low inventories, especially in Western Europe, amidst a surge in demand for near-term deliveries, partly induced by the current shortage of sunflower oil and margarine. Despite a decline in foreign purchases, sustained internal demand and low inventories in Europe provided support to world skim milk powder and cheese prices. By contrast, whole milk prices fell moderately, mainly due to a demand slowdown in China.

The FAO Meat Price Index* averaged 121.9 points in April, up 2.7 points (2.2%) from March and setting a new record high. The continued price strength stemmed from higher world poultry, pig and bovine meat prices. The poultry meat price increase was driven by solid demand amidst tight global supplies, reflecting disruptions to exports from Ukraine and rising avian influenza outbreaks in the Northern hemisphere. Meanwhile, pig meat prices rose further, although less steeply than in March, on the prolonged low supply of slaughter pigs in Western Europe and high internal demand in large producing countries. World bovine meat prices increased moderately, reflecting high export volumes from Brazil, despite the low slaughter cattle supply. With this increase, bovine meat prices reached a new record high. Regarding ovine meat, the pandemic-related lockdowns and port delays in China eased the countrys meat purchases, pushing prices marginally lower.

The FAO Sugar Price Index averaged 121.8 points in April, up 3.9 points (3.3%) from March, marking the second consecutive monthly increase and reaching levels more than 20% above those registered in the corresponding month last year. Higher ethanol prices in Brazil, coupled with the sustained strengthening of the Brazilian Real against the US dollar, continued to underpin the increase in world sugar prices. Additional support was provided by concerns over the slow start of the 2022 harvest in Brazil. However, larger-than- previously-anticipated availabilities in India, a major sugar exporter, bolstered the global supply outlook and prevented more substantial price increases.

Rice, consistent with the generally conducive weather conditions prevailing over the season, somewhat higher reported yield outcomes raised production expectations. Put together, these changes raised FAOs forecast for world rice production by a small margin of 0.4 million tonnes to 520.8 million tonnes (milled basis), which represents a 0.7% increase from the 2020 harvest and a new record high.

Global wheat output is pegged at 777 million tonnes, virtually on par with the crop produced in 2020. The forecast for world wheat production in 2022 has been scaled back moderately since the previous month, but standing at 782 million tonnes, FAO still predicts global wheat production to grow this year. The month-to-month reduction mostly concerns the United States of America, where persisting drought conditions have impaired yield prospects of the winter wheat crop and curbed overall production expectations. However, underpinned by a price-driven expansion in planted area, the countrys total wheat output is still foreseen to increase to 50 million tonnes in 2022, about 5 million tonnes (11%) above the previous years output.

In Europe, the forecast for wheat production in Ukraine remains unchanged and at a below-average level, reflecting the effects of the conflict that are foreseen to reduce the harvested area by at least 20%. Yields are also expected to decline in 2022 due to conflict-related disruptions to agricultural operations prior to the harvest period. The outlook in the Russian Federation remains broadly favourable, as conducive weather conditions continue to point to an upturn in yields that underlie the forecasted production increase in 2022. In the European Union, the forecast for wheat production has been raised to 139.5 million tonnes this month on account of recent official data indicating a small year-to-year increase in wheat sowings, compared to earlier expectations.

In South America, official data affirm expectations that Brazil will harvest a record maize crop in 2022, forecast at 116 million tonnes, driven by record-high plantings. In Argentina, dry weather conditions are likely to reduce yields and result in a moderate cutback in production to about 57 million tonnes; however, the harvest is still anticipated at an aboveaverage level. In Southern Africa, despite the impact of floods in eastern parts of South Africa, the leading producer and exporter in the region, maize production is still pegged at an above-average level of 15.3 million tonnes in 2022.

World wheat market
	2017-18	2018-19	2019-20	2020-21 Estimate	2021-22 Forecast
					Previous (08 Apr 2022)	Current (06 May 2022)
			million tonnes
Production 1/	761.5	731.4	759.8	776.7	776.5	776.6
Supply 2/	1,027.4	1,020.5	1,033.7	1,0575	1,065.5	1,068.7
Utilization	738.7	750.1	749.8	759.8	770.4	765.2
Trade 3/	177.8	168.6	183.8	189.2	189.8	191.0
Ending Stocks 4/	289.2	273.9	280.9	292.1	295.6	304.3
				percent....
World stock-to-use ratio	38.5	36.5	37.0	38.2	37.7	39.0
Major exporters stock-to- disappearance ratio 5/	21.0	18.1	15.5	15.5	17.2	17.3

World Wheat Market Forecast

Based on IFAs network of country correspondents, global fertilizer demand is expected to contract by 3% (5.5 million tonnes nutrients) to 198.2 million tonnes in 2021/22. Demand is expected to drop for all three nutrients, with nitrogen (- 2.1%) relatively less affected than phosphorous (-3.3%) and potash (-3.9%). The main factor behind this expectation for lower demand is reduced fertilizer affordability. International prices of urea, DAP and MOP rose sharply between late 2020/early 2021 and October 2021, much faster than crop prices.

Most regions are expected to reduce their demand for fertilizers in the fertilizer year 2021/22, driven by East Asia (-1.9 million tonnes or -3%), North America (-1.6 million tonnes or -6%), South Asia (-1.4 million tonnes or -3.5%) and WCE (-1.1 million tonnes or -6%). One notable exception is Latin America, where demand is expected to continue growing by 1.6 million tonnes (+6%), led by Brazil.

Global Mineral Fertilizer Demand
	(Mt nutrients)
	N	P O 2O 5	K2O	Total
2018-19	105.6	45.5	37.1	188.2
2019-20	108.2	46.5	37.0	191.8
2020-21 (f)	113.7	49.7	40.4	203.8
Change	+5.0%	+6.8%	+9.1%	+6.3%
2021-22 (f)	111.3	48.0	38.9	198.2
Change	-2.1%	-3.3%	-3.9%	-2.7%
2022-23 (f)	114.0	49.5	40.3	203.9
Change	+2.4%	+3.1%	+3.8%	+2.9%

"Short-Term Fertilizer Outlook 2021-2022", Market Intelligence Service, IFA

According to Short-Term Fertilizer Outlook 2020-21 published in November 2020 by IFA, the global fertilizer demand is expected at 189.8 million tonnes in 2019-20 against earlier prediction of 186.8 million tonnes. The recovery in demand is led by India which experienced good monsoon and abundant rainfall.

FAO forecasts Ammonia capacity to approach 190 million nutrient tonnes by 2022. This is driven by capacity additions in two core groups of countries. The first is export-orientated projects in countries such as Nigeria and Brunei. The second is import-replacement projects, for which India is the leader with 1.8 million nutrient tonnes of capacity forecast to commission in 2022.

FAO also forecasts global phosphoric acid capacity to grow to 60.9 million tonnes P2O5 in 2022. Three projects, in Russia, Morocco and Tunisia, are forecast to add 0.805 million tonnes of new phosphoric acid capacity in P2O5. The same projects are forecast to add 3.8 million tonnes of processed phosphates capacity in product tonnes.

Potash capacity are forecast to increase by 3.1 million nutrient tonnes to 66 million nutrient tonnes, between 2020 and 2022, primarily stemming from expansions in the Eastern Europe and Central Asia region. These projects will increase global potash capacity to almost 66 million nutrient tonnes.

Medium Term Outlook 2021-25 by IFA published in August 2021, the annual growth in global fertilizer demand is expected to remain around 1% between 2021-22 and 202526, with a slightly declining trend over the last three years of the period. Growth rates are expected to be slightly higher for K2O than for P2O5 and N. These expectations translate into a gain of 8 million nutrients tonnes between 2021-22 and 2025-26. Global fertilizer use is forecast to reach 208 million nutrients tonnes by 2025-26.

ii) Commodity prices

Global Commodity Prices:

As per World Bank forecast "Commodity Markets Outlook" published in Apr 2022, for most commodities, prices are expected to be significantly higher in 2022 than in 2021 and to remain high in the medium term. Brent crude oil averaged $116/bb in March 2022, an increase of 55% compared with December 2021 and its highest level since 2013. Non-energy prices are expected to rise by about 20% in 2022, with the largest increases in commodities where Russia or Ukraine are key exporters. Wheat prices, in particular, are forecast to increase by more than 40% this year, reaching an all-time high in nominal terms.

Natural gas prices in Europe reached an all-time high in March, reflecting fears of disruption to imports from Russia.

Among agricultural commodities, wheat prices saw a very steep increase, and were almost 30% higher in March compared to December 2021. In contrast, rice prices saw only a modest increase, reflecting ample supplies in China and India. Fertilizer prices also increased sharply during QT2022, partly reflecting the surge in natural gas and coal prices, as both are key inputs into fertilizer production.

Global Fertilizer Commodity Prices:

The World Banks Fertilizer Price Index rose nearly 10% in the first quarter of 2022 (q-o-q) to an all-time high in nominal terms. The increase follows last years 80% surge due to supply disruptions, soaring input costs, and trade restrictions in China and Russia. The Ukraine war threatens further disruptions, as Russia and Belarus are major producers and exporters of fertilizers and their main input, natural gas. Fertilizer prices are projected to rise by almost 70% in 2022 before easing in 2023.

Nitrogen (urea) prices surged following Russia - Ukraine conflict to levels well above the peaks during the 2008 global food price crisis. The price surge, which began last year, also reflects production cuts in response to sharply rising raw material costs and trade policies. Production cuts have been pronounced in Europe due to soaring prices for natural gas. In China, rising coal prices and power rationing forced fertilizer producers to cut production and exports as well, the latter to ensure domestic availability. Russia also temporarily banned exports of ammonia nitrate, a high nitrogen-rich fertilizer. While demand is under increasing pressure, soaring prices are likely to bring online significant volumes of new capacity, including in Brunei Darussalam, India, and Nigeria. Urea prices are projected to gain more than 75% in 2022, and ease in 2023 as new production from Brunei, Nigeria and India comes online, but will likely remain at historically high levels for as long as coal and natural gas prices remain elevated.

MOP (muriate of potash, or potassium chloride) prices jumped nearly 80% in QV2022 following the recent contract settlement by Chinese and Indian importers at $590/MT through CY 2022. Global spot prices have more than doubled to record-high levels in the past year. The price surge has been driven by sanctions last year on Belarus as well as supply disruptions and difficulties shipping through Black Sea ports since Russias invasion of Ukraine. Belarus and Russia together account for 40% of global potash exports. In addition to the sanctions, on 1st February 2022, Lithuania halted the use of its railways network to transport Belarusian potash to the port of Klaipeda, which typically handles 90% of Belaruss exports. Although some shipments apparently have been rerouted to Russia, it is difficult for Belarus to ship significant volumes. Elsewhere, shortages have been aggravated by a rail strike in Canada due to a labour dispute. Potash prices are projected to average 1.5 times higher in 2022 than in 2021 and remain elevated in 2023 unless supply returns to international markets from Russia and Belarus.

DAP (diammonium phosphate) prices continued to rise in Q1Rs 2022, up 11% (q-o-q), following large increases throughout 2021. Prices at end-March were more than four times higher than at the start of 2020. Rising input costs, particularly for ammonia and sulphur, have contributed to the price rise. Russia is the worlds second largest exporter of both ammonia and sulphur but, since the beginning of the war in Ukraine, has struggled to maintain shipments. China, which accounts for 30% of global phosphate trade, has introduced an export ban through at least June 2022 while Russia has imposed an export ban on ammonia nitrate, a key input to the manufacture of DAP. Following a near doubling in 2021, DAP prices are projected to increase further by 50% in 2022 before moderating in 2023 as production bottlenecks and trade restrictions are eased.

iii) Indian Agriculture

The agriculture sector has experienced buoyant growth in the past two years. The sector, which is the largest employer of workforce, accounted for a sizeable 18.8 per cent (202122) in Gross Value Added (GVA) of the country registering a growth of 3.6 per cent in 2020-21 and 3.9 per cent in 202122. Growth in allied sectors including livestock, dairying and fisheries has been the major drivers of overall growth in the sector.

Market Size

As per Fourth Advance Estimates for 2020-21, total foodgrain production in the country is estimated at a record 308.65 million tonnes which is 11.15 million tonnes higher than that during 2019-20. The production of rice, wheat and coarse cereals has increased at compound annual growth rates (CAGR) of 2.7, 2.9 and 4.8 per cent respectively during last six years i.e. 2015-16 to 2020-21. The CAGR for pulses, oilseeds and cotton has been 7.9, 6.1 and 2.8 per cent, respectively during the same period. Figure 6 depicts the trend in agricultural production over the past six years.

As per the second advance estimates of production of major Kharif crops for 2021-22 of GOI, there is an increase in the production of food grains, pulses, sugarcane whereas there is a decrease in the production of oilseeds and cotton as compared to target 2021-22. Details as follows.

Particulars	Unit of Measurement	Target 2021-22	2nd Advance Estimates of 2021-22
Total Food grains	million tonnes	310.74	316.06
Total Pulses	million tonnes	25.46	26.96
Total Oilseeds	lakh tonnes	384.01	371.47
Sugarcane	lakh tonnes	3970.00	4140.44
Cotton	lakh bales of 170 kg each	370.00	340.63

The Department of Agriculture and Farmers Welfare released the Final Estimates of 2020-21 and First Advance Estimates

of 2021-22 of Area and Production of various Horticultural Crops compiled on the basis of information received from States/UTs and other Governmental source agencies.

Total Horticulture	2019-20 (Final)	2020-21 (Final)	2021-22 (1st Advance Estimates) compared to 2020-21 (Final)
Area (In Million Ha)	26.48	27.48	27.56
Production (In Million Tonne)	320.47	334.60	333.25

Production of oilseeds: The production of oilseeds in the country has been increased substantially during last three years from 31.52 million tonnes in 2018-19 to 37.15 million tonnes in 2021-22 (2nd Advance Estimates, Directorate of Economics and Statistics). Details of production of oilseeds during last three years and current year are as under:

Year	Production (Million Tonnes)
2018-19	31.52
2019-20	33.22
2020-21	35.95
2021-22 *	37.15

* 2^nd Advance Estimates, Directorate of Economics and Statistics.

The estimated production of soybean, as per 2nd Advance Estimates of Directorate of Economic and Statistics, is 13.12 million tonnes during 2021-22 compared to the production of 12.61 million tonnes during 2020-21. The Government has been implementing a Centrally Sponsored Scheme, National Food Security Mission-Oilseeds & Oil palm (NFSM-OS&OP) from 2018-19 onwards to increase the production and productivity of oilseeds in the country. Now the Government has launched a separate Mission for Oil Palm namely National Mission on Edible Oils (Oil Palm) - NMEO (OP) in 2021-22. Both NFSM - Oilseeds and NMEO (OP) are being implemented in the country with the objective of augmenting the availability of edible oils by increasing the production and productivity of oilseeds & oil palm and reducing the import burden.

Edible Oils:

India is one of the major oilseeds growing country. As may be seen from the Figure 7, the oilseed production in India has steadily increased since 2016-17 onward after showing a fluctuating trend prior to that. The oilseed production in India has grown by almost 43 per cent from 2015-16 to 2020-21. The oil production in India has however lagged behind its consumption necessitating import of edible oils (Figure 8).

India is the worlds second largest consumer and number one importer of vegetable oil. As urbanisation increases in developing countries, dietary habits and traditional meal patterns are expected to shift towards processed foods that have a high content of vegetable oil. Vegetable oil consumption in India is, therefore, expected to remain high due to high population growth and consequent urbanisation. As per the OECD-FAO Agricultural Outlook 2021-2030, India is projected to maintain a high per capita vegetable oil consumption growth of 2.6 per cent per annum reaching 14 kg/capita by 2030 necessitating a high import growth of 3.4 per cent per annum.

Sugar Sector:

Significance of sugarcane and sugar industry for Indias economy can be gauged from the fact that it is the countrys second largest agro-based industry, next to cotton. It impacts the livelihood of over 5 crore farmers and their dependents. India is the largest consumer and the second-largest producer of sugar in the world. Average annual production of sugarcane is around 35.5 crore tonnes which is used to produce around 3 crore tonnes of sugar. The domestic consumption is estimated to be around 2.6 crore tonnes in 2020-21. Over the years, India has become a sugar surplus nation as reflected from the trend of sugar production and consumption in Figure 10. Since 2010-11, production has outstripped consumption except in 2016-17. This has been possible because of various measures undertaken by Government. For example, the interest of the farmers is protected by Fair and Remunerative Price (FRP) which has doubled in a span of ten years. In addition, some state governments announce State Advised Price (SAP) at levels higher than FRP. Additionally, sugar mills that buy sugarcane are mandated to purchase crops from farmers within a specified radius known as the Cane Reservation Area. In this way, sugarcane farmers are insured and protected against price risk. Moreover, in order to handle the surplus production and enhance liquidity of mills, the

Government has taken various steps such as incentivising sugar mills to divert excess sugarcane/sugar to ethanol production, providing financial assistance for transport to sugar mills to facilitate export of sugar, etc. About 70 LMT of sugar has been exported in sugar season 2020-21 in comparison to 59.60 LMT of sugar export in sugar season 2019-20. Further, contracts of about 30 LMT for export of sugar have already been signed in the sugar season 202122. Moreover, in the past four sugar seasons ending 202021, revenue of about Rs 35000 crore has been generated by sugar mills/distilleries from sale of ethanol to Oil Marketing Companies which has helped in clearing cane price arrears of farmers.

Price Policy: Minimum Support Price (MSP):

The Governments price policy for major agricultural commodities seeks to ensure remunerative prices to the growers for their produce with a view to encourage higher investment and production and thereby to safeguard the interest of consumers by making available supplies at reasonable prices. The Government fixes MSP of 22 mandated agricultural crops on the basis of the recommendations of Commission for Agricultural Costs & Prices (CACP) and after due consideration of the views of State Governments and the concerned Central Ministries/Departments. The 22 mandated crops include 14 Kharif crops viz. paddy, jowar, bajra, maize, ragi, tur (arhar), moong, urad, groundnut, soybean (yellow), sunflower seed, sesamum, nigerseed, cotton and 6 Rabi crops viz. wheat, barley, gram, masur (lentil), rapeseed and mustard, safflower and 2 commercial crops viz. jute and copra. In addition to that, MSP for toria and de-husked coconut are also fixed on the basis of MSPs of rapeseed & mustard and copra respectively. The Union Budget for 2018-19 had announced the pre-determined principle to keep MSP at the level of one and half times of the cost of production. Accordingly, Government had increased the MSP for all mandated Kharif, Rabi and other commercial crops with a return of at least 50 per cent over all India weighted average cost of production from the agricultural year 2018-19 onwards.

In line with the same principle, Government has announced the increase in MSP for all mandated kharif crops of year 2021-22. The highest absolute increase in MSP over the previous year has been recommended for sesamum (Rs 452 per quintal) followed by tur and urad (Rs 300 per quintal each). In case of groundnut and nigerseed, there has been an increase of Rs 275 per quintal and Rs 235 per quintal respectively in comparison to last year. The expected returns to farmers over cost of production is estimated to be highest in case of bajra (85 per cent). For urad and tur, return to farmers over cost of production is estimated at 65 per cent and 62 per cent respectively. For the rest of the crops, return to farmers is estimated to be at least 50 per cent (Figure 12).

Government also announced the MSPs for all mandated Rabi crops for Rabi Marketing Season 2021-22. In view of nutritional requirements, changing dietary pattern and to achieve self-sufficiency in pulses and oilseeds production, the Government has fixed relatively higher MSP for these crops (Figure 13). The highest increase in MSP has been recommended for lentil (masur) and rapeseed & mustard at Rs 400 per quintal each followed by gram at Rs 130 per quintal and safflower at Rs 114 per quintal. The expected returns to farmers over their cost of production are estimated to be highest in case of wheat and rapeseed & mustard at 100 per cent each. For masur (lentil) and gram, return to farmers over cost of production is estimated at 79 per cent and 74 per cent respectively and for barley and safflower, it is 60 per cent and 50 per cent respectively. The differential remuneration is aimed at encouraging crop diversification.

Salient Features of Monsoon 2021

> The southwest monsoon seasonal rainfall during June to September for the country as a whole has been normal (96 -104% of LPA).

> Quantitatively the 2021 all India monsoon seasonal rainfall during 1 June to 30 September 2021 has been 87.0 cm against long period average of 88.0 cm based on data of 1961-2010 (99% of its Long Period Average (LPA)) Fig.1.

> The southwest monsoon seasonal (June to September) rainfall over the four homogeneous regions is Normal over Northwest India (96%) and central India (104%). Seasonal rainfall is below normal over East and Northeast India (88%) and above normal over South Peninsula India (111%). Monthly and seasonal total rainfall over four homogeneous regions and all India are given in Fig.2

> The southwest monsoon seasonal (June to September) rainfall over the monsoon core zone, which consists of most of the rain fed agriculture regions in the country is above normal (>106% of LPA).

> Considering month to month rainfall variation over India as a whole, the season is very uniquely placed in the historical record for its distinct and contrasting month to month variation. The rainfall over country as a whole was 110%, 93%, 76% and 135% of LPA during June, July, August and September respectively.

> The formation and movement of the cyclone TAUKTAE, over Arabian Sea (during 14-19 May) and severe Cyclonic storm "YAAS" over Bay of Bengal (during 23 to 28th May) helped to increase cross equatorial flow and the onset of monsoon.

> Subsequent features favoured timely advance and monsoon covered entire country over many regions. However, monsoon cover entire country by 13th July against normal date of 8th July.

> In July, the country received slightly below normal rainfall (94% of LPA). The weak monsoon in July was mainly due to absence of any major monsoon disturbance over Bay of Bengal. Absence of such major systems in July also caused the weak monsoon trough. The monsoon trough lay to the north of the normal position or close to the foot hills of Himalayas on many days. It resulted in frequent and prolonged floods over north-eastern India, Bihar and adjoining areas of east Uttar Pradesh. At the same time, major parts of central India received deficient rainfall.

> During August, many unfavourable features of monsoon appeared resulting in deficient rainfall for the country (76%). Negative Indian Ocean Dipole unfavourable for Indian monsoon prevailed during this month. Also, the absence of formation of monsoon depression and a smaller number of low pressure area (16-18 & 28-30 August) over Bay of Bengal caused this rainfall deficiency. Normally two monsoon depressions and two low pressure area forms in the month of August. Most of the days monsoon trough was located north of its normal position which cause subdued rainfall over Central Indian Region. Most of the days Madden Julian Oscillation (MJO) was in the phase 8, 1 and 2 which are unfavorable for monsoon rainfall activity. Also, there was less West Pacific Typhoon activity. Normally remnants of westward moving typhoons help to form Low Pressure Systems (LPS) over Bay of Bengal.

> In September, the country as whole received excess rainfall due to many favourable conditions for the monsoon. The negative Indian Ocean dipole weakened during the month of August and at the same time the cold anomaly in the equatorial Pacific strengthened. There was a monsoon depression and a cyclonic storm formed in the month of September. During most of the days MJO was in the phase 3, 4 and 5 which are favorable for monsoon rainfall activity and low pressure system. More West Pacific Typhoon activity and the remnants of these westward moving systems helped to form LPS over Bay of Bengal. All the LPSs followed west/northwestward track causing good rainfall activity, especially over central India and adjoining areas,

Monsoon Forecast 2022:

Southwest monsoon seasonal (June to September) rainfall over the country as a whole is most likely to be normal (96 to 104% of Long Period Average (LPA)). Quantitatively, the monsoon seasonal (June to September) rainfall is likely to be 99% of the Long Period Average (LPA) with a model error of ?5%. The LPA of the season rainfall over the country as a whole for the period 1971-2020 is 87 cm.

iv) Indian Fertilizer scenario

The Indian fertilizer market reached a value of INR 858 Billion in 2021. Looking forward, IMARC Group expects the market to reach INR 1,131 Billion by 2027, exhibiting a CAGR of 4.8% during 2022-2027.

Indian Fertilizer Market: Drivers

• Catalyzed by a strong growth in the countrys population over the next five years, food demand is also expected to exhibit a strong growth. Conversely, as a result of increasing urbanisation levels, available arable land is expected to decrease. We expect fertilizers to play a key role in increasing the average crop yields per hectare.

• Despite strong historical growth, fertilizer consumption in India remains highly skewed. There are currently a number of states in India which still have a very low penetration of fertilizers. This leaves a lot of room for future growth.

• We expect a number of government and nongovernment awareness campaigns to educate farmers on the benefits of fertilizers. Promotion of fertilizers through television, radio and customized rural workshops are also anticipated to increase the consumption of fertilizers in the coming years.

• Increasing rural incomes, coupled by easy availability of credit, are also likely to create a positive impact on fertilizer usage in the country.

• Contract farming, where inputs in terms of technology and training are expected to be provided to the farmer from the food processor (contractor), is also expected to create a positive impact on fertilizer usage.

Volume of fertilizers produced in India from financial year 2018 to 2022 (in million metric tons)

Indias fertiliser subsidy expenses could touch Rs 2 trillion in 2022-23 because of a sharp spike in global prices of urea, diammonium phosphate (DAP) and muriate of potash (MoP) in the last one year, an official with the fertiliser ministry said on said. The fertiliser subsidy was at Rs 1.6 trillion in 2021-22. According to the ministry data, imported urea prices have risen by more than 145% to $930 a tonne in April 2022 from $380 a tonne a year ago. Similarly, prices of DAP and MoP have risen by 66% and 116% to $924 a tonne and $590 a tonne in April 2022, respectively, comparison to the year-ago period. It would be the third year in a row in 2022-23 that the annual Budget spending on fertiliser subsidy will be much above the Rs 1-trillion mark, against a lower range of about Rs 70,000-80,000 crore in the past few years. According to official estimates, against fertiliser requirement of 35.43 million tonne (MT) during the 2022 kharif season, availability would be 48.55 MT, including 10.47 MT of imported fertiliser and 25.47 MT of domestically produced soil nutrients.

For kharif 2022, the Centre has pegged the requirement at 354.34 LMT, of which urea accounts for 179 LMT, DAP for 58.82 LMT, muriate of potash (MoP) for 19.81 LMT, NPK (nitrogen, phosphate, potash) for 63.71 LMT, and SSP for 33 LMT

According to official estimates, against fertiliser requirement of 35.43 million tonne (MT) during the 2022 kharif season, availability would be 48.55 MT, including 10.47 MT of imported fertiliser and 25.47 MT of domestically produced soil nutrients.

The government on Wednesday said the Nutrient Based Subsidy (NBS) rates for phosphatic and potassic (P&K) fertilisers for the Kharif season (April-September, 2022) will be Rs 60,939 crore, as against Rs 57,150 crore for the whole of last year. The increase in subsidy is meant to insulate farmers from the increases in the prices of di-ammonium phosphate (DAP) and other non-urea nutrients in the global markets. These soil nutrients are largely imported.

Last years NBS subsidy included Rs 28,495 crore for the Kharif and Rs 28,655 crore for the Rabi season.

In 2022-23, 1,05,262 crore has been allocated to the Department of Fertilisers for fertiliser subsidy, a decrease of 25% over the revised estimates of 2021-22 (Table 7). Further, the allocation for subsidies of Urea and nutrient- based fertiliser in 2022-23 is 17% and 35% lower than the revised estimates of 2021-22. In 2021-22, the department has been allocated Rs 1,40,122 crore at the revised stage, which is 75% higher than budget estimate (Rs 80,011 crore). Note that the government had increased the subsidy rate for Phosphate by 204% from Rs 14.9 per kg in 2020-21 to Rs 45.3 per kg in 2021-22. This was in response to a sharp increase in international prices of raw materials used in the manufacture of fertilisers. In 2020-21, the actual expenditure included onetime allocation of Rs 32,155 crore to clear off pending dues of fertiliser subsidy of previous financial years. Dues had built up due to insufficient budget allocation over the years. Adjusted for this one-time expenditure in 2021-22 RE, the decrease in allocation for 2022-23 BE is 2.5%. Rs 63,222.32 crore allocation for urea subsidy in the Budget for 2022-23 was 17 per cent lower than the revised estimates (RE) for 2021-22. Another Rs 42,000 crore was allocated to subsidise NPK fertilisers; that was 35 per cent below the RE.

Table 7: Fertiliser subsidy allocation

(Rs crore)

Subsidy	2020-21 Actuals	2021-22 Revised	2021-22 Budgeted	% change in BE 2022-23 over RE 2021-22
Urea	90,549	75,930	63,222	-16.7%
Nutrient based	37,372	64,192	42,000	-34.6%
Fertiliser subsidy	1,27,922	1,40,122	1,05,262	-24.9%

Sources: Expenditure Budget No.6, Union Budget 2022-23; PRS.

v) Government initiatives:

PM- KISAN:

Under Pradhan Mantri Kisan Samman Nidhi Scheme (PM- KISAN), more than 1.60 lakh crore rupees have been directly transferred to more than 11.54 crore farmers till now.

PM-KMDY:

Total 21,42,718 number of farmers have been enrolled under Pradhan Mantri Kisan Maandhan Yojana (PM-KMDY).

AIF:

Till date, a total of 8702 projects have been sanctioned under the scheme with a loan amount of Rs 6254 crores, out of which, Rs 2291 crores have been disbursed for 4315 projects.

MSP:

The Union Budget for 2018-19 had announced the predetermined principle to keep MSP at levels of one and half times of the cost of production. In line with the same principle, Government had announced the increase in MSP for all mandated kharif crops of year 2021 -22 on 9th Ju ne, 2021 . The expected returns to farmers over their cost of production is estimated to be highest in case of bajra (85%), followed by urad (65%) and tur (arhar) (62%). For rest of the crops, return to farmers over their cost of production is estimated to be at least 50%. On 8th September, 2021, the Government has announced the MSP for all mandated Rabi crops for Rabi Marketing Season (RMS) 2022-23. The expected returns to farmers over their cost of production are estimated to be highest in case of wheat and rapeseed & mustard (100% each), followed by lentil (79%); gram (74%); barley (60%); safflower (50%).

National Food Security Mission:

During 2021-22, NFSM was implemented in identified districts of 28 states & 2 Union Territories (UTs) viz. Jammu & Kashmir and Ladakh in the country:

• NFSM-Rice in 193 districts of 24 states & UT of Jammu & Kashmir.

• NFSM-Wheat in 124 districts of 10 states & 2 UTs viz. Jammu & Kashmir and Ladakh.

• NFSM-Pulses in 644 districts of 28 states & 2 UTs viz. Jammu & Kashmir and Ladakh. NFSM-Coarse Cereals in 269 districts of 26 states & 2 UTs viz. Jammu & Kashmir and Ladakh.

• NFSM-Nutri-Cereals in 212 districts of 14 states.

• NFSM-Coarse Cereals in 269 districts of 26 states & 2 UTs viz. Jammu & Kashmir and Ladakh.

• NFSM-Commercial Crops, Cotton is implemented in 15 states, Jute in 9 states and Sugarcane in 13 states of the country.

• The Targeting Rice Fallow Area (TRFA) programme under NFSM is implemented in 11 states of the country to promote cultivation of pulses in rice fallow areas of the states.

An amount of Rs 1560.00 crore (BE) was allocated for NFSM during 2021-22.

Oilseeds:

NFSM-Oilseeds is being implemented in 27 States and 3 UTs.

• Annual Action Plan of the states/UTs have been approved for an amount of Rs 276.46 crores. Out of this, an amount of Rs 62.42 crore has been released to the state so far for implementation of NFSM-Oilseeds.

• Besides, Annual Action Plan of the 8 states for an amount of Rs 50.00 crore has been approved for implementation of TRFA Oilseeds.

• Govt. of India has fixed targets of 29.21 million ha for area coverage, 36.56 MTs for production and 1337 kg/ha for productivity under Oilseeds.

• Distribution of over 8,34,535 Soyabean mini kits with yield of not less than 20 qtl/ha and distribution of 58,416 groundnut seed mini kits with yield not less than 22 qtl/ ha under Kharif 2021-22 season.

• In Rabi season, over 8,20,600 Mustard mini kits and 11,000 groundnut mini kits are plan to be distributed.

Mission Organic Value Chain Development for North

Eastern Regions (MOVCDNER):

• 170 FPO/FPCs created covering 153116 farmers and 155495 ha area ^•

• 288 Collection, Aggregation, Grading units, Custom Hiring Centres, 26 processing and pack house entities created under FPO/FPCs and private ownership

• 93 transportation vehicles provided to FPO/FPCs

• 7 states developed their own brands

• Marketing facilitation of ginger, turmeric, pineapple and king chilli have been major success and FPCs have been supported with buyback agreements

• The export of king chilli sauce, pineapple (canned) and ginger flakes to UK, USA, Australia, France and Swaziland have already started

• Industry mentorship model with necessary infrastructure development with 3 FPCs

• Contract production of Ginger and Turmeric with 100% buyback assurance finalized with 3FPOs in Arunachal Pradesh with Parvata Foods

• Contract cultivation of other high value crops such as Perila, black thai ginger and Calandula flowers is under process.

Paramparagat Krishi Vikas Yojana (PKVY):

• Under PKVY Scheme, 19,043 clusters formed during 2018-19 to 2020-21 in Phase-II against the target of 20,500 clusters. Work continued in 19,043 clusters (Phase-II) and old 11891 clusters of Phase-I (2015-16 to 2017- 18) in 2021-22.

• Total 3.81 lakh ha area covered formed during 2018-19 to 2021-22 in Phase-II against the target of 4.10 lakh ha area and work continues in 2.38 lakh ha area covered in Phase-I (2015-16 to 2017-18) in 2021-22 under PKVY

• Total 9.52 lakh farmers have been benefitted during 2018- 19 to 2020-21 in Phase-II and farmers are engaged for completing the spillover activities during the CFY 2021-22.

• In addition to above, under Namami Gange Programme, Rs 101.56 crore funds has been released for 6181 clusters and 1.23 lakh ha area covered till date since 2017-18.

• In addition to above, funds released under natural farming for an area of 4.09 lakh ha area since 2020-21.

• In Jaivik-kheti portal total 5.45 lakh farmers, 16905 local groups, 75 input suppliers, 7881 buyers and 178696 products have been registered.

Government has initiated Large Area Certification (LAC) programme since 2020-21 to certify large traditional/default organic areas such as hills, islands, tribal or desert belt with no past history of GMO and agro chemical uses. Under this programme 14,445 ha area under Car Nicobar and Nancowry group of islands in Union Territory of A&N Islands have been certified to transform entire territory of these islands to organic similar to Sikkim. Proposal of 5000 ha area has been received from Ladakh under LAC and fund Rs 11.475 lakh has been released. The entire cultivable land of 2700 ha area of Lakshadweep have been certified organic under Large area certification.

Various Brands developed and business tie-ups have been formed with various business groups for marketing of organic produce under PKVY Scheme.

Rashtrya Krishi Vikas Yojana (RKVY-RAFTAAR) in 2021-22

• 1034.21 crore has been released to the States during 2021-22.

• So far, 286 projects has been approved by the States for implementation during 2021-22.

Seeds:

• During 2021-22, under Seed Village Programme, assistance amounting to Rs 13.44 crore has been released and 6.32 lakh farmers benefited (as on date).

• Under National Seed Reserve 1.75 lakh qtls. seeds of short and medium crop varieties proposed to be maintained to meet the contingency and unforeseen situations like drought and flood for Kharif-2021 and an amount of Rs 4.77 crore has been released.

• During 2021-22, a total amount of Rs 1.33 crore has been released to create Seed Storage Capacity of 2600 MT.

• Transport subsidy of Rs 4.86 crore has been released for movement of 2.54 lakh quintals of seeds to NorthEastern States and other States etc.

• Rs.4.00 crore has been released for strengthening and renovation of 5 Seed Testing laboratories in the Country.

• An amount of Rs 0.30 crore has been released for establishment of 3 Green House in the Country.

• An amount of Rs 0.06 Crore has been released for organizing Training on Seed related Activities in the Country.

• An amount of Rs 1.43 Crore has been provided for support to Seed Certification Agency (for the staff cost).

Agricultural Mechanization:

• During 2021-22, an amount of Rs 331.94 Crore, Rs 193.35 Crore, 159.59 Crore respectively have been sanctioned to Punjab, Haryana and Uttar Pradesh under Promotion of Agricultural Mechanization for in-situ Management of Crop Residue.

• An amount of Rs 523.04 crores have been allocated/ released to the State Governments for providing 75,223 numbers of various machines and equipment to the farmers on subsidy, 1540 Custom Hiring Centers, 53 Hi- tech hubs and 2629 Farm Machinery Banks.

• 10,166 trainees have been trained & 394 numbers of demonstrations have been conducted through FMTTIs, 829 agricultural machineries and equipment have been tested through FMTTIs and Identified Institutes of DA&FW, 75,223 numbers of agricultural machinery & equipment have been distributed on subsidy to the farmers and 4222 numbers of Custom Hiring Centers/ Hi-tech Hubs/Farm Machinery Banks have been established to provide machines and equipment to small and marginal farmers on rental basis.

• On multi-lingual mobile app-based aggregator platform FARMS (Farm Machinery Solutions) App 42,179 service providers have registered with more than 1,64,011

machines for renting. More than 5,23,95,476 farmers/ other users have also registered for availing the services through this app.

Pradhan Mantri Fasal Bima Yojana (PMFBY):

• Against budget provision of 16000 crore, Rs 9719.24 crore have been released/utilized during 2021-22.

• During Kharif 2021, total number of 484.6 lakh farmers applications have been enrolled over an area of 244.7 lakh ha. for a sum insured of Rs 99368 crore.

• Out of the partial claims of Rs 11148 crore for the year 2020-21, claims of Rs 10385 crore have already been paid to 110.7 lakh farmer applications.

Rained Farming System:

• Government has announced for augmentation of MicroIrrigation Fund corpus created in NABARD of Rs 5000 cr by another Rs 5000 cr and continuation during 15th Finance Commission for expanding area of microirrigation in country.

• An area of 59.37 lakh ha has been covered under Micro Irrigation in the country from 2015-16 till date under PMKSY-Per Drop More Crop programme.

Budget Allocation:

The Department of Agriculture, Cooperation and Farmers Welfare has been allocated Rs 1,23,018 crore in financial year 2021-22.

Trade:

The export of Agri and allied commodities during 2020-21 were Rs 310811.44 Crore as compared to the same period last year indicating an increase of 22.86%. The commodities which posted significant positive growth in exports were wheat, Other Cereals, Rice (other than Basmati), Soya meal, Raw Cotton, Fresh Vegetable, and Processed Vegetables etc.

Wheat and other cereals posted huge growth over last year, i.e., increased from Rs 444.20 Crore to Rs 4173.08 Crore and Rs 1454.72 Crore to Rs 5198.42 Crore, respectively. India has witnessed tremendous growth of 839.46% for Wheat export. Country has witnessed significant growth in export of Other Than-Basmati Rice that is 146.92%. Export of Other Than- Basmati Rice has gone up from Rs 14400.33 Crore in 2019-20 to Rs 35557.04 Crore in 2020-21.

Other commodities of Agri & Allied basket witnessing significant increase in export 2020-2021 as compared to corresponding period during 2019-20, have been Raw Cotton (Rs 13968.38 Crore vs Rs 7539.53 Crore, growth 85.27%), Fresh Vegetable (Rs 5388.03 Crore vs Rs 4617 Crore, growth 16.69%) and Processed Vegetables (Rs 3150.06 Crore vs Rs 2212.03 Crore, growth 42.41%) etc.

The export details of agriculture commodities in 2021-22 (upto October, 2021) are as follows - Raw cotton - Rs 9224.07 Crore, Fresh vegetable - Rs 3648.69 Crore, Processed vegetable - Rs 1887.94 Crore.

Despite COVID-19, balance of trade in agriculture has favorably increased during 2020-21 to Rs 156300.23 Crore as against Rs 105530.25 Crore during the same period in 2019-20.

Plant Protection:

• During 2021-22, an amount of Rs 108.74/- Crore has been released (as on 03.12.21).

• A total no. of 12,013 (Till October 2021) samples were analyzed for pesticide residue under Monitoring of Pesticide Residue at National Level (MPRNL) Scheme.

• Approximately 120.48 Lakh hectare Area has been covered under Locust Surveillance in the year 2021-22. Two National Training Workshop on Desert Locust were conducted in collaboration with FAO and 22 Locust Awareness Programme were conducted.

• Total No. of Farmers Field School (FFSs) conducted under CIPMCs are 70-Kharif & 212-Rabi. Total No. of farmers trained under CIPMC are 2450 (Kharif) & 7420 (Rabi).

• Up to November, 2021 a total No. of 4,53,573 Export Phyto-Sanitary Certificate and total 1,17,227 Import Release Order has been issued. Total Revenue generated through Plant Quarantine activities is 381.31 Crore.

• Total No. of Registration Certificates (CRs) issued under various categories u/s 9(3b) (provisional registration)/ 9(3) (new molecule registration)/9(4) (already registered molecules) under Insecticide Act, 1968 w.e.f. up to 28.12.2021 are 23009.

• A total no. of 46 pesticides have been banned till date. It is further informed that no pesticide has been banned in the year 2021-22 as on 28.12.2021.

• Total No. of Awareness Programme conducted under National Institute of Plant Health Management (NIPHM) are 121 Nos. and total No. of persons trained are 5803 Nos.

National Beekeeping & Honey Mission (NBHM):

• 8 project proposals of the State Govts./Agencies/ Organizations/Departments/ICAR/CAUs/SAUs, etc. for total assistance of Rs 1223.45 lakhs have approved by EC under NBHM by NBB.

• Madhukranti portal for online registration/ traceability system for source of Honey & other beehive products has been launched.

• More than 11,000 Beekeepers/Beekeeping & Honey Societies/Firms/Companies with 17 lakhs honeybee colonies registered with NBB and uploaded on Madhukranti portal.

• A State of the Art honey & other beehive products testing lab at lARl, Pusa, New Delhi has been launched.

• 100 FPOs of Beekeepers/Honey Producers have been allotted to TRIFED (14 nos.), NAFED (60 nos.) and NDDB (26 nos.) in the identified areas/Districts/ Clusters selected by the National Bee Board (NBB) for implementation of activities under NBHM.

• AMUL honey has been launched in collaboration with Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF) and Banaskantha District Cooperative Milk Federation, Gujarat.

ATMA:

During FY 2021-22, an amount of Rs.225.83 crore was released to States/UTs under ATMA scheme. States/UTs have reported physical achievements upto 31/10/2021 viz. Training of 20101 Extension Personnel, Training of 734529 Farmers, Exposure Visits of 165148 Farmers, Demonstrations on the field of 210712 Farmers, 320060 farmers visited in 4236 Kisan Melas, Mobilization of 11595 Farmers Interest Groups and Setting up of 10082 Farm Schools on the field of Progressive/Awardee Farmers.

Agri-Clinics and Agri-Business Centers:

During 2021-22, with the release of amount of Rs 1194.98 lakhs, total 3033 candidates trained, 1337 ventures established and 166 ventures subsidized till now.

Kisan Call Centre:

During 2021-22, total 32,95,656 calls answered and Rs 2336.01 lakhs have been released till now.

Sub-Mission on Agro-forestry (SMAF) Scheme:

Since inception of the scheme w.e.f. FY 2016-17, a total of 401 lakh trees under an area of 93,809 hectares have been planted in the country so far. Under the scheme, about 76,373 farmers have been benefitted under the scheme so far.

vi) Marketing:

While virtual meetings were organized by the regional teams during Q1-Q2 period, regular activities resumed during later part of Q3 and continued in Q4.

Key highlights of the Market Development Activities:

• The main focus during the COVID affected months was on connecting with farmers and retailers through virtual meetings to address farmers pain points and POS sales push for retailer with support of digital campaign.

• In the physical activities, emphasis was on promoting ZACL flagship product, Jai Kisaan Samarth along with Jai Kisaan Navratna 20:20:0:13 in Maharashtra & Karnataka by organising Jeep campaigns, Demonstrations, Field days, Crop seminars and Digital campaigns.

Farmer Connect: During the year 2021-22

• Contacted over 3 lakh farmers through online and physical contact programs.

• Organized 2506 (1896 online + 610 physical) farmer meetings to educate farmers about Adventz product range and provide solutions to their pain points.

• The teams conducted total 291 regular demonstrations to promote N-10, N-20 & N-19 and focused SPN & CPC products.

• Conducted 1123 spot demonstrations on focused SPN & CPC products.

• Organized 151 field days to show the product efficacy to fellow farmers.

• 299 campaign days organized through branded vehicles to promote Samarth & JK Navratna N20 and focused SPN/CPC products.

• Organized 220 crop seminars in which the external experts participated.

Brand Visibility

Completed 3.03 lakh sq. ft. of brand visibility (shop & wall paintings) during the year 2021-22.

Channel Partner Meet- ZACL Zone:

To motivate and develop strong relationship among potential channel partners, a Channel Partners meet was organised at Goa in November Rs 21 for top 100 dealers of ZACL Zone.

Special Events during 2021-22:

A key highlight of BTL Activities during 2021-22 were special events organized across all the marketing territories of ZACL.

• Jai Jawan Jai Kisaan Event - 15^th August Rs 21

- 77 Soldier-Farmers were felicitated at the events organized at 49 places.

- These events were attended by 4278 farmers. o Azadi Ka Amrit Mahotsav - October Rs 21

- Azadi Ka Amrit Mahotsav & DBT in Fertilizers Awareness Week organized from 2^nd October to 10^th October across India through various farmer related programmes.

- In ZACL regions, organized 33 Krishi Sammelanas, 19 DBT retailer meetings and 53 farmer meetings.

• World Soil Day - 5th Dec 2021

- World Soil Day events organized at 61 places on 5th Dec in all ZACL regions with programme theme Halt Soil Salinization, Boost Soil Productivity.

- Total 3140 Farmers, 107 Adventz dealers and retailers participated in the programme.

• Jai Kisaan Diwas - 23rd Dec-2020

- On 23^rd of December Rs 21, Jai Kisaan Diwas was celebrated with the theme line "Aap ka Amulya Ho Yogdaan, Aap par Ho Desh Ko Abhimaan".

- Organized 58 JKD events across all the regions of ZACL and total 4500 farmers, 120 dealers & 169 retailers participated in the events.

• International Womens Day - 8^th March 2022

- Jai Kisaan Team celebrated "International Womens Day" on 8^th March, 2022 across India to commemorate the cultural, political, and socioeconomic achievements of women - a unique programme to celebrate the contribution of women in farming.

- Organized 41 International Womens Day programmes across all the regions of ZACL Zone.

Digital communication:

Jai Kisaan Samarth 10-26-26 is companys flagship product and Brand Development activities are focused on this product. The Brand Development activities conducted during June 2021.

• Digital Media Campaign was released during Kharif 2021

o The campaign started on 19^th June, 2021 and ended on 15^th September, 2021.

o The campaign was planned at reaching out to 6.1 million audience and has reached 24.3 million as on 15^th September, 2021 with 4.8 million engagements (likes, comments, shares and clicks).

o Custom Audience ads are also a part of campaign to reach out specific audience Like Farmers, Retailers, Dealers.

o We have added 13615+ fans to our @jaikisaan. samvaad Facebook page (cumulative 28,601 fans).

o 3 non-FCO Agri-fluids - Bio 20, Restore 1, Restore 2 - listed on Amazon.

o Organized 43 FB live programmes for Karnataka, Maharashtra, AP & Telangana farmers on INM and IPM of focused crops.

o Jai Kisaan App: Available on Android Play Store, the App has been downloaded by 58,067 active users.

Total primary sales volume of fertilizers stood at 6.48 lakh MT while POS sales of 7.82 lakh MT was achieved during 2021-22. Last years primary sales volume was 8.46 lakh MT with POS sales of 768 lakh MT.

In the Specialty Fertilizer business, the Company achieved sales of Rs 272.97 crores during FY 2021-22, compared to Rs 118.08 crores achieved last year, registering a growth of 131%.

Overall sales of pesticides for the year were Rs 127.56 crores, compared to Rs 112.92 crores achieved last year, registering a growth of 13%.

vii) Internal Control Systems and their Adequacy:

The Company has adequate systems of internal control in place, which are commensurate with its size and the nature of its operations. These are designed to provide reasonable assurance with respect to maintaining reliable financial and operational information, complying with applicable statutes, executing transactions with proper authorization coupled with ensuring compliance of corporate policies through documented Standard Operating Procedures (SOP) and Limits of Financial Authority Manual (LOAM). These documents are reviewed and updated on an ongoing basis to improve the internal control system and operational efficiency. The Company uses a state of the art ERP (SAP S/4 HANA - high performance analytic appliance) system and GRC software, which have higher controls in place.

In addition, Internal Auditor reviews the internal control measures on an ongoing basis, whose reports are reviewed by the Audit Committee on a regular basis.

viii) Enterprise Risk Management (ERM):

The Risk Management Committee of the Board has approved a Risk Management Policy which has been formulated in accordance with the provisions of the Companies Act, 2013 and Regulation 21 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.

Companys ERM framework encompasses practices relating to identification, assessment, monitoring and mitigation of strategic, operational, financial and compliance related risks.

The coverage includes both internal and external factors. The risks identified are prioritized based on their potential impact and likelihood of occurrence. Risk register and internal audit findings also provide input for risk identification and assessment. The prioritised risk along with the mitigation plan are discussed with the Corporate Management Committee and Risk Management Committee on periodic basis.

The Company has, during the year internally conducted the Risk Assessment exercise for reviewing the existing processes of identifying, assessing and priortised risks and same are being reviewed for adherence periodically.

The Risk Management Committee shall periodically review the risks and report to the Board of Directors from time to time.

ix) Material development in human resources:

The overall IR situation at the Goa Plant has been cordial. To contain the COVID spread/infection, company had organized free vaccination camps for Employees as well as Contract workers. The HR Policies have been reviewed keeping in mind the business needs.

The Company under the Adventz Excellence Awards granted excellence awards to the Adventz family members who have excelled in both Sports & Academics.

The Company hired fresh Engineering degree & Diploma holders from reputed institutions to impart training in plant operations and create a talent pool to mitigate the attrition in operational areas. Likewise, the marketing division hired fresh BSc (Agri) & MBA (ABM) from reputed institutes to strengthen the frontline Sales of the Company. There has been significant improvement in the training man-days post COVID situation.

A new training module known as Nayi Disha was designed for the frontline Sales force keeping in mind the necessity to enhance their skills.The Company reviewed the compensation policy for Death during employment (Group Term Life Plan) including COVID and enhanced the benefits to mitigate the hardship to the dependants of the deceased.

FINANCIAL REVIEW:

The revenue from continued operations (Standalone) for the year ended 31st March, 2022 is Rs 8,301.07 Lakhs and discontinued operations is Rs 2,51,139.71 lakhs as compared to previous year ended 31st March,2021 continued operations of Rs 10.63 lakhs and discontinued operations of Rs 2,21,938.60 lakhs.

The loss before tax for the year ended 31st March, 2022 from continuing operations is Rs 7,776.16 lakhs and discontinued operations is Rs 452.75 lakhs as compared to previous year ended 31st March 2021 loss from continued operations of Rs 10,149.34 lakhs and discontinued operations to Rs 13,562.85 lakhs. The loss after Tax from continuing and discontinuing operations stood at Rs 8,345.08 lakhs for the year ended 31st March, 2022 as compared to loss of Rs 23, 712.19 lakhs for the previous year.

The Companys EBIDTA before exceptional item from continuing operations for financial year 2021-22 is Rs 42.00 Crores and from discontinuing operations is Rs 111.21 Crores as against previous year ended 31st March, 2021 Continued operations was Rs 20.53 Crores, discontinued operations was Rs 106.81 Crores. The Finance Costs (Continue and Discontinue) operation for 2021-22 was Rs 231.96 Crores as against Rs 321.63 Crores in 2020-21. During the year the Companys other income stood at Rs 63.34 Crores as against Rs 75.64 crores in the previous year.

The Performance of own manufactured fertilizers & other Agri Products

Own Manufacturing Fertilizers and other Agri Inputs
Particulars	2021-22	2020-21
Urea Sales- (MT)	430369.00	479675.00
Di-Ammonium Phosphates Sales- (MT)	10056.00	1129.00
Other Complex Fertilizers Sales- (MT)	175753.00	342864.00
Single Super Phosphate Sales- (MT)	31937.00	122.90
Urea Production - (MT)	433876.00	466039.00
Di-Ammonium phosphates Production - (MT)	10050.00	00
Other Complex Fertilizers Production - (MT)	156444.00	352670.00
Single Super Phosphate Production - (MT)	31976.00	00
Performance
Particulars	2021-22	2020-21
Sale of Single Super Phosphate ( in Crores)	43.28	0.32
Sales of Finished Products & Other Products ( in Crores)	2442.18	2205.86
Total Sales of Finished Goods ( in Crores)	2485.46	2206.18
Trade Products	2021-22	2020-21
Di-Ammonium phosphates Sales- (MT)	90.00	2947.00
Muriate of Potash- Sales- (MT)	148.00	395.00
Other Fertilizer grade Material- (MT)	9852.12	00
Other Fertilizers/Complex Fertilizers (MT)	12608.31	152.75
Sale of other Traded Goods ( in Crores)	105.66	11.78
Total Sales from Traded Products ( in Crores)	105.66	11.78

OUTLOOK:

Budget 2022 seeks to envision doubling the farmers income through a multi-pronged approach centred around access to finance, access to the marketplace and access to new age technology and better farming practices related to organic farming, drone technology, outlined as under:

Highlights of Union Budget 2022-23 in Agriculture Sector

- Agriculture and rural startups will receive funds from NABARD.

- The government will ensure wheat and paddy farmers get assured income by making direct payments of Rs 2.37 lakh crore for minimum support price (MSP) from April 2022 to March 2023.

- Oilseed cultivation will be expanded to reduce dependency on imports and production of millet will be encouraged.

- Kisan drones will be employed for crop assessments, digitalisation of land records, spraying of pesticides and nutrients.

- Chemical-free natural farming will be promoted all over India which will help farmers improve their income as well as sustainable agricultural productivity.

- About 9 lakh farmers will benefit from the Ken-Betwa River linking project. A total of Rs 44,000 crore has been earmarked for this project.

In the 2020-21 Union Budget presented by Finance Minister Nirmala Sitharaman, the Ministry of Agriculture and Farmers

Welfare has been allocated Rs 1,31,531 crore. The government has given a clear signal to rural India that it is committed to its their cause.

Monsoon Forecast 2022:

Southwest monsoon seasonal (June to September) rainfall over the country as a whole is most likely to be normal (96 to 104% of Long Period Average (LPA)). Quantitatively, the monsoon seasonal (June to September) rainfall is likely to be 99% of the Long Period Average (LPA) with a model error of ? 5%. The LPA of the season rainfall over the country as a whole for the period 1971-2020 is 87 cm.

OPPORTUNITIES FOR NEXT FISCAL:

Some new age reforms like delivery of digital and hi-tech services to farmers in public private partnership mode, use of Kisan drones to aid farmers have been announced. Also, to encourage start-ups in the business of leasing machinery for farmers, and providing technology including IT-based support, announcement of launch of new fund has been made. Similarly, proposal on steps for promotion of chemical- free natural farming, updating the syllabus of agricultural universities to meet the needs of natural, organic farming, modern-day agriculture has been made. To increase domestic production of oilseeds and reduce dependence on imports, proposal to implement a rationalized and comprehensive scheme has been made. From tax perspective, announcement on review of concessional customs duty rates on capital goods has also been made.

The government is committed to supplying fertilisers at affordable prices to farmers with required subsidies despite rising international market rates due to the Russia-Ukraine conflict, huge procurements by China and other global factors, which may push the annual fertiliser subsidy to up to Rs 2 lakh crore in the current financial year, sources said.

"For the Kharif season starting May, we have already made sufficient advance arrangements, including for 30 lakh metric tonnes of DAP (Di-Ammonium Phosphate) and 70 lakh metric tonnes of urea. We are fully prepared for the kharif requirements and will make further procurements as per the needs, the source added.

Government officials pointed out that urea price in the domestic market remains Rs 266 per 50 kg-bag today while the international market price has risen to Rs 4,000 per bag, resulting into a subsidy of about Rs 3,700 per bag.

The Cabinet has approved Nutrient Based Subsidy (NBS) rates for Phosphatic and Potassic (P&K) fertilizers for Kharif Season (from 01.04.2022 to 30.09.2022)

Subsidy approved by the Cabinet is Rs 60,939.23 crore for NBS - Kharif season 2022 (from 01.04.2022 to 30.09.2022), including support for indigenous fertilizer (SSP) through freight subsidy and additional support for indigenous manufacturing and imports of DAP.

The increase in the international prices of Di-Ammonium Phosphate (DAP) and its raw materials have been primarily absorbed by the Union Government. The Union Government has decided to provide subsidy of Rs 2501 per bag on DAP instead of existing subsidy of 1650 per bag which is a 50% increase over the last years subsidy rates. The increase in the prices of DAP & its raw material is in the range of approx. 80%. It will help farmers to receive notified P&K fertilizers on subsidized, affordable and reasonable rates and support the agriculture sector.

RISKS AND CONCERNS:

Indias fertiliser subsidy expenses could touch Rs 2 trillion in 2022-23 because of a sharp spike in global prices of urea, Di-Ammonium Phosphate (DAP) and muriate of potash (MoP) in the last one year, an official with the fertiliser ministry said.

The fertiliser subsidy was at 1.6 trillion in 2021-22.

According to the ministry data, imported urea prices have risen by more than 145% to $930 a tonne in April 2022 from $380 a tonne a year ago. Similarly, prices of DAP and MoP have risen by 66% and 116% to $924 a tonne and $590 a tonne in April 2022, respectively, in comparison to the year- ago period.

Fertiliser prices have broken new records as global supplies are hit by multiple factors including reduced supplies from Russia and Belarus, disruptions to the supply chain, a China export ban and a Canadian rail strike. Prices for raw materials that make up the crop nutrient commodity market - ammonia, nitrogen, potash, urea, phosphates, sulphates and nitrates - have risen 30% since the start of the year, and are now higher than the levels reached during the food and energy crisis when prices jumped in 2008, according to CRU, a UK-based commodity consultancy.

Details of Significant Changes in Key Financial Ratios, along with detailed explanations

Profitability Ratios	March 31, 2022	March 31, 2021	Variation%	Reason in Variation
i Interest Coverage Ratio (EBIT*/Interest (Cost)	0.62	0.21	203.88	Interest cost decreased by Rs 8,966.74 lakhs mainly due to reduction in working capital.
ii Operating Profit Margin (%) (EBITDA*/Revenue)	5.39%	4.69%	14.97	EBIDTA increased by Rs 2,547.58 lakhs mainly due to lower fixed cost when compared to previous year.
iii Net Profit Margin (%) (Profit After tax/Revenue)	-3.24%	-10.68%	69.67	During the year, net profit margin before exceptional item is higher when compared to previous year mainly because of higher operational margin, lower fixed cost and lower finance cost.
Balance Sheet Ratios	March 31, 2022	March 31, 2021	Variation%	Reason in Variation
iv Debtors Turnover (Debtors/ Revenue*365)	7723	61.81	(24.93)
v Inventory Turnover (COGS/ Average Inventory*365)	19.82	37.25	46.78	Variation is mainly due to liquidation of inventories and higher sales during the year
vi Current Ratio (Current Assets/Current Liabilities)	0.31	0.47	33.37
vii Debt Equity Ratio (Debt/Equity)	-8.22	-15.19	(45.85)	Variation is due to repayment of borrowings during the year.
viii Return on Net Worth (Profit after tax/Net Worth)	-0.56	2.18	(74.53)	Additional loss during the year led to negative net worth.

* EBIT stands for earnings before interest (both interest cost and interest income) and taxes.

** EBITDA stands for earnings before interest (both interest cost and interest income), taxes, depreciation and amortization. *** Previous year profit restated.

**** Above ratios are calculated for the continuing operation and discontinuing operations.

*****Exceptional income/expenditure not considered for calculation.