It is with great pleasure that I present to you the 44th Annual Report of your CompanyAries Agro Limited.
During 2013-14 the year under review in this Report monsoons were reported to beabove normal at over 106% of the long term average. However the extended rains delayedthe sowing for the second season and this was followed by extreme cold wave conditionacross North India during the winter. The extended monsoon provided a good Kharif revenuegrowth. However the Rabi revenues were affected due to the cold waves. These factors ledto your company's revenue increase by 24.69%.
Our overseas manufacturing units (Subsidiaries) have started supplying to BrazilAustralia New Zealand Sri Lanka Pakistan Bangladesh Vietnam Taiwan EcuadorTrinidad Zambia Kenya Singapore and United Kingdom. International sales accounted for27% of total group consolidated revenue. Distributors are being appointed on an ongoingbasis and we expect export and global sales to continue to grow and form 30% of the grouprevenues of the Company by Financial Year 2014-15.
Aries has always recognized that its business is working capital intensive and with theobjective of reducing working capital load the Company has taken several steps likereducing number of brands from 84 to 65 number of Stock Keeping Units (SKU) were reducedby 67 Nos sales depots were asked to maintain inventory of only the brands that providethem with 80% of their total turnover with the balance 20% being supplied on a need onlybasis. As a result of working capital control being established the number of daysinventory reduced by 44 days and debtors cycle reduced by 12 days during the year underreview.
The rising costs of raw materials fuel processing labour USD exchange rate andinterest rates continue to remain a cause of concern and have impacted the Company duringthe entire financial year. As a result the Company has raised its billing rates in 3quarters of the financial year for its entire range of products a major portion of thecost increase is yet to be passed on to the market. With depressed demand situationespecially in the second half of the year it was considered prudent not to increaseprices beyond a point with an intention to retain interest of farmers in using specialtyplant nutrients. Cost control on production and administrative costs have only partiallybeen able to counter this inflationary pressure.
During the previous financial year the Company had considered prudent to reduce the manpower employed in various areas. However considering the widespread operations andincreased market penetration some of these staff needed to be replaced and suchrecruitment was carried out in phases during the year under review as a result of whichthe total staff strength increased from 748 to 785. However further recruitment of manpower is now subject to prior approval and specific norms viz return per person employed.These norms are set in consultation with the State Heads during the Annual Planningmeetings.
Aries has sourced 30% of its total raw materials from overseas suppliers located inChina Israel Turkey U.A.E. U.S.A U.K. Belgium and South Africa. Imports constitute40% of our total purchases and our Company has identified a pool of reliable overseassuppliers.
Aries' total capacity utilization currently stands at 48 % of the total installedcapacity of 84600 MT p.a. in India. Our international manufacturing facilities at UAEhave also shown improved capacity utilization which currently stands at 39 % of the totalinstalled capacity overseas.
Aries' extension team continues to strongly advocate good agricultural practices in allstates of India. The activities are conducted under the supervision of Agronomist andAgricultural Research Institutions throughout the year. During the year under review 2532knowledge dissemination activities including farmers meeting were undertaken impacting54215 number of farmers. These sessions were conducted by team of 52 extension officialsspread across five states.
The Company has organized during the year soil testing camps in Andhra Pradesh usingMobile Soil Testing Kits which analyse 7 parameters including pH EC NPK levels in soilmicro nutrient levels including Zinc Ferrous Boron Organic Carbon etc. Approximately1840 Soil Health Cards were issued to farmers providing an additional service in orderthat they understand the specific nutrient needs of their farms.
As part of the Aspen India Leadership initiative the Company undertook a programme ofadopting 4 villages in 4 states with an intent to develop good agricultural practicesstandard for key crops of India. Standardized Farming practices have been drawn up formustard wheat rice and sugarcane based on the field work carried out so far.Documentation of these practices has been completed along with cost benefit analysis.Awareness sessions on the benefits of adoption of these practices have been explainedthrough a series of farmers meetings in the 4 target states of Rajasthan Andhra PradeshOrissa and Maharashtra.
Aries partnered with Confederation of Indian Industry's India @ 75 NationalVolunteering Week (12th January to 18th January 2014) during which a series sources ofactivities were undertaken in 6 states of Rajasthan Andhra Pradesh Odisha UttarakhandChhattisgarh and Maharashtra. The sessions focused on impact of climate change on Indianagriculture and how balanced plan nutrition and integrated crop management can helpfarmers deal with climate change.
The 2014 monsoons have been extremely delayed and all forecasts indicate that the yearshall be a drought year due to the El-Nino phenomenon. The Company has carried outextensive offseason placement during the first quarter in order to place on shelves withAries products in advance of the season. Hence the Company shall be actively monitoringthe progress of monsoon and also increasing its focus on non rain dependant agriculturenamely plantations irrigated districts perennial crops and river basins in addition toour focus on aquaculture farm equipment products will also continue despite the monsoonsituation.
For the third consecutive year we were awarded "Certificate of Excellence' inrecognition of our Exemplary Growth - in this year's Inc India 500 ranking of India's500 fastest-growing mid-size enterprises. Inc. India 500 is an offshoot of the annual Inc.500 Awards: "Est. in 1982 in America. Inclusion on this list is a mark ofentrepreneurial success and elevates our company above its competitors and is a proof ofthe talent drive and hard work our team have brought to our business.
We were also awarded the 'Innovative 100 - Certificate of excellence' inrecognition of smart innovation by 9.9 Media & Inc. India
I would like to thank each one of you personally for your confidence in Aries.Together we will ensure that your Company grows further in the years ahead.
Dr Jimmy Mirchandani
Chairman & Managing Director