It is with great pleasure that I present to you the 46th Annual Report of your CompanyAries Agro Limited.
During the year under review 2015-16 the agricultural input sector was adverselyaffected by defi cient monsoon across the entire country and flood situation in few areas.Out of the 36 Meteorological subdivisions 18 have seen defi cient rains for twoconsecutive years. Back to back crop failures worsened the distress in the agriculturalinput sector leading to lack of adequate demand in both Kharif and Rabi season. Most ofthe industry therefore was forced to hold high levels of inventory since stocks wereprepared in anticipation of a normal season. Moreover the fall in purchasing power andcash fl ow at the farm level also caused pressure on recovery of market outstandingsduring the entire year. The highly seasonal nature of the industry showed its impactduring the year under review and also placed pressure on margins since companies wereforced to lower margins to capture market and maintain market share. Despite theseefforts the Companys revenue remained almost fl at. The total capacity utilizationcurrently stands at 49% of the total installed capacity of 84600 MT p.a. in India. Ourinternational manufacturing facilities at UAE have also maintained the capacityutilization of 36% of the total installed capacity overseas.
The year 2015-16 was characterized by heavily pressured cost structure. Though materialcost remained stable there was an increase in fi nance cost and fixed cost of theemployee benefi ts remained unchanged.
Another cause of concern was the loss on account of foreign currency exchange rate fluctuations. Also during the second half of the year the classifi cation of certainproducts being imported by the Company under customs was changed resulting in higherlevies which forced the company to produce the same locally. In order to cater to themarket production was restarted of some brands at the Hyderabad manufacturing unit. Thispartially overcame the foreign exchange fl uctuation loss in the fi nal few months.
International sales have commenced in Australia Brazil Ecuador New ZealandPakistan Spain Singapore Sri Lanka Taiwan Trinidad United Kingdom United States ofAmerica Vietnam and Zambia with supplies from Indian and UAE factories. Distributorshave been appointed in Brazil Cambodia Ecuador New Zealand Sri Lanka and Vietnam andwe expect export and global sales to grow and form around 15% of the group revenues of theCompany by Financial Year 2016-17.
For eleven consecutive years Aries Quality Management System was audited and certifi edas NS-EN ISO 9001:2008 with zero non-compliance report showing complete adherence tointernational quality standards.
Aries continues its tradition of carrying out a range of activities that spreadknowledge and adoption of farming best practices in the markets that Aries functions in.The Company undertook several activities focused specifi cally on supporting school agedgirls across India. We supplied benches for classrooms and water purifi cation systemsdistributed beds and pillows for tribal students and supported the physically handicappedstudents.
The Companys Call Centre based in Vijayawada continued to provide answers tofarmers queries and provided direct interaction with consumers. During the yearunder review 3578 number of farmers called the call center at Vijayawada with queries onintegrated nutrient management pest management soil health and post harvest management.During the year under review 5889 knowledge dissemination activities including farmersmeetings were undertaken impacting 68008 numbers of farmers. These sessions were conductedby team of 58 extension offi cials spread across 20 states.
The Company has organized during the year soil testing camps in North Karnataka AndhraPradesh and Telangana using Mobile Soil Testing Kits. Approximately 1959 Soil Health Cardswere issued to farmers providing an additional service in order that they understand thespecifi c nutrient needs of their farms.
Aries also participated in the Swach Bharat Mission at the Child and Police ProjectSchool Guntur and Constructed toilets for women and kids under the Women & Kid ToiletProject. 2016 monsoons are expected to be above normal and the Company is hopeful thatthere will be good growth in revenues and consequent Profits during the current FY2016-17. In order to secure a confi rmed order book the Company (for the fi rst time inagri business in India) conducted All India Flash Sale and Booking Bazaar on 19th and 20thApril 2016 at the Bombay Stock Exchange Convention Hall Mumbai. Record breaking orderswith payment instruments were collected totaling to Rs. 201.78 Crores within a 30 minuteFlash Sale period. This will ensure that the Company is able to plan inventories andproduction as well as timely supplies to more than 400 dealers who participated in thisunique one of its kind booking bazaar. In the past the Company has conducted similar flash sales on the state level and the average conversion of bookings to orders wasapproximately 75% to 80%. Assuming similar conversion on all India basis this bookingbazaar will result in defi nite increase in sales during the fi rst half of the FinancialYear. The Company is also increasing focus on non rain dependant activities includingsales to aquaculture farmers plantations and perennial crops in irrigated districts ofthe country.
The Company will introduce two new products namely K-phonic and Mobomin during thecurrent Financial Year. However it will also focus on growing sales of the new productslaunched towards the end of 2015-16 namely Arisil Calcomag and Calpro.
Through its products and passion Aries continually demonstrates that it is aresponsible corporate citizen working hard to retain the delicate balance of nature andthe development of communities where it works and grows.
Dr Jimmy Mirchandani
Chairman & Managing Director