Fertilizer is an integral part of agriculture. It provides a crucial input inenhancing agriculture productivity. Sustainable agriculture is not possible withoutsustenance of the growth of the fertilizer sector. Further the food security for a countrylike India can never be an outdated issue. Fertilizer security is the pre-requisite forfood security.
Indian agriculture is not growing at the desired pace in the last few years. There isvery little scope to increase area under cultivation. Therefore increase in agriculturalproduction has to come from improvement in crop productivity per unit of land. Towardsthis sustenance of soil health is necessary for ensuring food security in the country.The solution is to lay more emphasis on balanced fertilization with integrated nutrientmanagement.
The year gone witnessed a good agricultural season infact one of the good seasonswhich the country has seen. The food grains production was 259 million tonnes which wasthe highest since 1947. This was possible due to good monsoon rains and high water levelin major reservoirs of the country. But this output is much lower than the 450 milliontonnes of food grains production achieved by China from 2/3rd of arable land.Though there being potentials but the fact of remarkable food grains production cannot beblot out. Fertilizer being one of the important agricultural inputs can never be ignoredfor its contribution in the success story.
Despite the increase in the consumption of fertilizers in last few years theconsumption pattern of the fertilizers remains skewed. The unbalanced consumption biasedtowards urea consumption needs immediate reform to enable balanced fertilization. Lookingforward to the potentials in agricultural production the balanced policy or reformnecessitates the situation.
Lowering current assets was another challenge during the year leading to increasingfinance costs. Roll over of unpaid subsidy to the next year resulted in escalating unpaidsubsidy and consequently increased the finance cost.
For continuous and reliable operation health of plant and machinery needs to be inexcellent condition. We continued the upgradation and modernization of the plant andmachineries through replacement of equipments and installation of the latest manufacturingfacilities to improve reliability of plant operation and achieve higher operatingefficiency.
On the seed front the success story of our BT cotton remained in the market. Ourdifferentiated and high-yielding seeds portfolio and ongoing research to provide qualityseeds improved the market share. Though the season was good it did not favour the marketserved by our company.
There was no remarkable achievement in the seed business but the fact we survived inthe industry gives new hopes for the upcoming seasons. Our R&D team works closely withfarmers in different regions to recognize and understand their needs and delivercustomized solutions using our wide range of seeds and soil health products.
Despite exposure to volatility in commodity as well as currency fronts the solventdivision has given increased contribution due to its ability to procure adequate seed forits crushing and manufacturing requirements. Considering the demand for DOC and increasedconsumption of soya oil better potentials are projected in the industry.
The new government has expressed its commitment to bring about sustainable andinclusive growth. To build a strong India it aims to usher the economy to a higherpedestal rein in inflation reduce current account deficit reignite the investment cycleand restore the confidence of domestic and international communities in the nationaleconomy. A series of measures and reforms to help Indian economy achieve its potential ofhigh growth are on cards.
In order to help Indian farmers and improve their lives we continued offering our biofertilizers & growth stimulants. Appreciating the initiative of the new government toprovide soil health cards to all farmers in the country we through all our endeavorscontinued educating farmers so as to encourage soil specific crop pattern and use ofquality seeds & fertilizers to increase the farm productivity.
As mentioned in my previous communication we have initiated the steps to set upadditional manufacturing facilities in other parts of the country. We express ourgratitude to all our stakeholders including shareholders customers bankers and farmersfor their unstinted support and contribution which we value the most.
With warm regards
Omprakash K. Gilda
Founder and Chairman
The year gone was again beset with challenges. Nevertheless a spell of globalfinancial turbulence caused capital outflows and pressure on the exchange rate but strongpolicy measures stabilized the currency rebuilt reserves and narrowed the excessivecurrent account deficit. In financial year 2013-14 the global economy showed signs ofrecovery. The overall agricultural GDP growth is estimated at 4.6% as compared with 4% inthe previous year. However the domestic macroeconomic environment still remainschallenging.
During the year the companys production of SSP has fallen by 27% as compared tolast year and the production of NPK fertilizer has risen by 26% whereas the sales volumeof SSP decreased by 24% and the same is increased by 56% in case of NPK. Your companyentered into marketing arrangement whereby the companys manufactured fertilizerwould be sold by another company in the market enabling the company to share marketingnetwork of another company and increase its own marketing share.
Despite the economic slowdown and other challenges the EBITDA percentage in relationto sales increaded to 10.95% against 9.55% of previous year. I am pleased to report thatThe Companys consolidated turnover increased from Rs. 518.07 crores in previous yearto Rs.526.15 crores in current year. The profits before tax of the consolidated entitystood at Rs.1014.64 lacs as against Rs.905.65 lacs of previous year.
Seeds the other primary and important agricultural input. We offer the seeds throughour subsidiary Kirtiman Agro to Indian farming community. In a short span of timeKirtiman Agro has smartly ramped up its market presence. The company failed to achieve thetargeted sales due to erratic and irregular monsoon in the areas served by the company.Though the company is satisfied with the performance of its products in seeds portfolio.It has a leading presence in hybrid paddy maize wheat soyabean bajra and cotton. Ourresearch variety paddy seeds namely Mugdha Hina & Kanchan were again falling short insupply as against their demand.
The solvent business once again gave the remarkable contribution during the year.Solvent business accounts for 62% of the turnover and 52% of the profit before tax of theconsolidated entity. Looking forward to the good monsoon and estimates of increase inyield of oil seeds throughout the country better results from the solvent business isexpected in the coming year.
Industry continues to operate in the highly regulated environment. With the expansionof production capacity in the country due to entry of 5 new SSP plants in India the morechallenges are expected in the coming years. The previous government expressed itsintention to pay subsidy direct to the farmers. Industry had welcomed it because industrywants to operate in free and competitive environment. Industry is performing onerous dutyof reaching fertilizers to 138 million farmers at subsidized prices in every nook andcorner of the country. Your company always strives for the farming community. In order toaddress more members of the farming community we have already stepped up in new marketscrossing the limits of the state of Maharashtra. This year was the beginning with a smallportion of the production being offered to the states of Karnataka.
The SSP fertilizer plants operated at a lower capacity throughout the country. Themajor drawback for the industry is its high dependence on imported raw materials andintermediates. This exposes the industry to the vagaries of international market. Securingconsistent quality of rock phosphate remains a challenge. Indian fertilizer companies areimporting rock phosphate from more than 10 different countries. Variation in quality ofrock phosphate affects the operation of phosphatic plants. Plants are blending variousgrades of rock phosphate to optimize operational efficiency. Further the highinternational prices of raw materials and declining demand of phosphatic and complexfertilizers resulted in low production levels. In spite of these challenges your companyhas invested heavily in improving operational efficiency and improvement in environment.
As reported in my previous communication the MOU with The M. P. State MiningCorporation Ltd. and the plan to set up BRP and SSP plants in the state of Madhya Pradeshwere further moved forward with effective steps during the current year to realize theplans and promises. Some further approvals of governmental agencies were received and someare in progress. We expect to commence operations in our first plant in Madhya Pradeshwithin next couple of years.
With the object to educate farmers to adopt quality seeds and use of soil specificfertilizers we continued educating farmers about the fertilizer best managementpractices. We found Indian farmers are very proactive and they will certainly adopt anyinnovative technique provided it is remunerative.
We hope that the new government will see the reason and bring reform in the sector andmake requisite allocation for fertilizer subsidy as determined by the prevailing pricingpolicies. With the support of Government and all stakeholders especially farmers yourcompany would march ahead successfully from strength to strength.
With warm regards
Deepak S. Maliwal