It is indeed an honour and privilege to share my thoughts with you. First I would liketo convey my sincere thanks and gratitude to Mr A. Vellayan under whose guidance andvision Coromandel has become one of the leading farm solutions providers in Indiagrowing in stature and earning respect from all stakeholders.
It has been an eventful year for India marked by implementation of some bold reformsand policy changes like Goods and Services Tax Bank Recapitalization Insolvency andBankruptcy Code etc. that will set the reform tone in coming years. Overall India's GDPgrowth at 6.7 percent in FY18 reinstated it as the world's fastest growing major economy.Today the Indian economy is in a healthy shape with fiscal deficit at 3.5 percent levelshigher foreign exchange reserves and a marginal increase in inflation signalling apositive outlook for 2018-19. During the year India achieved its highest food grainoutput with agri and allied sector growing at 3.4 percent. Flowever uncertainties inoutput price realization impacted the farmer's income. Government has laid out anambitious plan to double the farm income by 2022 and towards this intends to fix theminimum support price for crops at 1.5 times the cost of production. We at Coromandelare aligned with this vision to improve farmer prosperity and our initiatives are aimed atimproving the quality of produce to realize higher returns in addition to the improvedcrop yields.
The fertiliser industry witnessed the phased roll out of Direct Benefit Transfer (DBT)scheme that intends to bring traceability across the fertiliser value chain and promotebalanced nutrient practices. Considering the mammoth scale and complexity involved inconnecting more than 200000 retailers the industry along with the Department ofFertilizers (DoF) effectively took up the challenge and kexecuted its implementationwell. Though certain technical nd operational glitches exist in the system DoF isaddressing the same and this is expected to be sorted out soon. DBT signals a significantshift in operating philosophy for the industry and we expect its scope to be enhancedfurther in coming years placing higher thrust on efficient nutrient application based onthe soil health condition.
With the implementation of GST from July 2017 onwards Phosphatics fertiliserindustry has been impacted by an inverted duty structure wherein incidence of tax on someraw material is higher than the output resulting in significant credit accumulation.Though the GST Fitment Committee has partially brought down the tax rates on Phosphoricacid (a key raw material for manufacturing NPK fertiliser) from 18% to 12% the existingstructure continues to put a strain on the industry's working capital. We expect fewcourse corrections to happen in future that will lend support to domestic manufacturers aspart of Government's 'Make in India' initiative.
It was heartening to see that the Government is swiftly acting upon initiatives aimedtowards improving the nutrient balance of Indian soils. After the DBT roll out andintroducing neem coated Urea a year ago Government has mandated the industry to marketUrea in 45 kilogram (kg) bags instead of traditional 50 kg bags from 2018-19 onwards.Also higher budgetary allocation towards NPK fertilisers signals a positive intent.However price distortion between Urea and Phosphatics grades continues to influence thefertiliser consumption pattern leading to lopsided 'N' nutrient intake.
Coromandel has taken significant strides during the year towards enhancing farmprosperity by promoting healthy agricultural practices and providing quality farmsolutions. Initiatives were mainly based around expanding crop-centric approach soilsecurity and quality consciousness among the farming community. Further the benigncommodity prices stable exchange rate and comfortable raw material availability for amajor part of the year supported the business growth. Our differentiated value addedofferings continued to gain traction in the market ably supported by the integratednutrient marketing structure. To meet the changing business dynamics under DBT we havestrengthened our market presence by deploying additional manpower to improve the retailerconnect.
Crop Protection business has shown growth across the domestic and export sectorsinspite of tight raw material supplies. Business is improving on its 'Concept toCommercialization' capabilities. Further with the addition of Bio Pesticide operationspost acquisition of the business from EID Parry we expect to expand our market presenceand product offerings in the Indian North American and European markets.
On the Retail side we have consolidated our operations in Andhra Telangana andKarnataka and have set up five Custom Hiring Centres with support from State Government.These centres will provide farm mechanization services. Our continuous effort towardsdriving quality consciousness in the SSP segment resulted in significant policy changemandating the marketers to print the name of the manufacturers on the bags thus ensuringsubsidy eligibility only for the manufacturing unit from 2018-19 onwards.
On the environment side we continue to expand our green belt coverage at all Plantlocations and our commitment towards society remains firm. Considering future growthopportunities the Company is strengthening its talent pipeline and has an ongoingtraining and development programme which spans across leadership and functionalmanagement.
To the entire Coromandel team and its leadership my most grateful thanks for theirdedication diligence and commitment towards achieving stretch goals at all times. Mycolleagues on the Board have been a great source of inspiration strength and guidance tothe team and to me personally. My sincere thanks and appreciation to them. Mrs. NirupamaRao stepped down from the Board in May 2018.We thank her for her contribution and wish herwell in all her future endeavours.
Looking ahead we would like to continue our growth journey through strengthening thequality of customer engagement enhancing safety and sustainability efforts and nurturinga progressive work culture leading to happy and satisfied stakeholders. Being amongst thelarger corporate houses with a focus on agriculture Coromandel understands theresponsibilities it carries towards empowering the farming community. We will continue tosupport and pioneer change to drive agricultural productivity and embrace technology toenhance farmer prosperity. I thank you for your undeterred trust and support in us towardsthis effort.
M M Murugappan