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Paradeep Phosphates Ltd.

BSE: 543530 Sector: Agri and agri inputs
NSE: PARADEEP ISIN Code: INE088F01024
BSE 12:26 | 01 Dec 56.60 -0.15
(-0.26%)
OPEN

56.75

HIGH

57.35

LOW

56.45

NSE 12:14 | 01 Dec 56.60 -0.15
(-0.26%)
OPEN

57.00

HIGH

57.40

LOW

56.50

OPEN 56.75
PREVIOUS CLOSE 56.75
VOLUME 134671
52-Week high 72.00
52-Week low 37.45
P/E 16.65
Mkt Cap.(Rs cr) 4,610
Buy Price 56.65
Buy Qty 50.00
Sell Price 56.70
Sell Qty 1328.00
OPEN 56.75
CLOSE 56.75
VOLUME 134671
52-Week high 72.00
52-Week low 37.45
P/E 16.65
Mkt Cap.(Rs cr) 4,610
Buy Price 56.65
Buy Qty 50.00
Sell Price 56.70
Sell Qty 1328.00

Paradeep Phosphates Ltd. (PARADEEP) - Chairman Speech

Company chairman speech

Dear Shareholders

As I put forward to you the annual report of the company for thefinancial year 2021-22 the first one after the company's shares have been listed on thetwo stock exchanges in India I experience a concoction of emotions from humble pride toprofound gratitude to inspired confidence. It has been no easy task to reach where we aretoday and I am encouraged to achieve more.

Macro Scenes

2021-22 was a harbinger of challenges galore impacting people andbusinesses in varied yet alarmingly similar ways. After a head-on encounter with themultiple waves of the pandemic a brief period of optimism in the world was followed by athreat by the geo-political issues arising out of the Ukraine Russia tussle. A blend ofthe repercussions of the pandemic and the conflict has had far reaching impact on allsectors across the globe. The vicious trend beginning with supply chain distortionsleading to a deficit in the supply of essential commodities like crude oil edible oil andfood grains in turn leading to their prices sky-rocketing has had a cascading effect onthe inflation levels rising beyond target levels and interest rates getting hikedconsequentially.

India is also attempting to cut the Gordian knot with various fiscaland monetary measures being undertaken by RBI. However our country is better placed thanmost other nations primarily because it is a demand driven economy and is blessed witheconomically strong fundamentals a better than normal monsoon this year continued importof crude oil from Russia despite the ongoing clashes and encouraging policies likeProduction Linked Incentives (PLI) push for the creation of infrastructure and expansionof capital expenditure that will help India sail through the challenges with minimalimpact.

The Triangle of Food Hunger and Environment

The past century has seen human welfare being enhanced by leaps andbounds. Quantum advances in technology has made it possible for societies and industriesto radically innovate and improvise with augmented productivity. Nevertheless creatingand co-existing in a world free from 'hunger' still remains an unfulfilled global dream.The enormou divide between the haves and have nots exists in many parts making basicamenities including food inaccessible to the great many.

Agriculture has the potential to bridge this divide but doing so in aneconomically socially and environmentally sustainable manner is the need of the hour.Increasing agricultural productivity by increasing per hectare yield with the use offertilizers more often than not is accompanied with increased Green House Gas (GHG)emissions and deforestation resulting in climate change with its detrimentalramifications.

Thus devising and implementing sustainable agricultural systems tomeet the world's growing demand for food is a major area of work that people and theirinnovations need to focus on in line with the global two-fold goal of Zero Hunger andZero Emissions by 2030.

Fertilizers - Nourishing the Soil Feeding the Future

It is said that "If a nation cannot take care of its soil ittends to destroy itself" Soil health is a crucial factor in the development of theeconomy and fertilizers are quintessential for soil health.

Better soil quality results in better plant health which in turnimplies better human health. Soil forms the nucleus of our industry and it is not amisnomer that the success of agriculture depends on the success of the fertilizerindustry. Fertilizers promote higher crop yields and more nutritious food thus indirectlyimpacting food security concerns.

ESG - Turning Theory into Action

Fertilizers are fundamental to agriculture as they supply the perfectamount of required nutrients to the soil but our challenge is to feed the worldsustainably. Hence sustainable fertilizer production is the key to increasing ourindustry's efficiency whilst reducing emissions.

As an organization PPL strives to achieve balance in the imbalancedprogress of humanity that has been made over the years without impacting theenvironment. Prevention and control of water and air pollution environmental protectionhazardous waste management and noise pollution has been on our agenda since long and weare bound by the laws and regulations with regards to discharge emission storagehandling and disposal of a variety of substances that may be either inputs or output to/of our operations. Our initiatives on energy efficiency clean technology renewableenergy water conservation zero effluent discharge policy are tiny yet significant stepstowards greening our future world.

State-of-Affairs at Home

Despite the declining proportion in the country's GDP agriculture andallied activities continue to employ about 50% Indian population predominantly in ruralareas.

The production of food grains is on the upward growth trajectory from295 Mn tonnes in FY20 to 310 Mn tonnes in FY21 reaching 314 Mn tonnes in FY22 indicatingthat the agriculture sector maintained resilience even during the COVID-19 period.Similarly the production of pulses oil seeds and sugar cane in FY22 was higher than theproduction in two previous years.

Demand for fertilizers is derived from agriculture. India's populationhas been rising continuously requiring increased production of food grains and otheritems. The rising population and shrinking availability of agricultural land due tourbanisation and industrialisation have been compelling higher productivity per acre.Increasing the use of fertilizers appears as the most viable option to raise theagricultural output. These dynamics indicate continued demand for fertilizers in theforeseeable future.

Further India has been importing fertilizers to the extent ofapproximately 35% of its consumption. This assures adequate demand for domesticfertilizers in long term.

Higher subsidy rising rural incomes availability of creditdeployment of technologies like IoT increasing corporate farming rising awareness of thefarmers about the importance of fertilizers and better minimum support prices have beenplaying a crucial role in increasing the consumption of fertilizers.

All these factors have led to projecting the demand for fertilizers torise at a CAGR of 1.5 - 2.5% from 61 Mn tonnes in 2021 to 68 Mn tonnes by 2026.

For Whom the Bells Toll to the Scaling up Act

In addition to the listing of the company's shares there have been acouple of major developments after the end of FY22 which I want to briefly share with youbefore touching upon the annual financial performance.

Initial Public Offer

The Company has completed the Initial Public Offer (IPO) comprising afresh issue of shares amounting to Rs 1004.00 crores and an Offer For Sale (OFS) ofshares amounting to Rs 497.73 cr. The OFS comprised 112489000 equity shares by theGovernment of India amounting to Rs 472.45 cr and 6018493 equity shares by Zuari MarocPhosphates Pvt Ltd amounting to Rs 25.28 cr.

The Equity Shares of the company have been listed on 27 May 2022thereby increasing the number of listed companies in the Adventz group.

* Divestment of shares by the

Government of India

Through the Offer For Sale the government divested 19.55% of itsshareholding in the company. This is the divestment of the residual stake after the stakesale of 74% in 2002. After this second round of disinvestment by the government thecompany became fully a private company.

* Acquisition of Goa fertilizer plant

On 1 June 2022 the Company acquired the Goa fertilizer plant from ourgroup company Zuari Agro Chemicals Limited on a slump sale basis for Rs 1126.32 crores.This acquisition will help the company grow inorganically and reach out to new markets.Part of the IPO proceeds would be utilised to fund the acquisition.

Sustained Nourishment in FY22

During the year under review the consolidated operating revenue jumped52.2% to Rs 7858.72 crores from Rs 5164.73 crores in FY21. Net profit increasedsubstantially by 78.5% to Rs 398.45 crores from earlier year's Rs 223.26 crores. Theincreased profit has been the result of higher volumes lower finance costs and otherfactors.

Corporate Social Responsibility - Reciprocating back

Navratna Prayas a project that impacts almost 50000 lives every yearis the company's route towards catalyzing Inclusive Growth.

At Paradeep Plant we are closely working with communities in 30villages in the periphery of the plant covering 10000 households addressing issuesrelating to Livelihoods Education and Health (WaSH -Water Sanitation and Hygiene) witha special focus and involvement of women and children. These projects have beenimplemented by our partners HARSHA Trust and Society for Children. At Goa Plant the CSRprojects address Skills Development Women Empowerment and Community development projectimplemented through NGO partners Margdarshak and Sambhav Foundation covering 3000households especially women youth and children.

Harvesting Healthier Crops Ahead

While I am confident of better prospects for the fertilizer industry aswell as for our company I look forward to seeing the benefits of reorganisation of thefertilizer business in two group companies whereby Paradeep

Phosphates has acquired Goa Fertilizer Plant from Zuari Agro Chemicals.Through this acquisition Paradeep has got DAP/NPK Urea and Ammonia into its productportfolio and newer markets to serve. Overall the size of the company has increasedsubstantially and I am optimistic about the synergy benefits in the years to come.

I am grateful to all the shareholders board members employeescustomers suppliers banks regulatory bodies governments and all stakeholders forsupporting the company in its progress.

Warm Wishes
S. K. Poddar
Chairman

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