This is the second time I am communicating with you regarding the financial year2016-17. I thank you very much for your trust and continued support. In continuation to mycommunication in May 2017 I would like to put before you the 12th AnnualReport of R J Biotech Limited and share with you the performance highlights and financialindicators of the company during the financial year 2016-2017 as well as the futureoutlook.
The slowdown in agriculture sector due to below average rainfall continued this yeartoo. The entire agriculture industry has been suffering due to the inadequate rains forlast 2-3 years. Many potential areas in the country were draught declared. In the year2016-17 though the rains were good in the north but were very bad in South Indian stateswhere we have high volume pockets. Owing to this your company marks a fall in salesduring the FY 2016-17 witnessing high return of sales from market adding burden totransport overheads. This coupled with the finance cost further led to a loss of Rs.15.01Cr for the fiscal 2017.
Your company has taken the necessary corrective actions to control and avoid furtherlosses; and taking each and every decision very carefully. Continuous efforts are taken toplace your company in a very comfortable position in terms of reputation revenuegeneration and attractive returns to your investment.
I believe and hope you also agree that only profit earning cannot be the benchmark forthe company's performance evaluation. There are other factors also which has to beconsidered while evaluating performance of the company.
On the brighter side I am glad to inform you that the sale of our BT Cotton hasincreased three folds in the FY 16-17 owing to tremendous positive response from farmers.I am confident to generate 30% of the revenue from BT Cotton sale in FY 2017-18. We haveput these two Hybrids in four states & as on date the crop is of 75 days. The farmersare very happy with the initial reports. These Hybrids have the potential to turn aroundthe company single handedly.
I also wish to share with you that out of the four released unique hybrids of Maize(Corn) RJ 2020 has been "Notified" by Indian Council of Agricultural Research(ICAR) Government of India for its consistent performance over the other Competitors'hybrids. This hybrid along with other three hybrids will contribute 30% of the revenue ofthe Company in Kharif and Rabi Season.
Another good news is about our R&D Head at Hyderabad Dr. Narendra Kulkarnieminent Rice Breeder & Senior Scientist. Dr. Kulkarni has been awarded Best ScientistAward by the Indian Institute of Rice Research GOI. He has been working on Rice for last35 years in Rice Breeding & he has released many elite varieties & hybrids of Riceand Maize. Many of them have topped in all India trials. We are very proud to have him inRJ Bio-Tech family.
I would also like to highlight on your company's contribution in R&D to strengthenits base. Your company RJ Bio-Tech has spent almost 20 Cr. of rupees on research forproduct development and consistently working on crop improvement with the team of ourrenowned scientists and senior breeders assisted by Jr. Breeders.
In vegetable segment our R&D team has released a Chilly hybrid"Sanjeevani" five years ago and now it has become farmers' choice in Chillygrowing area of Andhra Pradesh and Telangana. It would be one of the top Grossers in thesegment. Similarly other vegetable products are also catching market and I am hopeful thatthe Vegetable segment will contribute to 20% to revenue of the Company. The growth of thecompany is sustainable.
Your company is in talks with top Indian conglomerates for supplying our Rice andCotton products developed by our R &D and are expected to be marketed by them once thetrails are successful during coming season. These companies currently don't have Rice& Cotton in their product basket.
The Union Budget 2017 has been very encouraging for the farming community as theCentral government has allocated Rs.1.87 lac Cr. towards rural agricultural and alliedsectors to achieve the target of doubling their income in next five years. Higher credittarget enhances the access to funds for the farming community. Additionally increasedallocations towards irrigation programmes would have an impact over long term withcreation of such infrastructure reducing dependence on monsoons. The Centre has alsoenhanced focus on Crop Insurance which will secure their crop from natural calamities andmake them financially stable. All these factors will motivate the farming community toconfidently carry out the farming activities. This will create more demand for the highyielding and improved seeds and will help in boosting the sale of your company. Secondlythe post demonetization effect is expected to bring long-term benefits by growth ineconomy between 6.75% and 7.5% in 2017-18.
Your company continues to strengthen its bond with the Distributors and Dealers networkin the operating states represented by experienced marketing team of your company. Thecompany also continues to take promotional activities by organizing field day and otherrelated activities at village level for deep penetration in the market to boost the sales.Your company also fulfills its Corporate Social Responsibility (CSR) by organizing blooddonation camp with enthusiastic participation of voluntary donors to help the needypatients.
Your Company has been on a continuous basis reviewing and streamlining its variousoperational and business risks involved in its business though we are bound to bend beforethe Nature.
Finally I would like to thank you for your faith and confidence in the Company. Iwould also like to thank the government distributors and dealers farmers for theircontinued support to the Company and also to the dedicated employees all being biggeststrengths for your company.
Yours sincerely Sd/-