28 May, 11:49 - Indian

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companylogoShiva Global Agro Industries Ltd

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BSE Code : 530433 | NSE Symbol : | ISIN : INE960E01019 | Industry : Fertilizers |


Chairman's Speech

Chairmans Message

Fertilizer is an integral part of agriculture. It provides a crucial input in enhancing agriculture productivity. Sustainable agriculture is not possible without sustenance of the growth of the fertilizer sector. Further the food security for a country like India can never be an outdated issue. Fertilizer security is the pre-requisite for food security.

Indian agriculture is not growing at the desired pace in the last few years. There is very little scope to increase area under cultivation. Therefore increase in agricultural production has to come from improvement in crop productivity per unit of land. Towards this, 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 nutrient management.

The year gone witnessed a good agricultural season, infact one of the good seasons which the country has seen. The food grains production was 259 million tonnes which was the highest since 1947. This was possible due to good monsoon rains and high water level in major reservoirs of the country. But this output is much lower than the 450 million tonnes 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 be blot out. Fertilizer, being one of the important agricultural inputs can never be ignored for its contribution in the success story.

Despite the increase in the consumption of fertilizers in last few years, the consumption pattern of the fertilizers remains skewed. The unbalanced consumption, biased towards urea consumption needs immediate reform to enable balanced fertilization. Looking forward to the potentials in agricultural production, the balanced policy or reform necessitates the situation.

Lowering current assets was another challenge during the year leading to increasing finance costs. Roll over of unpaid subsidy to the next year resulted in escalating unpaid subsidy and consequently increased the finance cost.

For continuous and reliable operation, health of plant and machinery needs to be in excellent condition. We continued the upgradation and modernization of the plant and machineries through replacement of equipments and installation of the latest manufacturing facilities to improve reliability of plant operation and achieve higher operating efficiency.

On the seed front, the success story of our BT cotton remained in the market. Our differentiated and high-yielding seeds portfolio and ongoing research to provide quality seeds improved the market share. Though the season was good, it did not favour the market served by our company.

There was no remarkable achievement in the seed business, but the fact we survived in the industry gives new hopes for the upcoming seasons. Our R&D team works closely with farmers in different regions to recognize and understand their needs and deliver customized solutions using our wide range of seeds and soil health products.

Despite exposure to volatility in commodity as well as currency fronts, the solvent division has given increased contribution, due to its ability to procure adequate seed for its crushing and manufacturing requirements. Considering the demand for DOC and increased consumption of soya oil, better potentials are projected in the industry.

The new government has expressed its commitment to bring about sustainable and inclusive growth. To build a strong India, it aims to usher the economy to a higher pedestal, rein in inflation, reduce current account deficit, reignite the investment cycle and restore the confidence of domestic and international communities in the national economy. A series of measures and reforms to help Indian economy achieve its potential of high growth are on cards.

In order to help Indian farmers and improve their lives, we continued offering our bio fertilizers & growth stimulants. Appreciating the initiative of the new government to provide soil health cards to all farmers in the country, we, through, all our endeavors continued educating farmers so as to encourage soil specific crop pattern and use of quality seeds & fertilizers to increase the farm productivity.

As mentioned in my previous communication, we have initiated the steps to set up additional manufacturing facilities in other parts of the country. We express our gratitude to all our stakeholders including shareholders, customers, bankers, and farmers for their unstinted support and contribution which we value the most.

With warm regards,

Omprakash K. Gilda

Founder and Chairman

Director’s Message

The year gone was again beset with challenges. Nevertheless, a spell of global financial turbulence caused capital outflows and pressure on the exchange rate, but strong policy measures stabilized the currency, rebuilt reserves and narrowed the excessive current account deficit. In financial year 2013-14 the global economy showed signs of recovery. The overall agricultural GDP growth is estimated at 4.6% as compared with 4% in the previous year. However, the domestic macroeconomic environment still remains challenging.

During the year, the company’s production of SSP has fallen by 27% as compared to last year and the production of NPK fertilizer has risen by 26% whereas the sales volume of SSP decreased by 24% and the same is increased by 56% in case of NPK. Your company entered into marketing arrangement, whereby the company’s manufactured fertilizer would be sold by another company in the market, enabling the company to share marketing network of another company and increase its own marketing share.

Despite the economic slowdown and other challenges, the EBITDA percentage in relation to sales increaded to 10.95% against 9.55% of previous year. I am pleased to report that, The Company’s consolidated turnover increased from Rs. 518.07 crores in previous year to Rs.526.15 crores in current year. The profits before tax of the consolidated entity stood 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 through our subsidiary Kirtiman Agro to Indian farming community. In a short span of time, Kirtiman Agro has smartly ramped up its market presence. The company failed to achieve the targeted 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. Our research variety paddy seeds namely Mugdha, Hina & Kanchan were again falling short in supply 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 the consolidated entity. Looking forward to the good monsoon and estimates of increase in yield of oil seeds throughout the country, better results from the solvent business is expected in the coming year.

Industry continues to operate in the highly regulated environment. With the expansion of production capacity in the country, due to entry of 5 new SSP plants in India, the more challenges are expected in the coming years. The previous government expressed its intention to pay subsidy direct to the farmers. Industry had welcomed it because industry wants to operate in free and competitive environment. Industry is performing onerous duty of reaching fertilizers to 138 million farmers at subsidized prices in every nook and corner of the country. Your company always strives for the farming community. In order to address more members of the farming community, we have already stepped up in new markets crossing the limits of the state of Maharashtra. This year was the beginning with a small portion of the production being offered to the states of Karnataka.

The SSP fertilizer plants operated at a lower capacity throughout the country. The major drawback for the industry is its high dependence on imported raw materials and intermediates. This exposes the industry to the vagaries of international market. Securing consistent quality of rock phosphate remains a challenge. Indian fertilizer companies are importing rock phosphate from more than 10 different countries. Variation in quality of rock phosphate affects the operation of phosphatic plants. Plants are blending various grades of rock phosphate to optimize operational efficiency. Further, the high international prices of raw materials and declining demand of phosphatic and complex fertilizers resulted in low production levels. In spite of these challenges, your company has invested heavily in improving operational efficiency and improvement in environment.

As reported in my previous communication, the MOU with The M. P. State Mining Corporation Ltd. and the plan to set up BRP and SSP plants in the state of Madhya Pradesh, were further moved forward with effective steps during the current year to realize the plans and promises. Some further approvals of governmental agencies were received and some are in progress. We expect to commence operations in our first plant in Madhya Pradesh within next couple of years.

With the object to educate farmers to adopt quality seeds and use of soil specific fertilizers, we continued educating farmers about the fertilizer best management practices. We found Indian farmers are very proactive and they will certainly adopt any innovative technique provided it is remunerative.

We hope that the new government will see the reason and bring reform in the sector and make requisite allocation for fertilizer subsidy as determined by the prevailing pricing policies. With the support of Government and all stakeholders especially farmers, your company would march ahead successfully from strength to strength.

With warm regards,

Deepak S. Maliwal

Director

   

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