Finly July 2022

FINLY JULY 2022 | Issue No. 112

Oil Prices & Production Increase by OPEC Intriguing Indeed

Sector Analysis

Eco Section

Terra Luna Downfall

Agriculture Industry

Pakistan Economic Crisis

CONTENTS 01

02

EDI TO R I AL

TEAM F I N L Y

04

07

C O VER ST O R Y

EC O SEC TI O N

Oil Prices & Production Increase by OPEC

Pakistan Economic Crisis

10

14

SEC TO R ANAL YSIS

C O MP AN Y AN AL YSI S

Agriculture Industry

Godrej Agrovet Ltd

18

22

I N TR IG U IN G IN D EED

EN TR EP R EN EU R SH I P I N N O VAT I O N

Terra Luna Downfall

Aarogya AI

25

27

R EAD ER 'S C H O I C E

C AL L F O R AR T I C L E: WI N N ER

The Cause & Effect of India's Rising Inflation

Harshit Pansari

27 C ALL F O R AR T I C L E: R U N N ER U P

Disha Dua

ISSUE NO. 112, JULY 2022

Dear Readers,

Editor's Note

“Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next. We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks and dead ideas, our dead rivers and smoky skies behind us. Or we can walk through lightly, with little luggage, ready to imagine another world. And ready to fight for it.” - Arundhati Roy This pandemic is an opportunity to expand our knowledge by finding new ways to circumvent the circumstances, invest in the most intuitive ideas that come to our mind and surpass this havoc. As Ben Franklin rightly said, “An investment in knowledge always pays the best interest,” we at Finstreet are back with the next edition of our monthly magazine “Finly” for the academic year 2022-23.

Team FINLY has always been a dedicated group of people who put in a lot of time and effort to put this magazine together, and we can't thank them enough for their unwavering support and initiative.

The July 2022 edition's cover story revolves around "Oil Prices & Production Increase by OPEC". The eco section describes the current situation of Pakistan Economic Crisis. Further, the Intriguing Indeed section delves into the concept of Terra Luna Downfall.

We are thankful to Prof. (Dr.) Pankaj Trivedi (Course Coordinator, MBA Core and Faculty Coordinator, Finstreet) for providing the much-required mentoring, support and backing to the Finly team.

HAPPY READING!!!

Moumita Biswas

Gaurav Bavkar

|Editor-in-Chief|

|Editor-Finly|

MBA A

MBA B

01

ISSUE NO. 112, JULY 2022

TEAM FINLY Faculty in-charge

Dr. (Prof) Pankaj Trivedi

Editing Team Editor-in-Chief

Editor - FINLY

Moumita Biswas

Gaurav Bavkar

Team Coordinator

Yash Duggal

Conceptualization & Design

Yash Duggal

Aman Pathak

02

Content Team

Anubhav Sood

Sudeshna Sur

Aditya Shukla

Uday Sardana

Aarohi Pandey

Vinay Kumar

Rishika Jain

Natania Mahipal

Gaurav Bavkar

Kamlesh Jain

Anshul Sharma

Paras Lodaya

03

| COVER STORY

OIL PRICES AND PRODUCTION INCREASE BY OPEC Anubhav Sood| MBA-B | 2021-23 Sudeshna Sur | MBA- C | 2021-23

WHAT IS CRUDE OIL? Crude oil is a natural petroleum product made up of hydrocarbon deposits along with other organic materials. Crude oil, a type of fossil fuel, is refined to produce products that include gasoline, diesel, and various other forms of petrochemicals. It is a non-renewable resource meaning it can't be replaced naturally at the rate we consume it and therefore is a limited resource.

Crude oil is mainly obtained through drilling, usually found with other resources, such as natural gas and saline water.

After extraction, crude oil is refined and processed into a variety of forms, such as gasoline, kerosene, and asphalt, for sale to consumers.

Although called "black gold," crude oil can vary in color from black to yellow depending

on its hydrocarbon composition. Distillation is the first stage in refining the oil.

Although fossil fuels have been harvested for centuries, for example, coal, crude oil was first discovered and developed during the Industrial Revolution.

WHO PRODUCES THE MAXIMUM OIL? The United States, Saudi Arabia, and Russia are the leading producers of crude oil in the world.

Saudi Arabia has 17% of the world’s proven crude oil reserves, second largest in the world. Saudi Arabia is a founder member of OPEC and contributes 22.4% to its current share. As seen in the table above, the US is the largest oil producer in the world alongside being one of the largest oil consumers. Russia along with the US and Saudi Arabia together make up for around

04

| COVER STORY 42% of the world’s oil production.

Sanctions on Russia after the Ukraine-Russia war and aggression by Russia have put global oil prices on a boil with prices nearing all-time highs and are being traded above $110/per barrel constantly. The same has impacted the prices of goods and commodities globally adding up to increasing inflation.

two classifications described above. Light crude is easier to refine and provides more high-quality gasoline and diesel fuel in larger volumes. At room temperature, it also flows smoothly. The more dense and heavier the oil, the more difficult it is to transport.

Bitumen is a term used to describe exceptionally heavy crude oil. It's so thick that it has to be diluted before being transported.

WHY IS OIL SO IMPORTANT? Universally, crude oil is one of the main fuel sources and, by and large, has added to over 33% of the world's energy utilization.

Exploring, separating, shipping, and refining unrefined oil is a long cycle, and the framework expected to help the interaction should be set up. This includes a great many miles of oil pipelines spread across nations, storage spaces in significant oil exchanging centres, and numerous processing plants.

Oil is particularly essential to organizations that have significant dependency on fuel, like airlines, plastic makers, and agrarian organizations. Being a particularly significant energy source, crude is a significant import and export product of various nations. The significance of this commodity creates a vast financial trading market for oil and oil derivatives such as futures, forwards, and options.

HOW ARE OIL PRICES DECIDED? Crude oil prices are largely influenced by the

Source: U.S. eia Sulfur concentration is also crucial in determining the quality of oil and, as a result, its price. Sulfur must be eliminated throughout the refining process, as previously stated. Transporting and working with the crude becomes more difficult when there is a lot of sulphur content. As a result, sweet oil is often more expensive than sour crude.

The most desirable crude oil is light, sweet crude oil. However, another key factor influences crude oil prices: the extraction location. It is significantly easier to transport crude oil around the world if it is extracted near the ocean. If it is to be transported globally, it must be extracted further inland

05

| COVER STORY and delivered by pipeline systems refineries and, eventually, to the ocean.

to

In order to determine the price of crude oil, oil benchmarks are used as a pricing tool.

The most commonly used benchmarks are West Texas Intermediate oil and Brent.

HOW OPEC+ PRICES?

PRODUCTION

IMPACTS

since not cooled down and is still on the boil, with Brent crude prices hovering near $120/per barrel consistently.

No action by OPEC for production increase, and subdued demand in China due to lockdowns have kept the Oil prices still north of $120/per barrel for crude oil.

OIL

Organization of the Petroleum Exporting Countries was originally formed in the year 1960 which included the gulf countries and today has 14 member countries including Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela (the five founders), plus Algeria, Angola, Congo, Equatorial Guinea, Gabon, Libya, Nigeria, the United Arab Emirates.

OPEC's main goal is to maintain oil prices at a profitable level for its members while keeping the market as free as possible from restrictions. The organization ensures its members receive a steady stream of income from an uninterrupted supply of oil.

PRODUCTION INCREASE BY OPEC+ The OPEC oil cartel decided to increase the production of crude oil by 648000 barrels per day in July and August 2021 to ease climbing prices, such moves by OPEC are well known for controlling oil prices. These oil prices again spiked due to Russia’s invasion of Ukraine on February 24. US crude oil prices rose by 54%, while international crude pricesrose by 54%, while international crude prices went up 40%. This oil price rise has

Source: U.S. eia

FORECAST With the decrease in the production of Russian oil as sanctions increase for Russia and economies move away from using Russian Oil and a pickup in demand in emerging markets a has given signs of no relief on oil prices in the near future.

Economists have predicted the oil prices to touch $140/per barrel to $150/per barrel in the near future.

Oil-producing nations alongside world economies need to address this grave situation as the increase in inflation due to excess currency printing by central banks during the COVID-19 crisis and tightening the monetary policy by central banks to control inflation is hampered by current oil prices and are posing the risk of global recession.

06

| ECO SECTION

PAKISTAN ECONOMIC CRISIS Aditya Shukla | MBA - FS | 2021-23 Uday Sardana | MBA - C | 2021-23 Pakistan is teetering on the brink of a major calamity. A long-running political crisis is going on in which Imran Khan refused to step down as prime minister until he had no choice and Shehbaz Sharif was sworn in. However, the country is presently amid a severe economic downturn. Pakistan’s high level of debt has rendered it more vulnerable to economic shocks and weakened it politically in the eyes of international lenders.

SO, WHAT EXACTLY IS THE CURRENT ECONOMIC SITUATION?

-ion at the same time during the previous year. According to the International Monetary Fund, Pakistan’s current account deficit is expected to rise from 0.6 percent of GDP in 2020-21 to 5.3 percent of GDP in 202122. With an external public debt of over USD 90 billion, Pakistan is clearly approaching a financial disaster.

COUNTRY’S

Pakistan is in the midst of a balance-ofpayments problem. Its currency is under strain, reserves are at risk, and a rising current account deficit threatens to bring the country to its knees. According to the Pakistan Bureau of Statistics, retail inflation in March 2022 was 12.7 percent, with perishable food goods seeing a 30 percent increase.

The country’s current account deficit has increased to $13.17 billion, up from $275 mill-

Source: Tribune.com

The Pakistani rupee’s continued devaluation versus the US dollar has added to the country’s mounting external debt. Pakistan’s currency has plummeted roughly 8% in the last month, according to Bloomberg

07

| ECO SECTION

statistics compiled from 13 countries, making it Asia’s worst performer. The Pakistani rupee has dropped to a new low, with one dollar currently worth 203 rupees.

Pakistan’s foreign exchange reserves are also dwindling, with current reserves falling below $11 billion for the first time in 28 months. In less than a year, they’ve decreased by half.

According to official estimates, the SBP’s reserves are only adequate to cover imports for 1.54 months. The foreign exchange reserves are declining as a result of twin deficit inflation, a shortage of foreign currency inflows, and a steep increase in foreign debt payment liabilities.

The budget deficit is exploding and may exceed the previous administration’s forecasts of little more than 6% of GDP. Reserves have been depleted. However, according to the State Bank of Pakistan (SBP), the country’s central bank, Pakistan’s foreign finance needs for the current fiscal year are “completely covered from known sources.”

There is no doubt that the economy is in serious trouble and that it is in a worse state than when the PTI (Pakistan Tehreek-e-Insaf) took office. The IMF’s decision to delay the $1 billion tranche due to the previous government’s third tax amnesty for the wealthiest and political upheaval in the country has exacerbated the problem. China is taking its time refinancing its almost $2.5 billion debt until the political dust settles. Given the government’s pledge to honour its commitments to the IMF and the extension of its loan by China, the reserves are expected to

grow once the IMF returns as scheduled.

The country is frantically negotiating a bailout package with the IMF and other countries to keep its economy afloat and avoid default. Receiving an IMF loan, however, comes with a long list of requirements, including reducing the budget deficit, improving banking and tax legislation, strengthening the social safety net for poor households, phasing out electricity subsidies, and reducing the federal bank’s foreign exchange market intervention, all of which Pakistan has previously struggled to meet. Pakistan has requested a bailout from the International Monetary Fund (IMF) 22 times in the past; however, they continue to return, as serious reform efforts have been missing.

BUT WHAT RESULTED IN SUCH A WEAK STATE OF PAKISTAN’S ECONOMIC AFFAIRS? Pakistan’s current economic problem is primarily due to the country’s excessive spending on non-developmental and economically unviable projects. Experts have mentioned failed infrastructure projects like the Gwadar-Kashgar Railway Line Project, which were financed with longterm debt instruments and heavily reliant on external borrowing rather than domestic institutions. All of this has exacerbated Pakistan’s problems. The China-Pakistan Economic Corridor’s (CPEC) construction raised Pakistan’s debt burden, opening the door to ever-increasing external borrowing.

CPEC also resulted in a $64 billion Chinese loan to Pakistan, which was previously

08

| ECO SECTION

assessed at $47 billion in 2014.

Low investments have been another reason for such a weak state of affairs. In the last 30 years, both public and private investment has declined in Pakistan. But nothing has been done to correct it.

Investment in manufacturing is shockingly low at 1.5 percent of GDP. As a result, export as a percent of GDP has declined. That figure stood at 19 percent of GDP in 1990. It is now 8.5 percent. In some respects, the current account crisis is the other side of the coin of underinvestment.

SO, WHAT CAN PAKISTAN DO TO GET OUT OF SUCH A SITUATION? The first thing is political stability, without which governments cannot meaningfully begin a reform program.

Pakistan will require $36 billion to $37 billion in financing for the fiscal year beginning in June. Pakistan’s international bonds have lost a third of their value, and the country is unable to repay its foreign loans. The only way out is to keep inflation under control.

However, with the government promising steep price hikes in critical products, that does not appear to be a realistic prospect in the near future. The government of Shehbaz Sharif has raised petrol and diesel prices by 30 Pakistani rupees per litre, resulting in a rise in the country’s production costs.

The government must initiate changes to restructure the economy for a sustainable turnaround in the longer term. One hopes it doesn’t resort to populist moves ahead of the elections.

The government must not just rely on indirect taxes to manage the budget deficit. The government of Pakistan has limited the discussion about increasing revenue through indirect taxes such as higher petroleum levy, GST, and import tariffs. This is understandable as each government wishes to stay in power, and raising indirect taxes would harm political stability. Yet, despite lip service in every budget speech to increase direct taxes, its ratio is no better and has gone down lately.

The contribution of indirect taxes is about twice as much as direct taxes. Extensive tax exemptions, favourable rates, and tax evasion prevent an increase in the share of direct taxes. The ordinary person is expected to keep funding the large budget deficit.

09

| SECTOR ANALYSIS

AGRICULTURE SECTOR Arohi Pandey| MBA-B| 2021-23 Vinay Kumar| MBA- IB| 2021 - 23 OVERVIEW Agriculture is the primary source of income for 54.6 percent of the population in India.

Agriculture and Allied Sectors account for 18.8% of total GVA (at current prices) according to the first advance estimates of National Income for FY22. Agriculture and related activities grew at a constant price rate of 3.6 percent in FY21.

When compared to FY21, the agriculture sector's Gross Value Added increased by 4.5 percent from April to June 2021. Budgetary allocations for the Ministry of Agriculture and Farmers Welfare have been increased from Rs. 1.25 lakh crore (US$ 16.20 billion) in 2020-21 to Rs. 1.32 lakh crore (US$ 17.28 billion) in 2021-22. Exports of agricultural and processed food products totalled $15.02 billion from April to November 2021.

The Indian agricultural sector is expected to grow to US$ 24 billion by 2025, according to

Inc42. Seed production by the private sector climbed from 57.28 percent in 2017 to 64.46 percent in FY21.

MARKET SIZE The Indian government has set a target for farmers to increase food grain production by 2% in FY22, resulting in 307.31 million tonnes of food grains. Production was 303.34 million tonnes in FY21, compared to a target of 301 million tonnes.

India is one of the top 15 agricultural commodity exporters in the world. India's agricultural exports totalled US$ 38.54 billion in the fiscal year 2019 and US$ 35.09 billion in the fiscal year 2020.

Rice, wheat, sugarcane, cotton, groundnuts, and fruits and vegetables are among India's top exports. From the last decade to 2019, it also produced 25% of the world's pulses.

10

| SECTOR ANALYSIS dietary and nutritional demands has increased demand for vegetables, according to the Indian Council of Agricultural Research (ICAR). This has resulted in a rise in vegetable production.

Per capita gross vegetable availability in India grew from 378.1 grammes per day to 388.7 grammes per day, according to the Ministry of Agriculture and Farmers

Source: IBEF

KEY MARKET TRENDS Favourable government encouraging market growth

policies

The Indian government has played a significant influence in the development of the country's agricultural sector. The Paramparagat Krishi Vikas Yojana (PKVY) scheme, which encourages and helps farmers to grow organic vegetables, received USD 505.1 million in 2018.

Pesticides and residues will not be present in the produce, resulting in better consumer health. As a result, the country's agricultural development will be aided by sustainable agricultural techniques.

Welfare (India); DES (India). This suggests that both the supply of vegetables and the pattern of consumption are increasing.

Exotic veggies such as mushrooms, green olives, fresh broccoli, and a range of other things have recently gained favour among Indian city dwellers and gourmet hotels.

Source: APEDA

As per the APEDA report, India exported fruits and vegetables worth USD 1,342.14 million in 2020-21, with fruits worth USD 674.53 million and vegetables worth USD 667.61 million.

INCREASING DEMAND FOR VEGETABLES Raised knowledge of the necessity of consuming vegetables to meet various

Source: FAO

11

| SECTOR ANALYSIS

GOVERNMENT INITIATIVES The government initiatives taken recently in the sector are as follows:

Source: APEDA

MARKET SEGMENTATION The market is categorized based on crop seasonality, crop type, application and distribution channel.

INVESTMENT Some major investments and developments in agriculture are as follows: India received ~US$ 1 billion in agritech funding from 2017 to 2020. With significant interest from the investors, India ranks third in terms of agritech funding and number of agritech start-ups. It is expected that by 2025, Indian agritech companies shall witness investments worth US$ 30-35 billion.

The oldest large-scale fertilizer manufacturer in India, crossed one million production and sales mark in March 2020.

Nestle India has planned on investing Rs. 700 crore (US$ 100.16 million) in the construction of its ninth factory in Gujarat.

Investments worth Rs. 8,500 crore (US$ 1.19 billion) have been announced in India for ethanol production.

The budget of Ministry of Agriculture and Farmers Welfare has been enhanced from Rs. 1.25 lakh crore (US$16.20 billion) in 2020-21 to Rs. 1.32 lakh crore (US$ 17.28 billion) in 2021-22. the Union Ministry of Agriculture and Farmers Welfare in October 2021 announced that 820,600 seed mini-kits will be distributed under a special programme. This programme is likely to boost production and productivity by speeding up the seed replacement rate and subsequently, help in increasing farmer’s income.

Prime Minister Mr. Narendra Modi in September 2021 launched 35 crop varieties with special traits such as climate resilience and higher nutrient content.

Rs. 4,000 crore (US$ 551.08 million) was allocated towards implementing Pradhan Mantri Krishi Sinchayee Yojana (PMKSY-PDMC) under the Union Budget 2021-2022.

Under Pradhan Mantri Formalisation of Micro Food Processing Enterprises (PM FME), an outlay of Rs. 10,000 crore (US$ 1.34 billion) over a period of five years from FY21 to FY25 has been sanctioned.

12

| SECTOR ANALYSIS

ACHIEVEMENTS IN THE SECTOR The total rabi area stood at 0.53 lakh hectares as recorded on October 27, 2021.

The first commercial consignment of Kashmir's Mishri cherry was shipped to Dubai in July 2021, this paved the way to boost horticulture crop exports.

India exported 24 metric tonnes of groundnuts to Nepal in June 2021 from West Bengal, with the aim of boosting groundnut exports from Eastern India.

India exported 1.91 lakh tonnes of bananas in FY21 which was worth Rs. 619 crore (US$ 82.90 million).

The principal commodities that posted significant positive growth in exports between FY20 and FY21 were the following: Wheat and Other Cereals: 727% from Rs. 3,708 crore (US$ 505 million) to Rs. 5,860 crore (US$ 799 million) Non-Basmati Rice: 132% from Rs. 13,130 crore (US$ 1,789) to Rs. 30,277 crore (US$ 4,126 million) Soya Meal: 132% from Rs. 3,087 crore (US$ 421 million) to Rs. 7,224 crore (US$ 984 million) Sugar: 39.6% from Rs. 12,226 crore (US$ 1,666 million) to Rs. 17,072

Spices: 11.5% from Rs. 23,562 crore (US$ 3,211 million) to Rs. 26,257 crore (US$ 3,578 million) ROAD AHEAD By 2022, India is predicted to have achieved the lofty aim of doubling farm revenue.

Increased investment in agricultural infrastructure, such as irrigation facilities, warehousing, and cold storage, is predicted to boost India's agriculture sector in the coming years. In addition the increased usage of genetically modified crops is expected to boost yields for Indian farmers. Due to a concerted effort by scientists to obtain early maturing types of pulses and a rise in the minimum support price, India is likely to become self-sufficient in pulses in the future years.

Under the PM Matsya Sampada Yojana, the central government plans to invest $9 billion in the fisheries sector over the next five years.

By 2024-25, the government wants to increase fish production to 220 lakh tonnes.

The food processing industry will benefit from the adoption of food safety and quality assurance mechanisms such as Total Quality Management (TQM), which includes ISO 9000, ISO 22000, Hazard Analysis and Critical Control Points (HACCP), Good Manufacturing Practices (GMP), and Good Hygienic Practices (GHP). By 2022, India's agricultural exports are expected to reach a target of US$ 60 billion.

crore (US$ 2,327 million)

13

| COMPANY ANALYSIS

GODREJ AGROVET LTD. Rishika Jain | MBA - D | 2021-23 Natania Mahipal | MBA - IB | 2021-23 COMPANY'S OVERVIEW Godrej Agrovet is a food and Agri conglomerate, dedicated to improving the productivity of Indian farmers by innovating products and services that sustainably increase crop and livestock yields. The Company holds leading market positions in the different businesses in which it operates - Animal Feed Crop Protection Oil Palm Dairy and Poultry and Processed Foods’ has a pan India presence with sales of over a million tons annually of high-quality feed and cutting-edge nutrition products for cattle poultry aqua feed and speciality feed.

HISTORY Godrej Agrovet Limited was incorporated as a private limited company with the name 'Godrej Agrovet Private Limited' on November 25 1991 in the state of Gujarat.

The company became a deemed public limited company and the word 'private' was struck off from the name of the

Company with effect from April 27, 1992.

In 1992 the company acquired the agro vet division of Godrej Soaps Limited.

In 1997 the company acquired the oil palm business from Godrej Soaps Limited. In 1999 the company acquired the poultry business from IPF Breeders Private Limited. The company was converted into a public limited company and the name of the company was changed to Godrej Agrovet Limited' on February 19, 2002.

In 2004 the company entered into a joint venture with the Advanced Chemical Industries Limited (ACI) Group from Bangladesh to manufacture and sell Compound Feed. The ACI-Godrej Agrovet joint venture ranks among the top three feed companies across all categories in Bangladesh. The company entered the dairy business with the acquisition of a 26% equity interest in Cream line Dairy Products Limited in 2005.

14

| COMPANY ANALYSIS In 2012 V-Sciences Invested in Godrej Agrovet Limited by acquiring a 19.99% equity stake. In 2015 Godrej Agrovet acquired promoter holding in Astec Life Sciences Limited. Aztec is a business-tobusiness tech bulk manufacturer of fungicides in India. It also has a contract manufacturing presence and counts multinational agro chemical companies like Sumitomo and Nufarm among its clients. It has established a successful track record in nurturing stable and longterm relationships with highly reputed companies in the U.S.A. Europe West Asia southeast Asia and Latin America. During the year under review, Godrej Agrovet increased its stake from 26% to 52% in Cream line Dairy.

In 2016 Godrej Agrovet sold its 26% stake in Polchem Hygiene Laboratories Private Limited. The company came out with an initial public offer (IPO) the period from 4 October 2017 to 6 October 2017. The IPO comprised of fresh issue of Rs 291.51 crore.

The IPO also comprised of an offer for sale of 1.23 crore shares by V-Sciences Investments Pte Ltd (an indirect whollyowned subsidiary of Temasek Holdings (Private) Limited) and an offer for sale of Rs 300 crore Godrej Industries.

The stock debuted at Rs 621 on BSE on 16 October 2017 a premium of 35% compared to the IPO price of Rs 460 per share. On 23 January 2018 Godrej Agrovet announced that Maxximilk Private Limited had also allotted 2.16 % of the Equity Share Capital to Anamudi Real Estates LLP on a Preferential Basis.

Consequently, the shareholding of Godrej Agrovet Limited in Maxximilk Private Limited on 18 January 2018 was less than 50% instead of 51% as informed earlier vide letter dated 18 January 2018. Hence Maxximilk Private Limited is not a subsidiary of Godrej Agrovet Limited.

Source: Screener.in

CORPORATE FINANCE The Company is a part of the 123- year- old Godrej Group, which has established a reputation for honesty, integrity, and sound governance. The Company’s philosophy on corporate governance envisages the attainment of the highest levels of transparency, accountability, and equity in all facets of its operations and interactions with its stakeholders, including shareholders, employees, lenders, and the government. The Company is committed to achieving and maintaining the highest standards of corporate governance. The Company believes that all its actions must serve the underlying goal of enhancing the overall stakeholder value over a sustained period.

15

| COMPANY ANALYSIS For the fiscal year ending 31-Mar-2021, Godrej Agrovet Ltd.'s primary products/revenue segments include Animal Feed, Oil Vegetable, Crop Protection, Other Operating Revenue, and others.

The company recorded a Consolidated Total Income of Rs 2,133.92 Crore for the quarter ended 31-03-2022, up 2.15 percent from the previous quarter’s Total Income of Rs 2,088.92 Crore and 44.93 percent from the previous year’s same quarter Total Income of Rs 1,472.39 Crore. In the most recent quarter, the company generated a net profit after tax of Rs 124.10 crore.

Strong year-on-year volume growth in Q4 and FY22, led by market share gains and innovative product development.

Rooftop solar panels at our animal feed plants in Bundi and Hanuman junction Oil palm plants use waste fruit bunches as renewable boiler fuel, resulting in a sustainable energy portfolio that accounts for 99 percent of total consumption.

FARMER INITIATIVES ASSISTED OVER 100,000 FARMERS IN INCREASING THEIR REVENUE. Third-party SROI (Social Return on Investment) study reveals that every rupee invested by GAVL creates more than three times social value Livelihoods initiatives have increased food security by over a month

Volume growth in all main feed categories – cattle (25 percent in Q4, 20 percent in FY), broiler (15 percent in Q4, 32 percent in FY), and layer (15 percent in Q4, 32 percent in FY) (28 percent in Q4, 26 percent in FY) Q4 FY22 segment performance was hurt by a rapid increase in key input commodity costs as well as limited transmission.

Segment results increased by 22.2 percent year on year in FY22 as a consequence of timely price increases, R&D benefits, and judicious stocking initiatives.

ESG INITIATIVES GAVL gets 69 percent of its energy from clean renewable energy programs.

Source: Screener.in

WATERSHEDS THAT HELP GAVL BECOME A WATER-POSITIVE ENTERPRISE 4,397 Ha of land covered, 2.96 lakh trees planted, 6.5 million m3 of water sequestered, or six times GAVL's footprint 2,911 households benefited, with 774 farmers receiving training.

16

| INTRIGUING INDEED

TERRA LUNAFINANCING DOWNFALL LITIGATION Gaurav Bavkar | MBA-B | 2021-2023 Kamlesh Jain | MBA-A | 2021-2023 Terra was created in 2018 by the team at Terraform Labs, founded by Do Kwon and Daniel Shin, with Do Kwon as the CEO. Terra, before its downfall, was one of the most ambitious crypto ecosystems with one critical mission - to build the largest algorithmic stablecoin. Terra was, in a way, created to provide an alternative to centralized stablecoins, and it grew to become 2nd largest blockchain by total value locked. LUNA debuted in 2019 and quickly became one of the most popular decentralized financial coins. It was once the seventh-largest cryptocurrency by market capitalization, according to CoinMarketCap. The project has piqued investors' interest because its market value has increased from $315 million on January 1, 2021, to about $35 billion by the end of the first quarter of 2022.

The Terra blockchain's goal was to create stablecoin, token designed to combine the decentralized freedom of cryptocurrencies with the stability of fiat money. The blockchain used a dual token system comprised of the stablecoin TerraUSD (UST)

and LUNA to accomplish this. UST is an algorithmic stablecoin, which maintains its peg to the US dollar through an arbitrage mechanism with LUNA. LUNA, also as a token, can be staked by validators to process network transactions and accrue rewards. The conventional way to implement stablecoin is to back it with an actual dollar and make it freely redeemable. However, an algorithmic stablecoin attempts to maintain its exchange rate with the dollar through an economic incentive system based on game theory. This prevents the need to hold physical US dollars, a purported trait.

Source: The Generalist

18

| INTRIGUING INDEED

USTs could be exchanged for LUNA after

THE CRASH

being minted by burning LUNA. If the UST value rose above $1, the equivalent amount of LUNA would be burned, creating more UST and making it less valuable. If the UST price fell below $1, they were exchanged for LUNA, making UST more valuable. This relationship has been compared to that of the Moon and the Earth, as both are dependent on each other for stability. Burning LUNA coins was critical

to

this

dynamic

because

it

incentivized users by giving LUNA value and, in theory, stability to UST. An

investor's

intention

to

hold

an

algorithmic stablecoin could be the ability to hold value in dollars without the authority of a centralized entity. Terra wanted to build a thriving ecosystem of financial applications with real-world payment integrations and incentivize people to hold and utilize UST; Terra provided yield.

It implemented this

Though the exact cause of the crash is still unknown, research shows multiple factors at play. Many small numbers of players identified shortcomings, most probably the low liquidity of the Curve pools securing UST's peg to other stablecoins and exploited them by withdrawing UST funds from the Anchor protocol on Terra, transferring it to Ethereum via the wormhole infrastructure (The Wormhole bridge facilitates transfers of tokens across multiple chains, including Ethereum, Solana, Terra, BNB Chain, Aurora, Polygon, Avalanche, Oasis, and Fantom) and taking benefit of any arbitrage opportunity present during the crash.

The aforementioned crash happened on May 11, 2022, but the signs were visible earlier. Large sums of money were being transferred to Ethereum.

through Anchor's savings protocol, which offered fixed 20% interest on UST. Adding to that, there was no cap on users withdrawing their money. These reasons that drove the exponential growth of UST would come back to become the final nail in the coffin. UST had over $18B in circulating supply at its peak, and Anchor had over $15B in Total Value Locked (TVL).

Terraform Labs also created the Luna Foundation

Guard

(LFG),

a

non-profit

foundation with the mandate of defending the UST peg. The LFG bought $3 billion of Bitcoin and planned to reach $10 billion.

Source: Goldman Sachs Global Investment Research

Subsequently, there was a bank run on Anchor, with users rushing to pull out their

19

| INTRIGUING INDEED funds and swap out of UST. The signs of the same could be viewed in the below price and volume chart of UST.

Source: Nansen

This selling pressure on UST led to a reflexive downwards spiral, commonly known as a death spiral. Arbitrageurs redeemed UST for LUNA, which they sold, leading to a significant decrease in its price, which necessitated more LUNA being minted for each UST burned, creating a hyper-inflationary loop in LUNA's supply, eventually leaving the token worthless.

20

| ENTREPRENEURSHIP INNOVATION

AAROGYA AI Anshul Sharma | MBA-C | 2021-2023 INTRODUCTION The two-year-old startup, which was named first on YourStory's Tech50 2021 list of most promising early-stage startups, combines genome sequencing and artificial intelligence (AI) to deliver the proper antibiotic combination for drug-resistant diseases such as tuberculosis (TB).

The startup, founded in 2019 by scientists Praapti Jayaswal and Avlokita Tiwari, has developed a SaaS (software-as-a-service) platform that allows patients to upload the DNA sequence from the bacteria infecting them, which is then analyzed using a machine learning (ML) algorithm and AI to generate a report that shows the patient's comprehensive drug susceptibility status.

A list of medicines and their combinations that will and will not work for the patient is included. Doctors can then use the information to prescribe a more effective

mix of antibiotics, dramatically reducing the treatment time to less than six months.

The software has passed internal validation and is now undergoing external validation and pilot testing. By the middle of 2022, it is projected to be available for commercial usage.

AarogyaAI was accelerated at Illumina Accelerator in San Francisco, USA, with the support of UKbased investor Entrepreneur First. In 2020, it raised a bridge through the accelerator.

ABOUT THE FOUNDERS Praapti, the CEO and co-founder of AarogyaAI, has worked as a researcher for over a decade at prestigious universities like All India Institute of Medical Sciences (AIIMS). She has a PhD in tuberculosis research from the Translational Health Science and Technology Institute (THSTI), New Delhi, and comes from a family of

21

| ENTREPRENEURSHIP INNOVATION (medical) professionals.

Praapti's co-founder Avlokita serves as a link between the company's "biology" and "technology." She has a master's degree in bioinformatics from the University of Turku in Finland and is knowledgeable in computational biology and genetic data.

The two had been friends since their research days at AIIMS in 2013. They reconnected in Bengaluru in 2019 over a "friendly cup of coffee" after pursuing their own career paths.

Praapti had begun developing the concept of integrating AI and bioinformatics for modern healthcare and patient Antimicrobial Resistance (AMR) predictions at the time. She was in Bengaluru for a "find a co-founder" meet as part of her six-month Entrepreneur First programme in the United Kingdom.

Surprisingly, her search led her to Avlokita, a bioinformatics expert who was going to return to Finland for work. She was asked to join the startup and help them turn the research into a commercial product.

BUSINESS MODEL AarogyaAI was accelerated at Illumina Accelerator in San Francisco, USA, with the support of Entrepreneur First. In 2020, it raised a bridge through the accelerator.

Its customers include diagnostic labs and hospitals, as well as pharmaceutical companies in the long run as it gathers more data to provide insights into antibiotic

research. It operates on a B2B2C (businessto-business-to-consumer) model.

The company will either charge a perdiagnostic-test price or create a subscription based business model. The goal, according to the founders, is to maintain the product as low-cost as feasible. With enough volume, pricing can be reduced. In the private sector, drug susceptibility testing (DST) costs around Rs 20,000. The startup is still in the prerevenue stage, with pre-deployment in Bengaluru and Jodhpur.

Many research tools, especially multinational ones, are capable of doing what AarogyaAI accomplishes. They haven't been validated or packaged as a product yet. There are few firms in France and the United States, such as GeneXpert and GenoScreen, but their technology is either not available in India yet or is not especially focused on tuberculosis.

The company is also working on dashboard analytics that display illness demographics, drug resistance dissemination, and emerging drug resistance patterns. It intends to charge a subscription fee for this service, which will be targeted at health organizations, hospitals, pharmaceutical businesses, and research institutions.

ROAD AHEAD The company is working toward its longterm objective of expanding the product's

22

| ENTREPRENEURSHIP INNOVATION capabilities to include other infectious diseases besides tuberculosis. It has received $700,000 in seed funding from Redstart Labs (India) Ltd, which is backed by Info Edge (India) Ltd, Avaana Capital (Seed Program), and current investors Entrepreneur First and First In Ventures. By 2022, it hopes to scale across India through five to seven public and three to four private chains, as well as expand to other nations where tuberculosis is a problem.

Other diseases are also being researched and proofs of concept are being developed by the startup.

AarogyaAI's diagnostic solution intends to fill a significant void in the healthcare industry. This breakthrough, which makes use of modern technology and whole genome sequencing, could help the medical community stay one step ahead in the fight against disease transmission. Consider the COVID-19 pandemic: it took us months to find out the impact, dissemination, mutations, and precautions, among other things. Pathogen genome sequencing and technology are intended to make predictions simple and speedy.

Source: Business Standard, Yourstory

23

| READER'S CHOICE

THE CAUSE AND EFFECT OF INDIA'S RISING INFLATION Paras Lodaya | MBA – A | 2021-2023 Inflation is the decline of purchasing power of a given currency over time. Inflation is a necessary evil--no one likes it, but it is needed for economic growth. Too much inflation can create significant problems for policymakers.

Inflation in India has now been rising in recent times. Retail inflation, calculated as the consumer price index (CPI), jumped to an 8-year high of 7.79% in April 2022, the highest since May 2014. The CPI Inflation numbers have now been above the upper limit of RBI of the 2% to 6% tolerance band for four

straight months. The wholesale price index (WPI), a proxy for producers' prices, climbed to 15.08% in April, the highest since 2005.

The causes for such high inflation areUkraine Conflict: Both Russia and Ukraine are significant exporters of Energy (Oil, coal, natural gas, etc.), commodities (Iron, platinum, steel, neon gas, etc.), and food (wheat, edible oil, corn, etc.). They contribute to about 25% of wheat exports and 65% of edible oil exports globally. Russia has been cut off from global trade due to export restrictions. Ukraine is facing massive production losses due to the war; hence, there is a shortage of essential commodities worldwide.

High Crude Oil Prices: The crude oil prices in all the benchmark indices, such as Brent and WTI, have been above the 100$ levels since late February 2022.

Source: Refinitive, Govt of India

24

| READER'S CHOICE OPEC, the cartel of oil-exporting nations, has been reluctant to increase crude production levels since the situation is in their favor. To soften the impact of high oil prices, India has now been purchasing discounted crude oil from Russia.

Expansionary Monetary and Fiscal Policies: Western nations' monetary and fiscal policies have been expansionary since 2020 to survive the COVID-19 pandemic. When the COVID-19 pandemic struck, the central banks of western countries resorted to quantitative easing (purchase of assets) and ensuring low interest-rate environments.

Their federal governments introduced fiscal stimulus and massive direct benefit transfers.

This has led to import-led inflation for developing countries such as India since more money is now chasing a limited quantity of goods, and developing countries need to compete for essential goods.

Supply chain disruptions: The COVID 19 pandemic has disrupted the production and distribution supply chains. There has

been

a

shortage

of

essential

commodities worldwide. Also, in 2022, China has enforced a strict lockdown in Shanghai due to its zero COVID policy, and it has led to container shortage as well as an exponential increase in freight rates since a significant amount of them are stuck at the ports.

Source: TOI, Ministry of Statistics, India

The effects of Inflation in India are clearly visible: Slowdown in Economic Growth: The most apparent impact of inflation is consumer expenditure. India is a consumer expenditure-driven economy where almost 60% of the economy is dependent on consumer expenditure.

Inflation has led to a decline in purchasing power of individuals, thereby leading to a slowdown in economic growth.

Increase in Monetary Policy Rates: The RBI, in an unscheduled meeting on May 4, had hiked the benchmark lending rates by 40 bps to 4.40% (Repo Rate), along with a 50-bps hike in the cash reserve ratio (CRR), signaling a hawkish tilt to its policy. The increase in monetary policy rates will slow down the flow of easy credit in the economy as well as reduce the discretionary expenditure of consumers, which will help in taming inflation.

25

| READER'S CHOICE Decline in Operating Margins of Corporates: The corporates in India have seen a decline in their operating and profit margins since they have been unable to pass the entire steep increase in the cost of the raw materials to consumers. To protect their margins, the companies, especially in the FMCG segment, are now resorting to shrinkflation, i.e., reducing the grammage size of packets while keeping the prices constant.

To reduce inflation, the Indian government has restricted wheat and sugar exports and imposed export duties on iron and steel product exports. Import duties have also been removed or reduced on imports of essential plastic products and edible oils.

However, the effects of these measures would become visible with a lag. It is vital to tame inflation; otherwise, it can easily lead to hyperinflation, as seen in the Weimar Republic, Zimbabwe, and Venezuela.

26

| CALL FOR ARTICLE: WINNER

THE RIPPLING EFFECT OF INDIA'S WHEAT EXPORT BAN Harshit Pansari | Shaheed Bhagat Singh College, Delhi Globalisation - A centuries old concept, to which the modern “Free India” became familiar with in 1991, with introduction of LPG policies. So, the ‘G’ here referred to the trade-off of goods and services across nations.

Those who had comparative advantage in producing one good could export it to other countries for a better price and in turn import other goods which the other nation might have an advantage in.

at various instances have hurt the economies of countries deeply. For India’s part, the instance of the 1965 war when the US threatened to cut the supply of wheat is a strong example.

Fast forward to 2022, India is the second largest producer of wheat and on 14th of May, the Government of India (GoI) astonished people all across the globe by putting a ban on exports of wheat, which without a doubt is an extremely essential commodity.

Interesting concept, right?

Well, as much interesting and beneficial this concept might sound, it came with its own set of intricacies. And when we talk about these intricacies, then “high interdependence” leads the table.

Globalisation made countries extremely dependent on each other and this in turn

Now before heading over to what happened next, let us first understand what inspired this move of GoI. So, starting off, India’s export touched 8.7 million tonnes during the previous fiscal year and before the ban India planned to ship 10 million tonnes.

What happened then? What led to this drastic change?

27

CALL FOR ARTICLE: WINNER There is not one but multiple factors which lead to this move India is experiencing extreme heatwaves this year, with temperatures crossing 44 degrees in states like UP and Punjab. This incessantly soaring temperature has reduced the crop yield by 5.3%.

If we move on to damage, then 10-15% of the crops were destroyed in the northern part of India.

All of this adversely affected the supply side and when the supply side is affected, what is the expected outcome? A price rise.

The Commerce Secretary was heard citing that some parts of the country saw price rise to the tune of 20-40%. What can be a better reason for a developing country hosting over a billion people to ban a commodity than rising inflation and supply constraints?

But whatever might have been the reason, this action led to some serious implications all across the world, which here we have referred to as the “rippling effect of India’s wheat export ban”.

Worsened by the Russian invasion of Ukraine, there’s supply shortage of wheat in almost every corner of the world, inducing skyrocketing prices for the essential commodity. Even the mighty red dragon, “China” is not able to keep pace with the rising demand and supply shortages.

The United Nations Food and Agriculture

Organisation forecasted that the RussiaUkraine war could leave around 13 million people undernourished.

And in the middle of this crisis India’s ban came as an even harder blow to wheat supply across the globe. The futures of big exchanges of the likes of US and Europe have jumped by 6% for wheat, and some even touched the maximum trade limit. Not only that, wheat prices have jumped by 60% this year.

This move was not at all in accordance with the earlier commitments of GoI to promote the exports of their wheat reserves. It was not only criticised by external organisations or countries, but even the country’s own farmers were not happy with this decision.

Why’s that you ask?

Well it is primarily because before the ban farmers were getting an additional INR 200 per quintal above MSP (Minimum Support Price), which they believed was acting as a compensation for the reduced output due to extreme heat waves. But the ban led to a jarring crash in the prices, which of course affected the welfare of the farmers in a nation where the slogan “Jai Jawan, Jai Kisan (Farmer)” is still prevalent and people are not very happy about it.

But this move was not a complete anomaly as well as it was pretty obvious that the government will have to do something to curb the rising inflation to safeguard the interest of the masses.

28

CALL FOR ARTICLE: WINNER However, similar to all the bitter situations in the world, there is a silver lining here as well, as GoI did not entirely ban wheat exports. India permitted existing issued letter of credits (LCs) and special requests by countries demanding wheat to meet their food security needs.

Approximately 1.2 million tonnes are set to be shipped as it remains stuck in the cargo.

These moves will help in easing the ugly situation of our neighbour countries like Nepal and Bangladesh.

These kinds of relaxations will not completely eliminate the crisis and its adverse effects but are definitely better than the complete ban on it and would serve the interests of not just consumers of wheat but its suppliers as well.

Source: Times of India, Economic Times

29

| CALL FOR ARTICLE: RUNNER UP

IS ARTIFICIAL INTELLIGENCE THE FUTURE OF STOCK TRADING Disha Dua | Great Lakes Institute of Management, Gurgaon Artificial Intelligence - Artificial Intelligence, or as all of us call it, AI is the next buzzword in the business world. From the creation of prediction models to automating every process, this technology makes everything ‘in store’ easily available for use in every business function, be it customer experience in marketing, supply chains in operations, or even investing in finance.

But, what does AI exactly do? While there is no particular explanation, the ability of robots to demonstrate human-like intelligence and a degree of autonomous learning is referred to as AI. Using AI, machines solve problems without the use of hard-coded software carrying detailed instructions.

AI AND THE STOCK MARKET AI has been creating a lot of noise, especially in the area of the stock markets.

There are four main methods by which AI facilitates the stock trading process and ultimately makes AI and finance the ‘soul mates’ of each other. These are as follows – Pattern Discovery - The world runs on data today and it is the extremely powerful computers that are able to crunch the countless data within minutes. For smart trading, the computers recognize past and recurring patterns that are sometimes hidden from human investors. It is hard for humans to discover patterns at the same speed as the technology does it.

AI has the ability to analyze thousands of stocks within a moment.

Sentiment Analysis - Analysis of sentiments is another way artificial intelligence and machine learning drives stock trading. This means that the machines today, are able to evaluate the human sentiments from

30

CALL FOR ARTICLE: RUNNER UP

the large chunks of qualitative data such as blogs, comments, articles, posts on social media, and even the transcripts of a video to understand the feelings of the market concerning a particular topic and to understand whether it is positive, neutral or negative.

Predictions and Forecasting - Through the use of deep learning and neural networks, artificial intelligence provides increased accuracy in predicting stock prices based on historical trends. This is then utilized to forecast the movement in the markets by minutes, hours, and days.

Fundamental Analysis Using fundamental analysis, the intrinsic value of securities is calculated by inspecting the financial and economic factors. It evaluates how macroeconomic factors like the conditions of the industry and state of economy as well as microeconomic factors such as effectiveness of the company’s management affect the value of the security. The use of artificial intelligence will make all the industries, whether informational. operational or technical more interconnected as well as independent. Complicated tasks that require years and years of deep knowledge of the domain could become simpler with artificial intelligence.

IS AI THE FUTURE OF STOCK TRADING: A CRITICAL VIEWPOINT Investing and trading in the stock market is based on a succession of logic and data insights. By constructing algorithms, AI systems try to detect patterns or connections in crunched data and help anticipate the future direction of equities. It is sure that organizations without an effective AI strategy will fall behind their peers in performance in the world of sophisticated AI capabilities and massive data.

Just like the wildfire spreads, the fact that AI can solve complexities and delve into the intricacies of the stock market has also been spreading.

“Hey Siri, invest in the stock that has the best chance of going up between 2% to 4% today.” Can such complex financial research be done by machines? The answer is a yes, but a no as well. In this fast-paced world, AI is the future but it is definitely not as easy as it sounds.

According to MarketsandMarkets, the global artificial intelligence (AI) industry is expected to reach USD 309.6 billion by 2026.

AI is being used by businesses across industries in a variety of ways. Companies had already invested $26 billion to $36 billion in artificial intelligence and have seen 3 times growth in external investment.

31

CALL FOR ARTICLE: RUNNER UP

Source: McKinsey & Company, 2017

But it is vital to make investing more accessible. Not just top corporations, but all of us, at some point, will have to rely on AI to grasp investment styles and the opportunities for wealth creation that it offers.

However, believing that AI is the ultimate formula that one can use to make quick money and be filthy rich might not be a good way to go about it. Humans often believe that machines know more than them ultimately forgetting the fact that those machines have been built by humans themselves.

The algorithms have just been designed to predict the future based on historical data.

AI forecasts an asset's technical features by looking at past price movements without taking future fundamentals into account.

And if these complexities can be overwhelming for humans, it can be the same for machines too. No matter how accurately these monitor and predict future stock prices, the dynamic nature of the markets is such that machines have failed to guard from the high standard deviation movements that are linked with the black swan events.

Foreign currency markets, for instance, were a non-volatile asset class in 2015. All of the main G10 currency pairs were rangebound, fluctuating here and there by a few hundred. The EUR/CHF currency pair had a rather peaceful beginning to the year until January 5th, when the Swiss National Bank (SNB) abruptly abandoned its €1.20 cap, producing a massive 20 percent intra-hour surge. Hedge funds and retail traders lost a lot of money in a couple of minutes, but the machines also lost a lot of money.

(Concoda, 2020).

Another one of the black events that nobody can forget is the COVID-19 pandemic where the market had faced a huge hit in the first quarter of 2020.

The solution to prediction failure by AI lies in the fact that humans always have an edge over algorithms. No doubt, it can make investing more accessible to everyone as it eliminates jargons and summarises various topics in simple easy to read the language.

However, because the final decision resides within the bounds of human cognitive capacities, AI can only be employed as a catalyst in the informed decision-making process by humans.

32

ISSUE NO. 112, JULY 2022

About Finstreet Finstreet, the finance committee of K J Somaiya Institute of Management aims at bridging the gap between industry and academic curriculum through effective delivery of knowledge-oriented sessions and events through a network of highly motivated members and renowned industry experts. Through the FINLY magazine, we focus on covering crucial topics for each month and giving our members a platform to express their views.

33