MANAGEMENT DISCUSSION AND ANALYSIS REPORT
WORLD ECONOMIC SCENARIO
Alter a year of fragile and uneven recovery, global economic growth started todecelerate on a broad front in mid-2010. The slowdown is expected to continue into 2011and 2012. The United Nations baseline forecast for the growth of world gross product (WQP)Is 3.1 per cent for 2011 and 3.5 per cent for 2012, which Is below the 3.6 per centestimated for 2010 and the prepress pace of global growth.
Developing countries continue to drive the global recovery, but their output growth Isalso expected to moderate to 6.0 per cent on average during 2011-2012, down from 7.1 percent in 2010. Developing Asia, led by China and India, continues to show the strongestgrowth performance, but GDP growth In these two new economic giants Is expected toexperience some moderation In 2011 and 2012.
INDIA ECONOMIC SCENARIO
India maintained Its growth momentum on the foundation of relatively strongfundamentals of the economy. The year saw one of the highest rates of repo rates andreverse repo rates to curb Inflation. However, strong domestic consumption and buoyantexports enabled GDP to grow by around 8.5% during 2010-11.
The cumulative amount of FDI equity inflows from April 2000 to February 2011 stood atUS$ 193.7 billion. The UNCTAD World Investment Report (WIR) 2010. In its analysis of theglobal trends and sustained growth of Foreign Direct Investment (FD:) inflows, hasreported India to be the second most attractive location for FDI for 2010-2012
India's total exports in goods for 2010-11 reached US$ 245.29 billion, registering 37.5per cent growth against US$ 178.76 billion in 2009-10. The Ministry of Commerce andIndustry has now set a target of achieving U$$ 500-billion exports by 2013-14 bystrategizing the country's foreign trade through diver suffocation of products, markets& technological enhancement.
There has been a shift in universal trend from synthetic to herbal medicine recently.The annual turnover of the Indian herbal medicinal Industry Is estimated as Rs 7.500 croreas against the pharmaceutical Industries turnover of 14,500 crore with a growth rate ofmore than 15 percent. The global herbal Industry is estimated to grow to Rs 70,000 croreby 2015, more than double from the current level of Rs 30.000 crore. The government ofIndia has been playing a active role In developing the sector which Is likely to witnessbrighter times ahead.
Foreign Tourist Arrivals (FTAs) during the period January-April 2011 were 2.15 millionwith a growth of 12.3 per cent. According to the report "Boomling Medical Tourism InIndia", medical tourism in India has emerged as the fastest growing segment of thetourism Industry, despite the global economic downturn. Several factors such as. low cost,government support, and high private Investments have contributed to a remarkable growthIn the medical tourism market. The market is expected to grow at a CAGR of around 26%during 2011-2013. A portion of these tourists may be looking for Ayurveda/Herbaltreatments.
This has been dealt with under Business Review in the Directors report forming part ofthis Annual Report.
There is a revival and renewal of global Interest in traditional medicine. World demandfor herbal product is increasing at rate of 10-15%.The huge potential for Increasedrevenue generation both in the export as well as in the domestic sector is really veryencouraging.
The infrastructure in the Indian system of medicine is below optimum level and about70% of Herbal plant collection is from wild source. Fluctuating market prices of rawmaterials and unexpected climatic fluctuations also play a great rote. The Increasedopportunity has led to heightened competition amongst exiting players and there are manynew companies entering this line of business. However your company has necessarytradition, authenticity and expertise to devise suitable strategies to face thecompetition and realize our goals.
SEGMENT WISE PERFORMANCE
Ayurveda business being the main business segment of your company registered totalrevenue of Rs 1728 Lacs as against Rs .1590 Lacs in the corresponding previous financialyear. During the year company has started a depot at Delhi for distributing products innorthern market and also setup new treatment centers at various locations. The ratio ofproprietary products sales to classical products have improved during the year. In orderto improve the efficiency, the company has reorganized its plant and also added New nowmachinery.
The company's one year para medical certificate course for Ayurveda Therapy, dulyrecognized by the Government of Kerala, is scheduled to begin at Academy at Aluva shortly.
HEALTHCARE SERVICES BUSINESS
At present the core focus is on carrying out research on Ayurveda Ingredients andformulations In a scientific manner, mainly to identity new proprietary formulation todemonstrate the efficacy of Ayurveda medicines and prove that they are sale as isacceptable to modem pharma world. Clinical trials are underway and the research wort isprogressing well, and we are sure it will deliver landmark results and provide scientificvalidation of specific Ayurvedic formulations in a short term.
CHALLENGES AND RISKS
Shortage of Raw materials, lowering of standards in the products, adulteration in theraw material, unhealthy growth of fake massage parlous, low entry barriers are the mainchallenges faced by the Ayurveda Industry. These challenges needs to be addressed by
1) promoting cultivation of medicinal plants,
2) taking Initiative tar high quality hospital chains,
3) imparting training for soft skill development for doctors and paramedical staff.
Bananas Hindu University ('BHU') entered Into MOU with Kerala Ayurveda Ltd underPublic-Private Partnership ('PPP') Model to pursue research related projects- A Memorandumof Understanding has been signed with Tata Global Beverages Limited, with the intention ofexploring the opportunity of formation of a Joint Venture for Product Development.
HUMAN RESOURCE DEVELOPMENT
Keeping in view the present and future capacity and capability needs of theorganization, it has always been your company's endeavor to create an environment oflearning and self development and utilize their full potential to achieve theiraspirations and organizational objectives KAL has a well structured and professional HRdepartment entrusted with training and motivating of the employees of the Company. AnIdeal Industrial relation climate has been created throughout the year by maintainingcordial relationship between management and trade unions in the company facilitating goodteam spirit and high productivity
RESEARCH AND DEVELOPMENT
The company developed two new products to enrich its range namely - Restgest tablet forrespiratory tract infections & Dgest capsule for IBS (Instable bowel syndrome). Newanalytical tools were introduced for inviter product evaluation to ensure antioxidantactivity and Vitamin-C content. Collaborative activities with various Institutionsresulted in clinical trials with herbal medicines based on folklore knowledge in the withthe ethical guidelines Issued by lCWR. We have an in-house RAD lab, which has beenrecognised by the Dept of Scientific & Industrial Research, Govt, or India. Thecompany has entered Into a MOU with Bananas Hindu University under PPP model under whichvarious activities are planned on research and clinical trials.
INTERNAL CONTROL SYSTEM
The company has in place adequate internal Controls and procedures commensurate withsize and nature of its business. The company has a System to ensure proper utilization offunds, safeguarding of assets against unauthorized use or disposition, true and fairreporting and compliance with all regulatory laws and company policies. Internal auditorsregularly check the adequacy and effectiveness of internal control system and compliancesof various procedures and policies of the company's plant, branches etc. Therecommendations made by the Internal auditors In respect of operational and financialmanagement is used to formulate management police and neck management procedures.
The statements in this management discussion and analysis describing the company'sobjectives, projections, estimates and expectations may be treated as 'forward lookingstatements' within the meaning or applicable laws and regulations. Actual results may varyfrom those expressed or implied, depending upon economic environments, exchange ratefluctuations. Government regulation etc.