Kothari Fermentation & Biochem Ltd

The Management of Kothari Fermentation & Biochem Ltd. is pleased to present itseighth analysis report covering segment wise performance and outlook.

Organizations in India are growing and even small organizations are seeking to move upthe value chain. As companies grow, many find it difficult to retain the verycharacteristics that first led to their success-flexibility and strong customerrelationship. Growing companies are often hampered by business systems that simply cannotkeep up with the changing requirements. Your company has also been providing GeneralInformation System (GIS) implementation, Revenue Management Services to utilities over thepast few years and continues to get new customers.

The company has business of two segments of Manufacturing Yeast and Trading activitiesof commodities during the year 2009-10.

Industry Structure and Developments

In Indian yeast Industry, there are three major companies manufacturing yeast in India,including our company. The other two companies are multi national companies. We have anexcellent team of technical and commercial professionals with expertise in yeastsmanufacture and marketing. We have better quality of our products in comparison ofproducts of these multi national companies.

Opportunities and Threats

The growth of yeast market is directly linked to the increasing trend of processed andfast food items, especially bakery items. As per the current trend, India is presently oneof the most promising markets for Baker’s yeast, as its demand is continuouslyincreasing with the rise in population and changing habits of Bakery products.India’s estimated per capita consumption of bread, as compared to other European anddeveloping countries of Asia is yet far below the lowest.

Due to presence of Multi National Companies (MNCs) in yeast industries in India, thecompetition in the market is obious. Your Company, through continuous Research andDevelopmental efforts the quality of its products has been able to maintain of quality ofyeast products comparable with multinational companies.

The Company’s proposal for financial facilities is likely to be sanctioned, andonce the financial facilities are sanctioned and utilized, the company expects to haveincreased turnover and profitability of the company. Thereafter would get enhance.

Segment wise Performance

There were two segments in the company during 2009-10, i.e. manufacturing of yeast andtrading of commodities. The comparison of financial data with previous year’s data,is provided under the heading "Discussion on Financial Performance with respect toOperational Performance" later in this Report.

Future Outlook

The company is regularly reviewing its whole structure and making changes for futureimprovements. Your Directors are confident of increase in production during the currentyear. Various steps have been initiated for cost reduction and improving operatingefficiencies. The Company expects to earn more profits in current year by higherproduction and efficiency.

Internal Control System and their adequacy

The Company has an internal control system with proper internal delegation ofauthority, supervision, checks and procedures. The system is reviewed and updatedperiodically in order to improve the same to meet the business requirements. The Board ofDirectors, Audit Committee and the Management ensure that the internal control systemoperate effectively within the organisation. Internal Audit team keeps on reviewing theadequacy of internal control systems and suggests necessary checks and balances toincrease the effectiveness of the system.

Discussion on Financial Performance with respect to Operational Performance

Material Developments in Human Resources/Industrial Relations Front, including numberof people employed

The Company believes that the competence and commitment of its people are the keydrivers for growth of our organization. There have been excellent relations between theemployees at various levels and the management. The Company responds to genuine grievancesof employees in order to foster warm and cordial relationships between the management andthe employees, increase job satisfaction of employees and ensure that employees can addvalue to their lives. There were 155 persons directly employed by the Company during theprevious financial year on an average basis.