MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Agriculture Industry is an important and integral part for economic development ofIndia. Agriculture plays an essential role in the process of economic development of lessdeveloped countries like India. In India, agriculture was the main source of nationalincome and occupation at the time of Independence. Agriculture and allied activitiescontributed nearly 50 percent to Indias national income. Around 72 percent of totalworking population was engaged in agriculture. These confirm that Indian economy was abackward and agricultural based economy at the time of Independence. After 61 year ofIndependence, the share of agriculture in total national income declined from 50 percentin 1950 to 18 percent in 2007- 08. But even today more than 60 percent of workforce isengaged in agriculture. Because of these reasons agriculture continues to be the dominantsector in Indian Economy.
INDUSTRY STRUCTURE AND DEVELOPMENT :
Growth in agriculture is twice as effective in reducing poverty as growth in othersectors.
Though the economic growth in the other nations was below average, the Asian economies,particularly India and China, recorded robust growth. The year also faced headwinds, suchas European sovereign debt crises, political upheaval in middle-east, spill-over from theJapanese natural disaster and the high oil & other commodities prices as well asmonetary tightening in emerging market economies to contain inflationary pressures.
Agriculture in India has a significant history. As of 2011, India has a large anddiverse agricultural sector, accounting, on average, for about 16 percent of GDP and 10percent of export earnings. Indias arable land area of 159.7 million hectares (394.6million acres) is the second largest in the world, after the United States. Its grossirrigated crop area of 82.6 million hectares (215.6 million acres) is the largest in theworld. India has grown to become among the top three global producers of a broad range ofcrops, including wheat, rice, pulses, cotton, peanuts, fruits and vegetables. Worldwide,as of 2011, Agriculture is demographically the broadest economic sector and plays asignificant role in the overall socio-economic fabric of India.
In fiscal year ending December 2011, with a normal monsoon season, Indian agricultureaccomplished an all time record production of 85.9 million tons of wheat, a 6.3 percentincrease from a year earlier. Rice output in India also hit a new record at 95.3 milliontons, a 7% increase from the year earlier. Lentils and many other food staples productionalso increased year over year. Indian farmers, thus produced about 71 kilograms of wheatand 80 kilograms of rice for every member of Indian population in 2011. The per capitasupply of rice every year in India is now higher than the per capita consumption of riceevery year in Japan.
The fundamentals of the Agriculture sector continue to be robust and will drive growthin the years to come. The future of the seed industry in India is expected to be verygood, with the demand for branded and quality seeds increasing. Seeds will be an importantcontributor to the targeted 4% growth in agriculture.
Agriculture is gaining significance the world over with the rising needs fromcultivation coupled with limited availability of land under cropping against the backdropof the growing population. It is given that most of this need will be met by increasingproductivity and making efficient use of natural resources which will see more constraintsinto the future.
In India, the changing demographics and increasing aspirations is leading to a variedset of expectations in the farming sector.
The Government too is seized of all these perspectives and is devoting increasedattention to the farming needs.
SEGMENT WISE OR PRODUCTWISE PERFORMANCE :
Ratnamani Agro (RAIL) operates in only one segment in which it manufactures oil,oil-cakes, soap and other useful raw material for natural product.
Ratnamani Agro (RAIL) Indias focus has been on expanding the presence of itsstores, training employees, improving its product quality, collection, customer serviceand reducing the aged stock. Due to Companys strategy of aggressive retailexpansion, up gradation of collection, Its entry into the safety natural product markethas been equally successful. Going forward, the Company remains committed to itsshareholders and will continue to deliver great results with its strategy of retail andwholesale expansion, improvement in customer service, and by delivering to itscustomers great products at great prices, which will ensure the continued success ofRatnamani Agro.
RISKS, CONCERNS AND THREATS :
Agricultural activities are still greatly dependent upon the vagaries of the monsoonand upon soil conditions, availability of skilled labour, quality inputs and farm credit.Non-availability of adequate irrigation facilities in most parts of the country restrictsthe acreage and possibility of a 2nd crop in the year. Macro economic factors like postrecession effect, inadequate rainfall, subdued demand, political uncertainty and socialupheavals and acts of god may also affect the business of your Company and also theindustry at large. Government of India has been supportive of technology advancement andimprovement in agriculture techniques in the country.
The business of the Company is dependent on various laws, regulations and policiesannounced from time to time. Any developments in these areas affecting the freedom of theCompany to operate may adversely affect the business and growth of the Company.
Major fluctuations in total rainfall and its distribution affect the crop acreages,pest incidence and overall productivity and have a direct correlation with sales.
Apart from the quantum, timing and even distribution of rainfall are critical for thedomestic business. The situation in 2012 was bad than what it was in 2011. Farmerswillingness and ability to spend will be an important driver to demand generation. Strongsupport prices and better availability of credit will ease the pressure on the farmingcommunity.
Organized retailers in India are also facing a threat from non-specialistretailers like apparel retailers diversifying into natural product and discounthypermarkets and retailers introducing and promoting their own brands at competitiveprices. These non-specialist retailers are likely to grow their market shares byincreasing the range of products offered, and shopping merchandizing space allocated totheir own product. Your Company is prepared to meet these challenges by increasing thecoverage open big stores, in best locations, shopping malls and developing aggressiveproduct & pricing strategies to meet the expectation of the customers.
The challenge of real estate management for any retailer in India today is very largeas the continuous evolution of modern retail spaces, combined with steep increase inrentals, presents real challenges. Your Company has been managing this challenge withnegotiating low rentals for all new stores and reducing rentals in existing stores.
CONTINGENT LIABILITY :
There are no claims against the Company which have to acknowledge as debts whichmentions in note no. B of schedule 25 of the schedules to the Statement of Accounts.
INTERNAL CONTROL SYSTEMS :
The Company has an adequate system of internal controls in place to ensure that allassets are safeguarded and protected and that all transactions are authorized, recordedand reported correctly.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE :
The Company has negative growth for some years but the Management is confident of turnaround soon, barring unforeseen circumstances.
The Company is deploying its internal accruals for aggressive expansion program.
CAUTIONARY STATEMENT :
Statements in the Managements discussion and analysis report describing theCompanys estimates, expectations or predictions may be forward-lookingstatements within the meaning of applicable securities laws and regulations. Actualresults could differ materially from those expressed or implied. Important factors thatwould make a difference to the Companys operations include demand-supply conditions,raw material prices, changes in Government regulations, tax regimes, economic developmentswithin the country and outside the country and other factors such as litigation and labournegotiations. .
The Directors place on record their sincere appreciation for the cooperation andsupport received from investors, our dear shareholders, customers, business associates,vendors as well as regulatory and governmental authorities. The Directors appreciate theinvaluable contribution of the management team in performing an outstanding job in takingthe Company to greater heights and also thank the employees for the significantcontribution made by them to the Companys progress.
We would like to specifically thank your Chairman for the untiring work in there-organization of our company.
| || ||For & on behalf of the Board of Director || |
| ||Sd/- ||Sd/- ||Sd/- |
|Date : 31/07/2012 ||(Lal Mirchandani) ||(Rokibhai Vaghela) ||(Bhagabhai Bharwad) |
|Place : Ahmedabad ||Director ||Director ||Director |