MANAGEMENT DISCUSSION AND ANALYSIS REPORTECONOMY-OVERVIEW
The World economy is continues recovering from the economic meltdown. The Strong andvibrant economic performance put up by the Asian economies is aiding the positive trend.The Global recovery too is more pronounced that earlier expectations, strengthened by theemerging and developing economies especially China, Russia and Brazil driven mainly bytheir internal demand. The Indian Economy has shown remarkable resilience was aided by theinherent strength of India's domestic demand that was complemented by Reserve bank ofIndia's monetary management and the central government's fiscal stimulus measures.However, high inflation rate seems to be major damper on the economy of the country andRBI has predicted the GDP will be 8% as compared to at 8.6% last year.
INDUSTRY STRUCTURE AND DEVELOPMENT
Company is engaged in the business of edible oil, lecithin, soya meal and soya flourbased varieties of products. The domestic oil consumption is continuously increasing inIndia .India is the largest importer of edible oils in the word and imports close to 50%of its domestic consumption. Being the nutritive quality the Soya's products are popularover the world and demand is continuously increasing and gives an opportunity for thegrowth of Soya Industry. Mostly all manufactured food products contain derivatives oringredients made from Soya.
The Asian Countries are major consumers of Soya products and imports from India,Brazil, USA and Argentina. During the year ended 31st March 2011 the prices of soybean andits products were continue volatile of on account of various factors like internationalmarket, demand- supply gap and weather factors etc.
OPPORTUNITY AND THREATS Opportunities
With rising incomes and populations, food remains an important item of expenditure towarrant large share of incremental spending. The demand of Soya oil and other processesfoods is rapidly increasing and expected to rise in coming year due to population growthin India as well aboard. The Asian Countries are major consumers of Soya products andimports from India, Brazil, USA and Argentina. India is better placed in the Asian regionfrom the point of logistics and customer servicing. The Indian Soya meal being processedfrom Non Genetically Modified soya seed, gives a value advantage as compared GMO productsin the international markets. The improved prosperity and health oriented lifestyle of thepeople gives an opportunity for the growth of Soya industry.
Threats
Inadequate water supply, insufficient power supply and reduced supplies of raw materialare major threats to company.
The price of soyabean seed, meal and oil are impacted by international prices, demand-supply gap, future markets and weather factors etc .Therefore it is very difficult tomaintain the price competitive. Instability in exchange rate specially the strengtheningof the Rupee in the international market is also may have an adverse impact on thebusiness of the Company.
Increasing of prices of crude oil may have an adverse impact on the business of thecompany.
SEGMENT WISE PERFORMANCE
The Company is operating in one segment only, hence segment wise reporting is notapplicable.
FUTURE OUTLOOK
Demand for protein rich meal in Asia is growing in the recent past and India is betterplaced in the Asian region from the point of logistics and customer servicing. Indiaenjoys an added advantage of producing entirely Non GMO crops with higher protein andnutritional values which strengthens its hold in the world markets.
In view of this, Company is continuously striving and shuffling its products mix toestablish itself as a producer of non-GMO Soya value added products not only in the Indiabut in the global arena, the company strategically transforming itself to be a recognizedname in soya products and show its presence in Indian market as well as overseas market.With rising population and incomes Soya products and Soya oil will remain an importantconstitute of dietary plan across the different states/region in the country. In futurethe consumption of Soya oil will continue to grow significantly in the packed segment.
RISK AND CONCERN
The Monsoon, weather conditions, volatility in foreign currency, domestic andinternational crops of soyabean, demand supply gap and government policy may have anaffects the business of the company. The fuel prices continue to be major are of concernas fuel is widely used in manufacturing and has a direct impact on total costs. Theincreasing of inflation is also a major area of concern which affects the business of theCompany. The government policy for agro processing and food processing industrial units isprogressive & encouraging. The major opportunities for the company in the market areability to develop more value added products with enhanced productivity at the best costeffectiveness price.
Your Company continues to place a strong emphasis on risk management and adoptedvarious measures to minimize the risk. Your Company has a risk management policy toidentify the nature and extent of risk associated with the Company and to take steps formitigating the impact of such risks & are reviewed periodically and placed before theBoard.
ADEQUACY OF INTERNAL CONTROL SYSTEMS
The Company has an in-house internal audit system with the objective of safeguardingthe company's assets, protection against loss from unauthorized use or disposition,ensuring that all transactions are properly authorized, recorded & reported correctly,and providing significant assurance at reasonable cost, of integrity, objectivity andreliability of financial information. The management of the Company duly considers andtakes appropriate action on recommendations made by the internal auditors, audit committeeof the board periodically, if any.
| FINANCIAL ANALYSIS | | | (Rs In Crores) |
| Particulars | 2010-11 | 2009-10 | Growth (%) |
| Sales & other Income | 766.93 | 735.61 | 4.26 |
| Total Expenditure | 745.27 | 721.54 | 3.29 |
| Profit before Interest and Depreciation | 21.66 | 14.07 | 53.94 |
| Less: Interest | 1.80 | 0.29 | 520.69 |
| Less: Depreciation | 3.90 | 3.74 | 4.28 |
| Profit before Tax | 15.96 | 10.04 | 58.96 |
| Less: Provision for Tax | 3.30 | 0.62 | 432.26 |
| Profit after Tax | 12.66 | 9.42 | 34.40 |
During the year the Sales & other Income of the Company increased to ^ 766.93crores from Rs 735.61 crores last year. The Profit after Tax is increased to Rs 12.66crores as compared to Rs 9.42 crores last year, registering a remarkable growth of 34.40%during this period.
DEVELOPMENT EN HUMAN RESOURCE AND INDUSTRIAL RELATIONS
During the year the industrial relations of the Company continue to remain harmoniousand cordial with focus in improving productivity, quality and safety. The Management wisho place on record their appreciation for contributions made by employees to the Companyduring the year. The Company believes that the Employees are important assets of anycompany and success depends largely upon the quality of its employees.
The Company endeavors to promote human resource fullness at all levels from the shopfloor to the Corporate office .On the job and various in-house training programmes havebeen put in practice to raise the skill, education, aptitude of employees. The Company'srecruitment practice ensures that suitable candidates are recruited and provided withright opportunities to grow within the organization.
CAUTIONARY STATEMENT
Statements in the "Management Discussion and Analysis" describing thecompany's objectives, projections, estimates and expectations may be "forward lookingstatements" within the meaning of applicable securities laws and regulations. Actualresults could differ materially from those expressed or implied. Important factors thatcould make a difference to the company's operations include, among others, economicconditions affecting demand/ supply and price conditions in the domestic and overseasmarkets in which your Company operates, changes in me govt, regulations, tax laws andother statutes and incidental factors.