fe india ltd Management discussions

The Management’s view on the Company’s performance and outlook are discussed below.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Agricultural production needs to significantly increase to meet the demands of the growing world population. Some estimates put this target as doubling the quantity of food production by 2050. With a limitation of bringing more land under agriculture, most of the additional production will need to come from higher crop yields.

Growth rates of productivity in agriculture sector are far below global standards; productivity levels of rice and wheat have declined after the green revolution of the 1980s. Another issue is soil degradation due to declining fertilizer-use efficiency. Also, the food subsidy has increased substantially in the past few years.

With 60 per cent of the total food grains and oilseeds produced being grown in the kharif season, and with just about 35 per cent of arable area being irrigated, Indian agriculture is still dependent on rainfall, which has been deficit on account of erratic rainfall with subnormal/deficit rainfall and 70 per cent occurrence of EL Nino. The government has put in place contingency measures in about 500 districts.

Currently, India is in an anomalous situation of being largely self-sufficient with large stocks of food grains on the one hand and registering high food inflation.

In other sectors the landscape has vastly changed. Macro-economic stability has returned, reforms are being undertaken, the external environment has moved in Indias favour, and above all, a new Government has come into power with a relatively unencumbered political mandate for decisive economic change, a mandate that markets have enthusiastically embraced. The Indian stock market has increased in value by 33 percent since March (in dollar terms), amongst the highest in the EMs, benefitting from surging foreign capital inflows. India now represents one of the sparks in the world economy and the only major country not to suffer a growth downgrade by the IMF. From Fragile Five to Near-Solitary Spark of the global economy is the Indian narrative of the last year.

Your Company is a global player in the Agro trade. It provides full logistic support from procurement, quality control to guaranteed timely deliveries of agro products from different parts of India through a wide network of regional and port offices in India and its contacts abroad.

Your Company continued to strengthen its business and has sustained its position in the global market and posted encouraging performance for the year under review.

OPPORTUNITIES AND THREATS

India’s population, the second largest in the world is estimated to increase over time. Given the Government’s initiative on food security, per-capita consumption of food grains and therefore the demand for them will only increase. Demand is also expected to increase in view of increased budgetary allocation from government. Although the availability and price of agricultural commodities may, in any given year, be affected by unpredictable factors such as weather, changes in governmental policies and law, still the Company is hoping growth in the coming years.

Company’s prime motive is to spread its roots in the international markets being the supplier of quality product. Due to their commodity nature, markets for our products are highly competitive and subject to the substitution. Competition is mainly based on price, quality product and service offerings and geographic location.

OUTLOOK

The immediate outlook continues to be challenging as there is no visible change in business sentiment. Order intakes by the company are relatively moderate to low. As significant part of company’s earning is dependent upon exports, the factors of global demand and supply and the economic scenario lay a significant role to the company’s trade. In order to mitigate the vagaries of International Trade the Company has also started foraging into the domestic market also as a measure of prudence. Margins are expected to remain under pressure as we continues to focus on products that are of long term relevance for us even if this is at the cost of profitability in the shorter run. Going forward we firmly believe that we are well placed to capitalized on any opportunities that may arise.

RISKS AND CONCERNS

On domestic and international marketing, the plethora of government interventions that were used to build a marketing set up have actually served as barriers to trade. Removing market distortions will create greater competition in markets, promote efficiency and growth and facilitate the creation of a national agricultural market.

Our company perceives risks or concerns common to industry such as Global Economic fallout, Regulatory Risks, Foreign Exchange Volatilities, Higher Interest Rates, Rising Raw Material costs and other commercial and business related risks.

We are exposed to various risks and uncertainties in the normal course of our business that can cause variations in our results from operations and affect our financial condition. We view effective risk management as an integral part of delivering of superior returns to shareholders. Principal risks and uncertainties facing the business are like Market Price Variations, Fluctuations in Government policies, Weather Conditions and Monsoons, Volatility in Foreign Currencies, Economic Downturns:

Your Company is exposed to market risks primarily arising from currency exchange rates and commodity prices. To manage these risks, Risk Management is looked upon as a facet of governance contributing towards greater predictability in performance and value creation. The Risk Management framework of the Company ensures, amongst others, compliance with Clause 49 of the listing agreement. The framework establishes risk management across all service areas and functions of the Company. These processes are periodically reviewed to ensure that the management of the Company controls risks through a defined framework.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The affairs of the Company are managed at various managerial levels in accordance with a well defined "Delegation of Powers". The Company has in place adequate systems of internal control for its business processes across departments to ensure efficient operations, compliance with internal policies, applicable laws and regulations, protection of resources and assets, accurate reporting of financial transactions.

The company also has well settled Internal Audit System & Procedures which is commensurate with its diverse functions, Internal Audit of the Company is conducted by an independent firm so as to cover various operations on continuous basis. Summarized Internal Audit Observations/ Reports are reviewed by the Audit Committee on regular basis. The finance and accounts functions of the Company are well staffed with qualified and experience members.

The Audit Committee meets the Company’s Statutory Auditors and Internal Auditors to ascertain, inter alia, their views on the adequacy of internal control systems and ascertain their concerns and observations on financial reports.

CAUTIONARY STATEMENT

Certain statements made in the "Management Discussion and Analysis Report" describing the Company’s objectives estimates and expectations may be ‘forward looking statements’ within the meaning of applicable laws and regulations. Actual results may differ from such estimates and projections etc, whether expressed or implied. Several factors could make a significant difference to the Company’s operations. These include economic conditions, Government regulations and Tax Laws, Political situation, natural calamities etc. over which the Company does not have any direct control.

	By Order of the Board
	For FE (India) Limited
	Sd/-	Sd/-
	Mukesh Jain	Mukund Sharan
Date: September 01, 2015	(Director)	(Director)
Place: New Delhi	DIN: 00059649	DIN: 00004881