1. Industry structure and developments.
2. Opportunities and Threats.
3. Internal control systems and their adequacy
4. Material developments in Human Resources / Industrial Relations front, including
number of people employed
5. Discussion on financial performance with respect to operational performance.
The food manufacturing industry in India has witnessed significant growth and
transformation in recent years. With a population of over 1.3 billion, there is a massive
market potential for food products and a growing demand for quality, convenient, and
diverse food options.
1) Brief overview of the industrys structure and its development in the recent past
and immediate future:
Structure of the Food Manufacturing Industry:
a. Organized Sector: The food manufacturing industry in India consists of both
organized and unorganized sectors. The organized sector comprises large-scale food
processing companies, multinational corporations, and established brands. These players
have state-of-the-art manufacturing facilities, robust supply chains, and a wide
distribution network.
b. Unorganized Sector: The unorganized sector mainly comprises small-scale and cottage
industries involved in traditional food processing and preservation methods. They often
operate on a local or regional scale and cater to specific markets or communities.
Recent Past Developments:
a. Technological Advancements: The food manufacturing industry in India has embraced
technology and innovation to improve efficiency, quality, and safety. Advancements in food
processing machinery, packaging techniques, and automation have helped companies scale up
operations and meet the demand for processed and packaged food products.
b. Changing Consumer Preferences: There has been a notable shift in Indian consumers
preferences, with a growing demand for healthier, organic, and natural food options. This
has prompted food manufacturers to adapt their product portfolios by introducing healthier
alternatives, fortified foods, and products with clean labels.
c. Rise in Food Start-ups: Indian consumers willingness to experiment with different
cuisines, coupled with the availability of delivery platforms, has contributed to the
emergence of numerous food start-ups. These start-ups focus on niche offerings,
personalized experiences, and innovative food products, thus adding diversity and dynamism
to the food manufacturing industry.
Immediate Future Outlook:
a. Increasing Government Support: The Indian government has recognized the potential of
the food manufacturing industry and is actively supporting its growth through various
initiatives. This includes infrastructure development, tax incentives, and favorable
policies aimed at promoting investments, R&D, and entrepreneurship in the sector.
b. Demand for Convenience Foods: The convenience food segment is expected to witness
significant growth in the near future. Hectic lifestyles, urbanization, and dual-income
households are driving the demand for ready-to-eat meals, packaged snacks, and quick meal
solutions. Food manufacturers are likely to focus on producing and marketing convenient
food products to cater to this market.
c. Sustainable and Ethical Practices: With an increased focus on sustainability, food
manufacturers are expected to adopt eco-friendly practices, reduce food waste, and
incorporate ethical sourcing methods. Consumers are becoming more conscious about the
environmental impact and ethical considerations related to the food they consume, leading
to a shift towards eco-friendly and socially responsible food manufacturing practices.
In conclusion, the food manufacturing industry in India has experienced significant
developments in recent years due to technological advancements, evolving consumer
preferences, and a rise in food start-ups. Looking ahead, the sector is expected to
witness further growth driven by government support, the demand for convenience foods, and
a shift towards sustainable and ethical practices. The industrys structure is likely to
continue comprising both organized and unorganized sectors, each playing a vital role in
fulfilling the diverse needs of Indian consumers.
2) Opportunities and Threat Opportunities:
1. Growing Demand: The rising population, increasing urbanization, and changing
consumer preferences present a significant opportunity for the food manufacturing industry
to cater to the growing demand for diverse and convenient food products.
2. Expanding Middle Class: The expanding middle class in India, with higher disposable
incomes and evolving lifestyles, is driving the demand for processed and packaged foods,
creating opportunities for food manufacturers to introduce new products and expand their
market share.
3. Export Potential: Indias food manufacturing sector has immense export potential,
with its rich agricultural resources, diverse food production capabilities, and proximity
to key global markets. Food manufacturers can tap into the export market by developing
high-quality, distinct, and value-added products.
4. Government Support: The Indian government has been actively promoting the food
manufacturing sector through initiatives such as Make in India, Food Processing
Infrastructure Development Fund, and foreign direct investment (FDI) incentives. These
provide opportunities for investments, technology transfer, and infrastructure
development.
Threats:
1. Competition: The food manufacturing industry in India is highly competitive, with
both domestic and multinational players vying for market share. Increased competition can
lead to price wars, reduction in profit margins, and the need for continuous innovation to
stay ahead.
2. Food Safety and Quality Concerns: Food safety and quality concerns can pose a threat
to the industry. Instances of adulteration, contamination, and compliance issues can
damage consumer trust and brand reputation, leading to financial and legal repercussions.
3. Rising Input Costs: Fluctuations in commodity prices, energy costs, and
transportation expenses can impact the profitability of food manufacturers. Rising input
costs can squeeze profit margins and make it challenging to maintain competitive pricing.
4. Regulatory Challenges: The food manufacturing industry in India is subject to
various regulations and compliances related to food safety, labeling, licensing, and
packaging. Strict regulations and changing norms can create challenges for small-scale
producers and those in the unorganized sector who may struggle to meet the required
standards.
5. Consumer Awareness and Changing Preferences: Increasing consumer awareness about
health and nutrition, sustainable practices, and ethical considerations can pose
challenges for food manufacturers. Companies need to adapt to changing preferences,
incorporate healthier ingredients, and adopt sustainable practices to stay relevant and
meet consumer expectations.
In conclusion, while the food manufacturing industry in India offers significant
opportunities driven by a growing consumer base, expanding middle class, and government
support. It also faces threats such as competition, food safety concerns, rising input
costs, regulatory challenges, and changing consumer preferences. Your Company navigates
these challenges effectively to sustain growth and profitability in the industry.
3) Internal control systems and their adequacy.
At GCKL, internal control systems and procedure are adequately commensurate with the
size and structure of the business. The operating and business control procedures have
been planned and implemented in a manner that ensures efficient use of resources, as well
as compliance with procedures and regulatory requirements.
The Company has engaged a firm of Internal Auditors to carry out audits extensively
throughout the year with the objective of testing the adequacy and effectiveness of
internal controls and recommending improvements.
The Audit Committee hold discussions with auditors periodically about internal control
systems, the scope of audit including the observations and reviews of the quarterly, half
yearly and annual financial statements before submission to the Board. The Audit Committee
ensures compliance of internal control systems.
4) Human Resources/Industrial Relation Font:
The industrial relations across different locations of the Company were cordial during
the year. The Company has, over the last few months, built the team necessary to be able
to build and execute the vision that has been articulated in the preceding paragraphs.
There were 105 permanent employees on the rolls of Company as on March 31, 2023 and for
the previous year there were 236 employees.
5) Financial performance with respect to operational performance Sales:
The Company achieved total revenue of Rs. 3209.12 lakhs during the financial year ended
March 31,2023 in comparison to Rs. 4074.08 lakhs in previous twelve months.
Profit/Loss after Tax:
The Company recorded a loss of Rs. 899.59 Lakhs for financial year ended March 31, 2023
in comparison Net Profit of Rs. 89.61 lakhs in previous financial year.
Finance Cost:
Finance Cost Increase from Rs. 78.31 lakhs incurred in previous twelve months of
2021-22 to Rs. 107.26 lakhs for financial year ended March 31,2023. The increase in the
finance cost is due to Inter corporate deposit loan taken.
Dividend:
The Board of Directors has not recommended any dividend for the year under review.
Equity Share Capital:
There have been no change in the Equity share capital of the Company during the year
under review. The equity share capital of the Company is Rs. 44,93,76,740/- divided into
44937674 equity shares of Rs. 10/- each.
Earnings Per Share (EPS):
The Companys Basic EPS has decrease from Rs. 0.19 in previous financial year to Rs.
(2.00) per share for the current financial year ended March 31, 2023.
Cautionary Statement:
Statements in the Management Discussion and Analysis describing the Companys
objectives, expectations or predictions may be forward - looking within the meaning of
applicable securities, laws and regulations. Actual results may differ materially from
those expressed in the statement. Important factors that could influence the Companys
operations include domestic and global environment; supplies and demand conditions
affecting prices of final product and service, input availability and prices, changes in
government regulations, tax laws, economic developments within the country and other
factors such as litigation and industrial relations.
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