jr organics ltd Management discussions

J.R. ORGANICS LIMITED (Formerly SOMAIYA ORGANICS (INDIA) LIMITED) ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENTS: The Companys performance during the year under review was not good when compared to the preceding year due to unavailability of Molasses at a valuable price on account of poor Sugarcane, crop in the Sugarcane crushing season 2045-06. The Distillery Unit has therefore, operated on a much lower capacity during the year. Current year performance is expected to be better, turnover wise as well as in terms of operating results. The sugarcane production in the ensuing Sugarcane crushing year 2006-07 commencing from December, 2006 is expected to be excellent then last two years because of good rains and a better price realizations in the hands of the sugarcane growers. OUTLOOK ON OPPORTUNITIES: 1. Distillery Works: To achieve the norms of the U.P. Pollution Control Board i.e., zero level discharge, the Distillery unit has developed adequate area for carrying out Bio-composting work. The area has been made of brick lining followed by LDPE lining to prevent seepage of effluent water into the Ground water. The Company is also placed an order for MEMBRANE System i.e. REVERSE OSMCSIS to further reduce the effluent quantity which in turn will reduce the land required for Bio-composing. This system is expected to be commissioned in the current financial year. 2. Chemical Works: Considering the growing demand of Ethyl Acetate, the Company is in the process of creating additional production capacity in the current financial year by realigning some of the equipments without disturbing any of the existing capacities and with installation of some small equipments, This is likely to result in the increase in the capacity from 42 MT per clay to 70 MT per day. In lieu of Conventional Cooling Tower System, the company has taken up the work for installing Mist Type Cooling Tower System at the Companys Chemical Works at Barbanki. It is expected that this will reduce the loss of water during cooling. OUTLOOK OF CONCERN: Growth of Alcohol based Chemical Industry is solely dependant on availability of basic raw material i.e., Molasses at a viable price. In case of scenario where Crude prices starts falling, the Alcohol based Chemical manufacturing companies could face stiff competition from the producers who use Neptha as their feed stock. SEGMENT-WISE PERFORMANCE: The Company is operating, in only one business segment i.e. Chemicals. INTERNAL CONTROL SYSTEMS AND ADEQUACY: The Company has adequate internal control procedures commensurate with its size and nature of the business. The internal control procedures ensure efficient use and protection of resources and compliance with the policies, procedures and statutes. FINANCIAL PERFORMANCE: The financial performance of the Company has already been detailed in the main Directors Report. HUMAN RESOURCES: The Industrial Relation scenario continued to be cordial during the year under review. LISTING: Your Company is listed with: (1) Stock Exchange at Kanpur (2) Stock Exchange at Delhi (3) Stock Exchange at Mumbai For and on behalf of the Board (Yogendra Kumar Jhunjhunwala) (Deoki Nandan Jhunjhunwala) Director Director Place: Barabanki. Date : 4th Sept., 2006