swarnajyothi agrotech power ltd Management discussions

a) Industry Structure and Developments.

India continues to be the largest source of castor seed in the world.The estimated total production of castor seeds for the season is around 1.1 million metric tons,against about 1.6 million metric tons for the previous year.This downward correction in the crop size was a reaction to the highest ever record crop of 1.6 million metric tons in the previous year,which resulted in the softening of prices and a huge carryover of the crop.After several years,a healthy surplus of castor seeds was carried forward.This surplus in the current year has led to the much needed price stability thus encouraging the user industry to invest more in R & D and new projects.

b) Opportunities & Threats.

The global economic climate remains uncertain and the mood remains cautious leading to a slowdown in new green field projects and the silver lining is that the largest economy in the world,USA,has shown signs of positive growth.However,this optimism is in a benign liquidity environment where the US treasury continues to print large sums of money.With the US Fed announcing plans to slow down on printing new money,the strengths of the global economy will be retested.The mood therefore remains extremely cautious.

The Indian economy has been experiencing high inflation,low growth and twin deficits,both internal and external.These problems are further compounded by policy paralysis.In spite of the uncertain global economic environment,the outlook for your Company remains stable.However,the major global economic uncertainties may have a negative impact in the immediate future.

Environment being a major concern,the search for long term and sustainable products is likely to intensify in the future.Castor Oil being a natural,organic,renewable and biodegradable product is gaining importance as a green product.Besides,due to its unique chemical structure,it finds myriad applications in virtually every industry be it Agriculture,Lubricants,Paints,Inks,Surface Coatings,Pharmaceuticals,Food,Engineering Plastics,Cosmetics,Perfumeries,Electricals,Rubber and so on.

Your Company continues to endeavor to tap these opportunities by focusing on Research & Development and investing in new capacities,new technologies,new applications,and new products.

c) Segment.

The Company is organised into three business segments - Castor Oil derivatives,agro farming and Power generation.

d) Outlook.

During the year under review your company has not achieved any sales but the demand outlook for the companys product remains positive.Emphasis on green eco-friendly products is likely to lead to increase in innovation of new product and uses in the castor oil industry.Your company continues to invest in research and development to tap on new growth opportunities.Your company is also undertaking a backward integration program in order to increase the availability of castor seeds.Barring unforeseen circumstances your directors expect satisfactory growth.

e) Risks and Concerns:

The Companys products are used in variety of industries,thereby to a great extent,mitigating the risks associated with demand for its production on a long term basis.The price behavior of raw material depends on monsoon,global demand and inventory,and prices of other oils including crude oil and vegetable oil and therefore,can be volatile as well as unpredictable.The Company is closely watching the development of various factors which affect the castor seed prices.

The company restricts its exposure to the price fluctuation of raw materials by limiting its un hedged exposure.With the business of the company growing at a hectic pace and demand for trained and experienced manpower in excess of the supply,the risk of managing the people its tremendous.The company has to retain its existing trained workforce and also attract new talent for its different operations.New businesses are bought and integrated into existing business.To improve the performance of the staff at work,various refresher training courses are organized to update their knowledge with the latest technologies and management ideas.

The erratic demand from the overseas markets and threat of competition continue to be of concern.The Company has focused its efforts on marketing and introducing new products thereby mitigating to a certain extent,the effect of recession/slowdown in the industry.

Unrestricted speculation and high volatility due to trading in commodity exchange could have a negative effect on the growth of the industry.

f) Foreign Exchange.

Volatile currency movements can affect the profits of the Company.Your management continues to take steps cover foreign exchange to mitigate the risks of appreciation of rupee against US Dollar.

g) Internal Control and its adequacy.

The Company has adequate internal control procedures in accordance with its size and nature of business.The internal control system,adopted by the Company,effectively ensures that all assets are safeguarded and protected against any loss from unauthorised use.

h) Financial / Operational Performance.The Companys Financial Performance & Analysis:

Particulars	For the Year ended 31st March (Rs.in Lakhs)
	2015	2014
Sales and Other Income	0.16	3319.68
Profit Before Interest and Depreciation	(61.58)	492.84
Interest & Finance Charges	61.98	176.14
Depreciation	205.32	268.38
Profit before Tax	(328.90)	48.30
Less: Provision for Taxation
Current Tax		9.20
Deferred Tax	(221.02)	35.99
Net Profit After Tax	(107.88)	3.11
Balance b/f from previous year	469.68	466.57
Depreciation on assets having no useful life	(134.96)
Total	226.83	469.68
Balance carried to Balance Sheet	226.83	469.68

i) Human Resources / Industrial Relations.

The Company continues to place significant importance on its Human Resources and enjoys cordial relations at all levels.

CAUTIONARY STATEMENT:

Statements in this " Managements Discussion and Analysis" describing the Companys objectives,projections,estimates,expectations or predictions may be "forward- looking statements" within the meaning of applicable securities laws and regulations.Actual results could differ materially from those expressed or implied.Important factors that could make the difference to the Companys operations include global and Indian demand,supply conditions,finished goods prices,changes in Government regulations,tax regimes,economic developments within India and the countries in which the Company conducts business and other factors such as litigation etc.