Kothari Fermentation & Biochem Ltd

BSE: 507474 | NSE:  | ISIN: INE991B01010 
Market Cap: [Rs.Cr.] 15.68 | Face Value: [Rs.] 10
Industry: Food - Processing - Indian

Management Discussions

The Management of Kothari Fermentation & Biochem Ltd. is pleased to present itsEleventh Analysis report covering segment wise performance and outlook.

The Financial Year 2012-2013 was the year of moderation for the Indian Economy. As perthe provisional estimates of the Central Statistical Organization, the GDP growth for2012-2013 was estimated lower at 5% compared to a 6.2% in the previous year.

In such an environment, the growing companies are often hampered by business systemsthat simply cannot keep up with the changing requirements, but your company with thephilosophy of sound business ethics and strong professional acumen aligns the interests ofall the segment of its stakeholders and the society at large.

Your company has also been implementing a General Information System (GIS) in theorganization and also providing Revenue Management Services to utilities over the past fewyears and continues to get new customers.

The company has business of Manufacturing Yeast during the year 2012-13.

Industry Structure and Developments

The Indian yeast Industry, there are three major companies manufacturing yeastincluding our company. The other two companies are multinational companies. With anexcellent team of technical and commercial professionals with expertise in yeastsmanufacture, we offer better quality of our products in comparison to the products of theother multinational companies.

Opportunities and Threats

The growth of yeast market is directly linked to the increasing trend of processed andfast food items, especially bakery items. As per the current trend, India is presently oneof the most promising markets for Baker's yeast, as its demand is continuously increasingwith the rise in population and changing habits of Bakery products. India's estimated percapita consumption of bread, as compared to other European and developing countries ofAsia is amongst the lowest.

The company is constantly working to enter into markets, other than Bakeries, and hadengaged a team of talented scientists and engineers to develop technologies for themanufacturing of Yeast based products needed for Distilleries, Feed, Food Pharmaceuticalsand Biotech Industries.

Due to presence of Multi National Companies (MNCs) in yeast industries in India, thecompetition in the market is obvious. Your Company, through continuous Research andDevelopment efforts, has been able to maintain the quality of yeast products as comparedwith the multinational companies.

Further the yeast industries is subjected to pollution problems and although thecompany has achieved zero discharge of polluted water by installing MEE (Multi EffectEvaporator) yet rare pollution problems cannot be ruled out.

Segment wise Performance

Manufacturing of Yeast is the only business segment of the Company during the year2012-2013. The brand names - Kothari "SUNRISE", "KF" and "FOURSEASONS" have been well established in the domestic and export market. The companyhas already exported its products to various countries.

The comparison of financial data with previous year's data, is provided under theheading "Discussion on Financial Performance with respect to OperationalPerformance" later in this Report.

Future Outlook

The company is regularly reviewing its whole structure and making changes for futureimprovements. Your directors are confident of further increase in production during thecurrent year. The company is constantly working to enter into markets for themanufacturing of Yeast based products needed for Distilleries, Feed, Food Pharmaceuticalsand Biotech Industries.

However, continuous increase in power tariffs and fuel costs are deterrent to thegrowth and profitability of the company. But, various control systems have been deployedfor the reduction of costs and improving of the operating efficiencies. The Companyexpects to earn more profits in current year by higher production and efficiency.

Internal Control System and their adequacy

The Company has an internal control system with proper internal delegation ofauthority, supervision, checks and procedures. This system is reviewed and updatedperiodically in order to improve the same to meet the business requirements. The InternalAuditor of the Company has ensured adequacy and compliance of Internal Control System andthat it commensurate with the size and nature of the Company and also suggests necessarychecks and balances to increase the effectiveness of the system

The Board of Directors, Audit Committee and the Management ensure that the internalcontrol system operate effectively within the organisation.

Discussion on Financial Performance with respect to Operational Performance

2012-13 (Rs. in lacs) 2011-12 (Rs. in lacs)
Particulars Manufacturing of Yeast Manufacturing of Yeast
a) Revenue
— Net sales 4390.50 3524.90
b) Result
— Before Tax & Interest 356.05 335.63
i) Finance Exp. 118.22 103.44
ii) Other Unallocable Exp.
Net Profit before Tax. 237.83 232.19
c) Capital Employed 2769.91 2605.95

Material Developments in Human Resources/Industrial Relations Front, including numberof people employed

The Company believes that the competence and commitment of its people are the keydrivers for growth of the organization. There have been excellent relations between theemployees at various levels and the management. The managers help employees identifyobstacles and teach them leadership techniques through training, mentoring and coaching.The Company responds to genuine grievances of employees in order to foster warm andcordial relationships between the management and the employees, increases job satisfactionof employees and ensures that employees can add value to their lives. There were 155persons directly employed by the Company during the previous financial year on an averagebasis.

Cautionary Statement

Statements in this report on Management Discussion and Analysis describing theCompany's objectives, projections, estimates, expectations or predictions may be"forward looking statements" within the meaning of applicable securities laws orregulations. These statements are based on certain assumptions and expectations of futureevents. Actual results could differ materially from those expressed or implied. Importantfactors that could make a difference to the Company's operations include global anddomestic demand supply conditions, finished goods prices, raw material cost andavailability, changes in Government regulations, tax regimes, economic developments withinIndia and other factors such as litigation and industrial relations. The Company assumesno responsibility to publicly amend, modify or revise any forward looking statements, onthe basis of any subsequent developments, information or events.

For and on behalf of the Board
Place : New Delhi Pramod Kumar Kothari
Date : 12th August, 2013 Managing Director
Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

Pramod Kumar Kothari , Chairman & Managing Director

Prasanna Kumar Pagaria , Director

Ratan Lal Dudheria , Director

Kapil Dev Puri , Director

Company Head Office / Quarters:

16 Community Centre,
1st Floor Saket,
New Delhi,
New Delhi-110017
Phone : New Delhi-91-011-26963167 / New Delhi-
Fax : New Delhi- / New Delhi-
E-mail : kfbl@airtelmail.in
Web :


Abhipra Capital Ltd
GF Abhipra Complex,A-387 G T Karnel Rd,Azadpur,Delhi - 110033

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