Ajanta Soya Ltd Management Discussions.

Cautionary Statement

This Management Discussion and Analysis statements of Annual Report has been included in adherence to the spirit enunciated in the code of corporate Governance approved by the Securities and Exchange Board of India, Statement in the Management Discussion and Analysis describing the Companys objectives, projections estimates expectation may be "Forward-Looking Statement" within the meaning of applicable securities laws and regulation. These statements are subject to certain risks and uncertainties. Actual result could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/ supply and price conditions in the Government policies, economic development, political factors and such other factors beyond the control of the Company.


The Company is engaged in the primary business of manufacturing of Vanaspati and various kinds of refined oil with shortening products for bakery like biscuits, puffs, pastries and other applications.

ASL is a leading manufacturer and marketer of Vanaspati, Edible Oils and Bakery Application since two decades. The company has focused on continuous expansion, across business verticals to consolidate, and its industry leadership over the years. The company is promoted by well established group having and proven track record in the fields of edible oils. By way of periodical expansion, ASL has increased its production capacity from time & again to cater to changing business environment & varied customer needs. The companys turnover has increased manifold over the decades and is expected to grow substantially in subsequent years. ASL also focuses on in-house research and innovation to be a low-cost manufacturer with high-quality products and innovative customer offerings.

ASL is now a company with a strong portfolio of brands viz. Dhruv, Anchal and Parv and enjoys reputed market share. ASL also offers its quality products as food ingredients to serve food manufacturers and food service industry.

ASL has strived for its commitment and promises to all the stakeholders and have valued their effort for making it a renowned brand, thereby increasing shareholder value. ASL has always been a front runner in taking all the developmental and social initiatives for its stakeholders including employees, customers, society, investors, promoters, vendors and government bodies.

Advanced technology has been the forte of AJANTA. Its state-of-the-art manufacturing plant has been following the highest standards of quality with an emphasis on sustainability. The Company after successful expansion in its refining capacity is now focusing on increasing the capacity utilization by market expansion for its different products and their variants for growing market demands.

Superior procurement and trading skills, continuous innovation, an endeavor to meet consumer needs and stringent quality control standards have enabled AJANTA to emerge as a highly-respected and admired Edible Oil company. Company is also investing continuously towards energy saving by adopting appropriate technologies as a measure to contribute to reduction in industrial pollution.

The management of the unit is very progressive by nature and the companys affairs are being managed by highly qualified/experienced professionals and the Company is promoted by well-established group having a proven track record in the field of edible oil.


India is a USD 2 trillion economy with GDP growing at more than 7% and a population of over 1.2 billion. It is the worlds largest edible oil importer, with oil and oil seed turnover of USD 25 billion and import export turnover of around USD 13 billion.

Considering the growing population and the food habits across India, edible oils form an essential part of the modern diet. The total consumption of edible oil in India is around 23 million metric ton out of which domestic supply is approx. 8 million metric ton due to stagnant production of edible oil seeds, leaving demand-supply gap of 15 million metric ton to be bridged by imports.

The edible oil industry worldwide is in good health as the rising population, disposable income and increasing demand has made sure that edible and cooking oil industry continue to perform efficiently and operate for a long time in the future. The global edible oil industry produces, imports and exports throughout the year and the major consumer countries rely heavily on their domestic production and imports. India is one of the largest producers and exporters of the edible oil across the continent and the world. The climatic conditions in India favor growing a variety of seeds from which oil can be extracted, they are called oil seeds. The growing population and the varied dietary habits of different and diverse demographics have ensured a thriving market for edible oil industry in the country and in Asia.

Edible oil constitutes an important component of food expenditure in Indian households. The edible oil industry is one of the most important within the agriculture sector in India, the worlds largest importer from Indonesia and Malaysia and the

third largest consumer. India is also the fourth largest oil seed-producing country in the world after USA, China and Brazil. The growth of edible oil consumption and increasing population coupled with limited availability of oil seeds and shifting of acreage to other crops have resulted in continuous demand-supply gaps for edible oil, which is being met by imports. Your Companys performance for the year 2018-19 may be viewed in the context of the above mentioned economic/ market environment.

Opportunities and Threats

The continued growth of the Indian Foods market represents an enormous opportunity for a steady growth in Revenues and Profits for companies like us. Also, with the rural India being revisited by marketers through the modern retail (haat) philosophy, the opportunity is huge.

Increasing income, urbanisation, changing food habits and deeper penetration of processed foods will be key drivers of future consumption growth of edible oil in the country.

India is also seeing a great increase in life style led diseases like heart ailments and cardio vascular illness which is said to rise much higher than other nations; this creates a potential for healthy edible oil. Competition from Indian and global players remain a matter of concern and probable threat; while the company is well prepared to tackle such issues on an ongoing basis.

The continuing digitization of todays world presents both an opportunity and a threat. An opportunity because it enables the Company to communicate with and deliver to consumers in a far more focused manner than was possible in the predigital age. However, it is also a threat because it enables smaller competitors to reach out to consumers in a manner not possible in the pre-digital age because of the high costs of legacy distribution systems.

The consistent rise in import of edible oil to bridge the demand-supply gap impacts the trade imbalance and results in significant outflow of foreign exchange. There is strong need to improve the production and productivity of domestic oil seed sector and promote domestic supply of edible oil to address the growing the demand -supply gap imbalance. The Direct risks are from the monsoon outlook, domestic and international production figures of mustered seeds, soyabean crop, palm oil and the government policies affecting rate of interest and duties applicable on the traded commodities. Fluctuating price of raw material is one of the major challenges in the market. The fluctuation in the price is due to various reasons such as environmental factors, crop diseases, and others. A fluctuation in the price of raw materials may have an adverse impact on the growth of the market during the forecast period. However, the deficit between production and consumption of edible oils is increasing rapidly, even after importing millions of tons of oil creating more demand for the edible oil.

Risks and Concerns

Your Company is exposed to commodity price fluctuations in its business the edible oil prices in India are directly correlated to international oil price movements and currency movements that make profitability vulnerable to unexpected fluctuations. Key risks for the edible oils sector include risks from change in import-export regulations; change in the minimum support price (MSP) on oilseeds offered by the government; high dependence on monsoons and finally, the risk arising out of exchange rate fluctuations. Procurement of oilseeds at the right price and quantity, optimum utilization of processing units, their strategic location, a strong brand name and diversification of product offerings are likely to be the key success determinants for players.

Increase in the number of competing brands in the marketplace, counter campaigning and aggressive pricing by competitors have the potential to create a disruption.

The key determinants of business risk profile of the company are their ability to overcome the regulatory risk and agroclimatic conditions. Other operational factors include operating efficiency, product diversity, market position, and ability to secure raw material as well as the commodity price.

The profitability of edible oil companies is significantly influenced by regulatory changes and remains highly susceptible to the changes in the duty differential between import duties on crude and refined oil by the Government of India (GOI). Also, the profitability of these companies depends on the changes in the export tax levied by exporting countries, mainly Indonesia and Malaysia (that account for most of palm oil imports).

Risk is an integral part of any business environment and it is essential that we create structures and processes that are capable of identifying and effectively mitigating the same. Your Company continues to place a strong emphasis on the risk management and has successfully introduced and adopted various measures for hedging the price fluctuations in order to minimize its impact on profitability. Also, your Company has initiated setting-up of a framework to upgrade itself to a robust risk management system. Further Your Company is well geared with multi-processing capabilities to cater to the variances and changing consumer preferences.

Human resource / Industrial relations

The Company recognizes the importance and contribution of its human resources for its growth and development and is committed to the development of its people.

At Ajanta Soya Ltd., equal importance is given to the development of the companys human resource. ASL has always recruited the best talent available in the industry - people with years of expertise and experience behind them. The Company considers its employees to be the most valuable asset and is committed to provide a conducive work environment to enable each individual to fully realize his or her potential. The human resource programmes focus on strengthening key areas of Enhancing individual and organization readiness for future challenges. Management is investing in enhancing technical and managerial skills of employees for building competencies needed for growth plans. Our business review & performance improvement process continues to put focus on performance and periodic review of each of our businesses and individuals.

The Company has cordial relations with employees and staff. There are no industrial relations problems during the year and the Company does not anticipate any material problems on this count in the current year.

The total number of permanent employee of Ajanta Soya Limited as on 31st March, 2019 was 97 (Ninety Seven).

Internal Control Systems and Adequacy

The Company has established internal control systems for ensuring optimum use of resources and safeguarding the assets. The Internal Control Systems and procedure are adequate and commensurate with the size of the Company. These are routinely tested and certified and which covered all offices, factories and key business areas. The Internal audit team reviews the quality of planning and execution of all ongoing projects and activities involving significant expenditure to ensure that management controls are adequate to yield "value for money". Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimise the impact of such risks on the operations of the Company. The Internal Control Systems and procedure are adequate and commensurate with the size of the Company. These business control procedures ensure efficient use and protection of the resources and compliance with the policies, procedures and status.

Product wise Performance

Presently the Company has been dealing in Vanaspati & Refined Oil. The details of the Vanaspati & Refined Oil business segment is as follows:



Current Year (2018-19)

Previous Year (2017-18)



Value (Rs in Lakhs) Quantity


Value (Rs in Lakhs)
Vanaspati/ Refined Oils 93579.527 69465.36 47556.157 34604.55

Company Performance

During the year under review total income of the Company was Rs. 69566.86 Lakhs as against Rs. 35204.97 Lakhs in the previous year. The total expenses of the Company was 69848.11 Lakhs during the year as compared to Rs.34828.06 during the previous year. The Company had suffered a loss after tax of the year of Rs. 40.31 Lakhs against a profit after tax of Rs. 94.10 Lakhs in the previous year.

Key Financial Ratios:

Particular FY 2018-19 FY 2017-18 Changes
Debtor Turnover 32.14 19.04 68.80*
Inventory Turnover 14.64 9.40 55.74*
Interest Coverage Ratio 1.36 4.21 (67.70)*
Current Ratio 1.09 1.22 (10.66)*
Debt Equity Ratio 2.37 1.52 55.92*
Operating Profit Margin 0.30 (0.12) 350*
Net Profit Margin (0.06) 0.27 (122.22)*
Return on Net worth (0.01) 0.02 (150)*

*During 2017-18, the Company has installed new machinery and recommenced its manufacturing operations in the month of February, 2018. During initial commissioning and stabilisation process and low capacity utilisation, the utility cost remained high and secondly as per NGTs directive and by orders of CPCB and RPCB the boiler fuel has been changed from Petcoke to imported coal in Steam Boiler and PNG in Thermosyphons resulting in higher fuel cost. The capacity utilistion has been low in the first year after recommissioning of expanded capacity of new plant resulting in higher production costs and due to the same Company has suffered loss. Due to the said reason there is significant change in financial ratios.