ambar protein industries ltd Management discussions

A. INDUSTRY STRUCTURE AND DEVELOPMENTS:

The Edible Oil market is likely to witness a stable growth rate over the forecast period driven by growing demand from emerging markets. Increasing family disposable incomes, rising urbanisation rates, changing dietary habits along with strengthening buyer power will support the Edible Oil market growth between 2020 and 2026.

Considering the rapidly changing market landscape, companies are changing their perspectives on expanding beyond traditional markets. In addition to focusing on widening applications, introducing new product portfolios, most food and beverage companies are planning to capture more domestic markets.

Challenges related to distribution channels, intense competition, pricing issues and shifting consumer preferences will continue to put pressure on vendors profit margins.

The retail segment is anticipated to boost the trades of edible oils owing to reputable chain of retail outlets and sturdy su pply chain of edible oil products. Vegetable oil usage has elevated in developing nations owing to surging retail sector, rising requirement from growing population, and increment in the general household revenue. In addition to this, makers of edible oils are accepting enhances techniques of processing to provide affordable and healthier oil.

B. OPPORTUNITIES AND THREATS.

Demand for edible oils in the domestic market is great and one of the trends emerging in the market that will have a positive impact on the growth of the market up to pre-Covid -19 pandemic. But the Covid-19 Pandemic have influenced negatively on the consumption of Edible oils. Fluctuating price of raw material, restrictions on exports and imports imposed due to Covid-19 restrictions and guidelines imposed by WTO are the major challenges in the market. The fluctuation in the price is also 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.

C. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE.

Presently the company has dealing in segment of refining cotton seed oil and trading and also purchased & packed Refined Cottonseed, Groundnut Oil, Refined Sunflower, Refined Maize Oil and Soybean Oil for resale.

Processing of Cottonseed for Edible Oil

we are purchasing Raw Material i.e Cotton Raw Oil. Crude oil we are purchasing by tanker from crushing oil mill and we offload after checking quality Parameter we are offloading in storage tank. (Crude oil Storage tank)

Our Finished Product Refined Edible oil Derived after processing different stage after Crude Edible oil. Processing derived in three stage Alkyl Refining, Bleaching & Filtration & Deodorization.

• Alkyl Refining: Crude oil feeding and heating by heat exchanger get desired temperature that stage we are addition Phosphoric acid & causticiye for removing impurities like gums, coloring matter, foreign matter & fatty acid with become metal soap. Finally get we call product Neural oil.

• Bleaching & Filtration: Neutral oil heat through heat exchanger by applied steam, that stage on desired temp can addition Activated Clay & Activated Carbon for removing Coloring impurities and Excess metal soap. Finally get after Filtration clear oil called as a bleached oil.

• Deodorization: Bleached oil passing through deodorization process there removing odoriferous material by distillation column with different stage heating by steam. Finally after filtration get refined oil thats oil cool down by heat exchanger and transfer to storage tank where we are storing refined oil.

During the year, your company has refined 21896.32 MT of cotton seed oil in its refinery (Previous Year: 27457.91 MT) Company also purchased & packed 1807.84 MT Refined Groundnut Oil, Refined Sunflower, Refined Maize Oil, Mustard Oil and Soybean Oil for resale.

Our total business operation income has increased to 34507.72 Lakhs from 33974.81 Lakhs in the previous year.

D. OUTLOOK

The long-term outlook of edible oil demand in India is favourable on expectation of increasing population, increase in per capita consumption which in turn would be driven by changing lifestyles, growing urbanization, increasing proportion of middle-class population and steadily rising affluence levels. The near-term outlook for the edible oil companies is expected to be stable on steady edible oil domestic demand and improvement in operating margin due to increasing refining operation.

In the coming season cotton growing is expected to be very higher because of the prices for cotton are ruled very higher and better than the Government Minimum Support Price. In addition to this, all the farmers of millets and chillies are going to sow only cotton because they incurred heavy losses due to sudden fall of all commodity prices at the time of harvesting season.

E. RISKS AND CONCERNS Price Volatility

The high volatility in edible oil prices and restriction on movements due to Covid-19 virus, the domestic participants are exposed to the risk of unexpected squeeze on margins because of mismatch between the prices of raw materials and final products (which are both linked to domestic factors as well as global ones. Due to implementation of Covid-19 Lock Downs it impacted negatively on Production.

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

Thus, your Directors are optimistic in utilizing the production capacities and to overcome the post COVID-19 pandemic, to ensure better working results in the ensuing years.

F. EDIBLE OIL INDUSTRY OVERVIEW IN GUJARAT

The state of Gujarat is one of the leading Processors of cotton in the country and as such the availability of raw material i.e. cottonseeds availability will be very good.

G. OVERALL BUSINESS ACTIVITY AND FINANCIAL PERFORMANCE OF YOUR COMPANY:

During the year, your company has refined 21896.32 MT of cotton seed oil in its refinery (Previous Year: 27457.91 MT) Company also purchased & packed 1807.84 MT Refined Groundnut Oil, Refined Sunflower, Refined Maize Oil, Mustard Oil and Soybean Oil for resale.

Our total business operation income has increased to 34507.72 Lakhs from 33974.81 Lakhs in the previous year.

H. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has well-established processes and defined the roles and responsibilities for people at various levels. The control mechanism also involves well documented policies, authorization guidelines commensurate with the level of responsibility specific to the respective businesses. Adherence to these processes is ensured through frequent internal audits. The internal audits conducted are reviewed by the Audit Committee and requisite guidelines and procedures augment the internal controls. The internal control system is designed to ensure that financial and other records are reliable for preparing financial statements and other information which ensures that all transactions are properly reported and classified in the financial records.

I. CAUTIONARY STATEMENT

Statements in the Boards Report and Management Discussion and Analysis describing the Companies objectives, projections, estimates, expectations may be "forward looking statements" within the meaning of applicable security laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the companys operations include, among others, economic conditions effecting deman d / supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.