Ambar Protein Industries Ltd Management Discussions.

A. INDUSTRY STRUCTURE AND DEVELOPMENTS:

Cotton is an important cash crop in India as its lint is the major raw material for Indian textile industry. India is now the largest producer of cotton in the world and during past 2-3 years, cotton lint production was 340 lakh bales (of 170 kg) or more. Fibres however constitute only one third of the weight of the harvested seed cotton while the remaining two third is constituted by the seed. Hence about 108 to 115 million tonnes surplus cottonseed is available every year in our country for processing. Cotton seed is rich in nutrients and depending upon the species, contains about 14-24% oil and about 15-26% protein (Shaikh and Balasubrahmanya, 1999; Chakraborty and Mayee, 2010).

Whole cottonseed was traditionally fed to the cattle and it was only in the early twentieth century that cottonseed was commercially exploited for edible oil production. First cottonseed oil mill in India was established at Navsari in 1914 and it took many efforts from Government and entrepreneurs to promote its use as edible oil and to convince cattle owners to use cottonseed cake in place of whole cottonseed for feed purposes. Today annual production of cottonseed oil is about 13-14 lakh tonnes and it is the third largest contributor to the Indian edible oil basket. It has become popular in cotton producing states mainly in Gujarat.

B. OPPORTUNITIES AND THREATS.

As mentioned in the earlier Annual report, 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 during the forecast period increasing the growth opportunities in the industry. But then, as per few market watch reports there are few hindering factors and one of the major factors hindering the growth of this market is fluctuating raw material price. 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.

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.

Company has installed new 200 TPD Refinery w.e.f 01st April, 2019.

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 that’s oil cool down by heat exchanger and transfer to storage tank where we are storing refined oil.

During the year, your company has refined 2610.93 MT of cotton seed oil in its refinery (Previous Year: 23430.29 MT)

Company also purchased & packed 3558.20 MT Refined Groundnut Oil, Refined Sunflower, Refined Maize Oil, Mustard Oil and Soybean Oil for resale.

Our total business operation income has increased to 23045.28 Lakhs from 20602.75 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

Your Company is exposed to commodity price fluctuations in its business. All major raw materials as well as finished goods being agro-based are subject to market price variations. Prices of these commodities continue to be linked to both domestic and international prices, which in turn are dependent on various Macro/ Micro factors. Also Commodities are increasingly becoming asset classes. Prices of the Raw materials and finished products manufactured by your Company fluctuate widely due to a host of local and international factors. 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. Your Company also has initiated setting-up of a framework to upgrade itself to a robust risk management system.

Fuel Prices

Fuel prices continue to be an area of concern as fuel, particularly Rice Husk, is widely used in manufacturing operations has a direct impact on total costs. Your Company has taken productivity linked measures aimed at controlling costs and taken further steps to focus on production of high margin products.

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.

OVERALL BUSINESS ACTIVITY AND FINANCIAL PERFORMANCE OF YOUR COMPANY:

During the year, your company has refined 2610.93 MT of cotton seed oil in its refinery (Previous Year: 23430.29 MT)

Company also purchased & packed 3558.20 MT Refined Groundnut Oil, Refined Sunflower, Refined Maize Oil, Mustard Oil and Soybean Oil for resale.

Our total business operation income has increased to 23045.28 Lakhs from 20602.75 Lakhs in the previous year.

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 company’s operations include, among others, economic conditions effecting demand / 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.