Today's Top Gainer
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1. INDUSTRY STRUCTURE AND DEVELOPMENTS
Being into the business of rearing and hiving honey bees for the purpose of generation and export of honey the Company basically carries on the business of apiculture and falls in the Agricultural Industry. The Companies operated in an unexplored apiculture market and focused for bright growth opportunities in future.
The Indian economy commenced the fiscal year 2018-19 with a healthy 8.2% growth in Q1 on account of domestic pliability. The country remained one of the fastest growing major economies and possibly the least affected by global turmoil. By the end of the fiscal, the economy grew at 6.8%, driven by strong macroeconomic fundamentals and policy changes including GST stabilization, amendments to the policy/ code related to insolvency and bankruptcy, bank recapitalization and flow of foreign direct investment.
Despite the positive influences during the year, economy remained susceptible to domestic and geopolitical risks, particularly economic and political changes that can affect relative prices and hurt current and fiscal account deficit. Growth in agriculture and allied activities was estimated at 2.7%, down from 5% in FY 2017-18. Increase in public spending maintained the pace of overall investment increase, while the contribution from household and private sector has remained low during the fiscal.
Although the year started well a slowdown in economic growth and consumption was witnessed in the last quarter of fiscal 2018-19 which is ascribed largely to low growth in farm sector, liquidity crunch and reduced public spending on account of impending Lok Sabha elections.
The Indian economy is anticipated to grow at 7.3% in CY 2019 as per World Bank report dated April
2019. With key economic policies on track and the new central government formed, the focus on broad based economic growth and infrastructure development is likely to continue. Government push may encourage subdued private investors to participate, thereby nurturing private sector expenditure and boost investments. On the flip side, however, increased borrowing by the government and reduced credit flow from banking sector may restrict the opportunities for the private sector to borrow from, hedging any expansionary strategies. Thus, it is believed that a key step towards healthy over the past several quarters. In spite of the challenges, India is still expected to remain the fastest growing economy in the world with expected 5 trillion of GDP by 2024 from the current level of 2.7 trillion. (Source: Deloitte, World Bank).
The growth of global economy at 3.1% in 2018 was buoyed by a strong fiscal expansion in US, which has largely offset the deceleration in several other large economies. The recent improvements in global financial market sentiment and the waning of some temporary drags on growth in the Euro area also contributed to the overall growth. However, the escalating trade tensions still remain a key risk to global economic growth along with softening of manufacturing activity and substantial financial pressure experienced by the large emerging economies.
The global economy is projected to grow at 2.9% in 2019, down 0.1 % points from the previous forecast. For 2020, the global economy is projected to grow at 2.8%. The growth is anticipated on account of increase in the relative size of economies, such as India, which are anticipated to witness robust growth in comparison to slower-growing advanced and emerging market economies. In the emerging market and developing economy group, growth is expected to move up gradually from 4.4% in 2018 to 4.6% in
2020. Growth in emerging and developing Asia will go from 6.5% in 2018 to 6.3% in 2019 and 6.4% in 2020. Chinas economy is anticipated to slow down due to the combined influence of financial regulatory
tightening and trade tensions with the US, while Indias economic growth is expected to increase to 7.3% in 2019, benefiting from lower oil prices and a slower pace of monetary tightening policies than previously expected. (Source: World Bank, IMF)
INDIAN FMCG SECTOR
The Fast moving Consumer Goods (FMCG) sector is an important contributor to Indias GDP and the 4th largest sector in India. During the year, the sector witnessed healthy growth of around 14% of which a major part is attributed to the growth in volume and consumption. Economic growth, rising incomes, young population entering workforce and growing brand consciousness among consumers is driving the demand for branded products. A shift towards e- commerce and adoption of digital technologies is also fuelling consumption among internet and smart phone enabled consumers. Besides traditional brick and mortar shops, the growing catchment of online sales have also broadened customer base for the FMCG sector. With improving infrastructure, growth in disposable incomes, availability of internet and distribution push by FMCG players, rural consumption is expanding at a good pace too.
The FMCG sector in India is likely to continue the growth trajectory by virtue of essential drivers like rising population, favourable demographics, increasing affluence level and disposable incomes, increasing penetration and per capita consumption and rapid growth of organized retail and online channels. Various grass root level initiatives for the farmers by government including agricultural credit and direct subsidy transfer together with remunerative prices for crops is anticipated to boost farm income, which in turn would augment rural consumption.
The Indian FMCG sector has grown from 31.6 billion in 2011 to 52.4 billion in 2017, expanding at a CAGR of 8.8 per cent.
Compared with global consumption, the outlook for Indias consumer market looks promising. The demographics are favourable as India has a population of 1.3 billion and half of those people are under the age of 25. Per capita income of Indian population has increased to USD 1,804 in 2018 and is expected to grow at 8-9% in the coming years. As per BCG, Even assuming conservative GDP increases of 6% to 7% a year, we expect consumption expenditures to rise by a factor of three to reach 4 trillion by 2025. Indias nominal year-over-year expenditure growth of 12% is more than double the anticipated global rate of 5% and will make India the third largest consumer market by 2025 (The New Indian : The Many Facets Of A Changing Consumer dated April 2017).
The shape of the countrys income pyramid is also changing dramatically. As per BCG, by 2025 the Elite, Affluent and Aspirer households having annual income more than H5 lacs are likely to account for 36% of 305 million households in India as compared to 12% in 2015. They will account for 73% of total FMCG consumption. Out of these the Elite and Affluent households will account for 48% of consumption which will be double of that in 2015 (BCG-Reimagining FMCG in India). Furthermore, life style changes such as increasing number of women in workforce, young population entering workforce and increasing nuclearisation of families will lead to acceleration in consumption spending. About 34 per cent of Indias population is now urbanised (3 per cent increase since the 2011 Census) and would reach 36% by CY20.
This is another driver for consumption as people in urban areas have more access to jobs, higher income levels and education, and are more inclined to spend on branded products as well as towards premium offerings. Another driver of FMCG growth is the rising adoption of e-commerce channels. These include the strong value proposition offered by online merchants, proliferating payment platforms, strengthening delivery logistics, and significant financial investment in the sector. It is estimated that the number of online buyers in India will climb to 150-200 million by 2020 and online commerce may become 10-15% of sales in select categories.
All this presents a tremendous opportunity for a company like Apis which has a large repertoire of brands in personal care, consumer health and food and beverage space and has a vast distribution network across urban and rural markets in both offline and online platforms.
2. OPPOTUNITIES AND THREATS
There is a huge opportunities for honey market to grow in India because of availability of raw material and other incentives provided by the Government. The opportunity in honey product will remain high considering enhanced demand in the international market as well as increase in consumption of domestic market. In India there is ample opportunity for new Retail food business taken up by the company as being increase in per capita income and growing spending on leisure activities.
Due to inflationary pressures, the fluctuation in prices of raw material and high prices of packing material will remain a major threat for honey market. But your Company is taking steps by negotiating with the buyers to get the requisite prices. In the Retail Food Division the product category being new in India, Company has to establish it among consumers and match the Taste preference of customers.
Fluctuation in Foreign Currency rates may result into both opportunity and threat for us since your Company is predominantly is Export oriented.
The Company will continue to explore the honey market as a whole and even aims at business expansion and exploration of unhidden areas of work.
4. RISK AND CONCERNS
Due to Increase in demand for the Raw Honey there might be an increase in the price of Raw Material which in turn might affect the margins of the company. The Competition is expected to be more aggressive driving the price pressures. Uncertainty in global economic growth coupled with inflationary pressures might impact the growth of the Company. For its Food division company has to compete with already well established Food chain operators and make a niche for its product in the highly competitive market
The shares of the company being non - frequently traded and the high price of the shares is 17.70 as on 8th December, 2016 and low price of the share is 12.03 as on 19th October, 2016.
5. RISK MANAGEMENT:
Your Company has laid down procedures to inform the Board members about the risk assessment and risk minimization procedures. The Company is exposed to risk from foreign exchange and price risks.
Foreign Exchange Risk
The Companys policy is to actively manage its long term foreign exchange risk within the framework laid down by the Board. A Volatile dollar rate is always a threat for the business but the Company had minimized such risk by taking dollar based fund facilities from Banks.
There is substantial increase in Raw Material Prices. But your Company is continuously negotiating with the existing vendors to get the requisite price hike.
6. INTERNAL CONTROL & THEIR ADEQUACY:
Your Company believes in formulating adequate and effective internal control system and implementing the same to ensure the protection against misuse or loss of assets and interest of the Company are safeguarded and reliability of the accounting data and accuracy are ensure with proper checks and balances.
The Audit Committee meets periodically reviews the effectiveness and suggests improvement for strengthening them. The culture of self-governance and internal control sustained through varied set of activities including well defined policies and self-certification on adherence to the policies and procedure. Good governance, sound internal controls forms the habitat in this environment.
The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically appraised of the internal audit findings and corrective action taken.
7. SEGMENT WISE PERFORMANCE
Segment wise reporting is not applicable to the Company for the year 2018-19.
8. FINANCIAL OPERATION AND PERFORMANCE:
In the current year, your Company has been successfully achieved the Standalone Net Sales of 22,502.12 Lakh as compare to previous year 19,667.80 Lakh. The Companys Exports of 11,174.50 Lakhs as compare to previous year 12,009.31 Lakh during the year under review.
During the year, Companys profit before tax has amounted to 927.61 Lakh (previous year 1,134.18 Lakh). Earnings per share were 16.83 as compared to 20.58 for the previous year.
The key ratios arising out of the Companys performance comprised:
Debtor Turnover ratio: 21%
Inventory Turnover ratio: 34.50%
Interest Coverage ratio: 5.78%
Current ratio: 1.53%
Debt Equity ratio: 0.81%
Operating Profit Margin ratio: 8.31%:
Net Profit Margin ratio: 5.61%
Return on Net Worth: 12.29%
Core competency in the unexplored market segment and huge growth prospects in honey and honey related products marks the strength of the Companys product.
10. INDUSTRIAL RELATIONS AND HUMAN RESOURCE MANAGEMENT:
In an ever-increasing competitive and challenging world, Apollo Tyres continues to focus on its people pillar as a key to achieve its core objective of sustainable growth and social objectives. The Company acknowledges the role of the Human Resource (HR) community as a strategic business partner in the organization and continues to invest in a wide variety of HR activities.
During the year under review, the Company continued with its HR strategy and a sharp focus on the following themes:
With One Family as one of the core values of the Company, it actively engages with the employees at all levels. The Company looks at engagement as beyond the traditional event-based engagement programmes and at a holistic engagement initiative where the endeavor is to provide clear job knowledge; clarity about the scope of opportunities (both horizontal and vertical); an environment, which promotes learning and sharing; open communication and others. The Company endeavors to provide an engaging environment by ensuring that the above parameters are met. A robust Internal Job Posting system ensures that employees are aware of available prospects. The leadership team actively participates in the quarterly town halls as it answers any and every questions from the employees. Finally, each location has a list of
events to continuously engage with the employees and, at times, their families as well. The Hungary plant has a regular programme for employees and their family members called Family Factory Visit and gives an opportunity to the closest relatives of the employees to visit the plant. The Indian plants held various events like festival celebrations, Womens Day celebrations, running and wellness programmes and others.
The performance management process, Horizon, completed its third annual cycle. The Companys performance management system gives ample opportunities to each employee to discuss not only about the performance but also the opportunities available in the organization.
In an increasingly competitive world, talent management has become a key focus area for the HR function in the organisation. The Company actively endeavors that its employees look at job enlargement and rotation opportunities. For the Company, supporting such a journey is a win-win arrangement wherein employees discover avenues of growth and the organisation can leverage well-inducted candidates with a deep understanding of its business and culture. Multiple people across the organisation were given the opportunity to work in new functions or move to a new location.
As on March 31, 2019, in all there were 740 employees on the rolls of the Company. Industrial relations situation in units of the Company continued to be cordial and peaceful.
11. CAUTIONARY STATEMENT:
Statement in this report describing the Companys objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable laws and regulations. Although we believe our expectations are based on reasonable assumptions, these forward-looking statements may be influenced by numerous risks and uncertainties which includes raw material availability, prices, cyclical demand and changes in government regulation, tax regimes and other incidental factors that could cause actual outcomes and results to be materially different from those expressed or implied.