Bambino Agro Industries Ltd Management Discussions.

Operational and Financial Performance during the yean

2017-18

to last year is as follows;

Particulars Year Ended 31st March 2018 Year Ended 31st March 2017
1. Production-MT 47474 54240
2. Sales - MT 27842 34204
3. Sales Turnover 16867.15 20786.30
4. Profit Before interest, depreciation, tax & other 1483.81 1687.02
5. Net Profit/(Loss) aftertax & other adjustments 373.93 338.78

Industry structure and development

Your Company operates in the packaged food segment mainly comprising of all pasta related food products and ready-to-cook food namely, instant pasta, instant soups, and ready to eat snack segment. Urbanization and increasing number of working women has pushed consumers to look for products offering convenience. This is leading to trading up from unpackaged to packaged and unbranded to branded products. Additionally, consumers are more aware and health conscious which has led them to choose packaged food products more wisely. Given that the industry is underpenetrated, improved competition will create more awareness and better availability through stronger distribution and bolster volume growth.

Reinforcing your Companys presence in the market, we have attempted to reconfigure our strategy, resources, and quickly be adept to the rapidly changing environment. The leadership alignment has created the necessary intent to drive organic growth with successful strategies. The impact of this could be seen in the changing business growth trajectory. We are also looking forward to strengthen and drive our analogy of products by entering into category of cereals, liquid food and Whole wheat Atta with our base material.

Opportunities and threats

The food processing industry is seeing growth and profitability due to increased domestic consumption and growing capabilities to meet the standards and demand for traded commodities and processed goods around the globe. The food processing sector is growing at an average rate of 8 percent per annum per the Government of India (GOI) February 2018 budget report.

India ranks second in terms of global food production and is the worlds largest producer of many commodities though very little is processed owing to market disconnects and infrastructure challenges. If modern food processing technologies, cold storage techniques, and food quality grades are adopted, the sector is expected to gain strength and the link between agriculture and manufacturing will forge. Analysts expect a stronger food processing sector will address some of the rising concerns of food wastage and farmer profitability. As disposable incomes rise, consumer diets are diversifying and people are demanding greater convenience and a higher-degree of processed and prepared products. Even though policy reforms suggest progress, import of non-standardized foods and ingredients is a challenge owing to regulatory and tariff barriers.

Future Outlook

Fast growth in the food processing sector has a key role to play in strengthening Indias economy by improving agriculture trade in both domestic and international markets. It holds immense relevance in ensuring food security of the country and is a crucial factor in reducing post harvest wastages. A thriving food processing industry is bound to give better returns and improve the livelihood of our farmers. Its a tough way ahead, but not far! Interest in functional foods and drinks has been fueled by a desire for convenience as well as health and will continue to grow in India. This is fueled by a strong link between diet and health.

The overall economic environment will impact all our businesses but we expect that we will be able to tide over it better than industry on account of strong brand, relatively lower dependence on wholesale channel and a culture of thrift that has been institutionalised.

Discussion on Financial Performance with respect to Operational Performance

Your companys key thrusts for the current year would be to deliver profitable growth through introduction of premium pasta products, venturing into liquid food, cereal and expanding its base in food category, aggressively scale up the FMCG initiatives . We continue to develop new products, improve quality and nutritive value of new and existing products. The company also seeks to enhance supply chain and sales distribution capabilities. Strong management and technical capabilities, good financial flexibility, experience in more than 3 decades in manufacturing and marketing the pasta products all these initiatives are expected to provide Sustainable growth by establishing the company as the leading FMCG player in the pasta segment.

Risks & concerns

The major risks faced by our company is intense competition from both organized and unorganized sector and price wars resorted by competitors, which may affect the profitability. Volatility in commodity prices is the other significant risk.

Internal Control Systems and their adequacy

The Company has an adequate internal control system commensurate with the size and complexity of the organization. The Company has undertaken a comprehensive review of all internal control systems to take care of the needs of the expanding size of the Company and also upgraded the IT support systems. A system of internal audit to meet the statutory requirement as well as to ensure proper implementation of management and accounting controls is in place. The Audit Committee periodically reviews the adequacy of the internal audit functions.

Human relations/Industrial relations

The company continues to provide extensive training to its sales team to improve its product knowledge and selling skills. The employees are motivated by creating employee friendly working environment and attractive compensation management. The relation with workers and employees remained cordial during the year under review. The company employed 247 employees during the year.

Cautionary Statement

Statement in this "Management Discussion & Analysis" may be considered to be "forward looking statements" within the meaning of applicable security laws or regulations. Actual results differ materially from those expressed or implied, important factors that could make a difference to the companys operations include Indian demand supply conditions, raw material availability and prices, agricultural yield, Government regulations besides other factors such as litigations and court cases.