bcl industries ltd share price Management discussions

Annexure - A :

To the Directors Report Global economic review

Geopolitical uncertainty pushed inflation to an unprecedented level at the beginning of the year. In the last few quarters, inflation has been perceived to be stabilising, indicating a positive outlook.

The global economy appears poised for a gradual recovery from the powerful blows of the pandemic and Russia-Ukraine war. The global economic output is expected to witness steady growth, driven by stabilising inflationary pressures, reviving consumer sentiment and investor confidence. The employment scenario in the US and other advanced economies has recovered from pandemic levels and rising disposable income is also likely to support growth in the coming years.

Emerging and developing countries are also witnessing growth across multiple sectors, powered by government focus on infrastructure and manufacturing sectors. China has also recovered from the COVID impact on its economy and industries and is on the mend.

Central banks monetary policies are expected to bear fruit, leading to a decline in global inflation from *8.7% in CY22 to 7.0% in CY23 to 4.9% in CY24. It is anticipated that the pent-up demand in numerous economies, along with a significant reduction in inflation, will contribute to accelerated economic growth in CY23.

[*Source: IMF World Economic Outlook, April 2023].

Outlook

Despite inflationary pressures, the global economy is supported by a robust labor market, increased domestic spending, an influx of foreign capital and a prudent response to the energy crisis in Europe.

Many emerging markets and economies (EMDEs) have already recovered, which has bolstered real incomes. An optimistic global outlook would also be determined by the speed and effectiveness of fiscal and monetary policy actions implemented to boost economic expansion. The central banks have been tightening monetary policy, which is expected to curb sticky inflation and foster long-term growth.

A stronger boost from pent-up demand in numerous economies or a faster fall in inflation is likely in the course of 2023. The governments and central banks of the world are expected to play a major role in accelerating economic growth through targeted, need-based measures.

Indian economic review

The Indian government has managed to maintain a favorable domestic policy environment and prioritise structural reforms, allowing the countrys economy to remain resilient amid global challenges. Projections indicate that Indias economy will continue to progress and expand at a rate of 7.2% during the fiscal year 2022-23.

Additionally, the countrys stable inflation rates, higher disposable income and continued investment in infrastructure development are expected to contribute positively to economic growth in the future.

Various high-frequency indicators, such as GST collections, railway and air traffic, electronic toll collections and E- Way bill volume, suggest a robust economic recovery in India. This persistent growth momentum has positioned India as an attractive investment destination. Moreover, India is expected to retain its status as the fastest-growing G-20 nation in the coming years. Indias presidency of the G20 Summit in 2023 has also bolstered its international stature.

Despite the challenges, the Indian governments prudent initiatives, such as the PM Gati Shakti - National Master Plan, the National Monetisation Plan (NMP) and the Production-Linked Incentive (PLI), have been instrumental in fostering economic growth. The Reserve Bank of India (RBI) has also taken prudent and proactive measures to ensure financial stability and address liquidity constraints. These factors have contributed to the Indian economys resilience and stimulated substantial investments.

In response to monetary policy actions by the RBI, together with other supply side measures, headline CPI inflation has gradually declined from its peak of 7.8% in April 2022 to 5.7% in March 2023 and is projected to moderate further to 5.2% in Q4, 2023-24.

Outlook

Despite global challenges, Indias economic activity has remained robust due to a favorable domestic policy environment and the Governments continued emphasis on structural reforms.

India is expected to be among the fastest growing major economies of the world in 2023-24, accounting for 15% of global growth—the second largest contribution, and higher than that of the US and EU put together.

A combination of rising disposable income, easy access to credit and lowering interest rates in the wake of a stabilising inflation trajectory will bode well for economic growth of the country, going forward.

Industry overview

FMCG

The FMCG market is rapidly expanding. The nature of demand and supply in the market is undergoing shifts. Consumers are becoming more demanding and prepared to spend more on quality rather than quantity. Rising disposable income, changing lifestyles, and a rise in packaged food consumption are likely to support robust growth in the Indian FMCG sector in the coming years. It is also one of the most attractive sectors for investors as it has high growth potential with low competition.

No FMCG player can afford to ignore India, which is mostly inhabited by middle-class families and has an average age of 28.2 years. This industry has also benefited from government efforts to improve its contribution to GDP.

In the fiscal year 2022-23, sales of everyday necessities, food, and home and personal care products increased by 8%, whilst sales of electronic devices increased by 25%. ¹ The industry is set to achieve a valuation of over $15 trillion by 2025. The registered CAGR is 5.4% from 2018 to 2025.²

We know that demand for FMCG items is influenced by both rural and urban markets. Rural markets, which account for around 35% of FMCG industry sales, are exhibiting signs of revival as a result of optimistic winter crop planting, indicators of higher farm revenue, and continuous government stimulus.

Initiatives taken by the government to improve the sector:

• In 2022, Government announced that food processing industry has invested Rs. 4,900 crore (US$ 593 million) so far under the PLI scheme which was approved in March 2021, with a budget outlay of Rs. 10,900 crore (US$ 1.3 billion), likely to increase sales and exports of food products.³

• As many big firms redesign their operations into larger logistics and warehouses, GST is projected to convert logistics in the FMCG sector into a contemporary and efficient model.

• The NITI Aayog has set aside Rs. 1,000 crore (US$ 120.7 million) for SETU to construct incubation centres and promote skill development to support the nations startup ecosystem while improving the ease of doing business..

A combination of rising income and stronger aspirations has led to an increase in rural consumption. Branded items are becoming increasingly popular in rural India. On the other hand, as the unorganised markets proportion of the FMCG sector declines, the growth of the organised sector is expected to accelerate due to increased levels of brand consciousness, which will be bolstered by the expansion of modern retail. The growing young population, particularly in urban areas, is a major factor boosting Indias demand for culinary services.

Distillery Industry

Global scenario

The worlds population is expected to reach 10 billion by 2050. As the population develops, so does the demand for alcoholic beverages. Crop output, farming pursuits, and commerce volumes will need to increase to support the expanding population. As a consequence, companies in this market should benefit from rising consumer demand for items created by distilleries, which generate spirits, throughout the projected period.

The worldwide spirits market expanded from $143.48 billion in 2022 to $153.33 billion in 2023, with a compound annual growth rate (CAGR) of 6.9%. The Russia-Ukraine crisis has, at least momentarily, impeded the likelihood of a COVID-19-related global economic rebound. Economic sanctions on a number of countries, a rise in commodity prices, and disruptions in the supply chain as a result of the war between these two countries have led to inflation in the cost of products and services, affecting many markets throughout the world. The worldwide spirits market is expected to reach $193.02 billion in 2027 at a CAGR of 5.9%.⁵

The European alcoholic beverage market is divided into Germany, France, Italy, the United Kingdom, Russia, and the rest of Europe, with demand and consumption expanding at a rapid pace. The evolving eating and drinking habits and lifestyles of millennials with significant disposable income are the primary drivers of this increase in demand for alcoholic beverages.

Indian scenario

Growth in the Indian alcoholic beverage business has accelerated as a result of innovation during the previous five years. With an expected market size of $52.5 billion in 2020, India is one of the worlds fastest-growing markets for alcoholic drinks. IMFL controls the Indian alcoholic beverage market. Country spirits, which are especially popular in Indias northern regions, are the countrys second most popular alcoholic beverage.

Alcohol imports to India jumped 54% in FY23. (April-January). Other types of cheese, fruits like tangerines, raspberries, blueberries, and other fruit categories like dragon fruits were up 26% compared to the previous year because alcoholic beverages are primarily a fermented form of the sugars in berries, grains, fruits, and other ingredients that primarily contain ethyl/ethanol alcohol.

Ethanol in India

1016 crore litres by 2025. As a result, the value of the ethanol business would more than double, from over 9,000 crore to over 50,000 crore. It is predicted that 165 LMT of excess grain would be used yearly beginning in 2025 to generate ethanol, resulting in a payout to farmers of around 42,000 crore. Beginning in 2023, the government intends to offer new vehicles that can operate on E20 gasoline, followed by flex fuel vehicles in 2024. 6

In an effort to lessen its reliance on imported crude oil and achieve the target of net zero by 2070, the Indian government is encouraging domestic distilleries to generate ethanol for oil marketing companies (OMCs). It is anticipated that ethanol output will expand by three to five times in the future to fulfill the demand for its 20% Ethanol Blending Programme (EBP).

Ethanol Blended Petrol Programme

Ethanol is an agro-based substance derived mostly from molasses, a by-product of sugar processing. During years of surplus sugarcane production and low prices, the Department of Food and Public Distribution (DFPD) announced a scheme on July 19^th, 2018 to provide financial assistance to sugar mills for the expansion and augmentation of ethanol production capacity in order to meet the ethanol distillation capacity restriction. The Ethanol Blending Programme (EBP) aims to accomplish ethanol-motor spirit blending in order to reduce pollution, preserve foreign exchange, and boost value addition in the sugar business, allowing farmers to erase cane price arrears.

The constraint of available ethanol distilling capacity was identified as one of the actionable areas in order to achieve 10% ethanol blending in gasoline by 2021-22 and 20% by 2030. In an effort to boost available feedstock alternatives and meet blending criteria, India has allowed the removal of extra stocks of rice and maize from state inventories. The Centre has broadened the scope of the Ethanol Blended Petrol (EBP) initiative to cover the extraction of fuel from surplus maize, jawar, bajra, and fruit/vegetable waste. Furthermore, the Centre has said that the cost of ethanol produced from destroyed grains will increase.

Ethanol blending plans received a major boost after India introduced the National Policy on Biofuels (NPB) 2018. In accordance with the revised policy, the target of achieving E10 was originally set for the year 2021-22, while the target for E20 was established for the year 2030. However, on World Environment Day in 2021, the Prime Minister declared the advancement of the E20 target to the year 2025-26 (as reported by the Press Information Bureau in 2021). Subsequently, in June 2022, the Government of India introduced amendments to the National Policy on Biofuels (as reported by the Press Information Bureau in 2022).

Evolution of the ethanol policy

2003	2006	2012	2018	2021	2022
Ethanol Blending Programme (EBP) launched	EBP is re-launched in 20 states and 4 UTS	OMCs and sellers decide price of ethanol	NPB 2018 launched	Ethanol procurement by public OMCS approved under revised NBP	Amendments to NPB 2018 (E20 by 2025- 26) and indicative target of 10% blending by Nov, 2022

 

	2008-9	2016	2019	2021	2023
Ethanol blending for fuel is made optional	The National Policy on Biofuels (NPB) launched and amendments made	Unrestricted movement of denatured ethanol allowed	PM Ji-Van Yojana launched to finance Integrated Bioethanol Projects (2G)	NITI Aayog roadmap released	E20 Launched by PM Modi in India Energy Week 2023.Target to expand to 84 retail outlets in 11 states/ UTS

Growth Drivers

India is a youthful country, with an average age of 28.2 years and the majority of the people of drinking age. Alcoholic beverage consumption has consistently increased throughout the years, and this trend is projected to continue in the future. The Company may capitalise on this trend by extending its production capacity and product offerings to match the growing demand, and because of strong discretionary income, there has been a continual growth in high quality and premium spirits in recent trends.

The distillery sector is always changing, with new technology and ideas being launched on a regular basis. BCL Industries can keep ahead of the competition by investing in R&D and using innovative technologies that increase efficiency and product quality.

Edible oil industry

Global scenario

The market for edible oils is anticipated to grow at a CAGR of 4.8% from 2022 to 2027, from USD 212.6 billion to USD 268.9 billion. The global consumption of processed foods is increasing as a result of changing lifestyles and rising population levels. Edible oils are an important component of processed foods. Moreover, the relevance of edible oils in taste enhancement has expanded with the continuing study and development of innovative goods such as confectionery and bakery items, ready-to-eat foods, and fast foods. A significant demand for edible oils is being driven in part by the rapidly changing food processing industry during the study period.⁷

The micro encapsulation process is a prominent technology that is progressively being adopted by the expanding food sector. According to a 2019 study from the Federal University of Santa Catarina in Brazil, oil encapsulation in the food business can increase the spectrum of its applications and avoid or lessen oxidation processes.

Oil encapsulation improves the flavor retention, shelf life, antioxidation, and storage time of processed food products. The encapsulation of edible oils is gradually gaining popularity in the global food industry due to its advantages in a variety of food applications, which is assisting in the growth of the edible oils market.

Indian scenario

Peoples growing health concerns have raised edible oil consumption across Asia-Pacific, particularly in China, India, Vietnam, and Indonesia, where edible oil consumption is highest. Moreover, the rising health concerns among consumers lead to the usage of fish oil as a nutritional supplement in developed countries such as Japan and Australia. Olive oil, in particular, has the highest growth rate due to its health benefits. From November to March, Indias edible oil imports increased by 8%, from 10.51 lakh tonne to 11.35 lakh tonne, owing to a significant increase in the import of crude palm and refined palm oils. The total import of vegetable oils for the first five months of the oil year 2022-23 increased by 22% to 70.60 lakh tonnes, up from 57.95 lakh tonnes in the same time the previous year.

Growth drivers

With rising health and wellness concerns, there is a greater need for better cooking oils. Consumers are increasingly interested in oils that are low in saturated fats, rich in unsaturated fats, and high in vitamins and antioxidants. Furthermore, rising population and urbanisation have increased demand for edible oils, as more people consume processed meals and dine out. This has resulted in an increase in the demand for cooking oils for commercial purposes, such as restaurants and food processing companies.

Outlook

The worldwide cooking oil market is being driven by strong demand for organic health-based goods, increased consumption of premium edible/cooking oils by health-conscious consumers, and rising demand from diverse applications such as confectionery, notably in the manufacturing of sweets. Furthermore, refined coconut oil and olive oil are being utilised more frequently in various baking applications since they have a bland flavor and help the product preserve its unique essence. The growing use of vegetable oil in emerging economies such as China and India is driving the global vegetable oil industry.

Real estate

Over the last few decades, Indias real estate business has seen substantial expansion and transformation. India, with a population of over 1.3 billion people, has a high demand for residential and commercial real estate. The industry has grown to be a significant contributor to the countrys economy, with strong ties to other industries including as construction, banking, and insurance.

The commercial real estate industry in India is also expanding fast, with factors such as economic development, foreign investment, and the expansion of e-commerce driving demand for office and retail space. Major foreign corporations have been investing in India, increasing demand for office space. With the expansion of organised retail and shopping malls, retail space is also in high demand. The Indian real estate business is highly regulated, with government policies and regulations affecting the sector in a variety of ways. The Real Estate (Regulation and Development) Act of 2016 (RERA), for example, has increased openness and accountability in the sector by requiring developers to register their projects and adhere to strict timelines for completion.

The government has introduced several initiatives to boost the sector, such as the Pradhan Mantri Awas Yojana (PMAY) aimed at increasing affordable housing, and the Smart Cities Mission aimed at developing sustainable and liveable cities.

Company overview

About the company

BCL Industries Ltd is one of the largest agro processing companies in North India with business interests in Edible oils, Rice Milling, Grain Based Distillery and Real Estate. The company is listed on both NSE and BSE and is ranked 965 in the list of top 1000 largest companies in India in terms of market cap as on 31^st March 2023. The company has one of the largest, vertically integrated, edible oil unit with a total management experience of more than four decades in agro based industries.

Born to a humble background, BCL Industries Ltd was started by late Shri Dwarka Dass Mittal. He started with a small solvent extraction plant which extracted rice bran oil and the company was then pioneer in manufacturing human grade rice bran refined oil. Mr. Rajinder Mittal, Managing Director of the Company joined the business at a very young age of 21 years and ever since has been at the helm of the company which has grown manifold since his joining of business. The management has vast experience of agriculture and are avid farmers themselves which helps them in understanding the farming patterns in the region along with farmer issues which has helped them in growing.

Mr. Kushal Mittal, Jt. Managing Director and 3^rd generation of the Promoter Family has been very active in taking the Company to newer heights ever since he has joined the Company. The Company is getting immensely benefitted from his expertise in managing finances, fund management, project financing, cost management and administration. He Has been contributing extensively and providing necessary directions and advice in finance, cost management and other investments and products additions related matters.

Highlights of the FY 2022-23

After the successful financial year 2021-2022, BCL Industries has transformed itself into an Rs. 20,000 Million business empire under the expert stewardship of Mr Rajinder Mittal, Mg. Director.

• As of 31^st March, 2023, the Companys market capitalisation stood at a staggering Rs. 9533 Mn.

• The Companys consolidated revenue for the fiscal 2022-23 stood at Rs. 18266 Mn.

• The EBITDA for the fiscal 2022-23 stood at Rs. 1303 Mn.

• The Profit after tax stood at Rs. 644 Mn in 2022-23.

Performance review

During the year under review, the total revenue of the Company stood at 18266 Mn. as against 20012 Mn. in the previous year. The drop in the revenue is mainly attributable to the steep fall in the Global edible oil prices. The Company has earned a Net Profit after Tax of 644 Mn. as against 848 Mn. in the previous year. Earnings Per Share of the Company for the current year 2022-23 has been Rs. 26.59 per share as against Rs. 35.10 per share.

The Company has had its highest turnover and profitability since its inception. The directors worked relentlessly to enhance the companys financial performance, and the companys financial results reflect that they were successful.

Standalone performance highlights of the industry:

Edible oil and vanaspati

• The edible oil business accounted for 66.23% of the revenue in 2022-23.

• Revenues from edible oil business stood at Rs. 11192 Mn for 2022-23 as compared to Rs. 15160 Mn for year 2021-22.

• EBITDA of edible oil and vanaspati segment stood at Rs. 304 Mn as against Rs. 621 Mn for the year 2021-22.

Product basket

• Vanaspati ghee

• Refined oil

• Expelling oil from oil seeds

• Solvent extraction of oils from oil cakes

• De-oiled cakes

• Basmati and par-boiled rice manufacturing facility

Our manufacturing plant is located at Hazi Rattan Road, Bathinda, Punjab, with a capacity of processing 200 metric tonnes per day.

Management outlook for the edible oil segment:

• Government has taken several initiatives to boost the edible oil sector because of the emerging growth drivers.

• The Company has stopped contract manufacturing for MNCs because its own brands, Homecook are still in high demand.

Distillery

• The Distillery business contributed 40% to the total revenue in 2022-23.

• Revenues from the Distillery segment stood at Rs. 6110 Mn as compared to Rs. 3453 Mn for previous year 2021-22.

• EBITDA of Distillery segment for the year 2022-23 was Rs. 962 Mn as compared to Rs. 809 Mn for previous year 2021-22.

• Produced 29389 KL of ENA and 67400 KL of Ethanol in year 2022-23 as compared to 31711 KL of ENA and 42075 KL of Ethanol in year 2021-22.

Distillery Business Highlights:

With the companys state of the art fully integrated, multi-feedstock and modern plants located at Punjab and West Bengal, BCL has an installed capacity of 600 kilo litres per day with expansion plans up to 850 KLPD. The distillery segment has best in class machineries and state of the art infrastructure which makes it a zero discharge and energy efficient sustainable business model, setting an example for efficient water management and effluent management processes. The Company can run its units on multiple raw materials like rice, maize, millets depending upon the availability of the same. The plant setup has been done in a way that the production of ENA and Ethanol can be controlled as per the requirement and the switch from ENA to Ethanol and vice versa can be done in no time which is an USP of BCL, which most of the distillers in the country do not have presently. Both Distilleries of the Company have ample land bank, steam and power for future expansion requirements whenever the Company decides to do so. Considering the Govt. of India Policy to go for higher mixing of ethanol in Petrol, the expansion opportunity for the Company is huge in the ethanol production sector.

Management outlook for the Distillery segment:

Bathinda Expansion:

BCL distillery unit at Bathinda continues to operate at 100% capacity utilization with good demand for both ENA and Ethanol. To combat inflation in fuel prices the company has commissioned its paddy straw based 10 MW power plant in the 2^nd half of May 23. The company expects this power plant to bring down the fuel cost for distillery segment moving forward. The company also commissioned its 200 KLPD expansion at Bathinda in the month of June 23. This should have positive impact on Company financials moving forward.

West Bengal Expansion:

To capitalize on the ENA supply demand deficit scenario of North-Eastern India, BCL installed 200 KLPD state of the-art ENA plant at Kharagpur, under its subsidiary M/s. Svaksha Distillery Limited. After stabilizing the operations of 200 KLPD production capacity in phase 1, Company started phase 2 wherein additional capacity of 100 KLPD is being installed. The company expects to commission this expansion by Dec 23 with a project cost of around 95 cr.

BCL Industries has plans to take up the total group distillery capacity to 850 KLPD over the next two years.

Key parameters giving competitive edge to the distillery segment of the Company:

Expertise	The Company is into agriculture-based business for last 40 years, which gives it a natural experience/expertise of buying the raw materials, prices of which are quite volatile in nature, at best possible prices. The distillery segment has best in class machineries and state of the art infrastructure which makes it a zero discharge and energy efficient sustainable business model.
Flexibility	The Company can run its units on multiple raw materials like rice, maize, millets depending upon the availability of the same. The plant setup has been done in a way that the production of ENA and Ethanol can be controlled as per the requirement and the switchover time from ENA to Ethanol and vice versa can be done in no time which is an USP of the Company which most of the distillers of the Country do not have presently.
Cost effective	The Company has been into rice milling business for last 4 decades which gives it an edge over its competitors to procure raw materials at the most economical price and over and above the power generation unit of the Company runs on rice straw which is the cheapest raw material to run the boiler of a power plant. The alcohol recovery of our plants is also an industry benchmark.
Scalability	Both Distilleries of the Company has ample land bank, steam and power for future expansion requirements whenever the Company decides to do so. Considering the Govt. of India Policy to go for higher mixing of ethanol in Petrol, the expansion opportunity for the Company is huge in the ethanol production sector.
Competitive Advantage	Both Distilleries of the Company has been strategically located in the rice belts where there is no dearth in the availability of raw materials throughout the year at the most economical prices and low transportation cost.

Real Estate

• Real Estate segment contributed to 1% of the revenue for the year 2022-23.

• Revenues from this segment stood at Rs. 130Mn in year 2022-23 as compared to Rs. 99 Mn in year 2021-22.

• BCL will be continuing to liquidate inventory from both the projects such as Ganpati Estates, the township project and DD Mittal City Project, the mid segment housing project, every year.

Management outlook for the real estate segment:

In its attempt to reduce the financial burden of the company, BCL has continued to utilize revenues from its real estate sales to liquidate the debts which is visible in the YOY results.

Opportunities and threats

The Company operates in a very dynamic environment, and it is vital for the Company to raise the rate of growth on a daily basis in order to maintain a strong position in the edible oil, Vanaspati, and real estate industries, as well as to increase attention on the range of goods. To maintain its competitive advantage in terms of value and quality ratio, the Company must keep a close eye on the competitors.

The following factors also contribute to the Companys success.

• When it comes to the opportunities that the sector provides, there is a lot of room for growth. Growing health consciousness, increased disposable income, and changing eating patterns are likely to drive demand for agro-based goods such as edible oils and specialty fats. This provides the Company with a chance to broaden its product offering and enhance its market share. Not only that, but there is a rising need for sustainable practices across industries, including the agro-based goods market. The companys dedication to sustainable practices such as biodiesel generation and waste reduction positions it as a leader in this field and may attract environmentally sensitive clients.

Technological advancements such as automation and artificial intelligence can help companies streamline their operations, reduce costs, and increase efficiency. The Company can leverage technology to improve its manufacturing processes, enhance quality control, and develop innovative products that meet customer needs.

• If there are possibilities, there will inevitably be risks. When it comes to agricultural products, there are numerous established businesses as well as new comers. The company risks losing market share to competitors that provide comparable or better items at lower prices or with better customer service. Price fluctuation is another aspect that threatens the organisation. The cost of raw materials utilised in the production process, such as seeds and oilseeds, fluctuate owing to a variety of reasons, including weather, transportation, and geopolitical difficulties. This has the potential to have an influence on the companys profitability and financial performance.

Financial review

As required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, during the year, the significant changes in the financial ratios of the Company, which are more than 25% as compared to the previous year, are summarized below:

Key ratios	2022-23	2021-22	% change	Reasons, if change is more than 25%
Debtors Turnover Ratio	1.40	1.40	0.00	NA
Inventory Turnover Ratio	6.72	8.96	-25%	NA
Interest Coverage Ratio	7.18	8.51	-15.62%	NA
Current Ratio	1.82	1.84	-1.09%	NA
Debt Equity Ratio	0.33	0.17	94.11%	Increase due to raising fresh Term Loan of Rs. 120.00 Cr for installation of Expansion of 200 KLPD ethanol unit.
Operating Profit Margin	4.00	5.27	-24.10%	NA
Net Profit Margin	4.41	4.27	3.28%	NA
EPS (Diluted) Rs.	29.85	35.22	-15.24%	NA
Price Earnings Ratio	13.22	12.67	4.34%	NA
Return on Investment	11.68	10.03	16.45%	NA

Accounting treatment

The Financial Statements of the Company for the year under review have been prepared in accordance with Indian Accounting standards (Ind AS) as notified by Ministry of Corporate Affairs pursuant to Section 133 of Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standard) Rules, 2015, Companies (Indian Accounting Standards) Amendment Rules, 2016 and subsequent amendments.

	Standalone		Consolidated
Particulars	Current Year 2022-23	Previous Year 2021-22	Current Year 2022-23	Previous Year 2021-22
Revenue from Operations	163309.62	199306.87	181991.70	199306.85
Other Income	662.26	811.21	671.46	811.78
Total Income	163971.88	200118.08	182663.16	200118.63
Profit before Depreciation, Finance Cost and Tax Expense	11894	14580.18	13027.58	14569.84
Less: Depreciation	1545.84	1454.24	2495.17	1468.10
Less: Finance Cost	726.87	1763.33	1983.42	1766.29
Profit before Tax	9621.29	11362.61	8548.99	11335.45
(Less): Current Tax	(2450.00)	(3000.00)	(2450.00)	(3000.00)
Add/(Less): Deferred Tax	37.53	141.92	336.46	141.92
Less: Prior period items		-		-
Profit for the year	7208.82	8504.54	6435.45	8477.37
Other Comprehensive Income/(Loss)	129.49	104.40	129.49	104.40
Total Comprehensive Income	7338.31	8608.94	6564.94	8581.78
Earnings Per Share
Basic	29.85	35.22	27.45	35.10
Diluted	28.92	35.22	26.59	35.10

Risks, Threats and Risk Management

Market risk

The Company operates in a highly competitive market where prices are subject to fluctuation. To manage market risk, the Company employs various strategies, such as diversification of its product portfolio, establishing long-term customer relationships, and monitoring market trends and price movements.

Operational risk

The manufacturing process of the Company involves several operational risks, including production failures, equipment breakdowns, and supply chain disruptions. To mitigate these risks, the Company has implemented various measures such as maintenance and repair of equipment, establishing backup suppliers, and having contingency plans in place.

Financial risk

The Company is exposed to various financial risks such as foreign exchange risk, interest rate risk, and credit risk. To manage these risks, the Company has implemented various strategies such as hedging against currency fluctuations, diversifying its funding sources, and monitoring credit risk exposure.

Compliance risk

The Company operates in a regulated industry and must comply with various laws and regulations related to environmental sustainability, health and safety, and employment practices. To manage compliance risk, the Company has established policies and procedures to ensure compliance with relevant laws and regulations, conducts regular audits and assessments, and provides training and awareness programmes for employees.

Reputation risk

The Companys reputation is essential for its success and growth. The Company faces various reputation risks such as product recalls, ethical misconduct, and environmental issues. To manage reputation risk, the Company has established a Code of Conduct. It also promotes transparency and ethical behavior, and invests in sustainable practices that align with the Companys values and objectives.

Developments on human resources and industrial relations

The Company places a high value on human resource development and the maintenance of positive labor relations. During the evaluation period, industrial relations were friendly, with no interruptions to production activity. During the review period, further appointments were made, and employees pay received yearly raises. The Company has [] employees on its payroll as of March 31, 2023.

The Company considers its people as its most significant resource. The Companys primary focus is to ensure their holistic well-being. To ensure the Companys success, it ensures that initiatives for employee training and development, safety and healthcare, communication, and diversity and inclusion are implemented.

The Company ensures that each and every employee at BCL contributes and gives his/her best in the organisation. The Company has a full-fledged manual on HR policies, which underpins and brings together the various codes of practices relating to specific aspects of Human Resources.

HR is a very dynamic function and it needs to adapt to the changing business needs of the organisation. Consequently, the manual offers the fundamental rules to direct HR initiatives in the organisation and might not offer comprehensive solutions to the issues that recur on a regular basis.

Objectives of HR

• The primary objective of HR is to attract and retain talented employees who can contribute to the organisations success.

• Another key objective of HR is to support the professional and personal development of employees. This involves providing training and development opportunities, coaching and mentoring, and career development programmes that help employees build new skills, take on new responsibilities, and advance their careers.

• HR also has an important role in ensuring the organisation complies with relevant laws and regulations related to employment, health and safety, and data protection. This involves implementing policies and procedures that mitigate risks, conducting audits and assessments, and ensuring that all employees are aware of their responsibilities and obligations.

Initiatives undertaken to achieve these goals:

• Employee performance was used as the basis for the Companys quarterly and half-yearly trainee appraisals, which promoted employee advancement by filling positions internally.

• Auditing procedures for the Company helps in getting information about the deviations from the standard.

• Regular training sessions for the employees.

Internal control systems and their adequacy

The Company has evolved a system of internal controls commensurate with its size and scale of operations, to ensure that the assets are safeguarded and transactions are authorised, recorded and correctly reported. The internal control system is supplemented by management reviews and independent periodical reviews by the outside chartered accountancy firms, which evaluate the functioning and quality of internal controls and provides assurance of its adequacy and effectiveness. The scope of internal audit covers a wide variety of operational methods and, as a minimum, ensures compliance with specified standards with regard to availability and suitability of policies and procedures, extent of adherence, reliability of management information system and authorisation procedures including steps for safeguarding of assets. The reports of internal audit are placed before Audit Committee of the Directors. The Audit Committee reviews such audit findings and the adequacy of internal control systems. The Statutory Auditors and the Internal Auditors of the Company also interact with the Audit Committee to share their findings and the status of corrective actions under implementation.

Management Outlook on Risk Mitigation process and measures:

The management has in place a process to set objectives by all the concerned departments and that the chosen objectives support and align with the companys vision & mission and are consistent with its risk tolerance.

RISK MITIGATION PROCESS

1. Risk Identification: Risk Identification is obligatory on all vertical and functional heads that with the inputs from their team members are required to report the material risks to the concerned officials along with their considered views and recommendations for risk mitigation. Analysis of all the risks thus identified shall be carried out by the concerned officials and senior management through participation of the vertical/functional heads.

2. Risk Analysis: Risk analysis involves consideration of the sources of risk, their consequences and the likelihood that those consequences may occur. The existing systems, control measures and procedures to control risk are identified and their effectiveness is assessed. The impact and likelihood of an event and its associated consequences are assessed in the context of the existing controls.

3. Risk Assessment: Risk evaluation involves comparing the level of risk found during the analysis process against the pre-defined risk weights so as to assess their potential severity of loss and to the probability of occurrence. Risk weights of High / Medium / Low can be assigned based on parameters for each operating activity. The output of the risk evaluation is a prioritized list of risks for further action. If the resulting risks fall into the low or acceptable risk categories they may be accepted with minimal further treatment.

4. Risk Response: Risk response involves identifying the range of options for treating risk, assessing those options, preparing risk treatment plans and implementing them. Options include avoiding the risk, reducing the likelihood of the occurrence, reducing the consequences, transferring the risk, and retaining the risk. Gaps will then be identified between what mitigating steps are in place and what is desired. The action plans adopted will be documented and its implementation tracked as part of the reporting process. Ownership and responsibility for each of those risk mitigation steps will then be assigned. This will be captured in a ‘Risk Assessment and Control Matrix which comprising of the key top risks.

The Board of Directors of the Company has constituted the Risk Management Committee and defined the roles and responsibilities of the Committee and also reviews them as and when deemed fit. The committee also reviews and monitor the cyber security threats on the Company and is responsible for effective implementation of the Risk Management Policy in the company.

ROLE & RESPONSIBILITIES

The role and responsibilities of Risk Management Committee are as follows:-

1. To formulate a detailed risk management policy which shall include:

(a) A framework for identification of internal and external risks specifically faced by the Company, in particular including financial, operational, sectoral, sustainability (particularly ESG related risks), information, cyber security risks or any other risk as may be determined by the Committee.

(b) Measures for risk mitigation including systems and processes for internal control of identified risks. (c) Business continuity plan.

2. To ensure that appropriate methodology, processes and systems are in place to monitor and evaluate risks associated with the business of the Company. Implementing and monitoring the risk management plan for the company and reframe the risk management plan and policy including evaluating the adequacy of risk management systems as it may deem fit.

3. Lay down procedures to inform Board members about the risk assessment and minimization procedures and to keep the board of directors informed about the nature and content of its discussions, recommendations and actions to be taken

4. Monitoring and reviewing of the risk management plan and policy from time to time and at least once in two years including by considering the changing industry dynamics and evolving complexity.

5. The Risk Management Committee shall coordinate its activities with other committees, in instances where there is any overlap with activities of such committees, as per the framework laid down by the board of directors.

6. Activities as may be required to be done under the Companies Act 2013 or SEBI (LODR) Regulations, 2015.

Risk Management Committee of the Board evaluated the risk matrix of the Company and below are their findings:

Risk factors	Risk level (H/M/L)	Committee Members comments
Raw material availability	M	Currently the Company is in a comfortable position as ample of FCI rice is available. In future company is planning to shift to Maize.
Increase in input Cost	M	Company has installed rice straw-based power plant to combat the rising fuel prices.
Changes in technology	M	Company has installed all state-of-the-art plant and machinery, which makes it one of the most efficient and well-run Companies.
Industry Trends	L	Currently all products fall under Govt. priority sectors and have very good demand.
Legal Ecosystem	M	The Company is on time on all permissions and renewals.
Human Resource Risks	M	With the growing economy there is a talent problem.
Sustainability Risk	L	All products have good demand with raw material availability in abundance hence the business model is sustainable.
Govt. Policies/Regulations	M	Currently the Govt. policy is quite favorable for both edible oil and ethanol manufacturing sectors.
Competition	M	Company being into the business for over 4 decades is well placed and is taking steps to counter any kind of competition which arises in the industry.

Cautionary statement

This document contains statements about expected future events, financial and operating results of BCL Industries Limited which are forward looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the Managements Discussion and Analysis of BCL Industries Limiteds Annual Report, 2022-23.