epic enzymes pharma industrial chemicals ltd Management discussions

EPIC ENZYMES PHARMACEUTICALS AND INDUSTRIAL CHEMICALS LIMITED ANNUAL REPORT 2011-2012 MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENT: The Company is part of the industry broadly known as agrochemical. The agrochemical industry consists of various products in different segments tike insecticides, fungicides, weedicides, herbicides, rodenticides. The fortunes of agrochemical industries are directly linked to take off from the farmers depending upon crop pattern under cultivation. Another factor, which directly affects production and sale of agrochemicals, is monsoon and distribution of rainfall throughout India. The other relevant factors having bearing on the industry are environmental concern, government agricultural policies, import and export restrictions for agriculture produce. During the last decade, the growth in the agriculture sector has been consistently positive due to favorable monsoon and largely even distribution of rainfall. The government has permitted private investment in the agriculture sector in limited way and has also eased restrictions on the marketing, transportation and exports of surplus food grains. The aforesaid measures will have positive impact on the agrochemicals industry. OPPORTUNITIES AND THREATS: The per capital consumption of agrochemicals in India is very low in comparison the developed countries. There is vast potential for higher consumption of agrochemical and growth in the industry. However a slow and sure revolution is taking place in agriculture sector like use of high yield seeds, improved techniques of harvesting, and larger area under irrigation coverage, research and development on GM and biotechnology agricultural produce. The global demand for agrochemical will be a great opportunity for Indian agrochemical industry to capitalize upon and to capture export market. The Major threat to the agrochemical industry is dumping of chemicals by China. Similarly, the introduction of patented molecules by multinationals will have adverse effects on Indian agrochemical industry. The delay in implementation of labour reforms by the government and non-upgradation of technology by Indian agrochemical industry also posses threat in the coming years. SEGMENT WISE PERFORMANCE: Presently company is dealing in single segment of activity namely agrochemical. OUTLOOK: The long-term outlook for the agrochemical industry is very encouraging as country gears up to maintain its self sufficiency in food grains and increasing cultivation of commercial crops. The current year performance will depends upon the amicable Settlement with State Bank of India. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: Considering the size and nature of the business, presently adequate internal controls systems are in place. However, as and when company achieves growths and higher level of operations, company will review the internal control system to match with changed requirement. The company has proper and adequate systems of internal controls to ensure that all assets are safeguarded and protected against unauthorized use or disposition and those transactions are authorized and recorded correctly. THE FINANCIAL AND OPERATIONAL PERFORMANCE: The financial statements are in confirmation with the provisions of the Companies Act, 1956 and applicable accounting standard recommended by the institute of Chartered Accountants of India. The financial statement reflects the genuine desire for the transparency and best judgment for the estimate made on prudent and reasonable bases to correctly reflect the true and fair affairs of the company. The net loss during the year has been Rs.(17.61) Lacs in comparison to Rs.(1402.83) Lacs loss in the previous year. CAUTIONARY STATEMENT: Statement in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the companys operations include settlement with State Bank of India, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Conducts business and other incidental factors.