Ganesh Benzopl. Management Discussions


GLOBAL ECONOMIC OUTLOOK

The global economy remains on track for a gradual recovery from the pandemic and Russias war in Ukraine. Chinas reopened economy is rebounding strongly. Supply chain disruptions are unwinding while the dislocations to energy and food markets caused by the war are receding. The massive and synchronized tightening of monetary policy by most central banks is starting to bring inflation back towards its targets. At the same time, serious financial stability-related downside risks have emerged.

As per world economic outlook of IMF, global growth will bottom out at 2.8 percent in 2023 before rising modestly to 3.0 percent in 2024. Global inflation will decrease, although more slowly than initially anticipated, from 8.7 percent in 2022 to 7.0 percent this year and 4.9 percent in 2024. Inflation pressures persist, and the drag on growth from the ongoing monetary tightening is expected to peak in 2023 in many major economies. Recent banking sector stress will further tighten credit conditions.

The global recovery from the COVID-19 pandemic and Russias invasion of Ukraine is slowing amid widening divergences among economic sectors and regions. The World Health Organization (WHO) announced in May that it no longer considers COVID-19 to be a "global health emergency." Supply chains have largely recovered, and shipping costs and suppliers delivery times are back to pre-pandemic levels. But forces that hindered growth in 2022 persist. Inflation remains high and continues to erode household purchasing power.

Recent bank collapses and bouts of financial instability underline the importance of sound international financial regulation. The rising number of EMDEs in debt distress highlights the need for globally coordinated debt relief that overcomes the challenges posed by the increasing diversity of lenders. Sustained international cooperation is also needed to accelerate the clean energy transition, help countries improve both energy security and affordability, and incentivize the investments needed to pursue a path toward resilient, low-carbon growth.

The need to bring down elevated inflation highlights the importance of central bank independence and credibility. Similarly, strengthening reserve buffers can make EMDEs more resilient to capital flow fluctuations and exchange rate volatility, while regulatory reforms and enhanced bank resolution frameworks can boost the strength of financial institutions. The combination of tighter financing conditions, slowing growth, and elevated debt levels poses significant fiscal challenges for EMDEs. Fiscal space is often limited, highlighting the need for more efficient spending and revenue collection systems. For some countries, particularly LICs, the rising cost of servicing debt is increasing the risk of debt distress.

Potential growth in EMDEs has been on a decades-long declining path because of slowing growth rates of labor force, investment, and productivity. The slowdown in these fundamental factors has been exacerbated by the overlapping shocks of the pandemic, Russias invasion of Ukraine, and the sharp tightening of global monetary policy in response to high inflation. Reversing the decline in potential growth will require decisive structural reforms. These include measures to improve investment conditions, develop human capital through education and health improvements, increase participation in the formal labor force, foster productivity growth in services, and promote international trade. In particular, fostering investment in green energy and climate resilience can ensure that growth is both robust and sustainable.

INDIAN ECONOMIC OUTLOOK

India is one of the fastest growing economies in the world and is poised to continue on this path, aiming to achieve upper middle income status by 2047, the 100th anniversary of Indias independence. Additionally, it is committed to addressing the challenges of climate change and ensuring a continued growth trajectory in line with its goal of achieving net zero emissions by 2070.

Indias aspiration to achieve high income status by 2047 will need to be realized through a climate-resilient growth process that delivers broad-based gains to the bottom half of the population. Growth-oriented reforms will need to be accompanied by an expansion in good jobs that keeps pace with the number of labor market entrants. At the same time, gaps in economic participation will need to be addressed, including by bringing more women into the workforce.

After real GDP contracted in FY21 due to the COVID-19 pandemic, growth bounced back strongly in FY22, supported by accommodative monetary and fiscal policies and wide vaccine coverage. Consequently, in 2022, India emerged as one of the fastest growing economies in the world, despite significant challenges in the global environment – including renewed disruptions of supply lines following the rise in geopolitical tensions, the synchronized tightening of global monetary policies, and inflationary pressures.

In FY23, Indias real GDP expanded at an estimated 6.9 percent. Growth was underpinned by robust domestic demand, strong investment activity bolstered by the governments push for investment in infrastructure, and buoyant private consumption, particularly among higher income earners. The composition of domestic demand also changed, with government consumption being lower due to fiscal consolidation.

Since Q3 FY23, however, there have been signs of moderation, although the overall growth momentum remains robust. The persisting headwinds – rising borrowing costs, tightening financial conditions and ongoing inflationary pressures –are expected to weigh on Indias growth in FY24. Real GDP growth is likely to moderate to 6.3 percent in FY24 from the estimated 6.9 percent in FY23.

Both the general government fiscal deficit and public debt to GDP ratio increased sharply in FY21 and have been declining gradually since then, with the fiscal deficit falling from over 13 percent in FY21 to an estimated 9.4 percent in FY23. Public debt has fallen from over 87 percent of GDP to around 83 percent over the same period. The consolidation has largely been driven by an increase in revenues and a gradual withdrawal of pandemic-related stimulus measures. At the same time, the government has remained committed to increasing capital spending, particularly on infrastructure, to boost growth and competitiveness.

LIQUID STORAGE TERMINAL

Growing demand for fuels and commodities in emerging markets and the emergence of new producers in areas such as clean fuels such as shale oil and LNG are driving global tank storage growth of 5-7% annually. Another major driver is the growing demand for chemical feedstocks from Asia and Africa as they expand their capacity to produce processed chemicals and agrochemicals for domestic and foreign markets. United States, China, Japan, India and the South Korea are the major countries accounted for major liquids storage capacity of the world.

Indias liquid bulk storage and logistics industry needs to expand production capacity, improve customer centricity and accelerate the introduction of new technologies to meet the prospect of growing demand in end-use industries. The bulk liquid storage industry provides critical support to various industries including crude oil (LNG), petroleum, petroleum and lubricant products, bulk chemicals and petrochemicals. These fluids serve as raw materials for many downstream sectors such as automotive, textiles, consumer durables, personal care, energy, and food production and processing. Maritime transport is estimated to account for 95% of bulk liquid volume and 70% of volume transfer.

Businesses that store and distribute liquid bulk goods require large investments and low operating costs. Investment costs depend on the type and nature of the product, capacity of individual storage facilities, total storage capacity, internal pipelines, receiving and delivery systems, vessel equipment on board, location and land prices, hinterland connectivity, and many other factors. Business income is determined by business volume and asset utilization.

Technology is rapidly changing the landscape in this sector around the world. Robots and drones are used for inspections. If these facilities are operated by human inspectors, they should be closed to ensure safety. Using robots reduces risk and downtime and increases efficiency.

In fact, automation can be used in multiple operations such as level, temperature and security systems that remotely notify terminal operators of tank and cargo status. Similarly, IoT and software operators can tell if a tank is being heated/ mixed, which pump is being used, etc. Predictive analytics is driving a new wave of transformation in ports, terminals and shipping companies. This can streamline operations, improve cybersecurity, and increase efficiency across the supply chain.

COMPANY OVERVIEW

The Company operates in two segments i.e. - LST and Chemical Manufacturing. The LST Division has tank farms at three major busy ports in India, viz., Jawaharlal Nehru Port Trust (JNPT), Cochin Port Trust and Mormugoa Port Trust, Goa. This segment also includes Rail Logistics, Engineering, Procurement and Construction (EPC) and Clean Energy. Under Chemical Division, the Company is engaged in manufacturing and exporting wide range of food preservatives, lubricant additives, specialty chemicals. GBL products are used in food & beverage pharmaceutical, paints, automobile, lubricants industries etc.

LIQUID STORAGE TERMINAL (LST)

LST division of the Company is major revenue generation division and leading independent Liquid Storage Tank (LST) provider, specialized in the storage and handling of liquid chemicals and oil products and has storage terminals at JNPT (Navi Mumbai), Cochin and Goa. With a Journey of almost Three Decades in Bulk storage and handling of liquids, the Company has a combined storage capacity of more than 3,09,000 KL, for storage of all types of Liquid Products such as ‘A, ‘B, and ‘C class liquids. The Company has total 82 storage tanks at JNPT, Goa and Cochin terminals which are of all storage categories namely stainless steel, mild steel and pre-coated steel and having a good mix of long-term capacity and short-term capacity leads to greater value realization. The Company has two dedicated berths and two Jettys at JNPT Port for Vessel loading and discharging of cargo. The Company is continuously upgrading its storage facilities by regular refurbishment of tanks and pipelines.

The company demonstrates an ongoing commitment to improving its storage facilities by engaging in a systematic and recurring process of refurbishing its tanks and pipelines.

New Storage Tanks at JNPT Terminal

This dedication to enhancement is pivotal in ensuring that the storage infrastructure remains efficient, reliable, and up-to-date. Through regular refurbishment efforts, the company not only maintains the integrity of its storage facilities but also strives to keep them in optimal condition, enhancing their overall performance and longevity.

In 2022, the Company allotted an additional Land on lease for 25 years at Jawaharlal Nehru Port Trust (JNPT). The land, admeasuring 4.5 hectares (45,090 square meters) has been leased out to GBL from 2022 to 2047. The new and upcoming special chemical grade terminal at JNPT for 17,876 KL is under construction and being constructed to meet long term demands for storing and handling specialty chemicals such as Dilute Nitric Acid etc. This ensures higher realization on per KL basis, compared to current average by over 50%. The Company has pre sold 10,200 KL capacity, which represents more than 50% of our new and upcoming capacity at the JNPT terminal, through the long-term contracts, to its customers prior to its commencement. The commissioning of the new storage terminal will be from the second quarter of FY24.

RAIL LOGISTIC

Under LST Business division, the Company also handles rail Logistic through its subsidiary Company Infrastructure Logistic Systems Limited (Formerly known as Stolt Rail Logistic Systems Limited) which is the material subsidiary of Company engaged in rail logistic business and provides transportation facilities from port-based storage facilities to the Clients plant. ILSL utilizes the Indian railways to run the rakes for transportation of liquids. ILSL has loading and unloading facilities at JNPT, Nagpur, Dahej and Daund. The company, provides end to end logistics solutions for transportation of liquid cargo from various ports and inland locations of India to customer door step. The Company owns 45 ISO containers for liquid cargo movement and storage. The Company has in house capabilities to design & fabricate ISO containers for transportation of liquid cargo by train for its customers to their remote locations and handle rail logistics of containers for our clients to economize their transportation costs.

ENGINEERING PROCUREMENT AND CONSTRUCTION (EPC)

Under LST division, the Company provides EPC Services to its clients, through its wholly owned subsidery Company GBL Infra Engg. Services Pvt Ltd (GBL IES) Under EPC the Company provides quality services in technical consultancy, design & engineering, procurement, construction & implementation of projects from concept to commissioning for industrial and other service sectors.

Furthermore, GBL IES commenced its operations by getting an order for the fabrication of 60 storage tanks (without material) from ANA Oleo Pvt Ltd part of ANA Oils for their Edible Oil Refinery project at Krishnapatnam Port, Andhra Pradesh.

CLEAN ENERGY

We believe in the power of sustainable and clean energy to shape a brighter and greener future for our planet. To further our commitment to environmental responsibility and promote the transition to a low-carbon economy. We are proud to introduce our subsidiary, GBL Clean Energy Pvt. Ltd. , dedicated exclusively to investments in clean energy.

GBL Clean Energy Pvt. Ltd. is driven by a clear vision – to accelerate the global shift towards clean and renewable energy sources. We leverage our parent companys financial stability, expertise, and resources to play a pivotal role in the transformation of the energy sector.

Our mission is to invest in cutting-edge clean energy potential to reshape the energy landscape. By supporting innovation, we aim to drive progress in renewable energy solutions. We are committed to making a positive environmental impact. Our investments are not solely focused on financial returns; they also prioritize sustainability and the reduction of greenhouse gas emissions. We actively contribute to the fight against climate change.

At GBL, sustainability is at the core of our investment decisions. We rigorously assess the environmental impact of every project and company we invest in, ensuring they align with our commitment to a greener planet

In GBL Clean Energy, the Company is planing to purchase electric vehicles to operate on dry Lease basis. The Company will get a fixed Lease rent every month for this.

CHEMICAL BUSINESS

The Chemical Division is engaged in manufacturing and exporting wide range of food preservatives, specialty Chemicals, lubricant additives, Gear Oil Additives, Hydraulic Oil Additives, Greece Additives etc. The Company is the only manufacturer of pure Benzoic Acid & its Derivatives like Sodium Benzoate well known food preservative and Benzoplast a Specialty plasticizer which is a superior plasticizer as compared with other plasticizers. The Company has manufacturing facilities at MIDC, Tarapur with capacity of 24,000 MTPA, Unit 1 manufactures oil additives and Unit 2 manufactures specialty chemicals and food preservatives. GBL products are used in food & beverage, paints, automobile, pharmaceutical, lubricants industries etc. The Company markets its products through distributors in Argentina, South Africa, USA, Taiwan, China, Brazil, and Nigeria.

CONSOLIDATED FINANCIAL PERFORMANCE

Analysis of Profit and Loss statement and Balance Sheet including the key ratios based on consolidated results is mentioned as follows:

PROFIT AND LOSS STATEMENT ANALYSIS ( in Million except EPS)

Consolidated Standalone

Particulars

FY23 FY22 (%) Change FY23 FY22 (%) Change
Revenue from Operations 4,208.48 3,575.10 17.72 1,926.92 2,906.82 (33.71)*
Other Income 82.88 30.75 169.53 109.57 27.70 295.56

Total Income

4,291.36 3,605.85 19.01 2,036.49 2,934.52 (30.60)
Cost of Goods Sold 1,878.13 1,426.63 31.65 71.16 1,112.76 (93.61)
Employee benefits expense 245.45 195.80 25.36 215.92 175.59 22.96
Other expenses 1,208.27 1,340.29 (9.85) 860.33 1,039.19 (17.21)
EBITDA 956.26 635.03 50.59 GHT>885.86 598.88 47.92
Depreciation and amortization expense 172.81 146.60 17.88 152.68 127.20 20.03
Finance cost 41.13 36.83 11.68 51.53 31.45 63.85

Profit Before Tax

742.32 451.61 64.37 681.65 440.23 54.84

Profit After Tax

550.79 326.89 68.49 509.36 320.36 59.00

EPS

8.73 5.24 66.60 8.08 5.14 57.20

Due to Shifting of sale and purchase transactions of chemical Division to GBL Chemical Limited, a WOS of the Company. In pursuit of better management and focused operational control, we have transferred business of chemical division (without transfer of fixed assets) to our wholly owned subsidiary, GBL Chemical limited. This strategic move is in alignment with our long-term vision to streamline our operations, enhance decision-making agility, and maximize overall value for our shareholders. This is not having an impact on the financials of the Company on consolidated basis.

At Consolidated level Revenue for FY23 stands at 4208 million with a growth of 18% Y-o-Y, despite a challenging environment. The growth has been largely delivered by LST & Chemical business; we have achieved an EBITDA of 956 million with EBITDA margin of 22.72% for the year. The margins are higher due to increase in revenue and decrease in other expenses.

Net profit for FY23 stands at 550.79 million with a increase of 68% Y-o-Y Earnings per Share (EPS) stands at 8.73 in FY23 against 5.24 in FY22.

BALANCE SHEET ANALYSIS

( in Million)

Consolidated Standalone

Particulars

FY23 FY22 (%) Change FY23 FY22 (%) Change
Equity share capital 65.18 62.36 4.52 65.18 62.36 4.52
Net worth 3,616.57 2,849.02 26.94 3,548.18 2,822.16 25.73
Long term borrowings 192.06 219.30 (12.42) 190.22 199.08 (4.45)
Non - current investments 162.16 153.81 5.43 680.56 672.22 1.24
Total capital employed 4,017.70 3,293.41 21.99 3,896.85 3,199.66 21.79
Property, Plant & Equipment 2,091.20 2,067.82 1.13 1,637.38 1,602.31 2.19

On consolidated basis, Net Worth increased to 3616 million from 2849 million in FY22.

During the year, Equity Share Capital increased to 65.18 million from 62.36 million in FY22, the Company allotted 28,25,000 Equity Shares of the face value of 1/- each at an issue price of 103/- (including a premium of 102/- per share), fully paid upon exercising the option available with the 23 warrant holders to convert 28,25,000 warrants held by them. Other equity increased to 3503 million from 2742 million in FY22.

Gross Borrowings decreased to 192 million from 219 million in FY22.

RATIO ANALYSIS

Particulars

FY 23 FY 22 (%) Change
Current Ratio 1.56 1.57 -1%
Debt-equity ratio 0.05 0.08 -31%
Return on equity ratio 0.17 0.13 35%
Inventory turnover Ratio 25 10 145%
Trade receivables turnover ratio 25 38 -33%
Trade payables turnover ratio 52 65 -20%
Net capital turnover ratio 7.80 8.59 -9%
Net profit ratio % 13% 9% 43%
Return on capital employed % 19% 15% 31%

OPPORTUNITIES AND THREATS

With the growing energy demand in India and increase in the movement of oil, chemicals and petrochemicals, there is therefore a huge potential for the expansion of pipelines, transportation and infrastructure and the Company will get good business opportunities in the coming years also. In the recent years, domestic oil companies in the private sector have also been hiring a lot of tank capacity at various ports from private players in the industry and this trend will continue and volumes will increase on a regular basis. Increasing urbanization and rise in per capita disposable income is resulting in a strong growth outlook for several key end use industries. This is going to positively impact the growth in Indian liquid bulk industry.

The India is the third largest consumer of the petroleum products and for meeting countrys increasing requirement of petroleum products and demand will create for more tank capacities at all port locations, which is good for the Company which is primarily engaged in the terminalling business of liquid and Chemicals. The Central Government is taking a number of progressive steps which would promote the growth of the Indian liquid bulk industry.

The Liquid Storage Business requires specialized infrastructure at key ports such as specialized berths, firefighting equipment, pipelines, transit storage and handling facilities and above all, safe and environmentally responsible handling practices. The main strength of the Company is availability of land near to Port and location at JNPT, as a tank at JNPT commands higher premium as compared to a tank at an upcoming minor port. Hence GBL with substantial capacities at major ports would be able to capitalize on this. Further, the other advantage which our Company has, is the access to all the four jetties at the JNPT terminal- two primary jetties and two secondary jetties for handling liquid cargo which add value to a customer and their vessels dont incur demurrage while waiting and having a pipeline access to a jetty and a multiple number of jetties is the key to success in this business

The Company allotted an additional Land of admeasuring 4.5 hectares at JNPT for 25 years on lease basis in year 2022. The allotment of land at a major port is the most value additive for the Company and its shareholders. It enables the Company to grow its business and provide more services to the ever increasing client base. In addition to this, the land allotted is adjacent to our existing facility and this implies that some expense heads will naturally be shared with the existing facility. This will make the new project seem more like a brownfield expansion rather than a greenfield expansion, implying higher EBIDTA margins for GBL as a whole and due to the storage of specialty chemicals at new facility will result in doubling of revenue and profits of the Company.

Under EPC segment, earlier GBL has built and commissioned chemical plants, storage terminals and cross-country pipeline at major Indian ports for its customers Krishnapatnams Port Project of Ana Oleo introduced GBL, to new opportunities at the Eastern Ports of India As the world economy constantly changing and opening up to the new and unexpected events and with the current global thrust of both the government and private companies in the infrastructure field, the company can get new opportunities in the EPC in the coming years, marking GBL as a key player in the liquid storage EPC field.

The Companys chemical and specialty products have been enjoying consistently good brand image and loyalty from the consumers for the past several years and the Company enjoys virtual monopoly in Sodium Benzoplast in India. The Company manufactures Benzoic Acid and Sodium Benzoplast in its computerized plant at Tarapur. The markets for products of the Company are well established with a good distribution network for domestic as well as export markets.

The Company does not foresee any major threats to its growth and market share in the coming years. The Company does not foresee any technological obsolescence for its products.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has in place adequate internal financial controls and are adequate in the opinion of the Board of Directors. The Company has a proper system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that transactions are authorized, recorded and reported correctly. The Companys internal control system is commensurate with its size, scale and complexities of its operations.

The Internal Auditor also evaluates the adequacy of the internal control system in the Company and reports to the Audit committee. The internal audit is entrusted to M/s. V K Baheti & Co., Chartered Accountants. The Internal Audit is conducted on regular basis and the reports are submitted to the Audit Committee of Directors at their quarterly meetings. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The views of statutory auditors are also considered to ascertain the adequacy of internal control system.

HUMAN RESOURCES

The Company continues to successfully strengthen its position as a contemporary, open, and an exciting place to work. The ability to attract, motivate and retain talent is crucial for the success of the Company, which is primarily achieved through forward-looking policies, continued emphasis on upgrading employee skills and empowering them to realise their full potential. The company believes its human resources to be one of its most valuable asset. The Company therefore provides an environment that fosters people to have a strong sense of belonging and places emphasis on the training and development of its employees.

As on 31st March, 2023, the Company had 191 permanent employees. The Company has excellent combination of experienced and talented Technical, financial and marketing Managers. The Companys relation with its employees continues to be cordial. The Company always reciprocates commitment to its employees in order to motivate them to perform the best.

RISK MANAGEMENT

The Company works predominantly engaged in Liquid Storge business, EPC, Rail Logistic and manufacturing of chemical products. With widespread operations, the Company faces various risks associated with business, whose long-term success largely depends on the existence of a robust risk identification and management system that helps identify and mitigate various risks.Every business is exposed to a certain amount of risk and concerns some of which may be regulatory or change in policy pertaining to the business, economic parameters, trade policy and geo-political factors, market risk, governmental clearances and approvals, credit riskfinancial risks and operational risks etc.

MACRO-ECONOMIC RISKS

Currently, the Company derives its major share of revenue from its Bulk Liquid Terminals at JNPT, Goa and Cochin. Since, the Company is majorly dependent on these terminals for its revenues, it is exposed to specific risks that are particular to its business and environment in which it operates. The main threat to the port based liquid terminalling business arises from changes in government policies and inadequate port infrastructure as well as geopolitical instability which leads to uncertainty on pricing and impacts customers for the liquid logistics business.

The timelines for initiation of projects may be extended due to the complex process of environmental clearances and getting various Licenses and permits.

Mitigation: However, the Company tries to overcome this difficulty and manages these risks by following business and risk mitigation practices. The management team and BOD also makes strategic interventions that ensures smooth conduct of operations.

Commodity Risks Geopolitical developments, changes in market dynamics and volatility in raw material prices may pose risks to availability of raw materials, that may lead to higher costs/cash outflows and working capital. Under Chemical Business the fluctuation in the raw material and finshed goods prices can impact the Company and exposed the Company to commodity price risks.

Mitigation: Generally, commodity price fluctuations are passed to the customers. This mitigates the Companys Commodity price variations to a large extent. It carries out periodic reviews of these risks at appropriate levels.

Human Resource Risk : In todays competitive environment, it is vital to attract, train and retain qualified and committed employees in order to create value for customers and achieve strategic goals.

Mitigation: The Company strives to create a work environment that motivates its employees and strives to provide growth opportunities to all its employees.

Information Security Risks : Cyber-attacks and threats may impact the security of IT infrastructure and critical IT assets of the Company. Technology or software obsolescence may result in compromise of quality standards and losing out on the competitive advantage.

Mitigation: The Companys IT systems are protected with anti-virus and its network security through firewall to avert any cyber-attacks. Adoption of strong IT security measures and Implementation of policies and procedures to ensure integrity of cyber security interventions, to mitigate the IT risks.

ENVIRONMENT, HEALTH AND SAFETY

Your Company is fully committed to the safety, health and well-being of its employees and to minimizing the environmental impact on its business operations. GBL is firmly committed to protect environment and prevent pollution within its plants and surrounding areas. A safe and healthy environment is maintained and appropriate steps are taken with the object of minimizing the environmental impact on all processes and practices. For enhancing awareness and knowledge about the health and safety parameters within its employees and contractors, the Company has health and safety policy and also conducts safety/fire drills and undertakes training programs throughout the year to create health awareness among the workers and employees.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The company believes in the interests of the community and improving the quality of life of people in communities and aims to undertake the activities with a focused approach for the marginalized sections in the local communities.

GBL contributes towards the eligible Corporate Social Responsibility ("CSR") projects and primarily spends on Education of unprivileged children, women empowerment and health and benefit of senior citizen, blind and handicap people. The Company also spends its CSR funds on rural development in and around areas of its terminals for providing better living conditions and facilities to the village people.

CAUTIONARY STATEMENT

The statements in the "Management Discussion and Analysis Report" section describes the Companys objectives, projections, estimates, expectations and predictions, which may be "forward looking statements" within the meaning of the applicable laws and regulations. The annual results can differ materially from those expressed or implied, depending upon the economic and climatic conditions, Government policies and other incidental factors.