(Annexure-A to the Directors Report)
Management Discussion and Analysis Report INDUSTRY STRUCTURE AND
DEVELOPEMENT: GLOBAL ECONOMIES:
The global cooking oil market is driven by increase in consumption of
high-quality edible oils/cooking oils by health-conscious consumers and growing demand
from various applications, such as confectionery, primarily in the production of candies.
Edible oils market is expected to reach USD 190.88 billion by 2030,
which is USD 102.37 billion in 2022, registering aCAGR of 8.10% during the forecast period
of FY 2023-30.
The global castor oil & derivatives market size is expected to
reach USD 1.9 Billion by 2030, as per the new report. The market is anticipated to
register a CAGR of 5.8% from 2022 to 2030. The demand is attributed to the increase in the
consumption of the product by various end-use industries such as coatings, lubricants,
medicinal products, and personal care.
INDIAN ECONOMYOUTLOOK:
Edible oils act as an intensive source of energy, delivering essential
nutrients to the body, including vitamins A and D. Besides this, they act as a heat
transfer medium at high temperatures and enhance taste sensation in spreads and salad
dressings. The Food Safety and Standards Authority of India (FSSAI) super vises the
manufacture, packaging, and distribution of edible oils in India.
In India, the rising consumer health concerns towards the high
prevalence of coronary heart diseases, diabetes, obesity, gastrointestinal disorders,
etc., are primarily driving the demand for healthy edible oil. Additionally, the market is
further catalyzed by the growing awareness towards several health benefits of organic and
low-cholesterol edible oil. As a result, various regional manufacturers have launching
healthy product variants enriched with omega-3, vitamins, and natural antioxidants.
Moreover, the changing consumer dietary patterns and their hectic work schedules have led
to the increasing consumption of processed food items. The rising demand for edible oil in
the food processing sector as food preservatives and flavouring agents is also catalyzing
the market growth in the country. Additionally, the elevating consumer living standards
coupled with the increasing penetration of international culinary trends and are further
augmenting the demand for high-quality product variants, such as olive oil, sesame oil,
flaxseed oil, etc.
Apart from this, the expanding agriculture sector along with the launch
of several initiatives for enhancing the production of oilseeds in the country is also
propelling the market. Furthermore, the Indian government is making continuous efforts to
increase the domestic availability of edible oil and reduce import dependency. For
instance, the government has proposed the National Mission on Edible Oil (NMEO) for
meeting the countrys consumption need for edible oil, such as sesame oil, groundnut
oil, sa3ower oil, palm oil, etc.
The Indian economy is in robust growth phase with lots of new
developments and investment sentiment being upbeat. The RBI expects Indias 2023-24 GDP
growth at 6.5%, with quarter Q1 at 8.0%, Q2 at 6.5%, Q3 at 6.0%, and Q4 5.7%. An average
GDP of 6.5% for India in a period when many global economies are struggling with higher
interest rates, rising inflation and slowing of consumption is truly commendable.
Indian PMI numbers, credit growth and even consumption numbers like
Auto sales have been robust for the year so far and with that it looks like that the India
GDP can even grow more then the number forecast by RBI.
Indian CPI numbers even though higher @ 4.81% but are still much below
RBIs upper tolerance limit of 6%, also the food inflation rose to 4.91% but that is
due to vegetable price increase and can be temporary as all round good rains increased the
prospects of good crops of all the agricultural products.
The progress of the monsoon have been fairly good in many parts of
India and it will have a significant impact on agriculture, animal husbandry and other
allied industries. The large portion of Indian population still earns their livelihood
from these industries, the good monsoon will enhance purchasing powers of these millions
of people who are directly and indirectly connected to Agriculture.
OPPORTUNITIES:
• At GARL we are always in lookout for opportunities where company
can grow exponentially and create value for themselves as well as for its stakeholders. In
the same endeavour, we planned for setting up of new greenfield edible oil refinery at
Krishnapatnam, in Andhra Pradesh to cater the growing needs of the people of the region
and to bolster our vision to expand PAN India basis.
• The Government of India is taking measures to increase the
domestic production of edible oil seeds. Initiatives like ‘ N a t i o n a l M i s s i
o n o n Ed i b l e O i l s a n d ‘O i l Pa l m Development Programme,
increasing the minimum support prices of oilseed crops, creation of bu3er stock for
oilseeds are being implemented by the Government to boost the production.
• There is a continuously increasing edible oil demand due to
rapid urbanisation, changing dietary patterns and the growth of the food processing
sector.
• Indias population and low per capita consumption is
continuously increasing which will boost the sector significantly.
THREATS:
• Our operations are dependent on the supply of large amounts of
raw materials, such as palm oil, soybean oil, sunflower oil and oilseeds. Unfavourable
local and global weather patterns may have an adverse effect on the availability of raw
materials. However, our internal processes are designed to shift the resources to products
with good price parity, which largely mitigates the threat of seasonality of products.
• Commodities tend to go through volatility and are prone to make
sharp price moves in short time however with disciplined hedging and being ahead of the
market we have been able to address them and deal with them quite well.
• Any adverse government policies or decisions both at exporting
countries and in India can have a temporary impact on the supply – demand.
RISK MANAGEMENT AND ADEQUACY OF INTERNAL FINANCIAL CONTROLS:
RISK MANAGEMENT
The Company has a well-defined process in place to ensure appropriate
identification and treatment of risks. Risk identification exercise is inter-woven with
the annual planning cycle which ensures both regularity and comprehensiveness. The
identification of risk is done at strategic, business, operational and process levels.
While the mitigation plan and actions for risks belonging to strategic, business and key
critical operational risks are driven by senior leadership, and for rest of the risks,
operating managers drive the conception and subsequent actioning of mitigation plans.
The key strategic, business and operational risks which are significant
in terms of their impact to the overall objectives of the Company along with status of
mitigation plans are periodically presented and discussed in the Committee Meetings. The
Company, through its risk management process, aims to contain the risks within its
appetite. There are no risks which in opinion of the Board threaten the operations and
existence of the Company.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS:
We have implemented a robust internal financial controls (IFC)
framework within the company. The Internal Financial Controls have been documented and
embedded in the business processes. Design and operating effectiveness of controls are
tested by the management. Internal auditor has issued an unqualified report after checking
the effectiveness of these controls. The management believes that strengthening IFC is a
continuous process and therefore it will continue its efforts to make the controls smarter
with focus on preventive and automated controls as opposed to mitigating manual controls.
The company has robust ERP and other supplementary IT systems which are integral part of
internal control framework. The company continues to constantly leverage technology in
enhancing the internal controls. On a voluntary basis, we endeavour to implement the same
in our subsidiary Companies.
HUMAN RESOURCES
The Company recognizes that thecompetence of its workforce is crucial
to achieve success and GARL is dedicated to provideemployeeswith the skills necessary to
keepup with continuous technologicaladvancements. Throughout theyear, t h e C o m p a n y
h o s t e d t r a i n i n g i n i t i a t i v e s i n v a r i o u s domains,including
technical skills,interpersonal skills, operationalexcellence, general and
advancedmanagement, leadershipqualities, customer focus, safety,values, and ethical
standards. The Companys workforce hasbeen enriched through a culturebased on
enthusiasm, exposureto various market conditions,emotional involvement, andempowerment
over the years.
We believe, ‘People are the most valued resource of an
organisation. Their interests and welfare is our prime concern. We strive to explore their
best by creating opportunities for growth and development, while maintaining discipline
and demeanour in consonance to the culture and values of the organisation.
Our Objective on Human Resource to provide direction and clarity in the
day-to-day administration of Human Resources and to provide standard reference to
employees in u n d e r s t a n d i n g t h e i r r i g h t s a n d c a r r y i n g o u t t
h e i r responsibilities.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
PERFORMANCE:
During the Financial Year 2022-23, we achieved a strong 1.68 % increase
in our revenue compared to the previous year. This financial performance was driven by our
stellar export performance and consistent domestic performance. Over the years we have
expanded our capacity, developed our expertise and broadened product base to drive this
growth of the Company.
Particulars |
FY 2022-23 |
FY 2020-21 |
YoY Change (in %) |
|
Standalone |
Consolidated |
Standalone |
Consolidated |
Standalone |
Consolidated |
| Revenue |
10,08,281 |
10,73,980 |
10,21,079 |
10,38,411 |
3.42 |
(1.25) |
| EBITDA |
25,632 |
29,831 |
21,225 |
24,149 |
23.53 |
20.76 |
| PAT |
10,470 |
13,240 |
10,297 |
12,290 |
7.73 |
1.68 |
Net Worth |
55237.41 |
65060.86 |
40654.03 |
47028.04 |
38.34 |
35.87 |
SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS (STANDALONE)
Ratios |
FY 2022-23 |
FY 2021-22 |
Change % |
FY 2020-21 |
| Debtors Turnover Ratio |
37.74 |
38.7 |
-2.48% |
NA |
| Inventory Turnover Ratio |
16.27 |
21.24 |
-23.40% |
NA |
Interest Coverage Ratio (in
times) |
2.97 |
4.18 |
-28.95% |
The interest coverage ratio
is a debt and profitability ratio used to determine how easily a company can pay interest
on its outstanding debt. Through strategicplant expansions and modernization
investments,we have successfully elevated our productivity, resulting in a substantial
rise in EBIT. However, with the substantial increase in Alternate Reference Rate during
the period under review, financing cost of the company has increased. |
| Current Ratio (in times) |
1.26 |
1.2 |
5.00% |
NA |
| Debt Equity Ratio (in times) |
2.44 |
2.49 |
-2.01% |
NA |
| Operating Profit Margin (%) |
2.54 |
2.08 |
22.12% |
NA |
| Net Profit Margin (%) (PBT) |
1.04 |
1.01 |
2.97% |
NA |
Return on Net Worth (%) |
18.96 |
25.33 |
-25.15% |
The Return on Net Worth of a
company is a critical financial metric that measures the profitability of the company in
generating earnings from its shareholders equity. The main reason for decrease in this
ratio is due to year end increased equity capital. |
Cautionary Statement:
The statements made in the Management Discussion and Analysis Report of
the Company describing the Companys goals, expectations and predictions, among others, do
contain some forward-looking views of the management. The actual performance of the
Company is dependent on several external factors, many of which are beyond the control of
the management, viz. growth of Indian economy, continuation of industrial reforms,
fluctuations in value of Rupee in the foreign exchange market, volatility in commodity
prices, applicable laws / regulations, tax structure, domestic / international industry
scenario, movement in international prices of raw materials and economic developments
within the country, among others.
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