iifl-logo-icon 1

Karnimata Cold Storage Ltd Management Discussions

11.07
(-4.98%)
Nov 12, 2024|12:00:00 AM

Karnimata Cold Storage Ltd Share Price Management Discussions

INDUSTRY STRUCTURE & DEVELOPMENTS:

Cold storages in India preserve agricultural produce for a fixed period of time (varying from one day and extending upto several months) at low temperature. Refrigerated storage helps in eliminating sprouting, rottage and tuber moth damage and in reducing weight loss of the agricultural produce.

India is the largest producer of fruits and second largest producer of vegetables in the world. Fruits & vegetables, being perishable in nature require certain techniques of preservation for retaining the freshness intact and making them an acceptable item even after few days of ripening. It also facilitates the farmer to realize a better price instead of selling the product at a throw away price due to the perish ability. This necessity as evolved a new concept of storing these items at below or just above sub-zero temperatures known as cold storage. Introduction of Cold storage/Cold room facility will help them in removing the risk of distress sale and simultaneously will ensure better returns. Varied agro climatic conditions and better availability of scientific package of practices, there is a vast scope for increasing the production.

Cold storages are essential for extending the shelf life, period of marketing, avoiding glut, reducing transport bottlnecks during peak period of production and maintenance of quality of produce. The development of cold storage industry has therefore an important role to play in reducing the wastages of the perishable commodities and thus providing remunerative prices to the growers.

Cold Storage is also essential in qualitative post-harvest management as well as food security and food quality by efficiently handling agricultural products upstream & downstream. Refrigerated storage helps in eliminating sprouting, rottage and tuber moth damage and in reducing weight loss of the agricultural produce.

We believe that the need for setting up and construction of cold storage facilities is highly required for the preservation of potatoes which is a cash crop and the same shall be equally beneficial to both producers and consumers and shall there by strengthen the rural economy of perishable commodities. Our project envisages perfect backward and forward linkage of marketing activities as an essential pre-condition. Further it has become a practice to accommodate necessary finance to hirers of the cold storage against their stocks stored in the cold storage in order to keep the price or potato steady and allow the support price to the growers of potato. Providing this seasonal finance is an important factor in the growth of our business.

OPPORTUNITIES & THREATS:

The cold storage facilities are the prime infrastructural module for such perishable commodities. Cold storage is the modern method of food preservation over a considerable period at ambient conditions. The preservation of food due to refrigeration, which involves the use of low temperature to eliminating or retarding the movement of spoilage agents. The degree of low temperature required for adequate preservation varies with the type of product stored and with the length of time the product is to be kept in storage. The cold storage is initially specified by its application for the preservation time of the product as short term and long term storage.

The cold storage system is poised to become a game changer for Indias food and agricultural industry. While ensuring access to food for all, it will play a major role in boosting Indias economy. Since infrastructure is still at a nascent state, cold storages could help reduce the burden on farmers and industries in transacting with other stakeholders. The apparent benefits of cold storages are so high that they could curtail inflation and reduce dependency on price sensitivity and volatility. A strong interplay of private players, markets and farmers is required for sustaining and developing the sector. Investments need to be attracted through right strategies, as the sector has a long-term effect on the health of the people and the economy of the state. Price control measures and regulations have to be minimised and eventually stopped to tap the benefits of market in cultivating fruits and vegetables. The inter linkages developed between them will define the gross output of fruits and vegetables market in India and its contribution to the global market. With the advent of technology, it is only a matter of time before the warehousing systems are revolutionalised with increasing demands and pressure on supply chain. It is therefore pertinent to have the right strategies in place to support the need of building an efficient cold storage industry in india..

India has a dynamic and strong in food processing sector playing a major role in diversifying the agricultural industry, improving opportunities and creating surplus nourishment for agro produce. Cold storage India has the goal of keeping vegetables and fruits fresh is to preserve quality, freshness, vitamins, and flavor. The condition of fruits and vegetables begin to deteriorate as soon as theyre cropped. Wastage of vegetables and fruits due to poor post-harvest management and lack of availability cold chain facilities.

India cold chain industry has been marked and recognized as the emerging sector as its holds a lot of untapped opportunities due to large current infrastructural demand and supply gap. With the advent of new technologies and demand generated by the major perishable products, India cold chain market revenue growing rapidly. However the agriculture sector in India is expected to generate better momentum in the next few years due to increased investments in agricultural infrastructure such as irrigation facilities, warehousing and cold storage. The growing use of genetically modified crops will likely improve the yield for Indian farmers. The Government of India through the Ministry of Food Processing Industries has formulated a number of policies for extending assistance in the form of grant, subsidy and soft loan to agro food processing industries. In order to give impetus to promotion of all Agro Food Processing Industries several incentives and concessions have been granted.

Our Unit located in the district of Paschim Medinipur of West Bengal, which is traditional potato growing region and also West Bengal is one of the top three potato growing states in India and hence we believe that the chances of shortfall in the crop may not happen in the near future. However there are some threats of crop failure due to the weak monsoons, lower seed sown by farmers as the price volatility of potatoes in the earlier year, natural calamities, crop diseases and labor scarcity etc. As your Companys main revenue is the rental income from storing potatoes and any shortfall in the crop harvest will affect to achieve the targeted capacity.

SEGMENT REPORTING:

The Company is engaged in the business of providing cold storage facility on rental basis and providing loans to traders and farmers and as such Accounting Standard 17 regarding Segment-wise Reporting issued by the Institute of Chartered Accountants of India and notified under the Companies (Accounting Standards) Rules, 2006 doesnt apply to our Company.

OUTLOOK:

The agriculture and food processing sectors in India have been developing and today India is a net exporter of food grains. However, lack of proper and adequate food storage, processing and cold chain logistics remains a serious challenge. The government had earlier constituted a National Task Force on Cold Chain in 2008. The Government of India is one of the driving forces in developing the cold chain industry and supports private participation through various subsidy schemes and grants. Investment in cold chain in India was also opened under the automatic route for 100% FDI participation. The existing cold chain in India largely comprised comparatively small private companies with a regional or local footprint.

Globally cold chains have now become an integral part of supply chain management for the storage and transportation of temperature-sensitive goods. The focus has now shifted from increasing production to better cold storages and transportation of food produce. The utilisation of cold chain logistics includes both cold storages and refrigerated transportation and is used to increase the shelf life of food produce.

RISKS AND CONCERNS:

The management cautions that the risks outlined below are not exhaustive and are for information purposes only. Stakeholders are requested to exercise their own judgment in assessing various risks associated with the industry and the Company.

Cold storage units provide storage facility to agricultural products on rental basis and your Company providing storage facility of Potatoes. Hence the main revenue of the Company depends on the potato growing, especially in the Paschim Medinipur area and adjacent areas of Paschim Medinipur, West Bengal i.e. the prime areas of potato harvesting. As cold storage industry related to agro products there are several risks associated with. Failure of potato crop in West Bengal State and specifically in and around Paschim Medinipur location, variation in potato prices in West Bengal and technical failures of key utility infrastructure such as power, water, machinery, uncertain climatic condition etc. And also in West Bengal the rent chargeable by the Company to the farmers and traders is set and controlled by the State Government. A decrease in rents ordered by the State Government or a substantial increase in operating costs not accompanied by the matching increase in rent would adversely affect our results.

RISK MITIGATION

The Company has built excellent relationship over the years with the local farmers and traders of potatoes. Also there is no other cold storage facility of our size and capabilities within a radius of approximately 10kms from our storage unit. And your Management continuously is trying to focus on long term strategies to identify such locations where there is demand supply mismatch; for future growth and expansion and mitigating the risk.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has proper and effective internal control systems commensurate with its nature of business and size of operations to ensure that all controls and procedures function satisfactorily at all times and all policies are duly complied with as required. These are considered adequate to reasonably safeguard its assets against loss or misappropriation through unauthorized or unintended use.

There is adequate and effective internal audit system that employs periodic checks on on going process. During the year the Company has appointed M/s Kshitiz & Co., 51, Nalini Sett Road, 5th Floor, Room No- 19, Kolkata- 700007 as the Internal Auditor of the Company. The Audit Committee of the Board of Directors regularly reviews the internal audit report and the effectiveness of internal control system in order to ensure due and proper implementation and due compliance with applicable laws, accounting standards and regulatory guidelines.

HUMAN RESOURCES

The Company has dedicated team of employees who have been contributing to the progress and growth of the Company. The manpower requirement of offices of the Company is assessed continuously and recruitment is conducted accordingly.

Your Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. Your Company has developed a comprehensive "in-house" induction training module to make sure that new employees understand the basic aspect of the Company in its all operations.

CAUTIONARY STATEMENT

Statement in this Directors Report and Management Discussion and Analysis describing the Companies objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities, laws and regulations. Actual results may differ materially from those either expressed or implied.

For and on behalf of the Directors Sd/-
Date: 30th May 2023 Pradip Lodha
Place: Paschim Medinipur Managing Director

Knowledge Center
Logo

Logo IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000

Logo IIFL Capital Services Support WhatsApp Number
+91 9892691696

Download The App Now

appapp
Loading...

Follow us on

facebooktwitterrssyoutubeinstagramlinkedintelegram

2024, IIFL Capital Services Ltd. All Rights Reserved

ATTENTION INVESTORS

RISK DISCLOSURE ON DERIVATIVES

Copyright © IIFL Capital Services Limited (Formerly known as IIFL Securities Ltd). All rights Reserved.

IIFL Securities Limited - Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

plus
We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp