Your Directors have pleasure in presenting the management discussion
and analysis report for the year ended on March 31, 2023.
1. INDUSTRY STRUCTURE, DEVELOPMENT : India is the third largest
producer and consumer of mineral fertiliser globally. Over the years, the Indian
fertiliser industry has grown significantly on the back of favourable demand,
governments support and increasing agricultural output. Presently, the Government is
actively focusing on addressing balanced crop nutrition and improving soil health. The
Fertilizers industry has always been an important part of peoples lives in India.
The fertilizers industry in India is one of the oldest manufacturing sectors in the
country and is currently its largest. The company was engaged in the business of
manufacture of Single Super Phosphate (SSP) in the Manufacturing unit situated at
Kathivakkam Village,
Ennore, Chennai-600057. The production was shelved/ discontinued due to
scarcity of imported quality Raw materials and want for working capital funds. The Board
of Directors proposed an alternative solution for capacity expansion, and identified the
factory situated at Ennore, which is not being fully utilized by the Company due to lack
of fund.. In this regard, the Board has approached and offered M/s.Coromandal
International Limited to operate the production facilities on lease basis as they are into
similar manufacture as well own mines the question of Raw materials scarcity does not
arise which is the backbone of this industry.The Board of Directors leased out the factory
for a period of 5 years situated at Ennore, Chennai to M/s. Coromandel International
Limited. During the year 2022-2023, the company has diversified into various business such
as Drones and
Hotels.
2. OPPORTUNITIES & THREATS : Governments vision to double
farmers income by 2024 is likely to increase agri inputs consumption. Improved
awareness about soil health and sustainable practices to promote balanced organic
fertilizer. Central and State governments support towards drip and microirrigation
adoption to improve the resource use efficiency and promote water soluble fertiliser
usage. The Government is committed to encourage the healthy growth of Capital Market for
development of the Economy. During the year 2022-2023, the company has diversified into
various business such as Drones and Hotels. Company has made an application for revocation
of suspension to BSE Limited. After revocation of suspension, company will raise capital
from the public. The company is exploring other significant business opportunities as part
of a diversification scheme which would generate financial outlay and the profitability of
the company during the rest of the current financial year 2023-24. The company was engaged
in the business of manufacture of Single Super Phosphate (SSP) in the Manufacturing unit
situated at Kathivakkam Village,
Ennore, Chennai-600057. The Business is operating under challenging
environment due to various factors as high cost of raw material /supplies, high Interest
Cost and the banks reducing the borrowing powers and then stopping abruptly funding of the
working capital are the factors that have led to the recent negative performance of the
Company. In addition to that due to continuous loss the entire net worth is eroded and it
is negative now. The production was shelved/discontinued due to scarcity of imported
quality Raw materials and want for working capital funds. Our factory was established in
the year 1960. The Land, Plant and Machinery and Building is under hypothecation since
1995.Since our factory is very old and situated in Coastal Regulation Zone(CRZ) and near
to sea, and Company is required fund to develop the factory so we are unable to run the
factory with latest technology. Since our factory is situated near to sea, we have lost 7
acres due to sea erosion.
Several initiatives such as launching of new products, substantial
improvements in quality and service, cost reduction etc. were taken in the past. However,
the performance of the Unit did not improve. As the Unit is considered no longer viable,
after considering various options the Board decided to sell the same in the overall best
interest of all the stakeholders, if we get a suitable buyer.
3. SEGMENT-WISE PERFORMANCE : The Companys main business
activity is trading of Fertilizers product and its related activities which fall under
four reportable segments. The company has rentals income on its property leased out to
various tenants subsequent to the close of the financial year. Major portion of the
companys rentable space have been parted pursuant to the approval of the
shareholders at the Extra-ordinary General Meeting held on 26th February 2019. Pursuant to
the approval of the shareholders at the Extra-ordinary
General Meeting of the company held on 26th February 2019,
the company sold two floors of Kothari Buildings to M/s.Gemini Iron and Steel Pvt. Ltd and
in July 2021 transferred remaining two floors to the financial creditor in full settlement
of its claim. The Company has leased out the factory situated at Ennore, Chennai to M/s.
Coromandel International Limited. The same has been approved by the shareholders of the
company vide EGM held on 07th December 2021.The rental income is likely to be
significantly reduced going forward. The Company has majorly focused on quality and
production. The company has embarked upon marketing of sanitizers and face masks (health
care products) the demand which is increasing due to COVID 19 incidence. These products
are well received by hospitals and general public. The company has started the production
and marketing of FMCG products in the 2021-2022 financial year. During the year 2022-2023,
the company has diversified into various business such as Drones and Hotels. During the
year, the Company recorded a total revenue of Rs. 1032.22 Lacs as compared to Rs. 1031.86
Lacs in the previous year. The details of segment-wise performance is furnished in notes
to the financial statements.
4. OUTLOOK : The Company continues to explore the possibilities of
expansion and will make the necessary investments when attractive opportunities arise.
Company will continue to focus on improving the quality of customer
engagement, creating new infrastructure & strengthening existing operations, promoting
a safe work environment, enabling culture for happy and satisfied employees, thereby
enhancing its stakeholders value creation. Overall, with a normal monsoon
expectation and strengthened business processes, KICL expects to sustain its growth
momentum in 2023-24. The company is exploring other significant business opportunities as
part of diversification scheme which would generate financial outlay and the profitability
of the company during the rest of the current financial year 2023-24.
5. RISK & CONCERNS : Risk management is a very important part
of the Companys business policy.
Risk Management structure spans across different levels and the
Company, continuously identifies, classifies and formulates mitigation measures.
The key risk management practices include risk assessment, measurement,
monitoring, reporting, mitigation actions and integration with strategy and business
planning. The Company has a robust Risk
Management framework to identify, evaluate business risks and
opportunities. This framework seeks to create transparency, minimize adverse impact on the
business objectives and enhance the Companys competitive advantage. The business
risk framework defines the risk management approach across the enterprise at various
levels including documentation and reporting. The framework has different risk models
which help in identifying risks trend, exposure and potential impact analysis at a Company
level as also separately for business segments.
6. INTERNAL CONTROL SYSTEMS & THEIR ADEQUEACY : Company has
adequate internal controls consistent with the nature of business and size of the
operations, to effectively provide for safety of its assets, reliability of financial
transactions with adequate checks and balances, adherence to applicable statutes,
accounting policies, approval procedures and to ensure optimum use of available resources.
These systems are reviewed and improved on a regular basis. The Companys operating
and business control procedures ensure efficient use of resources and comply with the
procedures and regulatory requirements. There are adequate internal controls to safeguard
the assets and protect them against losses from unauthorized use or disposition and the
transactions are authorized, recorded and reported correctly. The Audit Committee
periodically reviews the internal controls systems and reports their observations to the
Board of Directors if any. The Directors have appointed M/s. N. Ganesan & Co.,
Chartered Accountants as the Internal Auditors of the Company for the FY 2022-23.
7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
PERFORMANCE : During the year, the Company has recorded a total turnover of Rs.
1032.22 Lacs as compared to Rs. 1031.86 Lacs in the previous year. The Company has made
net loss of Rs. (1744.53) Lacs as compared to net loss of Rs. (1098.85) Lacs of the
previous year after providing depreciation, tax, etc. for the year ended 31st
March, 2023.
8. HUMAN RESOURCE DEVELOPMENT : Human resources are the most
important resources in an organization and need to be used efficiently, because success,
stability and growth of an organization depend on its ability in acquiring, utilizing and
developing the human resources for the benefit of the organization. There were no
incidents of sexual harassment reported during the year under review, in terms of the
provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013. The
Company believes that the human resources are vital in giving the
Company a Competitive edge in the current business environment. The Companys
philosophy is to provide congenial work environment, performance-oriented work culture,
knowledge acquisition / dissemination, creativity and responsibility. As in the past, the
Company has enjoyed cordial relations with the employees at all levels. The Company
continues to run an in-house training program held at regular intervals and aimed at
updating their knowledge about issues.
Total number of employees as on 31st March 2023 was 42.
9. KEY FINANCIAL RATIOS:
Description |
U/M |
2022-23 |
2021-22 |
Remarks |
| Debtors Turnover |
Days |
103.49 |
86.90 |
Due to monsoon failure. |
| Inventory Turnover |
Days |
69.05 |
65.75 |
It is in line with the previous year. |
| Interest coverage ratio |
Times |
(0.74) |
(0.12) |
Due to increase of interest. |
| Current ratio |
Times |
0.52 |
0.87 |
Due to increase in liability. |
| Debt Equity ratio |
- |
(1.53) |
(2.27) |
Due to increase of debt. |
| Operating Profit Margin |
% |
(169.44) |
(122.27) |
Due to loss is more as compared to last year. |
| Net Profit Margin % |
% |
(192) |
(107) |
Net Loss is more as compared to previous
year. |
| Return on Net worth |
% |
42 |
39 |
Due to increase in loss and increase in
equity. |
By Order of the Board of Directors
For KOTHARI INDUSTRIAL CORPORATION LIMITED PRADIP D KOTHARI Place :
Chennai CHAIRMAN Date : 31.08.2023 DIN : 01315682
+91-9892691696
