Economy Overview
During the period, various challenges were faced by the Global Economy like COVID-19
related disruptions in economies, Russian-Ukraine conflict and its adverse impact along
with disruption in supply chain, mainly of food, fuel and fertilizer. The Central Banks
across economies led by Federal Reserve responded with synchronised policy rate hikes to
curb inflation, leading to appreciation of US Dollar and the widening of the Current
Account Deficits (CAD) in net importing economies.
Like the rest of the world, India too, faced these extraordinary set of challenges but
withstood them better than most economies.
Indias recovery from the pandemic was relatively quick, and growth in the upcoming
year will be supported by solid domestic demand and a pickup in capital investment.
Global growth is forecasted to slow from 3.2 per cent in 2022 to 2.7 per cent in 2023
as per IMFs World Economic Outlook, October 2022. Despite the global slowdown, Indias
economic growth rate is stronger than in many peer economies and reflects relatively
robust domestic consumption and lesser dependence on global demand.
Indias gross domestic product (GDP) projected a growth to 6.4% in fiscal year FY-2023
ending on 31 March 2023 and rise to 6.7% in FY-2024, driven by private consumption and
private investment on the back of government policies to improve transport infrastructure,
logistics, and the business ecosystem.
However, geopolitical tensions and weather-related shocks are key risks to Indias
economic outlook.
Industry Structure and Developments
Gelatin is a natural product which is made of hydrolytic degradation of protein from
collagen and its distinctive structure of amino acids gives it several benefits. It is in
the form of tablets, granules or powders and has a high protein content.
Hydrocolloids have been popularly used as a gelling agent in food industries. Gelatine
has multiple applications across various industries including food & beverage,
pharmaceutical, photography, biomedical, personal care, and other technical areas.
In pharmaceutical, gelatin is used to manufacture hard and soft capsules, for coating
tablets, and in syrups. It also has many biomedical applications. It is used in the
manufacturing of scaffolds for healing wounds.
Gelatin is a key component of the food industry in modern cuisine owing to its gelling
capabilities. The food industry, for example, manufactures gourmet desserts using gelatin
for texture, foaming, and clarity, as well as stabilising the food structure. For canned
meat products such as sausages, frankfurters, loaves and hams, gelatin has also been used
to retain juices lost.
Gelatin is the most widely used among other types of hydrocolloids in the market. By
far, gelatin is actually a multivariate, functional substance in todays life.
Opportunities and Threats, Outlook, Risks and Concerns
Owing to the rapid growth of the ageing population across the world, the demand for
medicines is expected to increase.
There is also increasing demand for convenience food and beverages due to changing
lifestyles, increasing working population as consumers lacks the time to prepare home -
cooked food and are more inclined towards convenience food products. These are driving the
growth in gelatine demand world over.
Consumption of gelatin produced from particular species are forbidden in many religions
and cultures across the globe, is a major factor, which could restrain market revenue
growth. Vegans and vegetarians also do not prefer gelatin or foods containing gelatin.
The prices of gelatin vary depending on the prices of its raw materials, the region or
country where the product is being manufactured, demand and supply situations.
The lockdown had affected the availability of our main raw material, i.e., crushed
bones, but the availability of raw material has improved since, and the prices are stable
too. The difficulty in sourcing good quality raw material and rise in coal prices continue
as an area of concern.
Segment-wise or product-wise performance
The Company is engaged in only one segment, namely, manufacture and sale of gelatine
and related products like ossein and di-calcium phosphate (DCP) and as such there are no
reportable segments as per Ind AS-108 "Operating Segments."
Internal financial controls and its adequacy
The Companys Internal Financial Control framework is commensurate with the size and
the nature of its operations. These have been designed to provide reasonable assurance
about recording and providing reliable financial and operational information, complying
with applicable statutes, safeguarding assets from unauthorized use, executing
transactions with proper authorization and ensuring compliance of Corporate Policies.
The Company has laid down procedures and policies to guide the operations of the
business. The Company has a well-defined delegation of power with authority limits to
approve revenue as well as expenditure. Functional heads are responsible to ensure
compliance with the policies and procedures laid down by the board of directors.
The Company has appointed M/s P.B. Singh & Associates, Chartered Accountants to
oversee and carry out internal audit of its activities. The audit is based on an internal
audit plan, which is reviewed each year in consultation with the statutory auditors and
approved by the audit committee. The efficacy of the internal checks and control systems
are validated by internal auditors. The audit is based on a focused and risk based
internal audit plan, which is reviewed and approved each year by the Audit Committee of
the Company.
The Audit Committee reviews reports submitted by internal auditors. Suggestions to
improve any process are considered by the management and the Audit Committee follows up on
corrective actions taken by the management. The Audit Committee also meets the Companys
statutory auditors to ascertain, inter alia, their views on the adequacy of internal
control systems and keeps the Board of Directors informed of its major observations
periodically.
The operating management assessed the effectiveness of the Companys internal controls
over financial reporting as of 31st March 2023. M/s. Lodha & Co., the
Statutory Auditors of the Company audited the financial statements included in this Annual
Report and have issued a report on the internal controls over financial reporting (as
defined in Section 143 of the Companies Act, 2013).
Based on its evaluation (as provided under Section 177 of the Companies Act, 2013 and
Clause 18 of SEBI Listing Regulations), the Audit Committee has concluded that as of 31st
March 2023, the Internal Financial Controls were adequate and operating effectively.
Human Resources / Industrial Relations
The Companys human resources agenda continues to remain focused on the development of
its employees, building capabilities in the organization and progressive employee
relations policies. The Company addressed training and development needs of its workforce
in technical and behavioural areas by deploying internal and external faculty. During the
year 2018-19 a memorandum of understanding was reached and signed with the employees
union for a period of five years.
Human capital is at the heart of our companys success. It can be attributed through
our diversified and competent workforce, capable leadership and empowering culture and
efficient operational excellence.
We aim to provide a safe, dynamic, and trustworthy environment for all our employees
henceforth. Our people policies are designed to create a future ready workforce, while
empowering them and creating an enriching employee experience.
Our efforts were also in conjunction with various aspects like Employee health and
safety, Training and skill development,
We do not make employee decisions or discriminate against individuals based on personal
characteristics like race, color, age, gender, religion, nationality, marital status,
sexual orientation, etc. We base our employment relationship on the principle of equal
opportunity and fair treatment and strive to create an environment that fosters the same.
There were no incidents of discrimination in fiscal 2022-23.
We always led emphasis on employee wellbeing may it be mentally, physically,
emotionally or socially.
Industrial relations remained cordial throughout the year. Your Directors place on
record their sincere appreciation of the significant contributions made and the continued
support extended by all employees at all levels to the Companys operations during the
year.
Financial and operational performance
Revenue from operations stood at Rs. 191.14 crore, higher than the previous year by
21.5%. This was driven by volume growth of approx 8% in gelatin and 18% in Di-calcium
phosphate (DCP), and also better price realization compared to the previous year.
The contribution of gelatine sales to the turnover was lower as compared to the
previous year by 3%, whereas the DCP sales turnover was higher by 11% over the previous
year, mainly on account of better prices.
Material cost in fiscal 2022-23 reduced by 5.77%, but power and fuel cost increased by
13% over the previous year is mainly due to increase in the price of coal. Employee cost
stood at 7.17% (7.80% previous year) of revenue from operations. Other expenses were on
the higher side at 6.23% as compared to the previous year at 5.28% of revenue from
operations.
Earnings before interest, taxes and depreciation and amortisation (EBITDA) stood at Rs.
22.04 crores, higher than previous year by 25%
Profit before exceptional items and taxes was Rs. 19.82 crores, higher than previous
year by 28%. Growth led by higher volumes and price of both the products - gelatin and
DCP.
Profit after tax at Rs. 15.21 crores, higher than the previous year by 22% led by
improved operating performance of the company.
Diluted Earnings per share (EPS) for fiscal 2022-23 was Rs. 25.26 per equity share.
The financial highlights for the year 2022-23 are as follows:
(Rs.lakh)
|
2022-23 |
2021-22 |
Variance |
Revenue from Operations |
19114.14 |
15716.39 |
21.46% |
Profit before tax |
1981.68 |
1542.62 |
28.46% |
Profit after taxation |
1521.90 |
1246.81 |
22.07% |
Significant changes in key financial ratios
In accordance with the Listing Regulations, the Company is required to give details of
significant changes in the key financial ratios. During the year, the significant changes
in financial ratios of the Company, which are more/less than 25% as compared to the
previous year are summarized below:
Financial Ratio |
2022-23 |
2021-22 |
Change (%) |
Reason for change |
Operating profit margin (%) |
9.17% |
7.78% |
17.86 |
Margin increased due to better sales turnover/ realization of gelatin
and DCP |
Net Profit Margin (%) |
8.00% |
7.85% |
2.00 |
|
Return on Net worth |
12.78 |
8.69 |
47 |
The increase in ratio is due to increase in margin, volumes and
decrease is net worth which is due to payment of special interim dividend of 1000% |
Debtors turnover |
32 |
39 |
|
Due to better collection from debtors and in sales on cash basis |
Current Ratio |
4.78 |
4.98 |
|
|
EPS |
25.26 |
20.40 |
|
|
Market Price per share ^) |
292.15 |
207.00 |
|
|
Cautionary Statement
Certain statements made in the Management Discussion and Analysis Report relating to
the Companys objectives, projections, outlook, expectations, estimates and others may
constitute forward looking statements within the meaning of applicable laws and
regulations. Actual results may differ from such expectations whether expressed or
implied. Several factors could make significant difference to the Companys operations.
These include raw material availability, import and exports of raw material and finished
goods, economic conditions, affecting demand and supply, government regulations, changes
in taxation, natural calamities, period of lockdown and Covid-19 over which the Company
does not have any direct control.
+91-9892691696
