nimbus foods industries ltd Management discussions

1. Industry Structure and Development

Your Companys Bakery portfolio includes biscuit, cakes, bread and rusk. Bread and Biscuits are the largest of these categories , and has attracted a vast array of competitors ranging from large national local companies to smaller regional players.

The FMCG industry witnessed further deceleration in growth rate during the year with demand conditions remaining subdued for the fourth successive year. The much anticipated pick-up in consumption expenditure on the back of good monsoons in 2016, low inflation and implementation of the recommendations of the 7th Pay Commission did not play out fully. The incipient recovery in demand witnessed during the year was adversely impacted by the cash crunch. Further, the industry had to contend with sharp escalation in the cost of major commodities in the midst of heightened competitive intensity, leading to compression in margins.

The food market itself has seen some interesting structural changes in the past few years with the emergence of a diversified palate of choices across functional and indulgent products. Additionally, with greater affluence and exposure, consumers are increasingly migrating from unbranded commodities, sold loose, to branded and packaged solutions that are hygienic and convenient. The Company therefore expects the overall Bakery market to grow 12-15% in the coming year.

2. Business Strategy:

Your Companys strategy is based on inspirational growth, in the context of the opportunities and challenges that the Indian market presents - an increasing consumer appetite to continually upgrade, irrespective of price points, demanding value for money propositions at all times and a more intense and vibrant competitive scenario.

The focus continues to be on profitable growth, driven through innovation and operational excellence right through the value chain. Revenue and cost management form an intrinsic part of operational excellence and will continue to be monitored closely for improvement. The role of innovation in your Company is about creating new sources of value. These include completely new or renovated products and packs that create greater consumer delight or the application of new technology that reduces cost and increases quality delivery, or a process innovation that reduces time to completion and increases efficiency. This comprehensive view of innovation enables your Company to experiment and pilot new initiatives and scale those that are successful. An in-depth understanding of consumers and what excites and motivates them forms the backbone of all our actions - from product design and benefit propositions, to their delivery. Building, improving and maintaining consumer preference and purchase form the basis of your Companys business and long-term success.

3. Opportunities and Threats

A future of opportunities exists in the form of increasing user and increasing demand. Growth in Indian economy leads to creation of immense opportunities to the Company for future growth and development. Your Company perceives risks or concerns common to industry such as concerns related to the Global Economic fallout, Regulatory risks, Foreign Exchange volatilities, Higher Interest rates, and other commercial & business related risks.

Further, The Primary threat in this segment is expected to arise from competitors who discern the same opportunities and are investing significantly to tap these opportunities.

4. Internal Control system and their adequacy

The Company has adequate system of internal control commensurate with its size and operations to ensure orderly and efficient conduct of the business. These controls ensure safeguard of assets, reduction and detection of frauds and error, adequacy and completeness of the accounting record and timely preparation of reliable financial information.

5. Financial performance with respect to operational performance

The financial performance of the Company for the year 2018-19 is described in the Directors Report.

6. Segment wise Performance:

The Companys primary business is bakery and confectionery. The food related products of the Company incorporate product groups viz. Bakery and Bread which have similar risks and returns and are in one segment only.

7. Recent Trend and Future Outlook:

The domestic market for packaged, branded bakery product is expected to grow 14-15% in the near term. The challenge to profitable growth comes from the trend in commodity prices, the general economic sentiment and a macro environment that contributes to operational stability in the manufacturing units and markets. Simultaneously, the Indian market opportunity and food market growth will attract new local and international players with deep pockets and a

differentiatedcapabilityintheirdomainsofoperationtoenterandexpandoperationsinIndia.

Creating a leadership position in this environment will demand that your Companys brands and their propositions are relevant and exciting for consumers and differentiated enough to create a higher preferenceand purchase. Your Companysfocus is on differentiating its products and continually renovating and innovating them to create unique and superior experiences for its consumers and customers. This, combined with effective cost management will generate profitable growth.

8. Material developments in Human Resources/Industrial Relations front, including the number of people employed:

During the year under review, no such initiatives and/or developments in Human Resources/Industrial Relations front has been taken by the Company.

9. Cautionary Statement:

Statement in this Management Discussion and Analysis describing the companys objectives, projections, estimated and expectations are "forward looking statements" Actual results might differ, materially from those anticipated because of changing ground realities.

Date:31.08.2019	By the order of theBoard
Place: Ahmedabad	For,NimbusFoodsIndustriesLimited

 

Registered Office:- Plot No. B - 13 & 14,	Sd/-	sd/-
Phase-II, GIDC Industrial Area,	AMIT J KHAKSA	SHARAD KHANDELWAL
Naroda,	Executive Director	Director
Ahmedabad -382 330	(DIN: 00142084)	(DIN: 03447732)