origin agrostar ltd share price Management discussions

ORGIN AGROSTAR LIMITED ANNUAL REPORT 2003-2004 MANAGEMENTS DISCUSSION AND ANALYSIS REPORT Industry Scenario: a. The main, business of the company is in Starch and Starch based derivatives sector. This Sector has seen Positive growth during the post year after overcoming the slackness of earlier years. b. However unlike other major players, who use maize as the main raw material, the company is dependent on Tapioca for it feedstock. The prices and availability of Tapioca is highly fluctuating and hence the company is constantly under pressure on its production costs. c. However with the implementation of the Maize crushing project which will produce Maize Starch, the Company would overcome this major bottleneck and would be able to sell finished products at competitive prices. Opportunities: The Company has tremendous opportunities for marketing its products in South India being strategically located close to the main consuming industries in the food, pharma and confectionary industries. There has been substantial growth in these sectors due to entry of new players in the confectionary business and rapid expansions in pharma business. With increased production plans in downstream production like Dextrose, Monohydrate and Maltodextrine and with the Companys ability to manufacture products of high quality, there is tremendous potential to grow in these products. The company also has exported its products to various countries and sees a good export potential in Russia, Middle East and Far East countries. Outlook: With the completion of the Maize processing plant and enhancement of capacities of products with better margins and there would be an improvement of Companys performance in the next few years. Risks and concerns: The enormous delay in implementation of the critical projects have led to the substantial fall in the manufacturing operations of the company. The management is now implementing its plans in right earnest and would come out with better performance in the next two years. The statements above represent the view and intentions of the management and efforts to realize the some are being done in right earnest. The success depends on various internal and external conditions. Internal Control System: Your Company has established an advanced internal control system and manual in the Purchase, Production and Marketing areas and in line with ERP system requirements. Development in Human Resources: The Company has an employee strength of 139 as compared to 159 in the previous Accounting Period. The difference is due to the right sizing of the various departments to achieve better deployment and improving performance. The Company has cordial relations with the workers union.