Economic Overview
Global economic recovery was well on track until the Russia-Ukraine confict broke out
in February 2022. The confict has now continued over a year, disrupting the restoration of
the supply chains disrupted earlier by lockdowns and limited trade tra"c. In the last
eleven months, the world economy has faced almost as many disruptions as caused by the
pandemic in two years. The confict caused the prices of critical commodities such as crude
oil, natural gas, fertilisers, and wheat to soar. This strengthened the infationary
pressures that the global economic recovery had triggered, backed by massive #scal stimuli
and ultra-accommodative monetary policies undertaken to limit the output contraction in
2020. Infation in Advanced Economies (AEs), which accounted for most of the global #scal
expansion and monetary easing, breached historical highs. Rising commodity prices also led
to higher infation in the Emerging Market Economies (EMEs), which otherwise were in the
lower infation zone by virtue of their governments undertaking a calibrated #scal stimulus
to address output contraction in 2020.
Despite the three shocks of COVID-19, Russian-Ukraine confict and the Central Banks
across economies led by Federal Reserve responding with synchronised policy rate hikes to
curb infation, leading to appreciation of US Dollar and the widening of the Current
Account De#cits (CAD) in net importing economies, agencies worldwide continue to project
India as the fastest-growing major economy at 6.5-7.0 % in 2023.
India to witness GDP growth of 6% to 6.8 % in 2023-24, depending on the trajectory of
economic and political developments globally. Growth in the upcoming year will be
supported by domestic demand and increase in investment. However, developments around the
world, such as increase in interest rates by central banks, prolonged strains in supply
chain, and geo-political confict, pose a risk to economic growth.
The optimistic growth forecasts stem from a number of positives like the rebound of
private consumption given a boost to production activity, higher Capital Expenditure
(Capex), near-universal vaccination coverage enabling people to spend on contact-based
services, such as restaurants, hotels, shopping malls, and cinemas, as well as the return
of migrant workers to cities to work in construction sites leading to a signi#cant decline
in housing market inventory, the strengthening of the balance sheets of the Corporates, a
well-capitalised public sector banks ready to increase the credit supply and the credit
growth to the Micro, Small, and Medium Enterprises (MSME) sector to name the major ones.
The Emergency Credit Line Guarantee Scheme (ECLGS) scheme of the Government has
succeeded in shielding micro, small and medium enterprises from #nancial distress. A
recent CIBIL report (ECLGS Insights, August 2022) showed that the scheme has supported
MSMEs in facing the covid shock, with 83 per cent of the borrowers that availed of the
ECLGS being micro-enterprises. Among these micro units, more than half had an overall
exposure of less than Rs. 10 lakh. Furthermore, CIBIL data also shows that ECLGS borrowers
had lower nonperforming asset rates than enterprises that were eligible for ECLGS but did
not avail of it. Further, the GST paid by MSMEs after declining in FY2021 has been rising
since and now has crossed the pre-pandemic level of FY2020, refecting the #nancial
resilience of small businesses and the e$ectiveness of the pre-emptive government
intervention targeted towards MSMEs.
Industry Structure and Developments
The Company is in the investment business and your company holds majority investments
in its group companies. Apart from its operations in investment in securities including
through its Wholly Owned Subsidiaries, the Company also continues to be engaged in
business of food processing through its subsidiary Company Morton Foods Limited (earlier
known as ‘Allahabad Canning Limited). The company manufactures and markets canned
fruits, vegetables and food products like jams, squashes, crushes, vegetable sauces,
juices and breakfast cereals under the brand Morton since 1959. To support maximize sales,
Company is increasing customer base and focusing on e-commerce and has initiated process
to launch new products, which will give higher margin and with no seasonal stocking.
The company has a manufacturing unit at Prayagraj which makes Canned fruits and
vegetables, Jams, Crush & Squashes, Tomato Ketchup and Vegetable sauces etc. Breakfast
cereals and Pasta, Vermicelli are manufactured by third party manufacturer and Morton
Foods Ltd markets it under the brand Name Morton.
Morton Foods Ltd services and operates in the following customer segments
1) General Trade / Kirana
2) Modern Trade
3) Horeca – Hotel Restaurant and Catering
4) E commerce – Amazon, Flipkart , Big Basket ,
5) Central Police Canteen Stores
6) Institutions – Taj , Hayat , Specialty Restaurants etc.
7) Defense APO – Canned fruits, Vegetables and curries for in-house consumption
The countrys #nancial services sector consists of capital markets, insurance sector,
banking and non-banking #nancial companies (NBFCs).
According to Goldman Sachs, investors have been pouring money into Indias stock
market, which is likely to reach USD 5 trillion, surpassing the UK, and become the #fth
largest stock market worldwide by 2024.
Non-banking #nancial companies (NBFCs), banks, and #nancial institutions form the broad
constituents of the credit ecosystem of the Indian #nancial sector, with NBFCs being a key
pillar therein. NBFCs have demonstrated an innovative and resilient streak over the years,
adapting e"ciently, even during the Covid-19 pandemic, to an evolving credit
landscape. After several challenging years, FY 2023 has brought growth back into focus for
NBFCs as they are stronger, more resilient and well placed to tap growth opportunities.
NBFCs largely focussed on liquidity, capital and provisioning bu$er. These, combined with
the consistent improvement in economic activity, have put the sector in a better position
today to capitalise on growth opportunities.
Indias food processing sector is one of the largest in the world and its output is
expected to reach $535 Billion by FY2025-26. The Food Processing sector in India has a
quintessential role in linking Indian farmers to consumers in the domestic and
international markets. The Ministry of Food Processing Industries (MoFPI) is making all
eforts to encourage investments across the value chain. The food processing industry has a
share of 12.38% in the employment generated in all Registered Factory sector engaging
approximately 1.93 Million people. Unregistered food processing sector supports employment
to 5.1 Million workers as per the NSSO 73rd Round report. Major sectors constituting the
food processing industry in India are grains, sugar, edible oils, beverages, and dairy
products.
Opportunities and Threats.
Your Company being an Investment Company seeks opportunities in the capital market. The
unpredictability in the stock market represents both opportunity as well as challenges for
the Company. Global macroeconomic uncertainty, unprecedented in"ation, monetary
policy tightening, volatile markets, etc., resulted in hurting investor sentiments,
leading to a downbeat performance of global capital markets in FY 2023. Though global
macroeconomic and #nancial market developments exercised some in"uence on Indian
capital markets, Indias capital market had a good year, overall.
The economic fallout from Russia – Ukraine war is another massive setback to the
global economy. In"ation, which had already been rising in many countries as a result
of supply–demand imbalances and policy support during the pandemic, is likely to
remain higher for longer. Financial conditions have also tightened signi#cantly, putting
pressure on a wide range of emerging market and developing economies—through higher
borrowing costs and the risk of capital out"ows.
The primary equity markets witnessed participation from all segments, especially with
increased Small and Medium Enterprises (SMEs) contributions while primary private debt
markets saw a growth in placements and resource mobilisation. While secondary capital
market indices of the Nifty 50 and the S&P BSE Sensex were not immune to the
volatility in Foreign Portfolio Investment (FPI) "ows, they performed better than
their peers between April and December 2022. Furthermore, net FPI "ows turned
positive in the quarter ending December 2022. The indices have displayed a decreasing
trend in volatility as measured by the India Volatility Index (VIX) over this period. Both
developments underscore Indias strong macroeconomic fundamentals and relatively buoyant
demand outlook.
The food processing industry is a high growth industry and the same applies for it in
Indian market. The government of India has acknowledged the food processing sector as a
high priority industry and is currently promoting it with various #scal reliefs and
incentives. India has one of the largest working populations in the world. With increasing
disposable incomes, this segment can be regarded as the biggest consumer of processed
foods in the country. There are various threats to the Company like market Competition
that forces the Company to sell its product at low cost. This also led to loss to the
Company. On the other hand, raw material is based on agricultural produce which is afected
by natural calamities, which deteriorate the quality of the product, which is the major
threat to the Company. Pandemic like Covid-19 and external situation like Cross-border
emergencies and wars also afect the business.
Risks and Concerns:
The Company is exposed to speci#c risks that are particular to their respective
businesses in which they operate, including market risk, credit risk, liquidity risk,
interest rate risk, equity risk, operational risk, currency risk, regulatory and
macro-economic risks. The Company has a robust risk management framework that strives to
identify, monitor and minimize risks as also identify business opportunities.
Outlook
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. The
current growth trajectory will be supported by multiple structural changes that have been
implemented over the past few years. Despite facing global challenges, the country has
managed to sustain robust economic activity. Factors such as increasing disposable income,
easy access to credit, and declining interest rates, supported by a stabilising
in"ation trajectory, are expected to drive economic growth in the years ahead.
The Ministry of Food Processing Industries, through the component schemes of Pradhan
Mantri Kisan SAMPADA Yojana (PMKSY ), provide #nancial assistance for the overall growth
and development of the food processing sector. The Ministry also launched in 2020 the
Prime Ministers Formalisation of Micro Food Processing Enterprises (PMFME) Scheme as part
of the ‘Atmanirbhar Bharat Abhiyan to enhance the competitiveness of individual
micro-enterprises in the unorganised segment and promote the formalisation of this sector
by providing #nancial, technical and business support for upgradation/setting up of 2 lakh
micro units in the country. The Production Linked Incentive Scheme for Food Processing
Industry (PLISFPI), launched in March 2022, has the speci#c mandate to incentivise
investments to create global food champions. Sectors with high growth potential, like
marine products, processed fruits & vegetables, and ‘Ready to Eat/ Ready to Cook
products, are covered for support.
Performance
The Company operates in single segment which is to invest, deal etc. in securities. The
businesses of the Company are carried out by its Wholly-owned Subsidiaries/ Subsidiary.
The #rst three being wholly owned subsidiaries of the Company viz: OSM Investment &
Trading Company
Limited; Champaran Marketing Company Limited; Hargaon Investment & Trading Company
Limited and are registered NBFC with RBI and primarily engaged in investment activities
and whereas Hargaon Properties Ltd is a step down subsidiary engaged in investment of
properties. Another Subsidiary Morton Foods Limited (Formerly known as ‘Allahabad
Canning Limited) is engaged in the Food Processing Business.
During the Financial Year 2022-23, the Company incurred a Profit after tax of 426.34
lakhs on standalone basis. On consolidated basis the loss after tax stood at 1625.73
lakhs. Production of Morton Foods Ltd, subsidiary was increased from 3357 MT to 3707 MT
i.e. increased by more than 10%, however sales has been decreased from 5079 lakhs to
4538 lakhs i.e. decreased by more than 10%. The Company loss has been increased from
1712 lakhs to 2199 lakhs i.e more than 28%. The main reason for loss increased was
due to return of goods and low margins.
The Company aims to create sustainable vision to grow the business and make long-term
strategic investments in various new ventures promoted by the Company and its
subsidiaries.
Disclosure
The Disclosure w.r.t. details of significant changes in key financialratios
(Standalone) as stipulated under Regulation 34(3) read with Schedule V Clause B of SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 are as follows:
Particulars |
31.03.2023 |
31.03.2022 |
Change(%) |
Explanation |
| (i) Debtors Turnover Ratio |
0 |
0 |
0 |
-- |
| (ii) Inventory Turnover Ratio |
0 |
0 |
0 |
-- |
| (iii) Interest Coverage Ratio |
44.82% |
18.39% |
143.72% |
Due to increase in Profits |
| (iv) Current Ratio |
80.90% |
29.75% |
171.93% |
Due to increase in Profits |
| (v) Debt Equity Ratio |
8.55% |
9.42% |
9.24% |
-- |
| (vi) Operating Profit Margin (%) |
96.55% |
76.45% |
26.29% |
Due to increase in Profits |
| (vii) Net Profit Margin (%) |
81.64% |
76.25% |
7.07% |
Due to increase in Profits |
| (viii) Return on Net Worth |
14.07% |
7.03% |
100.14% |
Due to increase in Profits |
Internal Control Systems and Their Adequacy
The Company has an adequate system of internal control implemented by the management
towards achieving e"ciency in operations, optimum utilization of resources and
e#ective monitoring thereof and compliance with applicable laws. The Internal Auditors
were suggested with audit plan based on the risk profle of business activities of the
organization, which were approved by the Audit Committee. The adequacy of the internal
control system is reviewed by the Audit Committee of the Board of Directors. The
e"cacy of the internal checks and control systems are verifed by the Internal
Auditors as well as the Statutory Auditors. The Audit Committee reviews the internal audit
plan, adequacy and e#ectiveness of the internal control system, significant audit
observations and monitors the sustainability of remedial measures. The performance of the
Company is regularly viewed by the Board of Directors to ensure that it is in keeping with
the overall corporate policy and in line with pre-set objectives. The Company updates its
internal control systems from time to time, enabling it to monitor adherence to internal
procedures and external regulatory guidelines.
Human Resources
Steps have been taken to inculcate a performance-oriented culture by focusing and
laying more emphasis on the performance management system. It has been Companys endeavour
to attract talent from the most reputed institutions to meet the requirements of various
functions. The Company will strengthen its operative sta#s as and when need arises.
Cautionary Statement
Statements in this Management Discussion and Analysis describing the Companys outlook,
objectives, projections, estimates and expectations may be ‘forward looking
statement within the meaning of applicable laws or regulations. Actual results may di#er
from those expressed or implied. Important factors that could make a di#erence to the
Companys operations include government regulations and tax-regime, economic developments
within India and abroad, financialmarkets and other related and incidental factors. The
Company assumes no responsibility in respect of forward-looking statements that may be
revised or modifed in future on the basis of subsequent developments, information or
events. The financial statements are prepared under historical cost convention, on accrual
basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the
Act) and comply with the Accounting Standards notifed under Section 133 of the Act read
with the Indian Accounting Standards Rules, 2015. The management has used estimates and
judgments relating to the financial statements on a prudent and reasonable basis, in order
that the financial statements re$ect in a true and fair manner, the state of a#airs and
Profit/loss for the year. The narrative on our financialcondition and result of operations
should be read together with our audited consolidated financial statements and the notes
to these statements included in the annual report.
+91-9892691696
