The purpose of this discussion is to provide an understanding of financial statements
and a composite summary of performance of our business. Management Discussion and Analysis
(MDA) is structured as follows:
GLOBAL ECONOMY
Global output growth is estimated at about 3 percent (at an annualized rate) for the
third quarter of 2016—broadly unchanged relative to the first two quarters of the
year. This stable average growth rate, however, masks divergent developments in different
country groups. There has been a stronger-than-expected pickup in growth in advanced
economies, due mostly to a reduced drag from inventories and some recovery in
manufacturing output. In contrast, it is matched by an unexpected slowdown in some
emerging market economies, mostly reflecting idiosyncratic factors. Forward-looking
indicators such as purchasing managers indices have remained strong in the fourth quarter
in most areas.
Among advanced economies, activity rebounded strongly in the United States after a weak
first half of 2016, and the economy is approaching full employment. Output remains below
potential in a number of other advanced economies, notably in the euro area. Preliminary
third-quarter growth figures were somewhat stronger than previously forecast in some
economies, such as Spain and the United Kingdom, where domestic demand held up better than
expected in the aftermath of the Brexit vote. Historical growth revisions indicate that
Japans growth rate in 2016 and in preceding years was stronger than previously estimated.
The picture for emerging market and developing economies (EMDEs) remains much more
diverse. The growth rate in China was a bit stronger than expected, supported by continued
policy stimulus. But activity was weaker than expected in some Latin American countries
currently in recession, such as Argentina and Brazil, as well as in Turkey, which faced a
sharp contraction in tourism revenues. Activity in Russia was slightly better than
expected, in part reflecting firmer oil prices.
Commodity prices and inflation. Oil prices have increased in recent weeks, reflecting
an agreement among major producers to trim supply. With strong infrastructure and real
estate investment in China as well as expectations of fiscal easing in the United States,
prices for base metals have also strengthened. Headline inflation rates have recovered in
advanced economies in recent months with the bottoming out of commodity prices, but core
inflation rates have remained broadly unchanged and generally below inflation targets.
Inflation ticked up in China as capacity cuts and higher commodity prices have pushed
producer price inflation to positive territory after more than four years of deflation. In
other EMDEs, inflation developments have been heterogeneous, reflecting differing exchange
rate movements and idiosyncratic factors.
Financial market developments.Long-term nominal and real interest rates have risen
substantially since August (the reference period for the October 2016 WEO), particularly
in the United Kingdom and in the United States since the November election. As of January
3, nominal yields on 10-year U.S. Treasury bonds have increased by close to one percentage
point since August, and 60 basis points since the U.S. election. These changes have been
mostly driven by an anticipated shift in the U.S. policy mix. Specifically, U.S. fiscal
policy is projected to become more expansionary, with stronger future demand implying more
inflationary pressure and a less gradual normalization of U.S. monetary policy. The
increase in euro area long-term yields since August was more moderate—some 35 basis
points in Germany but 70 basis points in Italy, reflecting elevated political and banking
sector uncertainties. The U.S. Federal Reserve raised short-term interest rates in
December, as expected, but in most other advanced economies the monetary policy stance has
remained broadly unchanged. In emerging market economies, financial conditions were
heterogeneous but generally tightened, with higher long-term interest rates on
local-currency bonds, especially in emerging Europe and Latin America. Policy rate changes
since August also reflected this heterogeneity—with rate hikes in Mexico and Turkey
and cuts in Brazil, India, and Russia—as did changes in EMBI (Emerging Market Bond
Index) spreads. Exchange rates and capital flows. The U.S. dollar has appreciated in real
effective terms by over 6 percent since August. The currencies of advanced commodity
exporters have also strengthened, reflecting the firming of commodity prices, whereas the
euro and especially the Japanese yen have weakened. Several emerging market currencies
depreciated substantially in recent months—most notably the Turkish lira and the
Mexican peso—while the currencies of several commodity exporters—most notably
Russia—appreciated. Preliminary data point to sharp nonresident portfolio outflows
from emerging markets in the wake of the U.S. election, following a few months of solid
inflows.
Forecast
Global growth for 2016 is now estimated at 3.1 percent, in line with the October 2016
forecast. Economic activity in both advanced economies and EMDEs is forecast to accelerate
in 2017–18, with global growth projected to be 3.4 percent and 3.6 percent,
respectively, again unchanged from the October forecasts.
Advanced economies are now projected to grow by 1.9 percent in 2017 and 2.0 percent in
2018, 0.1 and 0.2 percentage points more than in the October forecast, respectively. As
noted, this forecast is particularly uncertain in light of potential changes in the policy
stance of the United States under the incoming administration. The projection for the
United States is the one with the highest likelihood among a wide range of possible
scenarios. It assumes a fiscal stimulus that leads growth to rise to 2.3 percent in 2017
and 2.5 percent in 2018, a cumulative increase in GDP of percentage point relative to
the October forecast. Growth projections for 2017 have also been revised upward for
Germany, Japan, Spain, and the United Kingdom, mostly on account of a
stronger-than-expected performance during the latter part of 2016. These upward revisions
more than offset the downward revisions to the outlook for Italy and Korea.
The primary factor underlying the strengthening global outlook over 2017–18 is,
however, the projected pickup in EMDEs growth. As discussed in the October WEO, this
projection reflects to an important extent a gradual normalization of conditions in a
number of large economies that are currently experiencing macroeconomic strains. EMDE
growth is currently estimated at 4.1 percent in 2016, and is projected to reach 4.5
percent for 2017, around 0.1 percentage point weaker than the October forecast. A further
pickup in growth to 4.8 percent is projected for 2018.
• Notably, the growth forecast for 2017 was revised up for China (to 6.5 percent,
0.3 percentage point above the October forecast) on expectations of continued policy
support. However, continued reliance on policy stimulus measures, with rapid expansion of
credit and slow progress in addressing corporate debt, especially in hardening the budget
constraints of state-owned enterprises, raises the risk of a sharper slowdown or a
disruptive adjustment. These risks can be exacerbated by capital outflow pressures,
especially in a more unsettled external environment.
• Nigerias forecasts were also revised up, primarily reflecting higher oil
production due to security improvements. Growth forecasts for 2017 were instead revised
down in a number of other regions:
• In India, the growth forecast for the current (2016–17) and next fiscal
year were trimmed by one percentage point and 0.4 percentage point, respectively,
primarily due to the temporary negative consumption shock induced by cash shortages and
payment disruptions associated with the recent currency note withdrawal and exchange
initiative.
• Elsewhere in emerging Asia, growth was also revised down in Indonesia,
reflecting weaker-than-projected private investment, and in Thailand, in light of a
slowdown in consumption and tourism.
• In Latin America, the growth downgrade reflects to an important extent more
muted expectations of short-term recovery in Argentina and Brazil following
weaker-than-expected growth outturns in the second half of 2016, tighter financial
conditions and increased headwinds from U.S.-related uncertainty in Mexico, and continued
deterioration in Venezuela.
• In the Middle East, growth in Saudi Arabia is expected to be weaker than
previously forecast for 2017 as oil production is cut back in line with the recent OPEC
agreement, while civil strife continues to take a heavy toll on a number of other
countries.
(Source: International Monetary Fund)
FMCG INDUSTRY OVERVIEW
World consumption of fats and oils is driven mainly by Asia, which accounts for 48% of
the world total. China is the top producer and India together make up 30% of the world
total. During the year under review, the international economic situations coupled with
steep fall in commodity prices have impacted domestic business sentiments considerably.
The steep fall in commodity prices has caused increase in consumption of edible oil and
imports and also intense competition and pressure on margins. European Union (EU) is the
top producer of Mustard Oil followed by China and Canada in 2016. India is the fourth
largest producer. China is the top producer of Groundnut oil followed by India and Burma
in 2016. Indias Soybean production has increased in the last 10 years at CAGR of 5.70
percent. Ukraine is the largest producer of Sunflower oil followed by Russia and EU in
2016. India is the 9th largest producer. China, United States, Argentina and Brazil were
the key producers of Soybean oil in 2016. India was the largest importer of soybean oil
that constituted 14.56 percent of the global import in the year 2016.in India Domestic
price of edible oil is higher than International prices. One area that we see global and
local FMCG brands investing in is health and wellness. Health and wellness is a mega trend
shaping consumer preferences and shopping habits and FMCG brands are listening. Leading
global and Indian food and beverage brands have embraced this trend and are focused on
creating new emerging brands in health and wellness.
AGRICULTURE INDUSTRY WORLD OVERVIEW
In recent years the growth rates of world agricultural production and crop yields have
slowed. This has raised fears that the world may not be able to grow enough food and other
commodities to ensure that future populations are adequately fed.
However, the slowdown has occurred not because of shortages of land or water but rather
because demand for agricultural products has also slowed. This is mainly because world
population growth rates have been declining since the late 1960s, and fairly high levels
of food consumption per person are now being reached in many countries, beyond which
further rises will be limited. But it is also the case that a stubbornly high share of the
worlds population remains in absolute poverty and so lacks the necessary income to
translate its needs into effective demand. As a result, the growth in world demand for
agricultural products is expected to fall from an average 2.2 percent a year over the past
30 years to 1.5 percent a year for the next 30. In developing countries the slowdown will
be more dramatic, from 3.7 percent to 2 percent, partly as a result of China having passed
the phase of rapid growth in its demand for food.
This study suggests that world agricultural production can grow in line with demand,
provided that the necessary national and international policies to promote agriculture are
put in place. Global shortages are unlikely, but serious problems already exist at
national and local levels and may worsen unless focused efforts are made.
(Source: FAO Corporate Document Repository)
OVERVIEW OF INDIAN ECONOMY
India has emerged as the fastest growing major economy in the world as per the Central
Statistics Organization (CSO) and International Monetary Fund (IMF). According to the
Economic Survey 2016-17, the Indian economy will continue to grow more than 7.50 per cent
in 2017-18
According to IMF World Economic Outlook Update (January 2017), Indian economy is
expected to grow at 7-7.50 per cent during FY 2016-17, despite the uncertainties in the
global market& Demonization. The Economic Survey 2016-17 had forecasted that the
Indian economy will growing by more than seven per cent for the third successive year
2017-18 and can start growing at eight per cent or more in next two years.
(Source: India Brand Equity Foundation)
According to Department of Industrial Policy and Promotion (DIPP), the total FDI
investments India received during April 2016-March 2017 rose 8 per cent year-on-year to
US$ 60.08 billion, indicating that governments effort to improve ease of doing business
and relaxation in FDI norms is yielding results – Source India Brand Equity
Foundation
The long-term growth prospective of the Indian economy is moderately positive due to
its young population, corresponding low dependency ratio, healthy savings and investment
rates, and increasing integration into the global economy. The Indian economy has the
potential to become the worlds 3rd-largest economy by the next decade, and one of the
largest economies by mid-century. And the outlook for short-term growth is also good as
according to the IMF, the Indian economy is the "bright spot" in the global
landscape.
The World Bank projected that India will grow by a robust 7.5 per cent in 2017 and 7.75
per cent in the next two years. World Bank also predicted that India will be the fastest
growing economy in the world in the next three years and would outpace China.
TEXTILE INDUSTRY OVERVIEW IN INDIA
India is the second largest textile manufacturing infrastructure in the world over
China. India is one of the few countries in the world which has production at each level
of textile manufacturing viz. fiber manufacturing, spinning, weaving, Knitting, processing
and garmenting.
Indian Textiles Industry has an overwhelming presence in the economic life of the
country. Apart from providing one of the basic necessities of life, the textile industry
also plays a pivotal role through its contribution to industrial output, employment
generation and export earnings of the country. It contributes about 14% to Indias
industrial production and 13% to the countrys export earnings. The textile sector is one
of the largest providers of employment along with agriculture. The Indian textiles
industry represents a widely diverse spectrum of activities with the hand-spun and hand
woven sector at one end, and the capital intensive sophisticated mill sector at the other.
The decentralized power looms, hosiery and knitting sectors form the largest section of
the Textiles Industry. The close linkage of the Industry to agriculture and the ancient
culture, and traditions of the country make the Indian textiles sector unique in
comparison to the textiles industry of other countries. This also provides the industry
with the capacity to produce a variety of products suitable to the different market
segments, both within and outside the country.
This is to be realized through an efficacious service delivery mechanism which is based
on the guiding principle of "minimum government and maximum governance". Central
among the major new initiatives is the ‘Make in India program which is designed to
facilitate investment, foster innovation, protect intellectual property, and build
best-in-class manufacturing infrastructure. Recognizing that the country needs to focus on
imparting skills to its young population in order to make the nations development happen
at the desired pace, the policy focus is now on generating skill, scale and speed. These
broad policy initiatives were actively followed up in the textile sector during 2016-17
and 2017-18.
FMCG INDUSTRY IN INDIA
The Indian economy is showing signs of strength, backed by improvement in overall
business sentiments. The pattern of consumption of edible oil is moving towards packed
and/or branded form due to factors such as rising incomes coupled with changes in
household demographics, improving health consciousness, growing organized retail improving
reach of the products across the country, visual advertisements etc. Given the growth in
the overall edible oil consumption, keeping in view the discerning and value conscious
need of the growing consumer base, the growth in packed segment has been growing almost
twice of the overall edible oil growth in the recent past. The trend is expected to
continue due to low base and vast potential.
The FMCG sector continues to grow in double digits; there has been some moderation
(9.4%) in growth rates during 2013 due to deceleration in GDP growth and high inflation.
It also forecasts the rural FMCG market to reach USD100 billion by 2025.The urban FMCG
market grew 8% while rural India expanded 12.2% in 2013, as per AC Nielsen. However, in
the last few years, the FMCG market has grown at a faster pace in rural India compared
with urban India. The rural FMCG sector with a market size of USD15 bn contributes the
remaining 33%. The urban sector constitutes 67% of the total FMCG market and had a market
size of USD30 bn in 2013. The Hindu Business Line, Business Standard, Aranca analysis 33%
67% USD44.9 billion Rural Urban Rural India accounts for one-third of the total FMCG
market and grew at a faster pace (12.2%) than urban market (8%) in 2013 (% share).
AGRICULTURE INDUSTRY IN INDIA
Agriculture plays a vital role in Indias economy. 54.6% of the population is engaged
in agriculture and allied activities (census 2011) and it contributes 16.90% to the
countrys Gross Value Added (current price 2016-17, 2011-12 series). Given the importance
of agriculture sector, Government of India took several steps for its sustainable
development.
TECHNOLOGY UPGRADATION SCHEME
In order to promote ease of doing business in the country and achieve the vision of the
Government for generation of employment and promotion of exports through "Make In
India" and Zero defect manufacturing, it has been decided by the Ministry of Textiles
that existing provisions of the Revised Restructured Technology Up gradation Scheme be
modified in terms of the benefits under the scheme and procedure for claiming the benefits
under the scheme. A new scheme "Amended Technology Up gradation Fund Scheme has been
improved by the Government for implementation which will provide one Time capital subsidy
for investments in the employment and technology intensive segments of textiles value
chain keeping in view promotion of exports and imports substitutions.
(Source: Ministry of Textiles Resolution passed on 13.01.2016).
INTERNAL CONTROL SYSTEM
We have developed our Corporate Audit Division which continuously monitors the
electiveness of the internal controls as well as an objective which provides independent
and reasonable assurance of the adequacy and electiveness of the organizations Risk
Management, Control and Governance process to the Audit Committee and the Board of
Directors. The division also assesses opportunities for improvement in business processes,
systems & controls; provides recommendations, designed to add value to the
organization and follows up on the implementation of corrective actions and improvements
in business processes over review by the Audit Committee and Senior Management.
The scope and authority of the Corporate Audit division is derived from the Audit
Charter approved by the Audit Committee. The Charter is designed in a manner that the
Audit Plan is focused on the following objectives:
• All operational and related activities are performed efficiently and electively.
• Significant financial, managerial and operating information that is relevant,
accurate, and reliable is provided on Time.
• Review of identification and management of Risks.
• Resources are acquired economically used efficiently and safeguarded adequately.
• Employees actions are in accordance with the Companys policies and procedures,
Code of Conduct and applicable laws and regulations.
• Significant legislative and regulatory provisions impacting the organization are
recognized and addressed appropriately.
• Opportunities identified during audits, for improving management control,
business targets and profitability, process efficiency and the organizations image, are
communicated to the appropriate level of management.
Corporate Audit division develops an annual audit plan based on the risk profile of
business processes/sub-processes of various functions and the audit activities are
undertaken accordingly. The audit plan is approved by the Audit Committee which regularly
reviews compliance to the plan.
During the year, the Audit Committee met regularly to review the reports submitted by
the Corporate Audit Division. All significant audit observations and follow-up actions
thereon were reported to the Audit Committee.
The Audit Committee also met the Companys Statutory Auditors to ascertain their views
on the adequacy of internal control systems in the Company and their observations on
financial reports. The Audit Committees observations and suggestions were acted upon by
the Management.
The company has a well-established internal audit function that reports to the Board of
Directors on monthly basis and has direct access to the chairman of the Audit committee,
who meets with the Director Audit several Times each year. The Audit committee receives
reports from the internal audit function four Times a year and also considers the terms of
reference, plans and electiveness of the function. The internal audit function works
closely with the external auditors. It provides independent and objective assurance to the
Board and the Audit committee and provides a systematic, disciplined approach to
evaluating and improving the electiveness of risk management, control and governance
procedures.
HUMAN RESOURCE
Today, the HR function has become a critical catalyst for continuous transformation
during a phase of rapid growth and transition; shaping not only processes, people and
mindsets, but creating a culture that personify MUL and unleashes innovation at every
level within the organization. For us, human resources are the most prestigious assets of
the company. We believe it is a long term investment in the company and hence we train
them to cope with the changing environment of the industry. During the year under review,
your company has pleasure to take severalinitiatives to ensure that the knowledge and
wisdom gained over period is available for all as well as next generation employees.
FORWARD LOOKING STATEMENTS
The report contains forward-looking statements, identified by words like ‘plans,
‘expects, ‘will, ‘anticipates, ‘believes,‘intends,
‘projects, ‘estimates and so on. All statements that address expectations or
projections about the future, but not limited to the Companys strategy for growth,
product development, market position, expenditures and financial results, are
forward-looking statements. Since these are based on certain assumptions and expectations
of future events, the Company cannot guarantee that these are accurate or will be
realized. The Companys actual results, performance or achievements could thus differ from
those projected in any forward-looking statements. The Company assumes no responsibility
to publicly amend, modify or revise any such statements on the basis of subsequent
developments, information or events
|
For and on behalf of the Board of Directors |
|
Sd/- |
|
Monoranjan Roy |
| Place: Kolkata |
Whole-Time Director |
| Date: 08.08.2017 |
(DIN: 02275811) |
+91-9892691696
