r t exports ltd share price Management discussions


Your directors are pleased to present the Management Discussion and Analysis for the financial year ended 31 March, 2023.

A. INDUSTRY STRUCTURE AND DEVELOPMENTS:

BUSINESS OVERVIEW

Your Company is in to trading of agri products, mainly rice. Your Company exports rice from India. Further, your Company also does trading locally. In developing economies, the growth is powered by increasing young population, growing disposable income, life-style changes etc. In developed economies where penetration and usage are already high, new products addressing needs are emerging to expand and/or change the face of the market. Changing economic and business conditions, evolving consumer preferences, rapid technological innovation and adoption and globalization are creating an increasingly competitive market environment that is driving corporations to transform the manner in which they operate.

GLOBAL SCENARIO

India is one of the largest consumers of rice, which is mainly consumed as a staple food by more than 70% of the population. Indian Basmati rice exports are expected to post strong growth on the back of improved demand in the international market.

The Global Basmati Rice Market is estimated to be USD 6.09 Bn in 2023 and is expected to reach USD 6.87 Bn by 2028, growing at a CAGR of 2.1%.

India is the largest market, with a share over 70%, followed by Pakistan and Kenya, both have a share over 20% percent.In terms of product, Indian Basmati Rice is the largest segment, with a share over 70%. And in terms of application, the largest application is Direct Edible followed by Deep Processing.

The Asia Pacific is the leading producer of rice, globally. The region accounts for almost 90% of the global production. China is the leading rice producer, followed by India. However, basmati rice, specifically, is primarily grown in India and Pakistan. India is the largest producer of basmati rice, accounting for over 70% of its output in the global basmati rice market. The country is also the leading exporter of basmati rice. The strengthening exports is a combined result of an increasing demand from Iran and the rise in prices that have been taking place over the last three years. Haryana, Punjab, Himachal Pradesh, Rajasthan, Uttarakhand, Uttar Pradesh, Jammu and Kashmir, and Delhi are the major basmati rice producing states in India. In Pakistan, the Punjab province is the largest producer of the paddy crop.

The Middle East and Africa is a significant consumer of basmati rice, which accounts for 37.5% of their total consumption of the paddy crop. GCC countries are the major importers of the basmati variety of the paddy crop. The steady increase in imports from Saudi Arabia and Iran is driving the rise of Indian exports of basmati rice. Iran was followed by Saudi Arabia and the United Arab Emirates are the significant importing countries of the basmati variety from India. Algeria, Somalia, and Kenya are the major importing countries in Africa. Europe and the US are also significant consumers of the basmati variety.

Rice is broadly divided into basmati and non-basmati varieties. Basmati is a rice type which was originally found in the Indian subcontinent and is traditionally consumed as part of Indian and other South Asian cuisines. It has a long and slender grain and is aromatic when cooked. It is either served plain or with accompaniments. It is also cooked with spices to make savoury rice dishes. They are available in either raw or parboiled forms.

B. OPPORTUNITIES AND THREATS

i. OUR STRENGTHS

We believe in our competitive strengths including leadership in delivering good quality product that enable clients in turn to deliver improved business results in addition to optimizing the efficiency of their business. Our proven, commitment to quality and process execution, strong brand, long-standing client relationships, commitment and dedication will eventually take us to the position of a leading competitive player.

ii. HUMAN CAPITAL

Your company strongly believes that our people are our greatest assets, they give your company its unique competitive edge. Your company recognizes and nurtures their strengths through a structured Talent Management process focused on capability building. The process also ensures continuous talentavailability, through ob ro j tations, job enlargements, Cadre building programs, eve l raging talent for different roles. Your company is committed to continuously engaging its employees as key drivers for shareholder value creation. Customized Unit level and Manager level Employee engagement action plans have enabled our company to take positive steps in this ourney j . Employee morale was fostered through encouraging "appreciation sharing"

iii. OUR STRATEGY

With an objective to sustain growth, your Company is pursuing several strategic initiatives in all key areas of business. The key elements of strategy include strengthening the product portfolio, refresh and update existing products and strengthen the Marketing Team. In addition, your Company is pursuing expansion in overseas markets. Establishing the channel and building the brand in key focus markets remain the priorities for your Company. We seek to further strengthen our march towards a leading global agri product trading and export house by:

Strengthening our strategic partnership with our clients

l Increasing our relevance to clients by being able to work in the entire spectrum of their business

l Delivering higher business value to clients through the alignment of our structure and offerings to their business objectives.

l To achieve these goals, we seek to increase business from existing and new clients, continue to enhance our engagement models and offerings, expand geographically, continue to develop deep industry knowledge, pursue alliances and strategic acquisitions, enhance brand visibility and continue to invest in infrastructure and employees.

iv. OPPORTUNITIES

Rice Business is coming of age and it is ranked among first few business of India. With policy measures from the government, the agriculture accounts for substantial percentage of the countrys exports. Indians spend majority of their household expenditure on food items at present. Agriculture sector industry would create substantial employment opportunities in the coming years. Strong urban middle class and changing food habits, promises a huge potential to be tapped. Agriculture has been declared as a priority sector by the Government. The National Policy towards the same has been revised for an integrated approach to facilitate speedy growth. The aim of the policy is to simplify procedures to comply with the need and growth of the sector. Under infrastructure development, Agro-Food Parks are identifieed in various Indian cities, which in turn will help agriculture.

The various states realising the importance of the Food Processing Industry from an employment as well as revenue generation perspectives have been extremely forthcoming in bolstering growth in this industry. Some states that have gone an extra mile by providing various ?scal as well as non-?scal initiatives include Andhra Pradesh, Punjab, Madhya Pradesh, Uttar Pradesh and Karnataka. Your Company aims to gain benefit of the same.

v. THREATS

The world economy has witnessed an unprecedented economic crisis causing severe recessionary trends in various countries. The synchronized global recession coupled with dramatic changes in the fnancial landscape is further decelerated the growth. Compared to other economies, India has been somewhat stable as the Government has taken some proactive steps to combat the situation. However, favourable demographics and low penetration levels still continue to remain the key levels of the consumption for India. Indias inherent strengths provide a strong foundation to better withstand the aftermath of the downturn in the global economy. Rice & Wheat are basic necessity of human being and invariably consumed by everyone in different ways. Hence, the Basic Food segment, in which your Company is operating, is less affected due to good production levels, increase in area under cultivation and huge and ready market availability for the products.

C. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

COMPANY AND PERFORMANCE OVERVIEW

During the financial year2022-23, your Companys revenue was Rs. 317.17 Lakh whereas revenue figures for the previous year were Rs. 520.70 Lakh.

Your Company follows strong customer engagement leadingnew business from existing and new customers. We have intensifed new cus i tomer development and is hopeful to see the demand pick up as the macro-economic conditions see a turnaround helped by Government initiatives

Particulars 2022-23 2021-22
1 Income
(a) Revenue from operations 317.17 520.70
(b) Other income 1.94 7.93
Total Income 319.11 528.63
2 Earnings Before Interest, Taxes Depreciation and Amortization 33.15 91.87
(c) Less: Finance costs 13.93 80.48
(d) Less: Depreciation 10.20 10.60
3 Profit before taxes 9.02 0.79
4 Less: Tax expense: ( Income of earlier years) - 6.30
5 Profit/(Loss) for the year (3 - 4) 9.02 (5.51)
6 Add: Other Comprehensive Income - -
Total Comprehensive Income 9.02 (5.51)

The global basmati rice market is being aided by the superior quality, taste, and aroma of the product, which are driving the consumer preference for the product. The basmati variety forms an integral part of the Middle Eastern cooking. It is used to cook lavish dishes which contain layers of rice, meats, and dried fruits. It also forms a part of the staple diet of many cultures, thus, further aiding the industry growth. The increasing export demand from the Middle Eastern countries is also propelling the global basmati rice market forward. The US and Europe, too, are significant importing countries.

The rising population is also acting as a catalyst for the growth of the global basmati rice market. The increasing disposable income in the major consuming nations is driving the market growth. The rising disposable income is leading to increased consumption of premium products and, thus, is providing further impetus for the global basmati rice market growth as basmati rice is perceived as a premium variety.

PRICE ANALYSIS

In India, Basmati paddy prices have been rising for the past few years. The prices are expected to continue growing in the current year due to increased demand and bottlnecks in production and the decline in cultivation area.

Indian Rice Industry: Market Share & ForecastOn the basis of rice variety, milled rice accounted for the largest market share in India with 80.3% of total rice production. Over the forecast period milled rice is expected to continue their dominance in the rice production.

D. OUTLOOK

Basmati Rice is one of the most demanded ingredients in the world. It is an indispensable staple diet. As India is the worlds largest producer of quality basmati and non-basmati rice, a huge amount of rice is exported to the world annually. A large portion of the rice export by India contributes to the world economy.

Basmati prices have climbed on rising demand from Iran, which plans to ban inbound shipments of the unique Indian rice variety, while prices of nonaromatic rice in eastern India remained flat as exports to Bangladesh came to a halt after the country doubled import duty on the grain. Countries like the Netherlands, Italy, Spain, Cyprus and Maldives are also showing keen interest in Indian basmati rice, which is superior and price competitive compared to Pakistans rice.

E. RISKS AND CONCERNS

The Board of Directors and the Audit Committee of the Board review the business risks to which your Company is exposed and the mitigation plans. The senior management team led by Director and CFO is entrusted to manager risks pro-actively with appropriate mitigation measures and implementation thereof.

KEY RISKS TO WHICH YOUR COMPANY IS EXPOSED INCLUDE

a) Escalation in prices and its impact on Orders received

Your Company, sometimes, gets order for export of rice in bulk quantities. The supply to be completed within the period specified therein. Though your company takes enough precautions before accepting such orders, sometimes, price fluctuation in the local market affects the company. However going forward, keeping the possibility of the commodity prices firming up, your Company continues to watch the market situation closely and continues to focus on cost re-engineering and value engineering to remain cost competitive.

b) Currency volatility

Your Company is in to export of goods and Foreign Exchange Risk is associated with export business. Fluctuations in exchange rate will affect the company. Your company has adopted risk mitigates to address the issue.

c) Attracting and retaining talent

As with any other business, high demand for talent globally impacts employee turnover. Your Company addresses this to the best possible extent by being an empowering organization with professional management culture and maintaining a lean structure.

d) Economic down turn

This could impact your Companys markets, suppliers, customers and finances leading to business slow down, disruptions etc. Your Company is dealing in daily necessities of the consumers and their demand is not much impacted by the downturn.

Your Company pro-actively monitors the emerging trends in consumption and offers relevant solutions to its customers so as to stay ahead of the curve. Your Company also is focused on containing costs and improving efficiencies as a means to stay competitive. Proactive supplier and customer engagement is another way your Company seeks to minimize risk to business continuity.

e) Our Competition

Our long standing in the industry, competitiveness, quick response to requests for proposals are well appreciated. Further, ability to scale, superior quality, fast execution, industry expertise, experienced management team, talented professionals, track record and competitive pricing stands as reasons to get orders to us.

In future, we expect intensified competition from some of the larger firms and may also experience competition from new companies.

We understand that price alone cannot constitute a sustainable competitive advantage. We believe that the principal competitive factors in our business are:

l Attracting and retaining high-quality management, technology professionals, and sales personnel.
l Articulating and demonstrating long-term value to potential customers.
l Effectively integrating onsite and offshore execution capabilities to deliver high-quality, seamless, scalable, cost-effective services.
l Increasing the scale and breadth of service offerings to provide one-stop solutions for customer needs.
l Keeping pace with ever-changing technology and customer requirements.
l Strong and well-recognized brand.
l Proven track record of performance excellence and customer satisfaction.
l Financial strength to be able to invest in personnel and infrastructure to support the evolving demands of Customers.
l High ethical and Corporate Governance standards to ensure honest and professional business practices and protect the reputation of the Company and its customers.

We believe we compete favorably with respect to these factors. This could put pressure on volume growth and pricing. Your Company focuses on quality, shorter lead time and high service level to keep the customer satisfaction high.

f) Wage increases in the developing markets

This could impact costs and margins. Your company has been successful in containing the head count and manage the employee costs.

g) Monsoon

A normal monsoon is important for both agriculture as well as the rural economy. The agri business in particular run the risk of price fluctuation and demand in case of a significant variation in the monsoon.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has in place internal control systems and a structured internal audit process charged with the task of safeguarding the assets of your Company and ensuring reliability and accuracy of the accounting and other operational data. The internal audit department reports to the Audit Committee of the Board of Directors. Your Company has a system of quarterly review of business as a key operational control wherein the performance is reviewed and corrective action is initiated.

The Audit Committee, the Statutory Auditor and the top management are regularly apprised of the internal audit findings, and regular updates, if any, provided at the Audit committee meetings of the Action taken on the internal audit reports. The Audit Committee of the Board consisting of non- Executive independent Directors reviews the quarterly, half yearly and the annual financial statements of your Company. A detailed note on the functioning of the Audit Committee and of the other Committees of the Board forms part of the section on corporate governance in the Annual Report.

Market Trends, Drivers, and Challenges

In the era of technology advancement, there is trend of producing genetically modified (GM) rice to ascertain the quality of rice and food security. Though commercially there is no production of GM rice, but many varieties have been approved for commercial production which is expected to boost the India rice industry.

Rice is a staple crop for 70% of the world and thus the demand for rice is expected to continue to grow over the forecast period. The food security concerns all over the world is driving the growth of the Indian rice industry, which by exporting rice to various countries is contributing towards global food security.

With the climate change, continuous rising demand by consumers and the food security, rice industry is facing the challenge of producing rice without compromising on efficiency, equitability, environmentally-friendly, and more resilience to climate change factors. It has become imperative to produce rice at lesser land, with lesser water and labor. India is also facing lack of adequate agriculture infrastructure such as technologically advanced equipment, transportation network, and effective public private partnership.

ECONOMIC ENVIRONMENT:

R.T. Exports Ltd. is a Public Limited Company, incorporated and domiciled in India and has its registered office in Mumbai, Maharashtra, India. It is listed in BSE Limited. The financial year 2022-23 has been a year marked with challenges for the global as well as the Indian economy.

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships.

l Real GDP: According to the data, the growth in GDP at constant prices (2011-12), also known as real GDP, during the financial year2022-23 is estimated at 7percent as compared to the contraction of 9.1

percent in FY 2021-22. This growth value estimation is lower than the 9.1 percent estimated in the first advance estimates. In terms of value, real GDP for the year financial year 2022-23 is estimated at INR 159.71 trillion as against the first revised estimates of GDP for FY 2021-22 at INR 149.26 trillion.

l Nominal GDP: The growth in GDP at current prices, also known as nominal GDP, during FY 2022-23 is estimated at 15.9 percent. For FY 2022-23, the nominal GDP is estimated at INR 272.04 trillion as against the first revised estimates of GDP for the year 2021-22 of INR 234.71 trillion.

Ref:https://www.india-briefing.com/news/indias-gdp-for-fy-2022-23-projected-at-7-second-advance- estimates-27301.html/

INDIAN AGRICULTURE AND ALLIED INDUSTRIES

India had the highest export volume of rice worldwide, at $11 Billion in 2022-23.Thailand was the second largest rice exporter, with about 8.2 million metric tons of rice worldwide in that year.

Major Export Destinations (2022-23): Saudi Arab, Iran, Iraq, Yemen Republic, U Arab Emts.

Agriculture is the primary source of livelihood for about 58% of Indias population.

Market Size

Agriculture and allied activities

l The performance of the agriculture and allied sector has been buoyant over the past several years, much of which is on account of the measures taken by the government to augment crop and livestock productivity, ensure certainty of returns to the farmers through price support, promote crop diversification, improve market infrastructure through the impetus provided for the setting up of farmer-producer organisations and promotion of investment in infrastructure facilities through the Agriculture Infrastructure Fund. The agriculture sector has been growing at an average annual growth rate of 4.6 per cent during the last six years. Growth in allied sectors including livestock, dairying, and fisheries have driven the overall growth in the sector.

l As per the Second Advance Estimates of National Income, 2022-23 released by Ministry of Statistics & Programme Implementation (MoSPI), the share of Gross value added (GVA) of agriculture and allied sectors in total economy and growth of GVA of agriculture and allied sectors for the years of 2020-21, 2021-22 and 2022-23 are as under:

Year Share of GVA of agriculture and allied sectors in total economy (%) at current prices Growth of GVA of agriculture and allied sectors (%) (at 2011-12 prices)
2020-21 20.3 4.1
2021-22 19.0 3.5
2022-23 18.3 3.3

l The gross capital formation (GCF) in agriculture and allied sectors relative to their real GVA has been fluctuating.Whereas private investment has fluctuated. The Survey suggested that there should be a focussed and targeted approach to ensure higher public and private investment in the sector.

l Crop diversification towards oilseeds, pulses, and horticulture needs to be given priority. This requires addressing core issues of irrigation, investment, credit, and markets in their cultivation. There is a need for coordinated action from state governments to facilitate the shift to high value and less water consuming crops. Use of alternative fertilisers such as Nano Urea and organic fertilisers should be promoted. These fertilisers protect the soil, are more productive, and contribute to higher nutrient use efficiency.

Ref: https://pib.gov.in/PressReleasePage.aspx?PRID=1894929

https://www.pib.gov.in/PressReleasePage.aspx?PRID=1909213

References: Agricultural and Processed Food Products Export Development Authority (APEDA), Department of Commerce and Industry, Union Budget 2021-22, Press Information Bureau, Ministry of Statistics and Programme Implementation, Press Releases, Media Reports, Ministry of Agriculture and Farmers Welfare.

G. DISCUSSION ON FINANCIAL INFORMATION WITH RESPECT TO OPERATIONAL PERFORMANCE

Overview

The financial statements of the Company have been prepared in accordance with Ind AS as per the Companies (Indian Accounting Standard) Rules, 2015 as amended and notified under Section 133 of the Companies Act, 2013 (the Act) and other relevant provisions of the Act.

Income

Of the total revenues for the year ended 31 st MARCH, 2023, approximately 99.39% were derived from sale of products and remaining 0.60%from other income like Interest Income, Rent received, profit on sale of flat, sundry balance written back, other receipts, etc.

Expenditure

Purchases of stock in trade includes Rice Purchase. Employee benefit expense relates to Salaries and wages and Staff welfare expenses. Finance cost relates to interest expense. Other expenses primarily represents repairs and maintenance, insurance, rate and taxes, travelling & conveyance expenses, telephone expenses, advertising expenses, legal and professional charges, etc.

Depreciation and amortization

We have provided Rs. 10.20 Lakhs and Rs. 10.60 Lakhs towards depreciation and amortization, for the financial years ended 31 st MARCH, 2023 and 31 st MARCH, 2022 respectively.

Sensitivity to rupee movement

Company is sensitive to change in US Dollar value change as one segment of the company is in to export.

Provision for tax

We have no provided for our tax liability.

Net profit after tax and exceptional item

Net profit stood at Rs. 9.02 Lakh for the year ended 31 st MARCH, 2023 in comparison with net loss of Rs. (5.51) Lakh in the previous year.

Earnings Per Share (EPS) after exceptional item

During the year, our basic EPS after exceptional item increase to Rs. 0.21 per share from Rs.(0.13) per share in the previous year.

Financial condition

Sources of Funds

1. Share capital

Share Capital of your Company comprises of three classes of shares equity shares having a face value Rs. 10/-each. Our authorized share capital is Rs 36.00 Crores, divided into 1,70,00,000 equity shares of Rs. 10/-each and 19,00,000 preference shares of Rs. 100/- each. The issued, subscribed and paid up capital stood at Rs. 435.90 Lakh as at 31 st MARCH, 2023, divided into 43,59,000 equity shares of Rs. 10/- each.

2. Reserves and Surplus Capital Redemption Reserve

The balance as at 31 st MARCH, 2023 stood at Rs. 5.53 Lakh/- same as the previous year.

Securities premium

The balance as at 31 st MARCH, 2023 stood at Rs. 355.67 Lakh /-, same as the previous year.

Application of funds

3. Fixed assets

Additions to gross block

During the year, we have capitalized Rs. 1.30 Lakhs whereas in the previous financial year, the amount stood at NIL to our gross block for Plant and Equipment.

During the previous year, no fixed assets have been capitalised.

Trade Receivables

Trade receivables amounted to Rs. Nil as at 31 st MARCH, 2023, compared to Rs 347.76 Lakhs as at 31 March, 2022. These debts are considered good and realizable.

Cash and cash equivalents

Cash and cash equivalents include balance with Banks and cash in hand.

Financial Assets and other non-current assets

The following tables give the details of our Financial Assets and other non-current assets.

Financial Assets and other non-current assets.

(Rs.in Lakh)

Particulars 31.03.2023 31.03.2022
Security Deposits 1.34 1.34
Loans & Advances (Related Party) 342.29 709.04
Advance Income Tax & TDS 0.32 1.23
Others 28.06 26.53
TOTAL 372.01 738.14
Current Liabilities and Trade Payables (Rs.in Lakh)
Particulars 31.03.2023 31.03.2022
Trade Payables 5.82 253.54
Bank Overdraft 7.42 0
Others (Statutory Payments) 0.39 12.73
Others 16.26 7.10
TOTAL 29.89 273.37

H. MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYE

SALES AND MARKETING

The year witnessed an unprecedented move of demonetization by the government, right after the festive season got over. The Company took a hit on its trading during the year.

EXPORT

Export business of the Company did not do well during the year.

I. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED

EXPLANATIONS THEREFOR:

Key Financial Ratios:

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector specific financial ratios. The Company has identified following ratios as key financial ratios.

Sr. No. Particulars 2022-23 2021-22 % of change
1. Current Ratio 28.51 3.99 615
2. Debt Equity Ratio 0.06 0.07 -14
3. Debt Service Coverage 1.72 1.14 51
4. Return on Equity Ratio 0.98% -0.06% -263
5. Inventory Turnover Ratio 1.27 N.A 100
6. Trade Receivables Turnover Ratio 1.82 2.94 -38.00
7. Trade Payables turnover Ratio 5.71 2.96 93
8. Net capital turnover Ratio 0.39 0.64 39
9. Net Profit Ratio (%) 0.03 (0.01) 369
10. Return on Capital employed 0.02 0.08 -72
11. Return on Investment - - -

Reasons for significant changes in key ratios:

1. Current Ratio - Increased primarily due to payment of trade payables.

2. Debt Service Coverage Ratio - Increase due to decrease in interest expenses and company has generated profit during the year.

3. Return on Equity Ratio - Increase due to increase in profit.

4. Inventory Turnover Ratio - Due to closing inventory balance during the year.

5. Trade Receivables Turnover Ratio - Primarily due to decrease in turnover.

6. Trade Payables Turnover Ratio - Primarily due to increase in purchases.

7. Net Capital Turnover Ratio - Primarily due to decrease in net sales.

8. Net Profit Margin - Net profit ratio increase primarily due to better operating profit and decrease in finance cost.

9. Return on Capital Employed Ratio - Primarily due to lower operating profit.

J. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:

Return on Net Worth in the financial year 2022-23 is -0.06% as compared to 0.98% in the immediately previous financial year 2021-22. During the financial year under review, return on Net Worth increased by 263% as compared to immediately previous financial year mainly because of increase in profit.

K. CAUTIONARY STATEMENT

Statements in this Annual report particularly those which relate to management discussion and analysis, describing your Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may materially differ from those expressed or implied.