FORWARD-LOOKING STATEMENT
CAUTIONARY STATEMENT:
This Management Discussion and Analysis statements of Annual Report has
been included in adherence to the spirit enunciated in the code of corporate Governance
approved by the Securities and Exchange Board of India, Statement in the Management
Discussion and Analysis describing the Companys objectives, projections, estimates,
expectation may be "Forward-Looking Statement" within the meaning of applicable
securities laws and regulation. These statements are subject to certain risks and
uncertainties. Actual result may differ materially from those either expressed or implied
in the statement depending on circumstances. Important factors that could make a
difference to the Companys operations include economic conditions affecting demand/supply
and price conditions in the Government policies, economic development, political factors
and such other factors beyond the control of the Company.
GLOBAL ECONOMIC OVERVIEW
The global economic growth was estimated at a slower 3.2% in 2022,
compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic
effect). The relatively slow global growth of 2022 was marked by the Russian invasion of
Ukraine, unprecedented inflation, pandemic-induced slowdown in China, higher interest
rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve. The
challenges of 2022 translated into moderated spending, disrupted trade and increased
energy costs. Global inflation was 8.7% in 2022, among the highest in decades. US consumer
prices increased about 6.5% in 2022, the highest in four decades. The Federal Reserve
raised its benchmark interest rate to its highest in 15 years. The result is that the
world ended in 2022 concerned that the following year would be slower.
INDIAN ECONOMIC OVERVIEW
Even as the global conflict remained geographically distant from India,
ripples comprised increased oil import bills, inflation, cautious government and a
sluggish equity market. Indias economic growth was 7.2% in FY 2022-23. India emerged as
the second fastest-growing G20 economy in FY 2022-23. India overtook UK to become the
fifth largest global economy. India surpassed China to become the worlds most populous
nation.
According to the India Meteorological Department, the year 2022
delivered 8% higher rainfall over the long-period average. Due to unseasonal rains,
Indias wheat harvest was expected to fall to around 102 Mn Metric Tonnes (MMT) in FY
2022-23 from 107 MMT in the preceding year. Rice production at 132 Mn Metric Tonnes (MMT)
was almost at par with the previous year. Pulses acreage grew to 31 Mn hectares from 28 Mn
hectares. Due to a renewed focus, oilseeds area increased 7.31% from 102.36 Lakh hectares
in FY 2021-22 to 109.84 Lakh hectares in FY 2022-23.
The countrys retail inflation, measured by the consumer price index
(CPI), eased to 5.66% in March 2023. Inflation data on the Wholesale Price Index, WPI
(calculates the overall price of goods before retail) eased to 1.3% during the period. In
2022, CPI hit its highest of 7.79% in April; WPI reached its highest of 15.88% in May
2022. By the close of the year under review, inflation had begun trending down and in
April 2023 declined below 5%, its lowest in months.
Per capita income almost doubled in nine years to H172,000 during the
year under review, a rise of 15.8% over the previous year. Indias GDP per capita was US$
2,320 (March 2023), close to the magic figure of US$ 2500 when consumption spikes across
countries. Despite headline inflation, private consumption in India witnessed continued
momentum and was estimated to have grown 7.3% in FY 2022-23.
OUTLOOK
The fast-moving consumer goods (FMCG) sector is Indias fourth-largest
sector and has grown healthily over the years, aided by the rise in disposable incomes,
growing young population and increased brand consciousness among consumers. India
continues to be an immense growth opportunity since it still has one of the lowest per
capita FMCG consumption in the world with many sub-categories of FMCG having very low
penetration levels. Within the FMCG sector, Household and Personal care category accounts
for 50% of the sales, while the Healthcare and Food & Beverages categories contribute
to 31% and 19%
of the overall sales, respectively. The rural sector, spread across
650,000 villages, accounts for 60% of Indias population and contributes to 40% of the
FMCG sales. Notwithstanding the demand sluggishness in recent times, rural India continues
to provide a large headroom for growth for the sector. In FY23, the FMCG sector volumes
grew only marginally, reflective of a slowdown as persistent inflation, led by
geo-political tensions in Europe and global supply chain disruptions, followed by monetary
tightening by central banks, weighed on consumption for the better part of the year.
However, as commodity and retail inflation moderated towards the end of the year, volume
growth entered into positive territory in the last quarter of the year after five quarters
of decline, signalling prospects of a sustained recovery. During the period, urban
consumption was steady throughout the year, while rural demand was tepid as it was far
more impacted by rising retail inflation. Home and Personal Care (HPC) categories were
under pressure and exhibited downgrading and downtrading trends, as household budgets of
value conscious consumers were constrained by inflationary pressures.
CPI Inflation (%)
INDUSTRY STRUCTURE, DEVELOPMENTS AND INDUSTRIAL OUTLOOK:
The branded edible oil market is estimated to be around Rs 1,56,000 cr
and is expected to grow faster than the overall category gaining a lions share of close
to 90% of the total market in terms of value in the coming five years. It is estimated
that close to 75% of the total edible oil available in terms of volume is retailed as a
branded product. The edible oil industry in India is fragmented wherein 13% of oil is sold
as loose/unbranded and the consumers are shifting to branded oils, which bodes well for
the organised players. The four key edible oils, palm, soya, mustard and sunflower
constitute 85-88% of the total consumption in India in terms of volume. Palm oil is
primarily used by the large-scale food processing enterprises. It is also used in blended
oils for domestic consumption. Palm and soybean are also being used by the HoReCa segment.
India imports most of its palm oil consumption. Soybean oil, mustard oil and sunflower oil
is largely used for domestic consumption. The other oils include sesame oil, coconut oil,
groundnut oil, rice bran oil amongst others.
A gradual shift is being witnessed in favour of soft oils such as
soyabean oil, sunflower oil, mustard oil. Consumption in rural India constitutes almost
50% of the total consumption in this category by volume. Indias per capita consumption of
edible oil is relatively low at 19-19.80 kg per year, compared to the global average of 24
kg per year. However, with a growing population and increasing per capita consumption,
demand for edible oils is expected to increase.
The first half of the year witnessed price volatility in the edible oil
market, leading to decreased demand for edible oil and impacting our volume growth.
However, in the second half, we successfully revived our business volumes. This was
attributed to a decline in edible oil prices, increased out-of-home consumption during
festivals and weddings, and improved direct coverage in both urban and rural areas.
GROWTH DRIVERS
Adaption of aspirational food by the upwardly mobile population is a
change which is pushing growth in consumption of edible oil in India. Marketing of western
food habits to the Indian population is bringing new avenues in food cooking processes,
requiring more cooking oil. Promotion of healthier oil variants which claim to be good for
heart are also spurring growth in consumption, discarding the fears related to oily food.
Fast food brands are also marketing themselves aggressively which is resulting in more
consumption of edible oil. This trend will continue to grow more. At ROML we are always in
lookout for opportunities where company can grow exponentially and create value for
themselves as well as for its stakeholders. In the same endeavor, we planned to expand and
grow in cosmetics covering Tier-I, Tier-II and Tier-III cities to cater the growing needs
of the people of the region and to bolster our vision to expand PAN India basis. We have
pleasure to inform you that we have launched a new product of Mustard Oil in the brand
name of "KHILONA" which will cater mass market across India. The main target
customers are Tier-ll and Tier-lll cities. This will help to achieve the Top line and
Bottom Line of the Company. Looking ahead for the continued growth trajectory the Company
is further planning to launch new category in Til Oil segment under the brand name
"TILYUKT" in coming months. These strengths will be helping your Company in
scaling the oil business rapidly towards achieving its vision. With the continued
dedication of our trusted partners, colleagues and shareholders, Raj Oil Mills Limited
will continue to evolve into a stronger entity, surpassing all our expectations and
continue to create value for all its stakeholders.
INDUSTRY OUTLOOK
Edible oils act as an intensive source of energy, delivering essential
nutrients to the body, including vitamins A and D. Besides this, they act as a heat
transfer medium at high temperatures and enhance taste sensation in spreads and salad
dressings. The Food Safety and Standards Authority of India (FSSAI) supervises the
manufacture, packaging, and distribution of edible oils in India. In India, the rising
consumer health concerns towards the high prevalence of coronary heart diseases, diabetes,
obesity, gastrointestinal disorders, etc., are primarily driving the demand for healthy
edible oil. Additionally, the market is further catalyzed by the growing awareness towards
several health benefits of organic and low-cholesterol edible oil. As a result, various
regional manufacturers are launching healthy product variants enriched with omega-3,
vitamins, and natural antioxidants. Moreover, the changing consumer dietary patterns and
their hectic work schedules have led to the increasing consumption of processed food
items.
The Government of India is taking measures to increase the domestic
production of edible oil seeds. Initiatives like National Mission on Edible Oils and
Oil Palm Development Programme, increasing the minimum support prices of oilseed crops,
creation of buffer stock for oilseeds are being implemented by the Government to boost the
production. There is a continuously increasing edible oil demand due to rapid
urbanisation, changing dietary patterns and the growth of the food processing sector.
Indias population and low per capita consumption is continuously increasing which will
boost the sector significantly. Apart from this, the expanding agriculture sector along
with the launch of several initiatives for enhancing the production of oilseeds in the
country is also propelling the market. Furthermore, the Indian government is making
continuous efforts to increase the domestic availability of edible oil and reduce import
dependency. For instance, the government has proposed the National Mission on Edible Oil
(NMEO) for meeting the countrys consumption need for edible oil, such as sesame oil,
groundnut oil, safflower oil, palm oil, etc.
The Indian economy is in robust growth phase with lots of new
developments and investment sentiment being upbeat. The RBI expects Indias 2023-24 GDP
growth at 6.5%, with quarter Q1 at 8.0%, Q2 at 6.5%, Q3 at 6.0%, and Q4 5.7%. An average
GDP of 6.5% for India in a period when many global economies are struggling with higher
interest rates, rising inflation and slowing of consumption is truly commendable.
Modern Retail:
Supermarkets like D Mart & Jio Mart are helping edible oil market
to grow rapidly, however low investments in warehouses remains a concern. New formats
& smaller supermarkets are emerging as hotspots for the Indian consumer to buy edible
oil, because of variety of brands and discounted offers available in them, as compared to
the conventional retail or kiranas stores. The aspirational behavior of the upwardly
mobile population in small towns as well as in metros and their suburbs, to shop from
superstores is pushing the sales of edible oil from modern retail.
Brand Consciousness:
The edible oil industry in India is fragmented wherein 13% of oil is
sold as loose/unbranded and the consumers are shifting to branded oils, which bodes well
for the organised players. Growth in incomes & aspiration has helped branded edible
oil products sell more. Branded means purer, better and healthy is the connotation derived
by the Indian consumer when buying cooking oil. Positioning their brands around health,
and bringing new healthy variants has helped all major brands.
GROUNDNUT OIL:
Over the years, your Company created one of Indias most trusted Oil
brand "GUINEA", deep sourcing capabilities, extensive supply chain and robust
distribution network for its edible oil business. Its been more than 75 years, your
Company has now reached a point where it has stitched together its significant
capabilities to deliver a wider impact across the Oil basket.
Groundnut Oil Market size is estimated to reach $934.5 Million by 2027,
growing at a CAGR of 3.8% during the forecast period 2022-2027. Groundnut oil is also
delineated as Arachis or peanut oil, and it falls under the category vegetable oil
expunged from edible seeds of legume crop "Peanuts." Groundnut oil is largely
taken into account as a base oil for culinary applications or to improve the savor of
underlying food. Arachis oil is one of the healthiest choices available in the market as
it is cholesterol and trans-fat-free. Moreover, it is a good source of vitamin E and
primary fatty acids such as palmitic acid, lignoceric acid, linoleic acid, oleic
acid/omega-9, and stigmasterol. Therefore, owing to the heavy availability of unsaturated
fats in groundnut oil, it extends several health benefits over other edible oils. The
presence of vitamin E safeguards the body from free radical attacks which eventually
prevents the risk of getting cancer and heart attack. Moreover, it progresses insulin
sensitivity and lowers the sugar levels in patients inflicted with diabetes. The global
ground oil market outlook is fairly captivating as the overall demand is augmenting. The
proliferating awareness among people regarding the health benefits of groundnut oil is a
major driver for the market. Nevertheless, nutty flavor and strong aroma, rising expertise
of industries in food processing, plunging disposable income, and broadening online and
offline retail networks are factors set to drive the growth of the global groundnut oil
market for the period 2022-2027.
E-Commerce:
Over the last few years, there has been a growing prominence of modern
trade and online channels (e-commerce, direct to- consumer (D2C) and quick commerce).
During the pandemic, the adoption of online channels accelerated further as consumers
preferred contactless and cashless retail experiences. Efficient logistics as well as
multiple modes of digital payments have also fuelled the exponential growth of e-commerce
in the last few years. However, the General trade channel continues to contribute to a
large majority of the sales for the sector. While the channel is imbibing higher degree of
professionalism and witnessing consolidation among players, it is also evolving to meet
consumers growing demand for convenience. Traditional kirana stores, which are small
independent grocery stores, are adopting digital payments and offering wider assortments,
home delivery facilities and promotions. Retailers are also investing in digital
technologies to enhance their operations, in terms of inventory management, accounting,
billing, payments and customer management, to compete in this evolving FMCG distribution
landscape.
As a result, the FMCG sector has now adopted omni-channel strategies to
provide a seamless shopping experience to consumers across multiple channels, including
physical stores, e-commerce platforms, mobile apps, and social media. This allows
customers to engage and purchase products through their preferred channels, integrating
online and offline experiences.
The E-commerce business also continued to grow in double-digits in FY23
on the back of portfolio interventions, customer partnerships and increased engagement
with our customers. We launched and scaled several products and continued to strengthen
our market shares in the oil categories on the channel. We also partnered with key
platforms on several supply chain led interventions to drive best-in-class practices to
deliver consumer delight through our brands. Prolonged lockdown induced by the pandemic
changed shopping habits and grew the buying of edible oil from e-commerce, as people were
scared to go out, and were mostly in-home. 26% is the MOM growth of edible oil recorded
between April 2020 & April 2021. New online faster delivery platforms like Swiggy,
Instamart, Blink It, Dunzo etc. are also helping growth of edible oil in e-commerce
platforms. D2C (Direct2Customer) is another segment within e-commerce which is helping
brands to sell directly to customers surpassing ecommerce marketplaces, from their own D2C
websites. Investment and efforts towards them is being made by all major edible oil
brands.
COMPANY OVERVIEW
The Raj Oil Mills Limited is engaged in the business of manufacturing
and trading of edible oils since its inception. The Company has established itself as one
of most trusted and reliable companies through consistent product quality and customer
service. Raj Oil is a trusted brand of edible oil since 1943 and has completed more than
75 years of serving quality products for their consumers.
The Company has strived for its commitment and promise to the entire
shareholders and have valued their effort for making it a renowned brand, thereby
increasing shareholder value. The management of the company has always been believing in
taking all the developmental and social initiatives for its stakeholders including
employees, customers, society, investors, promoters, vendors and government bodies.
The companys affairs are being managed by highly qualified/experienced
professionals and the Company is promoted by well- established group of promoters having a
proven track record.
INFORMATION TECHNOLOGY
ROML is consistently investing in IT infrastructure internally to
streamline processes, as well as externally to sell and service its channel &
customers better. A Salesforce automation app MSell is used to record & track sales
forces efforts everyday, thus enhancing the service quality and reducing time to deliver.
On customer experience and sales channel diversification, E-commerce listings and sales is
being worked on.
INTERNAL CONTROLS
The Company has proper and adequate system of internal controls which
ensures that all assets are safeguarded against loss from unauthorized use or disposition
and all the transaction are authorized, recorded and reported correctly. Regular internal
audits and checks are carried out to provide assurance that the responsibilities at
various levels are discharged effectively and that adequate systems are in existence. The
management continuously reviews the internal control systems and procedure for efficient
conduct of business. The Company has an Internal Control System, commensurate with the
size, scale and complexity of its operations.
M/s T.M. Dalal & Co. Chartered Accountants are the Internal
Auditors of the Company. The reports and findings of the internal auditors and the
internal control system are periodically reviewed by the Audit Committee. To maintain its
objectivity and independence, the Internal Audit function reports to the Chairman of the
Audit Committee of the Board.
The Internal Auditors monitor and evaluate the efficacy and adequacy of
internal control systems in the Company, its compliance with operating systems, accounting
procedures and policies at all locations of the Company. Based on the report of internal
audit function, process owners undertake corrective action in their respective areas and
thereby strengthen the controls. Significant audit observations and corrective actions
thereon are presented to the Audit Committee of the Board.
HUMAN RESOURCES
The Company recognizes the importance and contribution of its human
resources for its growth and development and is committed to the development of its
people.
Raj Oil Mills Limited, equal importance is given to the development of
the companys human resource. Company has always recruited the best talent available in
the industry - people with years of expertise and experience behind them. The Company
considers its employees to be the most valuable asset and is committed to provide a
conducive work environment to enable each individual to fully realize his or her
potential. The human resource programs focus on strengthening key areas of Enhancing
individual and organization readiness for future challenges. Management is investing in
enhancing technical and managerial skills of employees for building competencies needed
for growth plans. Our business review & performance improvement process continues to
put focus on performance and periodic review of each of our businesses and individuals.
The Company has cordial relations with employees and staff. There are
no industrial relations problems during the year and the Company does not anticipate any
material problems on this count in the current year.
RISK MANAGEMENT AND MITIGATION:
The Company will endeavor to maintain and enhance its position in the
edible oil and increase focus on the range of products. The Company has to ensure that the
people working for it, who constitute its major competitive advantage, continue to
contribute productivity to its business. The Company has to be on the lookout for tracking
the competition and maintaining its competitive edge in terms of quality and value
proportion.
Following also contribute to the favorable opportunities to the
Company:
• Favorable business environment and rise in demand for the
products.
• Ease in availability of raw materials in the domestic market.
• Increased import duties and restricted entry of edible oil from
foreign nations which would lead to push for domestic procurement of edible oil seeds.
ROML is exposed to the risk of price fluctuation on raw material as
well as on finished goods, business risk, commodity risk, etc. in its entire product range
of the edible oil segment. The risk identified are reviewed and evaluated on continuous
basis and suitable steps are taken on timely basis to mitigate the same.
CERTIFICATE ON CORPORATE GOVERNANCE
To,
The Members of,
Raj Oil Mills Limited,
We have examined the compliance of conditions of Corporate Governance
by Raj Oil Mills Limited (the Company), for the financial year ended March 31, 2023, as
stipulated in regulations 17 to 27, clauses (b) to (i) of sub-regulation (2) of regulation
46 and paragraph C, D and E of Schedule V of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015 (collectively referred
to as Listing Regulations).
Managements Responsibility for the Statement
The compliance of conditions of Corporate Governance is the
responsibility of the management. This responsibility includes the designing, implementing
and maintaining operating effectiveness of internal control to ensure compliance with the
conditions of corporate governance as stipulated in the Listing Regulations.
Auditors Responsibility
Pursuant to the requirements of the Listing Regulations, our
responsibility is to express a reasonable assurance in the form of an opinion as to
whether the Company has complied with the conditions of corporate governance as stated in
the paragraph above. Our examination has been limited to a review of the procedures and
implementation thereof, adopted by the Company for ensuring compliance with the conditions
of the Corporate Governance as stipulated in the said clause. It is neither an audit nor
an expression of opinion on the financial statements of the Company.
We have examined the relevant records of the Company in accordance with
the applicable Generally Accepted Auditing Standards in India, the Guidance Note on
Certification of Corporate Governance issued by the Institute of Chartered Accountants of
India (ICAI), and Guidance Note on Reports or Certificates for Special Purposes issued
by the ICAI which requires that we comply with the ethical requirements of the Code of
Ethics issued by the ICAI.
We have complied with the relevant applicable requirements of the
Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and
Reviews of Historical Financial Information, and Other Assurance and Related Services
Engagements.
Opinion
Based on the procedures performed by us and to the best of our
information and according to the explanations provided to us, in our opinion, the Company
has complied, in all material respects, with the conditions of corporate governance as
stipulated in the Listing Regulations during the year ended March 31, 2023.
We further state that such compliance is neither an assurance as to the
future viability of the Company nor the efficiency or effectiveness with which the
management has conducted the affairs of the Company.
Restrictions on Use
The certificate is addressed and provided to the Members of the Company
solely for the purpose of enabling the Company to comply with the requirement of the
Listing Regulations and should not be used by any other person or for any other purpose.
Accordingly, we do not accept or assume any liability or any duty of care for any other
purpose or to any other person to whom this certificate is shown or into whose hands it
may come without our prior consent in writing.
|
For D. Maurya & Associates |
|
Practising Company Secretaries |
|
Sd/- |
|
Dhirendra Maurya |
|
M. No. 22005, |
| Date: September 06, 2023 |
C.P.: 9594 |
| Place: Mumbai |
UDIN: A022005E000951043 |
+91-9892691696
