Rajgor Castor Derivatives Ltd Management Discussions

A. INDUSTRY STRUCTURE AND DEVELOPEMENT:

The exports of castor oil which were at 6,06,376 Metric Tons in 2022-23, stood at 6,46702 Metric Tons in 2023- 24 (Source: as per the data published by The Solvent Extractors Association of India). According to SEAs (Solvent Extractors Association of India) Castor Crop Survey 2023-24, India is estimated to produce 20.54 lakh tonnes of castor seed during 2023-24 against 18.81 lakh tonnes in 2022-23.

The global economic growth has been subdued, especially in Europe and USA post the geo political disturbances and conflicts between Russia Ukraine and Israel Palestinian. Uncertainties in demand and increased interest rates have led to lower inventory holdings by the importers. Under these circumstances, the Red Sea attacks disrupted the supply chain, causing ships to take the longer route through the cape of good hope increasing the lead time and costs. This disruption took the end user industry un-prepared and led to a surge in demand to replenish and also carry higher buffer stock resulting in a surge in demand in the quarter 4 after a subdued quarter 2 and 3. Given the current state of affairs the visibility of growth and consistency of demand remain a concern.

B. OPPORTUNITIES AND THREATS:

OPPORTUNITIES

1. Supply Chain Infrastructure

? Technology-driven, integrated supply chains enable entities to reduce inventory and costs, add product value, extend resources, accelerate time to market, expand market, increase pricing for sellers and variety for buyers as well as retain customers.

? In order to have a successful supply chain, the Indian Government has sought to involve multiple stakeholders to improve interactions between farmers, processors, distributors and retailers.

? Huge opportunity exists for agri input segments like seeds and plant growth nutrients.

? According to the Center for Environment and Agriculture (CENTEGRO) and Crop Care Federation of India (CCFI), India can become the global agricultural hub for other countries, which have harsh weather, scarce labour and lands, and are seeking to outsource their agriculture.

? Given the importance of agriculture in India, both the government and private players are working to improve the efficiency and productivity of Indian agriculture and exploring how Farming as a Service (FaaS) solutions can play a role.

? FaaS seeks to provide affordable technology solutions for efficient farming. It converts fixed costs into variable costs for farmers, thus making the techniques more affordable for a majority of small farmers. Its services are available on a subscription or pay-per-use basis in three broad categories, which are crucial across the agriculture value chain.

? There is no local government policy that provides certainty of standard prices for the product.

? Competition

? Foreign Currency Fluctuations

? The business is subject to seasonal volatility, which may contribute to fluctuations in the results of operations and financial condition.

? The business transactions carried with our customers on a purchase order basis and do not enter into long- term contracts with most of them. Further the company highly depend on major raw materials and a few key suppliers who helps to procure the same.

? The Company has not entered into long-term agreements with its suppliers for supply of raw materials. In the event of unable to procure adequate amounts of raw materials, at competitive prices the business, results of operations and financial condition may be adversely affected.

? Changes in technology may render our current technologies obsolete or require to make substantial capital investments.

? The Manufacturing facilities is dependent on the adequate and uninterrupted supply of electrical power and water at a reasonable cost. Failure on account of unavailability of electrical power and water may restrict in utilizing the full capacity and hence, may impact the business and results of operations.

? The Company has adequate internal control procedures and systems commensurate with its size and nature of its business for purchase of raw materials, plant and machinery, components and other items and sale of goods. The system covers all major processes including operations, to ensure reliability of financial reporting, compliance with policies, procedures, laws and regulations, safeguarding of assets and economical and efficient use of resources.

? The checks and controls are reviewed by the Audit Committee for improvement in each of these areas on a periodical basis. The internal control systems are improved and modified continuously to meet with changes in business conditions, statutory and accounting requirements. Moreover, the present management has experienced team for technical staff, who are already trained and are able to manage production cycle smoothly.