Shri Venkatesh Refineries Ltd Management Discussions

Overview

Indias economy remained robust in FY 2022-23 despite challenges likes International prices of edible oils surged in FY22 owing to a shortfall in global production and an increase in export tax levies by countries. India meets 60 per cent of its edible oils demand through imports, making it vulnerable to international movements in prices. Forinstance, sunflower oil, which makes up 15 per cent of our total edible oil imports, is procured mainly from Ukraine and Russia. Thus, FY22 saw edible oil inflation on account of international price pressures. However, inflation remained subdued in FY23 because of rationalisation of tariffs and the imposition of stock limits on edible oils and oil seeds.

Business Overview

Shri Venkatesh Refineries Limited (SVRL) is one of the fastest growing refinery company under Brand name “Rich Soya”, Rich Sun” and “Silver Gold”. Our Company is primarily engaged in the business of refining and preservation of Edible oils mainly soyabean oil. The business process involves purchase of the raw oil, then refining, packaging and selling of the edible oil. we are also engaged in the business of trading of edible oil mainly soyabean oil, sunflower oil, cotton seed oil and palm oil.

At present our Company has a refining capacity of almost 36000 tons. We dedicate immense amount of energy in building long and sustainable relation with our customers to understand their market needs while keeping them well informed of the market trends and price at regular intervals. We have a well-established network spread across Maharashtra catered by our distributors, distributing our products through different points of presence. These agents then distribute our products to the numerous retailers spread across the state. We intend to engage more distributers to increase the product visibility by our continuous brand building activities through various incentives and promotional schemes.

We setup environment friendly solar power panels of 650KWH at our factory premises. The electricity generated at these solar plants is used for captive consumption by our company.

Industry Overview

In India, Edible oil market is driven by increase in consumption of high quality & It plays important role to health conscious consumers. Edible oil constitutes an important component of food expenditure in Indian households. Edible oils provide nutrients to the body. These are rich source of dietary energy and contain more than twice the caloric value equivalent to the amount of carbohydrates. Functionality of oils and fats not only adds avor in the food, but it also increases the nutritional value of food also.

The Food Safety and Standards Authority of India (FSSAI) supervises the manufacture, packaging, and distribution of edible oils in India.

Growing demand for edible oil, rapid growth and expansion in the food sector is expected to enhance the growth of the edible oil market. The edible oils market is expected to reach USD 190.88 billion by 2030, which is USD 102.37 billion in 2022, registering a CAGR of 8.10% during the forecast period of 2023 to 2030. Sunflower, mustard, palm and soya oils are commonly used which compromises 8590% of the total edible oil consumption in India. The Hotel, Restaurants and Cafeterias sector accounts for40% of the 23 million tonnes edible oil demand required annually and 60% of the volume is consumed by the end consumersegment, with each of these segments consuming oil in packets.

The edible oil industry is one of the most important within the agriculture sector in India, the worlds largest importer from Russia, Ukrane, USA, Brazil Indonesia and Malaysia and the third largest consumer.

Growth Driver

Agrowing population and rising per capita consumption are expected to influence demand growth. Nowadays, consumers are highly conscious of their health. Thus, they are using high quality edible oil which is expected to create numerous opportunities for market growth. Growing demand for edible oils with low cholesterol, calories and fat content is propelling the market growth.

Future outlook

The Company maintains a very positive outlook of the future with its foray into new segments and the strengthening of the existing businesses. The company intends to steady growth and minimise risk by way of different product portfolio. The Company plans continuous expansion of its product portfolio such as Soya oil, Sunflower oil, Palm oil, mustard Oil and provide quality product.

The Company aims to set up distribution channel to ensure smooth supply of Products. Further Company aims to become largest edible oil refining Company.

Financial review

Your company has achieved a total income of 57,522.88 lakhs during the year under review as against 62,912.23 lakhs in the previous financial year. The net profit aftertax of the company for the year under review is 1,502.63 lakhs as against 1433.51 lakhs for the previous year.

Summarised Statement of Profit and Loss 3

(Amount in Lakhs)

PARTICULARS	YEAR ENDED 31.03.2024	YEAR ENDED 31.03.2022
Net Sales	57,522.88	62,912.23
Other Income	40.28	42.35
Total Revenue	57,563.15	62,954.68
Less: Expenses	55,521.92	61,020.65
Profit / Loss before Taxation	2,041.24	1934.03
Less : Provision for Taxation	527.45	497.44
Provision for Deferred Tax	11.16	3.08
Profit after Taxation	1,502.63	1433.51

Product wise sales

Break-up of Sales

(Rupees in Lakhs)

Particulars	2023-24	2022-23
A Manufactured Goods
1 Refined Oil	54533.93	47832.33
2 By Products	733.40	1024.46
Total (A)	55267.33	48856.79
B Traded Goods
Refined Oil	2038.38	11378.94
Raw Oil	217.17	2676.48
Total (B)	2255.54	14055.42
TOTAL(A+B)	57522.88	62912.23

Key financial ratios - Significant changes and explanations

Particulars	As on March 31st 2024	As on March 31st 2023	Variance	Remarks (Only for change in ratio by more than 25%)
(a) Current Ratio	1.72	2.40	-285	Due to Increase in Net Working Capital
(b) Debt-Equity Ratio	1.88	1.17	-38%	Due to Increase in earning before interest and tax
(c) Debt Service Coverage Ratio	2.36	3.81	-38%	Due to Increase in Earning before interest and tax
(d) Return on Equity	20.62%	24.09%	-14%	NA
(e) Inventoryturnover ratio	3.48	4.98	-30%	Due to Increase in the Inventory holding
(f) Trade Receivables turnover ratio	77.58	259.57	-70%	Due to Increase in the Receivable days
(g) Trade payables turnover ratio	29.03	53.56	-46%	Due to Increase in Trade Payables
(h) Net capital turnover ratio	6.60	7.55	-13%	NA
(i) Net profit ratio	2.61	2.28%	15%	NA
(j) Return on Capital employed	24.84%	22.06%	-1%	NA

Internal control systems and their adequacy:

The Company has a strong internal control systems for business processes, operations, financial reporting, fraud control, and compliance with applicable laws and regulations and best in class processes commensurate with its size and scale of operations to safeguard its assets and protect against loss from any un-authorized use or disposition. Statutory and internal Auditors carry out periodical review of the functioning and suggest changes if any.

The Audit Committee of the Board meets periodically to review various aspects of performance of the Company and reviews the adequacy and effectiveness of the internal control system and suggests improvement for strengthening them from time to time. Auditors also attends this Meeting and conveys their views on the business process and also of the policies of financial disclosures. When found necessary, the Committee also gives suggestions on this matter.

Revenue and capital expenditure are strictly governed by approved budgets and the expenditure approval levels are defined by a delegation-of-authority mechanism. Review of capital expenditure is undertaken based on the expected benefits forthe Company.

Human Resource and Employee Relations:

As business continues to grow at a steady pace amidst greater consumer expectations, the Human Resource Departments responsibility of nurturing the potential of employees is also greater. With digitization of the HR function we have made further progress towards creating an environment that fosters learning and growth.

We continue to deepen our relationship with campuses across the country to hire fresh talent. Our talent acquisition programme is also continually focused on hiring best in class lateral talent. The Nomination & Remuneration Committee (NRC) along with senior employees across other departments is invested in developing internal talent, and performing employees are given enhanced job responsibilities in yourfast growing company.

Cautionary statement

Certain statements in the Management Discussion and Analysis section may be forward-looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which would be different from what the Board of Directors envisage in terms of future performance and outlook. Investors are cautioned that this discussion contains forward-looking statements that involve risks and uncertainties including, but not limited to, risks inherent in the Companys growth strategy, dependence on certain businesses, dependence on the availability of qualified and trained manpower and other factors discussed. This discussion and analysis should be read in conjunction with the Companys financial statements and notes on accounts