Sita Shree Food Products Ltd Management Discussions.

MANAGEMENT DISCUSSION AND ANALYSIS

We have pleasure in submitting the Management Discussion & Analysis Report on the business of the Company:-

INDUSTRY STRUCTURE AND DEVELOPMENTS:

The Indian food and grocery market is the world’s sixth largest, with retail contributing 70 per cent of the sales. The Indian food processing industry accounts for 32 per cent of the country’s total food market, one of the largest industries in India and is ranked fth in terms of production, consumption, export and expected growth. It contributes around 8.80 and 8.39 per cent of Gross Value Added (GVA) in Manufacturing and Agriculture respectively, 13 per cent of India’s exports and six per cent of total industrial investment. The Indian gourmet food market is currently valued at US$ 1.3 billion and is growing at a Compound Annual Growth Rate (CAGR) of 20 per cent. Indias organic food market is expected to increase by three times by 2020.

Looking to the rise in nuclear family and working husband-wife working culture will lead to shift packaged floor and ready to use/eat meal. This will going to help a lot to the packaged food industry in future.

OPPORTUNITIES AND THREATS:

The local and export market for agro commodities has grown appreciably for countries like India and export and import of agriculture items have increased significantly over the past several years. Over a period of several decades the Company has developed a strong reputation in industry. Supply of raw material in agriculture based industry always depends upon the monsoon and as per projections it is going to be good in coming year. Company is expecting good business in running financial year.

Export of Soya bean oil and DOC always depends upon production of soyabean in other countries as well.

The global food industries are extremely competitive, hygienic and health conscious and Indian manufacture and exporter have to compete with low profit margin and unorganized set-up in India. Small our units are big competitor in local markets. Being in agricultural food industry availability of raw material is mostly dependent upon monsoon, which always unpredictable.

SEGMENT- WISE PERFORMACE OR PRODUCT-WISE PERFORMANCE:

The Company is engaged in the business of wheat, soya and pulses products manufacturing and by products of agro commodities in local as well as international market. In manufacturing activity of our division turnover is Rs. (4.86) Lakhs as compare to Rs.65.60 Crores of previous year similarly for soya division sales of manufacturing activity is Rs.(4.17)Crores as compare to Rs. 71.31Crores of previous year. In Grading & Processing activity of our division turnover is Rs .Nil as compare to Rs.7.53 Crores of previous year

The overall performance of the Company was affected mainly by slow movement of debtor, increase in amount of idle and spoiled stock for longer period, non-utilisation of production capacity and increased interest burden on debt requirement for high working capital needs.

OUTLOOK

Domestic market and export has been on downswing during the last two year. But industry as a whole and after implementation of GST it seems that it may get momentum in current year. Development of nuclear family concept is the basic line for packed food industry i.e. Atta and other packed basic food. With high protein soya products we are looking forward towards export market with good amount of margin.

RISK AND CONCERNS:

Risk is a potential event or non-event, the occurrence or nonoccurrence of which can adversely affect the objectives of company. Impact of risks could either be monetary that is impact on business profits due to increase in costs, decreasing revenue amongst others or non-monetary which is delay in securing regulatory approvals, reputational damage etc. In addition, we could also be susceptible to risks arising out of our business strategy, decision on innovation or product portfolio. If there is any significant unfavorable shift in industry trend or pattern of demand, our investments might get affected. We also have multiple competitors both in India and overseas and we also stride through risk associated with clients’ and prospective clients’ dispositions.

As a conscientious organization, we have adopted a risk management framework to ensure early identification and management of various critical risks, which accrue to our business model.

At present the financial position of the Company is suffering from heavy losses and acute shortage of working capital fund. Credit facilities with Banks and NBFCs are classified as NPA. No production activities during the year and both the plants of the Company are remain idle during maximum days in the year. Networth of the Company is fully eroded during the year due to losses. Notice u/s 13 (2) of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 dated 02.07.2018, has been issued by the State Bank of India, due to failed to repay the dues/outstanding liabilities. Turnover of the company is negative during the year due to sales return of Rs. 9.33 crore.

The Audit committee consisting of independent director’s review important issues raised by the Statutory auditors thereby ensuring that the risk is mitigated appropriately with appropriate rectification measures on a periodic basis.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has a proper internal control system, which provides adequate safeguards and effective monitoring of the transactions and ensures that all assets are safeguarded and protected against loss from unauthorized use or disposition.

The audit committee of the Company comprising of all independent directors regularly reviews the audit plans, adequacy of internal control as well as compliance of accounting standards.

Also the CFO has the responsibility for establishing and maintaining internal controls for financial reporting and that they also have the overall responsibility to evaluate the effectiveness of internal control systems of the company pertaining to financial reporting and they have to disclose to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which they are aware and the steps they have taken or propose to take to rectify the deficiencies.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Please refer to brief description of the Company’s Working during the year and State Of Company’s Affair in the Board of Directors Report.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT:

The Company has constituted an Internal Complaint Committee (ICC) in pursuant to the provisions of Companies Act, 2013 for prevention, prohibition and redressal of complaints / grievances on the sexual harassment of women at work places.

We have ensured safe and healthy working conditions in the Unit and have continued with our policy to ensure safe and healthy working conditions in the other premises of the Company taking into account of health and safety of all concerned, besides conservation of natural resources and protection of the environment.

A major factor which continued growth of your organization is the constructive support of Banks, Institutions, suppliers, Executives, employees, creditors and the confidence shown by them in the Company. Employer-Employee relations in all the offices of the Company were cordial throughout the year under review.

As at March 31st, 2018, the Company had a total workforce of approximately 3 persons, including managers, staff.

DISCLOSURE OF ACCOUNTING TREATMENT:

During the year under review while preparing the Financial Statements for the Financial Year 2017-18 the Company has followed the same treatment as prescribed in an Accounting Standards hence, disclosure/management’s explanation under this head is not applicable for the year.

For and on behalf of the Board of Directors of
Sita Shree Food Products Limited

 

Sd/- Sd/-
Dinesh Agrawal Lucky Mevati
Place: Indore Chairman Cum Director Director
Date: 28.08.2018 DIN: 00348853 DIN: 07793340