skm animal feeds and foods india ltd Management discussions

SKM ANIMAL FEEDS AND FOODS (INDIA) LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS COMPANYS PERFORMANCE: (Rupees in Lakhs) PARTICULARS 2005-2006 2004-2005 FINANCIAL HIGHLIGHTS: (a) Gross Income 15,037.20 11,126.21 (b) Profit before interest, depreciation 819.72 731.57 and taxes Less: Interest 190.06 Depreciation 379.67 Provision for current taxation 28.00 Deferred taxation 35.50 633.23 542.22 (c) Net Profit after interest, 186.49 189.35 depreciation and taxes (d) Add: Surplus carried from previous 82.56 71.68 year (e) Less: Previous Year Tax Adjustments 34.31 0.18 etc. (f) Profit available for appropriation 234.74 260.85 APPROPRIATIONS: (g) Dividend on Equity shares 24.81 24.81 (h) Corporate Dividend Tax 3.48 3.48 (i) Transferred to General Reserve 150.00 150.00 (j) Balance carried to Balance Sheet 56.45 82.56 RESERVES: Considering the satisfactory level of Profit, a sum of Rs.150.00 lacs is being transferred to the General Reserve. OPERATION AND TURNOVER: The Companys turnover for the year under review is Rs.174.66 crores as against Rs.138.71 crores during the previous year. The increase in turnover is in view of the increase in feed sales and solvent. extraction and oil. WIND MILL: The Company has installed two Wind Mills with a capacity of 750 KW of each at Rameswaram during the year 2004 and these units had been generated electricity. However, these Wind Mills were not generating the expected level of 40 lacs units per annum and the Company approached the supplier M/s. NEG Micon (India) Private Limited, Chennai. They surveyed the suitable place and finally they have chosen Surandai near Thenkasi, Tirunelveli Dist as the best place of generating electricity by Wind Mills. based on the wind velocity recorded. In view of this, these Wind Mills have been shifted from Rameswaram to Surandai. In Surandai, these Wind Mills are generating electricity at improved level. SOLVENT EXTRACTION PLANT (RICE BRAN)-II: The Company has installed the Solvent Extraction Unit with a capacity to process 180 tons of Rice Bran per day. The cost of the plant, is Rs.280 lass. This unit started its commercial production on 10/06/2005 aid running continuously. The cost of the unit is met from the Term Loan from Syndicate Bank and internal sources. The oil extracted from this unit was sold in bulk. The Company has plan to sell the oil tinder its own brand name. EDIBLE OIL REFINERY UNIT: The Company has installed a Refinery Unit with a production capacity of 100 tons per day. It commenced its Commercial Production on 29/08/2005. This unit is meant for refining the crude oil into quality oil. The cost of the unit is Rs.675 lacs. The cost of the unit is met from Term Loan from Syndicate Bank and from the internal accruals. In this unit the Company is able to process Rice Bran Oil and Coconut Oil. After refining the Rice Bran Oil, the Company packs the oil with the help of packing machine in pouches, tins and pet bottles etc. The Company has appointed a General Manager (Marketing) - a person with vast experience in marketing. the consumer products and experienced marketing personnel - three area Sales Managers and 20 Sales Executives to assist him and for marketing the edible oil. The Company has made an application for registration of its brand name as PORNNA with Trade Mark Registry, Chennai. During the current year 2006-07, the Company has launched its product on 01/06/2006 and started to sell the refined Rice Bran Oil in Pouches, Tins and Pet bottles to the users through the dealers. Advertisements are being released in all the leading TV Channels. The product has very good response froth the market. HATCHERY AT DHARMAPURI: To hatch the hatchable eggs produced from the Breeder Farms, the Comapny has installed a hatchery at Dharmapuri with a capacity to hatch 10,000 eggs per week at a coy of Rs.36 lacs. The unit started its commercial production on 16/07/2005. The chicks hatched from this unit are being sold to the customers. Besides this, the Company his also operates a hatchery at Kollam on lease basis. The cost of the Dharmapuri unit is met from the internal sources and subsequently reimbursed from Syndicate Bank as Term Loan. NEW PELLET PLANT: The Company has installed a new pellet plant in feed history premises at a cost of Rs.132 lacs to produce the pellet feeds for cattles. The new pellet feed plant is installed with modern technologies and facilities such as auto hatching and auto bagging etc. The project was completed and the plant has started its commercial production on 19/05/2005. The capacity of the plant is 60,000 MTs per annum. The plant is functioning efficiency, effectively and economically. The cost of the plant was met from internal sources and subsequently reimbursed from Syndicate Bank as Term Loan. MODERNISATION OF FEED PLANT - UNIT III: This unit was installed during the year 1994-95 with manual feeding of raw materials. Now the company has installed modern auto batching and auto bagging system in this unit. New silos are installed. The capacity of the existing unit has been doubled. The cost of the modernisation is met from the Term Loan from Syndicate Bank and from the internal sources. FEED PROCESSING: The Company has processed 75,463 MTs of pellet cattle feed to The Kerala Cooperative Milk Marketing Federation Limited (MILMA), Palakkad, Kerala and M/s. KSE Limited, Irinjalakuda, Kerala. The Company has received the gross receipt of Rs.334.14 lacs through this process. SKM ANIMAL FEEDS AND FOODS (INDIA) LIMITED: EXPELLER PLANT: The Company has installed 4 nos of Edible Oil Expeller Plants with Dryer to crush oil from oil seeds such as sunflower etc. The cost of the plant is Rs.230 lacs. It has commenced its commercial production during the month of August, 2006. The cost of the plant is met from Syndicate Bank Term Loan and internal sources. BREEDER FARMS: The Company has started the construction of Breeder Farms at Thenkumarapalayam and Salaiyur near Udumalpet, Coimbatore District. The capacity of the farms are 35,000 brooders at Thenkumarapalayam and 33,000 layers at Salaiyur. It is expected to run during the year 2006-2007. The cost of the plant is met from Syndicate Bank Term Loan and internal sources.