srinivasa hatcheries ltd share price Management discussions

POULTRY INDUSTRY – STRUCTURE AND DEVELOPMENT:

India is one among the prominent players in the world market for poultry products. The annual egg production is about 65 billion and broiler meat production is about 3.8 million tonnes. The Country ranks second in egg production and third in broiler meat production in the world. India has one of the largest livestock population in the World and contributes about 4% to the Countrys GDP and 27% to the Agricultural GDP. The poultry industry which forms an important sector in the economy has grown, thanks to good monsoons in the past few years, rising income levels and the resultant impetus to the spending propensity of the consumers.

The industry is labor intensive and employs a large number of rural work force and is a potential provider of gainful employment especially in the rural areas which form the backbone of the Indian economy. Currently it employs sizeable workforce in direct production and rearing operations while an almost equal number is indirectly employed in marketing and distribution activities .The poultry operations are reaping the benefits of innovative practices and technologies. The industry is now more adaptive and well placed to face challenges – be it in the form of epidemics or seasonal vagaries.

OPPORTUNITIES:

The Poultry Industry provides affordable nutrition to all sections of the society in addition to providing succor to millions of people in rural India. Though at a nascent stage, the processed poultry products present a huge space for value additions. Since the Poultry products are nutritious, hygienic and healthy, they have become the most preferred food option for most of the people especially in urban areas.

Buoyed by the changing socio-economic conditions such as rising purchasing power and changing food habits, the countrys poultry sector is expected to grow @ 12% to 15% per annum. The domestic broiler meat demand is expected to grow at 8% to 10% and table egg demand to grow at 4% to 5% in the long term on back of increasing urbanization, rising income levels and rapid growth of Quick Service Restaurants.

RISKS, CONCERNS & THREATS FOR POULTRY INDUSTRY:

The key challenges faced by the Poultry Industry include high feed cost, inefficient marketing system marked by inadequate cold chain and transportation infrastructure, presence of market intermediaries and vulnerability to disease outbreak and highly volatile realisations affecting cash flows.

The major risk area for the industry is on the price front of major inputs, especially the feed ingredients that go into the production of feed. Higher feed costs tend to squeeze the profitability margins of the poultry Companies and farmers as feed costs account for more than one third of the total cost of production.

SEGMENT WISE PERFORMANCE:

The Company has been engaged in two segments i.e., Poultry Operations and Wind Power Generation.

The performance of the Poultry Segment during the Financial Year under review is characterized by contrasting trend i.e., while there has been increase in price realisations in layers, the broiler operations witnessed a drop. On the volume front too, there have been only modest increases. Increase in feed cost and sluggish market conditions for most part of the year have adversely impacted the bottom line of the company.

As regards the Wind Power Operations, the turnover for the year under review was Rs. 2.23 crores as compared to Rs. 2.45 crores in the corresponding previous year. However the loss in this Division has been reduced to Rs. 0.90 lakhs in the year under review from that of Rs. 8.50 lakhs in the previous year.

The inherent strengths of the Company in terms of financial discipline, quality products and responsive service standards are likely to ensure a reasonable performance during the ensuing year.

OUTLOOK:

It is hoped that the Company is expected to perform reasonably good in the current year. However the Broiler market and the egg price are likely to experience volatility in the current year too, as in the previous year, due to imbalances in demand and supply. With a forecast of moderate monsoon, the prices of poultry ingredients are expected to witness pressure which is an unwelcome news for the Company.

INTERNAL CONTROL SYSTEMS :

The Company has established reasonably sound system of checks and controls in all operational areas and at all levels -material procurement, production, marketing and distribution, finance, administration and human resource departments. Internal controls have been evolved in line with the size of the operations and organisational requirements are adequate to protect the enterprise resources. The Company continues its drive to improve on the information and control systems.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT :

The Company has been maintaining cordial relations with all its employees since inception. The Company strives to provide congenial atmosphere to the employees and sets high standards of efficiency and performance. The Company has 499 employees as on 31.03.2015.

for and on Behalf of the Board of Directors

Place : Hyderabad	C.Jagapati Rao
Date : 29.07.2015	Chairman