svc superchem ltd Management discussions

FORWARD - LOOKING STATEMENTS

SVC Industries Limited, a Bombay Stock Exchange listed Company, was incorporated on August 29, 1989. The Company became public limited company on 4th January 1993 to set up, 2nd of its kind, Purified Terephthalic Acid (PTA) manufacturing plant in India. The Mathura (Uttar Pradesh) based plant could not continue production due to various reasons, and later with its capacity turning unviable and technology evolving, the project was shelved in 2018. Now, to harness the plants vast land and the available utilities, the Company has decided to enter new ventures such as Mega Food Park, Integrated Logistic Park and Warehousing facilities. To this end, the Company changed its name from SVC Superchem Limited to SVC Industries Limited on 13th August 2017 and its objects on 14th Match, 2018. The Mega Food Park activities, in joint venture with a Co-Investor and an experienced industry player, had taken off with the Co-Investor receiving an In-Principal Approval from Ministry of Food Processing Industries, Government of India on 21st December 2017 to set up a processing. Further, the Strategic Investor of the Company has received a proposal for setting up of Mega Food Park as provided under the Mega Food Park Scheme Guidelines issued by Ministry of Food Processing Industries, Government of India. Strategic Investor of the Company has received "Final" approval on dated 28.01.2019 of the competent Authority for establishment of Mega Food Park at Village Bhadawal, Chhatta, Chatta-Barsana Road, District Mathura, Uttar Pradesh.

Due to delay on the part of State Government Authorities and Mathura Vrindavan Development Authority (MVDA) in granting requisite permission for the Food Park, the Ministry of Food Processing, Government of India has withdrawn its earlier permission for setting up of the Food Park on Companys land. The SPV has filed fresh application for license for setting up the Food Park. In view of delay in implementation of this project due to regulatory reasons and due to unforeseen Covid-19 pandemic, the SPV and the company have agreed to keep land lease agreement between them in abeyance until clarity in the matter.

SVCs Business Framework

SVCs agri-business team took up the challenge of bringing post-harvest losses in the district of Mathura to an inconceivable figure of ZERO. While we understand that it is scientifically and physically impossible, we are still determined to work towards the same and make it a reality. We are working on achieving this through the following steps:

1) Study the soil, weather and anthropology of the district to understand the crops that grown here traditionally.

2) We are then studying the demand of the nearest consumption centers close to the SVC Agro Processing Zone in this case namely New Delhi NCR region and the denses populated towns of bordering states of UP, Haryana and Rajasthan.

3) Once we have studied the demand and supply, we have identified the gap the necessary post-harvest infrastructure will be created through cold store, dry store, scientific storage and crop wise processing units.

4) In the event where the processing units are not satisfied with the raw material available in the catchment area, we through our DEMO FARMS work with the farmers to improve the quality of the product by providing the farms the right scientific intervention in terms of the right seeds, weather monitoring data, timely intervention for soil health etc.

5) After the produce is processed the food/non-food forward linkage is put in place for these processing units or farmers to directly sell to these entities.

This process ensures that farmers get the right price of the produce, the processors get the right produce for processing and consumers get a well-priced high-quality product for consumption and role of the middle men is marginalized and inefficiencies are also reduced and brought down significantly. We are applying this model for the wheat, paddy, potato mustard crops of the district.

OPPORTUNITY AND THREAT

The opportunities in Agri processing space in India are immense. If we can solve the problem of post-harvest loss, through our model, in one district similar models can be set up in the other 74 districts of UP and may be in the time to come in the remaining 691 districts of India.

Packaged food and fast-food consumption in India is expected to grow to 156 USD Billion by 2026 from the 33.33 USD Billion it was in 2020. The crops in our district are directly or indirectly utilized in all packaged food consumption of the country, hence there is dire need to reduce post-harvest losses and increase processing and packaging for a growing population.

UP is the most populated state of India and an Agro Processing unit if designed and run properly and efficient will have no shortage of clients to purchase the processed food and non-food items.

As far the threats climate change is the first one which stands out which is causing some level of existential threat to various food and agro processing industries this must be addressed scientifically. We also have a drive towards healthier eating habits which may see a decline in consumption Wheat, Paddy, and Potatoes. The space is also overcrowded by processors so often we are faced with a buyers market syndrome where the buyers significantly squeeze the profitability from the sellers. Since the products which we deal with are Essential Commodities in the hyper connected country like India where the prices of Essentials like Wheat, Edible oil and vegetables are tracked every day, the minute the crops come under price speculation by international and domestic traders the government executes the Essential Commodities Act where processes are not allowed to store crops more than their processing unit capacity. Hence they not the loose the profitability which they have gained while buying their raw material on low prices during harvest season.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established an appropriate system of internal control to ensure that there exists a proper control over all the transactions and that all its assets are properly safeguarded and not exposed to risk arising out of unauthorized use or disposal.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

Relation with the employees remained cordial in general throughout the year. Employee strength is as per the company in view of new business development during the year.

For and on behalf of the Board

Suresh V. Chaturvedi Director (DIN:00577689)

Place: Mumbai.

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Date: 28 July, 2023