1. ECONOMY & INDUSTRIES OVERVIEW Global economy
Russia- Ukraine war increased the uncertainty and global unrest. It
demolished the growth prospects after the two years disruption caused by COVID &
increased the inflation too. The abnormal increment in the inflation encouraged central
banks to keep on increasing the policy rates, it was like double edge sword where the
inflation & ex- policy rate were inversely proportionate to the growth. On real terms
the current situation is most like a recession where capital expenditure & growth was
at its lowest unless policy rate are seen moving southward.
Indian economy
The GDP of India which was expected to grow during FY23, contracted
& came down to 6-6.5%. Although a business friendly atmosphere and very supportive
policies by the Indian government are available for all the sectors. Higher cost of funds,
lower disposable income & slowdown in developed countries has reduce the GDP in the
range on 6-6.5%.
Nevertheless, India has entered in the club of top 5 economy in the
world & also it is the largest growing economy. Inflation now seems to be under
control, therefore, we may not see further increase in policy rates.
Industry structure & development
Russia-Ukraine war has completely vanished the growth in FY23. The pain
of two years disruption was not yet over and Russian Ukraine war has further demolished
the sentiments of the market. Again MSME,SME and mid corporate are the biggest victim to
bear the higher cost of funds which in turn reduce the margins and puts pressure on bottom
line of balance sheets. However, the cycle of increase in the rate seems to end. Further,
cooling commodity prices may increase the consumption and demand. Manufacturing and capex
may further take forward the industrial activity and in turn may would be supportive for
economic growth.
The banking sector in India has responded in equally to cater the
demand of credit. Commercial banks have reduced their NPAs, deposit growth is tremendous
and the supportive policies of Government further strengthen the balancesheet of banks.
2. OPPORTUNITY ANDTHREATS Opportunity
High rates of interest are working in the right direction to bring down
the prices coupled with all time high production of pulses & food grains. Central
government has been purchasing the farm produce from farmers at MSP in turn farmers are
being benefited with cash in hand. This disposable income is further being spent/invested
in the overall economy. Company is engaged in the core activity of trading in commodities,
a robust availability of farm produce procured by FCI and NAFED shall be disposed in the
forthcoming sales tenders as per government policies.
Threats
Any geopolitical changes especially between Ukraine & Russia, any
policy change by OPEC may change the outlook of crude prices. Energy prices are key to the
price trend of other commodities. A deep slowdown in Europe may affect the global demand
and it may demolish the other economies as well.
3. SEGMENT WISE AND PRODUCT WISE PERFORMANCE
The Company is organized into business units based on its products and
services and has two reportable segments- Agro commodities that including trading in
Pulses, grains, Oil & Oil seeds, Sunflower meal and Steel abrasives that includes
Steel Shots, Steel Grits,, Cut wire shots.
The Board of Directors monitors the operating results of its business
segments separately for the purpose of making decisions about resource allocation and
performance assessment. Segment performance is evaluated based on profit or loss and is
measured consistently with profit or loss in the financial statements. Operating segments
have been identified on the basis of the nature of product / services and have been
identified as per the quantitative criteria specified in the IND AS. The segment reporting
has been prepared in accordance with IND- AS-108 and are made part of this Annual Report
in Notes to Standalone Financial Statements.
4. OUTLOOK
The main outcome of Ukraine -Russia war is inflation, unprecedented
volatility in commodities & higher rates of interest. This is historical proven ,
although the war at frontiers is being fought between the armed forces ofthe countries
involved but the economic and social war is being fought by citizens at large even after
months and years after the war is over. India cant be immune to these challenges, the
population of more than 1.4 billion require food & energy. We have seen disruption in
supply of crude, edible oil & pulses. However the prices of all these commodities had
cooled a lot. The strategy of company to remain conservative and prudent along with the
team of the dedicated employees are keeping company on front to capture the opportunity
that may arise in FY24 especially in Agri commodities.
The non-Agri division of steel abrasive has now been incubated as
healthy profit center to derisk the company from the volatile nature of othercommodities
and also to add good profit margin to the bottom line of company.
5. RISKS AND CONCERNS
Risk management is embedded in your Companys operating framework. Your
Company believes that managing risks helps in maximizing returns. The Companys approach
to addressing business risks is comprehensive and includes periodic review of such risks
and a framework for mitigating controls and reporting mechanism of such risks. The risk
management framework is reviewed periodically by way of various audits, review by Board
and the Audit Committee. Some ofthe risks that the Company is exposed to are:
Financial Risk
The Companys principal financial liabilities, other than derivatives,
comprise loans and borrowings, trade and other payables. The main purpose of these
financial liabilities is to finance the Companys operations. The Companys financial risk
management is an integral part of howto plan and execute its business strategies.
Foreign exchange risk
The fair value or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates. The Company has limited currency
exposure in case of sales, purchases and other expenses. It has natural hedge to some
extent. However, beyond the natural hedge, the risk can be measured through the net open
position i.e. the difference between un-hedged outstanding receipt and payments. The risk
can be controlled by a mechanism of "Stop Loss" which means the Company goes for
hedging (forward booking) on open position when actual exchange rate reaches a particular
level as compared to transacted rate
Commodity price risk
The Company is exposed to fluctuations in price of pulses, grains,
Sunflower Meal and Crude Degummed Soybean Oil (including fluctuations in foreign currency)
arising on purchase/ sale ofthe above commodities. To manage the variability in cash
flows, the Company enters into derivative financial instruments to manage the risk
associated with the commodity price fluctuations relating to all the highly probable
forecasted transactions.
Credit risk
The risk that the counter party will not meet its obligation under a
customer contract, leading to a financial loss. Customer credit risk is managed by each
business unit subject to the Companys established policy, procedures and control relating
to customer credit risk management.
Liquidity Risk
Risk that the Company will not be able to settle or meet its
obligations on time or at reasonable price. The Companys objective is to at all times
maintain optimum levels of liquidity to meet its cash and liquidity requirements. The
Company closely monitors its liquidity position and deploys a robust cash management
system
Equity Price Risk
The Companys listed and non-listed equity securities are susceptible
to market price risk arising from uncertainties about future values of the investment
securities. At the reporting date, the exposure to unlisted equity securities at fair
value was Rs. 1398.07 lakhs as on March 31,2020 (Rs.1,398.07 lakhs as on March 31,2019).
Political and economic environment
Any changes in political and economic scenario of the country will
impact the business of the company. Change in government policies may adversely impact the
business of the company
Regulatory Risks
The Company is exposed to risks attached to various statutes, laws and
regulations. The Company is mitigating these risks through regular review of legal
compliances carried out through internal as well as external compliance audits. The
Company has implemented an enterprise-wide compliance management system, capable of
effectively tracking and managing regulatory and internal compliance requirements.
6. INTERNAL CONTROLSYSTEM ANDTHEIR ADEQUACY
The Company have implemented an internal control framework to ensure
all assets are safeguarded and protected against loss from unauthorized use or disposition
and transactions are authorized, recorded and reported correctly. The framework includes
internal controls over financial reporting, which ensures the integrity of financial
statements of the Company and eliminates the possibility of frauds. The Companys internal
control system is commensurate with its size, scale and complexities of its operations.
The Company has implemented ERP systems with the aim of maximizing
automated control transactions and digitizing all critical control processes. The Company
has an internal control mechanism which is aligned with its evolving needs
The company has appointed Mr. Ganesh pandey (Deputy Manager-Accounts)
as internal auditor. Mr. Ganesh Pandey oversee and carry out internal audit of its
activities. The audit is based on an internal audit plan, which is reviewed each year in
consultation with the statutory auditors and approved by the audit committee. Suggestions,
recommendations and Implementation of Internal Auditors are placed before the Management
and the Audit Committee of the Board of Directors periodically. During FY21, the Audit
Committee was satisfied with the adequacy of the Internal Control systems and procedures
of the Company.
7. DISCUSSION IN FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
PERFORMANCE
Details of financial performance of the company given in financial
statements of the company including Balance sheet, Profit & loss account, Cash flow
statement and other financial information. Further, a detailed discussion on the financial
results is given in Directors report ofthe company. Both, directors report and financial
statements forms part of this Annual Report.
8. FINANCIAL RATIOS
The company has identified the following ratios as key financial
ratios:
| Particulars |
2021-22 |
2022-23 |
Reasons of Significant deviation |
| InventoryTurnover Ratio (Times) |
12.72 |
25.19 |
Ratio improved due to decrease in average
inventory as compared to last year |
| DebtorsTurnover Ratio (Times) |
20.48 |
9.62 |
Ratio decreased due to increase the average
debtors as compared to last year |
| Total Debt / Equity Ratio (Times) |
1.22 |
0.95 |
Ratio improved due to decrease the borrowings.
As compared to last year. |
| Current Ratio (Times) |
1.34 |
1.56 |
No significant change |
| Interest Coverage Ratio (Times) |
1.06 |
0.43 |
Ratio decreased due to increase in interest as
compared to last year. |
| Operating Profit Margin (% terms) |
1.19 |
0.72 |
Decrease in operating profit as compared to
last year has led to change in operating profit margin |
| Net Profit Margin (% terms) |
0.17 |
(0.90) |
Decrease in Net profit as compared to last
year has led to change in Net Profit margin |
| Return on net worth (% terms) |
2.14 |
(9.07) |
Net Loss has led to change in Return on Net
Worth |
9. HUMAN RESOURCES
The business strongly believes that people are the prime assets of the
organization. Your Company continued to focus on attracting new talent, organizing
trainings to help employees acquire new skills, explore new roles and realize their
potential. The company has 32 employees on its payrolls as on 31st March, 2023.
The company has robust HR system and employee-friendly HR policies for the holistic
development of its human resource.
10. ACCOUNTING TREATMENT
The financial statements of the company and its subsidiary are prepared
in accordance with the Indian Accounting Standards (referred to as Ind AS) prescribed
under section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting
Standards) Rules, as amended from time to time. Significant accounting policies used in
the preparation of the financial statements are disclosed in the notes to the financial
statements.
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