Uniphos Enterprises Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT:

The Company is engaged only in trading.

The Company operates in a single segment, viz. trading. During the year, the Company traded in agro commodities totaling to Rs. 3,200.27 lakhs.

The Company continues to look at new opportunities of trading.

The revenue of the Company is from trading activities, the Companys revenue is also from other income consisting of dividend on equity shares, mutual funds and interest on bank fixed deposits. The financial asset of the Company is mainly investment in listed security and accordingly, any material volatility in the capital market may impact the market value of the investment.

Key business risks perceived by the Company and mitigating initiatives are as under:

Funding risk:- As there are only trading activities in the Company, the Company may not be able to mobilize adequate funds, if any, in time. The mitigating factors are that the Company has good investment in the quoted shares, so raising additional funds, if any, will not be difficult for the Company.

Regulatory risk:- Any change in Government / Regulators Policy / Rules / Regulations will require fresh compliances. The mitigating factors are that the group has very strong and dedicated team consisting of professionals to study regulatory changes and fresh requirement.

Foreign currency fluctuation risk: - The Company is engaged in the trading activities, which may subject to risk of less profit / loss on account of volatility in foreign currency exchange. The mitigating factors are that the management ensures to enter in trading transactions in such a way that there are minimal risks of volatility in foreign currency exchange or the Company may take adequate forward cover for foreign exchange fluctuations.

Cyber Security Risk:- The Company is subjected to risks associated with IT and cybersecurity related to dealing with cybercrime, theft of sensitive information. The mitigating factors are that the group has Best-in-class IT Infrastructure and IT security systems that has established robust firewalls and disaster recovery mechanisms. Perpetual event monitoring, implementation of suitable access controls, continuous improvement on IT Infrastructure and Cybersecurity and educating the entire group on safe behaviour and practices are regularly undertaken.

Trading business Risks: The Company is engaged in the trading business of various items viz., agro commodities, metals, chemicals etc. The Company does business directly in the market through contractual arrangements with suppliers and customers, i.e., deals in market are done through sale and purchase contracts at pre-determined rates and quantities, with small tolerance, with the help of market intermediaries. There can be risks on unfulfillment of contractual terms by suppliers or customers such as non-delivery, late / short delivery, quality issues, etc., from supply side and non-payment from customer side. The Company also does business on MCX Commodity platform, i.e., deals are done on MCX platform through intermediary registered with MCX/SEBI. The deals are only done when there is difference between the spot rates and future rates based on the available future contracts at MCX.

The Company has established and maintains internal control systems and internal financial controls commensurate with the size, scale and complexity of its operations, comprising policies, procedures and segregation of duties across key financial, operational and compliance processes to ensure transactions are duly authorised, recorded and supported by appropriate documentation. These controls are reviewed periodically by management and the internal audit function (currently outsourced to M/s. Shah A P & Associates, Firm Reg. No. 157129W). Significant findings and recommendations are reported to the Audit Committee and tracked to closure. The report prepared by internal audit team forms the basis of utilization by the Managing Director and Chief Financial Officer for financial reporting as required under Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Company complies with applicable Accounting Standards and maintains accounting records in accordance with generally accepted accounting principles in India, which together support the preparation of reliable financial statements. Based on assessments from management and the internal auditor, the Board is satisfied that the internal control framework, including controls over financial reporting, is adequate and operating effectively for the current business environment.

During the year, the Company traded in agro commodities totaling to Rs. 3,200.27 lakhs as compared to 11,151.13 lakhs in the previous year. Other income was Rs. 2,522.94 lakhs as compared to Rs. 611.83 lakhs in the previous year. The Company has earned profit of Rs. 2,071.09 lakhs after tax as compared to profit of Rs. 27.83 lakhs in the previous year. The increase in the other income and profit was due to higher declaration of dividend by UPL Limited of 300% in the current year as against 50% in the previous year.

The relationship with the employees continued to be cordial throughout the year.

This has been dealt with in the Directors Report.

This has been delt with in the notes to the financial statements. Refer note no. 36 of the notes to the financial statements.

Certain statements in this section relating to estimates, projections and expectations may be forward looking within the meaning of applicable laws and regulations. The actual results could differ materially from what the directors envisage in terms of the future performance and outlook. The factors that may affect the performance of the Company will be drought or shortfall in rains, change in government policies, tariff barriers, delay in registrations, changes in local and overseas markets and the related factors.