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Universal Starch Chem Allied Ltd Management Discussions

Jul 22, 2024|11:24:00 AM

Universal Starch Chem Allied Ltd Share Price Management Discussions


Hon. Shri. Dadasaheb Rawal was on a world tour where he visited several agro-based industries in America and found a corn refining industry that could be suitable for his hometown. In 1973 he along with his sons started a small 60 Ton/Day starch plant in Dondaicha. Ever since its establishment, the company has successfully enhanced the production capacity of Maize Refining from 60 MTS to 750 MTS per day. Your Company has entered its 50th year of operation and is a leading Producer of Starch based Products in India and has a plant at Rawal Industrial Estate, Dada Nagar, Dondaicha, Dist. Dhule. M/s. Universal Starch-Chem Allied Ltd., Has achieved remarkable milestones during the history of the last 30 years since its incorporation in 1973. The Company has successfully enhanced the production capacity of Maize Refining. The company product range has been successfully expanded to cater for the requirements of various sectors which include; Food, Pharmaceutical, Textile, Paper & Adhesive industries. The collective effort of different teams like Marketing, R & D, Engineering & Production has helped in several of the new product launches. The company was awarded by the Organization of Pharmaceutical Producers of India as the"Best Vendor" in the category of "Excipient Supplier" for the year 1998-99.

Our ownership structure provides us with the stability to invest in businesses that we believe in and to support the growth of those businesses over the long term. Our growth has been mostly organic, achieved through investment in marketing, development of existing and new products & technologies, and capital expenditure to improve efficiency and expand capacity.


Opportunity: Today, Like any other sector of the economy, only happy and rewarded employees will be productive employees. After making handsome profit from the starch and animal feed this year, farmers will invest more money in new technologies and hybrid seeds to grow more maize. In the next two years, we expect 30% more farmers will grow maize or will switch from other crops to maize. Since the industry is in expansion mode, there will be huge demand for maize over the next three years.. The major raw material for the Indian starch and starch derivative market is maize and maize-derived starch is the most preferred substitute raw materials, like potato and tapioca, recording a high and efficient yield, along with high availability in all the seasons of India. The Indian starch and starch derivatives market is competitive in nature having a large number of domestic and multinational players competing for market share. Modified starches are used for functions such as thickening, stabilizing, binding, and emulsification. Apart from food products, it is also used in a wide range of non-food applications and the animal feed industry.

Threats: - The industry faces major threats on the raw

material front as Maize being basic raw material, which is an agriculture produce. The availability and price of Maize remain very volatile as its production/cultivation is subject to natural vagaries. The industrys raw material being agricultural in nature is subject to price fluctuations as well as production uncertainty. The industry is also faced with challenges like growing competition in the sector. The price of Maize and all other input costs may go up further in view of monsoon, which may affect the margins of the industry. A few reasons for dampened growth include volatile raw material supply, the competitive need for bio-energy as well as the relationship between oil prices and agricultural raw materials. The main reason why the good potential for corn starch in India remains untapped is because there is a legal restriction related to the use of modified starches in the country.

Risk and concern:- The Company identifies all type of risk at an early stage which helps it to control them better. The risks are normally perceived from Price fluctuation, government policies, market competition, and retention of manpower. Following are the main risks associated with the Starch Industry 1. Risk relating to increased competition in Starch Industry , 2. Risk relating to decrease in demand , 3. Risk relating to scarcity/ quality of raw materials, 4. Geographic presence is required for growth, 5. Change in environment regulations. A few reasons for dampened growth include volatile raw material supply, the competitive need for bio-energy as well as the relationship between oil prices and agricultural raw materials.


The Company has in place adequate internal control systems and procedures commensurate with the size and nature of its business. These systems and procedures provide reasonable assurance of maintenance of proper accounting records, reliability of financial information, protection of resources and safeguarding of assets against unauthorized use. The Company has appointed a firm of Chartered Accountant as Internal Auditors and has an effective internal control system to ensure that all the transactions are properly executed and recorded. The internal auditors conduct audits of various departments based on an annual audit plan. The planning and conduct of internal audits are oriented towards the review of controls in the management of the companys activities. The internal auditors report significant audit observations to the Audit Committee of the Board of Directors. The committee meets at regular intervals during the year to review audit observations and follow-up implementation of corrective actions. The committee also discusses with the companys statutory Auditors to ascertain their views of adequacy of internal control systems in the Company. The Committee submits its observations to the Board of Directors.


We live and breathe our values through the work we do every day, from investing in the health and safety of our employees, to promoting diversity and respecting human rights. Our values are respecting every ones dignity, acting with integrity, progressing through collaboration

and delivering with diligence. Various HR initiatives are taken to align HR policies to the growing requirements of the business. The Company has strengthened the deployment of high quality employees in key functions, through continuous in-house training and development programmes. The Company firmly believes that in-house human capital development will see organizations through success in todays highly competitive global environment. The companys continuing focus on human resources will help it to create and retain critical skills and scale up to meet the market demand. During the year under review, the industrial relations with the workman at various units of the company were by and large peaceful and cordial.


Your Companys Total Sales and Other Income for the year amounting to Rs. 51575 Lacs as compared to Rs. 45645 Lacs of last year. The profit before tax for the year under review stood at Rs. 809 Lacs as compared to profit of Rs. 1579 Lacs in 2021-2022.


The market is majorly driven by the abundant availability of raw materials from which starch is derived, low production costs incurred by the manufacturers, and the presence of many new players in the market. Also, the market is highly impacted by the export-import factors, which add high value to the revenue. Due to high production and less consumption of starch and starch derivatives in India, exports contribute, to a larger extent, to the growth of the market studied. In addition, the functional properties possessed by starch derivatives have also been instrumental in promoting their use in the pharmaceutical, cosmetic, and bioethanol industries.


The Company is engaged in developing, manufacturing, and distributing Maize Starch Powder, White Dextrin, Pregelatinized Starch, Modified Starch, Liquid Glucose, Dextrose Syrup, Dextrose Monohydrate, Dextrose Anhydrous, Maize Germ, Maize Glutton, Maize Husk as its bye products in the market.

The Total Sales of the Main products and Bye products of the company is Rs. 51,077 Lacs as compared to Rs. 45,156 Lacs for the previous year.


Statements in this respect of Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, or predictions may be forward looking statements within the meaning of applicable security laws or regulations. The actual results could differ materially from those expressed or implied, depending upon economic conditions, changes in Government regulations and policies, demand, supply and price conditions, political and economic developments within and outside the country and various incidental factors. The Company assumes no responsibility to publicity amends, modify or revise any forward looking statements on the basis of any subsequent developments, information or events. Management continues monitoring the material changes due to the said Pandemic and taking necessary measures accordingly to address the situation, the Company cannot guarantee the accuracy of assumptions and performance of the Company in the future. Therefore, the actual results, performance, or achievements could thus differ materially from those projected in any such forward looking statement. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statement, on the basis of any subsequent development, information or event.

Investors are cautioned that this discussion contains forward looking statement that involve risks and uncertainties including, but not limited to, risks inherent in the Companys growth strategy, dependence on certain businesses, dependence on availability of qualified and trained manpower and other factors discussed. The discussion and analysis should be read in conjunction with the Companys financial statements and notes on accounts.

For and on behalf of the Board of Directors
Universal Starch Chem Allied Limited
Place: Mumbai Jitendrasinh J. Rawal
Date: 12th August, 2023 Chairman & Managing Director

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