Vegepro Foods & Feeds Ltd Management Discussions

Industry structure & developments

The company till recently was registered as a Sick Company under Section 3(II)(O) of the Sick Industrial Companies (Special Provision) Act, 1985 with Board of Industrial and Financial Reconstruction (BIFR) in view of erosion of entire net worth of the Company. BIFR had recommended winding up of the Company and had referred the matter to Honble Allahabad High Court for further action. Accordingly the Honble Allahabad High Court passed winding up order and appointed a Provisional Liquidator. The Company preferred an appeal before the Honble AAIFR to set aside the impugned order of the BIFR. AAIFR vide its order dated 21.08.2014 set aside the order of BIFR and discharged the Company from the purview of BIFR. The Company thereafter approached the Honble Allahabad High Court to set aside the winding up order. The Honble High Court of Allahabad vide its order dated 12.05.2015 was pleased to dismiss the winding up order and quashed the appointment of the Provisional Liquidator and handed possession of the Assets of the Company back to it.

The Company is in the process of formulating a revival plan and has started refurbishment of the factory premises and also of the plant and machinery.

Opportunities and Threats

The factory of the Company is situated in an area which is a major wheat and green peas growing area. Given the enormous potential in the food processing sector and the Government support to the industry, the Company is exploring opportunities to enter into this sector.

In terms of threats, the area, being a backward area, does not have good irrigation facilities and hence the threat of uneven/uncertain monsoon is real thereby affecting the crop produce.

Segment-wise or product wise performance

The Company does not have any reportable segment.

Outlook

Given the enormous potential in the food processing industry and the abundant availability of agricultural produce in the vicinity of the factory, the Company believes there are exponential growth opportunities.

Risks and Concerns

The Companys plant is lying closed since fifteen years and the facility has been lying closed for the last several years. Hence it would be a herculean task to restart operations. Furthemore since the Company has very recently been discharged from the purview of the BIFR, but since the networth continues to be negative, availibilty of finance at competitive rates shall be a challenge.

Further more since the area does not have good irrigation facilities, the argicultural produce shall be dependent on the vagaries of nature and uncertain monsoon conditions.

Internal Control Systems and Their Adequacy

Internal control systems are generally adequate.

However, in view of no manufacturing activities, no internal audit has been carried out during the year.

Discussion on financial performance with respect to operational performance

The companys plant capacity remained unutilized during the entire year under review. Cost control measures have been carried out extensively. Expenses which are essential in nature are only being incurred.

Material developments in the Human Resources / Industrial relations front including number of people employed.

The plant is closed as aforesaid since last fifteen years. The company had laid off all its staff and workers at the time of closure of the factory and upon being referred to BIFR. The company is in the process of identifying business opportunities in the area and accordingly manpower recruitment shall be made.

Cautionary Statement

Statement in the Management Discussion and Analysis could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions, changes in Government regulations, fiscal laws and other statutes.