Venkys (India) Ltd Management Discussions

1. Industry Structure and Development :

During the year 2023-24, the global economy demonstrated resilience, inspite of various headwinds like geopolitical conflicts, rise in inflation and hardening monetary policy by various central banks. Global economy posted a growth of around 3.2%, while the advanced economies have grown by 1.6% which can be seen as a reasonably satisfactory trend.

Due to geopolitical tensions, the supply chain faced frequent difficulties in the Middle East and Red Sea regions which have disrupted international trade and global supply chain in the form of sharp increase in freight rates and shortage of container availability. However, with the gradual decline in global inflation, economic activities have started recovering in the current year.

As far as Indian economy is concerned, it is interesting to note that India is one of the fastest growing economies in the world, surpassing country like United Kingdom and has become the 5^th largest economy in the world. It is estimated that the Indian economy achieved a growth rate of 7.6% in the year 2023-24. Various initiatives adopted by the Government of India and the Reserve Bank of India have resulted in strong economy, protecting the country from high global inflation. As far as poultry sector is concerned, after facing challenges in 2023 due to high feed prices and subdued realisations, there are signs that a steady recovery is possible as the consumption of poultry products is expected to grow steadily.

2. Opportunities, Threats, Risks and Concerns :

Like in the past, the poultry sector is expected to continue to grow in the coming years. The National Institute of Nutritions recommended level of 180 eggs and 11 kgs. of meat as per capita consumption is providing ample scope for the future growth, since the present per capita consumption is only 91 eggs and 4.9 kgs of meat. From affordability point of view also, poultry meat and eggs are available at very competitive rates as compared to the other alternatives. Several entrepreneurs are investing regularly in the poultry sector with an aim to create high level of infrastructure to meet the ever growing market for poultry products. On the other hand, though the processing segment is growing steadily, cold storage capacities in large scale in all the zones are not adequately available. For the poultry sector, frequent increase in feed prices and intermittent fall in realisations are seen as the main risk factor.

3. Segmentwise Performance: a. Poultry and Poultry Products

The Companys major business segment is Poultry and Poultry Products which consist of production and sale of day old broiler and layer chicks, specific pathogen free eggs, processed chicken products and poultry feed. In the financial year 2023-24 this segments turnover was Rs. 1,755.29 Cr. as compared to Rs. 1,751.65 Cr. in the previous year. The segments profit before tax and interest was Rs. 47.45 Cr. as compared to Rs. 0.54 Cr. in the previous year.

b. Animal Health Products

The Company has its animal health products manufacturing facility at Pune. This segments sales turnover was Rs. 310.05 Cr. as compared to Rs. 290.02 Cr. in the previous year. Profit before tax and interest was Rs. 68.27 Cr. as against Rs. 59.82 Cr.

c. Oilseed

Oilseed segment registered a sales turnover of Rs. 1,777.87 Cr. as compared to Rs. 2,307.86 Cr. in the previous year. Profit before tax and interest was Rs. 24.93 Cr. as against Rs. 58.74 Cr. in the previous year.

4. Outlook

Looking forward, Venkys expects to perform better in the current year 2024-25, supported by its strong infrastructure and production capabilities along with a diversified product portfolio in the poultry sector. We are confident of overcoming the challenges and seize opportunities and unlock long-term growth. We are well positioned to drive sustainable progress and achieve better profitability backed by strong manufacturing capabilities and strong balance sheet. Our confidence is further based on the predicted normal monsoon for the current year which should result in improvement in rural and urban economies.

5. Internal Control Systems and their adequacy

The internal control system is designed to ensure that all the financial and other records are reliable for preparing financial statements and for maintaining accountability of the assets. The Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition and that transactions are authorised, recorded and reported correctly.

Commensurate with the size of operation, your Company has Internal Audit department which continuously reviews the internal control system by an exclusive programme of Internal Audit. The significant findings are then discussed by the Audit Committee of Directors and corrective measures are initiated. The Audit Committee also monitors the implementation of recommendations made by it.

6. Discussion on Financial Performance with respect to Operational Performance:

The Companys turnover registered a decline of 11.56% at Rs.3,777.39 Cr. as compared to

Rs. 4,271.36 Cr. in the previous year. The Company registered an increase of 12.18% in profit at Rs. 79.07 Cr. as compared to Rs. 70.48 Cr. in the previous year.

The Company had no long term borrowings as on 31.03.2024. The short term borrowings of the Company during the year decreased by 9.69% from Rs. 185.49 Cr. to Rs. 167.51 Cr. Finance cost of the Company also decreased from Rs. 18.48 Cr. to Rs. 18.18 Cr.

Keeping in view liquidity, returns and also safety, the Company has invested certain funds in bank deposit and debt/liquid schemes of mutual funds.

7. Material Development in Human Resources

/ Industrial Relations front, including number of people employed:

In line with VH Groups corporate philosophy, the Human Resource is considered as the most valuable resource in the Company. The focus is on developing a performance culture with high standards of efficiency and innovation. Employee relations at all levels continue to remain cordial. As on 31^st March, 2024 the Company has 5,138 employees.

8. Details of Financial Ratios

Details of significant changes (25% or more) in key financial ratios along with detailed explanation for such change as compared to the previous financial year: