1. INDUSTRY STRUCTURE AND DEVELOPMENT: ECONOMY & MARKETS:
The Economic Survey 2016-17 forecasts a growth rate of 6.75 to 7.5 per cent for FY18,
as compared to the expected growth rate of 6.5 per cent in FY17. Over the medium run, the
implementation of the Goods and Services Tax (GST), follow-up to demonetisation, and
enacting other structural reforms should take the economy towards its potential real GDP
growth of 8 per cent to 10 per cent. Indias consumer confidence index stood at 136 in the
fourth quarter of 2016, topping the global list of countries on the same parameter, as a
result of strong consumer sentiment.
Demonetisation has had short-term costs in the form of slow growth but holds the
potential for long-term benefits. Long-term benefits include reduced corruption, greater
digitalisation of the economy, increased flows of financial savings, and greater
formalisation of the economy, all of which could eventually lead to higher GDP growth,
better tax compliance and greater tax revenues.
Indias gross domestic product (GDP) grew by 7 per cent year-on-year in
October-December 2016 quarter, which is the strongest among G-20 countries, as per
Organisation for Economic Cooperation and Development (OECD) Economic Survey of India,
2017. According to IMF Indian economy is expected to grow at 7.2 per cent during FY
2016-17 and further accelerate to 7.7 per cent during FY 2017-18.
The tax collection figures between April 2016 and January 2017 show an increase in Net
Indirect taxes by 16.9 per cent and an increase in Net Direct Taxes by 10.79 per cent
year-on-year, indicating a steady trend of healthy growth. The total number of e-filed
Income Tax Returns rose 21 per cent year-on-year to 42.1 million in 2016-17 (till
28.02.17), whereas the number of e-returns processed during the same period stood at 43
million.
Corporate earnings in India are expected to grow by over 20 per cent in FY 2017-18
supported by normalisation of profits, especially in sectors like automobiles and banks,
while GDP is expected to grow by 7.5 per cent during the same period, according to
Bloomberg consensus.
India has retained its position as the third largest startup base in the world with
over 4,750 technology startups, with about 1,400 new start-ups being founded in 2016,
according to a report by NASSCOM.
Indias labour force is expected to touch 160-170 million by 2020, based on rate of
population growth, increased labour force participation, and higher education enrolment,
among other factors, according to a study by ASSOCHAM and Thought Arbitrage Research
Institute. Indias foreign exchange reserves stood at US$ 366.781 billion as on March 17,
2017 as compared to US$ 360 billion by end of March 2016, according to data from the RBI.
INDUSTRY OVERVIEW:
The Indian food industry is poised for huge growth, increasing its contribution to
world food trade every year. In India, the food sector has emerged as a high-growth and
high-profit sector due to its immense potential for value addition, particularly within
the food processing industry.
The food industry, which is currently valued at US$ 39.71 billion!, is expected to grow
at a Compounded Annual Growth Rate (CAGR) of 11 per cent to US$ 65.4 billion by 2018. Food
and grocery account for around 31 per cent of Indias consumption basket. Accounting for
about 32 per cent of the countrys total food market, The Government of India has been
instrumental in the growth and development of the food processing industry. The government
through the Ministry of Food Processing Industries (MoFPI) is making all efforts to
encourage investments in the business. It has approved proposals for joint ventures (JV),
foreign collaborations, industrial licenses, and 100 per cent export oriented units. The
online food delivery industry grew at 150 per cent year-on-year with an estimated Gross
Merchandise Value (GMV) of US$ 300 million in 2016.
Government Initiatives
Some of the major initiatives taken by the Government of India to improve the food
processing sector in India are as follows:
In Union Budget 2017-18, the Government of India has set up a dairy processing infra
fund worth Rs 8,000 crore (US$ 1.2 billion).
Union Budget 2016-17 proposed 100 per cent FDI through FIPB (Foreign Investment
Promotion Board) route in marketing of food products produced and manufactured in India.
The Government of India has relaxed foreign direct investment (FDI) norms for the
sector, allowing up to 100 per cent FDI in food product e-commerce through automatic
route.
The Food Safety and Standards Authority of India (FSSAI) plans to invest around Rs 482
crore (US$ 72.3 million) to strengthen the food testing infrastructure in India, by
upgrading 59 existing food testing laboratories and setting up 62 new mobile testing labs
across the country.
The Indian Council for Fertilizer and Nutrient Research (ICFNR) will adopt
international best practices for research in fertiliser sector, which will enable farmers
to get good quality fertilisers at affordable rates and thereby achieve food security for
the common man.
The Government of India allocated Rs 1,500 crore (US$ 225.7 million) and announced
various measures under the Merchandise Exports from India Scheme (MEIS), including setting
up of agencies for aquaculture and fisheries in coastal states and export incentives for
marine products.
Government of India plans to allow two Indian dairy companies, Parag Milk Foods and
Schreiber Dynamix Dairies, to export milk products to Russia for six months, after these
companies got approval for their products by Russian inspection authorities.
Ms Harsimrat Kaur Badal, Union Minister for Food Processing Industries, Government of
India inaugurated the first of its kind Rs 136 crore (US$ 20 million) mega international
food park at Dabwala Kalan, Punjab. She has also expressed confidence that the decision to
allow 100 per cent Foreign Direct Investment (FDI) in multi-brand retail with 100 per cent
local sourcing condition, will act as a catalyst for the food processing sector, thereby
controlling inflation, uplifting the condition of farmers, and creating more jobs in the
country.
FSSAI has issued new rules for importing products, to address concerns over the entry
of substandard items and simplify the process by setting shelf-life norms and relaxing
labelling guidelines.
The Ministry of Food Processing Industries announced a scheme for Human Resource
Development (HRD) in the food processing sector. The HRD scheme is being implemented
through State Governments under the National Mission on Food Processing. The scheme has
the following four components: Creation of infrastructure facilities for degree/diploma
courses in food processing sector Entrepreneurship Development Programme (EDP) Food
Processing Training Centres (FPTC) Training at recognised institutions at State/National
level FSSAI under the Ministry of Health and Family Welfare has issued the Food Safety and
Standards (Food Product Standards and Food Additives) Regulations, 2011 and the Food
Safety and Standards (Contaminants, Toxins and Residues) Regulations, 2011 which prescribe
the quality and safety standards, respectively for food products.
Spices Board, set up by the Ministry of Commerce to develop and promote Indian spices
worldwide, aims spice exports of US$ 3 billion by 2017.
The Government of India has approved the setting up of five numbers of Mega Food Parks
in the states of Bihar, Maharashtra, Himachal Pradesh and Chhattisgarh. The Government
plans to set up 42 such mega food parks across the country in next three to four years.
2. OPPORTUNITIES&THREATS: OPPORTUNITIES:
Large crop and material base in the country due to agro-ecological variability offers
vast potential for agro processing activities. Integration of developments in contemporary
technologies such as electronics, material science, computer, bio-technology etc. offer
vast scope for rapid improvement and progress. Opening of global markets may lead to
export of our developed technologies and facilitate generation of additional income and
employment opportunities. Social acceptability of agro-processing as important area and
support from the central government. Vast network of manufacturing facilities all over the
country. Vast domestic market.
THREATS:
Unreliable Sales Forecasts:
Market does not develop as quickly as processors predicted or conversely if may develop
too quickly. Each of these situations creates its own peculiar problem to an industrialist
in agro-business. Sales may too low and it may cause serious financial problems or, sales
may be too high and cause bottlenecks in production. If later happens, it will certainly
cause difficulties in purchasing enough products from vendors or suppliers. The issue of
hiring and scheduling of employees, and discussion with customers, who must wait longer
than they expected for your product or service will be a critical issue. Competitors
ability to under-price or, to make product obsolete. Un-favourable industry wide trends
Erratic supply of products or raw materials
Credit Risk:
The product market it volatile and thus the Credit in this volatile market also is very
tight. The Customers expect higher Credit than what is enjoyed by the industry and thus
this risk is un avoidable.
Interest rate volatility:
Fluctuations in interest rates could adversely affect borrowing costs, interest income
and net interest margins of companies in the financial sector.
3. SEGMENT WISE PERFORMANCE:
(a) Your company is in engaged in the business is trading in Agro based products like
Pulses, Grains, Spices, Edible Oil, Agarbattis and Agro Based - Fast Moving Consumer
Goods. The Vision of your company is to a global player in Agro industry and moving
forward to evolve as a pioneer company in Agro and Food industry by running successful
"Speciality Stores" and has a strategic business vision of forward and backward
integrated units.
(b) The Share Holders of the Company at the AGM held on 30th September, 2015 approved
the resolution under Section 2(46), 2(87), 186, 188 and all other applicable provisions of
the Companies Act, 2013, read along with rules thereof, and pursuant to clauses of
Listing Agreement read along with the Companys Policy on Determining Material
Subsidiary and accorded their approval to the Board of Directors of the Company to enter
in to a Share Purchase Agreement with the Shareholders of M/s. Amirdam Food
Private Limited (CIN: U15549TN1995PTC033387) (herein after referred to as
"AFP") to acquire the 100% Paid-up Equity Share Capital along with voting rights
of AFP constituting 12,50,000 Equity Shares at the Book value of Rs. 0.90/- per shares
arrived at on the basis of the Audited Financials of AFP for the FY 2014-2015. The Board
of Directors of the Company acquired 100% Voting Rights in AFP on w.e.f. 01st October,
2015.
However, in the light of the future prospective and competitive environment in the city
like Chennai and due to the operational difficulties of running a Hotel Business in
Chennai, the Board of Directors of the Company was of the opinion to disinvest 100% of the
paid up capital from AFP at a book value of Rs.1.40 per shares arrived on the basis of the
Audited Financials of AFP for the FY 2015-2016. Which was approved by the shareholders as
a Special Resolution vide decleration of results of the Postal Ballot held on 4th
February, 2017 for the Postal Ballot Notice dated 28th December, 2016.
Subsequently the Company disinvested its entire holding in Amirdam Food Private Limited
on 31st March, 2017.
4. OUTLOOK:
Well Qualified and Experienced Management Team:
We have on our management team competent and qualified professional who has vast
experience in the FMCG industry. We believe that their strong technical experience and
industry networks will help us in achieving our key business strategies.
Long Standing Track-record and Established relationships:
The Company has been operating in the said segment from past 3 decades and has a brand
value and long standing track record in terms of relationship with customers and vendors.
5. RISK MANAGEMENT:
The Company has a robust Risk Management framework to identify, evaluate business risks
and opportunities. This framework seeks to create transparency, minimize adverse impact on
the business objectives and enhance the Companys competitive advantage. The business risk
framework defines the risk management approach across the enterprise at various levels
including documentation and reporting. The framework has different risk models which help
in identifying risks trend, exposure and potential impact analysis at a Company level as
also separately for business segments. The Company has identified various risks and also
has mitigation plans for each risk identified. The Risk Management Policy of the Company
is available on our website: www.vitanagroindustriesltd.com.
The Board has adopted the policies and procedures for ensuring the orderly and
efficient conduct of its business, including adherence to the Companys policies, the
safeguarding of its assets, the prevention and detection of frauds and errors, the
accuracy and completeness of the accounting records, and the timely preparation of
reliable financial disclosures.
6. INTERNAL CONTROL SYSTEMS & ADEQUACY:
The Company has implemented a comprehensive system of internal controls and risk
management systems for achieving operational efficiency, optimal utilization of resources,
credible financial reporting and compliance with local laws. These controls are regularly
reviewed by both internal and external agencies for its efficiency and effectiveness.
Management information and reporting system for key operational activities form part of
overall control mechanism.
The Company has retained the services of Independent firms of Professionals to function
as internal auditors and provide reports and effectiveness of internal control measures
are reviewed by top management and audit committee of the Board.
The Company believes that it has internal controls and risk management systems to
assesses and monitor risks. The company has its management team which monitors and manages
risks by monitoring trends that may have an effect on the economic environment and
actively assesses on a routine basis the market value of the Companys loan book. The
Company seeks to monitor and control its risk exposure through a variety of separate be
but complementary financial and operational reporting systems. The Company believes it has
effective procedures for evaluating and managing the market, operationally and other risks
to which it is exposed.
7. DISCUSSION ON FINANCIAL PERFORMANCE:
During the year under review, the Company has earned a profit before Tax &
Extraordinary Items of Rs.12.27/-lacs as compared to previous year Rs. 10.97/-lacs. The
net profit for the year under review has been Rs.12.42 lacs as compared to the previous
year net profit Rs. 7.77 lacs. Your Directors are continuously looking for avenues for
future growth of the Company in Agro and Food Industry.
8. HUMAN RESOURCE:
The Company firmly believes that human resources is an important instrument to provide
proper communication of the Companys growth story to its stake holders and plays vital
role in the overall prospects of the Company. So the Company takes possible steps for the
welfare of its manpower. The employee relationship was cordial throughout the year. We as
on 31st March, 2017 do not have permanent employees on our roll.
By Order of the Board of Directors
For VITAN AGRO INDUSTRIES LIMITED
|
Sd/- |
Sd/- |
|
NAVIN SOMANI KUMAR |
RAKESH SHIVRATAN MISHRA |
| Date : 14.08.2017 |
(DIN: 07887499) |
(DIN:03322090) |
| Place : Chennai |
Managing Director |
Director |
+91-9892691696
