Vitan Agro Industries Ltd Management Discussions.


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.


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.


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.


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.


(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.


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.


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:

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.


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.


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.


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


Sd/- Sd/-
Date : 14.08.2017 (DIN: 07887499) (DIN:03322090)
Place : Chennai Managing Director Director