MANAGEMENT DISCUSSION AND ANALYSIS REPORT INDUSTRY STRUCTURE AND DEVLOPMENTS The global economic turbulence that continued for past few years was expected to ease off by 2015 with stable and motivated new Government. The Indian economy was under stress and the rupee debrciates sharply. India registered an economic growth of 4.7% in the financial year 2013-14 and 7.5% in 2014-15. Price brssure due to high inflation, fuel cost, a weakening rupee and rising input prices remained major concern for manufacturers. We faced significant strains in our growth rate as the same was in the Industry. But it was clear that edible oils and specially Vanaspati would go through a tough time. We did observe that commodity companies especially in the edible oils sector were losing money. Vanaspati also has been reeling from health related issues within the consumer domain. We also noticed that even amongst our traditional sweet trade there was continuous conversion from Vanaspati to palm oil. Containment of the fiscal and current account deficits in the coming months will provide a cushion to the Indian economy from further volatility. Low household consumption of Vanaspati Products in India due to health conscious, change in pattern of food culture, changing life style, introduction of new models and increasing consumer awareness give tough challenges to the industries to adopt new technologies. A large number of consumer brand loyalty were increasingly affecting the industry. Reserve Bank of India's policy seems to be heading towards creation of a stable, low inflation regime. The Reserve Bank of India (RBI) has started to lower the interest rates as well as increase the liquidity in the economy by taking various initiatives. The RBI has indicated that further monetary actions will be conditioned by incoming data especially on the easing of supply constraints, pass through of rate cuts into lending rates and improved availability of key inputs such as power, land, mineral and infrastructure. Additionally, impact of US interest rates on global capital flows will determine the pace of interest rate cuts. Post the regime change in India's federal Government, there have been firm signals of development agenda and pushing of reforms required to revitalize the economy. The Government has taken measures to revive the economy by modifying FDI policies for various industries, pushing hard for infrastructure spending and towards creating smart cities. Reforms to create flexibility in labour markets, safety net for the unorganized sector and passing of GST to create a common market will go a long way to take the growth momentum to a different level. COMPANY OVERVIEW & OUTLOOK The company's production has been discontinued with effect from 15th July, 2011. The company has obtained license from FSSAI for production. However, due to non clearance by the pollution control Board and non availability of orders from buyers the company could not restart its production. The production or operation procedure includes the use of boilers running on coal consumption which is objectionable to the Municipality & Pollution Control Board. There are various reasons behind decline in production. Even after due effort of the management to sustain in the industry it was not viable to continue with the same business line and the management has to take strong strategic decisions. Your Management is efficient to take the challenges to carry on the smooth operation of the Company with different line of business to take over the market as maximum as possible by utilizing the maximum capacity of the resources of the Company. The management after analyzing the current position of the whole set up of the Company, came across the following situations: 1. Strong pollution norms were also faced by the unit which was very tough to comply with for the management. 2. The demand of the product was so low to reach even the BEP. 3. The factory brmises area is surrounded with School, Official & Residential . building and is densely populated with human inhabitant. It was not practical to continue a large unit with such a densely populated area. In this situation, the management have no way but to shift the existing unit to a new remote suitable area and to diversify the existing unit into a new concept of developing and promoting the area for the fulfillment of demand of the locality and in this regard the Board at its meeting held on 22nd January, 2015 approved the proposed project viz; "Responce City" for building Housing Complex on the Land of the company. The Housing Complex may consists of Residential & Commercial buildings, Amusement Park, Play Ground, Hospital or Nursing Home and School etc. The company may with or without JV complete the project. The company may engage itself into Real Estate Business activity. Your Company continues to implement its strategy to concentrate on its core business activity of manufacturing of edible oil. The company may enjoy the synergy in its core business activity by utilizing its profits earned from the projected business into farming of oil seeds ie. manufacturing of raw-material and re-start manufacturing of Edible oil with use of new & advanced technological instruments at plant proposed to be shifted to a different location in remote village of West Bengal. Our backward bending strategy will continue to motivate agriculture sector in the Country and support farmers for their sustainability & livelihood. This will bring financial reliance and development of farmers and their family and the locality with betterment to the life. Your company also propose to continue its trading business activity to generate revenue. We brsumed our strategy in the best interest of stakeholders and the company. A success to the brsumed strategy may allow us to propose dividend in near future. Your Company is pleased to inform you that the Company has obtained listing & trading approval of its equity share at BSE Ltd. providing ready marketability of securities on a continuous basis adding brstige and importance to the company. This will increase your company's credential and we can borrow from financial institutions easily and also the company can raise additional funds from the public through the new issue market with a greater degree of assurance. The Audited Financial Statements of the Company as on 31st March, 2015 rebrsent Rs.7,60,00,000/- standing to the credit of Securities Premium / Free Reserves and Capital Redemption Reserve Account of the Company and to capitalize such sum and to pass on the benefit to its shareholders of amount lying in Securities Premium and Capital Redemption Reserve, your Company may propose for the issuance of bonus shares. OPPORTUNITIES Increase in disposable income and spending among people with moderate economic growth, leads to higher propensity to consume. We believe in the years ahead one will see more robust growth and therefore more consumption. Further, increase in rural market for product with verity of brands, change in consumption pattern and health conscious among consumers are likely to witness growing demand of quality products in the current years. Also Technological improvements on regular basis are needed to satisfy consumers test & brferences. They tend to look for healthy products when it comes to choosing products for consumption. Newer variants of our products will help the company in getting the attention of consumers who look for healthy lifestyle products that may replace & niche demand for our products. This also requires perfect marketing mix to penetrate product in the market. The company foresee glimpse of opportunity in the Real Estate as The Government has pushed big ticket reforms to provide housing for the masses with the introduction of their policy viz. 'Housing for All by 2022'. In India, the pace of urbanization has not been able to match its peers globally. Approximately 30% of India's population lives in cities as compared to an average 50% globally and 70% in developing nations and substantial portions of this population lives in illegal, shanty towns. The Government expects that half of the population would be shifting to urban cities by 2050. Further the government's initiation of SMART CITY concept is also one motivating factor. THREATS The industry has always been adversely affected by high volatility in prices of major inputs, deficiency of project management capabilities; slow down in government decision making, delays in approval by Authorities and lack of availability of skilled laborers. Natural calamities like poor weather conditions and manmade disruptions like encroachment, disruption of supply chain etc. continue to be a major constraint in the business growth. The major threat being faced are regulatory changes, interest rates hiked by RBI, high inflation etc. The Company is also facing stiff competition to sustain in the market with several brands Safola, Dalda Active, Emami Refined Soyabean Oil, Sunflower and various. The competition became toughest when customer's brand loyalty is considered. RISKS & CONCERNS Risks are inherent in every business and their successful mitigation is necessary to protect profitability. In a highly competitive market, the ability to manage diverse risks determines success for a company. Our Strategic focus on Real Estate sector in India exposes the Company to a vast variety of risks. Your Company's growth and profitability are dependent on the consumer's Life style, consumption habits & pattern along Marketing Strategies. The Company is exposed to several market risks like credit risk, liquidity risk and interest rate risk which are major cause of concern to the Company. INTERNAL CONTROL SYSTEM & ADEQUACY Internal control systems and procedures in the Company are commensurate with the size and the nature of Company's business and are regularly reviewed and updated by incorporating changes in regulatory provisions in order to safeguard the assets and to ensure reliability of financial reporting. The Company has adequate system of internal controls to ensure that all the assets are safeguarded and are productive and being replaced or scrape are sold whenever it considered waste. Checks and balances are in place and are reviewed at regular intervals to ensure that transactions are properly authorized and reported correctly. The internal control is supplemented by an extensive programme of internal audits, review by management, documented policies, guidelines and procedures. The internal control is designed to ensure that financial and other records are reliable for brparing financial information and other data, and for maintaining accountability of assets. HUMAN RESOURCES The Company continues to give priority to its human assets. The Company provides a fair and equitable work environment to all its employees. The Company is continuously working to create and nurture an atmosphere which is highly motivated and result oriented. FINANCIAL PEROFRMANCE The financial performance of the Company for the year under review is discussed in detail in the Directors Report. Your Company's finance function is responsible for correctness of all financial information, timely reporting of business metrics, ensuring complete financial propriety & control, effective risk management, treasury operations and institutional investor relations. The function is organized along with finance teams for each business unit which work within well defined parameters and policies to ensure flexibility, speed and control at the same time. Regular brsentations of audit reports including significant audit findings and compliance assurance along with the implementation status and resolution timelines is made to the Audit Committee of the Board by the internal auditors. Every quarter, the statutory auditors also make a brsentation of the summary of audit issues to the Audit Committee. Cautionary Statement The above Management Discussion and Analysis contains certain forward looking statements within the meaning of applicable security laws and regulations. These pertain to the Company's future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, government policies and actions with respect to investments, fiscal deficits, regulation etc. In accordance with the Code of Corporate Governance approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in the case of data and information external to the Company, no rebrsentation is made on its accuracy or combrhensiveness though the same are based on sources thought to be reliable. The Company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time. For and on behalf of board of directors (Tanmoy Mondal) Managing Director Place : Kolkata Date : 26th day of May 2015 |