RAJ OIL MILLS LIMITED
ANNUAL REPORT 2011-2012
Hello to all the shareholders and everybody associated with Raj Oil Mills
The Board and the management of the company are presenting the Annual
Report 2011-2012 to all of you. I have mixed sentiments to be shared with
you on the performance of the company. We did not do well as expected in
the last financial year. While there are genuine reasons both industry and
economy driven, there are also company based actions which had impact on
the performance due to non commencement of units in southern region.
The dollar going extremely adverse, the resultant shift in supply chain and
timing created a sudden adverse situation for a lot of companies in the oil
industry. The shift witnessed in terms of increased movement of palm oil
due to consumer price sensitivity also impacted the markets. Delayed
deliveries of crude and impact on pricing were contributing factors not
only affecting sales but also affecting the bottom line.
With the monsoon being below expectation this year we see a year of
churning and consolidation in the industry. There is definite possibility
of turmoil, changes even in the organized sector. Shift to palm is likely
to manifest in the coming year or two.
With four major states producing groundnut and the coastal areas of palm
cultivation not getting the requisite rain the likely hood of imports
becoming substantial over the last year cannot be ruled out. FASSI
implementation is a welcome move towards taking the right steps in making
good quality and unadulterated or mixed oil available to the customers. We
do hope it will not only be a requirement but will be strongly enforced in
what is likely to be a year where consolidation will happen further in the
Raj Oil Mills Ltd had a below expectations year in turnover but this year
we will move out from the shortcomings on the turnover and returns. Your
GDR for 20 mn USD has been approved and we have successfully issued GDRs
worth USD 7.5 mn in the markets. These will help us to spread our scale of
operations nationally and internationally.
Specific attempts have been implemented successfully in the company to
reduce the interest burden by restructuring the working capital mix.
Deferment of some financial liabilities thereby allowing to grade the
payouts with and in tandem with a market expansion plan.
We have seen the turnover drop down significantly in the last year, Rs. 341
Crores from Rs 469 crores in FY 2010-2011. For the first time we have seen
operating and cash losses and this year we resolve to undo the effects of
the last year and go beyond.
Try and contain passing on increasing in prices of crude inputs ,
transportation to the end customers has cost the company in terms of
volumes and value but we will continue to keep such increases to the
minimum. Due the uncertainty in USD $ rates and insufficient feed stock
there were substantial delays in the sourcing of oil leading to non
operations of the refinery and its impact on the overall operations has
been perceptible and worrisome.
There is going to be a major shift in the management style for driving
growth at Raj Oil Mills Ltd. The decision making and implementation will be
substantially handed over to the management team and the BOD will involve
itself more in policy decisions and interacting on the strategy.
IT initiatives, changes in financing to reduce cost of capital and paving
the way for strong managerial initiative we believe will help us move
rapidly for generating growth. There is a plan of action to recover lost
ground last year and move beyond. The team at Raj Oil Mills have their work
cut out for them and will have to definitely bend their backs and make the
effort which has commenced but needs to be sustained.
Change is a continual process and we must always be ready to move along the
times and plan for the future. I feel that space and room to prove
capabilities must be provided and hence I am planning to share some
responsibilities and activities with a few changes in the Board and
Management in future.
Finally and most importantly, I thank the shareholders who have reposed
faith in Raj Oil Mills Ltd. You have always stood by us in all our
endeavors; I on behalf of the Board individually and severally acknowledge
your support. I take this opportunity to also assure you of a strong and
robust performance by Raj Oil Mills Ltd. We had planned a robust business
plans at both domestic and international levels which have been pending and
I look forward to actioning them during this year.
The industry has capacities for good growth; Raj Oil Mills Ltd envisages
A long standing brand has to be enriched and a legacy to be built upon and
taken strongly forward.
With the best wishes of all associated with us, I see us achieving the
expectations from the customers and the industry as alongterm player in the
times to come.
Shaukat S. Tharadra
Chairman & Managing Director