AVT NATURAL PRODUCTS LIMITED
ANNUAL REPORT 2009-2010
ADDRESS BY Mr. AJIT THOMAS. CHAIRMAN AT THE 24th ANNUAL GENERAL MEETING OF
THE SHAREHOLDERS OF THE COMPANY TO BE HELD ON 9th SEPTEMBER 2010.
Ladies and Gentlemen,
I have immense pleasure in welcoming you all to the Twenty Fourth Annual
General Meeting of your Company.
The Directors' Report to the shareholders and the audited accounts of the
Company for the year 2009-10 have been with you for some time and with your
permission, I shall consider them as read.
Operations and Performance:
2009/10 Profits dropped by 7.12% as compared to previous year. Profit After
Tax was Rs 6.52 Crores in 2009/10 as against Rs 7.02 Crores in 2008/09.
Sales dropped to Rs.82.97 Crores in 2009/10 from Rs 87.45 Crores during
previous year. Global slow down coupled with poor monsoon in 2009 adversely
impacted both Sales and Profits.
Spice Oleo Sales and Value Added Beverages Sales were lower due to reduced
global demand. Marigold Oleoresins, key ingredient in Eye Health Care and
your company's main product line was not impacted as demand compression did
not occur in this segment.
Your company experienced margin pressures in all 3 product categories. Cost
push in labour, power and fuel prices coupled with lower product prices
dented the operating margins. With the increase in Agricultural commodity
prices and increase in cost of cultivation, Marigold Farmers are demanding
higher flower prices. Southern India experienced adverse weather conditions
for Marigold crop growing resulting in lower flower output and lesser
volumes through the plant. Thus margin pressures coupled with lower volumes
resulted in 7.12% drop in PAT.
Based on the performance of your company, your Directors have pleasure in
recommending a dividend of 30% on the equity capital absorbing a sum of Rs.
228.43 Lakh for the year 2009-10.
AVT Natural Pte. Ltd., Singapore together with its subsidiary, Heilongjiang
AVT Bio-Products Limited, China has recorded sales of Rs 7.15 Crores and
profit of Rs 20.41 Lakhs in the period ended December 2009 against the
sales of 8.43 Crores and a profit of Rs 9.56 Lakhs during the period ended
December 2008. We expect improved performance in sales and profits of the
subsidiary company in 2010 from our Chinese operation due to increase in
growing areas and higher flower output.
Recognition ofln-house R & D Unit:
The Department of Scientific & Industrial Research, Technology Bhavan,
Under Ministry of Science & Technology has accorded its recognition to the
in-House, R&D facility of your Cochin plant.
The Company had set up a windmill project 600 KW in Erode District, Tamil
Nadu. The wind mill has started its commercial operation with effect from
27th September 2008. The wind mill has generated 13.70 Lakh units in the
year 2009-10. This output is as per our projections.
Closure of Plant:
During the year 2009-10, the company had closed its plant located at
Hindupur. The said plant which was processing various grades of marigold
flower, cultivated in and around that area and that the plant was running
only 4 to 5 months a year depending on the flower arrival.
With the introduction of the Hybrid seeds at Sathyamangalam and Hassan
cultivation area, the company was able to meet its requirement of
'Xanthophyll' from these two areas. The Hindupur plant was set up in a
lease hold land and its lease period had already expired, is being vacated
by your company.
The 'Critical Global Strategic Partnership Agreement' signed with Kemin
Health, L.C. (Kemin), Des Moines, Iowa, USA last year for supply of
Marigold Oleoresin is progressing as planned. Future volume of this product
is expected to register around 5 to10% annual growth rates. Kemin and AVT
are working together in further strengthening the Lutein (Eye care
ingredient from Marigold Oleoresin) supply chain in anticipation of the
emerging global competition. Kemin is working closely with AVT to expand
their product range in the Functional Food space based on agricultural raw
materials from India and China.
Another Eye Health Carotenoid - Zeaxanthin - is exclusively grown and
extracted by your company for Chrysantis, Chicago, USA. Chrysantis holds a
patent for their hybrid seeds containing Zeaxanthin. This new molecule in
Eye Health holds promise for future growth.
Spice Oils and Oleoresins demand is bouncing back with the start of the
global economic recovery. Your company will continue its focus on 'niche
food safe' platform to increase the sales. The importing countries' thrust
on Food Safety will result in higher sales for this product group in future
Value Added Beverages - Decaffeinated Teas - will grow at a faster rate
with addition of more customers and higher volumes. We expect to fill the
second extraction plant volumes during next 2 to 3 years. Instant Teas is
another product we are focusing on.
2010 Crop Season is progressing well. Good summer showers and timely rains
from South West Monsoon are helping the crop growth. We increased flower
prices to meet the expectations of Farmers. We strengthened the
Agricultural Operations Management systems. To mitigate risk of single
season, your company now cultivates in Monsoon season in two more
geographies as well apart from traditional summer areas. Thus we expect
good flower output during 2010-11, thereby ensuring higher capacity
utilization of the plant.
Before concluding, I wish to take this opportunity to express my sincere
gratitude to our esteemed customers for their continued support.
I would like to place on record my sincere thanks and appreciation to my
colleagues on the Board for their invaluable guidance. I would like to
thank all our shareholders, customers, farmers, bankers, suppliers and
other stake holders for their continued support to the Company.
I acknowledge the contribution and dedicated efforts of our team of
employees at all levels in the organization.