MIHIJAM VANASPATI LIMITED
ANNUAL REPORT 2011-2012
Your Directors have pleasure in presenting 23rd Annual Report together with
the Audited Accounts of the Company for the year ended 31st March 2012.
(Rs. in Lakhs)
FINANCIAL RESULTS 2011-12 2010-11
Sales and Other Income 8711.25 10739.19
Profit before Depreciation, Interest & Tax 398.63 349.68
Less: Interest 213.51 216.91
Profit before Depreciation & Tax 185.12 132.77
Less: Depreciation 143.70 56.76
Profit before Tax 41.42 76.01
Less: Provision for current Tax 8.10 14.14
Deferred Tax 19.57 7.98
Add: Excess provision written back (0.11) (8.18)
Net Profit, transferred to Balance Sheet 13.86 62.07
Balance brought forward from previous year 214.01 151.94
Total Balance carried to Reserve & Surplus 227.87 214.01
The turnover of the Company during the year under review has fallen to
Rs.87l 1.25 lakh as compared to Rs. 10739.19 lakh in the immediately
preceding year registering a decline of 1 8.88%. The profit before tax of
your Company also has decreased from Rs. 76.01 lakh in the FY 2010-11 to
Rs.41.42 lakh in the FY 2011-12 registering a decrease of 45.51%. The
declines in the business turnover and profitability have occurred owing to
the volatile foreign exchange market resulting in the steep increase in the
exchange rates of U.S. Dollar. The international prices of crude palm oil
also increased. Your Company is making every possible effort to preserve
the financial health of the Company and all round containment of costs
including focusing on the products on which the margins are better.
The Company desires to conserve its resources for further restructurings.
The Directors regret their inability to recommend any dividend for the year
RESEARCH & DEVELOPMENT:
Your Company continued to adopt innovative measures in consultation with
industry experts and other allies on a regular basis to provide superior
quality products at competitive cost to its customers and bring in better
efficiencies at its Plant
RURAL AND SOCIAL DEVELOPMENT SERVICE:
In continuity of its belief in the qualitative improvement of the community
in the surrounding tribal areas, your Company continues to support various
social/developmental work and cultural programmes conducted by the local
population including the tribals.
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a
Management Discussion and Analysis, Corporate Governance Report and
Auditors' Certificate regarding compliance of conditions of Corporate
Governance are attached to this report and made a part of the Annual
During the year, Mr. Arup Roy, Director resigned from his post with effect
from 21st October 2011. Your Company expresses its sincere appreciation and
gratitude for his valuable contributions and services during his
association with the Company.
Mr. Vijoy Prakash and Mr. J.S. Mishra will retire by rotation at the
ensuing Annual General Meeting and being eligible, offer themselves for re-
DIRECTORS' RESPONSIBILITY STATEMENT:
As required under Section 217(2AA) of the Companies Act, 1956, your
Directors, to the best of their knowledge and belief, confirm that:
i) In the preparation of the Annual Accounts, the applicable accounting
standards have been followed and that no material departures have been made
from the same.
ii) The Company has selected such accounting policies, applied them
consistently, and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company as at the end of the financial year and of the profit of the
Company for that period.
iii) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting frauds and other irregularities.
iv) The Company has prepared the attached annual Statement of Accounts for
the year ended 31st March, 2012 on a going concern basis.
Messrs. Lihala & Company, Chartered Accountants, Statutory Auditors, will
retire as Auditors of the Company at the forthcoming Annual General Meeting
and being eligible, offer themselves for re-appointment.
The notes to the accounts referred to in the Auditors' Report are self-
explanatory and therefore, do not call for any further comments.
PARTICULARS OF EMPLOYEES, CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNINGS AND OUTGO:
Particulars of employees in accordance with the provisions of Section
217(2A) of the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975, as amended, are not given, as none of the employees
qualifies for such disclosure.
Particulars in regard to Conservation of Energy, Technology Absorption,
etc., required under the Companies (Disclosure of Particulars of the Report
of Board of Directors) Rules, 1988 are set out in a separate Annexure
attached to this report and forms part of it. During the year under review,
we have procured the raw materials (crude palm oil/palm kernels etc.) on
'High Sea Sale Basis' besides direct imports. The details of foreign
exchange earnings and outgo are furnished in the Annexure to Directors'
Your Directors gratefully acknowledge the unwavering support given by the
customers, suppliers, shareholders, employees, the Central Government and
the State Government, banks and all other stakeholders and look forward to
their continued support and encouragement in future. The Directors will
endeavor to make the investment in the Company rewarding in near future.
On behalf of the Board of Directors
Place: Mihijam-815 354 (Jharkhand) Rajesh Agarwal Amit Kumar Agarwal
Date : 29th May, 2012 Managing Director Director
Annexure to Directors' Report:
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings
Conservation of Energy:
a) Energy Conservation measures taken:
1) Avoided energy leakages by regular preventive checks.
2) Regular repairs and renewals/replacements of parts have been done to
preserve steam for\effective and better hydrogenation.
3) Installed stabilizers and other energy saving devices.
b) Additional Investment proposal if any for the reduction of consumption
This is being done on an ongoing basis including installation of new energy
c) Impact of the measures at (a) and (b) for reduction of energy
consumption and consequent impact on the cost of production:
Efforts are being made on regular basis to reduce energy consumption and
consequently achieve reduction in consumption per unit of production.
A. Power and Fuel Consumption:
Unit (KWH) 25,53,800.00 26,40,800.00
Total Amount (Rs.) 96,45,445.00 79,41,816.00
Rate per Unit (Rs.) 3.78 3.01
(b) Own Generation
(i) Through Diesel Generator
Unit (KWH) - -
Units per Litre of Diesel - -
Cost per Unit (Rs.) - -
(ii) Through Steam Turbine/Generator
Units - -
Units per Litre of Fuel Oil/Gas - -
Cost per Unit - -
Quantity (Tonnes) 3,534.42 2,300.42
Total Cost (Rs.) 80,42,928.09 61,51,459.00
Average Rate (Rs.) 2275.60 2674.06
3) Furnace Oil
Quantity (K. Ltrs.) - -
Total Amount (Rs.) - -
Average Rates (Rs. per Ltrs.) - -
4) Other (Briquettes)/Internal Generation
(LPG & Other Gases)
Quantity (Tonnes) - -
Total Cost (Rs.) - -
Rate per Unit (Rs. per Kg) - -
A. Consumption per Unit of Production ()
Production (MT) 15484.1866 18909.3852
(i) Electricity (KWH/MT) 164.93 139.66
(ii) Coal (Kg/MT) 228.26 121.65
(iii) Furnace Oil (K.Ltrs./MT) - -
(iv) Others - -
Research & Development (R. & D.)
1. The Company has not undertaken any expenditure (capital and regular) on
research and development during the year under review.
Foreign Exchange Earnings and Outgo:
(a) Activities relating to export, initiative taken to increase export,
development of new export market for products and services and export
The Company has not entered into the business of export of edible oil as
the internal demand exceeds supply.
(b) Total foreign exchange used and earned:-
(Rs. in Lakhs)
(i) Foreign exchange earned 0.00 0.00
(ii) Foreign exchange used 6154.15 5547.31
(Value of Imports calculated on CIF basis)
MANAGEMENT DISCUSSION AND ANALYSIS
INDUSTRY STRUCTURE AND DEVELOPMENTS:
Indigenous production of edible oil has not been able to keep pace with the
increase in demand. Hence India continues to depend heavily on the supply
of imported edible oils. Accordingly, Indian Vanaspati and Edible oil
business remain exposed to international market trends and Government
policies regarding import. The edible oil industry is one sector in India
that may see considerable reform in the foreseeable future.
During 2011-12 the country has imported over 9.5 million tonne of edible
oils while annual domestic consumption stands at about 13 million tonne.
India is the world's largest buyer of crude palm oil which represents 80%
of its edible oil imports. Higher edible oil purchases driven up total
vegetable oil imports to around 9.3 million to 9.5 million tonne including
8.2 million tones crude palm oil in 2011-12 from 8.8 million tonne last
year. This makes India one of the largest importers of vegetable oils. A
large population and rising household incomes make India a key area of
growth in edible oil consumption.
FINANCIAL AND OPERATIONAL REVIEW:
Despite the overall difficult conditions, your Company has recorded
satisfactory volume of turnover. The gross sales including other incomes
and profit before tax during the year were Rs.8711.25 lakh and Rs.41.42
lakh respectively. The Company has undertaken vigorous efforts to
streamline its operations and to broad-base its product profile for
achieving better net sales realization. This has resulted in reduction in
the cost of production/operations, besides improvement in profitability and
long term sustainability. Due to the volatility in the foreign exchange
market, particularly the steep increase in the exchange rate of U.S.
Dollar, the Company has suffered certain losses in its operations resulting
in the decline in the profitability. The Management has decided to take
steps to hedge the exchange risks by booking forward contracts with the
banks. The Management has also initiated steps to register itself with the
National Stock Exchange for the purpose of risk coverage, by availing of
screen based trading facility including futures and options through
electronic exchange. The Company hopes to do better in the years to come.
OPPORTUNITIES AND THREATS:
The products of the Company are for essential and daily human- consumption.
The per capita consumption of edible oil/fats in India is though on rise
but still at a very low level in comparison to average consumption world-
wide. With growing awareness towards health and rise in per capita income
of the Indian consumers in recent years, the Company perceives a
significant growth in the demand for its products in the years to come.
Further, with broad basing of the products, the Company expects fresh in-
roads in different market segments to have stability in its operations
throughout the year. Thus, the outlook for the sector continues to remain
The threats are perceived mainly from reduced demand in domestic markets
owing to erratic supply on account of unpredictable monsoon conditions in
the palm-kernel growing countries and erosion in purchasing power of the
domestic consumers. The products of the company being price sensitive, any
change in global scenario or change in import duty on raw edible oil may
have significant bearing on cost of production and consequent erosion in
Vanaspati and Refined Oils, being items of essential consumption, will
always be in demand from household as well as institutional segments.
Robust economic growth in the country augurs well for the demand of edible
oil products. While consumption pattern in urban markets has shifted to
refined oils, semi-urban and rural markets consume a mix of Vanaspati,
raw/filtered oils and less expensive refined oils. The demand for Vanaspati
and Refined Oils will continue to grow with increase in population and
RISKS AND CONCERNS:
The Company's brands may not have a pan India visibility. So the major
brands with all India customer base may easily take a march over the
Company's products. But the Company feels that with consistent efforts to
maintain and improve the quality, its brands are well positioned in the
State of Jharkhand which is showing commendable economic activities in the
recent years. Thus, we can surely have a niche in the targeted markets.
Further, the Company has plans to launch new brands in the premium segments
keeping the burgeoning health conscious high end middle class and high net
Location risk may place the Company away from its raw material sources
making its presence unviable. But with the revolution in containerization
of the international trade and the improvements in communication facilities
in recent years the entire world has become a global village. So, sourcing
the raw materials does not pose any problem. Moreover being in a backward
area, the Company gets cheap labour on regular basis. It will also serve
the Government's policy of decentralization of industries to provide
employment to the local population.
INTERNAL CONTROL SYSTEMS:
The Company has adequate internal controls, systems & procedures with
regard to purchase of stores, raw materials including components, plant &
machinery, equipment and other assets and for sale of goods etc. The
Company has clearly defined roles and responsibilities for all managerial
positions and all operating parameters are monitored and controlled. The
Company has internal audit system commensurate with size and nature of its
business. Compliance with laws and regulation etc. are ensured and it is
reported to the Board of Directors in every Board meeting. There is
sufficient Management Information System in place to ensure that the books
of accounts are properly maintained checked and kept up to date, various
consents/licences/permission etc. stand renewed or followed up with the
concerned authorities and various statutory statements/returns etc. are
regularly submitted to different authorities.
The finance and commercial functions have been structured to provide
adequate support and controls for the business of the Company. Standard
operating procedures and guidelines are issued from time to time to support
best practices for internal controls. All financial, operating and
information technology systems are being evaluated from time to time.
ENVIRONMENT & SAFETY:
The Company recognizes the importance of achieving and demonstrating sound
environmental safety norms by controlling the impact of its manufacturing
activities on the environment. The Company's environmental policy requires
compliance with environmental legislations and prevention of pollution and
to make efforts for constant improvements in the environmental safety. The
Company regularly renews Consents under Section 25 of the Water (Prevention
and Control of Pollution) Act, 1974 and under Section 21 of the Air
(Prevention and Control of Pollution) Act, 1981 and Authorization under the
Hazardous Waste (Management & Handling) Rules 1989 as amended from time to
time under Environment Protection Act, 1986.
The Company is making constant efforts to keep the ambience in a pollution
free manner by laying gardens, planting trees and beautifying the precincts
of the factory. Fire-Extinguishers and sand bags are placed at the required
places. Medical facilities/first aid kit etc. is in readiness for the
safety of the employees.
INDUSTRIAL RELATIONS & HUMAN RESOURCE DEVELOPMENT:
The Company firmly believes that the human resources are the most important
resources at its disposal. Constant efforts are being made to interact with
the employees/workers with a view to improving their knowledge, skill and
problem solving capacities. The Company is committed to provide training
opportunities to employees in order to equip them with belle: skills which
enable them to adapt to contemporary technological advancements. Industrial
relations continue to be harmonious thorough-out the year.
Statement made in the Management Discussion & Analysis describing the
Company's objectives, projections, estimates, expectations may be 'Forward-
Looking Statements' within the meaning of applicable securities law &
regulations. Actual result could differ from those expressed or implied.
Important factors that could make a difference to the Company's operations
include global and domestic demand-supply conditions, price fluctuations in
the raw materials, technological changes, changes in government
regulations, tax laws & other statutes, conditions impacting conduct of
business and other incidental factors.