RAJ OIL MILLS LIMITED ANNUAL REPORT 2011-2012 CHAIRMAN'S REPORT Hello to all the shareholders and everybody associated with Raj Oil Mills Ltd. 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 industry. 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 the same. 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. Thank You. Shaukat S. Tharadra Chairman & Managing Director