SANWARIA AGRO OILS LIMITED
ANNUAL REPORT 2011-2012
To The Members of Sanwaria,
Your Directors have pleasure in presenting their report along with the
accounts of the Company for the year ended 31st March 2012.
FINANCIAL RESULTS (Rs. in Lacs)
Net Turnover & Other Income 143315 159203
Profit before depreciation, Interest and Tax 8278 7088
Depreciation & Amortization expenses 590 578
Finance charges 5767 2678
Profit before Tax 1921 3832
Provision for Tax 300 708
Profit after Tax (Before Deferred Tax) 1620 3124
Less/Add: Tax (Deferred) (84) 25
Profit After Deferred Tax 1704 3099
Reserves 20016 20052
Shareholders` Fund 23396 21598
PERFORMANCE REVIEW- OPERATIONAL
Company is making out all effort to ensure that the products developed are
in tune with the needs of the consumers and initiated several steps to mark
its presence in the premium markets, reducing the marketing lag and improve
of the Company`s product are some of the current initiative that are
expected to help the Company to be a cost effective to enable its to meet
the challenges of competitive markets in the future.
During the year Soya Seeds processed stood at 238852 MT. Your Company
sustained to be one of leading player in the Edible Oil sector. The
Capacity Utilization of the solvent extraction plant has been constantly
higher than Industry average.
Production of Refined oil stood at26573 MT during the year under review.
With a view to conserve resources for funding the business expansion plans
of the Company, no dividend on the Equity Shares for the year ended 31 st
March, 2012 was recommended.
Transfer to Reserves
The Board has recommended to transfer of Rs. 200 Lacs, being 11.7% to the
profit earned during the year to the General reserve and an amount of Rs.
1505 lacs out of Current year`s profit is retained in the profit & loss
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed report on the management discussion and analysis provided in
separate section elsewhere in this Annual report.
BRANDING, AWARD AND RECOGNITION
Your Company won many accolades and Crowned with "fastest wealth creators"
award and top with 1st rank by "Motilal Oswal creation study during
(Financial Year 2006-2011)".
Ranked 379th in terms of Net Sales, Ranked 512th in terms in terms of Cash
Profit and 459th in terms of PAT by "Fe 500India`s Finest Companies out
of500 companies ".
Ranked 194th in term of Market Capitalization by "Fe 500 India`s Finest
Companies "out of500 companies.
Ranked 347th in terms of Net Sales, 747th in terms of Operating Profit
,657th in term of Net Profit, 663rd in terms of Total Assets ,755th in
terms Net Worth and 577th in terms of Market Cap by "Business Standard
Ranked at 263rd being "the fastest-Growing mid size Company by Inc. india
magazine" and awarded with 1st position in terms of Top Public Wealth
Creator during tenure of 2007-2010 and Stood in Top 25 Companies in terms
of top line CAGR with 35.6% among the turnover (Topline) range of Rs. 1000
crore to Rs. 1500 crore.
Ranked by "Plimsoll Global Analysis, United Kingdom" at 290th largest
Company in the Global Food Manufacturing industry amongst the World`s top
500 Food Manufacturers and also listed as a top performer at 230th most
profitable food manufacturing of the World.
STEPPED DOWN AREA
Your Company continues to rein enviably in its product portfolio-both in
number and performance. The Company has launched:
WHOLE WHEAT CHAKKI FRESH ATTA under the brand "SANWARIA SETH" in a consumer
pack of 1, 2,5 & 10 Kg. Currently it has been launched in M. P., CG. Going
forward it shall be launched in some other parts of central region and in
North & South (Andhra Pradesh, Tamil Nadu) region also. We are going for
fortification of this Chakki fresh Atta which is enriched with more protein
and nutrient that meet the WHO standards.
SOYA NUGGETS/CHUNKS - "SANWARIA PRODIET", Leveraging new capabilities to
open up new growth vectors new products like " Sanwaria Prodief` launched
which is currently being outsourced. Consumption opportunities were
successfully tapped and widened through Introduction of (Soya Nuggets
/Chunks), In the upcoming year the Soya Nuggets production plant is also on
BASMATI RICE , Additionally your Company focused attention on building new
capabilities and a robust pipeline of innovation, While building brand
differentiation and relevance the Company has entered into Basmati rice
segment which is expected to be launched in a couple of months under the
"SANWARIA" brand, promoted during the year in addition to "NARMADA" hold
promise and hope for the Company business. Import of commodities like Soya
Crude Degummed Oil, Crude Palm Oil, Coal, RBD Palmolien and sunflower Oil
etc. are already placed to strengthen the business.
The Company is gaining momentum for Supply of "SULABH" RBD Palmolien
domestically with a view of growing demand in the upcoming years .
Fortified Soya refined Oil, Blended edible oil, Refined Bleached Deodorized
Palm olien, High protein soya meal, Full fated and Defatted Soya flour are
the new avenues to capture market.
Your Company will invest more in marketing initiatives with an aim to grow
the non-credit based segment. Some new retails like Wall Mart, Metro, Carry
Four are likely to be inducted, On the other hand we are expanding our own
marketing network into various regions. The core business and will work
with strategic partnerships or alliances in the various divisions to create
more value for the shareholders with a vision to emerge as an FMCG player
and focusing to promote its "SANWARIA" brand by entering into long-term
marketing and branding strategy in place and through this Company will
increase its branded sale to 35-40% from 10% of current level. Further the
step of government to ban the loose oil sale will also support branded sale
Operation have also been streamlined for differentiated products Like
"SALT" in addition to existing portfolio of Whole Wheat Chakki Fresh Atta
(SANWARIA SETH), Soya Nuggets ("SANWARIA PRODIET"),Basmati Rice. "Sanwaria"
,"Narmada", and "Sulabh", are placing prominent position of the Company
into the market.
Some value added Soya based products Like Soya Flour, Soya Tofu and Potato
based -Like Chips, Flakes, and Vanaspati, Vegetable oil refinery are in
WIND POWER DIVISION-HIVED OFF
Board considered and approved hive off Wind power division of the Company
to purely concentrate on FMCG sector and its branded sales. Thereby
disposed off its Wind power division with effect from 1 st April 2012 to
its subsidiary Company Sanwaria Energy Limited incorporated solely for the
purpose of wind power generation.
There has been no business activity during the year by Sanwaria Singapore
Pte. Limited (Singapore), a wholly owned subsidiary of Sanwaria.
Mr. Santosh Kumar Tiwari, Mr. Surendra Kumar Jain and Mr. H. K. Agrawal,
are Directors retire by rotation in accordance with the provisions of the
articles of Association of the Company and being eligible offers themselves
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to section 217(2 AA) of the Companies (Amendment) Act 2000, the
Directors confirm that:
In preparation of the Annual Accounts, the applicable Accounting Standards
have been followed and that there are no material departures.
They have consulted the Statutory Auditor in the selection of Accounting
Policies. The Policies have been applied consistently and the judgments and
estimates made are reasonable and prudent so as to give a true and fair
view of the state of affairs of the Company at the end of the financial
year ended March 31st, 2012 and the profit and loss for the year ended
March 31st, 2012.
Proper and sufficient care has been taken 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 fraud and other irregularities.
The Annual Accounts have been prepared on a going concern basis.
CONSERVATION OF ENERGY, TECHNOLOGY & FOREIGN EXCHANGE EARNINGS/OUTGO
Details of energy conservation and Research and Development activities
undertaken by the Company along with information in accordance with the
provisions of Section 217(e) of the Companies Act, 1956 read with Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988, are given inAnnexure to the Directors` Report.
Your Company has not accepted any deposits under section 58A of the
Companies Act, 1956 and hence no amount of principal and interest was
outstanding as on the date of this Annual report.
FINANCE & INSURANCE
The Company`s relationship with its consortium and other bankers continued
to be cordial during the year. Company would like to thanks its Bankers for
their support. The assets of the Company are adequately insured against all
types of risks. "CARE" assigned to Company "A2+" rating revised for short
term debts and "BBB+" for long term debt, whereas annual surveillance is
The Company is also viewing to step into Overseas Listing. At present the
shares of the Company are listed on Bombay Stock Exchange of India limited
and National Stock Exchange of India Limited.
PARTICULARS OF EMPLOYEES
None of the employees of the Company were paid such remuneration during the
year under review, which attract the provisions of Section 217(2A) of the
Companies act, 1956 as amended.
AUDITORS AND AUDITORS` REPORT
M/s Sunil Saraf & Associates, Chartered Accountants, Indore, auditors of
the Company retire at the ensuing Annual General meeting and have confirmed
their eligibility and willingness to accept office, if re-appointed. The
Board of Director recommends reappointment of Auditors of the Company for
the Financial year 2012-2013 for shareholders approval.
The report of the Board of Directors of the Company on Corporate Governance
is given as a separate section titled Report on Corporate Governance, which
forms part of the Annual Report. The Auditors Report on Corporate
Governance compliance is also annexed therewith and compliance report
signed by the Chairman of the Company in connection with compliance with
the Code of Conduct and also CEO/CFO certification in addition to
Certificate from Statutory Auditors of your Company regarding compliance of
Conditions of Corporate Governance as required by the amended clause 49 of
the listing agreement
The Directors place on record their sincere gratitude for the assistance
received from the Banks during the year and would like to thank all
stakeholders, namely, customers, shareholders, dealers, suppliers,
employees and all other business associates for the continuous support
given by them to the Company and its management.
For and on behalf of the Board
Date : 25/08/2012 Ram Narayan Agrawal
Place: Bhopal (Chairman)
Information required under the Companies (Disclosure of Particulars in the
Report of Directors) Rules, 1988 and forming part of director`s report for
the year ended 31st March, 2012
A. CONSERVATION OF ENERGY:
The Company has taken the following measures towards the conservation of
i) Using light only whenever required.
ii) Minimise the use of air conditioner.
iii) Various energy conservation techniques were initiated at large scale
and successfully implemented.
iv) Maintained/controlled the mixing of Fuel & Air ratio resulting into
maximization of boiler efficiency.
v) Online monitoring of Boiler Efficiency resulting into improvement of
Efficiency by 2%.
vi) Installation of higher efficiency DG sets for uninterrupted power
vii) Power generation through Wind Turbine Generator.
viii) Utilization of UPS and high voltage control stabilizers.
b) The required date with regard to conservation of energy is furnished
below: Power and Fuel Consumption
Electricity Year Ended Year Ended
31st March, 2012 31st March,2011
a) Purchased Unit KWH 10428063 12457602
Total amount in Rs. 61828441 61696332
Rate/Unit(KWH) Rs. per unit 5.93 4.95
b) Own Generation KWH 167656 194914
Total amount in Rs. 1938995 2638611
Rate/Unit(KWH) Rs. 11.56 13.54
COAL `C & `D` Grade for Steam generation
Quantity MT 25881.68 31778.22
Total Cost in Rs. 128653161 10643838
Average Cost per MT Rs. 4970.82 3481.75
FURNACE OIL - -
Consumption per unit of production Cost per MT of Production
Electricity 253.79 219.25
Furnance Oil Litre KWH/MT - -
Coal (Specify) MT 528.09 393.20
Others (Specify) MT - -
Benefits of above measures
i) Reduction in consumption of electrical power.
ii) Reduction in recourse consumption.
iii) Increase in equipment utilization.
iv) Optimal load management.
v) Reduction of Green House Gases through wind power generation.
Also Company has been able to achieve the least possible consumption of
energy in comparison to the industry average.
Contents Company`s Industry`s
Electricity Consumption 42 units 50 units*
Coal Consumption 106 kg 150 units*
* Source: Observed from the cases of most of the plants in the area.
B. TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT:
1. Specific areas in which Technology absorption and R&D carried out by the
1. Developing new products and product improvements.
2. Standardization of raw material, production methods and finished goods
3. Up gradation of plants for the improvement in quality of oil.
4. Promotion of its Brands through Radio channels, Advertisement in TV.
channels, Cineplex etc. to expand market share and to increase consumption
of the products.
5. Reduction of emission of pollutants from Chimney by installing pollution
6. Process of getting certification of ISO-14001,22000 and GMP.
7. Manufacturing of Jar for packaging of Soy Refined Oil and RBD Palm oilen
as captive consumption.
2. Benefits Derived as a result of above:
* Product Improvement
* Cost Reduction
* Product development
* Enhanced capacity utilization.
* Significantly reduce the emission of pollutants into environment.
* The quality of Company`s products has improved and thereby enjoying
significant position in the industry.
3. Future plan of action:
To Continue R & D in the existing area. Explore new ingredients, processes
and technologies to create new preposition and taste experiences.
FOREIGN EXCHANGE EARNINGS AND OUT GO:
The Company has continued to maintain focus and avail of export
opportunities based on economics considerations.
Foreign Exchange earned and used: (In US $)
Contents 2012 2011
Foreign exchange earned US$ 15.35 Million US$ 17.01 Million
Foreign exchange used US$ 19.85 Million US$ 43.42 Million
Net Foreign exchange earned US$ -4.50 Million US$ -26.41 Million
Date : 25/08/2012 For and on behalf of the Board
Ram Narayan Agrawal
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Soybean has been a staple for thousands of years, touted as a miracle crop,
low in fat and cholesterol, and an ideal protein for vegetarians or those
wishing to cut back on animal protein. Conventional wisdom among many
dietary experts is that eating soy is good for you. Fibrous soy can be
processed into fake meat, rendering a versatile, plant-based protein.
A one cup serving of soybeans has more than 55 percent of the daily need
for protein. Soyabean has attained a vital status in agriculture and oil
economy of India. India is the fifth largest producer of Soyabean in the
world producing 11 Million Metric tonnes having 4.37% of total soya
production in 2011.
Whole Soyabean products are primarily edible products such as the seed,
bean sprouts, baked soyabean, full fat soya flour used in various products
of baking, roasted soyabean used as confectioneries, soya nut butter, soy
coffee, and other soya derivatives of oriental foods.
India is primarily a closed economy in the soyabean arena. Every year it
exports around 5 Million Metric Tonnes de-oiled cake (DOC) and earns
valuable foreign exchange. Sanwaria is one of the leading solvent extractor
and manufacturer of soy refined oil & de oiled cake. It exports about 65%
of its production of soy meal. In addition to normal Soya meal, it also
produces specialized high protein soybean meal. It is an integrated agro
food processor and an emerging FMCG Company engaged in the business of
manufacturing of soy oil ,soy cake and other FMCG products and has presence
in the sector since 1991.
Industry Structure and Development
Consuming fats is an essential nutritional need, most of which is met
through visible fat sources - vegetable Oils. The per capita consumption
has already reached 14.2 kg, which means the average consumption has risen
to 38.9 gm, Edible oil consumption is closely linked to economic
development, in which soyabean has been placed at the 2nd rank with 42.6
Mn. Metric Tonnes, placing palm at the first with 49.6 Mn. Mt.
World vegetable Oil Consumption, 2011
Palm Kernel 5.1
Vegetable oil consumption is income and price elastic. Both higher incomes
and lower prices have contributed to the rising consumption. The increasing
oil demand is an economic challenge, too. The import bill is bound to go up
with rising consumption.
The vegetable oil deficit in FY 2011 -2012 was expected to be around 10.8
million tons of which 87 is likely to be met through imports. The edible
oil import for current marketing year is estimated at 9 million tons, which
include 7 million tons of palm oil, 1.4 million ton of soy oil, 6,00,000
tons of Sunflower oil and 15000 tons of other edible oils. The total
vegetable oil needs of the projected Indian population of 1,685 million by
2050 works out to 17.84 MT to meet the nutrition requirement. The needs of
vegetable oils to meet the nutritional fat requirement even by 2050 can
easily be met if we increase the production of supplementary sources of
vegetable oils, besides increasing productivity.
Export of edible oils was permitted only in branded consumer packs of up to
5 Kgs, but now such export of edible oils is prohibited, as per Directorate
General of Foreign Trade (DGFT)
Soybean has only 17-18% oil content. In trading, major price guiding factor
is soybean meal. Most of meal is exported to big nations. Moreover, Doc
demand also finds its way from Asian countries regularly.
According to the production estimate, while internal supply of edible oil
seed is around 38.5 Mn MT, demand is roughly 59 Mn MT. The gap is met
increasingly through imports, a drag on the exchequer. Demand and supply
gaps in edible oil are to be addressed by emphasizing minor oil seeds as
well, such as rice bran, cotton or safflower and nigerseed. Technology will
need to be imported from edible oil exporting countries, to reduce the lead
time for sowing and production.
Health and Benefits of Soya
Soybeans have been used for centuries as food, medicine, filler and animal
feed, Some of the point satisfies the statement.
* Enhance immune function
* Strengthen human tissues and organs
* Improve energy
* Whiten and care skin
* Prevent cancer
* Prevent oxidation
* Reduce blood fat
* Prevent deafness
* Bring high blood pressure down
Versatile For Many Applications
Composed of both protein and oil, soybeans open the door for a variety of
uses. Soybean processors can divide soy`s components into soy protein
(soybean meal) and soy oil. Soy protein, which makes up 80 percent of the
soybean, primarily serves as animal feed and is incorporated in many human
foods. For oil, food industry consumes more than 83 percent of U.S. soybean
oil for purposes such as cooking, baking and frying. The remaining soybean
oil is applied in industrial applications such as adhesives, coatings and
printing inks, lubricants, plastics and specialty products, but also
biodiesel, a fuel using soybean oil as a feedstock.
Now candles are made from soy wax, which is hydrogenated soybean oil. They
are cheap, natural, long lasting upto 50% and it produces about 90% less
soot compared to paraffin wax candles.
Threats, Risks and Concerns
India`s edible oil imports in the year beginning November could top 10
million tonnes with consumption set to grow and poor rains clipping the
domestic oilseeds crop, Even if we presume oilseed production at existing
levels, 800,000 tonnes more of oil has to come in the next oil year, with
annual demand increasing by an average 3-4 percent and an additional annual
population of 20 million.
The country could buy up to 9.4 million tonnes of oil in the current year
ending Oct. 31, up from 8.4 million tonnes last year with insufficient and
erratic rains in some of the oilseed growing regions paring the summer crop
by eight to ten percent. India, the world`s top edible oil importer, buys
palm oil mainly from Indonesia and Malaysia and soyoil from Argentina and
Key oilseeds growing states including Madhya Pradesh, Maharashtra,
Rajasthan, Gujarat and Karnataka have so far received less than normal
rainfall in the monsoon season that began on June,l .Much would also depend
on how the monsoon shapes up in the last phase of the monsoon in September
and later on in October. Area under key oilseeds has been more or less at
the same levels as in the previous year, erratic rains during the sowing
season in July and earlier weeks have either caused damage to the crop or
have led to withering in some regions.
This would ultimately hit production and productivity.
Soybean output will be at same levels as last year with rains comfortable
in the growing belt in Madhya Pradesh and Maharashtra. But there is a
problem with the groundnut crop in Karnataka and Saurashtra region in
Gujarat even though the acreage is lower. Soybean has lower oil content
than groundnut and rapeseed, but its prices have been ruling high due to
global and domestic factors.
Overall summer oilseeds output will be lower than last year. Groundnut,
sunflower, sesame production will be hit. Cotton area is also lower and
cotton oil will suffer and all this will lead to higher edible oil imports.
There is no increase in custom duty on import of RBD Palmolein, which was
requested for by the Association to counter the inverted duty structure of
Indonesian Government for CPO (16.5%) RBD Palmolein (8%). This is evident
from the fact that import RBD Palmolein already jumped up from monthly
average of 1,00,000 tonnes to 3,00,000 tonnes in the month of Feb. This
will surely call a death knell for Indian domestic vegetable oil refining
industry. This will also cause unemployment of more than 1 lakh persons
directly and affect more than 5 lakh people of ancillary industries.
There is arrangement for Vegetarian and Non Vegetarian in our country just
like that the arrangement should be for GM food labeling in interest of
Indian farmers. GM food is injurious to health and Indian agriculture as
well. European countries do not allow even single export which contains GM
Borrowing Cost: The year under review interest rate was very high, expected
to be lower in 2012-13 which will reduce finance cost of the Corporate`s
Higher Electricity Charges- The rates of electricity charges are continue
to be very high. Government should take some measures to reduce the burden
Emerging as a FMCG player the Company has already added few products ,
Planning to leverage by adding some more in to the product basket viz
Fortified Soya oil, Soya refined Oil, Blended edible oil, Refined Palm
olien oil, High protein soya meal, Full fated and Defatted Soya flour, and
Salt etc. Sanwaria is doing good in all its three oil brand "SANWARIA",
"SULABH" and "NARMADA".
In view of increasing demand and expected revenue, the Company is promoting
its "Sulabh" Brand by trading in RBDPalmolien.
During the year the Company launched Whole Wheat Chakki Fresh Atta (Flour)
under brand strategy named "SANWARIA SETH", Soya nuggets/Chunks under
"SANWARIA PRODIET" these value added products will lead by 15-20% increase
in branded sales this marketing year.
Going forward some new retail chains like Wall Mart, Metro, Carry Four are
likely to be inducted, On the other hand we are expanding our own marketing
network into various states .We have targeted 35% contribution from branded
sales in next 2 years.
Presently we have two supply chains -Direct & Indirect for our product
Through Direct chain -We have marketing arrangements with Hariyali Kisan
Bazar (DCM), Reliance fresh, Pantaloon (Big Bazaar), ITC Choupals, and
Vishal Retails etc.
Indirect Chain- We have various C&FA in M.P., CG, U.P., Delhi(NCR) Himachal
Pradesh, Haryana, Orissa, Maharashtra and 10-15 Distributor under each
C&FA, Our branded sale have contributed 10% in total oil revenue which was
only 2% till the year 2007,
Surely the Company is strengthening as an FMCG Company. Basmati rice
segment which was on the trail is going to deliver its consumer packs in
next 3 -4 months.
Segment Wise Performance - Wind Power
Till 31st March 2012 the Company has Wind Turbine Generators of 8.4 MW
capacity out of which 1.8 MW at Tenkasi in Tamilnadu and 6.6 MW at Dewas in
Madya Pradesh. This Segment of your Company registered a revenue of Rs. 350
lakhs and Profit after Tax (PAT) of Rs. 151.86 lakhs, for the year.
W.e.f. 1st April,2012 WindPower division has been hived off to Sanwaria
Energy Limited, Subsidiary Company of Sanwaria Agro Oils Limited
Financial performance of the Company is covered in the Directors` Report.
Internal Controls system
The Company has an internal audit system with the objective of safeguarding
the Company`s assets, protection against loss from unauthorized use or
disposition, ensuring that all transactions are properly authorized,
recorded & reported correctly, and providing significant assurance at
reasonable cost, of integrity, objectivity and reliability of financial
information. The management of the Company duly considers and takes
appropriate action on recommendations made by the internal auditors, audit
committee of the Board periodically.
A knowledge driven Company built on the strength of technical talent,
progresses fast and sustain long, In tune with philosophy, Sanwaria has
consciously added skilled and experienced professional on a regular basis.
And in view of this conscious need of the formal human resources, system
oriented planning and business strategies, the Company has initiated steps
to create systems and procedures that will enhance further the work
environment, productivity and performance. The Company will continue to
focus on talent search and retention and working towards this objective.
Statements in this Directors` Report and Management Discussion and Analysis
describing the Company`s objectives, projections, estimates and
expectations may constitute "forward looking statements" within the meaning
of applicable laws and regulations. Actual results may differ materially
from those either expressed or implied.
Corporate Social Responsibility
Committed to be socially responsible, the Company is going to start a
hospital through a charitable trust at Itarsi by the end of this fiscal
year which will be helping hand towards social and economic development of
the villages and the communities located close to its operations and also
providing assistance to improving their quality of life.