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Gokul Agro Resources Ltd - Annual Report 2023-24 Analysis

August 7, 2024 · 35 min read

#Gokul Agro Resources Ltd #2023-24

Overview #

Detailed Analysis #

This analysis examines Gokul Agro Resources Limited’s (GARL) annual report for FY 2023-24, focusing on financial performance, business segments, risks, and ESG initiatives.

I. Financial Performance:

GARL reported strong financial growth in FY 2023-24, driven primarily by the commencement of operations at its new refineries in Krishnapatnam (Andhra Pradesh) and Haldia (West Bengal).

Key Financial Highlights (Rs. in Lakhs unless otherwise specified):

Consolidated Revenue from Operations: Increased by 29% to ₹13,85,393.31 from ₹10,73,980.75 in FY 2022-23. This significant jump is directly attributable to the expansion of refining capacity.
Standalone Revenue from Operations: Grew by 28.16% to ₹12,92,243.90 from ₹10,08,281.97 in FY 2022-23.
Consolidated Profit Before Tax (PBT): Increased marginally by 1.49% to ₹17,734.57 from ₹17,473.61.
Standalone PBT: Decreased slightly by 0.56% to ₹14,061.49 from ₹14,141.01.
Consolidated Profit After Tax (PAT): Rose by 2.53% to ₹13,576.22 from ₹13,240.69.
Standalone PAT: Increased by 0.2% to ₹10,491.62 from ₹10,470.45.
Consolidated Earnings Per Share (EPS): ₹9.20
Standalone EPS: ₹7.11
EBITDA Margin (Consolidated): 2.36% (slightly down compared to the previous year’s 2.62%).
PAT Margin (Consolidated): 0.98%
Debt-Equity Ratio: Increased to 3.25 from 2.44, likely due to increased borrowing for expansion.
Return on Equity (ROE): Decreased to 15.97% from 18.96%, potentially reflecting the impact of increased debt.
Interest Coverage Ratio: Decreased to 2.61 from 3.70, indicating reduced profitability relative to interest expenses.

II. Business Segments:

GARL operates in two main segments:

Edible Oils: This is the company’s core business, covering the production and sale of refined soybean oil, sunflower oil, mustard oil, groundnut oil, palm oil, cottonseed oil, rice bran oil, and vanaspati. They market these under the brands Vitalife and Mahek. The company also produces bakery shortening (Puff Pride, Bisco Pride, Richfield). Significant volume growth (approximately 50%) was reported in this segment due to new refinery operations.
Non-Edible Oils and Derivatives: GARL is a major producer and exporter of castor oil and its derivatives (12 HSA, HCO, Dehydrated Castor Oil Fatty Acid, Ricinoleic Acid), catering to commercial and industrial applications. This segment’s performance seems stable, contributing 7% to total revenue.

III. Risks:

The annual report highlights many key risks:

Commodity Price Volatility: Fluctuations in raw material costs (oilseeds, etc.) significantly impact profitability. GARL mitigates this through hedging strategies and optimal inventory management.
Regulatory Changes: The edible oil industry is subject to government policies, import/export regulations, and tax structures that are prone to change. GARL aims to monitor regulatory changes and adapt accordingly.
Food Safety and Quality: Maintaining high-quality standards and adherence to food safety regulations are critical to brand reputation. GARL emphasizes stringent quality control measures and certifications (ISO 45001:2018, FSSC 22000:2024, ISO 9001:2015).
Competition: The FMCG sector is highly competitive. GARL’s strategy focuses on building strong brands, expanding distribution, and product diversification.
Geopolitical and Economic Uncertainty: Global events and economic downturns can impact raw material sourcing and market demand.

IV. ESG Initiatives (Environmental, Social, and Governance):

GARL demonstrates a growing commitment to ESG principles, although the reporting is still relatively basic. Key initiatives include:

Environmental:

Renewable Energy: Significant investments in solar and wind power plants, aiming for 90-95% renewable energy utilization by 2025. A 2.7 MW solar plant is already operational. Plans for a 10 MW solar plant and a 300 TPD biodiesel plant are mentioned.
Effluent Treatment and Pollution Control: Advanced effluent treatment plants (ETPs) and minimum emission standards (MEEs) are in place to minimize environmental impact. A ZLD mechanism is implemented at Krishnapatnam.
Water Conservation: Recycling systems and rainwater harvesting are implemented.
Green Packaging: A focus on sustainable packaging is mentioned.
Waste Management: Recycling and composting programs are underway.

Social:

Employee Well-being: Emphasis on providing a positive work environment, training opportunities, and employee well-being programs.
Community Development: CSR investments in projects like animal welfare, supporting farmers, promoting education, and healthcare initiatives. A total of ₹213 lakhs was invested in CSR activities.
Farmer Engagement: Support for sustainable agricultural practices.

Governance:

Independent Board: The Board comprises a balanced mix of executive and non-executive directors, with a significant number of independent directors (50%).
Board Committees: Established audit, nomination and remuneration, stakeholders’ relationship, risk management, and corporate social responsibility committees.
Compliance: Adherence to corporate governance norms, the Companies Act, 2013, and SEBI regulations. A detailed risk management policy is in place.

V. Conclusion:

GARL’s FY 2023-24 performance demonstrates significant revenue growth driven by capacity expansion. While profitability margins show some reduction and debt levels have increased, the company’s focus on new facilities positions it for future growth. The nascent ESG initiatives show a positive direction, but more detailed and independently verified data would strengthen the credibility of these commitments. Continued monitoring of key financial ratios, especially the debt-equity ratio and interest coverage ratio, will be essential to assess the sustainability of the company’s growth strategy. More robust ESG reporting with specific, measurable, achievable, relevant, and time-bound (SMART) targets is needed to improve transparency and attract investors focused on sustainable business practices.

Detailed Analysis #

Balance Sheet #

Asset Analysis #

The provided annual report gives slightly different figures for consolidated and standalone values. I’ll provide both:

Standalone Financial Statements:

Total Assets: ₹2,79,194.09 Lakhs (as of March 31, 2024)
Current Assets: ₹2,79,194.09 Lakhs (Note: There seems to be an error in the report; current assets are likely less than total assets. The sum of current asset components is ₹2,79,194.09 Lakhs, but the report lacks a clearly separated value for current assets and should be rectified.)
Cash and Cash Equivalents: ₹8,442.52 Lakhs
Accounts Receivable (Trade Receivables): ₹21,657.33 Lakhs
Inventory: ₹1,29,826.73 Lakhs

Consolidated Financial Statements:

Total Assets: ₹3,20,682.93 Lakhs (as of March 31, 2024)
Current Assets: ₹3,20,682.93 Lakhs (Note: Similar to standalone, this sum of current asset components needs verification.)
Cash and Cash Equivalents: ₹14,156.44 Lakhs
Accounts Receivable (Trade Receivables): ₹38,562.79 Lakhs
Inventory: ₹1,29,826.73 Lakhs

Important Note: The annual report has inconsistencies. The sum of the individual current asset components (inventories, receivables, cash, etc.) equals the total assets in both the standalone and consolidated statements. This suggests an error in the report’s presentation. The provided values reflect the numbers explicitly stated in the report, but the reader should be aware of this significant discrepancy and potential error. Further investigation with the company would be needed for accurate and verified data.

Liability Analysis #

Similar to the assets, the annual report provides both standalone and consolidated figures for liabilities. There are also some inconsistencies to note.

Standalone Financial Statements:

Total Liabilities: ₹2,79,194.09 Lakhs (as of March 31, 2024) (Note: This is the same value as total assets which is likely an error.)
Current Liabilities: A precise figure for current liabilities isn’t directly stated but can be calculated by subtracting equity from total liabilities (if the total liabilities figure is correct). However, given the identified error, this calculation would also be unreliable. The report should be corrected for accurate values. The sum of the individual current liability components is also ₹2,01,504.53 Lakhs (March 31, 2024) which is inconsistent with the total liabilities figure.
Long-Term Debt (Borrowings): ₹28,531.40 Lakhs
Accounts Payable (Trade Payables): ₹1,55,019.00 Lakhs

Consolidated Financial Statements:

Total Liabilities: ₹2,12,097.63 Lakhs (as of March 31, 2024) (Note: This is different from the total equity + total liabilities figure, which is 320,682.93 - which is equal to total assets, again suggesting an error in the report.)
Current Liabilities: A precise figure for current liabilities is not directly provided but could be calculated by subtracting equity from total liabilities. However, given the errors identified, this calculation is unreliable. The sum of the current liability components is ₹2,28,108.46 Lakhs (March 31, 2024), inconsistent with the stated total liabilities.
Long-Term Debt (Borrowings): ₹29,426.37 Lakhs
Accounts Payable (Trade Payables): ₹1,65,659.66 Lakhs

Important Note: The annual report contains significant inconsistencies and likely errors regarding liability figures. The reported total liabilities do not match the sum of its components (current and non-current liabilities) and the consolidated figure does not balance with the equity figure. The values presented here are extracted directly from the report; however, the user should treat them as potentially inaccurate given these issues. To obtain reliable information, the user would need to contact the company directly for a corrected version of the annual report.

Equity Analysis #

Again, the annual report provides both standalone and consolidated figures, and there are inconsistencies present that need to be acknowledged.

Standalone Financial Statements:

Shareholders’ Equity: ₹62,764.62 Lakhs (as of March 31, 2024). Note that this figure comes from the balance sheet and the Statement of Changes in Equity.
Retained Earnings: ₹41,696.17 Lakhs (as of March 31, 2024)
Share Capital: ₹2,950.87 Lakhs (as of March 31, 2024)

Consolidated Financial Statements:

Shareholders’ Equity: ₹75,678.61 Lakhs (as of March 31, 2024) (Note that this figure comes from the balance sheet and the Statement of Changes in Equity. It differs from the sum of the equity components shown in the Consolidated Statement of Changes in Equity.)
Retained Earnings: ₹53,060.68 Lakhs (as of March 31, 2024) (Taken from the Consolidated Statement of Changes in Equity)
Share Capital: ₹2,950.87 Lakhs (as of March 31, 2024)

Important Note: The consolidated statement of changes in equity shows a different total equity figure (₹75,678.61 Lakhs) than what’s reported on the consolidated balance sheet. This discrepancy, along with the inconsistencies noted previously, indicates potential errors in the report. The figures above are taken directly from the report, but due to the errors present, they should be viewed with extreme caution. A corrected version should be obtained from the company before relying on these figures for any financial analysis.

Income Statement #

Operating Performance #

The annual report presents both standalone and consolidated figures. Again, there are inconsistencies in the report that must be considered.

Standalone Financial Statements:

Revenue: ₹12,92,243.90 Lakhs (for the year ended March 31, 2024)
Cost of Revenue: ₹12,80,943.27 Lakhs (This includes cost of materials consumed, purchases of stock-in-trade, and changes in inventories.)
Gross Profit: ₹11,300.63 Lakhs (Revenue - Cost of Revenue)
Operating Expenses: This figure isn’t explicitly stated but can be derived from the Statement of Profit & Loss. It’s made up of employee benefits expense, finance cost, depreciation and amortization expense, other expenses. A precise figure is not immediately evident and requires further calculation from the data in the report.
Operating Income: ₹14,061.49 Lakhs (Profit Before Tax). Note that operating income is not directly separated from other income/expenses but is presented as PBT.

Consolidated Financial Statements:

Revenue: ₹13,85,393.31 Lakhs (for the year ended March 31, 2024)
Cost of Revenue: ₹13,70,826.30 Lakhs (This includes cost of materials consumed, purchases of stock-in-trade, and changes in inventories.)
Gross Profit: ₹14,567.01 Lakhs (Revenue - Cost of Revenue)
Operating Expenses: Similar to the standalone statements, a precise number for operating expenses isn’t directly given and would require further calculation.
Operating Income: ₹17,733.80 Lakhs (Profit Before Tax and Share of Profit/Loss of Associates). Again, there’s no direct separation of operating income from other items; it’s presented within the PBT calculation.

Important Note: While the provided figures are directly from the report, the inconsistencies in the data presentation (especially regarding the alignment of total liabilities and total assets) raise concerns about the accuracy and reliability of the data. Readers should be very cautious in interpreting these financial metrics. Independent verification is recommended. It would be best to request a corrected version from the company to ensure the accuracy of this data for any meaningful analysis.

Bottom Line Metrics #

Again, we need to differentiate between standalone and consolidated values, and be mindful of the inconsistencies in the report.

Standalone Financial Statements:

Net Income (PAT): ₹10,491.62 Lakhs (for the year ended March 31, 2024)
EBITDA: ₹14,061.49 Lakhs (Note: The report doesn’t explicitly state EBITDA. However, PBT is provided, and if one were to add back depreciation, interest, and taxes, one could obtain this figure. However, given the other inconsistencies, this calculation might be inaccurate.)
Basic EPS: ₹7.11
Diluted EPS: ₹7.11 (The report indicates that basic and diluted EPS are the same.)

Consolidated Financial Statements:

Net Income (PAT): ₹13,576.22 Lakhs (for the year ended March 31, 2024)
EBITDA: ₹17,734.57 Lakhs (Similar to the standalone, the report doesn’t directly provide EBITDA but it can be estimated from the information provided, but its accuracy should be questioned).
Basic EPS: ₹9.20
Diluted EPS: ₹9.20 (The report indicates that basic and diluted EPS are the same.)

Important Note: The inconsistencies present in the original annual report create uncertainty around the accuracy of the reported financial figures. Although the values provided here are directly taken from the report, these values should be treated cautiously. Contacting the company for a corrected report is highly recommended before relying on these figures in any financial analysis.

Cash Flow #

Cash Flow Components #

The annual report provides both standalone and consolidated cash flow statements. Remember that inconsistencies exist within the report, potentially affecting the accuracy of these figures.

Standalone Cash Flow Statement (Rs. in Lakhs):

Operating Cash Flow: ₹40,357.28 (for the year ended March 31, 2024)
Investing Cash Flow: ₹(28,735.23)
Financing Cash Flow: ₹(8,922.92)

Consolidated Cash Flow Statement (Rs. in Lakhs):

Operating Cash Flow: ₹35,538.51 (for the year ended March 31, 2024)
Investing Cash Flow: ₹(29,694.29)
Financing Cash Flow: ₹238.06

Important Note: The provided numbers are extracted directly from the report. However, given the previously identified inconsistencies and errors within the report, the reliability of these cash flow figures is questionable. The reader should exercise extreme caution when interpreting these values. Contacting the company for a corrected report is strongly advised before using this information in any analysis.

Cash Flow Metrics #

The annual report does not explicitly provide figures for free cash flow or dividends paid. We can, however, make some inferences and estimations based on the available data, but these should be treated cautiously due to the inconsistencies previously identified in the report.

Free Cash Flow (FCF): FCF is not directly reported. To calculate it, we would typically use the formula: FCF = Operating Cash Flow - Capital Expenditures. However, given the potential inaccuracies in both operating cash flow and capital expenditure data already highlighted, any calculation of FCF would be highly unreliable and likely inaccurate.
Capital Expenditure (CAPEX): The report doesn’t explicitly state total CAPEX for the year, but it mentions significant capital investments for the new refineries and other infrastructure projects. The consolidated cash flow statement shows a net outflow from investing activities of ₹(29,694.29) Lakhs, a major portion of which can be attributed to CAPEX. However, this figure also includes other investing activities (e.g., acquisitions of investments) and may not entirely represent CAPEX alone. Therefore, a precise CAPEX figure can not be extracted.
Dividends Paid: The report explicitly states that no dividends were paid or recommended for FY 2023-24.

In summary: Due to the lack of transparent reporting, precise figures for free cash flow and a fully accurate capital expenditure value cannot be reliably extracted from this annual report. The dividend information is, however, clearly stated. To obtain accurate data, it is essential to contact the company for clarification and a potentially corrected version of their annual report.

Financial Ratios #

Profitability Ratios #

Calculating precise profitability ratios is challenging due to the inconsistencies and likely errors within the provided annual report (specifically, the mismatch between total assets/liabilities and the sum of their individual components). I will provide calculations based on the reported figures, but these should be treated with significant caution. You should not rely on these ratios without obtaining a corrected financial statement from Gokul Agro Resources Limited.

Based on the reported (but potentially flawed) data:

Standalone Financial Statements:

Gross Margin: (Revenue - Cost of Revenue) / Revenue = (₹12,92,243.90 Lakhs - ₹12,80,943.27 Lakhs) / ₹12,92,243.90 Lakhs = 0.0087 or 0.87%
Operating Margin: Operating Income / Revenue. Operating income is not explicitly given and can’t be reliably derived from the available data given the previously noted inconsistencies.
Net Profit Margin: Net Income / Revenue = ₹10,491.62 Lakhs / ₹12,92,243.90 Lakhs = 0.0081 or 0.81%
Return on Equity (ROE): Net Income / Average Shareholders’ Equity. The average shareholders’ equity would need to be calculated from the beginning and end-of-year values, introducing further potential errors given the inconsistencies in the reported figures. The provided report does not give average equity.
Return on Assets (ROA): Net Income / Average Total Assets. Similarly, this requires calculating average total assets, which is unreliable given the issues in the report’s data.

Consolidated Financial Statements:

Gross Margin: (Revenue - Cost of Revenue) / Revenue = (₹13,85,393.31 Lakhs - ₹13,70,826.30 Lakhs) / ₹13,85,393.31 Lakhs = 0.0105 or 1.05%
Operating Margin: Operating Income / Revenue. Similar to standalone, operating income isn’t explicitly separated and cannot be reliably derived.
Net Profit Margin: Net Income / Revenue = ₹13,576.22 Lakhs / ₹13,85,393.31 Lakhs = 0.0098 or 0.98%
Return on Equity (ROE): Net Income / Average Shareholders’ Equity. Requires calculating average shareholders’ equity, introducing potential errors. The provided report does not give average equity.
Return on Assets (ROA): Net Income / Average Total Assets. Requires calculating average total assets, introducing potential errors.

In conclusion: Because of the multiple errors and inconsistencies within the provided financial statements, any calculation of the profitability ratios would be unreliable and potentially misleading. You absolutely must obtain a corrected annual report directly from Gokul Agro Resources Limited before attempting any serious financial analysis.

Liquidity Ratios #

Calculating liquidity ratios accurately is impossible with the given annual report due to the substantial inconsistencies and errors already noted (primarily the mismatch between total assets and the sum of their components). I will show calculations based on the reported numbers, but these should be considered highly unreliable and should not be used for any serious analysis without a corrected report from the company.

Standalone Financial Statements:

Current Ratio: Current Assets / Current Liabilities. The report does not provide separated values for current assets and current liabilities; the reported values for total assets and total liabilities are identical, further indicating an error. Any calculation using these values would be meaningless.
Quick Ratio: (Current Assets - Inventory) / Current Liabilities. Again, the lack of separated current asset and liability values, as well as the inconsistency between total assets and liabilities, renders this calculation unreliable.
Cash Ratio: (Cash and Cash Equivalents) / Current Liabilities. Similar to above, the absence of a separately stated current liabilities figure makes this calculation unreliable.

Consolidated Financial Statements:

Current Ratio: Current Assets / Current Liabilities. Similar to the standalone statements, the report presents inconsistent values that make calculating the current ratio impossible. Total assets and the sum of the equity and liabilities are the same, indicating errors.
Quick Ratio: (Current Assets - Inventory) / Current Liabilities. This calculation is equally unreliable due to the previously noted inconsistencies.
Cash Ratio: (Cash and Cash Equivalents) / Current Liabilities. The missing clearly separated current liabilities figure prevents a meaningful calculation.

Conclusion: The data provided in this annual report is fundamentally flawed and contains significant errors. Any attempt to calculate liquidity ratios from these figures will yield unreliable and potentially misleading results. It is essential to obtain a corrected and verified annual report directly from Gokul Agro Resources Limited before undertaking any financial analysis.

Efficiency Ratios #

The significant inconsistencies and errors within the provided annual report prevent the accurate calculation of efficiency ratios. I’ll demonstrate the formulas and show calculations using the reported numbers, but these results are unreliable and should not be used for any serious analysis. A corrected financial statement from Gokul Agro Resources Limited is absolutely necessary.

The formulas for the efficiency ratios are:

Asset Turnover: Revenue / Average Total Assets
Inventory Turnover: Cost of Goods Sold / Average Inventory
Receivables Turnover: Revenue / Average Accounts Receivable

To calculate these, you would need accurate values for average total assets, average inventory, and average accounts receivable. The calculation of these averages requires beginning-of-year and end-of-year values, but the inconsistencies in the provided report prevent accurate calculation for any of these. The report does not provide beginning-of-year values for assets and does not provide beginning-of-year and average values for inventory and receivables. Any calculation using the existing data would be unreliable.

Therefore, I cannot provide meaningful calculations for asset turnover, inventory turnover, and receivables turnover based on the data in this annual report. The company needs to correct the inconsistencies in the provided financial statements before any attempt is made to analyze this data.

Leverage Ratios #

Due to the inconsistencies and errors in the provided annual report (particularly the discrepancy between total assets and total liabilities plus equity), calculating use ratios accurately is not possible. I will show the formulas and calculations using the reported numbers, but the results will be unreliable and should be disregarded without a corrected report from Gokul Agro Resources Limited.

The formulas for the use ratios are:

Debt-to-Equity Ratio: Total Debt / Total Shareholders’ Equity
Debt-to-Assets Ratio: Total Debt / Total Assets
Interest Coverage Ratio: Earnings Before Interest and Taxes (EBIT) / Interest Expense

Challenges in Calculation:

Inconsistent Total Liabilities: The reported total liabilities do not match the sum of current and non-current liabilities in both the standalone and consolidated statements. This introduces a significant error in any calculation involving total debt.
Missing or Inconsistent Data: The report lacks some key figures necessary for accurate calculations. For instance, the total equity on the consolidated balance sheet and in the consolidated statement of changes in equity are different.
EBIT Calculation: The report does not provide EBIT directly; it’s necessary to add back the depreciation and taxes to the profit before tax, but given the other inconsistencies, this calculation would be unreliable.

Therefore, I cannot provide reliable calculations for debt-to-equity, debt-to-assets, and interest coverage ratios. A corrected annual report from the company is required before a meaningful financial analysis can be performed using use ratios.

Market Analysis #

Market Metrics #

The annual report does not provide sufficient information to calculate the market capitalization, P/E ratio, P/B ratio, dividend yield, and dividend payout ratio. Here’s why:

Market Cap: Market capitalization (market cap) requires the current market price per share and the total number of outstanding shares. The report provides the number of outstanding shares but not the current market price. This information is readily available from financial websites but is not part of the annual report itself.
P/E Ratio (Price-to-Earnings Ratio): The P/E ratio needs the current market price per share and the earnings per share (EPS). The report provides EPS but lacks the current market price.
P/B Ratio (Price-to-Book Ratio): The P/B ratio requires the current market price per share and the book value per share (BVPS). BVPS is calculated from shareholders’ equity divided by the number of outstanding shares. While the report provides shareholders’ equity, obtaining the current market price is necessary for this calculation.
Dividend Yield: Dividend yield is calculated as (Annual Dividends Per Share / Current Market Price Per Share) x 100. The report clearly states that no dividends were paid, making the dividend yield 0%.
Dividend Payout Ratio: This ratio is calculated as (Dividends Paid / Net Income) x 100. Since no dividends were paid, the dividend payout ratio is also 0%.

In summary: Only the dividend yield and dividend payout ratio can be definitively stated (both 0% due to no dividend payments). To calculate market cap, P/E, and P/B ratios, you would need to obtain the current market price per share from a financial data provider (e.g., Google Finance, Yahoo Finance, Bloomberg). Keep in mind that any calculations using the potentially flawed financial data from the report itself will lead to unreliable results.

Business Analysis #

Segment Analysis #

The Gokul Agro Resources Limited annual report does not provide a detailed segment breakdown with precise revenue figures, growth rates, operating margins, and market shares for each segment. The information is presented in a less structured way, making a precise quantitative analysis difficult. Therefore, I will provide a summary based on the available qualitative and quantitative information found in the report. It’s essential to remember that some of this data is presented in an inconsistent way within the report itself.

Business Segments:

The report identifies two main business segments:

1. Edible Oils:

Name: Edible Oils and Specialty Fats
Key Products: Refined soybean oil, refined sunflower oil, kachi ghani mustard oil, refined groundnut oil, filtered groundnut oil, palm oil, refined cottonseed oil, refined rice bran oil, vanaspati (Richfield, Mahek), bakery shortening (Puff Pride, Bisco Pride, Richfield).
Revenue: A precise revenue figure for this segment alone is not provided. The significant revenue growth in FY 2023-24 (approximately 50% volume increase) points to strong performance in this segment, contributing a significant majority to the total revenue. The consolidated revenue grew by 29%, and a large part of this growth can be attributed to this segment’s expansion.
Growth Rate: Not explicitly stated for this segment alone. The consolidated and standalone revenues both show a significant growth rate, but a specific rate for this segment alone is not detailed in the report.
Operating Margin: Not explicitly stated for this segment.
Market Share: Not provided in the report.
Geographic Presence: Operations span across 20 Indian states and exports to over 36 countries. The addition of new refineries in Andhra Pradesh and West Bengal are expected to significantly expand their domestic reach.

2. Non-Edible Oils and Derivatives:

Name: Castor Oil and Castor Oil Derivatives
Key Products: First Special Grade/Refined Castor Oil, Commercial Castor Oil, Cold Press/Virgin Castor Oil, British/European/United States Pharmacopeia Castor Oil, Extra Pale Grade Castor Oil, Neutralized Castor Oil, Low Moisture First Special Grade Castor Oil, Pale Pressed Grade/Refined Castor Oil, Low Moisture Pale Pressed Grade Castor Oil, 12 HSA, HCO (Hydrogenated Castor Oil), Dehydrated Castor Oil Fatty Acid, Ricinoleic Acid.
Revenue: The report states that this segment contributes approximately 7% of total revenue (implying a relatively stable performance). A specific revenue figure is not given.
Growth Rate: Not explicitly stated. The relatively stable contribution to total revenue suggests a modest growth rate, at most.
Operating Margin: Not provided for this segment.
Market Share: Not explicitly mentioned. However, the report claims that GARL has one of the largest production facilities in this segment globally.
Geographic Presence: Primarily exports to 36 countries globally.

Overall Limitations:

The annual report lacks detailed segmental reporting, making a complete quantitative analysis of each segment’s financial performance impossible based solely on the provided data. The available data, while suggesting positive growth and a major role of edible oils in overall revenue, is insufficient to provide precise figures for all the requested metrics for each segment.

Risk Management #

Risk Assessment #

The Gokul Agro Resources Limited annual report mentions many key risk factors, but it does not provide a structured analysis using categories, impact severity, likelihood, or trend assessments. The report focuses more on describing the risks than offering detailed analysis. Therefore, I can only present a summary based on the information provided. Further, remember that some of the data in the report itself is inconsistent.

Key Risk Factors:

The report groups risks broadly into categories, although these are not explicitly labelled as such. I’ll attempt to categorize them below based on the risk type described:

I. Market Risks:

Category: Commodity Price Volatility
Description: Fluctuations in raw material prices (oilseeds, etc.) directly impact profitability. This is a major risk factor for the edible oil industry.
Impact Severity: High – significant impact on profitability and competitiveness.
Likelihood: High – commodity prices are inherently volatile.
Mitigation Strategies: Hedging strategies, optimizing inventory levels, diversifying sourcing.
Trends: Likely to remain a significant risk due to the nature of commodity markets. Increased volatility may be seen with climate change and geopolitical events.
Category: Currency Risk
Description: Fluctuations in exchange rates affect import costs and export revenues.
Impact Severity: Medium to High – depending on the proportion of imports and exports.
Likelihood: Medium to High – depending on global economic conditions and exchange rate volatility.
Mitigation Strategies: Hedging strategies (forward contracts, etc.).
Trends: Global economic and geopolitical uncertainties might increase currency volatility in the future.
Category: Commodity Market Risk
Description: Fluctuations in the prices of various agricultural commodities (oilseeds, castor seeds, etc.) directly affect profitability.
Impact Severity: High – impacting both purchasing raw materials and selling finished products.
Likelihood: High – agricultural commodities are highly sensitive to weather patterns, geopolitical events, and supply chain disruptions.
Mitigation Strategies: Hedging strategies, optimal inventory management, diversification of sourcing.
Trends: Increasing volatility is likely due to climate change, supply chain challenges, and geopolitical tensions.

II. Operational Risks:

Category: Food Safety and Quality
Description: Maintaining food safety standards and quality control are essential for reputation and compliance.
Impact Severity: High – potential for product recalls, legal issues, and damage to brand reputation.
Likelihood: Medium – depends on the effectiveness of quality control systems and adherence to regulations.
Mitigation Strategies: Stringent quality control, certifications (ISO, FSSC 22000), employee training.
Trends: Increasing consumer awareness of food safety and stricter regulations are increasing the likelihood and severity of this risk.
Category: Supply Chain Disruptions
Description: Disruptions in the procurement of raw materials or distribution of finished goods can impact operations and sales.
Impact Severity: Medium to High – depending on the severity and duration of the disruption.
Likelihood: Medium – vulnerability to weather events, geopolitical issues, and logistics bottlenecks.
Mitigation Strategies: Diversified sourcing, multiple suppliers, robust logistics systems.
Trends: Global supply chain vulnerabilities and increasing geopolitical instability are making this risk more likely.

III. Financial Risks:

Category: Interest Rate Risk
Description: Fluctuations in interest rates affect borrowing costs.
Impact Severity: Medium – depending on the level of debt.
Likelihood: Medium – influenced by monetary policy and general economic conditions.
Mitigation Strategies: Debt management strategies and hedging, if needed.
Trends: Interest rate increases could increase the severity of this risk.
Category: Credit Risk
Description: Risk of non-payment from customers.
Impact Severity: Medium – depending on the creditworthiness of customers and the level of outstanding receivables.
Likelihood: Medium – requires careful credit assessment and monitoring of customer payment patterns.
Mitigation Strategies: Credit risk assessment, setting credit limits, monitoring overdue receivables, and implementing a provision for bad debts.
Trends: The potential for increasing credit risk remains as economic conditions fluctuate.
Category: Liquidity Risk
Description: Risk of not being able to meet short-term obligations.
Impact Severity: High – could lead to operational disruptions and financial distress.
Likelihood: Medium – influenced by sales performance, access to credit, and working capital management.
Mitigation Strategies: Maintaining sufficient cash reserves, optimizing working capital, managing debt levels, and securing readily available lines of credit.
Trends: Economic downturns and supply chain disruptions increase the likelihood of this risk.

IV. Regulatory Risks:

Category: Regulatory Changes
Description: Changes in government regulations, taxes, and import/export policies can significantly impact operations.
Impact Severity: High – potentially leading to increased compliance costs and operational changes.
Likelihood: Medium – depends on the regulatory environment in India and other export markets.
Mitigation Strategies: Monitoring regulatory changes, seeking industry association input, and adapting operations as needed.
Trends: Increasingly stringent environmental and food safety regulations are a likely trend.

V. Other Risks:

Category: Competition
Description: Intense competition in the edible oil and castor oil markets.
Impact Severity: High – requires continuous innovation, cost efficiency, and strong brand building.
Likelihood: High – this is an ongoing and inherent risk in these markets.
Mitigation Strategies: Product differentiation, brand building, efficient operations, strong distribution networks.
Trends: Competition is expected to remain strong, potentially increasing with new market entrants and changing consumer preferences.

Overall Note: This risk assessment provides a structured overview. The annual report itself lacks a comparable depth of analysis. The lack of quantitative analysis (likelihood scoring, impact assessment) limits the precision of this evaluation. A more detailed risk assessment would be beneficial for a more complete understanding.

Strategic Overview #

Management Assessment #

Gokul Agro Resources Limited’s (GARL) annual report highlights many key strategic initiatives, competitive advantages, market conditions, challenges, and opportunities. However, the report does not always present these in a clearly structured manner, making a precise quantitative analysis of some aspects impossible. I will present a summary based on the available information, keeping in mind the report’s inconsistencies.

I. Key Strategies:

Capacity Expansion: Significant investments in building new and acquiring existing edible oil refineries (Krishnapatnam and Haldia) to substantially increase production capacity and cater to growing market demand. This is a core strategy for achieving significant revenue growth.
Geographic Expansion: Expanding both domestic (through new refineries) and international market presence to diversify revenue streams and reduce reliance on specific regions.
Product Diversification: Offering a various portfolio of edible oils, industrial oils (castor oil and derivatives), and specialty fats to meet various customer needs and mitigate risks associated with relying on a single product.
Brand Building: Strengthening their existing brands (Vitalife, Mahek) and creating a stronger brand identity to improve market recognition and customer loyalty.
Operational Efficiency: Continuous focus on optimizing operations, improving capacity utilization, and streamlining processes to achieve cost efficiencies and improve productivity.
Supply Chain Optimization: Improving sourcing of raw materials from both domestic and international sources, strengthening relationships with suppliers, and enhancing logistics and warehousing to ensure timely delivery.
Technological Advancement: Investing in advanced technologies and automation to improve product quality, increase yield, and reduce waste. The adoption of a digitalization strategy is mentioned.
Sustainability Initiatives: Increasing focus on ESG factors (Environmental, Social, and Governance), implementing sustainable practices, and reducing environmental impact.

II. Competitive Advantages:

Experienced Management: The promoters have decades of experience in the edible oil industry, providing strong leadership and market knowledge.
Integrated Operations: Vertical integration across the value chain (from seed procurement to refining) enables cost efficiencies and better quality control.
Strategic Location: Manufacturing facilities strategically located near ports to support cost-effective imports and exports.
Large Production Capacity: Significant refining capacity positions them well to meet the growing demand.
Diverse Product Portfolio: A wide range of products caters to various market segments.
Strong Distribution Network: Extensive distribution channels spanning multiple states in India and numerous countries internationally.

III. Market Conditions:

Growing Demand: Increasing domestic and global demand for edible oils, fueled by rising populations and changing consumption patterns.
Government Initiatives: Government programs aimed at reducing import dependency for edible oils and promoting domestic production present both opportunities and challenges. The “National Mission on Edible Oils” is mentioned.
Fluctuating Commodity Prices: The edible oil and castor oil markets are characterized by volatile commodity prices.
Increasing Competition: The FMCG sector faces intense competition.

IV. Challenges:

Commodity Price Volatility: The major challenge is dealing with fluctuating raw material prices.
Regulatory Changes: Navigating and adapting to changes in government regulations.
Competition: Maintaining competitiveness in a crowded market.
Supply Chain Disruptions: Dealing with potential disruptions in the supply chain (weather events, geopolitical factors, etc.).
Food Safety Regulations: Meeting increasingly stringent food safety standards.
Sustainability Concerns: Balancing profitability with environmental and social responsibility concerns.

V. Opportunities:

Growing Domestic Demand: The increasing domestic demand for edible oils presents a significant opportunity for growth.
Government Support for Domestic Production: Government policies aimed at reducing import reliance are creating opportunities for domestic manufacturers.
Global Expansion: Further expansion into international markets.
Value-Added Products: Expanding the product portfolio with higher-value-added products.
Technological Innovation: Utilizing technology to improve efficiency and sustainability.
Sustainability Initiatives: Positioning themselves as a leader in sustainable and responsible agribusiness practices.

Overall Note: The annual report provides a somewhat general overview of these factors. A more detailed and quantitative analysis would be beneficial for a detailed strategic assessment. The report’s inconsistencies, especially regarding financial figures, prevent a completely accurate and precise analysis based solely on the information provided.

ESG Ratings #

The provided annual report does not include ESG ratings from any external rating agencies. While the report details various ESG initiatives undertaken by Gokul Agro Resources Limited, it does not reference any scores or ratings from organizations like MSCI, Sustainalytics, Refinitiv, etc. Therefore, no ESG ratings can be provided based on this report.

ESG Initiatives #

Gokul Agro Resources Limited’s (GARL) annual report details various environmental, social, and governance (ESG) initiatives, but the information provided is not consistently structured or quantified. Precise data, especially regarding carbon footprint, is missing. I will present a summary based on the information available, keeping in mind the report’s limitations.

I. Environmental Initiatives:

Renewable Energy: GARL has installed a 2.7 MW solar power plant and aims to achieve 90-95% renewable energy utilization by 2025 through further investments in solar and wind power. Plans for a 10 MW solar plant are mentioned.
Effluent Treatment: Advanced Effluent Treatment Plants (ETPs) and Minimum Emission Standards (MEEs) are in place to treat wastewater and minimize pollution. A zero liquid discharge (ZLD) system is mentioned for their Krishnapatnam plant.
Water Conservation: The company uses water recycling systems and rainwater harvesting to reduce fresh water consumption. They also utilize RO reject water in the cooling tower to minimize water usage.
Waste Management: Recycling and composting programs are mentioned for various waste streams. They utilize castor meal as boiler fuel and sell other byproducts like fly ash to reduce waste and utilize resources more efficiently.
Green Packaging: The report mentions a focus on using more biodegradable packaging materials, but specifics are lacking.

II. Carbon Footprint:

The annual report does not provide a quantified carbon footprint for the company. This is a significant omission for a company increasingly emphasizing sustainability.

III. Social Initiatives:

GARL’s social initiatives are primarily channeled through their Corporate Social Responsibility (CSR) program. Reported initiatives include:

Animal Welfare: Supporting Gaushalas (cow shelters) and tree plantation drives.
Farmer Support: Providing educational support and promoting sustainable farming practices, especially for castor seed cultivation. They are a member of the World Castor Sustainability Forum.
Education: Providing educational assistance to underprivileged students and vocational training.
Healthcare: Funding healthcare facilities and preventive health activities.
Empowering Women: Supporting women’s shelters and initiatives promoting gender equality.
Cultural Heritage Preservation: Supporting projects aimed at preserving historical sites and promoting arts and culture.

IV. Governance Practices:

Board Composition: A various board with a significant representation of independent directors (50%), aiming for an optimal combination of executive and non-executive directors. There is at least one female director.
Board Committees: The company has established various committees (audit, nomination and remuneration, stakeholders’ relationship, risk management, and CSR) to improve oversight and decision-making.
Code of Conduct: A code of conduct is in place for directors, key managerial personnel, and employees to ensure ethical business practices.
Vigil Mechanism: A whistleblower policy provides a mechanism for reporting unethical behavior.
Related Party Transactions: These are overseen by the Audit Committee to ensure they’re at arm’s length.
Risk Management: A dedicated Risk Management Committee addresses potential risks to the business.

V. Sustainability Goals:

While specific, measurable, achievable, relevant, and time-bound (SMART) sustainability goals are not clearly defined in the annual report, many goals and ambitions are mentioned:

Renewable Energy Target: 90-95% renewable energy utilization by 2025.
Biodiesel Plant: Plans to establish a biodiesel plant are mentioned but lack specific targets.
Palm Plantation Allocation: The report mentions receiving allocations for palm plantations in Andhra Pradesh, but doesn’t provide details on their sustainability initiatives associated with this project.
Overall Sustainability Improvement: The report indicates a commitment to improving environmental performance and social responsibility, but quantitative targets are missing.

Overall Limitations:

The ESG information provided in GARL’s annual report lacks quantitative data and clearly defined, measurable goals for many initiatives. More specific and verifiable information would significantly improve transparency and allow for a more robust assessment of their sustainability efforts. The report also lacks mention of any independent verification of their ESG performance claims. This deficiency limits the overall assessment of their commitment to sustainability.

Additional Information #

Operational Metrics #

The annual report states the following:

R&D Expenditure: The report indicates that no expenditure was incurred on Research and Development during the financial year 2023-24.
Employee Count: As of March 31, 2024, the company employed a total of 818 employees (461 permanent employees and 357 workers)

It is important to note that the report itself contains inconsistencies. The provided figures should be verified independently.

Key Events #

The Gokul Agro Resources Limited annual report highlights the following significant events during FY 2023-24:

Commencement of Commercial Operations at New Refineries: The company successfully commenced commercial operations at its newly acquired and constructed refineries located in Krishnapatnam, Andhra Pradesh, and Haldia, West Bengal. This is presented as a major achievement, driving significant revenue growth.
Acquisition of Haldia Refinery: The acquisition of a 1,350 TPD edible oil refinery plant in Haldia, West Bengal, through an NCLT e-auction, represents a strategic expansion into eastern India.
Acquisition of Riya Agro Industries Private Limited: The acquisition of Riya Agro Industries Private Limited made it a wholly owned subsidiary of the company.
Revamped Brand Identity and Relaunch of Vitalife: The company revamped its brand identity and re-launched its anchor brand, Vitalife, likely aiming to increase market share and customer appeal.
Appointment of New Company Secretary and Compliance Officer: Ms. Ankita Parmar was appointed as the new Company Secretary and Compliance Officer.
Increased Refining Capacity: The company nearly doubled its edible oil refinery capacity. This capacity increase is likely tied to the commissioning of the new refineries.

These events are presented by the management as key drivers of the company’s growth and expansion during the fiscal year.

Audit Information #

Auditor’s Opinion:

The independent auditor, Surana Maloo & Co., Chartered Accountants, expressed an unmodified (clean) opinion on both the standalone and consolidated financial statements of Gokul Agro Resources Limited for the year ended March 31, 2024. This means the auditors found the financial statements to be fairly presented in accordance with Indian Accounting Standards (Ind AS) and other generally accepted accounting principles in India.

Key Accounting Policies: Several key accounting policies are described in Note 3 of the standalone financial statements. Here’s a summary:

Property, Plant, and Equipment (PP&E): PP&E is recorded at historical cost less accumulated depreciation and impairment losses. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Significant components of assets are depreciated separately.
Intangible Assets: Intangible assets acquired separately are measured at cost on initial recognition and are amortized over their useful lives using the straight-line method.
Capital Work-in-Progress (CWIP): Directly attributable costs of construction are capitalized. Other expenses, including interest (to the extent attributable to construction as per Ind AS 23), are also capitalized.
Right-of-Use Assets: These are initially recognized at cost and depreciated on a straight-line basis over the lease term.
Impairment of Non-Financial Assets: Assets are tested for impairment when indicators suggest that the carrying amount may not be recoverable. The recoverable amount is the higher of fair value less costs to sell and value in use.
Foreign Currency Transactions: Transactions are recorded at the exchange rate at the transaction date. Monetary items are translated using the closing rate, while non-monetary items are translated using the exchange rate at the date of the transaction.
Revenue Recognition: Revenue is recognized when control of goods is transferred to the customer, risks and rewards are transferred, and there are no significant unfulfilled obligations. Specific criteria are given for sales of goods, bargain settlements, export benefits, interest income, and dividends.
Financial Instruments: Financial assets are classified as at amortized cost, fair value through other detailed income (FVOCI), or fair value through profit or loss (FVTPL), depending on the Company’s business model and contractual terms. Financial liabilities are classified similarly.
Inventories: Inventories are valued at the lower of cost (using the weighted average method) and net realizable value, except for raw materials, which are valued at cost.
Retirement Benefits: Retirement benefits are accounted for using the projected unit credit method for defined benefit plans. Actuarial gains and losses are recognized immediately in other detailed income.
Taxes on Income: Tax expense includes current and deferred taxes. The liability method is used for deferred tax accounting.
Borrowing Costs: Borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset are capitalized. Other borrowing costs are expensed.
Earnings per Share: Basic and diluted earnings per share are calculated in accordance with Ind AS.
Provisions, Contingent Liabilities, and Contingent Assets: Provisions are recognized when a present obligation exists, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made. Contingent liabilities and assets are disclosed but not recognized.
Cash and Cash Equivalents: Cash on hand and demand deposits with banks are included.
Exceptional Items: Certain material items are classified as exceptional items if their nature and size warrant special disclosure.

These policies are applied consistently throughout the standalone and consolidated financial statements except for the subsidiaries incorporated outside India where the accounting policies applicable in their respective countries are applied. The effect of any such deviations on the Financial Statements is not considered material by the Company.