Overall Review

The unit of the company is located at plot No.3 &4, Block ‘H’ at kandla port kandla, Kutch District in Gujarat. The location of the unit is very ideal for the reason that kandla port is a site recognized by the Government authorities for export and import. The company has developed petroleum and edible oil storage tanks with connecting pipelines with port/jetty for directly loading & unloading ship. This storage and the rental income contribute a major portion of the company’s total income. The company has in all fourteen storage tanks owned by it.

The company was involved the business of trading in commodities including silver. Subsequently, the company decided to close down the businesses of dealing in bullions, currencies etc. however, the company continues to carry on the business of renting of storage tank, trading in commodities including gold and silver and also shares and securities. During the year, the company traded in commodities including silver. However, due to sudden and volatile price movements, it had to incur loss in the same.

Industry Structure and developments

There are very few organized players in the field of commodities trading and renting of storage tank. As such these activities are carried out by large number or unorganized players and such activities are also carried out by organized players as incidental/ancillary/other activities.

The commodities trading business is very volatile and risky in nature. There has been sweeping movements in the commodities in which the company deals. Hence, the company has to take market position after considering various factors. As regards, business of renting of storage tank, there is more or less assured revenue stream. However, due to increased capacity available, the rates/realization are under pressure. The company, therefore, enters into firm contact with reputable corporate to have hedge against sudden drop in rent and to optimize its revenue from this segment.

Opportunities and threats

The volatility in the commodity prices provides both opportunities and poses threat. Hence, the company weigh all aspects before venturing into the commodities trading. Due to general trade depression, lesser import of edible oil, increase in overall tank capacity at Kandla, the rent rates have come down substantially. However, in the time to come, if edible oil industry trade scenario improves, there may be more realization from the renting of the storage tank.

Internal Control Systems and their Adequacy

The company practices an internal control system which ensures proper handling and management of its assets. The internal control system of the company is geared towards achieving efficiency in operations, effective monitoring and compliances with all applicable laws and regulations. The company regularly conducts internal audit programs. The internal control department of the company functions under the guidelines of the Audit Committee of the company.

The company regularly reviews the adequacy and effectiveness of the internal control system and suggests improvement for strengthening them.

Outlook and Opportunities

The company’s one portion of income is dependent on the rent received from letting the tanks, and it is likely to increase in the near future if we get the permission of increase of our storage tanks.

There is a strong undercurrent prevalent in the commodities market also, which is favorable for the company. Our main portion of income is from rent for giving strong tank on hire. At the same time, wherever, found appropriate, the company also undertakes trading in commodities and its future market.