Annexure-C
A. ECONOMIC REVIEW
In 2022, global economies faced significant headwinds as a result ofbroadening
inflationary pressures and rising energy costs. The ongoing Ukraine-Russia conflict and
the resulting economic sanctions imposed on Russia lead to a tightening of monetary
policies by central banks and a decline in private demand. In addition, supply chain
disruptions and rising commodity prices contributed to inflationary pressures during the
year. To support economic recovery, governments continued implementing supportive fiscal
policies, while central banks adopted a more cautious approach to monetary policy. While
the global economy continued its recovery in 2022 following the COVID-19 pandemic, there
are still challenges that could impact growth and stability.
According to the latest report by the International Monetary Fund, the global growth
rate is estimated to slow down to 2.9% in the calendar year 2023. However, it is expected
to be back on track, increasing by 3.1% in the calendar year 2024. The emerging and the
developing economies of the world are expected to play a major role in accelerating global
economic growth going forward.
Indias economic growth remained strong in the year 2022, with a growth rate of 6.9%.
This growth was driven by continued fiscal and monetary policy support, robust domestic
demand, and ongoing structural reforms. The countrys economic recovery is expected to be
sustained, with economic activity likely to surpass pre-pandemic levels. The Indian
economy is expected to benefit from the governments focus on infrastructure spending,
which is likely to boost employment and income levels. Additionally, the normalization of
economic activity is expected to lead to a recovery in consumption.
India enters the new fiscal year with optimism, bolstered by underlying and overall
macroeconomic stability and vigilance against geopolitical and global economic concerns.
However, inflationary pressures are expected to remain a concern in the coming quarters,
which could impact the countrys outlook. Indian governments emphasis on capital
expenditure and strengthening the private sectors intent to spend is likely to strengthen
investment demand.
B. INDUSTRY STRUCTURE & DEVELOPMENT, SEGMENT-WISE / PRODUCT- WISE PERFORMANCE,
OPPORTUNITIES & THREATS AND OUTLOOK TEA
India remains the second largest tea producer and largest black tea producer in the
world, following China, and the fourth largest exporter of tea in the world. As a
significant consumer of the beverage, India accounts for nearly a fifth of global
consumption with 80% of its total production consumed domestically. All India Tea
production in 2022 was 1365 million kgs as against 1343 million kgs in the previous year.
Despite a sharp decline in purchase by Iran, a key buyer, Indian tea exports were higher
by 16% from the previous year on higher demand from CIS countries, Continental Europe and
West Asia.
The economic crisis in Sri Lanka led to a production loss in the island nation, which
kept the supply tight in the international market in calendar year 2022 not only leading
to higher volumes of exports from India but also driving the prices of orthodox tea
upwards. A lower carryover stock from the previous year also kept the prices firm. Average
tea prices in auction centres in North India witnessed an increase of around Rs 10/- per
kg compared to previous year. However, rising labour cost, energy and other input costs
are a cause of concern for the tea industry. The severe weather conditions including
heatwaves and lack of adequate rains in the tea growing regions have impacted production
of the crop affecting both quality and quantity.
The Indian tea market is expected to exhibit a Compound Annual Growth Rate (CAGR) of
4.2% between 2023 and 2028, driven by increasing consumer preference for premium and
packaged tea brands. The rising demand for the packaged variety of the beverage in both
urban and rural areas due to lesser chances of adulteration, convenient storage, and their
superior quality is further aiding the tea industry in India. The demand for packaged
varieties with natural ingredients is also witnessing a growth. The popularity of online
applications and easy product delivery has also benefited the markets supply chain.
The Company produced 38,39,051 kgs of tea during the year ended 31st March, 2023
against 48,00,429 kgs for the same period last year. The average price for Assam teas
realised by the Company during the year was 208/- per kg and for South Indian teas was
100/- per kg.
COFFEE
Global Coffee production for the financial year 2022-23 is estimated to increase by
2.5% to 171.38 million bags compared to 167.17 million bags in the previous year. Arabica
production is expected to reach 96.24 million bags, a 2.9% increase from the previous
year, while Robusta production is estimated to be 75.14 million bags, up by 2.8%. The
World Coffee consumption is projected to grow by 4% to 177.20 million bags in the year
2022-23 as compared to 170.30 million bags in the previous year.
The production of Coffee in India, which is the seventh largest producer of coffee in
the world, for the season 2022 is estimated at around 355 million Kgs comprising of 254
million Kgs of Robusta and 101 million Kgs of Arabica. Heavy rains in July 2022 damaged
the coffee crop and plants in Hassan, Kodagu and Chikmagalur districts of Karnataka, the
main coffee growing regions. Fruit and stalk rot diseases became commonplace. Coffee
berries, if not dropped turned black, resulting in poor quantity and quality. The harvest
pace was slower than expected as the ripening of fruits was uneven due to untimely rains
during the blossom period delaying the drying process.
In 2022, domestic Arabica raw coffee prices have continued to show an upward trend,
with a 20-25% increase compared to the previous year. Prices ruled at near record levels
due to supply constraints from large producers, Brazil and Vietnam. Indias coffee exports
have remained strong, with shipments exceeding last years recordbreaking billion-dollar
mark. Tracking the global trend, the domestic prices of raw coffee have risen by as high
as 40% over the past six months for the robusta cherry variety. It is expected that the
export demand for Indian coffee shall remain strong throughout 2023 -24, although
recession in the European countries and the United States will likely weigh on the prices.
The Company produced 3,63,264 kgs of Coffee comprising of 1,10,775 kgs of Arabica and
2,52,489 kgs of Robusta during the year ended 31st March, 2023 against 3,61,373 kgs
comprising of 86,907 kgs of Arabica and 2,74,466 kgs of Robusta harvested for the same
period last year. The average price for coffee realised by the Company during the year was
higher at 250/- per kg as compared to 205/- per kg last year.
RUBBER
Global production of natural rubber continued its upward trend in 2022 with estimates
projecting a growth of 4.3% to reach 14.38 million tons. However, it still fell short of
the peak production levels seen in 2018. The recovery in natural rubber production was
supported by a rebound in demand from both the tyre and non-tyre sectors.
According to the Rubber Board, the revised projection of Indias production of natural
rubber for 2022-23 is 8,30,000 tons. Production rose to a ten - year high being second
only to the production of 9,13,700 tons in 2012-13. The surge in production is
attributable to various factors such as increase in yield, tappable area
and Boards intervention in promoting rain guarding and controlling diseases. Natural
rubber consumption increased to a record high of 13,50,000 tons, despite imports declining
by 3.2 % during the year.
Due to the characteristics of natural rubber market, which is relatively sensitive to
market sentiments, the positive fundamentals were offset by elevated risks around global
financial markets, high borrowing costs from interest rate hikes, impact from the
prolonged conflict between Russia and Ukraine and stubborn inflation amid a projected
slowdown recovery of global economy in 2023. Replanting in rubber estates has come down in
Kerala, the major rubber growing estate in India, due to declining prices and increasing
labour cost, eroding the profitability of plantations.
Natural rubber market is expected to register fluctuating growth trends in the long
term, while inflation and supply chain concerns are expected to continue in 2023. Shifting
consumer preferences in a projected economic slowdown scenario, amendments to industrial
policies to align with growing environmental concerns, huge fluctuations in raw material
costs triggered by prevailing geo - political tensions and expected economic turbulences
are the key challenges to be addressed by the natural rubber industry during the short-
and medium-term forecast.
The Company produced 10,52,090 kgs of rubber during 2022-23 as against 8,62,100 kgs
during the previous year. The average price realised by the Company during the year was
149/- per kg as against 182/- per kg last year.
C. RISKS AND CONCERNS
Effective risk management is a crucial process for any business entity as it can aid in
improving operations, prioritizing resources, ensuring regulatory compliance, achieving
performance targets, and ultimately preventing potential losses or damages. However, it is
important to note that businesses cannot be entirely risk-averse as taking risks is often
necessary for profitability. The essence of risk management lies in reducing risks to an
acceptable and manageable level on an ongoing basis. This involves a two-step process of
identifying existing risks and handling them in ways that best align with the companys
objectives. To ensure proper risk management, the Company has established procedures for
regular review and mitigation of risks, with periodic reporting to the Board of Directors.
Nature plays a significant role in determining yield and quality parameters for
plantation crops viz., tea, coffee and rubber. The change in climate patterns in recent
times has been disastrous to plantations. Erratic weather patterns, extreme temperatures
and insufficient rainfall have a significant impact on crop growth. Nutrient management is
a big issue under severe weather conditions. To mitigate potential weather-related risks,
our estates take steps to obtain timely weather information to initiate appropriate
measures such as the application of fertilizers, chemicals, and pesticides.
The Company has been increasingly focusing on labour optimization initiatives and
mechanization of critical cultural operations to mitigate the problems of shortage of
labour during peak seasons and rising labour costs. A long-standing predicament, the
wildlife encroachment in plantations has reached new heights. As food and water within
reserve forests deplete, wild animals venture into plantations which leads to casualties,
injuries and destruction to property and infrastructure. The Company has taken effective
measures to minimize the risk of man-animal conflict.
D. INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY
The Company recognizes the importance of having a reliable internal control system to
maintain the integrity of its operations and protect its stakeholders interests. The
Company has robust internal control system, which is tailored to its size, scale, and
complexity of operations. This system provides reasonable assurance in safeguarding the
Companys assets, promoting operational efficiency through cost control, preventing
revenue leakages, and ensuring adequate financial and accounting controls. The Company
also ensures strict compliance with various statutory provisions.
A qualified and independent Audit Committee of the Board of Directors actively reviews
the adequacy and effectiveness of the internal control systems. The Committee also
suggests improvements to strengthen the system further.
E. FINANCIAL & OPERATIONAL PERFORMANCE
The details of Financial Performance and Operational Performance have been provided in
the Report of the Directors.
F. HUMAN RESOURCE DEVELOPMENT / INDUSTRIAL RELATIONS
The Company is committed to attracting, developing and retaining top talent and
believes that investing in its employees is a strategic and important move to create a
robust talent landscape which acts as a catalyst for meeting its short and long-term
business objectives. The Company has built its workforce with a diverse background of
individuals - essential for the kind of organization what it is.
With years of continuous effort, weve been able to craft a unique and comprehensive
performance management system that helps teams work to their potential by providing them
necessary support and guidance. The system achieves a perfect balance between development,
growth, rewards, conversations and strengthens the manager- subordinate relationships. As
on 31st March, 2023, there were 2952 permanent employees on the rolls of the Company. The
Company has been maintaining exceptionally good relations with its labour force and with
the employee friendly approach being adopted by it, the industrial relations continue to
remain cordial.
G. SIGNIFICANT CHANGES (MORE THAN 25%) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED
EXPLANATIONS
Sl. No. Key Financial Ratios |
31.03.2023 |
31.03.2022 |
Change(%) |
Remarks |
1 Debt Equity Ratio |
0.36 |
0.52 |
-30.00% |
Due to decrease in total debts. |
2 Interest Service Coverage Ratio |
0.38 |
0.25 |
52.00% |
Due to reduction in interest expense. |
3 Current Ratio |
1.09 |
0.35 |
214.00% |
Due to increase in Current Assets. |
• During Financial Year 2022-23, there was no significant change in Debtors
Turnover Ratios, Inventory Turnover Ratio compared to that of Previous Year.
• In view of the losses incurred by the Company for the year ended 31st March,
2023 and 31st March, 2022, Operating Profit Margin, Net Profit Margin and Return on
Networth is not calculated.
H. CAUTIONARY STATEMENT
The statements made in the Managements Discussion and Analysis describing the
Companys objectives, projections, estimates and expectations may be “Forward Looking
Statements” within the meaning of applicable Securities Laws & Regulations and
are based on the currently held beliefs and assumptions of our management, which are
expressed in good faith and in their opinion, reasonable. Actual results could differ from
those expressed and implied since the Companys operations are influenced by many external
and internal factors beyond the control of the Company. Several factors could make a
significant difference to the Companys operations which includes climatic conditions,
economic conditions affecting demand and supply, government regulations and taxation,
natural calamities, raw material price changes, domestic supply and prices conditions,
companys success in attracting and retaining Key Personnel, integration and
re-structuring activities, general business and economic conditions over which the Company
does not have any direct control.
+91-9892691696
