FORWARD LOOKING STATEMENTS
Readers are cautioned that this discussion contains forward looking statements that
involve risk and uncertainties. When used in this discussion, the words
"anticipate", "believe", "intend", "will" and
"expect" and other similar expressions as they relate to the Company or its
business are intended to identify such forward looking statements. The Company undertakes
no obligation to publicly update or revise any forward looking statements, whether because
of new information, future events or otherwise. Actual results, performances or
achievements could differ materially from those expressed or implied in such forward
looking statements. Readers are cautioned not to place under reliance on these forward
looking statements that speak only as of their dates. The following discussion and
analysis should be read with the Companys financial statements included in this report
and notes thereto.
1. FINANCIAL & OPERATING OVERVIEW
NHC Foods Limited (the Company) is a growing Indian food processing company i.e.
manufacturer and exporter of whole and blended spices. The Companys sustainability has
been focused around enlarging its presence in high demand markets.
Our company is focusing on growing the value-added product portfolio, to cater to the
growing demands of the market and consumers. Despite the challenges faced, our company had
a successful year with notable achievements. Here are some highlights:
FINANCIAL PERFORMANCE- The Total Revenue of the company increased in March 2023 to
Rs. 16,411.34 Lacs as compared to previous year revenue which amounted to Rs. 15,405.57
Lacs. Also Profit after Tax of the company is Rs. 175.64 Lacs. Our exports market grew
with around 21.83% during the year 2022-23 and our forecasting growth for coming year will
be around 15-20%.
MARKET EXPANSION: We successfully expanded our market presence by entering new
geographical regions. Our efforts to tap into emerging markets and strengthen our position
in existing markets yielded positive results. We collaborated with local partners to
understand the unique preferences and demands of each market, allowing us to tailor our
product offerings accordingly.
The Management accepts responsibility for the integrity and objectivity of the
financial statements, as well as for the various estimates and judgements used therein.
The Financial Statements are prepared in accordance with Indian Accounting standards (Ind
AS) read with section 133 of the Companies Act, 2013. These estimates and judgements
relating to financial statements are prudently made to reflect in a true and fair manner
the form and substance of transactions. This also enables in reasonably presenting the
Companys State of Affairs and Profits and Cash Flows for the year ended March 31, 2023.
2. INDIAN MARKET OVERVIEW
The spices industry in India has witnessed steady growth over the past year. India is
one of the largest producers and exporters of spices globally, catering to both domestic
and international markets. The industry plays a crucial role in the countrys agricultural
sector, contributing to economic growth and providing employment opportunities. The India
spices market is mainly driven by the increasing product usage to manufacture
ready-to-cook (RTC) and ready-to-eat (RTE) food products. Furthermore, the inflating
consumer expenditure power has fuelled the demand for authentic cuisines, innovative
flavours, and ethnic tastes in food, which is creating a positive outlook for the market
in the country. Moreover, the increasing consumer consciousness regarding the adverse
health impact of synthetic additives in spices has prompted the Government of India (GoI)
to inhibit the adulteration of spices to produce organic product variants, which, in turn,
is propelling the market growth. Apart from this, the rapid growth of the food and
beverage (F&B) industry and changing consumer consumption patterns are fuelling the
market growth. Other factors, such as the extensive expansion of the hotels, restaurants,
and catering (HoReCa) sector and changing consumer consumption patterns, are providing a
considerable thrust to the market growth.
Key Performance Indicators (KPIs):
Production Volume: The production volume of spices in India remained robust during
the fiscal year 2022-23. The industry witnessed an increase in overall production, driven
by favourable weather conditions, improved farming techniques, and government initiatives
to support farmers. The production volume for the year reached 11 million metric tons
across India.
Export Revenue: The spices industry continued to perform well in terms of export
revenue. Indian spices are highly sought after globally due to their quality and distinct
flavours. Despite the challenges posed by the COVID-19 pandemic and international trade
disruptions, the industry managed to generate substantial export revenue. The export
revenue from April 2022 to Feb 2023 amounted to approximately US$ 3,332.02 million. (As
published by the Indian brand equity foundation, https://www.ibef.org/).
Domestic Consumption: The demand for spices within India remained strong during the
reporting period. Spices are an integral part of Indian cuisine, and their consumption is
deeply ingrained in the culture. The industry witnessed steady growth in domestic
consumption, driven by population growth, urbanization, changing food habits, and
increasing disposable incomes.
Challenges:
Price Volatility: The spices industry faced challenges related to price volatility,
primarily driven by fluctuations in raw material costs, global market dynamics, and
currency exchange rates. Managing price risks and maintaining profitability remained
critical for industry participants.
Quality Control: Maintaining consistent quality standards across the supply chain
continued to be a challenge. Adhering to stringent quality regulations, implementing
proper hygiene practices, and ensuring traceability were areas of focus for the industry.
Opportunities:
Increasing Health Consciousness: The rising awareness among consumers about the
health benefits of spices has opened new opportunities for the industry. Spices are known
for their medicinal properties and nutritional value. Capitalizing on this trend, the
industry can develop and promote value-added products catering to the health-conscious
consumer segment.
Technological Advancements: Embracing technology and innovation can significantly
enhance productivity, quality control, and supply chain efficiency. Automation, data
analytics, and adoption of smart farming techniques can drive operational excellence and
cost optimization.
3. Global Spice Industry
The global spice industry plays a significant role in the culinary world, adding
flavour, aroma, and diversity to food products. Spices are widely used in various cuisines
and have gained popularity due to their unique tastes and health benefits. The industry
encompasses a wide range of spices, including pepper, turmeric, cinnamon, ginger, cloves,
and many more.
Key Trends and Drivers:
Increasing Demand: The demand for spices has been steadily increasing due to the
growth of the global population, changing dietary preferences, and the popularity of
international cuisines. Spices are also being recognized for their medicinal properties,
further driving their demand.
Health and Wellness: Consumers are becoming more health-conscious and are seeking
natural and organic food products. Spices are considered to be natural flavour enhancers
and are often associated with various health benefits, such as antioxidant and
anti-inflammatory properties.
Ethnic and Fusion Cuisines: The rise in multiculturalism and globalization has led
to the popularity of ethnic and fusion cuisines. Spices play a crucial role in these
culinary styles, contributing to unique and diverse flavour profiles.
E-commerce and Online Retail: The growth of e-commerce platforms and online retail
has provided convenience to consumers, allowing them to access a wide range of spices from
different parts of the world. Online platforms have also enabled small-scale spice
producers to reach a global customer base.
Food Processing Industry: The spice industry is closely linked to the food
processing sector. The increasing demand for processed and convenience foods has created
opportunities for spice manufacturers and suppliers to cater to this segment.
Future Outlook:
The global spice industry is expected to continue its growth trajectory in the coming
years. Key factors that will shape the industrys future include:
Rising Consumer Awareness: Consumers are becoming more knowledgeable about
different spices, their origin, and their health benefits. This trend is expected to drive
demand for high-quality, authentic spices and encourage companies to provide transparent
and traceable supply chains.
Technological Advancements: Innovations in cultivation techniques, processing
methods, and packaging technologies are likely to enhance efficiency, product quality, and
shelf life. Automation and digitalization in the industry will streamline operations and
improve traceability.
Sustainable Practices: The industry is expected to witness an increased focus on
sustainable sourcing, organic cultivation, and fair trade practices. Consumers are likely
to prefer spices that are produced in an environmentally and socially responsible manner.
Market Expansion: Emerging markets, especially in Asia
4. GOVERNMENT INITIATIVES
Export Development and Promotion of Spices
This initiative by the Spices Board of India aims to support the exporter to adopt
high-tech processing technologies and upgrade the existing level of technology for the
development of industry and to meet the changing food safety standards of the importing
countries. The initiative provides benefits of infrastructure development, promoting
Indian spice brands abroad, setting up infrastructure in the major spice growing centres,
promoting organic spices and special programmes for north-eastern entrepreneurs.
Setting up and maintenance of infrastructure for common processing (Spices Parks)
Spices Board has launched eight crop-specific Spices Parks in key production/market
centres intending to facilitate the farmers to get an improved price realization and wider
reach for their produce. The purpose of the park is to have an integrated operation for
cultivation, post-harvesting, processing, value-addition, packaging and storage of spices
and spice products. The common processing facilities for cleaning, grading, packing, and
steam sterilization will help the farmers to enhance the quality of the produce, resulting
in better price realization.
Spice Complex Sikkim
Spices Board submitted a project proposal to the states cell for setting up a Spice
Complex in Sikkim seeking financial assistance for facilitating and demonstrating common
processing and value addition in spices to help farmers and other stakeholders in the
state.
5. ECONOMY OVERVIEW
The spice industry plays a significant role in the global economy, with spices being
traded internationally and used in various culinary and medicinal applications. Spices are
valued for their unique flavours, aromas, and health benefits, making them an essential
ingredient in the food and beverage industry.
Global Market Size: The global spice market has been experiencing steady growth
over the years. According to reports, the global spice market was valued at around USD 15
billion in 2020 and is expected to reach USD 20 billion by 2026. This growth is primarily
driven by increasing consumer demand for ethnic and exotic flavours.
Major Spice Producing Countries: Several countries are major players in spice
production. Some of the prominent spice-producing countries include India, China, Vietnam,
Indonesia, Sri Lanka, and Bangladesh. These countries have favourable climatic conditions
and agricultural practices that support the cultivation of various spices.
Trade and Export: The spice industry heavily relies on international trade. India
is the largest exporter of spices, accounting for a significant share of the global spice
trade. Other major spice-exporting countries include China, Vietnam, the Netherlands, and
the United States. The demand for spices in both developed and emerging markets drives the
export activities.
Spice Varieties: The spice industry encompasses a wide range of products, including
popular spices like pepper, cinnamon, turmeric, cloves, ginger, nutmeg, and cardamom,
among others. Each spice has its own market dynamics, supply chain, and demand drivers.
Value Chain and Processing: The spice industry involves various stages in its value
chain, starting from cultivation and harvesting to processing, packaging, and
distribution. Value addition through processing and packaging enhances the marketability
and economic value of spices. Many countries have developed specialized infrastructure and
technologies to improve the quality and safety standards of spices.
Emerging Trends: In recent years, there has been a growing demand for organic and
sustainably sourced spices due to increasing health consciousness and ethical consumer
preferences. Additionally, there is a rising interest in spice blends and exotic flavours
in the food and beverage industry, leading to product innovation and market expansion.
INDIAN ECONOMIC OVERVIEW
The India spices market size reached INR 160,676 Crores in 2022. Looking forward, IMARC
Group expects the market to reach INR 298,909 Crores by 2028, exhibiting a growth rate
(CAGR) of 10.8% during 2023-2028. India produces about 75 of the 109 varieties which are
listed by the International Organization for Standardization (ISO). The most produced and
exported spices are pepper, cardamom, chilli, ginger, turmeric, coriander, cumin, celery,
fennel, fenugreek, garlic, nutmeg & mace, curry powder, spice oils and oleoresins. Out
of these spices, chilli, cumin, turmeric, ginger and coriander makeup about 76% of the
total production.
The largest spices-producing states in India are Madhya Pradesh, Rajasthan, Gujarat,
Andhra Pradesh, Telangana, Karnataka, Maharashtra, Assam, Orissa, Uttar Pradesh, West
Bengal, Tamil Nadu and Kerala.
6. RISKS AND CONCERNS
The Company continuously works towards de-risking its business by adopting preventive
measures. However, there are certain potential risks being more industry oriented and the
management strongly feels the same could be mitigated by having systematic decisions and
measures. These Industry Oriented risks are as listed below:
Procurement Risk: Adequate availability of key raw materials at the right prices is
crucial for the Company. The major raw material being agro based, availability of same
depends on the vagaries of nature. Therefore, any disruption in the supply due to a
natural or other calamity or violent changes in the cost structure could adversely affect
the Companys ability to reach its consumers with the right value proposition. However,
the Company is adopting best possible measures to ensure constant supply at right prices.
Intense competition from unorganized sector: One of the characteristics of this
industry is the presence of unorganized sector offering products in loose unbranded form
which intensifies competition. However, Our Company is adopting best possible measures and
has invested significantly in building strong brands which helps differentiate its
products and also we are continuously focusing on brand building process to attain our
objectives.
Exchange Rate Fluctuation: The Company being engaged in exports, derives
approximately 70-75% of its revenue from export sales. An appreciation of the Indian Rupee
can adversely impact the Companys exports. The Company manages this financial risk
through booking of forward contracts in the range of approximately 70% of our projected
sales. Also currently NHC has benefited from the depreciated rupee.
7. INFRASTRUCTURE
We have with us, dependable and sophisticated infrastructure that helps us in quality
processing and packaging of our range of Indian Spices. This well equipped infrastructure
is spread across a wide area and has separate hulling unit and cleaning unit, which are
ISO 22000:2005 certified. Apart from this unit, we have also developed a packaging unit,
which enables us to offer flexible packaging as per the requirements of the clients.
Our infrastructure has following facilities:
1. Roaster cum Blender
2. Packaging Machine
3. Grinding Machine
4. Shrink Wrap & Vaccum Pack Machine
Our Plant at Gujarat is a fully integrated facility spread over 4 acres of land in
moisture and dust free atmosphere , facilitated with modern amenities readily available
and set in a region declared as special business park- set up at an approximate cost of
INR 1500 Mn.
EXPANDING EXPORT OPERATIONS
Our company has reached a significant milestone in our journey of growth and global
outreach. We are thrilled to announce the expansion of our export operations, with the
addition of two new ports to our comprehensive network.
These new ports will facilitate quicker and more efficient access to global markets,
enabling us to deliver your products to even more destinations with reduced transit times.
With multiple ports at our disposal, we can now offer a wider range of routing options,
ensuring flexibility and adaptability to ever-changing market dynamics. Our extended
export network will help us mitigate potential congestion at existing ports, leading to
smoother operations and minimizing any potential disruptions. The strategic selection of
these ports contributes to optimizing transportation costs, which we are dedicated to
passing on to you through competitive pricing.
CAPACITY
State of the art technology taking care of mass production of 1ton/hr for spices &
2ton/hr for seeds. On a 3 shift basis/ 280 days annum-6720 tons of spices & 13440 tons
of seeds.
LOGISTICS
Central location of Plant ideal for smooth flow of raw-material to or from any place in
India and convenient to distribute the consignment across the globe, in accordance with
timely delivery.
QUALITY EVALUATION
In house laboratory facility to carry out day to day quality evaluation with highly
qualified technical staff to work under clean and safe work environment.
8. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Companys well defined organization structure, documented policy guidelines,
predefined authority levels, and an extensive system of internal controls ensure optimal
utilisation and protection of resources, accurate reporting of financial transactions and
compliance with applicable laws and regulations. The Companys internal auditors review
business processes and controls. The Audit Committee of the Board then discusses
significant findings and corrective measures initiated.
9. COMPANY OVERVIEW
The roots of NHC Foods Limited go back to 1960 with the aim of promoting export of
Indian spices and foodstuff to the world. Today it is 3rd generation in
working. NHC Foods Limited is a Government Recognized Two Star Export House engaged in the
Business of Exports of Whole & Ground Spices, Lentils, Pulses, Grains, Oil Seeds and
various other Agri-products and Assorted Food Products. Our companys constant goals has
always been to increase efficiency and productivity without sacrificing quality.
Continuous improvement is undeniably the most important driver that has been introduced to
achieve this goal, particularly because it aims for maximum efficiency while also ensuring
process practicability and flexibility Currently NHC Foods Limited is Exporting the
above-mentioned Commodities to more than 85 Countries World-wide.
Existing Clientele Countries:
Singapore, USA, Canada, Israel, Russia, Spain, New Zealand, Hong Kong, Malaysia, China,
Indonesia, Vietnam, Thailand, Taiwan, UAE, Saudi Arabia, Kuwait, Bahrain, Turkey, Egypt,
Mauritius, Sri Lanka, Brazil, Ukraine, Iran, Bangladesh, South Africa, Morocco.
At present NHC Foods Limited is exporting more than 50 types of Whole Spices, Ground
Spices, Oil Seeds, Grains, Pulses, Animal Feeds, Dehydrated Foods Products, Assorted Food
Products, and Ready to Eat Food Products to all its Clients world-wide.
NHC Foods Limited has already got its presence in majority of the Spice Importing
Countries world-wide like, USA, Canada, Mexico, Brazil, Singapore, Hong Kong, China,
Malaysia, Vietnam, Indonesia, Sri Lanka, Bangladesh, New Zealand, Zimbabwe, Taiwan,
Thailand, Jamaica, Trinidad & Tobago, Mauritius, Spain, Bulgaria, Turkey, Egypt,
Jordan, South Africa, Morocco etc to name a few, but still there is a huge market which
can be tapped and captured and in this Direction NHC Foods Limited has strengthened its
Core Marketing Team who are utilizing various platforms and marketing tools like sourcing
new Clients and markets through various Trade shows like Gulf Food Exhibition in Dubai,
ANUGA in Germany, SIAL in Paris, etc, various online B2B Portals like Alibaba.com, etc and
also personal visits to our clients in his country.
NHC FOODS LTDS range of Masalas under its own brand "SAAZ" which are
prepared by blending a number of pure spices (sometimes more than 30) like chilly,
turmeric, coriander, pepper, cardamom, cumin, clove, etc in precise proportions imparts a
distinct colour, aroma, and taste to a dish. Our SAAZ Masalas & Curry Powders are
prepared especially from recipes passed down by generations thus giving you the same
authentic and aromatic pure taste of Indian traditional delicacies. NHC FOODS LTDS
perfect blend of pure spices brings the regions closer by providing the authentic taste of
other regional cuisines, in the convenience of a pack, at home. We are also promoting
brand SAAZ in International Market in Consumer and Bulk Packaging.
10. CERTIFICATIONS
Our company holds various certificates:
| 1. ISO 22000:2005 |
11. GHP & GAP |
| 2. HALAL CERTIFICATE |
12. HACCP & GMP |
| 3. STAR K KOSHER CERTIFICATE |
13. FIEO CERTIFICATION |
| 4. SPICE BOARD CERTIFICATE |
14. APEDA CERTIFICATE |
| 5. IMC CERTIFICATE |
15. FSSAI CERTIFICATE |
| 6. IOPEPC |
16. COCONUT BOARD |
| 7. AEO Certificate |
17. TWO STAR EXPORT HOUSE |
| 8. SHELLAC |
18. TEA BOARD CERTIFICATE |
| 9. IEC CERTIFICATE |
19. COFFEE BOARD |
| 10. US FDA |
|
With these certificates, our company gets it audit done every year for safety measures,
cleanliness measures, operational measures, etc as we cater to International market.
11. HUMAN RESOURCE STRATEGY
In NHC Foods Limited, we work as a one big family from more than 25 years with
effective training, rewards and recognition, and also help to encourage superior
performance and a competitive mind set. Also the management of Human Resources is aligned
with the organisations intended future direction. It is concerned with long term people
issues and macro concerns about structure, quality, culture, values, commitment and
matching resources to future need. HR strategy also involves crisis management. When
things go wrong, strategies are required to manage and solve the issue at hand.
12. DISCLAIMER CLAUSE:
Statements in the Management Discussion and Analysis Report describing the Companys
objectives, projections, estimates, expectations may be "forward-looking
statements" within the meaning of applicable securities laws and regulations. Actual
results could differ materially from those expressed or implied. Important factors that
could make a difference to the Companys operations include economic conditions affecting
demand/supply and price conditions in the domestic and overseas markets in which the
Company operates, changes in the Government regulations, tax laws and other statutes and
incidental factors.
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