Bangalore Fort Farms Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS:

The jute industry in India witnessed a robust performance during the FY 2024-25, supported by sustained demand in both domestic and global markets. The eco-friendly nature of jute, coupled with increasing environmental awareness, has fueled the demand for jute products globally.

During the year under review, our company achieved significant growth in both income and profit after taxes, reflecting our strong position within the industry and our ability to capitalize on emerging opportunities. The global demand for jute continued to rise, driven by a shift towards sustainable packaging solutions and the versatility of jute in various applications. This favorable industry environment has enabled us to enhance our production capacities and optimize our operational efficiencies, further strengthening our market presence.

Looking ahead, the jute industry is expected to maintain its growth trajectory, with ongoing government support for the sector and increasing consumer preference for sustainable products.

The Company is into Jute and Agro trading; however, the company did not enter into exports of Jute bags and accessories this fiscal year. However, due to high demand for jute and agro products worldwide, the company is of the view that there will be significant exports in the coming years. It has also spread hands in metal handicrafts etc along with raw jute and merchandise, import, export of metal handicrafts, merchandise etc.

To meet the rising global demand, we strategically increased our production capacity, ensuring timely delivery and maintaining the quality of our jute products. This expansion was complemented by investments in advanced technology to improve operational efficiency.

We focused on expanding our footprint in existing markets while exploring new geographical regions with untapped potential. Our efforts were directed towards establishing strong distribution networks and strategic partnerships to enhance our market reach.

The availability and cost of raw jute are subject to seasonal variations and climatic conditions, which can lead to price volatility. Any significant increase in raw material costs may impact the profitability of jute manufacturers.

The industry is heavily regulated, with government policies influencing both production and pricing. Any adverse changes in regulations, including export restrictions or increased environmental compliance costs, could pose challenges to the industry.

With the rising global demand for sustainable materials, the jute industry faces competition from other natural fibers and synthetic alternatives. The industry must continuously innovate and improve to maintain its competitive edge.

The Company is presently into Single Business Segment.

Opportunities:

As environmental concerns continue to rise, there is a growing global shift towards sustainable and biodegradable materials. This trend presents a significant opportunity for the jute industry to expand its market share, especially in sectors like packaging, textiles, and home furnishings.

The Indian governments continued support for the jute industry, including various subsidies and promotional schemes, provides a favorable environment for growth. Additionally, policies promoting the use of jute bags over plastic alternatives create new opportunities for the industry.

There is a growing demand for innovative jute products that go beyond traditional uses. By focusing on research and development, companies can tap into new market segments, such as fashion accessories, composites, and high-end consumer goods.

With increasing awareness about the environmental benefits of jute, there is potential to expand into new international markets. Penetrating untapped regions could lead to substantial growth in exports.

The major threats are:

Despite the advantages of jute, it faces stiff competition from synthetic alternatives and other natural fibers that may offer lower costs or different functional properties. This competition could limit the industrys market share.

The price of raw jute is subject to fluctuations due to various factors, including weather conditions, agricultural practices, and market demand. Significant price increases can strain margins and affect profitability.

The jute industry is subject to various regulatory standards and environmental norms. Stricter regulations or changes in compliance requirements could increase operational costs and impact profitability.

Geopolitical tensions, logistical challenges, or natural disasters nowadays disrupt the supply chain, leading to delays and increased costs. The industry must navigate these uncertainties to ensure consistent supply and delivery.

Our internal control system incorporates a thorough risk management process that identifies, assesses, and mitigates risks across all areas of the business, including procurement, production, and sales. This is particularly crucial given the price volatility of raw jute and the global demand fluctuations.

We have implemented automated financial controls to ensure accurate and timely financial reporting. These controls are supported by advanced ERP systems that facilitate real-time monitoring of transactions and compliance with accounting standards.

Internal audits are conducted regularly to assess the effectiveness of our operations and to identify areas for improvement. This includes audits of our production processes, inventory management, and supply chain operations, ensuring that we maintain high levels of efficiency and cost-effectiveness.

The outlook for the jute industry in India and globally remains positive, driven by increasing demand for sustainable and eco-friendly products. As environmental concerns continue to influence consumer preferences and regulatory frameworks worldwide, jute, with its biodegradable and renewable properties, is well-positioned to play a significant role in the global shift towards greener alternatives.

For FY 2025-26 and beyond, the Company anticipates continued growth in both domestic and international markets. Key drivers include:

As more countries and companies prioritize sustainability, the demand for jute products, particularly in packaging and textiles, is expected to grow. This trend presents significant opportunities for expansion and market penetration.

The Indian governments ongoing support for the jute industry, through various subsidies and initiatives promoting the use of jute products, is likely to continue, providing a strong foundation for industry growth.

The Company plans to invest in research and development to innovate new jute-based products that cater to emerging consumer needs. Expanding our product portfolio will enable us to tap into new market segments and drive revenue growth.

To meet the anticipated rise in demand, the Company intends to further expand its production capacities, incorporating advanced technologies to enhance efficiency and output quality.

The Company is keen on exploring and entering new geographical markets, particularly in regions where jute is gaining popularity as an alternative to plastic and other non-biodegradable materials.

The Company remains committed to upholding the highest standards of ethics and integrity in all its operations. The Code of Conduct serves as a comprehensive guideline for ensuring that the Companys values are consistently reflected in the behavior and decision-making of its directors, employees, and stakeholders. This Code is rooted in our commitment to transparency, fairness, and responsibility, particularly in the context of the jute industry, where sustainable practices and ethical sourcing are paramount.

The jute industry is subject to fluctuations in market demand, raw material prices, and competition from alternative materials. Changes in these factors could impact the Companys performance and profitability.

The industry operates under a complex regulatory environment. Any changes in regulations or government policies, particularly those related to environmental standards or trade, could affect the

Companys operations and financial outcomes.

Global and domestic economic conditions, including economic downturns or slowdowns, could influence consumer spending and demand for jute products, potentially impacting the Companys growth prospects.