Chambal Breweries & Distilleries Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As management of the company offer readers of financial statements this narrative overview and analysis of the financial activities of the company for the financial year ended on 31st March, 2024 we encourage readers to read the information presented here in conjunction with additional information that we have furnished in the financial statements, which follow this narrative.

Industry structure and developments

The Company operates in the trading and retailing sectors of Indian Made Foreign Liquor (IMFL) and beer. IMFL represents the largest segment within Indias alcoholic beverage industry, which is further categorized into whisky, rum, brandy, vodka, and gin. This industry has experienced steady growth, driven by factors such as increasing population, rising disposable incomes, and growing social acceptance of alcohol consumption. However, the IMFL and beer industry in India is subject to stringent regulations, including high taxation, restrictions on cross-border movements, production constraints, retailing limitations, and other barriers. In several regions, state governments control wholesale and/or retail distribution through monopolies.

• Growing Population and Rising Disposable Income:

With around 13 million individuals reaching drinking age annually and increasing disposable incomes, more consumers can afford premium alcoholic beverages, driving market growth.

• Increasing Social Acceptance: Alcohol consumption is becoming more socially acceptable, especially among younger generations and urban residents, leading to higher consumption rates.

• Market Diversification: Theres a growing demand for flavored and craft beverages, presenting opportunities to introduce diverse product offerings.

• Urbanization and Middle Class Expansion: Rapid urbanization and the growth of the middle class create a larger market for branded and premium alcoholic drinks.

• E-commerce Growth: The expansion of online platforms for alcohol sales offers a new, convenient sales channel, especially in a post-pandemic world where online shopping has surged.

• Investment and Innovation: Increased foreign investment and technological innovation are bringing new brands and advanced production methods to the market, enhancing competitiveness.

Threats

• Regulatory Constraints and State Monopolies: The industry faces strict regulations, including high taxes and licensing restrictions, along with government-controlled distribution in several states, which limit market access and operational flexibility.

• Health Concerns: Growing awareness of health issues related to alcohol consumption may lead to increased advocacy for stricter regulations and a shift towards non-alcoholic alternatives.

• Economic Fluctuations: Economic downturns can reduce disposable incomes and consumer spending on nonessential items like alcohol.

• Pandemic Impact: The Covid-19 pandemic highlighted the industrys dependence on social gatherings and the hospitality sector, which can be severely disrupted by public health crises.

• Cultural and Regional Variations: Diverse cultural attitudes towards alcohol consumption across India can affect market penetration and brand acceptance in different regions.

• Environmental Concerns: Sustainability challenges and environmental regulations may impact production processes and increase operational costs.

• Counterfeit Products: The prevalence of counterfeit and illicit alcohol poses health risks to consumers and undermines the market for legitimate products, affecting the industrys overall reputation.

Segment-wise or product-wise performance

During the year under review, due to Strong p olices of the government, which were not in the favour of your company hence your company did not carry out any business activity of retails selling of IMFL and beer during financial year 2015-16, 2016-17, 2017-2018, 2018-19, 2019-20, 202 0-21, 2021-22, 2022-23 and 2023-24. But, the management of the Company always trying to do best work in the interest of the company.

Outlook

The Company is committed to improving cost efficiency, expanding its reach to new consumer segments, and further consolidating its brand image. Barring unforeseen circumstances, the Company anticipates enhanced profitability. With numerous initiatives underway and a strong operational foundation, we remain confident in our growth prospects moving forward.

Risks & concerns

India is one of the fastest-growing markets in the global wine and spirits industry, yet it faces significant restrictions due to government policies and taxation systems. The countrys complex tax regime and regulatory framework present continuous challenges for the liquor industry, prompting brands to seek alternatives for smoother business operations. Despite these obstacles, the market remains highly lucrative, and these challenges seldom overshadow its potential. In recent years, the industry has also seen the emergence of local and new players, further diversifying the competitive landscape.

Internal control systems and their adequacy

Internal Control Systems as per the Companies Act, 2013 emphasizes the need for an effective internal financial control system in the Company which should be adequate and shall operate effectively. Rule 8(5) (viii) of the Companies (Accounts) Rules, 2014 requires the information regarding adequacy of internal financial controls with reference to the financial statements to be disclosed in the Boards report. The internal control system focuses on assessment of business and operational risks, operational controls and compliance with policies and processes. This system continuously monitors compliance to internal processes across the operations to ensure that all assets are safeguarded and protected against loss from un-authorised use or disposition, that transactions are authorised, recorded and reported correctly and that operations are conducted in an efficient and cost effective manner. The Audit Committee reviews the effectiveness of the internal control system, and also invites Directors and senior management personnel to provide periodic updates on operational effectiveness and controls.

The Company regularly conducts internal check, using external and internal resources to monitor the effectiveness of internal control in the organization. It strictly adheres to corporate policy with respect to financial reporting and budgeting functions. The Audit Committee of the Board of Directors deals with significant control issues and instructs further areas to be covered.

Discussion on financial performance with respect to operational performance:

The financial performance of the Company with respect to operational performance of the company as compared to last year is shown as under:

Operational performance

Financial Performance

The Total Income of the company is Rs.1103832.00/- from the interest income earned on financial assets during the financial year 2023-24. However, the profit after tax is Rs.(24674727.06)/- during the F.Y. 2023-24 as against Profit of Rs. (3734058.37)/ in the previous year.

Human Resource Management

The Company treats its human resources the most important assets and believes in its contribution to the all round growth of the Company. Human capital continues to be a vital resource for the Company. The Company has a continuous process to monitor individual performance. The Company continued to have cordial and harmonious relations with its employees. None of new employees were appointed and 3 (three) on rolls employees working in the Company during the financial year 2023-24

Cautionary Statement

Statements in the Management Discussions and Analysis describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities, laws and regulations. Actual results could differ materially from those expressed or implied.

Details of Significant Changes In Financial Ratios:

Return on Net Worth