cheviot company ltd share price Management discussions

a) Industry structure and developments

There was a good harvest of Raw Jute and the prices prevailed for the year at very beneficial levels.

Domestic markets were buoyant and there was a sharp increase in production and capacity utilisation for the Jute Industry. Expectation of such bulk buying for foodgrains by the Government of India shall continue.

Valued added sectors have su3ered as a result of poor demand both domestically and in overseas market. Mills with traditional jute products have performed better in such scenario. There was a sharp increase in wage cost due to increase in Dearness Allowance during the year under review.

b) Opportunities and threats Opportunities

• Full support extended by the Government of India for eco-friendly products and continuation of 100% reservation norms for using Jute Bags for foodgrain packaging.

• Growth in the Jute Industry due to better demands and viability.

Threats

• Shortage of workers for the Jute Industry is a concern.

• Raw Jute forms the major portion of the conversion costs and with inflation there has been sharp increases in cost of Raw Jute which needs to be absorbed by the Jute Industry.

• Prosperity in the Jute Industry may lead to further wage increases and cost increases in future years.

• Global economic crisis looming large may affect the overseas market for Jute Industry.

c) Segment-wise or product-wise performance

The Company is engaged in a single business segment i e. manufacturing and sale of jute goods. Hence, disclosure requirement as required by IND AS - 108 are not applicable in respect of business segment. However, the geographical segments considered for disclosure are as under:

Particulars	For the year ended 31st March, 2023			For the year ended 31st March, 2022
	Within India	Overseas	Total	Within India	Overseas	Total
Revenue	36,658.87	19,340.06	55,998.93	32,617.52	23,548.04	56,165.56
Non-current assets other than financial instruments *	21,024.30	-	21,024.30	18,826.24	-	18,826.24

* Non-current assets other than financial instruments include property, plant and equipment, capital work-in-progress, right of use assets, investment property, other intangible assets, intangible assets under development, non-current tax assets (net) and other non-current assets.

d) Outlook

We are affected by the world economic situation in our segments of exports. Profits have reduced but we are now optimistic on the future outlook. We feel the worst is behind us.

e) Risks and concerns

The major areas of risk and concern for the Jute Industry are:

• Long term interest of the farmers in jute cultivation is at risk due to the hard manual work involved which the younger generation are not keen to get involved in.

• New generation workers and supervisors are looking for more modern sectors than Jute. This is creating a vacuum for skilled Jute mill workers.

• Lack of modernisation of the Jute Industry and inadequate new technologies for the Jute Sector.

• In the unorganised sector, small units have been setting up in the last 2-3 years. They are operating with lower wages and costs. Further increase is expected in this sector which may lead to unequal competition.

f) Internal control systems and their adequacy

The Board of Directors have designed and implemented various policies and procedures for internal financial controls to ensure orderly and effcient recording and generation of reliable financial and operational information, safeguarding of assets from unauthorised use or losses, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, timely preparation of reliable financial information and ensuring compliance with corporate policies and applicable laws.

The audit committee evaluates the internal control system periodically. During the year under review, no fraud was detected by the auditors. The Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls with reference to financial statements were operating effectively as at 31st March, 2023, based on the essential components of internal controls over financial reporting criteria established by the Company.

g) Discussion on financial performance with respect to operational performance

The following are the significant areas of financial performance:

Particulars	For the year ended 31st March, 2023	For the year ended 31st March, 2022	% Increase/ (Decrease)
Revenue from operations	56,358.84	57,113.07	(1.32)%
C.I.F. value of export sales	19,340.06	23,548.04	(17.87)%
Finance cost	34.04	42.57	(20.04)%
Inventories	10,032.18	8,769.83	14.39%
Purchase of property, plant and equipment and other intangible assets (including changes in capital work-in-progress, capital advances/creditors)	2,412.05	1,046.35	130.52%

Due to lower Raw Jute rates and consequent finished goods prices, the revenue, though similar to last year in value terms, represents a substantial increase in production quantity. Exports were impacted as explained above. Capex includes expenditure on new weaving unit commissioned during the year under review.

h) Material developments in human resource/industrial relations front, including number of people employed

Industrial relations remained cordial during the year under review. There is shortage of new entrants in the Jute Industry. The Company continues to impart in-house training to new entrants to bring about all-round improvement in their working knowledge and skills. The Company also continues its various Staff welfare schemes. As on 31st March, 2023, there were 4,139 employees on the roll of the Company.

i) Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof

Particulars	For the year ended 31st March, 2023	For the year ended 31st March, 2022	% Change
Debt-Equity Ratio	0.01	0.02	(50.00)%
Net Profit Margin (%)	9.66%	13.89%	(30.45)%

The debt-equity ratio has reduced due to decrease in both long-term and short-term borrowings. The bottom line was impacted by lower profitability in exports and lower return on investments reflected in other income. Please refer to Note 56 to the financial statements for the financial year ended 31st March, 2023 for more details on Financial Ratios.

j) Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof

Particulars	For the year ended 31st March, 2023	For the year ended 31st March, 2022
Return on Net Worth	12.50%	17.20%

Return on net worth had dropped as an impact of lower profits due to trading conditions and lower return on Investments.

k) Cautionary statement

Statement made in this section of the report is based on the prevailing situation and future expectation are anticipated based on the prevailing market situation. Actual results may di3er from those expressed or implied in the statements depending on the circumstances.