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Chothani Foods Ltd Management Discussions

28.03
(-4.98%)
Jul 8, 2024|12:00:00 AM

Chothani Foods Ltd Share Price Management Discussions

Management Discussion and Analysis is given in a separate section forming part of the Directors Report in this Annual Report.

1. Industry Structure & Development:

India is known for its varied culture and abundant heritage, and also one of the key elements that specify the nations culture is its food. The substantial use spices in cooking are just one of the specifying features of Indian food, making it special and tasty. India is among the biggest producers as well as exporters of flavors worldwide, with a rich history of flavor trading dating back to old times. The country is blessed with an exotic climate and fertile soil that makes it perfect for the cultivation of a variety of flavors.

India produces about 75 of the 109 varieties listed by the International Organization for Standardization (ISO). The most produced and exported spices are pepper, cardamom, chili, ginger, turmeric, coriander, cumin, celery, fennel, fenugreek, garlic, nutmeg & mace, curry powder, spice oils, and oleoresins. Out of these spices, chili, cumin, turmeric, ginger, and coriander makeup about 76% of the total production.

The Indian spices market is a quickly growing market, driven by a number of aspects such as enhancing need for seasonings in residential and also global markets, the development of the food as well as beverage sector, and also transforming customer choices. The market is extremely fragmented, with a large number of gamers operating out there, as well as is anticipated to expand at a CAGR of greater than 7% during the projection duration (2020-2025). The growth of the export market for Indian seasonings is likewise significant as well as is expected to proceed in the coming years.

The Indian spice processing industry have bright future as agro processing units because India may be a big spice basket for majority of countries in the world as India is the largest producer and processor of spices. India has been the largest producer of spices for many years. India accounts for more than one-third of global production with more than 75 varieties of spices, including cardamom, chilli, coriander, cumin, turmeric, ginger, garlic, fenugreek, mustard, and pepper.

We are engaged into manufacturing and supplying of blended spices, whole spices and grinded spices. We have been supplying the traditional and delectable range of spices. We are committed to manufacture and supply different types of spices, meeting highest quality standards in line with customer requirements.

We have two brands "APPU MASALA" & "GAYATRI MASALA" with more than 30 types of Spices and Masalas including instant mix range such as Pav Bhaji Masala, Chaat Masala, Tea Masala, Garam Masala, Sambhar Masala, Punjabi Chole Masala, Biryani / Pulav Masala, Kitchen King Masala and various Powders like Red Chilli Powder, Jeera Powder, White Pepper Powder, Turmeric Powder. We are positioned as professional and built a reliable reputation within Maharashtras spices arena.

2. Opportunities and Threats Opportunities

The Indian kitchen spice market provides numerous manufacturing opportunities. The growing popularity of Indian cuisine around the world, as well as a shift in consumer preferences towards branded, organic, and natural products are driving up demand for spices.

Spice processing, blending and packaging, organic spice production, spice oil extraction, spice export, and spice trading are all manufacturing opportunities in the Indian kitchen spices market. The investment required for each of these opportunities is determined by the size of the operation and the profitability is determined by factors such as the cost of raw materials, machinery, labour, transportation, and product demand.

In addition to the manufacturing sector, there are many opportunities in spice retailing, distribution, and e-commerce. As more people shop online, e-commerce platforms provide an excellent opportunity to reach a larger consumer and grow their business.

The Company has already tie up with Reliance Retail Limited (Jio) to sale its products online. We as a Company constantly puts an effort to on product quality, pricing, marketing, and distribution and we concentrate on developing a solid business plan, investing in quality control and research and forming strong partnerships with suppliers, retailers, and distributors.

Threats

The spice market is becoming a more diverse and complex industry. Consumer demand for spices is growing in different parts of the world, but there are also many challenges associated with this expanding market.

The price of spices has been on the rise in recent years, as production has outpaced demand. This has put pressure on small producers who cannot afford to increase prices. On the supply side, there are also concerns about sustainability due to climate change and increasing plant disease. Climate change may also impact yields, making it difficult for farmers to replant crops after a devastating drought or frost event.

There are specific difficulties that the Indian flavors market is facing, such as the presence of low- quality and adulterated spices in the marketplace, lack of standardization and also quality control in the market, and high rates of natural flavors.

Another challenge that countries face when it comes to spice production is logistics. Many manufacturers do not have enough warehouses or storage facilities to store all of the spices that are being produced. This creates problems when it comes to transporting these spices from the producers to the markets which makes it difficult for spices to reach the markets.

One way to overcome some of these challenges is to develop standardized protocols for the procurement, storage, and distribution of spices. Additionally, efforts must be made to ensure that spices are available at an affordable price. Greater awareness among consumers about the various benefits of using spices could also help increase their popularity.

3. Future Outlook

The latest report by IMARC Group, titled "India Spices Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2023-2028", 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

The Company plans continuous expansion of its product portfolio and provide differentiated offerings with the objective to capitalize on the emerging trends and strengthen its position in the market.

Your Company will adapt, innovate and collaborate with established and emerging e-commerce players to stay ahead in further evolution of this channel and increase share of online sales and make its brands available across various e-commerce channels thereby appealing to consumers need for convenience.

4. Segment Wise Performance

The Company is engaged in manufacturing of masala and spices. The turnover of the Company for the year ended 31st March, 2023 is Rs. 820.20 Lakhs.

5. Risk & Concern

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. The Company has invested significantly in building strong brands which helps differentiate its products.

Credit Risk: The Company has the capability of producing spices and spices products ware to suit the budget and tastes of customers and hence is optimistic of growth in domestic market. It also enjoys customer loyalty.

6. 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.

7. Financial performance and Operational Performance

The company has achieved a total income of 821.03 Lakhs and net profit is at 12.85 Lakhs during the year ended 31st March, 2023 as compared to 731.26 Lakhs and net profit is at 9.92 Lakhs respectively for the last financial year.

8. Human Resources/ Industrial Relations:

Your Company considers its intellectual capital as its most valuable asset. Personnel policies of the Company are designated to ensure fairness to and growth of all individuals in the organization and aim to provide a challenging work environment. The Industrial Relations was harmonious cordial during the year under review.

CAUTIONARY STATEMENT:

Statement made in this report in describing the companys objectives, estimates and expectations are "Forward looking Statement" within the meaning of applicable laws and regulations. They are based on certain assumptions and expectations of future events but the company, however, cannot guarantee that these assumptions are accurate or will be materialized by the company. Actual results may vary from those expressed or implied, depending upon the economic conditions, Government policies and/ or other related factors.

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