Chothani Foods Ltd 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 being the largest spice producing country producing 50 different types of spices and people are looking for ready-made food, and spice powder makes their cooking more accessible. Powdered spices are convenient to use, and it saves time and physical efforts for preparing different delicious cuisine. Every commercial food industry like hotels, restaurants, catering business and many more are using powder spices on a daily basis.

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

As growing acceptance by consumers, rise in the demand for Spices worldwide, we are constantly striving to expand our line of products and we are always on the lookout for complementary products that will add to our solution bouquet. We would seek product lines, which have better scope for value addition and therefore offer us higher than average margins.

Threats

Spices Industry is prone to changes in government policies. Any material changes in the duty and fluctuations in raw material prices may adversely impact our financials. There are no entry barriers in our industry, which puts us to the threat of competition from new entrants. Other factors which may have impact on the performance are intense competitive pressure, rising labour wages and perishable items. It is difficult to estimate the revival period of the Company.

3. Future Outlook

Food and beverage industry is the most important end user of spices in the world. Hence the usage of the spice powder is increasing consistently and futuristic. Packaged and frozen foods are also utilizing spices to make the food seem more edible while preserving it for a long time simultaneously. This has been contributing to the overall market growth of spices and will define its direction in the upcoming years.

In 2020 however the COVID-19 pandemic struck and disrupted the export markets and economics of countries across the globe. However, even when Indias overall merchandise export had suffered and declined, the masala and spice export saw an increase of 23% in June 2020 as compared to the previous year, with the United States alone importing spices worth approximately 37 billion Indian rupees. Further the spice market is expected to expand at a CAGR of 6.5% from 2020 to 2027.

These figures and statistics point out that the spice and masala business continued to grow, despite a global pandemic, will continue to do so in the future, scaling new heights of success.

We are focused on achieving continuous, sustainable growth and leadership in the food industry through manufacturing wide range of finished products. We are into continuous efforts to provide innovative and deliver quality products to promote a healthy lifestyle. We are also focused on maximizing profits by increasing sales and reducing production costs and overheads.

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, 2021 is Rs. 3,96,85,530.59/-

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 396.85 Lakhs and net profit is at 8.83 Lakhs during the year ended 31st March, 2021 as compared to 457.44 Lakhs and net profit 12.25 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.

9. There were no significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios.

10. Return on Net worth was 1.89% in the previous year while return on net worth in current year is 1.34%.

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.