Dhunseri Tea & Industries Ltd Management Discussions

Industry Structure and Development

The Companys main business is manufacture and sale of Tea. Tea is a seasonal industry. The manufacturing process starts around mid March and continues till mid December. The crop depends to a large extent on weather conditions. The plantation area being constant the yield depends on irrigation facilities, better soil management techniques, weather etc. Necessary steps are initiated by the Company for improving the yield and quality of crop in its gardens. The Company lays stress on improving the quality. Use of vermi compost in the plantation areas is being executed for sustaining the quality of soil as well as for improving the yield. The Company adopts good cultivation practices to maintain the yield and has embarked on production of quality teas. We have initiated Integrated Pest and Nutrient Management practices on the estates as part of our improvement drive.

Opportunities and Threats

The Companys major income is from sale of tea. The tea manufactured by the Company is sold through auctions as well as private sales.

The production cost of tea, comprises of various inputs which are statutorily required to be met by the Company including those under the Plantation Labour Act, Minimum Wages Act etc and levies imposed by the Central and State authorities under various other laws.

We have introduced Battery operated machines on Estates to mitigate shortage of workers in plucking.

Solar Power Plants in the remaining Tea Estates of the Company in South Bank were set up in 2024-25 and have been commissioned in May25.

Segment wise performance

The Companys main business activity is manufacture of Tea which is sold through auction centres at Kolkata and Guwahati and also though bulk / private sales. These are covered under the section Financial Results and Operations respectively under Directors Report.

Industry Outlook

Tea is a common mans drink and is consumed widely throughout the country. The total production of tea is almost sufficient to meet the domestic internal demands. The weather is of prime importance for the industry and due to the vagaries of the weather the production often fluctuates. The outlook for the tea industry is positive due to increasing domestic demand.

However due to increasing cost of production the margins are under pressure and with the unfair competition from the un-organised sector, the Industry is undergoing through a difficult phase. The Industry expects effective incentives from the Authorities.

Risk and Concern

The Management has to constantly monitor the risks and concerns associated with the industry by ensuring adequate irrigation facilities to the Plantation areas, soil enrichment, protection of plantation against attacks by pests and coverage against other issues involving excessive rains/ drought/ hail storm etc and the changing market conditions and trends. Further increased supply in the global market and slowdown of the economic growth may also adversely affect the Companys business prospects.

Internal Control System & their adequacy

The Companys internal control system are commensurate with its size and ensures operational efficiency, accuracy in financial reporting and compliance of applicable laws and regulations. The systems are reviewed from time to time.

Disclosures on financial performance with respect to operational performance

The disclosures under financial performance with respect to operational performance are covered by the respective sections of the "Directors Report i.e., Financial Results and Operations.

In continuation of the program of rationalization of operations and improving profitability the Companys unit viz., Dilli Tea Estate was disposed off during 2024-2025.

Material developments in Human Resources / Industrial Relations front including number of people employed

The Tea industry is labour intensive and provides employment to a very large segment of the local population. The company presently has Eleven tea estates along with their respective Tea Estate Factories all located in the State of Assam with a total plantation area of about 6861.12 hectares. As on March 31, 2025 the Company provided employment to about 12,412 employees including workers, staff and sub-staffs.

Significant changes in key financial ratios and return on Net Worth

Operating Profit Margin, Net Profit Margin, Return on Net Worth, Interest Coverage Ratio, Debt Service Coverage Ratio, Return on Equity Ratio, Net Profit Ratio and Return on Capital Employed, Return on Capital Employed and Net Profit ratio has improved due to increase in profit.

Inventory Turnover Ratio was favourable due to reduction in inventory level.

Turnover Ratio was favourable due to timely realisation of Debtors.

Net Capital Turnover Ratio has increased due to increase in Turnover.

Return on Investment has declined due to fall in fair value of Unquoted Investments.

Cautionary Statement

Statements in this management discussion and analysis describing the Companys objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in the industry- global or domestic or both, significant changes in political and economic environment in India, applicable statues, litigations etc.