Dhunseri Tea & Industries Ltd Management Discussions

230.96
(3.51%)
Jul 24, 2024|01:59:45 PM

Dhunseri Tea & Industries Ltd Share Price Management Discussions

Industry Structure and Development

The Companys main business is manufacture and sale of Tea. Tea being a seasonal industry manufacture of tea commences from around mid March and continues till around mid December. The crop yield depends to a large extant on the 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 in vogue for sustaining the quality of soil as well as for improving the yield. The Company adopts good tea plantation practices to maintain the yield and has embarked on production of quality teas.

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.

The Company has completed augmentation of its tea manufacturing facilities located at North Bank Tea Estates in Assam.

Solar Power is also being availed by the North Bank Garden and it is proposed to commission solar power in the remaining gardens of the Company during 2023-24.

Segment wise performance

The Companys main business is manufacturing. Tea which is sold through auction centres and as bulk / private sales is covered under the sections ‘Financial Results and ‘Operations respectively in the Directors Report.

Outlook

Tea is common mans drink and is consumed throughout the country. The domestic production of tea is sufficient to meet the 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.

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 etc and is also subject to changing market conditions and the 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 it ensures operational efficiency, accuracy in financial reporting and compliance of applicable laws and regulations. The system is subject to review 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, Khagorijan Tea Estate a unit of the Company was disposed off during the year and five tea estates viz; Tara, Duamara, Deohall, Hapjan and Budlabeta Tea Estates were acquired during the year.

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 twelve tea estates including five tea estates which were acquired during 2022-23 all located in the State of Assam with a total plantation area of about 7151.37 hectares. As on March 31, 2023 the Company provided employment to about 13172 employees including workers, staff and sub-staffs.

Significant changes in key financial ratios and return on Net Worth

Decrease in current Ratio, Interest Coverage Ratio and Operating Profit Margin primarily due to increased expenditure resulting from acquisition of tea estates during the year.

Increase in Debt Equity Ratio consequent to increase in working capital borrowings during the year.

Return on Net Worth has decreased due to increased expenditure resulting from acquisition of tea estates during the year.

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.

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