Diana Tea Company Ltd Management Discussions

Annexure - "A"

The total world tea production was 6604 million Kgs in 2023 as compared to 6422 million Kgs in 2022, out of which contribution from Indian tea crop was 1368 million Kgs when compared to 1365 million Kgs. last year. Total Indian tea export was 228 million Kgs in 2023 against last year 231 million Kgs. The contribution of small growers in Indian tea production continues to swell every year and has already breached 50% of total crop. Whereas production from organized sector is showing a declining trend. Global tea consumption is likely to grow due to rising population of tea drinkers as tea being recognized as health drink. Indian tea consumption is likely to continue to grow at a steady rate.

Segment Analysis

Tea crop is entirely dependent on weather conditions being agriculture in nature. With global warming and extremely uncertain weather conditions the crop tends to suffer. Extreme weather conditions also gives rise to pest infestation which is again detrimental for crop. We follow prudent field practices and 100% irrigation facilities to overcome such natural vagaries.

Opportunities Threats, Risks and Concerns

Global tea production is rising every year and so is the consumption. Being agricultural in nature, production is directly linked to the weather conditions prevailing during the year and tends to affect the production in adverse conditions. Furthermore, mushrooming of small growers in the Indian tea sectors is challenging the survivability of organized tea gardens as there is no level playing field between the two. The latter is burdened with huge social cost falling under Plantation Labour Act, whereas small growers are not affected by it. Rising cost in form of higher wages and other inputs not supported by increase in price realization, continues to pose major threat on survivability or organized sector.

Outlook

Current year outlook looks to be very concerning at the back drop of very hostile conditions resulting in crop loss of 58 million kgs till May followed by excessive pest and fungal activity. Prices have firmed up due to shortage and is expected to be during the year. Price gap between MRL compliant quality tea and non-compliant non quality tea continues to widen. However such price rise does not compensate the crop loss till date. It remains to be seen how crop behave in balance part of the year. However tea market is expected to be better due to crop shortage. Our company is confident of passing through this tough times with backing of our higher yielding gardens and focus of making better quality.

Financial Review and Analysis

The Companys financial position is strong enough which has helped company to pass through in turbulent times. The development and modernization work in garden is always given top priority for improvement in quantity as well as quality. The surplus fund in the Company is deployed in such a way that reasonable returns are derived.

Details of Significant Changes in key financial ratios along with detailed explanations In compliance with the requirement of the Listing Regulations, the key financial ratios of the Company along with explanation for significant changes (i.e., for change of 25% or more as compared to the immediately previous financial year will be termed as ‘significant changes) has been provided hereunder:

The significant changes over previous year across all ratios is due to increase in profit as compared to last year and deduction in interest cost. For detailed explanation, please refer to Note no. 41 of the Notes to Standalone Financial Statements for the financial year ended March 31, 2024.

Internal Control systems and their adequacy

The Company has laid down policies, guidelines and procedures, which form part of its internal control system. The Companys internal control system are periodically tested and supplemented by an extensive programme of internal audit by independent firm of Chartered Accountants. Audits are finalized and conducted based on internal risk assessment. Significant findings are brought to the notice of the Audit Committee of the Board and corrective measures are recommended for implementation. Material developments in human resource / industrial relations front, including number of people employed Industrial relations in all tea estates and units continued to be cordial. Focus on better deployment of labour in garden area has resulted in improving productivity both in quantitative and qualitative manner. The total number of people employed in your Company as on 31st March, 2024 was 3580.

Cautionary Statement

The statements in the report of the Board of Director sand the Managements Discussion and Analysis Report describing the Companys projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities Laws and Regulations. Actual results could differ materially from those expressed or implied since the Companys operations are influenced by many external and internal factors beyond the control of the Company.