FY2023 represents the iscal year 2022-23, from 1 April 2022 to 31 March 2023, and
analogously for FY2022 and previously such labelled years.
Global Economic
Global Economic growth is projected to fall from an estimated 3.4 % in 2022 to 2.9% in
2023, then rise to 3.1% in 2024. The forecast of low growth in 2023 relects the rise in
central bank rates to ight inlation especially in advanced economies as well as the war in
Ukraine which continue to weigh on economic activity. The rapid spread of COVID-19 in
China dampened growth in 2022, but the recent reopening has paved the way for a
faster-than-expected recovery.
Analysts estimate that 2023 will continue to see the above issues playing out leading
to a further slowdown in economic growth and a mild recession in the UK as well as
potentially in the Euro area. The UK has been impacted by an increase in cost-of-living,
dampening households purchasing power and consumption, as well as tighter iscal and
monetary policy. Current estimates project global recovery in the second half of 2023,
with the moderation of inlation and re-opening of the Chinese economy. We have already
started seeing a cooling-of of fuel and commodity prices as well as global container
freight rates.
However, risks remain to this outlook with the stress seen in banking systems in the US
and Europe in the last few months, potentially getting aggravated with extended high
inlation levels and triggering further rounds of rate hikes and adversely impacting the
business environment. There is also continued uncertainty on a resolution of the
Russia-Ukraine conlict further impacting energy markets and disrupting the supply-demand
balance.
Despite these headwinds, real GDP was surprisingly strong in the third quarter of 2022
in numerous economies, including the United States, the euro area, and major emerging
markets and developing economies. The sources of these surprises were in many cases
domestic, stronger-than-expected private consumption and investment amid tight labor
markets and greater-than-anticipated iscal support.
Indian economic
India has emerged as the fastest-growing major economy in the world and is expected to
be one of the top three economic powers in the world over the next 5-15 years, backed by
its robust democracy and strong partnerships. Strong economic growth in the irst quarter
of FY 2022-23 helped India overcome the UK to become the ifth-largest economy after it
recovered from repeated waves of COVID-19 pandemic shock. Real GDP in the irst quarter of
2022 23 is currently about 4% higher than its corresponding 2019-20, indicating a strong
start for Indias recovery from the pandemic.
Indias nominal gross domestic product (GDP) at current prices is estimated to be at
Rs. 232.15 trillion (US$ 3.12 trillion) in FY22. With more than 100 unicorns valued at US$
332.7 billion, India has the third-largest unicorn base in the world. According to the
McKinsey Global Institute, India needs to boost its rate of employment growth and create
90 million non-farm jobs between 2023 and 2030 in order to increase productivity and
economic growth. The net employment rate needs to grow by 1.5% per annum from 2023 to 2030
to achieve 8-8.5% GDP growth between 2023 and 2030. Indias current account deicit (CAD),
primarily driven by an increase in the trade deicit, stood at 2.1% of GDP in the irst
quarter of FY 2022-23.
In the second quarter of FY2022-23, the growth momentum of the irst quarter was
sustained, and high-frequency indicators (HFIs) performed well in July and August of 2022.
Indias comparatively strong position in the external sector relects the countrys
generally positive outlook for economic growth and rising employment rates. India ranked
ifth in foreign direct investment inlows among the developed and developing nations listed
for the irst quarter of 2022.
Indias economic story during the irst half of the current inancial year highlighted
the unwavering support the government gave to its capital expenditure, which, in FY 2022
23 (until August 2022), stood 46.8% higher than the same period last year. The ratio of
revenue expenditure to capital outlay decreased from 6.4 in the previous year to 4.5 in
the current year, signaling a clear change in favour of higher-quality spending. Stronger
revenue generation as a result of improved tax compliance, increased proitability of the
company, and increasing economic activity also contributed to rising capital spending
levels.
Despite the continued global slowdown, Indias exports climbed at the second-highest
rate this quarter. With a reduction in port congestion, supply networks are being
restored. The CPI-C and WPI inlation reduction from April 2022 already relects the impact.
In August 2022, CPI-C inlation was 7.0%, down from 7.8% in April 2022. Similarly, WPI
inlation has decreased from 15.4% in April 2022 to 12.4% in August 2022. With a proactive
set of administrative actions by the government, lexible monetary policy, and a softening
of global commodity prices and supply-chain bottlenecks, inlationary pressures in India
look to be on the decline overall. Exports fared remarkably well during the pandemic and
aided recovery when all other growth engines were losing steam in terms of their
contribution to GDP. Going forward, the contribution of merchandise exports may waver as
several of Indias trade partners witness an economic slowdown. According to Mr. Piyush
Goyal, Minister of Commerce and Industry, Consumer Afairs, Food and Public Distribution
and Textiles, Indian exports are expected to reach US$ 1 trillion by 2030.
Over the years, the Indian government has introduced many initiatives to strengthen the
nations economy. The Indian government has been efective in developing policies and
programmes that are not only beneicial for citizens to improve their inancial stability
but also for the overall growth of the economy. Over recent decades, Indias rapid
economic growth has led to a substantial increase in its demand for exports. Besides this,
a number of the governments lagship programmes, including Make in India, Start-up India,
Digital India, the Smart City Mission, and the Atal Mission for Rejuvenation and Urban
Transformation, are aimed at creating immense opportunities in India.
Indian Katha Industry
Katha & Cutch are extracted from Wood of the Khair tree. Acacia is the botanical
name of this tree and it has diferent varieties like Acacia Sundra, Acacia Catechuiodes
& Acacia Catechu. Manufacture Of Katha is an important Forest-Based Traditional
Industry In India. Katha is Bitter, Acrid and is used in Paan and in Medicinal And
Ayurvedic Preparations. Cutch is a byProduct of Katha and is used as Tanning Material. The
overall size of the Katha Industry (B to B) is about 2500 Crores p.a. with the organized
segment being approx. 30%. These species of the tree are mainly concentrated in
Uttarakhand, Arunachal Predesh, Gujrat, Maharashtra, J&K, Punjab and Himachal Pradesh.
Katha is being produced in the country since long and it is a mass consumption item as
it is used in the preparation of paan throughout the country. It has got medicinal values
as well and used in ayurvedic preparations as it cures itching, indigestion and bronchitis
and is very efective in leprosy, ulcer, boils, piles, throat diseases etc. On the other
hand, the cutch has various industrial applications.
It is one of the important sources of vegetable tanning materials, used extensively as
an additive to the drilling mud used for oil drilling and for the preservation of sailing
rods, ishing nets, mail bags etc. Thus, both products are versatile with varied
applications.
The demand of quality Katha is growing steadily. Our Company continues to be the
leading player in Katha Industry.
Indian Spice Industry
India is known as the home of spices and boasts of a long history of trading with the
ancient civilizations of Rome and China. Today, Indian spices are the most sought-after
globally, given their exquisite aroma, texture and taste. India has the largest domestic
market for spices in the world. Indias varying climatic conditions ofer enormous scope
for the cultivation of a variety of spices. Almost all Indian states produce spices. About
2.94 million hectares were under spices cultivation, with Andhra Pradesh, Gujarat,
Rajasthan, Karnataka, Madhya Pradesh, Tamil Nadu, Assam and Uttar Pradesh being the top
producers.
India produces about 75 of the 109 varieties which are listed by the International
Organization for Standardization (ISO). The most produced and exported spices are pepper,
cardamom, chilli, ginger, turmeric, coriander, cumin, celery, fennel, fenugreek, garlic,
nutmeg & mace, curry powder, spice oils and
Out of these spices, chilli, cumin, turmeric, ginger and coriander makeup about 76% of
the total production. The Indian spice market is largely unorganized and branded segment
makes up about 15%. The branded market is dominated by players such as MTR, Catch,
Everest, Ramdev etc. Recently, Tata Chemicals launched its spices brand Tata Sampann
Spices. The culture of buying loose spices and grinding them in fashioned equipment called
"Chakki" is still dominant, But its reducing Year on Year which opens up the to
organized players.
India is the largest exporter of spice and spice items. India exported spices and spice
products to 180 destinations worldwide as of 2022. The top destinations among them were
China, the USA, Bangladesh, Thailand, the UAE, Sri Lanka, Malaysia, the UK, Indonesia, and
Germany. These destinations comprised more than 70 per cent of the total export earnings.
During April-Feb 2023, the country exported spices worth US$ 3,332.02 million. In
February 2023, the exports of spices from India increased by 44.12% to US$ 379.51 million.
In 2021-22, India exported 1.53 million tonnes of spices. From 2017-18 to 2021-22, the
total exported quantity from India grew at a CAGR of 10.47%.
This initiative by the Spices Board of India aims to support the exporter to adopt
high-tech processing technologies and upgrade the existing level of technology for the
development of industry and to meet the changing food safety standards of the importing
countries. The initiative provides beneits of infrastructure development, promotion of
Indian spice brands abroad, setting up infrastructure in the major spice growing centres,
promotion of organic spices and special programmes for north-eastern entrepreneurs.
Operations
Katha
Our Company is one of the deep-rooted and strong oleoresins.player in the organized
Katha Industry in India with a market share of approx. 35~38%. Subsequent to GST and E-Way
bill implementation, the market share of the unorganized sector was expected to come down
drastically but unfortunately, still, rampant tax evasion continues, the Govt is taking
proactive steps. We expect that our market share to further increase in the coming
inancial year with addition of new customers in view of the new plant in J&K fully
operational now. The EBITDA
- in the current year has increased and going forward we expect better EBITDA margins.
Our company has implemented cost efective measures and better work condition for the staf.
In FY2023, despite the challenges due to inlation, scarcity of quality raw materials
and geopolitical unrest, the company has made steady progress and has delivered good
inancial results with a well-rounded performance across key metrics.
The Catechin extraction unit set up in Indonesia through our Joint Venture Company in
Singapore is operational and of the Catechin extraction is imported in India and used in
the production of the Katha.
Achieving ultimate customer satisfaction is the prime outlook of the Company. To
materialize this, the organization has adopted stringent quality control tests from the
intermediate stages of input of raw materials the output of inished products. To achieve
this, we have a qualiied team of 20 engineers & chemists who monitor the operation and
the quality.
We are well equipped with laboratory facilities and modern equipment such as HPTLC,
GLC, Polarimeters, TLC, Spectrophotometer, Moisture meter, Hygroscopes besides Kjeldahl
extractor etc. The Company also owns a research lab having plant & equipment for Pilot
Plant scale research for improving quality & research and is investing heavily with
topmost priority to stay ahead of the curve.
During the year under review, the Company has achieved a sales volume of 3487.67 MT
Katha in FY2023 as compared to 3443.88 MT in FY2022. The sales of Cutch (by-product)
decreased from 1236.33 MT in FY2022 to 990.23 MT in FY2023. Good inancial performance is
the combined result of an increase in volume, average realization and operational
eiciencies. The management is focused on achieving desired results coupled with sustained
production levels. The trend is likely to continue and we are hopeful to have a better
operational and inancial performance in FY2024. The Company has recorded a turnover of Rs
18369.37 Lakhs in FY2023, as compared with Rs. 17789.63 Lakhs in FY2022 representing an
increase of 3.26% because of an increase in volume, average realization and change in
product mix. The Proit Before Tax (PBT) for the year, was Rs. 180.99 lakhs as compared to
the loss of Rs 118.19 lakhs for the previous year. During the inancial year 2022-23, the
Company earned a Proit After Tax Rs 138.01 lakhs as compared to the loss of Rs. 103. lakhs
in the previous year.
The better inancial performance is the combined result of an increase in volume,
average realization and operational eiciencies. The management is focused on achieving
desired results coupled with sustained production levels. The trend is likely to continue
and we are hopeful to have a better operational and inancial performance in FY2024.
Spices
The Spice Division has recorded a turnover of Rs. 582.52 lakhs in FY2023 as compared to
Rs. 1230.29 lakhs in FY2022. Due to a focus on brand awareness and with more expenditure
on retailer-level schemes, this division continued to incur cash losses and no near-term
turnaround was visible.
Accordingly, the Board of Directors had decided to discontinue the Spice Division. The
closure of full operations of Spice Division is expected by the end of FY2024.
Financial and operational Performance:
Production Performance:
At present, the Company has two business segments viz. Katha and Spices. Our Company is
one of the leading manufacturers of Katha in India. Our company has recorded total revenue
from operation of Rs. 16993.82 Lakhs, 93.33 % of the total turnover from the sale of Katha
and Rs. 582.52 Lakhs being 3.20% of the total turnover from Spices.
During FY22-23, the Company has produced 3487.670 MT of Katha as compared to 3443.884
MT in FY 21-22. The operational performance of the Company during the period under review
was good. We intend to achieve sustainable and proitable growth through our consistent
eforts.
Operating Results:
Key highlights of inancial performance for the
Company for FY2023 on a standalone basis are tabulated below:
|
|
|
(Rs. in Lacs) |
| Particulars |
FY2023 |
FY2022 |
FY2021 |
| Sales and Other Income |
18369.37 |
17789.63 |
15790.36 |
| Earnings before interest, tax, depreciation and amortisation |
1189.78 |
927.80 |
1129.60 |
| Proit before Tax |
180.99 |
(118.19) |
50.77 |
| Proit after Tax |
138.01 |
(103.73) |
32.74 |
| EPS |
0.22 |
(0.16) |
0.05 |
However, on a consolidated basis, revenue from operations for FY2023 at Rs 18369.37
Lakhs. Proit after tax ("PAT") for the year was Rs. 183.63 Lakhs.
Risks and Concern
Risk and its Management: Risk accompanies prospects. As a responsible corporate, it is
the endeavor of the management to minimize the risks inherent in the business with the
view to maximize returns from situations.
The architecture: At the heart of the Companys mitigation strategy is a comprehensive
and integrated risk management framework that comprises prudential norms, structured
reporting and control. This approach ensures that the risk management discipline is
centrally initiated by the senior management but prudently decentralized across the
organization, percolating to managers at various organizational levels helping them
mitigate risks at the transactional level.
The discipline: The Company has clearly identiied and segregated its risks into
separate components, namely operational, inancial, strategic and growth execution All the
identiied risks are inter-linked with the Annual Business Plans of the Company, so as to
facilitate Company-wide reviews.
The review: A Risk Management Committee of the Board of Directors, comprising Board
Members, has been constituted to review periodically updates on identiied risks,
implementation of mitigation plans and adequacy thereof, identiication of new risk areas
etc.
The Board of Directors also reviews the Risk identiication process and mitigation plans
regularly. A senior executive has been entrusted at all the levels of business operation
in the Company whose role is not only to identify the Risk but also to educate about the
identiied risk and to develop Risk Management culture within the business.
Keycountermeasures:TheCompanyhasinstitutionalized certain risk mitigation procedures
outline as under: ? Roles and responsibilities of the various entities in relation to risk
management have been clearly laid down. A range of responsibilities, from the strategic to
the operational, is speciied therein. These role deinitions, inter alia, are aimed at
ensuring formulation of appropriate risk management policies and procedures, their
efective implementation, independent monitoring and reporting by internal audit. ?
Appropriate structures are in place to proactively monitor and manage the inherent risks
in businesses with proper risk proiling. ? Wherever possible and necessary, appropriate
insurance cover is taken for inancial risk mitigation. riskConirmation of compliance with
applicable statutory requirements are obtained from the respective unit/ divisions and
subjected to an elaborate veriication process. ? Quarterly reports on statutory
compliances, duly certiied, are submitted to the Audit Committee as well as the Board of
Directors for review. ? Status of Demand/Notices on the Company, under various Acts and
Rules, as well as status of litigations are reported to the Board of Directors every
quarter.
Internal Control Systems
The Company has both external and internal audit systems in place. Auditors have access
to all records and information of the Company. The Board recognizes the work of the
auditors as an independent check on the information received from the management on the
operations and performance of the Company. The Board and the management periodically
review the indings and recommendations of the statutory and internal auditors and takes
corrective actions whenever necessary. The Company maintains a system of internal controls
designed to provide reasonable assurance regarding: ? Efectiveness and eiciency of
operations. ? Adequacy of safeguards for assets. ? Reliability of inancial controls. ?
Compliance with applicable laws and regulations.
Corporate Social Responsibility
The companys CSR policy covers activities in the ield of eradication of extreme hunger
and poverty, promotion of education, promotion of gender equality, empowerment of women,
improvement of mental health, slum area development and rural development projects,
employment enhancing vocational skills, ensuring environmental sustainability, sanitation
contribution to Swachh Bharat Kosh set up by Government, ensuring animal welfare,
contribution Prime Ministers National Relief Fund or any set up by the Central Government.
The Company has created a trust in the CSR Trust for undertaking CSR activities for
behalf of the Company.
During FY2023, in compliance with Section 135 Act, an amount of Rs. 6.53 Lakhs is
required by the Company on CSR activities. The spent Rs. 6.53 Lakhs on CSR activities
towards Welfare, Women Empowerment and the People with disability through IWP CSR Trust.
no unspent CSR amount as on 31st March
Human Resources and Industrial Relations
Our employees are our core resource and the Company has continuously evolved policies
to strengthen its employee value proposition. Your Company was attract and retain the best
talent in the market same can be felt in the past growth of the Company is constantly
working on providing the working environment to its Human Resources view to inculcate
leadership and autonomy and this objective; your company spends large eforts training.
Your Company shall always place all necessary emphasis on the continuous development of
its Human
Resources. The belief "great people create a great organization" has been at
the core of the Companys approach to its people.
Key Ratios
| Particulars |
FY 2022 |
FY 2023 |
| Revenue (Rs. in Lacs) |
17789.63 |
18369.37 |
| Net Proit After Tax (Rs. in Lacs) |
(103.73) |
138.01 |
| Earnings Per Share |
(0.16) |
0.22 |
| Operating Proit Margin (%) |
3.05% |
4.72% |
| Net Proit Margin (%) |
(0.58) % |
0.76% |
| Return on Net worth the Central |
(0.29) % |
0.39% |
| to Current Ratio (times) the |
1.43 |
1.41% |
| Debtors Turnover(times) project |
3.80 |
3.84% |
| Debt-equity (times) |
0.52 |
0.50 |
| Interest Coverage of IWP and on Ratio(times) |
0.82 |
1.27 |
Cautionary Statementof the
Statements in this Management Discussion and Analysis to be spent report detailing the
Companys objectives, projections, has Animal estimates, expectations or predictions may
be "forward- of looking statements" within the meaning of applicable There is
securities laws and regulations. Actual results could difer . materially from those
expressed or implied. Important factors that could make a diference to the Companys
operations include global and Indian demand-supply conditions, raw material prices,
inished goods prices, cyclical demand and pricing in the Companys products to and andthe
their principal markets, changes in Government regulations,. The tax regimes, economic
developments best within India and the countries with which the Company conducts business
and other factors such as litigation a and/or labor negotiations. on
+91-9892691696
