Mihika Industries Ltd Management Discussions.

The Management Discussion and Analysis Report has to be read in conjunction with the Companys financial statements, covering overall performance and outlook of its activities which read as follows-

TRADE STRUCTURE AND DEVELOPMENT

The jute industries has seen significant increase in investments in the recent past due to need for improved efficiencies and economies of scale in the face of increasing labour costs and competition from dumped exports from Bangladesh.

Recent developments are going on mainly in Non-women/Composite areas. Movement towards jute-based consumer goods aided by increasing environmental awareness and lifestyle changes is quite perceptible.

OPPORTUNITIES

There is rising awareness about disposal issues leading to high total cost of using synthetic; here lies the opportunity to offer jute consumer products including jute bags as a mass consumption product. Acceptance of jute products are increasing due to its biodegradability as well as eco-friendly nature.

Jutes versatile applications have been already started for lifestyle and promotional bags, decorative, apparels, composites, upholstery furnishings, and also non-wovens for both technical and non-technical purpose. Number of Research & Developments are going on in these fields. The industry would do well to take advantage of such various developments.

Usage of eco-friendly jute sacs for packaging foodgrains under JPM Act1, 1987 is in sync with the government adopted UN sustainability goals of alleviating poverty, zero hunger, responsible consumption/production and climate change. Hence, continued compulsory jute packaging for foodgrains is likely to be an environmental necessity as well in times to come.

THREATS/RISKS AND CONCERNS

Following are the major areas of risks and concerns:

(a) Conversion cost such as Wages, Power, Insurance etc. have been increased to a large extent resulting in higher cost of production.

(b) Abnormal absenteeism causing a serious loss of production with respect to capacity utilisation which is indirectly Increasing conversion cost also. Despite of increase in minimum wages from Rs.257/- to Rs.370/- per month and average 2/- per day per worker. There is no change in scenario of absenteeism.

(c) Due to large difference of wage structure in comparison to Bangladesh, we have lost overseas market drastically.

(d) Seasonal shortages of labour due to adhoc absenteeism, change in new migrant labour availability patterns, shortage of skilled labour and union activism further add to high manpower costs.

(e) Attempt made for artificially lowering/capping the price being paid for sacking supplied by the industry for Packaging foodgrains to various government agencies is an area of concern.

(f) Despite its eco-friendly nature and ability to withstand multiple use, jute industry is forced to plead its case each year for extension of JPM Act, 1987.

(g) There is an urgent need for organised training facilities for attracting new workers to the industry at an early age.

(h) Unbridled increase in wage costs without linkage to productivity in the face of competition from Bangladeshi jute Products produced with cheap de-unionised labour and dumped into India.

(i) As an agricultural product, Jute is at the mercy of the vagaries of weather.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company operates primarily in one business segment viz. trading of Raw Jute activities in India and accordingly this is the only Single Reportable Segment.

OUTLOOK

Good agricultural production in India (almost 20% higher than last year) is expected to further boost demand for jute products in the medium term. With increased focus on increased farmer income and assurance of a remunerative Minimum Support Price, demand for packaging products would sustain. Continuous increase in Jute prices from Q1 to Q3 during Financial Year 2018-19 was not favourable for the industry in face of competition from other natural fibres. However, the price of Jute had reduced in Q4.

It is seen that jute-based consumer products are gaining increasing acceptance. With the increasing aversion to plastic bags owing to pollution threats, increased usage of jute products can b e expected.

The Company endeavors to be an important player in the field of Raw Jute trade. There is good prospect of expanding business in this trade.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has proper and adequate internal control systems to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and all transactions are authorized, recorded and reported properly.

The Internal Auditors are mandated to carry out periodical audit and report on areas of non-compliances/weaknesses. Corrective actions in case of reported deficiencies, if any, are taken actively to further strengthen the internal control systems. These reports are reviewed by the Audit Committee of the Board of Directors for follow-up action and instructions are issued for taking necessary measures.

FINANCIAL AND OPERATIONAL PERFORMANCE

The financial and operational performances are separately elaborated in the Directors Report.

DEVELOPMENT IN HUMAN RESOURCES

Since development in human resource is needed for the organizations growth and to maintain its sustainability in the long run. The Company has continued its endeavor in maintaining peace and harmony at all levels of employment in the organization in the year under review.

CAUTIONARY STATEMENT

The Statement in the Managements Discussion and Analysis Report detailing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. These statements being based on certain assumptions and expectation of future events, actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include changes in Government regulations and tax regime, economic developments within India and abroad, financial markets etc. The Company assumes no responsibility in respect of forward-looking statements that may be revised or modified in future on the basis of subsequent developments, information or events. The financial statements are prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015. The management of the Company has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements reflect true and fair picture, the state of affairs and profit for the year. The following discussions on our financial condition and result of operations should be read together with our audited financial statements and the notes to these statements included in the Annual Report.

For and on behalf of the Board
Mali Chand Agarwal
Chairman
Place: Kolkata DIN:00772091
Date: 31st August, 2019