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

Jute Industrial sector is an important segment of Indian economy. Jute has been the most versatile natural fibre. The jute sector produces products ranging from low value geo-textile to high end jute made ups including sacking, hessian, yarn, decorative fabrics etc. In our country, due to the growing environmental concerns, state and central government started making laws and banning the use of single use plastic bags and items which may create a huge demand for low cost shopping bags. As yet consecutive year, the Met office has forecasted that the monsoon in India will remain normal and hence raw jute crop of ensuing crop season appears to be very encouraging. The price of the raw jute has dropped to some extent and the closed mills have started production. Recession is looming large in global market scenario due to Russia-Ukraine conflicts and there is uncertainty in improvement in export market for jute products.

OPPORTUNITIES

Jute is a natural fibre obtained from the bark of the white jute plant or the tossa jute plant. It is also known as the golden fibre owing to its golden and silky shine, and is extensively used in the manufacturing of packaging products and textiles. As a packaging material, jute offers advantages such as good insulation, low thermal conductivity and moderate moisture retention. On account of this, jute bags are used as packaging material for bulk goods as well as shopping and gift bags. The global jute shopping bag industry is currently at a nascent stage with encouraging growth aspects. The demand for jute bags has witnessed a surge over the past few years, particularly in the European Union. This can be attributed to the growing environment consciousness in the region. The imports of jute bags in non-producing countries have also been facilitated by the ban on plastic packaging materials and bags. Additionally, the benefits offered by jute bags such as their biodegradability, durability, low cost, high strength, etc. have further supported the market growth. The Indian jute industry is having plenty of opportunity by its side; it is not only one of the oldest industries of India but also among the major employer of the nation. There are a lot of strengths and also much chance to seize them but it could only be done if it overcomes its weaknesses and threats.

THREATS/RISKS AND CONCERNS

The following areas of risks and concerns continue to pose threat to Jute Industry -

a) Threat of dilution from the Government by amending JPMA Guidelines.

b) Cut throat competition from Bangladesh in export market which continues to enjoy benefits in the form of lower costs and government subsidies.

c) Further decline in Global markets due to extraneous geo-political reasons.

d) Increase in wage cost without linking to productivity which constitutes high proportion of production costs in a labour-intensive industry.

e) Shortage of raw jute due to unfavourable weather conditions.

IMPACT OF COVID-19

The beginning of financial year 2021-22 (FY2022) was once again dominated by the COVID-19 pandemic as new waves of infection swept across the world. In India, the second wave (called Delta) proved far more lethal than the first that struck in 2020. After a shaky start in some places, the vaccine immunisation programme by the Indian Government and Governments across the world has been exemplary. Itsaved lives and livelihood.

The highly transmissible variant Omicron in early January 2022 (the third wave) spread rapidly across the world. During this wave, Indias daily number of reported cases peaked to nearly 350,000 on 20 January 2022. Faced with the prospect of yet more lockdowns, there was fear that the world would face yet another year of slow economic growth. Fortunately, while highly transmissible, Omicron was not as lethal as Delta. So, while many got infected, fatality rate was fortunately low. As long as the new variants are like Omicron, we should have less to worry about mass hospitalisations, high mortality, multiple lockdowns and lower growth.

This pandemic has inflicted enormous pain and suffering to individuals and corporates alike across the world. Flowever, it gave the world an opportunity to reinvent itself to adapt to new ways of life and business. COVID-19 was a real test of resilience and agility for every business. Corporations that have successfully adapted the challenges thrown by COVID- 19 have become more resilient and prepared to weather future disruptions. It was not just the corporate sector that has been forced to rapidly adapt. Public services organisations, regulators, governments, and local administrations have demonstrated their potential to adapt and overcome.

The Company continues its business activities, in line with the guidelines issued by the Government authorities, take steps to strengthen its liquidity position and further explore cost restructuring exercise. The Company does not anticipate any challenges in its ability to continue as going concern or meeting its financial obligations. As the situation is unprecedented, the Company is closely monitoring the situation as it evolves in the future.

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

Jute crop during the current year seems to be better than the previous year due to favourable weather conditions. Raw jute prices may also soften, barring unforeseen circumstances. Indian jute industry is largely dependent on captive demand for sacking due to the Jute Packaging Material (Compulsory Use in Packing Commodities) Act, 1987. The government demand is very robust. Uncertainty in escalation of Russian-Ukraine conflicts is continuing and the company cannot escape from the likely impact thereof

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. The Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls with reference to financial statements were operating effectively as at 31st March, 2022, based on the essential components of internal controls over financial reporting criteria established by the Company.

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. The Company is continuing its efforts through training to enhance competence of its manpower to make them more resourceful in their present job and also to prepare them for future roles. The Company has also introduced staff welfare schemes under which benefits are provided to deserving members of staff.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

There has been no significant change (i.e., change of 25% or more as compared to the immediately previous financial year) in any key financial ratios viz. debtors turnover, inventories turnover, current ratio, debt-equity ratio, and operating profit margin. The Company has decided to report following Key Ratio:

Particulars FY 21-22 FY 20-21
Current ratio 7724.23:1 10825.97:1
Return on equity ratio -0.08 -0.02
Net Capital turnover ratio 0.07 0.07
Net profit ratio -0.6 -0.09
Return on Investment 0.72 3.88
Return on capital employed 0.07% -0.91%

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 above 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
Manoj Sethia
Chairman
DIN:00585491
Place: Kolkata
Date: 5th September, 2022