I. GLOBAL ECONOMY OVERVIEW
In 2022, the global economy encountered a widespread deceleration, which was
exacerbated by an unprecedented in ation surge, soaring to 8.7%. The root cause of this
surge can be traced back to the prolonged geopolitical con icts between Russia and
Ukraine, which triggered far-reaching global supply chain disruptions, sharp spikes in
commodity prices, and a surge in pent-up demand. The collective impact of these factors
signi cantly contributed to the in ation rate reaching multi -decadal highs across
numerous economies.
As a consequence of these formidable challenges, the Global GDP growth rate experienced
a notable deceleration, expanding by a mere 3.4% in 2022 as compared to the more robust
growth of 6.2% observed in the preceding year of 2021. Likewise, the growth trajectory of
Advanced Economies also witnessed a slowdown, with a growth rate of 2.7% recorded in 2022,
in stark contrast to the more favorable growth rate of 5.4% achieved in 2021. Similarly,
Emerging Market and Developing Economies displayed a decline in growth, growing at a rate
of 4.0% in 2022, compared to the higher growth rate of 6.7% recorded in 2021.
It is worth noting that the aforementioned geopolitical con icts between Russia and
Ukraine not only directly impacted regional economies but also reverberated across global
markets, leading to signi cant consequences for various sectors and countries. The
resultant supply chain disruptions and surges in commodity prices further compounded
economic challenges, necessitating careful analysis and prudent policy measures to
mitigate the adverse effects.
OUTLOOK
The worst is now seemingly past us, as clear signs of recovery are visible within many
sectors and industries. Most crucially, many central banks worldwide moved in to implement
favorable monetary policies and raised the interest rates to ensure that the economies can
outplay the adverse effects of the slowdown and provide liquidity, which would stimulate
economic activities. The disruptions to the energy and food sector supply chains are also
disappearing gradually, indicating a slow recovery. However, many economies are still
absorbing the shocks and are far from the path to recovery. Most of the economies are
likely to witnesses lower growth in 2023, driven by unemployment. The IMF also predicts as
lower growth in 2023, and a gradual pick-up in the economy in 2024.
As per their report, the Global Economy is projected to grow by 2.8%, Advanced
Economies by 1.3% and Emerging Markets and Developing Economies by 3.9% in 2023.
Meanwhile, for 2024, the current projections for the Global Economy area 3.0% growth, for
Advanced Economies are 1.4% growth and Emerging Markets and Developing Economies are
4.2% growth. Once the cooling effects of the monetary policy tightening come into effect,
along with the decline in fuel and non-fuel commodity prices, the global head line in
ation (Consumer Price Index) is expected to decline, from 8.7% in 2022 to 7.0% in 2023.
Over the medium term, the outlook now looks feeble. For 2028, the global growth is
projected at 3.0%, which is the lowest ever medium-term growth projection published in the
IMFs World Economic Outlook report since 1990.
II. INDIAN ECONOMY OVERVIEW
The Indian economy has demonstrated remarkable resilience and strength in navigating
the challenges posed by the global economic climate. Despite the prevailing global
slowdown, Indias GDP exhibited substantial growth, reaching 6.8% in 2022. This signi cant
expansion has propelled India to attain the status of the 5th largest economy in the world
in terms of nominal Gross Domestic Product (GDP). The impetus for this growth can be
attributed to robust investments owing into India, which in turn, stimulated manufacturing
activities within the country. Such positive economic m o m e n t u m w a s b o l s t e r
e d b y t h e implementation of favorable government policies and initiatives, including
the Production Linked Incentive (PLI) scheme and the PM GatiShakti Yojana, among others.
Moreover, Indias burgeoning domestic consumption played a crucial role in fostering
economic growth, particularly as the nation surpassed China to become the worlds most
populous country. By reducing its reliance on global demand and focusing on bolstering
internal consumption, India managed to outpace the growth rates of other comparable
countries. However, it is worth noting that the impact of the global economic scenario was
not entirely impervious to India. As evidenced by the elevated headline in ation rate of
6.7% during the year, the country did experience some repercussions. Despite this, Indias
overall economic performance remained resilient, a testament to its proactive measures and
favorable conditions. (Source: IMF World Economic Outlook, April 2023)
OUTLOOK
Indias economic prospects continue to be highly promising, as the nation is poised to
witness robust growth driven by augmented capital investments and strengthened credit
disbursement, facilitated by the bolstering banking sector. According to the Asian
Development Outlook of July 2023, Indias GDP is projected to achieve a growth rate of
6.4% in 2023 and 6.7% in 2024.This growth trajectory is further reinforced by several
other factors that under pin the nations economic resilience.
Firstly, Indias burgeoning population provides a substantial demographic dividend,
which contributes to its economic growth potential. Secondly, the implementation of
progressive digital transformation initiatives has led to greater ef ciency and innovation
across various sectors, thus bolstering the overall economic performance. Additionally,
the governments commitment to supportive policies has fostered a conducive environment
for business and investment, fostering con dence among domestic and international
stakeholders.
Furthermore, the prudent management of macroeconomic fundamentals has played a pivotal
role in strengthening Indias economic foundation. The convergence of declining global
commodity prices and the interest rate adjustments implemented by the Reserve Bank of
India (RBI) are expected to contribute to a reduction in in ation to 4.9% in CY 2023 and
4.4% in CY 2024, thereby ensuring stable price levels and enhancing economic stability.
In addition to these factors, recent governmental pronouncements aimed at boosting
agricultural productivity, including the establishment of digital services for crop
planning and support for agriculture start-ups, are expected to have a positive impact on
the agricultural sectors growth in the medium term. Moreover, the governments commitment
to infrastructure development under initiatives such as GatiShakti, logistics, and
industrial corridor development will signi cantly enhance industrial competitiveness and
pave the way for sustained economic expansion. Given these robust macroeconomic indicators
and policy initiatives, international agencies such as the World Bank, the International
Monetary Fund (IMF), and the Asian Development Bank have all projected India to be the
fastest-growing economy in the forthcoming years. These institutions acknowledge Indias
strong economic fundamentals, strategic initiatives, and demographic advantages as key
drivers of its impressive growth outlook.
III. INDUSTRY OVERVIEW
Indian FMCG Industry
TThe Fast-Moving Consumer Goods (FMCG) industry in India has witnessed a signi cant
expansion in recent years, primarily driven by consumer-led growth and an increase in
product prices, particularly for essential goods. The explosion of digital connectivity
and e-commerce services has played a pivotal role in boosting the FMCG sector in India.
The high penetration of smart phones, coupled with the easy accessibility of credit and
debit cards and the increasing adoption of online banking, has enabled even rural
populations to access and purchase FMCG products conveniently. E-commerce platforms have
become a preferred mode of shopping for a vast number of consumers, providing them with
easy access to a wide range of products and the convenience of door step delivery. To add
to this, the rising disposable income, especially in rural India, combined with the
sectors low penetration levels, also presents a signi cant growth opportunity for FMCG
companies. The surge in rural consumption has also created a heightened demand for branded
products in this vast untapped market.
This growth has propelled the FMCG sector to new heights, with the total revenue of the
market expected to achieve an impressive Compound Annual Growth Rate (CAGR) of 27.9% from
2020 to 2027, reaching nearly US$ 615.87 billion (As per IBEF Report on FMCG Industry,
February 2023). Such substantial growth can be attributed to various factors, including
changing consumer preferences, a burgeoning middle class, and increasing urbanization.
The FMCG industrys growth has also been fueled by innovation and product diversi
cation. Companies have been constantly introducing new products to cater to the evolving
tastes and preferences of the Indian consumer. The emphasis on product quality and
packaging has further strengthened consumer trust and loyalty to wards various brands.
Another aspect that has contributed to the expansion of the FMCG sector is the emergence
of new distribution channels and marketing strategies. FMCG companies have adopted
innovative distribution models and focused on building robust supply chains to reach even
the most remote corners of the country ef ciently. Additionally, digital marketing and
social media campaigns have played a crucial role in enhancing brand visibility and
attracting a broader consumer base.
Despite the impressive growth, the FMCG industry in India also faces a few challenges
that demand attention. Price volatility in essential commodities, changing regulatory
landscapes, and increasing competition from both domestic and international players
necessitate constant adaptation and strategic planning.
With the continued adoption of digital technologies and consumer - centric innovations,
the FMCG industry in India is poised to continue its upward trajectory, catering to the
diverse needs and preferences of the vast and dynamic Indian consumer base. The FMCG
sector holds immense potential due to its low penetration levels, well - established
distribution networks, cost - effective operations, lower per capita consumption, large
consumer base, and streamlined manufacturing processes for most products, resulting in
relatively lower capital investments. To add to this, in 2022, the UAE announced a
substantial investment of US$2 billion to establish integrated food parks in India,
incorporating state-of-the-art climates mart technologies to reduce food waste and
spoilage, conserve fresh water, and utilize renewable energy sources, further re ecting
the potential of the industry.
Basmati Rice Industry
India stands as the worlds second-largest rice-producing nation, owing to its
favourable climatic conditions, enabling it to supply more than 20% of the global rice
demand. Various regions within the country cultivate diverse rice varieties at different
times of the year. Notably, the Eastern, North-Eastern, and Southern parts of India serve
as major rice-producing regions, blessed with a climate conducive to year-round rice
cultivation.
Despite rice being a widely consumed and versatile grain globally, few varieties rival
the esteemed reputation of Basmati rice. Bestowed with the Geographical Indication (GI)
status in India, Basmati rice can only be sold under this name if grown in speci c regions
of the country. The cultivation of Basmati rice demands precise agro-climatic conditions,
speci c geographic locations, meticulous plant nutrition, agronomic practices, and
specialized methods of harvesting, processing, and aging. The distinct aroma, texture, and
avor of Basmati rice make it a highly sought-after ingredient in culinary traditions
worldwide. Its diverse varieties, each boasting unique characteristics, offer endless
opportunities for culinary exploration and innovation.
As the largest producer and exporter of Basmati rice globally, India holds a prominent
position in the market. In FY23, the value of total Basmati rice exports from India
amounted to Rs.385.24 billion, registering a Compound Annual Growth Rate (CAGR) of 7.5%
from FY 2020-23. Basmati rice is a very widely used ingredient, especially in the Middle
Eastern cuisine, which translates into the demand for Basmati rice as the MENA region
accounted for approximately 77.7% of Indias Basmati rice exports in FY23. Europe and USA
+ Canada contributed 6.9% and 6.8%, respectively, of the Basmati rice exports from India
in FY23, with the remaining being exported to other regions and countries. Indian packaged
rice market also gaining ground on the back of growing demand for packaged products on
account of growing per capita income, increasing urban population, and a sharp increase in
demand of the nest quality products like Basmati rice. As per industry reports, the
overall Indian rice retail market is growing at ~3% CAGR rate while packaged rice market
growing at a much faster pace at ~7% CAGR providing solid growth opportunities for
MISHTANN.
Indias favorable climatic conditions and expertise in cultivating Basmati rice
continue to support its dominant position in the market. With its unique aroma, texture,
and avor, Basmati rice remains a sought-after culinary ingredient worldwide, driving
consistent demand. The Geographical Indication (GI) status further enhances its
exclusivity and market appeal. Indias strong track record as the largest exporter of
Basmati rice, coupled with steady growth in export value, signi es a positive trajectory
for the industry. As consumers increasingly seek premium and distinctive rice varieties,
the diverse range of Basmati rice cultivars offers ample opportunities for culinary
experimentation and expanding market horizons. Overall, the Basmati rice industry in India
is poised for continued growth and prosperity.
IV. Market Trends, Drivers, and Challenges
In the era of technology advancement, there is trend of producing genetically modi ed
(GM) rice to ascertain the quality of rice and food security. Though commercially there is
no production of GM rice, but many varieties have been approved for commercial production
which is expected to boost the India rice industry.
Rice is a staple crop for 70% of the world and thus the demand for rice is expected to
continue to grow over the forecast period. The food security concerns all over the world
is driving the growth of the India rice industry, which by exporting rice to various
countries is contributing towards global food security.
With the climate change, continuous rising demand by consumers and the food security,
rice industry is facing the challenge of producing rice without compromising on ef ciency,
equitability, environmentally-friendly, and more resilience to climate change. It has
become imperative to produce rice at lesser land, with lesser water and labor. India is
also facing lack of adequate agriculture infrastructure such as technologically advanced
equipment, transportation network, and effective public private partnership. operations,
lower per capita consumption, large consumer base, and streamlined manufacturing processes
for most products, resulting in relatively lower capital investments. To add to this, in
2022, the UAE announced a substantial investment of US$2 billion to establish integrated
food parks in India, incorporating state-of-the-art climates mart technologies to reduce
food waste and spoilage, conserve fresh water, and utilize renewable energy sources,
further re ecting the potential of the industry.
Key Growth Drivers
Shift in market towards packaged food and branded, organised players
Upsurge of modern retail driving penetration and consumption
Emergence of the omni-channel consumer comfortable in making both of ine and online
purchases
Steady disposable incomes driving demand for premium and semi-premium products
Evolving consumer taste to try out new and innovative products
Rise of large consumer internet companies in the food delivery space creating new
consumption avenues
Some of the threats that the company is exposed to are as follows:
Commodity Price Risks
The Company is exposed to the risk of price uctuation of raw material as well as nished
goods. The company proactively manages these risks through forward booking, Inventory
management and proactive vendor development practices. The Companys reputation for
quality, product differentiation and service, coupled with existence of powerful brand
image with robust marketing network mitigation the impact the impact of price risk on
nished goods.
Legal and regulatory compliance risk
Our activities in India and in the countries where we export our products to is subject
to close government oversight. Various laws govern food production, supply and
distribution, and it is imperative that we comply to these laws to ensure our status as a
going concern.
Human Resources Risks
Retaining the existing talent pool and attracting new talent are major risks. The
company has initialed various measures including rolling out strategic talent management
system, training and integration of learning and development activities.
Strategic Risks
Emerging businesses, capital expenditure for capacity expansion, etc., are normal
strategic risk faced by the company. However, the company has well-de ned processes and
procedures for obtaining approvals for investments in new business and capacity expansion
etc.
Competition Risks
The foodgrains industry is highly competitive, with a number of global, pan-India,
regional and local companies. Failure to effectively address competitive challenges could
adversely affect our business.
Unanticipated business disruption risks
Failure to effectively prepare for and respond to unanticipated disruptions in
operations can cause delays in delivering products to our consumers, leading to a negative
impact on our business.
V. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUECY
Mishtann Foods Limited believes that safeguarding of assets and business ef ciency can
be prolonged by exercising adequate internal controls and standardising operational
processes.
The Company possesses a robust internal control system to review performance, track
operations and gauge liquidity. The system also ensures that all transactions are duly
reported and all assets are properly safeguarded. Timely review of operations and
recommendations of auditors allow the Company to make corrections whenever and wherever
necessary.
Some of the major features of the Companys internal control systems that re ect suf
cient adequacy include the following
Adequate articulation and documentation of policies and guidelines
Preparation and monitoring of annual budgets through ongoing reviews
Strong compliance management systems that amplify monitoring, surveillance and response
Well-de ned delegation of power with authority limits for approving revenue and capital
expenditure, which is reviewed on a needs-based basis
Use of enterprise resource planning (ERP) system to record data for accounting and
consolidation and also for management information purposes
Periodic engagement of outside experts to carry out independent reviews of the
effectiveness of various business processes:
Furthermore, internal audit is carried out in accordance with auditing standards to
review design and effectiveness of internal control systems and procedures to manage risk,
enable operational monitoring control and ensure compliance with relevant policies and
procedures. Moreover, the Audit Committee of the Board regularly reviews execution of the
audit plan, the adequacy and effectiveness of internal audit systems and monitoring of
implementation of internal audit recommendations, including those relating to bolstering
the Companys risk management policies and systems.
VI. HUMAN RESOURCES
The Mishtann Foods family comprises 9 full-time employees and their dependants. The
Company believes that its employees are its biggest asset, focusing on their personal and
professional advancement through a culture of empowerment, trust and career growth.
HR Aim
Establishing healthy linkages to continuous improvement in productivity, quality, cost
competitiveness and ef ciency
Carrying out continuous improvements in all areas of work to increase competitiveness
and retain customer focus
Simplifying complex problems to focus on critical issues and maintain a lean
organisation structure
Empowering and motivating the employees to do their best through decentralised
operations
Recruiting the right candidates with positive attitude and growth potential
Speci cations of quali cations and experience customised for different jobs
Providing opportunities of employment for all irrespective of caste, religion, region
or any other criteria
Rewards and recognition based on meritocracy and achievement of prestated target
Providing proper induction and orientation to all levels and share the group visions
for early integration in the group
Developing a sense of pride, belongingness, pleasure and social ful lment in being a
member of Mishtann family
Providing opportunity at all levels to participate in the decision making process of
the Company
Providing feedback to the employees on their performance, strengths and weakness to
increase ef ciency
VII. FINANCIAL PERFORMANCE REVIEW
The company recorded total income of Rs. 65,043 lacs, higher by 30.45% as compared to
the previous year. EBIDT of the company stood at Rs. 8,260 lacs as compared to Rs.5,201
lacs in previous year.
Particulars |
2022-2023 |
2021-2022 |
Total revenue from operations |
650,43,16,779 |
498,58,86,777 |
| Earnings |
before interest, |
82,60,38,340 |
52,01,74,468 |
depreciation and tax (EBIDT) |
|
|
| PBT |
|
76,81,38,361 |
47,26,94,403 |
| PAT |
|
49,92,25,748 |
31,41,27,423 |
| EPS |
|
0.50 |
0.63 |
VIII. KEY FINANCIAL RATIOS
Key nancial ratios for FY2022-23 compared to the last nancial year are given below
Particulars |
2022-2023 |
2021-2022 |
| Return on capital employed (%) |
68.82 |
42.96 |
| Return on equity (%) |
33.23 |
31.05 |
| Net debt to equity |
0.72x |
0.59x |
| Net working capital |
91 Days |
72 Days |
| Operating pro t margin (%) |
12.58 |
10.24% |
| Net pro t margin (%) |
7.68 |
6.30% |
Rewards and recognition based on meritocracy and achievement of prestated target
Providing proper induction and orientation to all levels and share the group visions
for early integration in the group
Developing a sense of pride, belongingness, pleasure and social ful lment in being a
member of Mishtann family
Providing opportunity at all levels to participate in the decision making process of
the Company
Providing feedback to the employees on their performance, strengths and weakness to
increase ef ciency
VII. FINANCIAL PERFORMANCE REVIEW
The company recorded total income of Rs. 65,043 lacs, higher by 30.45% as compared to
the previous year. EBIDT of the company stood at Rs. 8,260 lacs as compared to Rs.5,201
lacs in previous year.
Particulars |
2022-2023 |
2021-2022 |
| Total revenue from operations |
650,43,16,779 |
498,58,86,777 |
| Earnings before interest, |
82,60,38,340 |
52,01,74,468 |
| depreciation and tax (EBIDT) |
|
|
| PBT |
76,81,38,361 |
47,26,94,403 |
| PAT |
49,92,25,748 |
31,41,27,423 |
| EPS |
0.50 |
0.63 |
VIII. KEY FINANCIAL RATIOS
Key nancial ratios for FY2022-23 compared to the last nancial year are given below
Particulars |
2022-2023 |
2021-2022 |
| Return on capital employed (%) |
68.82 |
42.96 |
| Return on equity (%) |
33.23 |
31.05 |
| Net debt to equity |
0.72x |
0.59x |
| Net working capital |
91 Days |
72 Days |
| Operating pro t margin (%) |
12.58 |
10.24% |
| Net pro t margin (%) |
7.68 |
6.30% |
CAUTIONARY STATEMENT
The statements in the management discussion and analysis section with regard to
projections, estimates and expectations have been made in good faith. The achievement of
results is subject to risks, uncertainties and even less than accurate assumptions. Market
data and information are gathered from various published and unpublished reports. Their
accuracy, reliability and completeness cannot be assured.
Date: 05-09-2023 |
Hiteshkumar Gaurishankar Patel |
Navinchandra Dahyalal Patel |
Place: Ahmedabad |
Managing Director |
Director |
|
(DIN: 05340865) |
(DIN: 05340874) |
+91-9892691696
