Neha International Ltd Management Discussions.

(Forming Part o f Directors Report)



Neha is a premiu m grower of cut roses with over 20 years of experience in the field of floriculture with floriculture operations in Ethiopia. It is recognized as one of the top growers in the highlands of A frica where roses are cultivated at 8500 feet above sea level in Ethiopia. A world class propagation unit has been established along with a growing facility. Different varieties of roses that confirm to international standards are grown in these farms. These A frican subsidiaries grow long stem red roses in high altitude for supply to the auctions in Aalsmeer, Netherlands, Japan, Italy, Switzerland, Australia and Middle East. Neha sells its cut roses not only to the Flora Holland, Netherlands but also to the direct markets in Italy, Middle East, Australia, Germany, etc.

Although the potentially lucrative nature of the floriculture industry has long been beyond dispute, its vulnerability to circumstance is notorious. Based around the sale of a non-staple, perishable agricultural good, bad weather, delays in transportation or dissipating demand for luxury items in market destinations can quickly throw the industry into turmoil. The pro fitability of the sector for established exporters nose-dived following the financial downturn in Europe, thus, consumer demand for A frican flowers in Europe, A fricas biggest export market, quickly dissipated. Rising production costs and competition also add to the pressure on the margins. Neha is planning to exit loss making floriculture units in a phased manner and concentrate on profit making business like agriculture, trading, processing, etc.


Neha made a foray into agriculture through its subsidiary namely, NINT Agri Plc., Ethiopia. Global food shortages and the spike in food prices, presents an opportunity to produce food crops on a large scale. Africa, with its virgin soils, congenial climate, and abundant resources has the potential to be the bread basket of the world. Since, Neha already has operations in Ethiopia; the Company acquired 4,000 hectares of arable land on long term lease of 45 years in Bako region of Ethiopia for the production of food grains, lentils, oil seeds, spices, etc. The farm site is located in a high rainfall region receiving about 1400 mm per annum which is the most ideal situation for growing various crops. In addition, other hydro assets like Chakosa, Gibbe and Lagjaati rivers can be utilized for assured availability of water during the dry seasons.

The co mpany built the required infrastructure in Ethiopia: a 13 km approach road has been constructed fro m the highway to the agricultural site; land has been cleared of trees and bushes; internal roads and irrigation facilities are being developed. Neha sourced equipment fro m world class manufacturers -Tractors and Implements fro m CLAAS and A mazone in Germany, and Excavators fro m Doosan o f South Korea. The co mpany finished the trial runs and is now harvesting the first commercially cultivated crop. Sowing for the second crop is due in December. During FY 17-18, about 1000 acres will be under cultivation. The farm will be using funds generated fro m sale o f the crop for its operations.


Neha started trading operations since 2008. India is one of the worlds largest food grains producers, the second largest vegetable producer and rice producer, making it one of the worlds agricultural powerhouses. With global agricultural trade on a sustained rise coupled with robust economic growth across the world, the Agro sector has number o f trade opportunities in its offing, which is an i mportant contributor to Indias growth story. Neha International Limited (Neha) has achieved substantial growth in its trading operations over the last few years, resulting in increasing revenues and profits. Our team is committed to keep this growth on track and is constantly on the look-out for opportunities that can add to its revenues with a better contribution to the bottom line. We were able to achieve the above results and are confident of the growth only due to the support received from our stakeholders.

A major portion of our current trading activity is domestic. Going forward, the company wishes to also focus on international trade as it sees a significant business potential in international trade – both in imports and in exports, especially between Asia and Africa. Nehas presence in Africa, Singapore and India places it in a unique position to realise the potential. We wish to export rice and import edible oils, MDF and Cashew.


a. Edible Oils

India has been self sufficient in vegetable oils right up to early 90s when most of the consumption was groundnut, rapeseed, and cottonseed oils. Palm, soya bean and sunflower oils together accounted for less than 4% o f the consumption. Growing population and income levels led to an increasing demand fo r vegetable oils. But the domestic oilseed production remained static, resulting in increase in imports. Today, Indias consumption is over 20 mn MTs and more than half o f it is met through imports – mostly palm oil which represents about 40% of Indias consumption and about 75% of it imports, making India worlds largest importer o f pal m oil.

Considering that Indias per capita consumption of vegetable oils today is about 16kgs (world average is 27kgs), it is expected the demand will increase substantially as the per capita consumption increases. According to one estimate, India will consume about 26 Mn MTs by the year 2020-21. With the domestic supply expected to remain stagnant at 10 Mn MTs, imports will be over 16 Mn MTs. This situation can change only if the domestic supply of oil seeds increases substantially, which appears unlikely in the near future.

Fro m the turn of the century, Indian government, in order to encourage domestic edible oil refining industry, adopted the policy of deferential duty structure for crude and refined imported oils, with lower duties for crude. Huge port based refining capacities (over 20mn MT) came up in the country. Unfortunately, the capacity utilisations are less than 50%. The primary cause for this is the inverted duty structure adopted by crude producing countries like Indonesia and Malaysia. This resulted in most of refining units running into financial hardships. They are suffering with inadequate working capital reducing their refining capacities further.

Opportunity for Neha: This provides an opportunity for traders with sufficient working capital limits to import vegetable crude oils for supply to the refining industry. Neha has chosen the sector as the volumes are significant, and increasing, and as it will remain so for the foreseeable future. The companys presence and contacts in SE Asia and Africa makes the identifying and sourcing of supplies easier. It should be noted here that Neha was exporting fairly large volumes o f maize to SE Asia until a couple of years back.


Neha is planning to set up a pulse and grain processing unit in near future. The Indian food industry is poised for huge growth, increasing its contribution to world food trade every year. In India, the food sector has emerged as a high-growth and high-profit sector due to its immense potential for value addition, particularly within the food processing industry. The industry accounts for 32 per cent of the countrys total food market, 14 per cent of manufacturing GDP and 13 per cent of Indias exports.

The Government of India has been instrumental in the growth and development of the food processing industry. The government through the Ministry of Food Processing Industries (MoFPI) is making all efforts to encourage investments in the business. It has approved proposals for joint ventures (JV), foreign collaborations, industrial licences and 100 per cent export oriented units.

Neha aims to be a trusted partner locally & globally in providing quality and value to our partners through efficient procurement of agri commodities, processing and management o f supply chain.


Unrestrained production and indiscriminate growth without concern for the environment would put the lives of our future generations in jeopardy. At Neha, agriculture is practiced while nurturing the environment. Various methods like integrated nutrition management, pest and disease management, usage of bi-fertilizers and bio-pesticides, composting methods would be integrated to not only maintain but also improve soil texture. Water, being the fore most elements in agriculture, would be conserved through effective water management techniques like reduction of outflow, rainwater harvesting and judicious usage. Neha International believes in sustained growth by involving the local communities in farming operations and also allocates revenues towards their development.


Proactive governments in Eastern Africa, huge markets for grains like rice within Africa and a possibility of exporting them to Middle Eastern Markets seems to be a viable alternative. Production costs can be minimized by using state of art infrastructure and an integrated approach to agriculture using biological inputs for nurturing the environment. Soil dynamics, suitability of germ plasm, rainfall patterns, pest incidence, and climatic variations are few parameters that might pose a risk to crop yields. The Company is taking all possible measures for mitigating the perceivable risk. Few steps for risk mitigation include performing field trials prior to scaling up, assessment of land fertility, presence of water resources, and access to agricultural workforce before land acquisition.

In India, despite being the largest producer of the largest varieties of cereal grains and pulses, the demand for consu mption of is just growing owing to a large increase in population. Processing of cereal grains and pulses has a bright future ahead.


The Internal Control System co mprises o f exercising controls at various stages and is established in order to provide reasonable assurance for:

> Safeguarding Assets and their Usage,

> Maintenance of Proper Accounting Records and

> Adequacy and Reliability of the In formation used for carrying on Business Operations.

The key elements of the system are as follows:

a) Existence of clearly defined Organizational Structure and Authority.

b) Existence of Corporate Policies for Financial Reporting and Accounting

c) Existence of Management In formation System updated fro m time to time as may be required.

d) Existence of Annual Budgets and Long Term Business Plans.

e) Periodical Review of Opportunities and Risk Factors depending on the Global/Domestic Scenario and to undertake measures as may be necessary.


The Company continued with it policy of Human Resources Development and retention in all its units located at various destinations of the world. To enrich the skills of employees and enrich their experience, the Company invites experts in the field of Production, pest control, post-harvest management, packing etc., and provide in-house training to the employees in their respective & allied operational areas. The Company is maintaining good employee relations and no man-days are lost during the period due to employees unrest. The Company continues to provide with welfare activities such as canteen Facility, Medical Aids, Transport Facility, uniforms etc.


During the period ended 31stMarch,2018 the companys consolidated turnover of Rs.32362.60 lakhs. The operations generated a profit/(Loss) of (Rs.2432.17) lakhs during this period.

Financial Results: Consolidated

(Rs In lakhs)
Particulars Current Period Previous Period
01.04.2017 To 31.03.2018 01.04.2016 To 31.03.2017
1 Net Sales & Inco me 32362.60 45167.19
2 Increase/(Decrease) in stock 55.88 20.94
3 Total Expenditure 31717.72 44243.39
4 Interest 598.12 526.12
5 Profit before depreciation & Exceptional Items (9.13) 418.62
6 Depreciation 317.04 150.34
7 Less: Write off / prior period items - -
8 Less: Minority interest - -
9 Less: Provision for tax (Net) 129.66 152.08
10 Profit/Loss carried to Balance Sheet (2432.17) 116.20

Financial Results: Standalone

Particulars Current Period Previous Period
01.04.2017 To 31.03.2018 01.04.2016 To 31.03.2017
1 Net Sales & Inco me 31072.83 30091.10
2 Increase/(Decrease) in stock 55.88 20.94
3 Total Expenditure 30130.55 29340.44
4 Interest 501.94 399.32
5 Profit before depreciation & Exceptional Items 384.46 372.27
6 Depreciation 5.68 6.27
7 Less: Write off / prior period items - -
8 Add: Extra Ordinary Income: - -
9 Less: Provision for tax (Net) 129.67 127.55
10 Profit/Loss carried to Balance Sheet 249.11 238.45


Geographical Revenues: Consolidated

(in Rupees )

Geographical Segment REVENUE
Current Period Previous Period
Netherlands 13,64,39,778 188,057,022
India 310,27,74,213 274,280,696
Singapore - 317,324,799
Ethiopia 87,88,933 60,223,498
Indonesia - -
Malaysia - 147,254,363
Hongkong - 1,048,651,475
Dubai - -
Total: 324,80,02,924 4,503,791,853

Segment wise Revenues – Stand Alone

Segment wise Revenues – Operation wise:

(In Rs)

Farm Merchandising Trading Sales Total
Current Period (12 Months) - - 310,27,74,213 310,27,74,213
Previous period(12Months) - - 274,22,80,696 274,22,80,696

Geographical Revenues:

(In Rs)

Geographical Segment REVENUE
Current Period Previous Year
India 310,27,74,213 2,742,280,696
Ethiopia 87,88,933 -
Hong Kong - -
Dubai - -
Malaysia - 253,680,930
Total 3,111,563,146 2,995,961,626