NTC Industries Ltd Management Discussions.

As part of the Director s Report or as an addition thereto, a Management Discussion and Analysis Report forming part of the Annual Report to the Shareholders includes discussion on the following matters within the limits set by the company s Competitive position:


As per IMF estimates, aggregate global economic growth is expected to record a sharp rise of 6.0% in 2021, mainly off a low base in 2020. Advanced Economies are projected to grow by 5.1% with major economies such as United States, Euro Area, United Kingdom and Japan set for a strong rebound. Emerging Market and Developing Economies are estimated to grow by 6.7%, led by the Chinese economy which is expected to grow by 8.4%.

While many economies are on the path to recovery on the back of measures towards virus containment, Vaccination drives, stimulus packages etc., the outlook remains challenging on account of divergence in the shape and pace of recovery as well as the potential for medium-to-long term economic scarring from the crisis.

The Indian economy faced its worst crisis ever, degrowing by 7.3% during the year; the first quarter of the year was particularly impacted with GDP contracting by 23.9%. Overall for the year, the Industry and Services sectors declined by 8.2% and 8.1% respectively, while Agriculture remained relatively resilient growing by 3% over the previous year.

While earlier estimates of India s GDP growth for 2021-22 ranged between 11.0% to 13.0%, the ferocity of the second wave in India since February, 2021 has adversely impacted economic prospects. Most States have had to reimpose mobility restrictions in a bid to contain the spread of the virus which has slackened the recovery momentum significantly.

The onset of COVID-19 pandemic towards the end of FY 2019-20 and the subsequent lockdowns and restrictions imposed to curb its spread, caused unprecedented disruption across the value chain with manufacturing and sales operations coming to a virtual standstill. Manufacturing operations were resumed in mid-May immediately upon receipt of requisite permissions; the Business swiftly ramped up production and availability of its brands across markets, while ensuring the highest standards of hygiene and safety protocols across all nodes of operations. With easing of restrictions and improvement in mobility from September, 2020 onwards, the Business recovered progressively over the remainder of the year to reach nearly pre-Covid levels towards the close of the year.

Though the market conditions were not favorable and the same was challenging for the company. Though the domestic demand continued to be sluggish in throughout the year due to trade disruption and geo-political uncertainties. Yet your company managed to achieve better results across the different markets especially international.

In the Union Budget 2021, the government has skipped any taxation changes on Cigarettes which is a welcome step, yet the taxes on tobacco and tobacco products are very high and discriminative. Due to the high, volatile and discriminatory taxation policy, all the market players are facing margin and volume problems.

Tobacco Institute of India (TII), the association that lobbies for cigarette companies, has long been vocal about high tax structure which it said has created the market for smuggled foreign cigarette impacting the legal cigarette manufacturers. On the other hand, relatively lower taxed tobacco products like bidi, khaini, chewing tobbaco, gutkha and smuggled cigarettes constitute for about 89% of total tobacco consumption in India, according to TII.

New pictorial warning covering 85% on both front & back panels replaced 40% warning on front panel in April 2016. The government has made it mandatory to change the graphic every 12 months.

The discriminatory taxation policy, increased high pictorial warning and availability of cheaper non duty paid cigarettes, impacting your company s performance. Above all there is also a huge competition with the other manufacturers.

However, in the above said adverse scenarios, your company is dedicated to its customers and taking all the available efforts to regain its lost place in the industry by improving its portfolio and technologies. With implementation of GST and regularization of formal economy coupled with initiatives taken by the government to improve infrastructure, agriculture and industry across all segments, significant consumer growth is expected in the times to come.


India is the world s 2nd largest producer of tobacco with an estimated annual production of 800 million kgs and the 3rd largest producer of Flue-Cured Virginia (FCV) tobacco a variety used in Cigarettes, with an annual production of around 300 million kgs.India is amongst the top tobacco exporters in the world reflecting the tremendous success that Indian tobacco companies achieved. The growth in exports has been remarkable in the recent years. The global leaf tobacco trade is valued at US$ 12 billion per annum; India s share of this trade is just around 7% currently. India is poised to increase its share of leaf tobacco trade, particularly as India s tobacco production share in the world is more than 12%.

Tobacco & Tobacco Products are a large contributor to the National exchequer by way of Central Excise and Goods

& Service Tax. The combined tax revenue collected annually from tobacco products is around Rs 53750 crores annually.

Cigarettes which bear the brunt of taxation in India are the major revenue contributor from the Tobacco sector.

Despite just 11% share of tobacco consumption, legal cigarettes contribute 85% of tax revenue.

Tobacco provides direct and indirect employment to more than 45.7 million people, around 70% of whom are in the agricultural sector. Tobacco is a highly remunerative crop providing economic/social benefits to farmers in the tobacco growing regions.

This shows that India has significant opportunity for cigarette industry to extend and consolidate its position in intentional market due to some recent trend like withdrawal/reduction of agricultural subsidy and escalating costing in the traditional cigarette exporting countries.

It is your Company s continuous endeavor to maintain the taste and preferences of its customerswhile upgrading and developing new brands. Your company will launch new brands in the 64 mm, 69 mm and 84 mm segments in the near-term in new designs across various places in India.



Extreme Regulation

Despite India being the 2nd largest tobacco producer and a major exporter, tobacco control measures in India have always been equally or more stringent than in many developed countries.


As a percentage of per capita GDP, Cigarette taxes (Excise Duty & Goods & Service Tax) in India, of the most popular price category, are amongst the highest in the world. Consequently, cigarette prices in India, relative to per capita GDP, are also amongst the highest in the world.

Pictorial/Graphic Warning

The Union Ministry of Health & Family Welfare has mandated an increase in the size of pictorial warnings from the current 40% on front of the packs to 85% on both sides with effect from 1st April 2016. Such an extreme position on warnings overlooking the huge livelihood dependency and enormous socio-economic benefits of Tobacco in India.

Illegal Cigarette Trade

Extremely high tax rates and constantly increasing tax rates on Cigarettes provide a profitable opportunity for tax evasion by illegal trade in both international smuggled and domestic tax evaded cigarettes

Moreover, in the current market situation there is a stiff competition from big players with regard to marketing of new brands.


Your Company considers "Manufacturing of Cigarette and Smoking Mixture" as the primary business segment.

Therefore segment wise / product wise performance reporting is not applicable to your company.


NTC has a robust system of internal financial control, commensurate with the size and complexity of its business operations. The system which comprised of policy, procedure and internal audit processes. It safeguarding its assets, ensuring transactions are in accordance with the policies, and are duly authorised to identify possible risk areas and to prevent possibilities of frauds or other irregularities.

The Company has an external and independent firm of Internal Auditors that scrutinizes the financials and other operations of the Company. Internal Auditors directly report to the Audit Committee. The Audit committee review the adequacy and effectiveness of internal control system of the Company and keeps the Board of Directors informed of its major observations from time to time. Based on the findings of Internal Auditors, process owners undertake corrective actions in their respective areas. During the year and at the year-end, no reportable material weakness or significant deficiency was observed in the design or operations. Your company is also ISO 9001:2008 certified for its internal audit function.


At NTC, we follow a culture that provides a platform for continuous learning and development to meet the challenges posed by ever-changing market realities. Employees are your Company s most valuable assets and the Management recognizes them as the prime machinery of the organization. They are always given the first priority and are provided with all the basic requirements and safety measures for good health and well-being. The Management, in order to create enduring value, has fostered a culture of feeling of being togetherness and attachment amongst ntc employees through participative management practices, open interaction and mutual respect.

Your Company s human resource management systems and processes aim to enhance organizational capability and vitality to seize emerging market opportunities. The strategy of the organization and its ongoing emphasis on developing and nurturing distributed leadership has ensured that each of your Company s business is managed by a team of competent, passionate and inspiring leaders.

Your Company s belief in the mutuality of interests of key stakeholders binds all employees to a shared vision and purpose. The Company continued to maintain healthy industrial relations and did not report any sort of strike or lockout that would have impacted Company s operations.


Pursuant to the provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of key financial ratios along with the reasons for significant changes therein are given below:

Sl. NO. Particulars For the year ended March 31st, 2021 For the year ended March 31st, 2020 Reasons for significant change (if any)
1. Debtors Turnover 4.00 5.61 Due to increase in credit period
2. Inventory Turnover 2.31 1.53 Due to increase in turnover
3. Interest Coverage Ratio 33.00 7.00 Due to increase in EBIT
4. Current Ratio 3.21 4.35 Due to increase in current assets and current liabilities
5. Debt Equity Ratio 0.09 0.13 Due to increase in equity
6. Operating Profit Margin (%) 29% 16% Due to increase in turnover
7. Net Profit Margin (%) 22% 14% Due to increase in turnover


1. Above ratios are based on the standalone financial statements of the Company.

2. Significant change means a change of 25% or more as compared to the immediately preceeding financial year.

Details of Change In Return On Net Worth As Compared To The Immediately Preceeding Financial Year

Sl. NO. Particulars For the year ended March 31st, 2021 For the year ended March 31st, 2020 Reasons for significant change (if any)
1. Return on Net Worth 16% 9% Due to increase in turnover


Statements in the Management Discussion and Analysis describing the industrial expectations are "forward looking statements" within the meaning of applicable securities law and regulations. Actual results could differ materially from those expressed or implied, important factors that could make difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in the government regulations, tax regimes, economic developments in India and other incidental factors.

For and on behalf of the Board
Place: Kolkata
Date: 29.06.2021
Priyawart Dipakbhai Jariwala
Managing Director