Octavius Plant. Management Discussions


In this Management Discussion and Analysis Report, your Directors present a comprehensive overview of the companys performance, achievements and prospects for the financial year ended on 31st March, 2023. This report aims to provide stakeholders with insights into the companys operations, key financial metrics, risk management, opportunities, threats and future outlook.

NATURE OF BUSINESS

The outlook for the Indian economy in the financial year 2023 is cautiously optimistic, with several key factors shaping its trajectory. After experiencing a rebound from the pandemic-induced downturn, the economy entered a phase of steady growth in the previous years, and this momentum is expected to continue.

At present, the Company is engaged in the field of producing and processing coffee and spices. Today, the Company enjoys a prominent position in the market which is due to high quality products produced and supplied by them. Company operates in following segments of producing edible products:

• Coffee

• Spices

Industry Structure and Developments

Tea being a Seasonal Industry, the plantation activities is subject to the vagaries of nature. The crop yield depends on the climatic conditions to a very large extent. The steps are initiated by the management for increasing the crop yields by implementing necessary improved agricultural practices. This is very essential for the growth and betterment of the Industry. Tea has established itself as a wellness and lifestyle beverage and several varieties of tea are emerging in the market opening up new avenues.

India produces a wide range of spices and holds a prominent position in world spice production. Because of the varying climates - from tropical to sub-tropical to temperate-almost all spices grow splendidly in India. In reality almost all the states and union territories of India grow one or the other spices. Under the act of Parliament, a total of 52 spices are brought under the purview of Spices Board.

Opportunity, Threats, Risk and Concerns

While the economic downturn may negatively impact the speciality coffee growth curve - which was hitherto driven by the cafe culture and a desire to experience new offerings - we do see a shift in Roasters preference towards reliable coffee companies. We continue to diversify our portfolio and seek growth opportunities in major consumption and growth markets. Our pursuit to gain substantial market share in all key geographies will be backed by continuous product development efforts and relentless pursuit of customer centricity.

Tea being essentially an agricultural produce, is always subject to enviro-climatic inconsistencies which affects both quality and quantity of produce and thereby your Companys performance. The costs of production of tea, comprises of various inputs which are required to be met by the Company as stipulated under various statutes including the Plantation Labour Act. Thus after meeting the costs. Global tea production is rising every year and so is the consumption. The key challenges faced by the Industry are selling prices not keeping pace with the rising costs, climate change. The escalation of wages and other input costs such as gas, fuel, electricity, pesticides, fertilizers etc. makes the Indian tea in competitive in the international market.

The ecosystem from the farm to the cup is evolving at a rapid pace to address this cultural shift; an evolution that is getting further catalysed by the entry of international players. Apart from this, a number of home grown entrepreneurs are emerging to help spread the coffee culture and transform the entire coffee experience in homes through provision of freshly roasted coffee beans, a range of distinguished varieties of coffee as well as coffee brewing equipment.

The impact of this is expected to be particularly visible in North India, which has not been a traditionally coffee drinking market like South India. Coffee consumption has only entered the urban, young demographic. For companies to be more profitable, they have to focus on their rural marketing applications to increase profitability.

Segment-wise or Product-wise Performance

Company had generated its revenue from the sale of coffee and coffee beans, further some of the revenue had also been generated from trading of Pepper.

Internal Control Systems & their Adequacy

The Company has a proper and adequate system of internal controls. This ensures that all transactions are authorized, recorded and reported correctly, and assets are safeguarded and protected against loss from unauthorized use or disposition. In addition, there are operational controls and fraud risk controls, covering the entire spectrum of internal financial controls.

The internal financial control framework has been designed to ensure that the financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets. In addition, the Company has identified and documented the risks and controls for each process that has a relationship to the financial operations and reporting.

The Companys internal control system are commensurate with its size and it ensures operational efficiency, accuracy in financial reporting and compliance of applicable laws and regulations. These are reviewed from time to time and improved upon, where required. The internal audit is carried out by external firms of Chartered Accountants besides checks carried out by the Cost Auditors, the Secretarial Auditors and the Statutory Auditors during the course of their respective audits. The different sets of auditors periodically visit the Companys units, their reports are looked into by the Management and by the Audit Committee for effecting corrective action/improvement as may be called for.

Outlook

Tea and Coffee are common mans drink and is consumed widely throughout the country. The domestic production of tea is almost sufficient to meet the internal demands. Weather is of prime importance for Tea manufacturing industry for achieving the production target for the Industry. Due to vagaries of the weather the production of tea fluctuates within a given range. The outlook for the tea industry appears to be positive. due to increasing demand and consumption

Coffee Market is growing. Coffee is one of the worlds favorite beverages and a major source of caffeine, coffee continues to be an essential factor in societys daily routine.

• The global coffee market is anticipated to reach US$ 134.25 billion in 2024. Factors such as increasing out of home coffee consuming population, rapid urbanization, rising e-commerce retail sales, accelerating disposable income, increasing instant coffee preferences in emerging economies are expected to drive the market. However, the growth of the industry would be challenged by weather uncertainties and retails consolidations.

• The consumers prefer Nespresso coffee machines, coffee brewers, and drip coffee makers to prepare coffee at home. South America is the largest producer of Coffee in the world whereas, Europe being the largest producer of high-quality coffee. Germany, Italy, France, Spain, and the United Kingdom are the dominating coffee consumers in the European region

Human Resources:

Human resources are the most valuable assets of the Company and thus adequate care is taken by the Company for their development and wellbeing.

Your Company deeply appreciates the performance and cooperation of the employees during the year and look forward to maintain cordial relations in the years to come.

The Company has also adopted the Code of Conduct which renews our commitment to values of excellence and leadership with trust.

The employee-management relations have remained positive throughout the year. Initiatives are being taken to enhance the productivity of employees.

Financial & Operational Performances

The following table gives an overview of the financial results of the Company:

PARTICULARS

2022-23 2021-22

Total Revenue

222,318,987 181,869,158

Total Expenses

199,198,051 158,258,758

Net Profit Before Tax

23,120,936 23,610,400

Tax Expenses

4,184,784 2,015,452

Net Profit After Tax

18,936,152 21,594,948

Earning per Equity Shares a) Basic & Diluted

6.31 7.20

No. Of Equity share ( Face value

30,000,000 30,000,000

Material Developments in Human Resources/Industrial Relations Front

The relationship with the employees was harmonies and cordial through the year

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be (forward looking statements) within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied.

For Octavius Plantations Limited

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Raj kumar Jain

Sajjan Kumar Deora

Whole Time Director

Director