United Nilgiri Tea Estates Company Ltd Management Discussions

Industry Structure and Developments

Indian tea industry saw significant growth in exports in 2024, achieving a decade high of 255 million kgs, surpassing Srilanka to become worlds second largest tea exporter. While South India contributed significantly to Indias tea exports, production saw a decline, though exports increased.

Opportunities and threats

Improved quality and increased production of primary grade teas has led to a very good demand for Companys teas and the order books are full for the next one year.

With increased demand and more orders, there is a threat of delayed supplies to customers.

Performance

The total quantity of tea manufactured during the year under review was 30.43 lakhs kgs as against 32.35 lakhs kgs during the previous year. Sale of teas during the year under review was 34.25 lakhs kgs. (previous year 36.35 lakhs kgs) The total exports during the year were 18.33 lakhs kgs as against 17.28 lakhs kgs during the previous year. The average price realized for the year was, however, higher than the previous year. Profit before tax for the year was Rs. 2,130.13 lakhs as against Rs. 2,037.43 lakhs during the previous year.

Income from commercial building during the financial year 2024-25 generated a revenue of Rs. 638.22 lakhs as against previous years revenue of Rs.584.07 lakhs

Outlook

Timely summer showers in the current year have led to more production from April onwards. With enhanced production capacity, more production of primary grade tea in the factories, strict control on man-power usage and increase in mechanized harvesting in the field, the outlook for the current year is encouraging.

Risk and Concerns

Your Company is dependent on weather conditions for production of green leaf, which is a major risk factor for the business. The market demand and potential competition in both domestic and international markets have significant impact on the results. Prevailing government regulations with reference to labour and operations also continue to have an impact on operations. Since export of teas is substantial, foreign exchange risk is inciental to the Companys operations.

Internal Control Systems and their adequacy

Your Company has adequate internal control systems in place which are further strengthened by an internal audit function carried out by an external audit firm. With the statutory auditors operating at the apex level, in the opinion of the Board of Directors, these systems are adequate for the size and nature of the Companys business.

The Company has appropriate strategies in place to metigate the above risks.

Financial Performance

Revenue from operations achieved during the year was Rs. 89.79 crores as against Rs.84.01 crores in the previous year. Profit before tax for the year was Rs. 21.30 crores as against Rs.20.37 crores during the previous year. The performance of the Company improved due to better sales realization and also increase in fair value gain from financial assets during the year under review.

Labour Relations

The labour relations in the estates during the year were cordial. The estate managements continue to implement various measures relating to safety and welfare of the employees beyond what is stipulated by the prevailing laws and regulations. The total number of permanent employees on the rolls of the Company as on 31st March, 2025 was 1,097.

Key financial ratios

Key financial ratios are given under Note 32 of the attached financial statements.