Neelamalai Agro Industries Ltd Management Discussions

The performance of Plantation Segment with regard to industry structure and development, opportunities and threats, segment wise performance, outlook, risks and concerns, internal control systems and its adequacy, discussion on financial performance with respect to operational performance and material developments in Human Resources/Industrial Relations Front, including number of people employed is analyzed in detail below :-

1) BUSINESS PROFILE

The Company is engaged in Plantation activity and the crop dealt with by the Company is Tea and the main business being Tea cultivation, Tea manufacturing, sales and exports of Tea.

The Company has two estates i.e. Katary & Sutton Estates, located in the Nilgiris District in Tamil Nadu, spanning an area of 635.56 Hectares.

The factory has facilities to produce Orthodox Tea. Good manufacturing practices and HACCP systems are followed in the Tea factory. Currently the company produces 100% Orthodox Tea.

2) INDUSTRY SCENARIO

The sale price has dropped when compared to the previous year for Orthodox Tea.

3) PERFORMANCE

During the year under review, sales has decreased by 12.83 %. The company has posted a comprehensive income (net of tax) of Rs. 461.19 lakhs, as against Rs. 435.95 lakhs during the last year. The summary of the performance is given below:-

	31.03.2023	31.03.2022
Particulars	Rs. Lakhs	Rs. Lakhs
Sales	2,493.06	2956.76
Other Receipts	940.87	779.54
Total Income	3433.93	3736.30
Material Cost	(472.58)	(457.83)
Expenses	(2381.48)	(2599.45)
Interest	(3.80)	(2.76)
Depreciation	(77.33)	(74.55)
Profit / (Loss) before Tax and Exceptional item	498.74	601.71
Profit / (Loss) before Tax and after Exceptional item	498.74	601.71
Tax Expenses (Current & Deferred Tax)	105.22	117.90
Net Profit / (Loss)	393.52	483.81
Remeasurement of the post-employment benefit obligations	46.40	(14.90)
Changes in Fair Value of FVOCI Investments	23.93	(46.85)
Income Tax Expenses / (Credit)	(2.66)	13.89
Total comprehensive income	461.19	435.95

4) OPPORTUNITIES AND THREATS

Opportunities

Market potential is there for Tea which however is constrained by stiff competition from global, national and local players.

Threats

Any recession in general economy may affect the plantation industry also. The major threat for plantation industry is the yearly increase in cost of production which is not at all proportionate with the increase in sale realization. Moreover, plantation crops are generally prone to vagaries of nature and erratic monsoon.

5) OUTLOOK

The outlook for the industry depends on (a) consistent demand for Plantation Crops throughout the year (b) a higher realization commensurate with the cost of production and (c) the growth of packet tea segment. The Company has been constantly endeavoring on this. Quality upgradation and attainment of cost efficiency are the prime missions of the Company. Plant modernization and field development have been undertaken with the above missions in mind.

6) RISKS AND CONCERNS

With regard to the business risk, the same has been dealt with under Opportunities and Threats stated above. Regarding the general risk, the company follows a minimal risk business strategy as given below:-

Particulars	Risk minimising steps
Fixed Assets and Current Assets	The company has taken adequate insurance coverage of its fixed assets and current assets which will minimize the impact of another event or development
Financial Risk	The company has a conservative debt policy. The debt component is very marginal The credit is insured through Export Credit and Guarantee Corporation Limited
Credit risk on exports	(ECGC)

7) INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The Company has appropriate and adequate internal controls and also has appointed a leading firm of Chartered Accountants as Internal Auditors to cover Internal Audit of the Company. The Internal Audit coverage is adequate to ensure that the assets of the company are safeguarded and protected and there is regular review by Management on policies, internal controls and procedures and also internal audit reports.

8) FINANCIAL PERFORMANCE ANALYSIS

During the year under review, total revenue of the Company was Rs. 3433.93 Lakhs as against Rs. 3736.30 Lakhs during the previous year. Tea production including Bought Leaf during the year was 15.48 Lakhs kgs as against 20.74 Lakhs kgs. during the previous year. Other receipts have recorded an income of Rs. 940.87 Lakhs during the year.

9) INFORMATION TECHNOLOGY

The company has upgraded all its information systems resources and review of the same is done on a periodic basis.

10) HUMAN RESOURCES

The company attaches significant importance to continuous upgradation of Human Resources for improving the productivity of employees at all levels leading to improvement in quality of the produce, which will ensure a better customer satisfaction and a higher growth. As a part of HR strategy, training programmes are organised for employees at all levels. As on 31st March 2023, the company has an employee strength of 963 nos.

11) CAUTIONARY STATEMENT

The analysis given above may contain certain statements which are futuristic in nature. Such statements represent the intention of the Management and the efforts put in by them to realise certain goals. The success in realising these goals depends on various factors, both internal and external. Therefore, the investors are requested to make their own independent judgements by taking into account all relevant factors before taking any investment decision.