MANAGEMENT'S DISCUSSION AND ANALYSIS OVERVIEW Indian Tea production was lower at 1191 million kg. compared to 1207 million kg. in 2014. The South India, Cachar & Dooars production was down. Conducive weather in Assam Valley, Darjeeling & Terai helped in higher production. Your Company produced 223.50 lac kg. of tea against 215.62 lac kg. last year. Out of this your own crop was 173.95 lac kg against 167.17 lac kg. The bought leaf production was increased from 46.23 lac kg to 49.64 lac kg. Upper Assam crop was higher by 5.84%, Dooars higher by 15.19%, Terai higher by 5.65% and Cachar up by 1.32%. Darjeeling crop was lower by 1.15%. Apart from wage increase, the higher cost of power, fertilisers and other inputs are affecting the industry. SEGMENT ANALYSIS AND REVIEW The Company is engaged in the manufacture of tea, sugar and chemicals & fertilisers besides tea warehousing and investment activities. Tea accounts for 66%, sugar 21%, chemicals & fertilisers 12% and others 1% of the gross turnover during 2015-16. OUTLOOK There is normal rainfall in North India and brdiction of good monsoon in whole India. This should boost up Indian production in current year. Global Tea production likely to remain stagnant. Consumers are now recognising quality and are willing to pay brmium. Your Company's tea are continuously placed in top quality segment. This is going to have positive impact on your tea prices. The demand for orthodox tea to remain strong as both Iran and CIS countries are in under bought situation and their country's balance of payment situation with India is in their favour. Further, Sri Lanka is facing productivity issue affecting consistency of their quality and grade mix. So the export from India is likely to improve further. RISKS AND CONCERNS a) South India production hurt by sharp fall in prices and rising costs. b) Substantial increase in wages, high social and infrastructure cost remain major problem. c) Shortage of labour during peak season in some pockets particularly South India is a cause of concern. CHEMICALS & FERTILISERS REVIEW OF OPERATIONS All India production of Single Superphosphate (SSP) was more or less same at last year level. Your Company's production was also lower. The adverse climatic conditions in West Bengal had an impact on consumption of phosphatic fertilisers in West Bengal. However, with better marketing efforts, your Company could improve its sale to some extent. Two consecutive years of deficient monsoon has burdened the industry with excess inventory estimated at about 5 million tonne equivalent to around 100 days of consumption. The Sulphuric Acid production in India has to compete with the smelter units where it is a by-product. The sale price of the Sulphuric Acid gets reduced in the market when the supplies from such units are more than the requirement. The performance of Sulphuric Acid unit at Pataudi was somewhat better compared to last year. OUTLOOK SSP is one of the cheapest chemical fertilizer available and it is more suitable for crops like oil seeds, paddy, pulses horticulture, vegetable, sugarcane etc. The requirement for its use will always be there to maintain nutrients in soil. OPPORTUNITIES AND THREATS Strengths Annapurna brand of the Company is well received in West Bengal market and enjoys brmium over others. Established distributors network in all districts of West Bengal. Applicability of SSP for various agricultural produces. Threats Reduction in Government subsidy for sale of SSP. Adverse climatic conditions always impact sales and its realisaitons. Rupee Dollar volatility increases the cost of imported raw Continuing price disparity between urea and phosphatic fertilizers. • High NPK (Nitrogen, Phosphorus and Potassium) inventories in the backdrop of stressed farm income. SUGAR India's annual sugar production is down by 9% during 2015-16 crushing season on lower cane production in various parts of the country. Carry over stock is far less than was expected. Export picked up during the year due to recovery in international sugar prices. Around 2 million tonnes was contracted for export against 4 million tonnes of export quota fixed by the centre for the current season. Sugar production pegged at around 25 million tonnes in 2015-16, the sale price increased to t 34/35 per kg. Government took various steps to bring the industry out of trouble. The industry responded well and the farmers dues were cleared to a large extent. Your company produced 40334 tonnes of White sugar in 201516 compared to 45154 tonnes in season 2014-15. The sugarcane crushed was 422084 tonnes compared to 484700 tonnes last year. The recovery percentage was 9.54% as compared to 9.32% last year. On all operational parameters the mill is considered to be one of the best operated mills of Bihar. OPPORTUNITIES AND THREATS Strengths • High value of by-product for downstream industries. • Government's making ethanol blending mandatory from 5 to 10%. • Growing population and rapid socio economic development particularly in rural area with no major increase in acreage is going to create mismatch in demand and supply situation of every agricultural produce. Strong Government at the centre should push further reforms in the sugar industry. Threats • State Government policies regarding cane pricing. • Industry cycle. Indian sugar industry has passed through a difficult phase earlier and the cycle is now up for change to better. The long term prospects seems to be very good with steady increase in prices and increase in consumption every year and opportunities from byproducts. Your Company has initiated cane development program on large scale basis with improved varieties of cane. It has taken several steps to obtain better quality cane leading to improved recovery. Our agriculture team is carefully monitoring cane planting and harvesting schedule and its development. Good quality seeds, fertilisers and manure are provided to the farmers well in time in our command area. This will help in improved yield and recovery in years to come. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE The Company laid emphasis on working capital management to have strict check on borrowings. There was focus on cash forecasting and liquidation of unproductive assets to retire debts. The deployment of extra fund was guided by the tenets of safety of principal, liquidity and return. During the year the investment portfolio mix was continuously rebalanced in line with the evolving interest rate environment. BUSINESS RESPONSIBILITY STATEMENT (BR) HEALTH, SAFETY, SECURITY AND ENVIRONMENT Health, safety, security and environment (HSSE) is a key priority for your Company. Simply stated, our goals are: no accidents, no harm to people and no damage to environment. The health, safety and security of everyone who works for your Company, is critical to the success of business. All fertilisers factories of your Company are following full Environment Management System and Occupational Health & Safety Management System All the tea estates follow green environment policy. Afforestation is being carried out on regular basis. The sugar mill has adopted good occupational health and safety management system. DEVELOPMENT IN HUMAN RESOURCES MANAGEMENT The industrial relation in all tea estates and other units continued to be cordial. The Company carries out various program for development of its executives at all levels. During the year the company carried out restructuring exercise at key level for improvement in plantation activities and overall corporate performance. During the year under review, the focus continued to be on the development of leadership capability and talent management with a view to ensure alignment to the overall business strategy. The focus this year was on engaging employees for improvement in quality. Using interactive sessions, your Company engaged all its employees on Safety, Respect, Excellence, Courage and One Team and is now actively seeking to embed these values. Your Company's updated performance and reward system now creates an explicit link between its values and behaviours and the way individuals are judged and rewarded within your Company. Continuing its journey of building a diverse and inclusive workforce, your Company's key initiatives in this area included training program to equip workers to succeed in the workplace. Workshops were also conducted for Managers by senior management team to enable them to effectively manage and interact with each other. In addition, there is a continuous endeavour to ensure that your Company is hiring and retaining diverse talent. Your Company continued to maintain high standards of employee relations and 2015-16 saw many achievements on this front. All the employees were motivated with their grievances sorted out by the top management to give their 100% to the Company. The total number of people employed in your Company as on 31st March, 2016 was 23677. CAUTIONARY STATEMENT The statements in the report of the Board of Directors and the Management's Discussion and Analysis report describing the company's projections, estimates, expectations or brdictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those exbrssed or implied since the Company's operations are influenced by many external and internal factors beyond the control of the Company. Further tea, sugar and chemicals industries depend upon the vagaries of nature and any adverse/ favourable situation can change the whole situation. |