Director's report and management discussion

Chairman’s message

In the message to the stakeholders the Chairman Mr. R. A. Shah has mentioned how the planetary economic conditions were disputing for the fiscal twelvemonth 2013-14. He besides states that as per the latest studies by the IMF strong growing is expected in assorted foreign markets like Central and South American, Middle East and African, the ASEAN part every bit good as India because of exports and increase in domestic demand. He besides wishes the freshly formed authorities good fortune. The company wishes to aline itself with national ends of increasing per capital income, cut downing income disparities, and relieving poorness.

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Addition in the wellness consciousness among the population has brought about a alteration in the ingestion form of the company’s baccy merchandises. The continually increasing revenue enhancement rates on baccy merchandises has made it necessary for the company to strike a all right balance between the duplicate aims of concern growing and legal conformity. Technical promotions and health tendencies are taking companies to bring forth merchandises aimed at injury decrease. He besides thanks all the interest holders for continued support in the company’s enterprise.

President’s message

The President Mr K. K. Modi has mentioned the company’s turnover at has mentioned the company’s turnover at INR 4,196 crore with a growing of 15.2 % over the old twelvemonth. Despite the closing of one of the fabrication works at Andheri, Mumbai the company recorded a 7.6 % addition in the net incomes before revenue enhancement at INR 255 crores. The company has besides witnessed a 31 % growing in gross in the non-tobacco sector to make 270 crores. The company has besides declared a dividend of INR 40 per portion.

There was a direction alteration because of the sad death of a immensely experienced and able leader Mr. S. Seru after drawn-out unwellness. The new direction is concentrating on developing a public presentation goaded civilization to smoothen its growing.

In the close hereafter the company wishes to spread out its international concerns by affiliations, coactions etc. for come ining into new markets like Latin America, Middle East and Africa. The company is committed to bring forth advanced merchandises across all classs with a clear end of injury decrease. The company aims to put in fabricating capablenesss to fit planetary criterions and besides upgrade people accomplishments. Despite the new budget non favoring baccy merchandises, the company will take to accomplish sustainable growing under all fortunes. Mr. K. K. Modi thanks all the stockholders and stakeholders for their ceaseless trust in the Company’s leading and assures of growing.

Fiscal Highlights: Tendencies

  1. Gross Revenue ( Ref. pg 4 of Annual Report ) :

The gross gross of the company has increased continuously since 2004-05 till 2012-13. The gross gross for the old twelvemonth 2012-13 is INR 4,196 crores a significant addition over the old twelvemonth grade which was around INR 3,750 crores. The company managed to increase its grosss despite tough economic conditions which is applaudable.

  1. PAT ( Ref. pg 4 of Annual Report ) :

The company has besides managed to keep same net income after revenue enhancement degrees somewhat above INR 150 crores. There was non much of an addition in the overall net incomes because of the additions in the revenue enhancement rates every bit good as altering consumer behaviour.

  1. Book value per equity portion ( Ref. pg 4 of Annual Report ) :

A fiscal step that represents a per portion appraisal of the minimal value of a company ‘s equity. More specifically, this value is determined by associating the original value of a house ‘s common stock adjusted for any escape ( dividends and stock redemptions ) and inflow ( maintained net incomes ) qualifiers to the sum of portions outstanding. Calculated as:

Book Value Of Equity Per Share (BVPS)

  1. EPS ( Ref. pg 4 of Annual Report ) :
  2. Shareholders’s financess ( Ref. pg 4 of Annual Report ) :
  3. Market capitalisation ( Ref. pg 4 of Annual Report ) :

The twelvemonth under reappraisal, started with a cautious sentiment and a hard clip for the planetary economic activity.

However, with things acquiring under control the concern state of affairs improved bit by bit. Major economic zones

saw divergent growing during the twelvemonth. While the US economic system strengthened, Euro Zone saw a turbulent

economic stage. On the other manus, developing economic systems such as Latin America, Middle East and Africa

witnessed a sulky growing.

The domestic economic system continued on its disputing flight, with growing at decadal low. The domestic

industrial sector saw relentless lag, despite steps being taken by the authorities. The currency as

good as demand was under force per unit area, compounded by high rising prices and steepening input costs.

With recovery on the anvil and favorable economic kineticss, the domestic environment is easy

altering. Demand is expected to resurge, as financial conditions improve and developed economic systems rebound.

However, geopolitical hazards in other developing economic systems have increased and will be of import to maintain

an oculus on.

While planetary growing is projected to better from 3.3 per cent in 2013-14 to 3.6 per cent, growing in

advanced economic systems is expected to dawdle the planetary growing at 2 per cent. Fiscal tightening and accommodating

pecuniary conditions are likely to be the cardinal contributing factors. Growth in the development economic systems is

projected to be in the 5 % scope in 2014-15. With geopolitical hazards shriveling down in the development

states, public presentation of your Company’s export division is further likely to profit.

Tobacco INDUSTRY

Globally, the baccy industry has grown by around 3 per cent in value footings to USD 783 billion in FY14.

The planetary coffin nail volumes have declined by 1 per cent in FY14, whereas the value has grown by 3 per

cent. Increasing revenue enhancements & A ; widening ordinances are hindering growing of coffin nail volumes globally.

The Indian baccy industry is estimated to be around USD 13 billion in FY14. Cigarette constitute 61 per

cent of the entire value, followed by Bidi ( 23 per cent ) & A ; Chewing baccy ( 16 per cent ) .

Indian coffin nail market has shown a diminution of around 3 per cent in volume, impacted by pricing force per unit area

and turning wellness concerns. However, the monetary value hikings taken by the industry have resulted in a value growing

of 14 per cent over the old twelvemonth. The 64mm section, aided by favorable revenue enhancement, has grown by two

& A ; half times in volume footings as compared to last twelvemonth. Premiumisation tendency has continued with turning

Kings Segment ( KSFT ) , which now accounts for more than 15 per cent of the industry’s volumes. The growing

in King Size has been driven by Lights/Milds discrepancies due to the perceptual experience of decreased injury. However,

the Regular Size Filter ( RSFT ) class, which forms the organic structure of the industry has lost industry’s portion from

76.9 per cent in FY13 to 66.3 per cent in FY14. There has been increased up-trading from Premium RSFT to

KSFT section this twelvemonth, due to decreased monetary value difference. Besides, the industry continues to confront the challenge

of illicit trade. With turning wellness concerns, consumers are besides researching new coevals merchandises such

as e-cigarettes, nicotine gums, etc.

Indian foliage baccy exports were higher as compared to last twelvemonth, both in volume and value footings.

Regulation and Taxation

With planetary baccy regulative environment going stricter by the twenty-four hours, concerns are confronting a

dashing undertaking of turning top-line and bottom-line. In India excessively, over the past few old ages the Union

DIRECTORS’ REPORT & A ; MANAGEMENT DISCUSSION AND ANALYSIS

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