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Dhunseri Petrochem Ltd.

BSE: 523736 Sector: Industrials
NSE: DPL ISIN Code: INE477B01010
BSE LIVE 15:47 | 17 Nov 133.15 0.80
(0.60%)
OPEN

135.85

HIGH

138.80

LOW

132.50

NSE 15:31 | 17 Nov 133.10 1.10
(0.83%)
OPEN

135.95

HIGH

138.60

LOW

131.20

OPEN 135.85
PREVIOUS CLOSE 132.35
VOLUME 18946
52-Week high 153.65
52-Week low 70.35
P/E
Mkt Cap.(Rs cr) 466
Buy Price 133.15
Buy Qty 493.00
Sell Price 0.00
Sell Qty 0.00
OPEN 135.85
CLOSE 132.35
VOLUME 18946
52-Week high 153.65
52-Week low 70.35
P/E
Mkt Cap.(Rs cr) 466
Buy Price 133.15
Buy Qty 493.00
Sell Price 0.00
Sell Qty 0.00

Dhunseri Petrochem Ltd. (DPL) - Director Report

Company director report

DHUNSERI PETROCHEM AND TEA LIMITED ANNUAL REPORT 2011-2012 DIRECTOR'S REPORT Your Directors have pleasure in presenting the Ninety Sixth Annual Report of your Company together with the Audited Statement of Accounts for the year ended 31st March 2012. FINANCIAL RESULTS (Rs. in lacs) 2011-12 2010-11 Turnover and other income 2,00,453 1,70,306 Profit before interest and depreciation 13,326 25,115 Interest 4,122 2,589 Profit before depreciation 9,204 22,526 Profit for the year 5,903 19,412 Provision for tax - Current tax 719 3,789 - Deferred tax 526 2,884 - Adjustments of earlier years (291) 8 Profit after tax 4,949 12,731 Amount brought forward from previous year 4,903 20,317 Amount available for appropriation 9,852 33,048 Appropriation proposed: Transfer to General Reserve 495 26,306 Dividend proposed on equity shares (Current year @ Rs.4.50/- and previous year @ Rs.4.50/- per share of Rs.10/- each) 1,576 1,577 Tax on dividend 256 262 Balance carried to Balance Sheet 7,525 4,903 Dividend Your Directors recommended a dividend @ Rs.4.50/- per equity share of Rs.10/- each for the year ended 31st March 2012, maintaining the last year's rate, subject to the approval of the shareholders at the ensuing Annual General Meeting. Performance Petrochem Division The PET plant at Haldia operated at 105% capacity utilisation. The production of PET resin increased from 2,00,981 MT in 2010-11 to 2,08,975 MT in 2011-12. Although the plant operated in excess of 100% capacity utilisation the margins remained under pressure throughout the year. Further the unexpected and steep decline in the value of Indian Rupee against other foreign currencies also affected the bottomline. Your Directors take satisfaction to inform you that all the term loans pertaining to the first PET project of the Company have been fully repaid in the financial year 2011-12. The pledge of 53,04,700 shares in the Company held by Dhunseri Investments Ltd., provided as a security in respect of the aforesaid term loans, have since been released on 3rd April 2012. As reported in last year's Directors' Report in respect to the unfortunate incidence of fire due to electrical short circuit in the raw materials godown at Haldia plant on 14th March 2011, your Directors wish to inform you that the claims under the 'Stock Policy' towards destruction of raw materials & packing materials and reimbursement of expenses aggregating to Rs. 51.82 crores have been settled by the insurance company to the tune of Rs. 36.26 crores (net of salvage of Rs. 5.32 crores) in the current year. The shortfall on this account amounting to Rs. 10.24 crores has been charged off in the books of accounts for the year ended 31st March 2012. Further, during the current year your Company restored to operation some fire damaged fixed assets valuing Rs. 2.89 crores in the books and as on 31st March 2012 is carrying Rs. 9.82 crores in the books of accounts towards amount receivable from insurance company on account of loss incurred on damage/ destruction of fixed assets & spares under 'Industrial All Risk' (IAR) policy. Your Company expects to receive the claim amount under IAR policy shortly. Tea Division Crop in Assam was affected due to early close of season due to no rain from end September 2011 till first week of April 2012 resulting in severe drought. There was increased pest activity due to very unfavourable weather condition. The production of your Company increased from 103.03 lac kgs tea made to 134.81 lac kgs tea made mainly due to addition from new bought leaf factories. However, price realisation was substantially lower due to poor market condition for medium quality teas especially from new bought leaf factories where quality parameters could not be stabilised in the first year. Orthodox market was also substantially lower by Rs. 20/- due to fall in prices of orthodox teas as compared with Rs. 17.16 lower for our teas. Prospects Petrochem Division The existing plant is running at full capacity utilisation and is expected to operate likewise in the coming year. The project for expansion of the PET plant capacity in Haldia to 4,10,000 TPA from 2,00,000 TPA is progressing satisfactorily. Mechanical completion is expected to be achieved around middle of May 2012. Start up of trial run is expected around middle of June 2012. Delay in the project completion is due to delay in civil construction caused by heavy rains during construction. With this the capacity of the Company's total production will increase to around 3,50,000 tonnes for the financial year 2012-13. The Company appointed marketing representatives in various international markets and is gearing up to meet marketing challenges to sell enhanced production. As already reported in the last report, your Company plans to produce and market barrier resins using M&G's state of the art BicoPET technology, after carrying out necessary modifications in the existing plant. All the equipments for this purpose have been procured. The erection of these equipments will be done after the commissioning of the new plant. After the erection of the plant and machinery, the commissioning will be synchronised with the maintenance shutdown of the existing plant. Tea Division Tea garden received some useful rain in the second week of April (after prolonged drought for the past six months) and now crop prospects appears to be good from the month of May 2012 onwards. Your Company mitigated the ill effect of drought to a large extent by continuous use of sprinkler irrigation. Some gardens in South Bank also suffered this year due to less rainfall upto February 2012 where irrigation facilities are provided only for newly planted tea areas. Continued emphasis given on manufacturing quality teas yielded favourable results in some gardens. However, all the gardens have been brought under similar manufacturing process to improve the quality as well as grade mix and there should be substantial improvement in overall quality of teas to be produced by the Company in the Season 2012. Company's packet tea brands LAL GHORA and KALA GHORA continued to receive good response from consumers due to overall improvement in quality and also packaging which helped in achieving the targeted sale quantity and it is expected that there should be substantial increase in sale quantity in 2012-13 as the trend shows for the month of April 2012. The tea market is expected to remain good during the year and difference in prices would be maintained for quality teas. The Company has sold and handed over one tea factory in Assam and negotiation for another tea factory is under progress and expected to be completed shortly. The operations of the remaining two bought leaf factories are being stabilised and is expected to achieve the targeted quantity of 3 mn kg tea made depending on availability of quality green leaf at competitive rates in the area. A new factory at Hatijan Tea Estate is being constructed having an annual capacity of 1.5 mn kg production and commercial production will start from the first week of May 2012. Further subsequent to the end of financial year 2011-12, the Company has entered into an agreement for sale of one of the tea estates namely Namsang Tea Estate, having around 5% of the production of the Company, at a consideration of Rs. 28.29 crores. The Company's current tea production is 13.5 mn kg and is expected to reach 20 mn kg in the next 2/3 years if negotiations to acquire tea gardens abroad fructifies. IT-SEZ Division The construction work of 'Dhunseri IT Park' at Bantala is progressing gradually. In respect of the first phase having a built up area of 3,70,000 sq. ft., the construction is expected to be completed in the last quarter of financial year 2012-13. Barring unforeseen circumstances, the Company's performance for the coming year is expected to be satisfactory. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings/ Outgo: The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are attached as an annexure to this report. Disclosure Under Sec 217(2A) of the Companies Act, 1956: The particulars of employees whose salary exceed the limits as prescribed under Section 217(2A) of the Companies Act, 1956 are given as an annexure to this report. Auditors: M/s Lovelock & Lewes, Chartered Accountants, retire on the conclusion of this Annual General Meeting, and being eligible, offer themselves for reappointment. Audit Report With regard to the observations of the auditors in paragraph 4 of Auditors' Report, the relevant notes to accounts are self explanatory. Directors As already informed in the last report, the Central Government had accorded its approval u/s 259 of the Companies Act, 1956 to increase the maximum number of Directors of the Company from 12(Twelve) to 18 (Eighteen), subject to the condition that the increase in the number of Directors had to be effected within 19th September 2011, failing which the approval would lapse. Since the Company has not affected the increase in the number of Directors by 19th September 2011, the approval lapsed. Hence the maximum number of directors of the Company has come down to 12(Twelve) again. During the year Mr. S. K. Pai ceased to be a Director of the Company consequent to the withdrawal of nomination by IDBI Bank Limited following the full repayment of its term loan. The Board of Directors wish to place on record their sincerest appreciation for the contribution made by Mr. S. K. Pai during his tenure. Further, during the year the tenure of Mr. B. K. Biyani as the Executive Director (Corporate) of the Company ended on 31st March 2012 and simultaneously he has resigned from the post of Director with effect from close of 31st March, 2012. The Board of Directors wish to place on record their sincerest appreciation for the contribution made by Mr. B. K. Biyani during his tenure. Mr. R. K. Sharma, has been appointed as a Director of your Company in the casual vacancy created by the resignation of Mr. B. K. Biyani with effect from 1st April 2012. Mr. R. K. Sharma shall hold office till the term Mr. B. K. Biyani would have held office. Mr. A. Bagaria, Mr. R. N. Bhardwaj and Mr. Y. F. Lombard, Directors of your Company will retire at this Annual General Meeting by rotation, and being eligible, offer themselves for reappointment. The Board recommends their reappointment as Directors of your Company. The tenure of Mr. M. Dhanuka as the Vice Chairman & Executive Director has ceased on 31st March 2012. He is proposed to be reappointed as the Vice Chairman & Managing Director of the Company with effect from 1st April 2012. Your Directors recommend approval of his reappointment as the Vice Chairman & Managing Director of the Company. The particulars required for reappointment as the Vice Chairman & Managing Director are contained in the Notice for the Annual General Meeting of the Company. The tenure of Mr. B.Chattopadhyay as the Executive Director & CEO ceased on 31st March 2012. He is proposed to be reappointed as the Managing Director & CEO of the Company with effect from 1st April 2012. Your Directors recommend approval of his reappointment as the Managing Director & CEO of the Company. The particulars required for reappointment as the Managing Director & CEO are contained in the Notice for the Annual General Meeting of the Company. Mr. R. K. Sharma is presently the CFO of the Company. He is proposed to be appointed as the Executive Director (Finance) of the Company, liable to retire by rotation, with effect from 1st April 2012. Your Directors recommend the approval of his appointment as the Executive Director (Finance) of the Company, liable to retire by rotation. The particulars required for appointment as the Executive Director (Finance), liable to retire by rotation are contained in the Notice for the Annual General Meeting of the Company. Mr. D.P.Jindal has been appointed as the Additional Director of your Company with effect from 2nd May, 2012. In terms of Section 260 of the Companies Act, 1956 he shall hold office only upto the date of this Annual General Meeting. The required notice pursuant to provisions of Section 257 of the Companies Act, 1956 has been received from a member proposing his appointment as a Director of your Company, liable to retire by rotation. Your Directors recommend approval of his appointment as a Director of your Company, liable to retire by rotation. The particulars required for appointment as Director are contained in the Notice for the Annual General Meeting of the Company. Fixed Deposits The Company has not accepted any deposits from the public. However the Companies (Acceptance of Deposits) Rules, 1975 were complied with in view of the deposits being accepted from the employees of the Company. All deposits which matured during the year were repaid. Subsidiary Company 1) Egyptian Indian Polyester Company S.A.E (EIPET): EIPET's project in Egypt is progressing satisfactorily. Start up of trial run is expected to be achieved by fourth quarter of financial year 2012-13. 2) Dowamara Tea Company Private Ltd. (DTCPL): Dowamara Tea factory belonging to Dowamara Tea Company Private Limited (DTCPL), which is a wholly -owned subsidiary of the Company, produced 5.25 lac kgs during the year ended 31st March 2012. DTCPL suffered a loss of 1112.64 lacs during the current year. 3) Dhunseri Petrochem & Tea Pte Ltd. (DPTPL): Your Directors wish to inform you that a wholly owned subsidiary has been incorporated in Singapore on 28th December, 2011 under the name and style of Dhunseri Petrochem & Tea Pte Ltd. for the purpose of transferring the investment of the Company in Egyptian Indian Polyester Company S.A.E.(EIPET) to the aforesaid subsidiary in Singapore. Upon receipt of the approvals and other statutory permissions, the investment of the Company in EIPET would be transferred to DPTPL. Subsidiary Accounts Ministry of Corporate Affairs has granted general exemption to the companies under Section 212 of the Companies Act, 1956, from attaching the reports and accounts of the subsidiary company, subject to fulfillment of certain conditions, which amongst others include the consent of the Board of Directors for not attaching the annual accounts of the subsidiary. Accordingly, the Board of Directors of the Company, at its meeting held on 2nd May 2012, has consented for not attaching the annual accounts of the subsidiaries viz, M/s Egyptian Indian Polyester Company S.A.E. and Dowamara Tea Company Private Ltd. with the accounts of the Company. Accordingly, the Audited Statements of Accounts, the reports of Board of Directors and Auditors of the subsidiary companies have not been annexed. The annual accounts of the subsidiary companies and the related detailed information shall be made available to the shareholders of the Company and subsidiary companies seeking such information at any point of time. Shareholders who wish to have a hard copy of the full reports and accounts of the subsidiaries will be provided the same on receipt of written request from them. These documents will also be available for inspection by any shareholder at the registered office of the Company and that of the subsidiaries on any working day during business hours, except on Saturdays. As required under the listing agreement with the stock exchanges, the audited consolidated financial statements of your Company are also attached and form a part of the Company's annual report. However, the consolidated financial statements do not include the operations of Dhunseri Petrochem & Tea Pte Ltd. as the first financial year of the said Company will end only on 31st March 2013. Cost Audit Your Company is under the purview of Cost Audit as per Section 233B of the Companies Act, 1956 in respect of manufacture of Tea. Further with effect from financial year 2012-13 Poly Ethylene Terephthalate (PET) resin has also been covered for Cost Audit. M/s Mani & Co., Cost Accountants, have been appointed as Cost Auditors of the Company. Directors' Responsibility Statement Pursuant to Section 217 (2AA) of the Companies Act, 1956 Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed: (i) That in the preparation of the annual accounts, the applicable accounting standards were followed, except as specified in Para 4 of Auditors' Report. Proper explanation relating to material departures, have been clarified in note no. 35 in the notes to accounts which is self explanatory; (ii) That the Directors selected such accounting policies and applied them consistently except as specified in note no. 38 in notes to accounts and made judgments and estimates that were reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period; (iii) That the Directors took proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the Company's assets and for preventing and detecting fraud and other irregularities; (iv) That the Directors prepared the annual accounts on a going concern basis. Corporate Governance and Management Discussion and Analysis Reports: Corporate Governance and Management Discussion and Analysis Reports are set out as separate annexure to this report. Corporate Social Responsibility Your Company understands that the expectations of society from industry is constantly changing and is conscious of its social responsibilities. It has continued with its welfare activities for development in the fields of education, health, culture and other welfare measures and to improve the general standard of living. Your Directors have decided that 1% of the profits of the Company would be used towards CSR activities, with a maximum ceiling of 11 crore including contributions to Dhanuka Dhunseri Foundation Trust (DDFT). As reported in the last year's report, DDFT acts as the vehicle through which the CSR activities of the Company are carried out across the various parts of the country. The Trust was formed in 1972 for various charitable objectives. It is involved in various philanthropic activities like building schools, colleges and girls hostel, providing free medicines through dispensaries and grants to charitable institutes. Certifications Petrochem Division As already informed in the last report, the Petrochem division of the Company holds quality certifications from renowned national and international agencies like the USFDA, EC, Japanese and Canadian Food and Health Bodies and ITRC and is also ISO 9001:2008, ISO 14001: 2004 and BS OHSAS 18001: 2007 certified. Further during the year the Petrochem division of the Company has received SA 8000: 2008 certification (i.e. Certificate of Social Accountability) from TUV NORD for its plant at Haldia in respect of manufacture and sale of PET resin in International and domestic markets. Tea Division As informed in the last report, your Company was already having the ISO 22000:2005 certification for Dilli & Santi Tea Estates. Further during the year your Company has also received the ISO 22000:2005 certifications from DNV Business Assurance in respect of Food Safety System for the following Tea Estates: i) Bahadur Tea Estate ii) Bahipookri Tea Estate iii) Bettybari Tea Estate iv) Dhunseri Tea Estate v) Khagorijan Tea Estate vi) Namsang Tea Estate (agreement for sale executed) vii) Orang Tea Estate Awards Your Directors have the pleasure to inform you that the following awards have been received: Petrochem Division Second Best Exporter Award: The Company's Petrochem division has received the second best exporter award for the year 2009-10 in the product category of Plastic Polymers by The Plastics Export Promotion Council, Mumbai. Environment, Health and Safety Health and safety has always been a matter of major concern and importance. Your Company continuously strives to ensure that our operations are safe. The Company recognises the importance of managing its environmental impact. These are matters of priority and therefore caring for the environment and responsible disposal of wastes are some of the ongoing initiatives undertaken by the Company. Utilisation of Proceeds from Preferential Issue Erstwhile SAPL had made an allotment of equity shares, warrants and FCCBs in 2007-08. Consequently, during 2007-08, erstwhile SAPL raised Rs. 7,416.23 lacs by preferential allotment of equity shares and equity share warrants and Rs. 7,864.00 lacs from the issue of the FCCBs. The FCCB proceeds as at 31st March 2012 (as reduced by redemption in 2009-10) is Rs. 2949 lacs. The money raised out of such issue was to be utilised for: i) Equity participation in overseas subsidiaries ii) Retirement of high cost borrowings iii) Other business purposes, including working capital requirements The amount raised by issue of equity shares, equity share warrants and FCCB's have been fully utilised towards equity participation/issue related expenses in the overseas project in Egypt. CRISIL EQUITIES GRADING Your Directors inform that CRISIL vide its independent equity research report dated 16th February, 2012 has assigned a CRISIL fundamental grade of 3/5 (pronounced three on five) to the Company. The grade indicated that the Company's fundamentals were 'good', relative to other listed equity securities in India. CRISIL has assigned a valuation grade of 5/5, indicating that the stock has a strong upside as compared to the market price of Rs.122/- (as on 16th February, 2012). CRISIL's fair value of the Company's stock was Rs. 243/-. Credit Rating by Credit Analysis & Research Ltd. (Care) Your Directors inform that CARE has reaffirmed the Credit rating of CARE A + (Single A plus) assigned to long term bank facilities of the Company and CARE A1+ (A One plus) assigned to short term facilities of the Company. At the same time CARE has reaffirmed the Credit rating of CARE A1+ (A One plus) assigned to the Short Term Debt (STD) programme (including Commercial Paper) of the Company for a maturity upto six months. Employees Your Company believes that 'people' are the most prized asset for the success of any organisation. Your Directors wish to express their appreciation to all the employees for their exemplary contributions and excellent team spirit. Their dedicated efforts, enthusiasm and commitment have played a pivotal role in the growth of the Company. Acknowledgement The Directors wish to place on record their sincere appreciation for the whole-hearted support received from Axis Bank, Allahabad Bank, Bank of Baroda, Bank of India, Canara Bank, Deutsche Bank, Development Credit Bank, DBS Bank Limited, Export-Import Bank of India, HSBC Limited, HDFC Bank Limited, ICICI Bank Limited, IDBI Bank Limited, International Finance Corporation, Washington, Punjab National Bank, State Bank of India, State Bank of Travancore, Syndicate Bank, Standard Chartered Bank, United Bank of India, West Bengal Industrial Development Corporation Ltd, Tea Board, Haldia Development Authority, Office of the District Magistrate of East Midnapore, West Bengal Pollution Control Board, West Bengal State Electricity Board, Ministry of Environment & Forest, Government of West Bengal, Government of Assam, Government of Egypt, Governorate of Suez, General Authority for Investment and Free Zones (GAFI), Egyptian Petrochemicals Holding Company (ECHEM), Engineering for the Petroleum and Process Industries(ENPPI), Ahli United Bank (Egypt) S.A.E, Commercial International Bank (Egypt) S.A.E, Egypt, the customers, suppliers, shareholders and all others associated with the Company. For and on behalf of The Board of Directors Place: Kolkata C.K. Dhanuka Date : 2nd May, 2012 Executive Chairman Annexure to the Directors' Report Information Pursuant to Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and Forming Part of the Directors' Report for the year ended 31st March 2012. A. Conservation of Energy: Your Company attaches priority to conservation of energy. The activities of the Company in this direction are: a. Energy conservation measures taken: Petrochem Division 1. Installation of LED based low voltage, low wattage lights in FGS. 2. Installation of turbo ventilators in FGS to replace electrical motor driven exhaust fans. Tea Division: Vibratory fluidised bed dryer has been installed in all the gardens and manufacturing has been stabilised with improvement in quality. b. Additional investments and proposals, if any, being implemented for reduction of consumption of energy: Petrochem Division: Investments and proposals presently under consideration are: 1. Stoppage of existing MEG unloading pumps for installation of new Cross country MEG pipe line. 2. Replacement of conventional tube lights with energy efficient for office areas. 3. Replacement of conventional street lights with LED type. Tea Division: New gas burners have been installed in two factories for efficient use of gas. Initial results have shown savings on energy. However, final assessment will be made after continuous use of the same in the peak season. Installation of santoor in all the gardens will reduce the percentage of reprocessing thereby improving the quality and reduction in non- remunerative grade. c. Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: Petrochem Division The proposed energy conservation measures are expected to yield an annual cost savings of: 1. Rs.4.52 lacs on account of stoppage of MEG unloading pumps for cross country MEG pipeline. 2. Rs.1.33 lacs on account of Replacement of conventional tube lights with energy efficient for office areas. 3. Rs.1.15 lacs on account of replacement of conventional street lights with LED Tea Division The energy conservation measures have resulted in saving of approx 4-5% in both gas and electricity consumption and will also save on maintenance costs in future. Its full impact will be visible in the year 2012-13. FORM A Form for disclosure of particulars with respect to conservation of energy Current year ended Previous year ended A. POWER & FUEL CONSUMPTION 31st March 2012 31st March 2011 1. Electricity a) Purchased units (lacs KWH) 78.59 60.80 Total Amount (Rs.lacs) 568.20 397.16 Rate/Unit (Rs./KWH) 7.23 6.53 b) Own Generation i) Through Diesel Generator Units (lacs KWH) 20.60 13.03 Units per ltr. of diesel oil 2.75 2.74 Cost/unit (Rs./KWH) 13.86 13.44 ii) Through F O generator units (lacs KWH) 61.29 154.52 Units per kg of furnace oil (KWH) 4.69 4.46 Cost/unit (Rs./KWH) 7.62 5.94 iii) Through gas generator units (lacs KWH) 13.14 16.29 Units per S cum of gas 3.82 5.29 Cost/unit (Rs./KWH) 2.32 1.55 iv) Through turbine generator units (lacs KWH) 514.03 368.15 Units per MT of coal 908.15 773.78 Cost/Unit (Rs./KWH) 4.83 4.82 2. Coal (Note 1&2) Quantity (MT) 44,907.56 28,973.53 Total cost (Rs. lacs) 1,938.42 1,025.99 Average rate (Rs./MT) 4,316.48 3,541.11 3. Furnace Oil (for heating) Quantity (MT) 911.54 2,633.95 Total cost (Rs. lacs) 315.14 696.85 Average rate (Rs./MT) 34,572.53 26,456.64 4. Gas Quantity (lacs S cum) 34.32 25.93 Total cost (Rs. lacs) 282.84 187.75 Average rate (Rs./S cum) 8.24 7.24 Standard Current year ended Previous year ended (if any) 31st March 2012 31st March 2011 B. CONSUMPTION PER UNIT OF PRODUCTION Product-Tea Tea produced (lac kgs.) 134.66 102.83 Electricity (KWH) 1.00 0.83 0.87 Coal (kg.) (Margherita and Khasi coal) 1.00 0.43 0.49 Gas (S cum) 0.25 0.25 Product- Poly Ethylene Terephthalate (PET) Resin PET produced (MT) 2,08,975 2,00,981 Electricity (KWH/MT) 273.00 275.70 260.14 Furnace oil (Kg/MT) 86.00 4.36 13.11 Coal (Kg /MT) (steam coal/ROM coal) 187.25 118.96 Note: 1) Quality of coal- a) Petrochem division: Imported Indonesian coal/steam and ROM coal; b) Tea division: Margherita and Khasi coal. 2) Where used- a) Petrochem division: In coal-fired HTM heaters for process heating; b) Tea division: In coal-fired heaters. 3) In Petrochem division, process heating was done primarily by coal and in case of emergency by FO during the year. In Tea division process heating was done by coal in North Bank gardens and gas in South Bank gardens. FORM B Form for disclosure of particulars with respect to absorption Research and Development (R&D) Petrochem division Research and Development is spread across the business of the Petrochem division. Constant development efforts are made to increase efficiency and for cost reduction 1. Specific areas in which R&D was carried out by the Company- The following R&D activities were conducted during the financial year 2011- 12 to achieve significant development in quality and to make the product compliance to changing international criteria. In continuation to the R&D activities pertaining to the replacement of heavy metal cobalt from the range of product, DPTL with its intense study, trail and review could be able to eliminate cobalt completely from the product with effect from August 2011. Subsequently EU had banned the use of cobalt in food grade packaging material in January 2012. DPTL is the only PET manufacturing unit in India who took the initiative in making the PET cobalt free. Most of the domestic customers catering their product to EU would be able to sell their product. The transition of PET with cobalt to zero cobalt was very smooth and had no adverse impact on gloss and tinge of the downstream product. 2. Benefits derived as a result of the above R&D- ASPET brand PET is more environmental friendly with no heavy metal cobalt as its ingredient. The product is fully in compliance with EU regulations. Further due to elimination of cobalt the Company could save Rs. 1.20 crore annually. 3. Future plan of action- To extend the same facility and implementing the above for products with new plant. 4. Expenditure on R&D: a. Capital: Rs.33.88 lacs b. Recurring: Nil c. Total: Rs.33.88 lacs d. Total R&D expenditure as a percentage of total turnover: 0.02% The R&D is integrated to the production and quality control process of the Company and as a result cannot be segregated. The benefits are consequently synergised and not allocated in terms of financial heads. Tea division The Company subscribes to Tea Research Associations, which does R&D work for its tea industry and their expert advice is also being obtained through visits by their Advisory Officers to the garden from time to time. Gramin Krishi Unnayan Prakalpa is implemented for agricultural development as well as overall improvement of socio-economic improvement of the area through various tea associations. Technology absorption, adaptation and innovation 1. Efforts, in brief, made towards technology absorption, adaptation and innovation. Petrochem division Material procurement for required modification of existing plant to produce barrier PET was completed and modification job would be done at nearest opportunity. The new plant erection is in full swing to meet the target date of completion. With the commissioning of new plant, company could be able to double its production with Haldia production facility. Tea division Indigenously developed technologies for the improvement of production both in field and factory were adopted and required modifications and innovations were done on continuous basis. Garden started using JCB for uprooting tea bushes with good results in both quality and speed of work. This reduced the involvement of manual workers without increasing the overall cost of uprooting and replanting. 2. Benefits derived as a result of the above efforts, e.g, product improvement, cost reduction, product development, import substitution etc. Petrochem division The adaptation and absorption of the technology knowhow will make the organisation capable to meet demands for Barrier PET which is currently being imported. With new plant commissioning, more flexibility for availability of different and specialised grade PET would be available. Tea division Benefits in the tea division included reducing the cost of production and improvement in product quality. 3. In case of imported technology (imported during the last five years, reckoned from the beginning of the financial year), the following information may be furnished: (a) Technology imported - licensing agreement for import of technology in connection with the production of Barrier PET was signed in the FY 2010-11. (b) Year of import - agreement signed in 2010-11 and implementation of the modifications in the existing plant are underway. (c) Has technology been fully absorbed- In project stage. (d) If not fully absorbed, areas where this has not taken place, reasons therefore and future plans of action - project progress is as planned. Would be completed as per target. Foreign exchange earnings and outgo: 1. Earnings in foreign exchange- Rs. 54,889 lacs 2. Foreign exchange outgo- Rs. 84,241 lacs Information on foreign exchange earnings and outgo is contained in Note no. 48, 49 and 50 to the Accounts. Activities Relating to Exports: Your Company's product (bottle grade PET resins), produced in Haldia plant, is exported to 37 countries currently. Your Company exported 67,182 MT in 2011-12. The export quantity is reduced due to strong domestic demand. There are no exports in respect to tea. Initiatives taken to increase exports: Our export sales strategy remains similar to last financial year. Your Company reduced sales channels and contacted end-users directly, developing good relationships with them for long-term business, achieving better bottomline and better brand visibility in the market. Direct contact with customers helps understand customer- specific needs, guides them for appropriate products and provides them with customised services to strengthen relationships. Due to GSP benefit reinstated to USA with effect from October 2011, your Company has restarted exporting to the US and switched majority of business to European Union & Latin American Markets. Development of new export markets for products and services: Your Company targeted strong and regular customers in Europe, USA & Latin America in view of future capacity expansion and working closely with them to enhance their business and became a part of their business process. Your Company has been marketing specialty resin as per technology license agreement with M&G, Italy for producing and marketing M&G's proprietary oxygen and passive gas barrier technologies in association with M&G's proprietary 'BicoPET' technology for specialty resin production. The same product is successfully being tested in India at different locations for various suitable applications and development work is under process. Export plans: Your Company's plan for 2012-13 is based on current global supply demand. The Company's focus is on the market which will give optimum returns and employing experienced sales professionals in the respective market for better follow ups and customer services. Management discussion and analysis Petrochem division Overview Polyethylene terephthalate (PET) is a versatile plastic used as a packaging material for beverages, food, personal and home care, pharmaceuticals, consumer and industrial products. The material gained global acceptance as a preferred packaging material on account of hygiene, strength, lightness, durability, inertness, economy, attractiveness and freshness-retention. Global food and health-safety agencies approved PET as perfectly safe for food and beverage packaging. The result is that PET consumption increased significantly in the last 15 years over other alternative packaging materials (aluminium, glass, paper and others). This is best reflected in global PET demand increase for beverage packaging, which grew at a CAGR of 7.5% in 15 years compared with 2.2% for aluminium and 1.5% for glass. As a result, the product is establishing its superiority and deepening its penetration across products, sectors and countries (Source: SBA CCI, Euromonitor, IVL Analysis). Global PET resin industry The global PET resin industry grew at a 6% CAGR in the five years leading to 2011-12. The industry experienced an oversupply; global capacity utilisation was placed at 79% in 2011, which is expected to improve to 84% in 2015 (Source: Crisil Research). Global PET packaging consumption is expected to grow 5.1% annually to 19.1 MT by 2017 with an estimated value of USD 43.7 bn. Asia is expected to account for 29.4% of the world's PET packaging consumption. (Source: Pira International). The PET packaging markets have evolved over the years, with demand shifting from Europe and the US to Asia-Pacific. West Europe and North America accounted for about 24% and 28% respectively of the global PET packaging demand in 2007; they are expected to account for about 17% and 21% of the demand respectively by 2017. On the other hand, Asia-Pacific demand is likely to increase from 25% to 34% during the period (Source: Pira International). Global PET resin demand by geography Expected demand Proportion of Increase in 2011 in 2012 world total ('000 tonnes) % ('000 tonnes) North America 3,774 22.1 95 2.6 South America 1,469 8.2 112 8.3 Middle East/Africa 2,033 11.2 171 9.2 West Europe 3,001 17.8 35 1.2 East Europe 1,057 6.1 37 3.6 Asia/ Pacific 6,364 34.6 615 10.7 Total 17,698 100.0 1,047 6.4 (Source: PCI PET packaging) Global PET resin demand by industry Expected demand Proportion of Increase in 2011 in 2012 world total ('000 tonnes) % ('000 tonnes) Carbonated soft drinks 5,293 29.9 207 4.1 Water 4,609 26.0 292 6.8 Other drinks 3,581 20.2 310 9.5 Food 1,757 9.9 90 5.4 Non-food 1,052 5.9 100 10.5 Sheet 2,801 15.8 198 7.6 RPET -1,395 -7.9 -132 10.5 Total 17,698 100.0 1,065 6.4 (Source: PCI PET packaging) Indian PET resin industry The Indian packaging industry (USD 15 billion) grew at a 15% CAGR in the five years leading to 2011-12; the industry is expected to grow to USD 40 billion by 2015 (Source: Assocham), driven by a huge consumption growth for products like milk, food, beverages, food grains and pharmaceuticals as well as a packaging shift from the conventional to PET. Demand for PET from within India grew at a compounded 35% in FY06-11 even as the country's per capita PET consumption remained at a low 0.3 kg (global average 2.3 kg) (Source: Crisil Research). PET demand in India's packaging industry Domestic Growth demand over (tonnes) last year 2006-07 147,918 49% 2007-08 177,424 20% 2008-09 243,508 37% 2009-10 309,233 27% 2010-11 408,723 32% 2011-12 500,000 22% PET demand drivers in India: * Rising population: India's population rose by 181 million to 1.21 billion people over 10 years ending 2011 (Source: Census). Youth: Almost 65% of Indians between the age group of 20-60 years are employed, leading to higher disposable incomes in the hands of the youth with aspirations for a better lifestyle. An estimated 70 million individuals will enter the workforce over the next five years. (Source: The Hindu) * Increasing disposable income: The average employee remuneration grew 10.8% in 2010-11; per capita income is estimated to rise 14.3% to Rs.60,972 in 2011-12 (Source: Deccan Herald). * Urbanisation: According to the United Nations, India is the world's fastest-urbanising country. Nearly 30% of India's population live in urban locations; almost 40% could be living in urban areas by 2030 (Source: Assocham). Segment-wise or product-wise performance During the year under review, the Company's PET sales revenue increased 26% to Rs. 1,78,559 lacs in 2011-12. The Company's domestic sales grew 35% to Rs. 1,22,078 lacs, accounting for 68% of the total PET sales. Exports grew 9% to Rs. 56,481 lacs, accounting for 32% of the total PET sales. Domestic sales were higher given the increased demand in the sub-continent coupled with attractive margins. Outlook The Company undertook improvements in its existing plant and focused on commissioning its upcoming Haldia (2,10,000 TPA by June 2012) and Egypt plants (4,20,000 TPA by Q4 FY 2012-13). The Egypt plant will cater to the growing PET demand in Africa, the Middle East and Europe, whereas the Indian expansion will cater primarily to the Asian market (including India) and some demand of Europe and the US. The Company optimised its existing resources and appointed marketing representatives to market the material coming out of the expanded capacity. The outlook for this division is positive as the global PET resin industry is expected to grow at a compounded 5% in 5 years whereas Indian consumption is expected to grow at a compounded 18-20% during the period (Source: Crisil Research). The packaging industry in India, a major consumer of PET resins, is expected to grow at a compounded rate of 15% to USD 40 billion by 2015 (Source: Chairman of Indian Institute of Packaging). Tea division Overview The global tea industry is largely dominated by India, the world's second- largest producer and largest consumer. India offers a wide tea range (CTC, orthodox, green tea) compared with other tea exporting countries. The country's tea industry accounts for 30% of the world production, 25% of global consumption and provides employment to over 35 lac workers across 1,500 tea estates. The Indian tea industry faces competition from China, Sri Lanka, Kenya and Vietnam. Production India's tea production increased from 966.4 mn kg in 2010 to 988.33 mn kg in 2011. Assam (509 mn kg of tea in 2011) contributed to over 50% of this production (Source: Tea Board). Consumption India's tea consumption has increased from 837 mn kg in 2010 to 856 mn kg in 2011, growing at 3% annually compared with a 2.2% production growth, leading to a domestic deficit of 55 mn kg (Source: Tea Board). Exports India's tea exports declined from 193.3 mn kg in 2010 to 186.7 mn kg in 2011, given the sharp decline (24%) in exports during January-April 2011. Tea exports stood at Rs. 2,595 crores in 2011 compared with Rs. 2,786 crores in 2010 (Source: Tea Board). Imports India's tea imports declined from 20.04 mn kg in 2010 to 18.6 mn kg in 2011. Imports declined from Rs. 214.44 crores in 2010 to Rs. 172.69 crores in 2011 (Source: Tea Board) Yield The country's tea yield per hectare is more or less stagnant in the last few years. India's yield per hectare in 2009, 2010 and 2011 stood at 1,662 mn kg, 1,662.9 mn kg and 1,697 mn kg respectively (Source: Sharekhan research report). Tea demand drivers * Preference: India is the world's largest tea consumer, accounting for nearly 25% of the global tea production (Source: Assocham). * Health benefits: Tea is perceived as a health drink, helps to combat cardise ailments, controls cholesterol, protects the skin, keeps cancer at bay, strengthens bones and teeth and contains no calories, fat or salt. Affordability: Nearly 90% of Indian households are regular tea drinkers, the beverage being cheap and affordable. * National drink: Indian Government finalised to declare tea as the national beverage with effect from 17th April 2013. Segment-wise or product-wise performance The Company suffered on account of severe drought and major pest attacks in its gardens during 2011-12, leading to crop loss and decrease in revenues. Notwithstanding this, overall tea production increased from 10.29 mn kg in 2010-11 to 13.48 mn kg in 201112 due to the Company's acquisition of bought leaf factories. Average tea realisation decreased from Rs. 134.07 per kg to Rs. 113.38 per kg mainly on account of tea made in bought leaf factories. The new factory at Hatijan tea estate is expected to be commissioned shortly having a capacity of 1.5 mn kg. The Company sold one bought leaf factory during the year under review and another bought leaf factory is at the final stage of negotiations for sale due to non- availability of sufficient quantity of good quality green leaf. Outlook The Indian tea industry (six lac hectares under cultivation) is expected to report a CAGR of 15%, its turnover increasing from Rs. 19,500 crores to Rs. 33,000 crores by 2015. Volume-wise, production is expected to reach 1,000 mn kgs in 2012. As tea consumption grows faster than production, tea prices are expected to progressively strengthen (Source: Assocham). Risks and concerns Risks and opportunities are inseparable components of the Company's business. The Company's Directors and management keeps this in mind when taking decisions to ensure that stakeholders are not adversely affected. The Company's Risk Management Committee, comprising various departmental heads, meets regularly to assess and minimise risks without losing opportunities. These have been discussed in details in the risk management section in this annual report. Internal control systems and their adequacy The Company introduced internal control systems to ensure that all assets are safeguarded and protected against loss and that transactions are recorded and reported correctly. The internal control system is commensurate with the size and nature of the Company's business. The systems are regularly reviewed for effectiveness. The Managing Director & CEO, Executive Director (Finance) and Senior V. P. (COO-Tea division) of the Company oversee the entire internal control system. The Company ensures control through Oracle, E-Business Suite and ERP. Discussion on financial performance with respect to operational performance This has been covered in the Director's Report specifically under the section on financial results and performance. The financial review for the year has also been separately covered in this annual report. Material developments in human resources/industrial relations front, including number of people employed The Company emphasises training and development for optimum results. The Company strives to maintain healthy industrial relations across its various locations and employees in both the petrochem and tea divisions. The actual number of persons employed by the Company as on 31st March 2012 was 6,179. Financial Review Highlights, 2011-12 Revenue from operations increased by 24.18% from Rs.1,593.95 crore in 2010- 11 to Rs. 1,979.45 crore Net profit declined by 61.13% from Rs. 127.31 crore in 2010-11 to Rs.49.49 crore EBIDTA declined by 46.94% from Rs.251.15 crore in 2010-11 to Rs.133.26 crore Interest coverage declined from 9.70 in 2010-11 to 3.23 Profit before tax (PBT) declined by 69.59% from Rs.194.12 crore in 2010-11 to Rs. 59.03 crore Income The revenue from operations registered a growth of 24.18% from Rs. 1,593.95 crore in 2010-11 to Rs. 1,979.45 crore in 2011-12 primarily due to rise in prices of polyester chips. Other incomes declined from Rs. 109.11 crore in 2010-11 to Rs. 25.08 crore in 2011-12 since the other incomes in the previous years included insurance claims and profit on sale of long-term non-trade investments. Expenses Cost of raw materials: This increased by 36.02% from 1,146.93 crore in 2010-11 to Rs. 1,560.11 crore in 2011-12 largely driven by increase in prices of major raw materials Purified Terepthalic Acid (PTA) and Monoethylene Glycol (MEG). Employee costs: This increased by 12.45% from Rs. 48.30 crore in 2010-11 to Rs. 54.31 crore in 2011-12. Power and fuel costs: This increased by 18.45 % from Rs. 53.17 crore in 2010-11 to Rs. 62.98 crore in 2011-12 primarily on account of inflated fuel prices. Foreign exchange loss: The Company faced a loss of Rs. 33.54 crore in 2011-12 on account of raw material imports and outstanding current liability in foreign currency. Finance costs: This increased by 59.20% from Rs. 25.89 crore in 2010-11 to Rs. 41.22 crore in 2011-12 primarily on account of higher foreign exchange difference and increase in interest on net working capital. Depreciation: This increased by 6% from Rs. 31.14 crores in 2010-11 to Rs. 33 crores in 2011-12 due to capital expenditure including for replacement of assets damaged by fire. Resources Reserves grew by 4.58% from Rs. 680.42 crore as on 31st March 2011 to Rs.711.58 crore Capital employed: The capital employed in the Company increased by 5.88% from Rs. 1,075.97 crore as on 31st March 2011 to Rs. 1,139.24 crore as on 31st March 2012 (excluding the capital employed amounting to Rs. 350.41 crore for plant under construction) due to increase in reserves and debt capital. Networth: The net worth of the Company increased by 4.36% from Rs. 715.45 crore as on 31st March 2011 to Rs. 746.61 crore as on 31st March 2012 on account of profit generated during the year. Return on capital employed declined by 1164 bps from 23.34% in 2010-11 to 11.7% Long term borrowings: The Company's long-term borrowings increased from Rs. 96.02 crore as on 31st March 2011 to Rs. 350.29 crore as on 31st March 2012 primarily to fund the expansion project at Haldia. The debt equity ratio of the Company as on 31st March 2012 was at 0.47. Gross block: The gross block of the Company increased by 4.21% from Rs. 793.68 crore as on 31st March 2011 to Rs. 827.07 crore as on 31st March 2012. This increase in gross block is due to acquisition of land for new plant expansion and general upgradation and upkeep of existing plant. Environment, Health and Safety management The Company invested in a clean manufacturing technology resulting in low emissions and a positive environmental impact. The Petrochem Division of the Company was certified with SA 8000:2008 from TUV NORD for maintaining workers' rights, workplace conditions, and management systems. This is in addition to the ISO 9001, ISO 14001 and OHSAS 18001 certifications already received. Environment Dhunseri has always been committed to the highest environmental and safety standards which is reflected in complete compliance of such regulations. This commenced with the selection of advanced technology from Germany, complying with international environmental standards and marked by no emissions. The various initiatives undertaken by the Company in these areas are: * Created a dedicated Environmental Cell to review related activities, report shortcomings and undertake various improvement steps * Continuous monitoring of effluent treatment and water discharge to keep it well below the norms * Invested in rainwater harvesting, afforestation drive and vermi-compost pits * Installed roof top extractor and modified control circuit for ventilation fans at Haldia plant * Installed ventilator fans at all tea factories to circulate fresh air These initiatives improved water and energy consumption efficiency on the one hand and reduced hazardous gases and waste on the other. Health The Company undertook the following initiatives towards maintaining and improving the health of the employees: Petrochem division * Protected employee health by establishing a well-equipped occupational health centre with a qualified doctor * Free medical check-ups for all employees * Regular training for all employees Tea division * Medical camps are organised with the help of specialist doctors * Free distribution of chemically-treated mosquito nets to workers * Provided a water filtration plant with iron filtration for potable water supply to workers Safety Dhunseri is committed to employee safety through the following initiatives: * Safety audit through internal team and external agencies * Regular safety rounds * Periodic inspection of breathing apparatus and personal protective equipment * Developed a fire handling system at plant by installing a 16,000 m3 water reservoir, procuring additional fire tenders and installing sprinklers in raw material warehouse Corporate Social Responsibility: The Company carried out various CSR activities across the country through Dhanuka Dhunseri Foundation (DDF). DDF was established in 1972 and focuses on four major philanthropic areas: * Promoting education by building schools and colleges and providing assistance for their maintenance * Empowering the girl child through education and other initiatives * Improving healthcare by distributing free medicines and setting up dispensaries and providing assistance to charitable hospitals * Focusing on community development through donations The Foundation regularly provides financial assistance in association with various organisations to carry out CSR activities in these areas. During the year, the Foundation undertook initiatives to provide primary education to 352 children and medical treatment to 58,250 patients. We are currently building a new girls hostel in Kolkata to accommodate 400 girls with a built-up area of 70,000 sq. ft. Building plans have been submitted to Kolkata Municipal Corporation and the construction work will begin once the plan is sanctioned. In 2011-12, we contributed a sum of Rs. 0.61 crores towards CSR activities. Risk management Industry Risk:- A downturn in the economy or select sectors (petrochem or tea) could adversely impact revenues Mitigation - Petrochem * The PET industry in India is expected to grow at a compounded rate of 18- 20% during the next five years * The global consumption of PET packaging is expected to grow 5.1% annually during the next five years * The Indian packaging industry (USD 15 billion), the primary consumer of PET in India, grew at a CAGR of 15% in five years and is expected to reach USD 40 billion by 2015 which is likely to boost PET demand Mitigation - Tea The country's rising population and increased tea preference is likely to sustain domestic consumption * India's tea industry turnover is expected to grow from Rs. 19,500 crores to Rs. 33,000 crores by 2015 Quality Risk:- An inability to manufacture quality products could lead to poor realisations and brand diminution Mitigation - Petrochem * The Company's robust and tested German technology enables it to manufacture top quality products for demanding clients * The Company regularly undertakes plant maintenance and upgradation to ensure that the end product is of acceptable quality * The Company maintains strict quality control checks and ensures that the two major raw materials - PTA and MEG are procured from quality vendors * The Company's ISO 9001:2008 certifications has been a result of all the above. Substantial revenues were derived from longstanding customers Mitigation - Tea * The Company's research and development is engaged with TRA and UPASI Tea Research Foundation to enhance yield and quality * Installed cooling driers, enclosed withering trough and humidation plant, which are likely to improve processed tea quality * Provided adequate labour training regarding tea plucking to enhance tea quality * Installed machines to enhance quality and minimise tea reprocessing of secondary grades for overall improvement in quality * Nine gardens with factories are ISO 22000:2005-certified for food safety Inability of the Company to maintain the quality of its existing plant may hamper its efficiency, resulting in production losses Asset Quality Risk:- Mitigation- Petrochem * The Company undertakes predictive plant maintenance activities regularly to ensure higher plant uptime and asset utilisation resulting in increased production Mitigation - Tea * Automation of factories to improve productivity and also overcome shortage of workers resulting in lower cost of production Cost Risk:- Inability of the Company to manufacture products at a lower cost could lead to a loss in market share Mitigation - Petrochem * The Company operates at a high capacity utilisation level of 105%, which rationalises overheads * MEG pipelines from the port to the plant will reduce logistics cost * The upcoming 10 MW coal-based power plant in Haldia will reduce energy cost * Optimum utilisation of resources at the Haldia plant 1 and 2 will reduce overheads Mitigation - Tea * Plant automation and efficient use of machineries will reduce operating cost * Increasing yield per hectare at the gardens will help in reducing cost once new plantation comes into full bearing Marketing Risk:- Inability of the Company to efficiently market products could lead to unsold stock and lower capacity utilisation Mitigation - Petrochem * The Company recruited specialised representatives across regions to market products globally following expansion * The Company's brand ASPET is respected across around 40 countries; none of the countries to which products were exported accounted for more than eight per cent of revenues in 2011-12 Mitigation - Tea * The Company appointed famous cine actor Hema Malini to promote its package tea/branded tea sales in Rajasthan * The Company created a wide distribution network to cover each district in Rajasthan for its packet tea sale * The Company's tea brands are very popular in Rajasthan due to quality of tea as well as packaging Technology Risk: Use of outdated technology will result in inefficiency in the production process resulting in lower margins Mitigation - Petrochem * Our existing plant at Haldia, expansion at Haldia and new plant in Egypt has been equipped with the latest PET manufacturing German technology * The Company associated with M&G (Italy) to provide BicoPET technology to manufacture barrier grade PET resins to store products with higher shelf- life Mitigation - Tea * The Company upgraded its factories with new drying machines, humidation plant, enclosed withering trough, monorail system, online sorting machineries and automated most of the operations to enhance factory efficiency * The Company regularly invests in replacing machines with modern equipment and upgrading processes to improve tea quality The Company invested in factory automation processes to reduce downtime and enable higher capacity utilisation levels Environment Risk: Inability of the Company to maintain plant o