Financial Performance Analysis of The Scottish Assam for FY24

20 November 2024

• Revenue and Profitability: In FY24, The Scottish Assam experienced a decline in revenue and a significant increase in net profit. The total revenue decreased by approximately 17% from ₹39.27 crore in FY23 to ₹32.59 crore in FY24. This decline was mainly due to a 9.02% reduction in tea production and a slight decrease in average price realization from ₹247 per kg in FY23 to ₹244 per kg in FY24. Despite the operational challenges, the company's Profit After Tax (PAT) surged by 211%, rising from ₹3.9 crore in FY23 to ₹12 crore in FY24. This substantial increase in PAT was driven by non-operating profit of ₹15.86 crore from mark-to-market gains on investments, even though the company remains operationally loss-making.
  
• Financial Position: The Scottish Assam's financial position saw improvements in certain areas despite the challenges faced. Total assets increased by 19.1%, growing from ₹78.74 crore in FY23 to ₹93.77 crore in FY24. Total equity also rose by 17%, reaching ₹80.10 crore in FY24 compared to the previous year's ₹68.46 crore. However, the company faced higher employee costs, which rose from 51% of sales in FY23 to 66% in FY24, adding ₹5 per kg to the cost of production due to higher wage rates in Assam and West Bengal.
  
• Future Prospects: Turning The Scottish Assam operationally profitable in the near term remains challenging due to persistent issues in the tea industry. The company has been affected by adverse weather conditions, a pesticide ban, and increased production costs. India's overall tea production in May 2024 fell by over 30% year-on-year, marking the lowest production for that month in more than a decade. Despite these challenges, the significant non-operating gains suggest potential for financial stability if operational efficiencies can be improved. The strategic focus on addressing the production challenges and optimizing cost management could enhance the company's prospects.