india cements capital ltd Management discussions

OVERVIEW OF THE ECONOMY

After global growth rebounded from Covid pandemic crisis and recorded strong growth in 2021, the GDP growth of world economy moderated to 3.1% in 2022 as estimated by World Bank and 3.4% by IMF. Last year the world economy was impacted by a range of factors including resurgence of covid virus in select geographies, risks created by the continuing Russian-Ukraine war, surge in commodity prices and in ation rate, besides geo-political tensions and monetary tightening by top central banks.

INDIAN ECONOMIC OVERVIEW

Indian economy remained relatively shielded from global headwinds and sustained its position as one of the fastest growing major economies in 2022-23. It clocked growth rate of 7.2% in 2022-23.

INDIAN ECONOMIC OUTLOOK

Indias GDP growth is expected to remain robust in 2023-24. GDP forecast for 2023-24 to be 6.5% as predicted by Reserve Bank of India. The governments thrust on capital expenditure, moderation in commodity prices and robust credit growth are expected to nurture investment activity. However Weak external demand, geo-economic fragmentation and protracted geopolitical tensions pose risks to the outlook.

INDUSTRY OVERVIEW

GLOBAL TRAVEL INDUSTRY

During the year 2022, easing travel restrictions in many countries and a stronger boost from pent up demand facilitated the global tourism growth. The number of international travelers exceeded 900 million in 2022 which was twice the number in 2021 but still 37% less than reported in 2019.

After pandemic people focusing more on work life balance which is resulted in huge surge in travel, popularly termed as revenge tourism.

INDIAN TRAVEL INDUSTRY

As the pandemic subsides, Indias tourism sector is demonstrating early signs of recovery. Foreign tourist arrivals have been increasing month on month in FY23 following the resumption of scheduled international ights.

COMPANY BUSINESS

Your Company is a designated Authorized Dealer (Category-II) from Reserve Bank of India, for money changing which includes buying and selling of Foreign Exchange in retail as well as wholesale to individuals and corporate clients and various permissible outward remittance activities such as remittance for overseas education, medical treatment abroad and for other permissible purposes. Your Company is also one of the Agents of overseas money transfer entities for international inbound money transfer business.

In money changing, the Company provides an array of products and services including buying and selling of foreign currency notes and outward telegraphic remittances, including outbound remittances towards student fees, tour remittances etc. and also extends to forex prepaid cards.

The Companys strength is its service, its brand image and number of allied products being made available to its valuable customers.

OPPORTUNITIES AND THREATS

The Company foresees that the Companys forex business would continue to grow as the travel restrictions are removed in the remaining countries. The Companys business depends on the global economy and growth of travel and tourism sector.

Your Company has exposure in foreign exchange and any wide uctuations in foreign exchange rates have adverse effect on the performance of the Company. Further the increase in competition, low entry barriers and change in government policies may affect the operations of the Company.

OPERATING AND FINANCIAL PERFORMANCE REVIEW OF PERFORMANCE FORXCHANGE

The gross turnover and gross income for the year ended 31st March, 2023 were Rs.20803.52 lakhs and Rs.395.65 lakhs respectively as against Rs.6292.05 lakhs and Rs.179.03 lakhs during the previous year. The Company earned a Pro t After Tax of Rs.69.67 lakhs as against pro t of Rs.4.03 lakhs during the previous year. Besides main business of foreign exchange, your Company is engaged in a small way in various fee based activities like travels, forex advisory, etc. These fee based activities are volume based business and showed a mixed results during the year.

The Coromandel Travels Division and Midas Forex earned operational income of Rs.6.16 lakhs during the year ended 31st March, 2023 as against Rs.6.20 lakhs during the previous year. These divisions earned other income of Rs.0.51 lakhs for the year ended 31st March, 2023 as against Rs.0.55 lakhs during the previous year.

RISK MANAGEMENT

RISK MANAGEMENT	MITIGATION
Credit risk: Company is exposed to credit risk since many corporates are being given credit for their transactions.	To mitigate this risk Company has laid down a detailed risk management policy, customer identification and acceptance procedure. The financial risks involved are evaluated through a well laid down procedure.
Forex risk: The Company deals in several currencies and runs the risk of unfavourable movement in any currency leading to financial losses.	Exchange rate volatility is not only faced by the Company but is attuned to the forex industry globally. To mitigate the said risks, Company closely monitors the exchange rate movement and hedges its liability on this account in the Forwards Forex market.
Competitive risk: There is a Competition risk in terms of existence of many players because of low entry barriers.	Company mitigates this risk by ensuring extreme good service and transparent dealings.
Operation risk: Operations involves movement and storage of foreign currencies and Indian rupees.	To mitigate this risk Company has put in place Money in transit, Fidelity insurances and necessary processes to record these events.

INTERNAL CONTROL SYSTEM

The Company has already put in place an elaborate Internal Control and Internal Audit systems. The system ensures adequate periodical checks and balances are exercised. Continuous monitoring by the Internal Audit team of these checks and balances ensures compliance of the regulatory framework of RBI & FIU. The Audit team is suitably guided and updated by the Audit Committee in its functions.

The Company has put in place a strict credit policy for extending credit to its corporate customers. The same is continuously monitored and reviewed periodically to ensure funds at Companys disposal are being judiciously utilised and ef ciently managed vis-a-vis the business requirements.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

The Company being part of the Banking and Financial Services sector, human resources has always been the main pillar for all the activities of the Company. Companys focus have been to improve the staffs contribution towards the various services offered thereby ensuring customer satisfaction. To achieve this objective Company has ensured that all its employees receive continuous update on the Companys policies as well as the regulatory framework.

CHANGES IN KEY FINANCIAL RATIOS

Ratios	Financial Year 2022 -23	Financial Year 2021-22	Variance (%)	Explanation for Variation of 25% or more
Debtors Turnover Ratio (Days)	4.82	8.37	(42)	Inspite of increase in business volumes collection efficiency has improved.
Current Ratio (Times)	4.21	5.07	(16.96)	Not Applicable.
Debt Equity Ratio (Times)	2.21	2.18	1.38	Not Applicable.
Net Profit Margin (% )	17.61	2.25	682.67	Improvement in the business operations post Covid 19 pandemic.
Return on Equity (% )	3.21	0.19	1589	Improvement in the business operations post Covid 19 pandemic.
Operating Pro t Margin (%)	22.10	5.04	338.49	Improvement in the business operations post Covid 19 pandemic.
Return on Capital Employed (%)	1.37	0.14	878.57	Improvement in the business operations post Covid 19 pandemic.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities Laws and Regulations. Actual results may differ materially from those expressed in the statement. As in any other business the performance of the Company is totally dependent on the market conditions of demand and supply, the volatility in exchange rate, the Government policy & regulations, the economy of the country and other factors.

	On behalf of the Board
	V.MANICKAM
	CHAIRMAN
	(DIN: 00179715)
Place : Chennai
Date : 7th August, 2023