Global Economic Overview
The global economy is gradually recovering from the impact of pandemic and at the same
time facing new challenges emerging from Russias invasion of Ukraine. Tightening of
monetary policy by most Central Banks is expected to have a positive impact. According to
the International Monetary Fund (IMF), the global economy experienced a GDP growth rate of
3.4% in 2022, which was lower compared to the previous years growth rate of 6.1%. Despite
this moderation, there were notable developments in the tourism sector, with international
tourist arrivals rebounding to reach 63% of pre-pandemic levels. Particularly, the Middle
East and Europe exhibited robust recovery in this aspect, reflecting positive trends in
the tourism industry. The relatively slow global growth of 2022, unprecedented inflation,
and pandemic induced slowdown in China, higher interest rates, global liquidity squeeze
and quantitative tightening by the US Federal Reserve.
Outlook
The International Monetary Fund (IMF) has projected a growth rate of 2.8% for the year
2023. The inflation outlook appears promising, with an anticipated decrease from 8.4% in
2022 to 7.0% in 2023. While the inter-country trade is a significant driver of global
economic growth, certain geopolitical factors, such as trade tensions between the United
States and China, as well as the ongoing Russia-Ukraine conflict, may contribute to a
slower expansion in inter-country trade. However, despite these challenges, there are
still opportunities for economic progress and cooperation among nations. By working
collectively, these obstacles can be addressed, leading to sustained growth in the global
economy.
India has emerged as the worlds fastest-growing major economy, and it is predicted to
be one of the top economic powers in the next decade, owing to its robust democracy and
strong partnerships. The Government adopted a slew of measures to save lives and
livelihoods, and enhance healthcare facilities.
Indian Economy Overview
Despite global volatility, the Indian economy grew by 6.8% in 2022 - making it the
fifth largest economy globally in terms of nominal GDP (US dollars). This growth has been
supported by: (1) reduction in Covid-19 cases leading to opening up of the economy; (2)
expansion of manufacturing footprint by both global and Indian firms, aided by Government
policies (eg Production Linked Incentive (PLI) Scheme, PM Gati Shakti, corporate tax
cuts); (3) capex recovery; and (4) cyclical upturn in many sectors (eg Banking, Auto).
Indias digital infrastructure has strengthened in the last few years and the widespread
adoption of real-time digital payments is estimated to have unlocked 0.56% of GDP.
However, inflation headwinds were also felt by the Indian economy with increase in
crude oil prices and we saw interest rate hikes done were by the Reserve Bank of India to
control inflation. The Indian rupee weakness against the US dollar also added to the
inflationary pressures.
Outlook
According to the International Monetary Fund, Indian economy is projected to deliver
robust growth of 5.9% for 2023, highest amongst the emerging economies, driven by strong
domestic demand and healthy consumption growth supported by an improvement in labour
market conditions, increasing consumer confidence, an expected recovery in rural demand
and higher purchasing power with moderating of inflation. In the Union Budget for
FY2023-24, the government announced a 33% increase in capex allocation to INR 10 trillion,
which is expected to boost private investments. The Budget has also targeted a lower
fiscal deficit in FY2023-24 at 5.9% and the government has committed to bring it down to
below 4.5% by FY2025-26.
Risks to the outlook remain with weakness in the global economy impacting exports,
volatility in food and crude oil prices, slowdown in private consumption and aggressive
monetary tightening by global central banks to moderate inflation.
Industry Structure and Developments
Fast-moving consumer goods (FMCG) sector is Indias fourth-largest sector and has been
expanding at a healthy rate over the years as a result of rising disposable income, a
rising youth population, and rising brand awareness among consumers. With household and
personal care accounting for 50% of FMCG sales in India, the industry is an important
contributor to Indias GDP.
Growing awareness, easier access and changing lifestyles have been the key growth
drivers for the sector. The urban segment (accounts for a revenue share of around 55%) is
the largest contributor to the overall revenue generated by the FMCG sector in India.
However, in the last few years, the FMCG market has grown at a faster pace in rural
India compared to urban India. Semi-urban and rural segments are growing at a rapid pace
and FMCG products account for 50% of the total rural spending.
FMCG market reached US$ 56.8 billion as of December 2022. Total revenue of FMCG market
is expected to grow at a CAGR of 27.9% through 2021 to 2027, reaching nearly US$ 615.87
billion. In 2022, urban segment contributed 65% whereas rural India contributed more than
35% to the overall annual FMCG sales. Good harvest, government spending expected to aid
rural demand recovery in FY24. The sector had grown 8.5% in revenues and 2.5% in volumes
last fiscal year. In the January-June period of 2022, the sector witnessed value growth of
about 8.4% on account of price hikes due to inflationary pressures. In Q2, CY22, the FMCG
sector clocked a value growth of 10.9% Y-o-Y - higher than the 6% Y-o-Y value growth seen
in Q1.
Indian food processing market size reached US$ 307.2 trillion in 2022 and is expected
to reach US$ 547.3 trillion by 2028, exhibiting a growth rate (CAGR) of 9.5% during
2023-2028.
Digital advertising will grow at 14.75% CAGR to reach Rs. 35,809 crore (US$ 4.3
billion) by 2023, with FMCG industry being the biggest contributor at 42% share of the
total digital spend. (Source: IBEF)
Outlook
After global and national pandemic-induced lockdowns, there have been a lot of changes
that have revolutionized the FMCG industry. The global pandemic has increased the demand
for online consumer goods. This has compelled FMCG companies to opt for a
direct-to-customer approach and digital channels for offering their goods.
India is a land of diverse languages, cultures, and religions. Thus, businesses
planning to enter Indias FMCG industry must make multiple marketing efforts to take
advantage of these aspects. Apart from localizing their products to meet the Indian
consumers needs, they also need to set a price that can appeal across customer segments.
Moreover, firms also have to face a wide array of legal and regulatory challenges to
set up their business in this land. So, they must join hands with the right people who
have in-depth knowledge of the market and can help establish their company.
Businesses can expect an increase in consumer goods because of global population
growth. The rise in individual income, easy access to goods via e-commerce platforms,
launching of new products, and effective advertising are all responsible for the
exponential growth of this industrial sector.
Company Overview
Polo Queen Industrial and Fintech Limited belongs to the House of Rajkamal which was
founded by late Shri Jiwanram Sanghai over 5 decades ago. It is a publicly traded
Multi-Division Company engaged in activities encompassing Minerals Trading,
Pharmaceuticals, FMCG products and Information Technology. The House of Rajkamal has been
well-known for its highest level of integrity, long-term stability and commitment to its
various endeavours. In its long decades of existence, the House has been exposed to most
advanced business processes and requirements to the benefit of its customers and
associates. Over the period, the House companies have been engaged in wide ranging
activities such as marketing of textile products both in domestic as well as export
markets and trading and export of speciality chemicals. Polo Queen Industrial and Fintech
Limited has diverse activities through multi-divisional operation.
Division Doan Rajkamal
Doan Rajkamal is the FMCG Division of Polo Queen Industrial and Fintech Limited. It
leverages the immense number years of experience of the group in marketing on a Pan-India
basis and brings this to the fore in its FMCG business. Doan Rajkamal has significant
range of high quality consumer products for Personal, Home, Kitchen and Fabric Care which
enjoy unbridled loyalty from users in the Indian Civil market as well as the Indian
Defence Forces. Through our comprehensive range of products, we touch the lives of all
consumers, in all age groups, across all social boundaries. New products are regularly
added to Doan Rajkamals range, each of which offers a unique and superior value
proposition to the discerning consumers, giving them a wide array to choose from, and to
our valued Dealer, Distributor and Retailer network, a bouquet comprising of an extensive
gamut of products from this sector to promote.
Brand POLOQUEEN
With the conception of POLOQUEEN, we have envisioned a future where consumers have a
superior experience and feel fully empowered to take care of their day-to-day needs in the
FMCG segment. A brand is a commitment to consumers and POLOQUEEN is a blend of innovation,
cutting-edge technology, product effectiveness and smart pricing that have made them the
common mans choice. POLOQUEEN brand of products are diversified enough to provide an
excellent solution for almost every household need. From Personal Care to Kitchen Care,
Fabric Care to Home Care, POLOQUEEN has not missed any household need and is the perfect
companion for every consumer. Brand POLOQUEEN is rapidly growing and is backed by a vision
to be one of the largest FMCG product Companies in India.
Opportunities and Strengths
At an all India level, food continued to witness higher consumption growth up to 4.3%
in the first quarter, compared to 1.6% in the last quarter of the previous fiscal, with
staples driving this uptick.
The research firm forecasted that the FMCG market would grow 7%-9% for the full year
2023.
In the wake of the COVID-19 pandemic, health and wellness will remain a top priority
for consumers in 2023. FMCG Companies will respond by developing more functional and
healthy products, such as probiotics, plant-based foods, and supplements. Brands will also
continue to focus on natural and organic ingredients, as well as clean labeling.
As people continue to lead busy lives, convenience will remain a key factor in FMCG
product development. Expect to see more products that are easy to prepare and consume on
the go, such as meal kits, snack bars, and single-serve packaging. Additionally,
e-commerce will continue to play a significant role in the FMCG industry, with companies
investing in faster and more efficient delivery methods.
As the world becomes increasingly digital, the FMCG industry will continue to embrace
technology in new and innovative ways. From smart packaging that tracks product usage to
virtual reality shopping experiences, FMCG companies will use technology to improve the
customer experience and streamline their operations.
Overall, 2023 promises to be an exciting year for the FMCG industry, with new and
innovative products and services that cater to changing consumer needs and preferences. By
staying ahead of these trends, FMCG companies can position themselves for success in the
years to come.
Consumers will continue to spend on these categories - grocery and daily essentials,
such as toothpaste, shampoo and soap. They are likely to manage their budget by moving to
cheaper brands. However, discretionary products like convenience goods have a risk of
getting dropped out," the report said. If prices go further up, nearly one-fifth of
consumers may stop spending on categories such as packaged juices, soups, ketchup,
entertainment and eating out
Just when demand seemed to be recovering, a war in Ukraine sent commodity prices
shooting up early this year. To tackle high raw material costs, several FMCG companies
downsized product packets while keeping the price unchanged. Dubbed shrinkflation, this
effectively means consumers are paying the same for less of the products.
"About Mega Project"
The detailed project report for both the Mahad Agro Processing and Data Centre Projects
have been finalised and that the Mahad Agro Processing Project has been accorded
"Mega Project" status by the Government of Maharashtra.
The company is presently in active discussion with various Merchant Bankers and
Financial Institutions for additional capital raising towards execution of the Mahad and
Dombivli projects. The Board of Directors are positively confident about achieving success
in this endeavour.
It is pertinent to emphasize that the Mahad Agro Processing Project will present
significant Social and Environmental benefits to the Nation along with major direct and
ancillary employment opportunities. Some of the products that will be produced at Mahad
have critical application in the Pharmaceutical and Food segment. The products from Mahad
will also be aligned with the Governments focus on creating adequate sources for Green
Renewable Energy.
The proposed Data Centre at Dombivli will be an enabler of Digital Infrastructure.
Looking at the exponential growth of Data consumption across India and the rapid
Digitisation of various processes and interactions at multiple levels ranging from G2C,
B2B and B2C it is estimated that the demand for Data Centres is going to continue seeing
very significant growth for the foreseeable future. Dombivlis close proximity to the
existing Data Centre hubs of Mahape / Navi Mumbai and its road infrastructure seeing
significant investment with projects like the "Airoli-Katai Expressway" and
"Mothagaon-Mankoli Bridge" the attractiveness of Dombivli as a Data Centre
location is very apparent.
An official announcement on the Mahad and Dombivli projects execution will be made once
we have achieved financial closure.
External Threats and Mitigation Strategies
We operate in large and growing segments in India and the International markets. The
Indian packaged foods consumption growth story remains strong with trends in health,
wellness and convenience becoming even more relevant for the consumer as a result of the
pandemic. The penetration of branded products still remains low but will continue to
increase due to favourable demographics, rising per capita incomes, urbanization, higher
awareness and expansion of modern retailing and e-commerce.
Key threats to our business include changing consumer preferences, volatility in
commodity, inflation and concentration of retailers in developed markets. In FY2022-23, we
witnessed exceptionally elevated cost pressures whether it be commodity prices, packaging
and freight costs. We took strategic pricing interventions to mitigate some of the effects
of input cost inflation while protecting the interests of the consumers.
Segment - wise or Product - wise performance
During the year under review the Company has recorded receipts of Rs. 7790.28 Lakhs as
compared to Rs. 5657.46 Lakhs in the previous year. The Company has recorded a Net profit
Rs. 228.67 Lakhs as compared to a Net profit of Rs. 141.59 Lakhs in the previous year.
During the year under review the sales turnover of the Company has shown growth close
to 40% as compared to the previous year mainly due to wide acceptance of the Companys
products in the target market. The Companys profitability also improved by a very healthy
61.50% with profit after tax of Rs. 228.67 lakhs as compared to profit of Rs.141.59 Lakhs.
For further sustained profitable growth your company is constantly working on
introducing new products and increasing sales with Modern Trade, Canteen Stores Department
as well as Tie II and Tier III cities in Maharashtra. Adequate investment in supply chain
is being made commensurate with the increased sales. The pride which the company feels in
partnering with and supporting the Indian Defence forces cannot be emphasized enough.
The Companys trading activities in chemicals and minerals are being revitalized with
induction of additional technical personnel in the belts having a concentration of foundry
and steel industries. Besides the companys management is also attending major
international exhibitions to have tie-ups with reputed international companies for sales
in India. Sales from chemicals and mineral trading have grown by more than 100% in FY
2022-23 relative to FY 2021-22. Further growth initiatives are being actively pursued for
this business area.
Internal Control Systems and their adequacy
Polo Queen has a sound Internal Control System, which aims to assure that operations
are effective and well aligned with the strategic goals. The internal control framework is
intended to ensure correct, reliable and timely financial reporting and management
information. The Company has implemented the Internal Financial Control (IFC) framework to
ensure proper Internal Controls over financial reporting. Then internal control system is
further supplemented by Internal Audit carried out by an independent firm of Chartered
Accountants and periodic review by Management. The Internal Audit process is designed to
review the adequacy of internal control checks in the system and covers all the
significant areas of the Companys operations. The Audit Committee reviews the adequacy
and effectiveness of the internal control systems and tracks the implementation of
corrective actions. Significant audit observations and corrective actions taken by the
Management are presented to the Audit Committee.
Human Resource
Company operations are challenging as its people centric. Company truly values its
human resources, who have committed themselves to the Companys Mission and Vision.
An effective talent management strategy and an optimum workforce helps us meet the
demand for talent in our business.
We have been focusing on training and development for enhancing the capabilities of our
personnel and building on their core technical skills throughout the year
Performance snapshot
There is no significant changes in the financial ratios as provided below.
| Ratio |
FY 2022-23 |
FY 2021-22 |
| Current Ratio |
0.85 |
0.89 |
| Debt-Equity Ratio |
0.07 |
0.09 |
| Debt Service Coverage Ratio |
3.11 |
2.23 |
| Return on Equity Ratio |
1.24% |
0.77% |
| Trade Receivables turnover ratio |
4.34 |
4.63 |
| Inventory Turnover |
28.83 |
23.82 |
| Trade payables turnover ratio |
4.34 |
4.50 |
| Net capital turnover ratio |
0.42 |
0.31 |
| Net profit ratio |
2.94% |
2.50% |
Forward-Looking Statement
Certain statements made in the Management Discussion and Analysis Report relating to
the Companys objectives, projections, outlook, expectations, estimates, and others may
constitute forward-looking statements within the meaning of applicable laws and
regulations. Actual results may differ from such expectations, whether expressed or
implied. Several factors could make a significant difference to our operations. These
include climatic and economic conditions affecting demand and supply, government
regulations and taxation, any epidemic or pandemic, and natural calamities over which we
do not have any direct/indirect control.
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