spring fields infraventures ltd Management discussions

1. Industry Structure and Developments Summary

Worldwide PCD shipments posted decline of 25.8% year over year in the first quarter of 2023 (1Q23), totaling 87.6 million units. Weak demand, excess inventory, and a worsening macroeconomic climate were all contributing factors for the precipitous drop in shipments. Global PC shipments numbered 57 million, marking a contraction of 28.8% compared to the same quarter in 2022. Tablet shipments declined by 19.4% year over year with a shipment volume of 30.2 million units. These results also represented a coda to the era of COVID-driven demand and at least a temporary return to pre-COVID patterns. Tablet shipment volume in 1Q23 was comparable to the 30.1 million units shipped in 1Q19 and 31.6 million in 1Q18. PC shipment volume in 1Q23 was noticeably lower than the 59.2 million units shipped in 1Q19 and 60.6 million in 1Q18. Sell-in shipment in the first half of 2023 is expected to be low, with vendors focusing on clearing out their inventory before the launch of newer models. As the global economy has continued to struggle, consumers have tightened spending and commercial buyers are delaying purchases. Consumer demand is at risk of perishing as they revert to pre-pandemic habits where the PC wasnt at the center of their daily computing needs, However, commercial buying is expected to ramp up during 2024 and will help the PC market grow beyond prepandemic levels.

In the last two years, average selling prices (ASPs) have risen dramatically as a result of component shortages, inflation, logistics disruptions, and rapid product mix shifts. With the shortage abruptly turning into surplus, weve seen prices come down due to liquidation and mix regression. We expect this to continue throughout the year with ASPs projected to decline 2.8% to $700. This would mark the first ASP decline for a full year since 2015.

On August 4 2023, the Indian government announced it would defer the implementation of import restrictions on laptops, tablets, personal computers (PCs), and other electronic items falling under the HSN 8741 category to October 31, 2023. These are amendments to the DGFT notification dated August 3, 2023. Regardless of the extension, the decision to introduce a license regime will impact Indias electronics market. Major foreign players like Dell, Acer, Samsung, Panasonic, Apple, Lenovo, and HP are expected to encounter challenges and may need to adjust their pricing or profit margins to stay competitive in the Indian market.

2. Opportunities and Threats

The India traditional PC market, inclusive of desktops, notebooks, and workstations, continued to drop shipping only 2.99 million units, a decline of 30.1% year-over-year (YoY) in 1Q23 (Jan-Mar), according to new data from the International Data Corporation (IDC) Worldwide Quarterly Personal Computing Device Tracker. In 1Q23, while the demand for desktops was positive, the notebook category witnessed another weak quarter as it declined by 40.8% YoY. The consumer segment declined by 36.1% YoY primarily due to slowing demand and low market sentiment, and the commercial segment declined by 25.1% YoY due to reduced/delayed procurement by enterprises and SMEs.

3. Segment-wise Performance

Government and education were the only segments seeing positive traction in 1Q23. Procurement from government bodies propelled the segment to grow by 25.2% YoY, while fulfillment of the Gujrat education order helped the education segment grow by 65.6% YoY. Premium notebooks (>US$1,000) declined by 65.8% YoY in the commercial segment and 59% YoY in the consumer segment. Significant inventory correction of Apple MacBooks and low demand from enterprises led to a slump in the shipment of premium notebooks. The online channel struggled for the second consecutive quarter, declining by 42.4% YoY in 1Q23.

"Channel partners across tiers for almost all vendors have been carrying heavy inventory for the last two quarters. Hence, shipments in the consumer segment decreased significantly in 1Q23 as they focused on clearing off aging inventory. The consumer market is expected to gradually recover from June-July with the back-to-college demand and followed by aggressive online sales expected during the festive months in Q3/Q4," said Bharath Shenoy, Senior Market Analyst, IDC India.

4. Outlook

After a muted 2023, Canalys forecasts that the Indian PC market (including tablets) will rebound strongly with 11% growth in 2024 and a further 13% growth in 2025. "Vendors remain optimistic about the Indian market and are taking steps to target its growing consumer base," said Aithal. "HP announced its first gaming experience zones, known as Omen Playground stores, in February, with a plan to expand to over 40 outlets over the course of the year. Apple opened its first stores in Mumbai and New Delhi in April. Beyond the move to drive interest through offline retail locations, vendors are also increasingly turning to manufacturing in India, helping ensure future supply to the market and allowing them to tap into new commercial opportunities."

Most PC (excluding tablet) vendors faced significant double-digit shipment declines in India in Q1 2023 as they prioritized working through substantial inventory build-up. HP extended its leadership streak in the market, holding 34% market share even as its shipments fell 30%. Dell narrowly secured second place but underwent the biggest decline of the top five vendors with its shipments down 41%. Lenovo was close behind in third place, posting a similar shipment drop of 38%. Acer took fourth place with a relatively small drop of 10%, helped by its participation in government tenders and a robust desktop business, while Asus rounded out the top five with a 27% shipment decline.

5. Risks and Concerns:

All the above sums it up

6. Internal Control systems and their Adequacy:

Your Company has well established procedures for internal control across its various locations, commensurate with its size and operations. The organization is adequately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment.

The internal audit function is adequately resourced commensurate with the operations of the Company and reports to the Audit Committee of the Board.

7. Financial Performance with respect to Operational Performance Revenues - Standalone

During the year under review, the Company on a standalone basis has recorded an income of Rs. 5,246.53 Lakhs and incurred a Profit of Rs. 159.53 Lakhs as against the income of Rs. 2,383.66 Lakhs and Profit of Rs. 8.41 Lakhs respectively in the previous financial year ending

31.03.2022.

Revenues - Consolidated

During the year under review, the Company on a consolidated basis has recorded an income of Rs. 12,007.64 Lakhs and incurred a Profit of Rs. 230.18 Lakhs as against the income of Rs. 7,938.61 Lakhs and Profit of Rs. 64.14 Lakhs respectively in the previous financial year ending 31.03.2022.

8. Material developments in Human Resources / Industrial Relations from, including number of people employed.

There are no material developments in Human Resources / Industrial Relations from FY 22 to FY 23.

9. Details of any change in Return or Net Worth as compared to the immediately previous financial year.

RATIOS:

Particulars	2022-23	2021-22	Remarks (if change % is more than 5)
Current Ratio	2.68	5.80	-
Debt Equity Ratio	0.13	0.07	-
Return on Equity	5.44%	0.41%	Due to Issue and allotment of shares
Inventory Turnover Ratio	15.88	11.18	Due to increase in sales
Trade Receiva bles Turnover Ratio	5.72	4.13	-
Trade Payable Turnover Ratio	8.02	6.31	-
Net Capital Turnover Ratio	2.05	1.42	-
Net Profit Ratio	2.49%	0.25%	-
Return on Capital Employed	2.47%	-1.30%	-
Return on Investment	21.47%	1.25%	There was an investment in subsidiary Company
Return on Net worth	4.35	0.28	Due to increase in turnover and profit

Change in Return on Net worth as compared to the immediately previous financial year along with a detailed explanation thereof: Increased from 0.28% to 4.35 % Due to increase in turnover and profit.

10. Any other Sector Specific ratios, as applicable: Not applicable

11. Disclosure of Accounting Treatment

During the preparation of Financial Statement of F.Y 2022-23 the treatment as prescribed in an Accounting Standard has been followed by the Company. There are no significant changes in Accounting Treatment as followed by the Company in current financial year as compared to previous financial year.

12. Cautionary Statement

Although we believe we have been prudent in our projections, estimates, assumptions, expectations or predictions while making certain statements, realization is dependent on various factors. Should any known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information.

	For and on behalf of the Board For Variman Global Enterprises Limited
	Sd/- D. Sirish
Place: Hyderabad	Managing Director
Date: 05.09.2023	(DIN:01999844)