standard industries ltd Management discussions

TRADING DIVISION

For the Financial Year April, 2022 to March, 2023 under review, the Company has achieved a textile trading turnover of Rs. 1567.65 lakhs in comparison with Rs. 807.01 for the previous financial year.

We have recovered lost ground of uniform business which was badly affected by pandemic situation in earlier years. We shall be introducing new product line such as prints / 2x2 Rubia etc., in the near future.

PROPERTY DIVISION & OUTLOOK

The Standard Mills Company Limited was incorporated in India in the year 1892 under the Indian Companies Act, 1882. In line with the diverse nature of its business, it had changed its name from The Standard Mills Company Limited to Standard Industries Limited, (‘the Company) in October 1989. The Company also has a Property Division which comprises of assets which are in excess of business needs, which the Company would liquidate based on market conditions.

INDUSTRY OVERVIEW

The real estate sector has witnessed a healthy increase in demand over the last two years and we clearly see the end-user consumption led momentum continuing. The market share of reputed brands increased due to a clear preference from the home-buyers. In spite of the economic slowdowns, the residential segment of the Real Estate Sector has been resilient to perform, progress and prosper.

In the commercial segment, we see that employees are coming back to their desks for work and there is renewed interest from corporates to consolidate and expand their existing office spaces.

With the pandemic easing out, the retail business has made a commendable comeback and has bounced back much faster than what was anticipated.

STRENGTHS

The Company is optimistic in Textile trading, as our main strength is brand image.

Indias real estate sector is witnessing a healthy increase in demand and this momentum is expected to hold. From commercial spaces to the residential market, the overall market outlook is a bright one for the real estate industry. According to Savills India, real estate demand for data centres are expected to increase by 15-18 million Sq.ft. by 2025.

RISKS AND CONCERNS

The Textile Industry has been adversely affected because of the worldwide pandemic situation.

Due to the pandemics tail-end, interest rate hikes, job losses, a sluggish economy has been taking place to slow things down. Affordable housing could be sluggish in the face of a slow and cautious economy and general increases in realty costs are attributable to rising prices of raw material.

OPPORTUNITIES & CHALLENGES

The Company largely benefits from its strong brand name. Our Textiles brand sees enormous opportunities in product and design innovations to address the changing performances of customers.

The Government of India has been supportive towards the Real Estate Sector. The Union Cabinet has approved 100 Smart City Projects in India. The Government has also raised FDI (Foreign Director Investments) limits for Townships and settlements development projects to 100%. The shares of top listed developers in Indian residential market is expected to increase in the Financial Year 2024 driven by a strong pipeline for residential project launch.

The challenges, however, would be unanticipated delays in project approvals, concerns due to after effects of pandemic situation, increased cost of manpower, unavailability of trained labour force, rising cost of construction and over regulated environment.

SEGMENT-WISE PERFORMANCE

Segment-wise performance together with discussion on financial performance with reference to the operational performance has been dealt with in the Directors Report which should be treated as forming part of the Management Discussion and Analysis.

INTERNAL CONTROL SYSTEMS & ADEQUACIES

The Company has proper and adequate system of internal control to ensure that all assets are safeguarded and protected against loss from unauthorized use on disposition and transactions are authorized, recorded and reported correctly.

Internal control systems are supplemented by Internal Audit Reviews, coupled with guidelines and procedures updated from time to time by the Management.

Internal control systems are established to ensure that the financial and other records are reliable for preparing financial statements.

Internal Audit System is engaged in evaluation of internal control systems. Internal audit findings and recommendations are reviewed by the Management and Audit Committee of the Board of Directors.

HUMAN RESOURCES

As on 31^st March, 2023, the employees strength (on permanent roll) of the Company was 12.

FINANCIAL STATEMENT ANALYSIS

In accordance with SEBI (Listing Obligation and Disclosure Requirements) (Amendment) Regulations,

2015, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector-specific financial ratios.

The Company has identified the following ratios as key financial ratios:

Particulars	Note no. of Standalone Financial	Year ended March 31, 2023	Year ended March 31, 2022
	Results
Return on Equity	43b	0.10	1.78
Ratio
Inventory Turnover	43c	—	4.07
Ratio
Trade Receivables	43d	0.73	49.27
Turnover Ratio
Net Capital	43f	0.17	7.45
Turnover Ratio
Net Profit Ratio (%)	43g	140%	51%
Debt Service	43j	3.15	5.97
Coverage Ratio

Ratios where there has been a significant from year ended March 31, 2022 to year ended March 31, 2023

1. Return on Equity Ratio : Net profit after tax divided by average equity. The ratio decreases from 1.78 in FY 21-22 to 0.10 in FY 22-23 mainly on account of reduction in revenue on account of revenue recognized on assignment of leasehold land during the year ended 31^st March, 2022.

2. Inventory Turnover Ratio : Cost of materials consumed divided by average inventory. As there is no closing inventory as at 31^st March, 2023, this ratio is not comparable.

3. Trade Receivables Turnover Ratio: Credit Sales divided by average trade receivables. This ratio is not comparable as previous year Sales includes Assignment of Leasehold Rights under Revenue from operations.

4. Net Capital Turnover Ratio: Sales divided by Net Working Capital. The Ratio changes from 7.45 in FY 21-22 to 0.17 in FY 22-23, mainly on account of revenue recognized on account of assignment of leasehold land and its corresponding impact in net working capital in previous year. Additionally the period of borrowing has been extended, therefore, the borrowing becomes non-current borrowing as compared to previous year.

5. Net Profit Ratio : Net profit before tax divided by

Sales. This ratio is not comparable as previous year profit includes Assignment of leasehold Rights under

Revenue from operations.

6. Debt Service Coverage Ratio : Earnings available for debt services divided by total interest and principal repayment. The ratio increases from 5.97 in FY 21-22 to 3.15 in FY 22-23 mainly on account of increase in profit on account of revenue recognized on assignment of leasehold land and also repayment of borrowing during the year ended 31^st March, 2022.

THE DETAILS OF RETURN ON NET WORTH ARE

GIVEN BELOW:

Particulars	Note No. of Standalone Financial Results	Year ended March 31, 2023	Year ended March 31, 2022
Return on
Net Worth	43b	0.10	1.78

Return on net worth is net profit after tax divided by average equity. The ratio decreases from 1.78 in FY 21-22 to 0.10 in FY 22-23 mainly on account of reduction in revenue on account of revenue recognized on assignment of leasehold land during the year ended 31^st March, 2022.