add shop e retail ltd share price Management discussions


i) AN OVERVIEW:

The Company Add-Shop E-Retail Limited (Formally Known as Add-Shop Promotions Limited) is engaged in the business of manufacturing, marketing and distribution of products in the categories of ayurvedic products, food supplement products, agricultural products, animal feed supplement products and personal care products under the brand name "Add-Shop". In this present competitive era of medicines and food supplements, our company is aiming to focus on ways to bridge the nutrition gap, which is a recognized cause of any diseases, by promoting Ayurveda and its products, the Government of India has also introduced several projects to assist the agriculture sector which is ensuring better growth prospects in the said Industry. Foreseeing the growth in the agricultural sector, company intends to tap the growth opportunity by pushing sales through a wide range of agro products. Company is a fellow member of Federation of Direct Selling association vide membership number FDSA/F/10,

ii) INDIAN ECONOMY & HEALTH CARE INDUSTRY:

India ranks sixth in the world in terms of nominal gross domestic product ("GDP") and is the third largest economy in the world in terms of purchasing power parity ("PPP"). India is estimated to be among the top three global economies in terms of nominal GDP by Fiscal 2050. Since FY 2005, Indian economy’s growth rate has been twice as that of world economy and it is expected to sustain the growth momentum in the long term. In the wake of COVID-19, India’s normal GDP has contracted by approximately 3% in FY2021 and is expected to bounce back and reach US$ 4 Tn by FY 2025. It is also expected that the growth trajectory of Indian economy will enable India to be among the top 3 global economies by FY 2050.

The rapid spread of the COVID-19 pandemic led to a surge in demand for immunity-boosting Ayurvedic Health Care Products in India. Ayurveda, with its time-tested remedies and benefits, gained prominence in the minds of consumers who were seeking natural remedies to fight against the illness.

Indian consumers are increasingly transitioning towards herbal and natural offerings, especially in analgesics, cold, cough and allergy (hay fever) remedies and dermatologicals. More consumers are becoming health and hygiene conscious due to the prevailing health and wellness trend in the country.

According to Expert Market Research consultant services, the market for Ayurvedic products is expected to grow at a CAGR of 15% between 2021 and 2026. Greater innovation and emphasis on developing newer products coupled with the adoption of aggressive marketing strategies by players in this sector are guiding the growth of the market in India.

iii) INDUSTRY STRUCTURE AND DEVELOPMENTS:

Indian herbal market is registering an extremely significant growth. The world herbal trade has grown to $120 billion and is expected to reach $7 trillion by 2050. India is stated to have 45,000 plant species (nearly 20% of the global species) occurs in the Indian sub-continent. Out of these, about 4,500 species of both higher and lower plant groups are of medicinal value. The states which are major producer of herbal products having the highest medicinal value Range.

Several structural factors are likely to contribute to economic growth in the long run. These include favorable demographics, reducing dependency ratio, rapidly rising education levels, steady urbanization, growing young & working population, IT revolution, increasing penetration of mobile & internet infrastructure, increasing aspirations and affordability etc. The growth of the Ayurvedic products market was driven by the rising popularity of natural and organic medicines, in confluence with the growing awareness regarding the benefits of these medicines among the consumers. Moreover, the improving accessibility of Ayurvedic products in both urban as well as rural regions further invigorated the sector’s growth. Penetration of some Ayurvedic products increased significantly during the year with a growing number of young consumers adopting this time-tested remedy to build their immunity.

The market for herbal products has increased. The huge marketing and promotional activities by the herbal companies and rising awareness about benefits of using herbal products has accelerated the size of the industry.

With the economic environment becoming uncertain, not only are consumers more thoughtful about their consumption but also more conscious of their savings and investments. The consumption priorities are also drivenby the health and safety concerns and the other behavioral changes adopted because of the pandemic.

The Indian Government has undertaken deep structural and sustained reforms to strengthen the healthcare sector and has also announced conducive policies for encouraging FDI. The Aatmanirbhar Bharat Abhiyaan packages include several short-term and longer-term measures for the health system, including Production-Linked Incentive (PLI) schemes for boosting domestic manufacturing of pharmaceuticals and medical devices. Additionally, India is working towards becoming a hub for spiritual and wellness tourism, as the country has much to offer in Ayurveda and Yoga.

India’s medium to long term growth and its positive impact on private consumption will be determined by inter-play of demographics, urbanization and policy reforms. Young population, women workforce, growing middle class and nuclearization will be some of the growth drivers in this growth.

iv) OPPORTUNITIES AND THREATS:

Company has been continuously innovating to ensure that the traditional knowledge of Ayurveda remains in sync with the changing needs and aspirations of millennials and centennials, the Company not only increased its R&D spends but also ensured that innovations are targeted to meet the consumer needs and are quick to reach the market company also launch a E-Application for Rapidly Expansion of Company’s E-Retail business.

Apart from this, today, over 44,000 families are involved in this self-employment generating activity of spreading health to everyone and more than 75,000 Authorized Distributors who have a presence in more than 25 states throughout the country

Company work hard to improve its infrastructure and network, with a focus on increasing distribution channels, adding more channel partners, and hiring more farmers as associates. The Company is also using technology to expand its company; plans are in the works to create an online portal to investigate the increasing e- commerce potential. In addition, an application for digitising process is being created. The company is also constructing a food processing facility and intends to join the export market as soon as possible, With robust expansion plan in place, we are very sure about our future performance."

Threats

• Emerging premium and health focused segments

• Competition

• Availability and price of raw materials

• Government policies and levies

• Lack of scientific evidence makes it difficult to convince people

• Growing ability to address rural and semi-urban demand

v) RISK AND CONCERNS:

The herbal industry with high investment cost, patent issues and low profit margin that make the small- scale industries sustenance tough. The industry for its sustenance need to be export oriented, but product variability and poor tie-ups with foreign countries makes it challenging to target international market. The product variability is affected due to lack of process standardization. Finally, inadequate interest regarding scientific studies impacts the product development, validation and standardization.

vi) INTERNAL CONTROL SYSTEMS AND ITS ADEQUACY:

The Company has implemented proper and adequate system of internal controls commensurate with its size and nature of operations to provide reasonable assurance that all assets are safeguarded, transactions are authorised, recorded and reported properly, applicable statutes and corporate policies are duly complied with.

The Company has an Audit Committee with Independent Directors as members. The mechanism of internal control and checks are reviewed by the management, and statutory auditors from time to time and suitable changes/ modifications are implemented so as to ensure that an effective scheme of checks and balances exists at all times. The management is reasonably satisfied with the existing internal control systems. The Audit Committee of Board of Directors also reviews these matters from time to time in their meetings.

vii) OPERATIONAL PERFORMANCE & OUTLOOK:

(Rs. In Lakhs)

PARTICULARS YEAR ENDED YEAR ENDED
31.03.2022 31.03.2021
Income for the year 15965.31 7857.12
Other Income - -
Total Income 15965.31 7857.12
Profit before Financial Cost, Depreciation and Taxation 2491.09 1147.8
Less: Financial Cost 99.48 98.37
Operating profit before Depreciation & Taxation 2391.61 1049.43
Less: Depreciation 46.33 28.38
Profit before Taxation 2345.28 1021.05
Provision for Taxation:
Current Tax/Excess Short Provision 428.70 256.91
Deferred Tax 7.90 (3.53)
Profit After Taxation 1908.68 767.67

For the year ended 31st March, 2022, your Company has reported total revenue Rs. 15965.31 lakhs compared to Rs. 7857.12 lakhs in the previous financial year. The Company’s Profit for the year before depreciation, interest and taxation has been Rs. 2391.61 lakhs (P.Y. Rs. 1049.43 lakhs) and the Net Profit after interest, depreciation, prior period adjustments & taxes are Rs. 1908.68 lakhs (P.Y. Rs. 767.67 lakhs).

The Company continues to explore the possibilities of expansion and will make the necessary investments when attractive opportunities arise.

viii) HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

The Company firmly believes that motivated and empowered employees are the cornerstone of competitive advantage. The Company’s employee value proposition is based on a strong focus on employee development, providing a satisfying work environment, performance appraisal and counselling and appropriate empowerment. The Company continues to maintain and enjoy a cordial relationship with its employees, providing positive environment to improve efficiency with regular investments in upgrading the knowledge and skills of the employees.

Industrial relations with staff and workmen during the year under review continued to be cordial.

ix) ACCOUNTING POLICIES

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. The financial statements have been prepared under the historical cost convention on an accrual basis. The management accepts responsibility for the integrity and objectivity of the financial statements, as well as for the various estimates and judgment used therein

x) DISCLOSURE OF ACCOUNTING TREATMENT IN PREPARATION OF FINANCIAL STATEMENT:

The Company has followed all relevant Accounting Standards laid down by the Institute of Chartered Accountants of India (ICAI) while preparing Financial Statements.

xi) CAUTIONARY STATEMENT:

This report contains forward- looking statements based on the perceptions of the Company and the data and information available with the company. The company does not and cannot guarantee the accuracy of various assumptions underlying such statements and they reflect Company’s current views of the future events and are subject to risks and uncertainties. Many factors like change in general economic conditions, amongst others, could cause actual results to be materially different. The Company does not assume any obligation for such variations.

For, Add-Shop E-Retail Limited
Dineshbhai B. Pandya
Date: 31.08.2022 Managing Director
Place: Rajkot DIN:06647303