Add-Shop E-Retail Ltd 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 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,

The operating and financial review is intended to convey the Managements perspective on the financial and operating performance of the Company. This report should be read in conjunction with the Companys financial statements, the schedules and notes thereto and the other information included elsewhere in the Integr0ated Report. The Companys financial statements have been prepared in compliance with the requirements of the Companies Act, 2013, the guidelines issued by the Securities and Exchange Board of India (SEBI).

This report is an integral part of the Directors Report. Aspects on industry structure and developments, opportunities and threats, outlook, risks and concerns, internal control systems and their adequacy, material developments in human resources and industrial relations have been in the Directors Report.

ii) Indian Economy & Health Care Industry

Factors such as continued domestic consumption and investment trends have positioned India as the sixth largest economy and one of the fastest growing countries in the world. The growth in the domestic consumption demand is catalyzed and strengthened by factors such as harmonized of Goods and Services Tax (GST) and recapitalized bank. Agriculture and manufacturing are the two key industry sectors that are expected to contribute to this growth graph.

The COVID-19 pandemic is likely to have a major negative impact across the world. It has led to quarantines, regional lockdowns and social distancing- which are essential to contain the virus with particularly acute effects on sectors that rely on social interactions such as travel, hospitality, entertainment, and tourism. Workplace closures are disrupting supply chains and reducing productivity. Layoffs, lower incomes, fear of contagion, and heightened uncertainty make people spend less, leading to consumption squeeze and triggering further business closures and job losses. Health care expenditure, support to vulnerable sections of society and reduced tax revenue is likely to put severe pressure on fiscal balances of the government

In view of Covid-19 pandemic, the need to build immunity and fight illnesses has gained prominence, not just in consumer mind space but also among the medical fraternity. The demand for Ayurvedic products has been on the rise for a few years now. As per a report by IMARC, released prior to the COVID pandemic spread, Indian Ayurvedic products market is expected to grow at a CAGR of 14% during 2019-2024.

A key factor driving the Indian ayurvedic products market is increasing popularity of natural and herbal medicines and their benefits among the consumers. Factors such as rising health concerns and awareness about the side-effects of western medicines is further driving the consumer preference for Ayurvedic products in the country. Furthermore, the distribution networks of ayurvedic products have improved significantly, increasing the accessibility of these products across both urban and rural regions.

Prime Minister Mr. Narendra Modi has also been promoting Ayurveda and Yoga on various forums. These initiatives have further established the long-term relevance of Ayurveda and its role in natural healthcare.

Few factors shaping the nations economic growth are:

• Increased ease of doing business through changed processes such as a uniform Goods and Services Tax across India since mid-2017 and relaxed norms of opening, obtaining licenses and investing in new businesses.

• Policy reforms such as increased FDI limits in most sectors, including retail, manufacturing and telecom are driving increased participation of foreign investors and improved investment norms for non-resident Indians.

• Large-scale infrastructure development projects such as smart cities, industrial corridors, road, rail and shipping hubs and power projects.

• Make in India initiative has got a boost by a slew of measures aimed at improving the ease of doing business in the Country. Small and medium industry- a major employment generator for the economy- has been liberated to participate in the Nations development.

iii) Industry structure and developments

Ayurveda is an Indian system of medicine derived from "Ayurvedic" natural herbs & is a form of alternative medicine. Nearly 75% of people in India use some form of traditional Ayurvedic medicine, a category that includes Ayurveda.

By adopting new innovative methods, and the ayurvedic products are now available in the form of capsules, syrups, tablets, powders, and plant extracts. Some of the factors such as the growing preference for traditional medicines by consumers and fewer side-effects even on the use for a longer period enhance the demand for herbal and ayurvedic products the ageing population with health problems and growth of young, awareness, health conscious population will drive the growth of the Ayurveda sector. The support of the Government, focus on quality and standardization, increase in health insurance coverage and Central Government Health Scheme (CGHS) coverage will drive the growth of this sector. The ability of the Government to promote ayurveda at international platforms will play a big role in enhancing the growth of this sector, overall the business of the company depends upon the growth of the economy of the country.

iv) Opportunities and Threats:

Ayurveda, as an industry, has scope for tremendous growth which can benefit from investments in identified spaces. They will allow Ayurveda to evolve itself to a form that is cognisant of the needs and trends of new generations. Today, the sector is more structured, has integrated technological advancements, environmental changes and evidence-based research methodologies to provide premium care. These advancements, built on Ayurvedas affordability and pre-existing user base, can help advance the systems benefits to the population at large.

Bringing Ayurveda into the mainstream requires a concerted effort which can be led by the Ministry of AYUSH. The ministry can also explore the incorporation of industry suggestions towards designing standardisation and licensing norms that regularise Ayurveda products in India. The AYUSH Ministry can also help companies seeking overseas sales of their products. It can be streamlined with the ministrys intervention and outreach to other countries. As a positive move, the government recently introduced an economic stimulus package under the Atmanirbhar Bharat Abhiyan and has allotted INR 4,000 crore ($ 535Mn) to the herbal sector for promotion of herbal cultivation. The move aims to cover 10 lakh hectares (24.7 lakh acres) under herbal cultivation over a period of two years.

Some of the driving factors favouring the market growth include growing demand for natural and organic products, increasing consumer awareness and growing demand for ayurvedic cosmetics products, expanding medical tourism through the globe. Organic skincare products are achieving fast grip and the market is expected to expand even further.

Personal care products is leading the ayurvedic market globally due to increasing awareness of personal care products, changes in consumption patterns and lifestyles, and improved the purchasing power of women, promises moving times for the personal care industry. The Asia Pacific is estimated to dominate the global market owing to the presence of established ayurvedic manufacturing units

Further the Global Ayurvedic Market was value US$ 4.5Bn in 2017 and is expected to reach US$ 14.9Bn by 2026 at a CAGR of 16.14%.

The coronavirus pandemic has reminded us that our bodys immunity is our first and best line of defence. Healthy living and good nutrition are crucial for selfpreservation. Fortunately, India, with its vast heritage and knowledge in Ayurveda, does not have to look too far. Riding on many waves of evolution, Ayurveda is poised to re-enter our lives in unique ways. This ancient wisdom has taught us that the more things change, the more they stay the same.


• Patent issue

• Shortage of raw materials

• Lack of support in International Market

• Escalation in raw materials price

• Lack of scientific evidence makes it difficult to convince people

• Adulteration in the raw materials

• Product quality variation due to lack of process standardization.

v) Outlook:

The year ahead looks good for the business if the Company buoyed by strong domestic consumption as well as demand. With consumerism, disposable income on the rise and with the entry of several international players into the India markets, the retail sector has experienced a rapid growth. The Continual growth in the retail apparel sector is necessary to give support to the industry. The company is making all effort to accelerate the growth of its business. It Expect to improve its position in the market by focusing in the technologically advanced and more profitable Product and market segment and working aggressively in the area of productivity, efficiency and cost reduction.

Analysts are upbeat over the expected above normal monsoon and higher growth. The slow pace of public and private sector projects is expected to improve with the Government of Indias thrust on projects. Further, Make in India initiative has got a boost by a slew of measures aimed at improving the ease of doing business in the Country. Small and medium industry- a major employment generator for the economy- has been liberated to participate in the Nations development in accordance with its potential. Bold measures by the Government such as improved targeting of subsidy, broadening of the tax base and expected buoyancy in tax revenue are all aimed at achieving the fiscal consolidation which had been an area of concern in the recent past.

vi) Risk and Concerns:

The herbal industry has certain weaknesses that need to be addressed. In general, the industry has weak backward linkages that affect supply chain like inadequate backward linkages such as contract production and investment from finished industry to minimize the business risk. Further, despite a friendly government, industry does not find the policies and regulation adequately appropriate for sector growth. However, the management is aware of the said problems and therefore is in process of designing the system to address the same.

This industry is marred 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.

vii) 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.

viii) Discussion on financial performance of the Company with respect to operational performance:

(Rs. In Lakhs)
Income for the year 3733.77 2274.38
Other Income 9.40 -
Total Income 3743.17 2274.38
Profit before Financial Cost, Depreciation and Taxation 268.02 179.35
Less: Financial Cost 73.67 51.44
Operating profit before Depreciation & Taxation 194.35 127.90
Less: Depreciation 23.11 9.81
Profit before Taxation 171.24 118.09
Provision for Taxation:
Current Tax/Excess Short Provision 44.50 28.57
Deferred Tax 6.36 2.89
Profit After Taxation 120.38 86.63

For the year ended 31st March, 2020, your Company has reported total revenue Rs. 3733.77 lakhs compared to Rs. 2274.38 lakhs in the previous year. The Companys Profit for the year before depreciation, interest and taxation has been Rs. 194.35 lakhs (P.Y. Rs. 127.90 lakhs) and the Net Profit after interest, depreciation, prior period adjustments & taxes are Rs. 120.38 lakhs (P.Y. Rs. 86.63 lakhs).

ix) Material developments in Human resources/industrial Relations front, including number of people employed.

The Company firmly believes that motivated and empowered employees are the cornerstone of competitive advantage. The Companys 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.

x) 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 Companys 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
Date: 29.08.2020 Dineshbhai B. Pandya
Place: Rajkot Managing Director