add shop e retail ltd Management discussions


i) AN OVERVIEW:

The Company Add-Shop E-Retail Limited is engaged in the business of manufacturing, marketing and distribution of products in the categories of Ayurveda 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:

The world economy in 2022-23 faced high uncertainty due to the continued impact of adverse events of the last three years– notably the COVID-19 pandemic and Russias invasion of Ukraine. Inflation rates have skyrocketed to multi-decade highs in many countries, causing central banks to raise interest rates and slow down economic activity to bring inflation back to their targets. In early 2023, the world economy had started showing signs of stabilizing after the adverse shocks of the previous year, but this progress was disrupted by recent financial sector disturbances. Some financial institutions that relied heavily on low interest rates have been caught off guard by the rapid pace of rate increases, causing financial stress and raising concerns about stability. In such a scenario, the world economy saw growth of 3.4% with Advanced Economies growing at 2.7% and Emerging Markets posting an increase of 4% 2022 (Source: IMF World Economic Outlook April 2023).

Returning to the growth rate as seen before the series of shocks that hit the world in 2022 and the recent financial sector disruptions is becoming increasingly difficult. The tightening of global financial conditions is further hindering the recovery process, resulting in slower income growth and increased unemployment in several economies. Consequently, the outlook for economic growth in the medium term seems less optimistic. As a result, IMF has forecasted growth to fall to 2.8% in 2023 before rising to 3.0% in 2024, which is still lower than the 3.4% growth seen in 2022.

Driven by the pent-up demand, widespread vaccination coverage, rising employment and substantially higher private consumption, India recovered from repeated waves of COVID-19 pandemic shock to overtake the UK and become the fifth-largest economy in the first quarter of FY 2022-23. However, with the global economy entering a phase of severe slowdown, India could not remain insulated from these developments. As the year progressed, Indias economic growth slowed and dropped to 4.4% in the October-December quarter from 6.3% in July September. The slowdown resulted from an easing of pent-up pandemic-era demand, continuing weakness in the manufacturing sector, and the fading of the pandemics low base effect. But in the fourth quarter, Indias economic growth accelerated to 6.1%, boosted by government and private capital spending. This has resulted in full year growth of 7.2%, a level that makes it the worlds fastest-growing major economy

iii) INDUSTRY STRUCTURE AND DEVELOPMENTS:

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 sectors 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 driven by 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.

Indias 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 Companys E-Retail business.

Apart from this, today, over 46,000 families are involved in this self-employment generating activity of spreading health to everyone and more than 80,000 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: (Amt in Lakhs)

PARTICULARS

YEAR ENDED YEAR ENDED
31.03.2023 31.03.2022
Income for the year 19988.41 15965.31
Other Income - -

Total Income

19988.41 15965.31

Profit/Loss before Depreciation, Finance Costs,

2902.46 2491.09

Exceptional items and Tax Expense

Less: Depreciation & Amortization Expenses 54.21 46.33

Profit/loss before Finance Costs, Exceptional items and Tax Expense

2848.25 2444.76
Less: Finance Cost 99.82 99.48

Profit/loss before Exceptional items and Tax Expense

2748.43 2345.28
Add/(less): Exceptional items 0 0

Profit/loss before Tax Expense

2748.43 2345.28
Less: Tax Expense:
Current Tax 680.37 428.70
Short /Excess Provision of Previous Year 145.03 0.00
Deferred Tax 6.79 7.90

Profit/loss for the year (1)

1916.25 1908.68
Total Comprehensive Income/ loss (2) 0 0

Total (1+2)

1916.25 1908.68

Earnings per share (Face value Rs. 10/-) Basic &

7.86 9.91

Diluted (In Rupees)

For the year ended 31st March, 2023, your Company has reported total revenue Rs. 19988.41 lakhs compared to Rs.15965.31 lakhs in the previous financial year. The Companys Profit for the year before depreciation, interest and taxation has been Rs. 2902.46 lakhs (P.Y. Rs. 2491.09 lakhs) and the Net Profit after interest, depreciation, prior period adjustments & taxes are Rs. 1916.25 lakhs (P.Y. Rs.1908.68 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 Companys employee value proposition is based on a strong focus on employee development, providing a satisfying work environment, performance appraisal and counseling 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 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: 05.09.2023 Dineshbhai B. Pandya

Place: Rajkot Managing Director DIN:06647303