Adhiraj Distributors Ltd Management Discussions.
The Management Discussion and Analysis Report
(MDA) is an integrated part of Companys annual financial statements. The purpose of the MDA is to provide a narrative explanation, through the eyes of management, of how the Company has performed in the past, its financial condition, and its future prospects. This report contains a description of the year gone by and some of the key factors that influenced the business of the Company during the year, as well as a fair and unbiased overview of the Companys past, present, and future. There are forward looking statements mentioned in this report which may involve risks and uncertainties, including but not limited to the risk inherent to the Companys growth strategy, change in regulatory norms, economic conditions and other incidental factors. Actual results could differ materially from those expressed or implied.
2. GLOBAL ECONOMY
After strong growth in 2017 and early 2018, global economic activity slowed notably in the second half of last year, reflecting a confluence of factors affecting major economies. In the middle of the year, the global growth became uneven with rising trade tensions. In 2018, the global economy grew at a rate of 3.6%. The year was marked by various political uncertainties such as future trade disputes between USA and China, upcoming Brexit negotiations, budgetary policy of Italy, among many others. These global tensions are expected to affect the global growth in 2019 as well. The global economy is expected to grow at a rate of 3.2% in 2019 and 3.5% in 2020.
It is expected that beyond 2020 growth will stabilize at around 3 percent, bolstered mainly by growth in China and India and their increasing weights in world income.
This is a delicate year for the global economy. Growth is expected to pick up in the second half of 2019. If the downside risks do not materialize and the policy support put in place is effective, then global growth will return to 3.6 percent in 2020. If, however, any of the major risks materialize, then the expected recoveries in stressed economies, export-dependent economies, and highly indebted economies may not occur. In that case, policymakers will need to adjust.
(Source: IMF Report, July, 2019 and IMFBlog dated April, 2019)
3. INDIAN ECONOMY
The Indian economy retained its tag of the fastest growing major economy in the world in 2018-19. Additionally, India climbed 23 points in the World
Banks ease of doing business Index to 77th place, becoming the top ranked country in South Asia, raking in a more positive image for the country.
According to Department for Promotion of Industry and Internal Trade (DPIIT), FDI equity inflows in India in 2018-19 stood at US$ 64.37 billion. India emerged as the top recipient of greenfield FDI Inflows from the Commonwealth, as per a trade review released by The Commonwealth in 2018, indicating that governments effort to improve ease of doing business and relaxation in FDI norms is yielding results.
Interestingly, India overtook France in 2018 to become the worlds 6th largest economy. It is now on its course to achieve the 5th position from the United Kingdom this year, on way to $3 Tn GDP by
2020. Since 2000, Indias share in the global economy has doubled from 1.5% to 3.2%.
During the year, just when the economy began recovering from the twin impacts of demonetization and Goods and Services Tax (GST) related transition, the crisis related to the performance of Non-Banking Financial Companies (NBFC) cast its shadow on consumption demand and market sentiments, putting economic growth off track.
The Reserve Bank of India (RBI) announced multiple rate cuts as well as infused liquidity through open market operations to ease the liquidity stress witnessed in the markets since September 2018. RBI also initiated USD-INR swap auctions in March and April 2019, to further augment systemic liquidity. All these measures are expected to play a significant part in nudging the banking system to transmit the benefit of lower rates to borrowers.
With the National Democratic Alliance (NDA) winning the May 2019 general elections, economists expect to see continuity in the implementation of macroeconomic policies over the next five years, creating a sense of stability in the Indian economy. The economic success of the new government will depend on how it faces challenges that are inhibiting Indias current growth momentum, and its ability to brace the economy from unavoidable external challenges. With both demand and investment slowing, the government might have to re-evaluate the implementation of its policy agenda and adjust its priorities to accelerate growth in the near term. Despite challenges, the economic outlook for India remains positive for the second term of the Modi-led BJP government, with a GDP growth forecast averaging 7% per year during the 2019 to 2023 period.
(Source: Economic survey 2018-19, IMF)
4. INDUSTRY STRUCTURE
India continues to be one of the fastest growing major economies of the world, with an increasing need for growth capital. The countrys banking and financial services sector is a significant driver for keeping Indias economic growth engine humming.
5. OPPORTUNITIES & THREATS
We operate in an industry, which faces intense competition from established as well as unorganized players. Our competition depends on several factors, which include quality, price and most importantly our pace in keeping up with the changing trends in fashion industry. Competition emerges from both organized as well as unorganized sector.
Appropriate changes are done to face these challenges. Company is trying to grab all the opportunities on its way which would enhance the companys performance overall.
6. FINANCIAL PERFORMANCE
Revenue from Operations
The Company has witnessed revenue growth of 222.37% during the year, to Rs.350.00 lakhs during the FY 2018-19 as compared to Rs.108.57 lakhs in the previous year.
In 2019, other Income growth of 0.94% during the year, to Rs.58.3 lakhs during the FY 2018-19 as compared to Rs.57.60 lakhs in the previous year.
In the FY 2018-19, the total expenses, excluding depreciation, financial expenses, and provisions amounted to Rs.388.04 lakhs which is 95.08% of net revenue as against Rs.145.75 lakhs in the FY 2017-18 which was 87.71% of net revenue.
Profit before Tax and Profit after Tax
Profit before tax and extra-ordinary income for the financial year ended 2018-19 is Rs.20.09 lakhs as compared to Rs.20.42 lakhs in the FY 2017-18.
The Net Profit after tax for the financial year 2018-19 decreased to Rs.14.87 lakhs as compared to Rs.15.19 lakhs in the FY 2017-18.
Paid up Equity Capital of the Company remained at Rs.1568.50 lakhs.
Reserves & Surplus
At the end of the FY 2018-19, Reserves and Surplus is Rs.57.65 lakhs as against Rs.42.78 lakhs at the end of FY 2017-18.
7. FINANCIAL RATIOS
Following are ratios for the current financial year and their comparison with preceding financial year, along with explanations where the change has been 25% or more when compared to immediately preceding financial year:
|Sl. No. Ratio Description||March 31, 2019||March 31, 2018||Reasons for increase (in case of change of more than 25%)|
|1. Debtors Turnover||1.25:1||0.54:1||Realisation from Debtors could not be done and expected to be realised in forthcoming year.|
|2. Inventory Turnover||8.43:1||-||Not Applicable|
|3. Interest Coverage Ratio||3.90:1||-|
|4. Current Ratio||1.31:1||102.07:1||Movie rights purchased by the company can be sell in forthcoming 3 years. After realisation of sale proceeds, sundry creditors will be paid off.|
|5. Debt Equity Ratio||-||-||Not Applicable|
|6. Operating Profit Margin (%)||0.05:1||0.12:1||Nominal Variation|
|7. Net Profit Margin (%)||0.04:1||0.09:1||Nominal Variation|
|8. Return on Networth||0.01:1||0.01:1||Nominal Variation|
8. RISKS AND CONCERNS
Risk is an integral part of the Companys business and sound risk management is critical to the success of any organization. The Company is exposed to specific risks that are particular to its business and the environment within which it operates.
The Company is aware of the need to better understand, anticipate, evaluate and mitigate risks in order to minimize its impact on business. The Company has put in place a Risk Management Policy to ensure that all the current and future material risk exposures of the Company are identified, assessed, quantified, appropriately mitigated, minimized and managed.
9. INTERNAL CONTROL SYSTEM
Effective internal controls are necessary for building up an efficient organization. Your Company has in place, an adequate internal control and internal audit system managed by qualified and experienced people to ensure the compliances under statutory regulations. Corporate policies are made to figure out the weaknesses persisting in the system and suggest remedial measure for the same.
The system is improved and modified continuously to meet with the changes in business condition, statutory and accounting requirements.
The Audit Committee also met the Companys statutory auditors to ascertain their views on the financial statements, including the financial reporting system, compliance to accounting policies and procedures, the adequacy and effectiveness of the internal control and systems followed by the Company.
10. HUMAN RESOURCES MANAGEMENT
The Company always regards human resources as its most valuable asset and ensures friendly work environment that encourages initiatives by individuals and recognizes their performance.
To maintain competency and to improve the analytical abilities of employees for gearing them to face challenges, proper training and development is imparted by the Company before the employee takes up any responsibility. Our Company has always valued its employees whose dedication and contribution have helped us to reach the levels of excellence and rewarded them appropriately during the appraisal.
11. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal)
Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
The following is a summary of sexual harassment complaints received and disposed off during the year 2018-19.
Number of complaints received: Nil
Number of complaints disposed off: Nil
Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimate, expectations may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Important factors that could make a difference to the Companys operations include changes in Government regulations, tax regimes, economic developments within India and other such factors over which the Company does not have any direct control.
For and on behalf of the Board of Directors
Date: August 31, 2019